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Failure to make an environmental impact assessment and liability

’47. ...the fact that an environmental impact assessment was not carried out, in breach of the requirements of Directive 85/337, does not, in principle, by itself confer on an individual a right to compensation for purely pecuniary damage caused by the decrease in the value of his property as a result of environmental effects...’

14 March 2013, Court of Justice of the EU (Case C 420-11). Mrs Leth instituted court proceedings before the Austrian Courts, against the State of Lower Austria, seeking damages (120,000 Euro) for depreciation of her property, which was situated very close to the Vienna International Airport. This airport has been extended a number of times since Austria joined the EU in 1995, and Mrs Leth claimed that her property was losing in economic value because of the airport and the more so because of its expansion. She claimed that these enlargements had occurred without prior assessments of the environmental effects on the surroundings, in breach of Directive 85/337.

The Austrian Supreme Court,  by means of a request for a preliminary ruling under art. 267 TFEU, sought to establish whether the duty to conduct an environment impact assessment is intended to protect the affected individuals from pecuniary damage caused by the project. The EU Court of Justice ruled that the environment impact assessment must consider the effects of the project, for example the effect of noise on people, but does not go so far as to consider the financial impact of a project and what effect that project will have on the value of surrounded, affected properties.

On the other hand, pecuniary damage is covered by the objective of protection pursued by Directive 85/337, where such damage is a direct economic consequence of the environmental impact of the project. So, if the house affected by the noise is rendered less capable of fulfilling its function, and the individual’s quality of life, and possibly health, are affected, a loss in the pecuniary value of the house may amount to a direct economic consequence of such effects on the environment.

The Court of Justice of the EU however observed that the Directive in question did not prohibit the carrying out of projects which had a negative effect on the environment. Therefore, the fact that the assessment of a project was not carried out, did not by itself confer on an individual a right to compensation for pecuniary loss on the basis of the environmental effects of the project.

To access the actual judgement, click here