## Facts

- Case 5/71 concerned an action for damages brought against a European Community institution in 1971.
- The claimant, Zuckerfabrik Schöppenstedt, alleged that a Community measure had caused it economic harm and sought compensation.
- At the time, the scope of non-contractual liability under what is now Article 340(2) TFEU was uncertain, leaving claimants without a clear test.
- The suit required the Court to clarify when an unlawful act or omission by an EU body gives rise to liability.
- The judgment became a reference point for claims directed at institutional acts.

## Issues

1. Whether an individual undertaking can obtain damages from a Community institution for unlawful measures or omissions.
2. What substantive conditions govern non-contractual liability, particularly the required gravity of the breach.
3. Whether proof of both a direct causal link and actual damage is necessary, and how these elements should be assessed.

## Decision

- The Court accepted that the Communities may incur non-contractual liability but imposed restrictive conditions.
- Liability arises only where the institution commits a “sufficiently serious breach” of a superior rule of law intended to protect individuals.
- The claimant must establish a direct causal connection between that breach and the loss claimed.
- Compensation is confined to actual, proven damage; hypothetical or speculative losses are excluded.

## Legal Principles

- For liability under Article 340(2) TFEU, a claimant must show:
  - the existence of a superior rule conferring rights on individuals;
  - a breach that is sufficiently serious, reflecting a manifest and grave disregard of limits on discretion;
  - a direct causal link between the breach and the damage;
  - real, quantifiable loss.
- The “sufficiently serious breach” threshold filters ordinary illegality, ensuring only egregious errors trigger liability.
- Schöppenstedt supplied the analytical framework later used and refined in EU case-law on institutional liability.

## Conclusion

The European Court of Justice held that EU institutions are liable in damages only when they commit a sufficiently serious breach of a superior rule protecting individuals, and that breach directly causes proven loss; lesser illegality alone is inadequate for compensation.

Zuckerfabrik Schöppenstedt v Council (Case C-5/71) [1971] ECR 975