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State liability for acts of the Judiciary

 

His Honour the Chief Justice, last week at the opening of the Maltese Courts' Forensic Year, pointed out that the Judiciary is one of the three pillars of the State. To this I add (hopefully without sounding disrespectful to the Courts and the Judiciary - and certainly without entering the issue that his Honour was discussing) that it is an arm of the State which enjoys exemption from liability. To the best of my knowledge, this matter is as yet unquestioned, in the sense that in line with our British lineage the State is still considered as exempt from liability for any damages caused by their Excellencies the Judiciary of Malta (carrying out their judicial functions).

However, since Malta joined the European Union, the legal scenario has changed, even if Malta has not yet had to face the situation. This is thanks in particular to two European Court of Justice (ECJ) judgements.

 

The first of the two judgements is Gerhard Köbler v. Republik Österreich (Case C-224/01). Applicant was a professor at an Austrian University, who after ten years of service with this university applied for a special length-of-service increment under a particular law. This increment was due after fifteen years’ service. Professor Köbler claimed that, although he only had ten years’ service with this university, he had worked for five years at other universities, in other Member States of the European Community. When his request was refused, he claimed that the refusal to take into account services with other universities of other Member States amounted to unjustified indirect discrimination under Community Law. Professor Köbler instituted proceedings before a domestic administrative court, which initially sought a preliminary ruling from the European Court of Justice, but later withdrew the request and dismissed his application on the grounds that the special length-of-service was a loyalty bonus that objectively justified a derogation from the Community law provisions on freedom of movement for workers. Köbler brought an action for damages against the Republic of Austria, claiming that the judgement of the administrative court infringed directly applicable provisions of Community law. The Court observed that in the joined cases Brasserie and Factortame (C-46/93 and C-48/93) the principle of State liability holds good in any case in which a Member State breaches Community law, whichever the organ of the State responsible for the breach. However, in the Köbler case it went on to rule that although the administrative court had in fact breached Community law, the infringement was neither manifest nor sufficiently serious (i.e. the criteria for establishing liability were not all satisfied).

 

The second judgement is Traghetti del Mediterraneo SpA (in liquidation) v. Repubblica italiana (Case C-173/03). Applicant (TDM), a company running ferry services, instituted proceedings against a  competitor (Tirrenia), seeking compensation for damages resulting from Tirrenia having abused its dominant position. Tirrenia used to receive subsidies from the Italian State and TDM claimed this to have been contrary to European Law. The court actions instituted by TDM were dismissed, including an application for referral to the ECJ, on the basis that there were no breaches of the laws of competition. Subsequently, the European Commission took action against Italy for over subsidies paid out to Tirrenia (Commission Decision 2001/851/EC of 21 June 2001), leading TDM to submit that, had the Court made a reference to the ECJ, the outcome of the proceedings would have been different. The Government defended its position by referring to a law regulating judicial liability (Law No. 117 of 13 April 1988) pointing out that TDM's action does not give rise to damages under it (this law provides for intentional fault or serious misconduct on the judiciary's part). A request for a preliminary ruling was made to the ECJ, concerning 1. whether Member States could be held liable for errors of the courts when making, or failing to make a preliminary reference to the ECJ; and 2. on the limits to state liability imposed by domestic legislation. The judgement overlapped with the Köbler case, and in fact was decided on the same lines.

The first question was decided in the affirmative although with reservations in the sense that it was made clear that such liability is exceptional:

'32...having regard to the specific nature of the judicial function and to the legitimate requirements of legal certainty, State liability in such a case is not unlimited. As the Court has held, State liability can be incurred only in the exceptional case where the national court adjudicating at last instance has manifestly infringed the applicable law. In order to determine whether that condition is satisfied, the national court hearing a claim for reparation must take account of all the factors which characterise the situation put before it, which include, in particular, the degree of clarity and precision of the rule infringed, whether the infringement was intentional, whether the error of law was excusable or inexcusable...'

 The second question the ECJ ruled against domestic law precluding or seriously limiting State liability for its Judiciary where there is a manifest infringement of EU law:

'46. ...Community law also precludes national legislation which limits such liability solely to cases of intentional fault and serious misconduct on the part of the court, if such a limitation were to lead to exclusion of the liability of the Member State concerned in other cases where a manifest infringement of the applicable law was committed...'

Apart from the question of whether these judgements could lead to a situation where domestic courts 'play it safe' and always accept requests for preliminary rulings, the biggest issue seems to be the potential change to the domestic scenario. Unlike Italy, liability for acts of the Judiciary is excluded in Malta (obviously apart from actions for breach of human rights such as fair hearing etc., which do not count as actions for damage). Admitted that State liability for acts of the Judiciary is  restricted to the application of European Law, but one must bear in mind that European Law makes always more inroads into domestic matters and also that there is always the potential of concepts 'spilling over' into domestic law (overseas this has proven to occur).

State liability is expanding in Malta, especially since Malta joined the EU. This is to the Citizens' benefit, but could present a serious headache to the legislator, to the entity which was previously exempt from liability and ... (in the event of a successful outcome to such an action) to the tax payer who ultimately foots the bill. The last can be avoided by shifting towards personal liability (but this is another matter which perhaps will be dealt with in future blog entries).

ECJ judgements are available from http://curia.europa.eu/jcms/jcms/Jo1_6308/ .

 

Ivan Mifsud LLD Phd

5 October 2009

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