## Facts

- The dispute arose over the application of Italian social security legislation to seafarers employed by Traghetti del Mediterraneo.
- Italian authorities claimed social security contributions for periods when seafarers worked on vessels registered in another Member State.
- Traghetti del Mediterraneo argued that this demand contravened EU law, specifically Regulation (EEC) No 1408/71, which governs social security coordination for persons moving within the EU.
- The case concerned whether the Italian authorities' application of the territoriality principle and social security laws was consistent with EU legal obligations concerning the prevention of overlapping contributions.

## Issues

1. Whether the Italian court’s interpretation and application of Regulation 1408/71 constituted a manifest and sufficiently serious breach of EU law.
2. Whether a Member State can be liable for damages caused by its court of last instance in cases of manifest breaches of EU law.
3. What criteria determine when such a judicial breach is “sufficiently serious” to trigger state liability under EU law.

## Decision

- The Court of Justice of the European Union found that the Italian court had committed a manifest breach of EU law by misapplying Regulation 1408/71 and the territoriality principle, leading to overlapping social security contributions.
- The CJEU affirmed that Member States can be held liable for judicial breaches of EU law by national courts of last instance.
- The Court clarified that an infringement is “sufficiently serious” if the court has manifestly disregarded the applicable EU law, especially where the rules are clear and there is little discretion afforded to the national court.
- The judgment reinforced and clarified the conditions for state liability set out in previous cases, including _Brasserie du Pêcheur_ and _Factortame III_.

## Legal Principles

- State liability arises where a rule of law confers rights on individuals, the breach is sufficiently serious, and there is a direct causal link between the breach and the loss suffered.
- The seriousness of a judicial breach depends on factors such as the clarity of the rule, the discretion available to the court, the nature and reason for the infringement, and the positions adopted by EU institutions.
- National courts of last instance must ensure the correct and uniform application of EU law and should refer questions of interpretation to the CJEU when in doubt.
- The prospect of state liability incentivizes national courts to uphold EU law and use the preliminary ruling procedure (Article 267 TFEU) to avoid divergent interpretations.

## Conclusion

The CJEU in Traghetti del Mediterraneo clarified that Member States may be liable for damages resulting from manifest judicial breaches of EU law by national courts of last instance, emphasizing the need for rigorous application of EU legal standards and effective judicial remedies for individuals.

Traghetti del Mediterraneo SpA v Repubblica Italiana (Case C-173/03) [2006] ECR I-5177