## Facts

- An EU directive required Member States to create guarantee institutions to ensure payment of employees’ outstanding wage claims when an employer becomes insolvent.
- Italy did not implement the directive within the required period.
- Andrea Francovich and, separately, Danila Bonifaci and other workers were owed unpaid wages after their employers became insolvent and could not satisfy wage claims.
- The workers sued Italy in Italian labor courts, arguing either that they could rely directly on the directive to obtain payment or that Italy had to compensate them for losses caused by non-implementation.
- The Italian courts referred questions to the European Court of Justice on direct effect and Member State liability for failure to implement a directive.

## Issues

1. Whether the directive’s employee-protection provisions were sufficiently precise and unconditional to be invoked by individuals in national court to obtain payment from the State absent implementing measures.
2. Whether EU law requires a Member State to compensate individuals for losses caused by the State’s failure to implement a directive on time, and if so, under what conditions.

## Decision

- The Court held the employees could not obtain payment directly from the State on the basis of the directive alone because the directive did not identify the entity liable to pay the guaranteed sums where no implementation occurred.
- The Court recognized a principle of Member State liability in damages for breaches of EU law, including failure to transpose a directive, when specified conditions are met.
- The Court left to national courts the task of applying the liability criteria and determining compensation under national procedural rules consistent with EU requirements.

## Legal Principles

- A directive may have direct effect only where its provisions are unconditional and sufficiently precise; however, where the liable party cannot be identified from the directive absent national measures, individuals cannot enforce payment obligations against the State solely based on non-implementation.
- EU law requires Member States to make good loss caused to individuals by breaches of EU law attributable to the State when:
  - The directive is intended to confer rights on individuals.
  - The content of those rights is identifiable from the directive.
  - A causal link exists between the State’s breach and the damage suffered.
- National rules governing actions for damages must satisfy:
  - Equivalence (no less favorable than comparable domestic actions).
  - Effectiveness (must not make enforcement practically impossible or excessively difficult).

## Conclusion

The Court denied direct recovery of unpaid wages from the State under the unimplemented directive but established that Member States can be liable in damages for failure to implement EU directives when the directive confers identifiable individual rights and the breach causes loss, with remedies administered in national courts subject to equivalence and effectiveness.


Francovich v. Italian Republic, Joined Cases C-6/90 & C-9/90, 1991 E.C.R. I-5357 (E.C.J. 1991)