Short answer
A Member State must pay damages under EU law when the breached rule was intended to confer individual rights, the breach was sufficiently serious, and it directly caused the claimant's loss. National procedure cannot treat the EU claim less favourably than a similar domestic claim or make recovery impossible or excessively difficult.
A breach is sufficiently serious when the State manifestly and gravely disregarded the limits on its discretion. Relevant factors include the rule's clarity, the State's room for choice, excusability, and settled case law. Complete failure to take any transposition measure by a directive's deadline is serious in itself. Liability can arise from legislation, administration, or—exceptionally—a manifest infringement by a final-instance court.
Not every EU-law error is compensable. Rights, seriousness, causation, and loss must each be established, and the applicable national limitation period and procedural route can ultimately determine whether the claim succeeds.
Why EU law recognises State liability
The principle is called Francovich liability after the Court's 1991 judgment in Joined Cases C-6/90 and C-9/90. Employees lost wage claims after Italy failed to implement a directive protecting workers when employers became insolvent. Because direct reliance provided no guarantee, the Court held that EU law required reparation.
That conclusion protects EU rights from a State's failure to adopt the measure needed to make them work. It also reflects the duty of sincere cooperation in Article 4(3) of the Treaty on European Union (TEU):
The Member States shall take any appropriate measure, general or particular, to ensure fulfilment of the obligations arising out of the Treaties or resulting from the acts of the institutions of the Union. —
The three conditions for compensation
The general formulation, clarified in Brasserie du Pêcheur and Factortame, Joined Cases C-46/93 and C-48/93, has three parts.
First, the EU rule breached must be intended to confer rights on individuals. A rule may constrain a Member State without giving the claimant the particular protected interest asserted. The court must interpret the provision's wording, purpose, and scheme rather than assume that every EU obligation creates a damages claim.
Second, the breach must be sufficiently serious. This filters out errors that do not cross the EU threshold for State liability. The standard is objective and contextual; it is not simply a national-law inquiry into negligence.
Third, there must be a direct causal link between the State's breach and the loss. The claimant must show what would probably have happened without the breach and prove the recoverable damage. A serious violation does not remove the need for causation.
These are EU-law conditions. National law may recognise liability on less strict terms, but it cannot add a requirement—such as a demanding domestic concept of official fault—that undermines the EU right to reparation.
What makes a breach sufficiently serious?
The central question is how clearly the State crossed the limits of the lawful choices available to it. The Court stated the test in Brasserie du Pêcheur and Factortame:
As to the second condition, as regards both Community liability under Article 215 and Member State liability for breaches of Community law, the decisive test for finding that a breach of Community law is sufficiently serious is whether the Member State or the Community institution concerned manifestly and gravely disregarded the limits on its discretion. —
A national court may consider:
- how clear and precise the EU rule was;
- how much discretion the rule left to the State;
- whether the infringement and damage were intentional or involuntary;
- whether the legal error was excusable;
- whether an EU institution contributed to the error; and
- whether the State adopted or retained measures contrary to EU law.
No single checklist item automatically resolves every case. If a rule left wide legislative or administrative discretion, the claimant must show a manifest and grave disregard of its limits. If the State had considerably reduced or no discretion, the infringement itself may be enough to establish seriousness.
Prior case law is especially important. A breach is clearly serious where it continues despite a judgment finding the infringement, a preliminary ruling, or settled Court of Justice case law that makes the unlawfulness clear. But a claimant does not need to wait for the Commission to bring an infringement action or for the Court of Justice to condemn the Member State first.
Missing a directive deadline is the clearest example
The Court resolved an important point in Dillenkofer and Others, Joined Cases C-178/94 and others. Germany had failed to establish the insolvency protection required by the Package Travel Directive by the implementation deadline. The Court treated complete inaction differently from a difficult choice made within a broad discretion:
Failure to take any measure to transpose a directive in order to achieve the result it prescribes within the period laid down for that purpose constitutes per se a serious breach of Community law and consequently gives rise to a right of reparation for individuals suffering injury if the result prescribed by the directive entails the grant to individuals of rights whose content is identifiable and a causal link exists between the breach of the State's obligation and the loss and damage suffered. —
“Per se serious” does not mean automatic payment. The directive must still confer identifiable rights, and the claimant must prove direct causation and loss. The rule also concerns failure to take any transposition measure by the deadline. An allegation of defective or incomplete implementation may require the fuller seriousness assessment.
A 2025 judgment applies the test to an emergency. In S.A. and R.J., Case C-97/24, Ireland could not avoid liability by relying on sudden, unforeseeable and unavoidable exhaustion of reception accommodation. Directive 2013/33 anticipated temporary exhaustion yet still required applicants' basic needs to be covered. This was not general strict liability; the obligation was clear and left very limited discretion.
Which State bodies can generate liability?
The Member State cannot avoid liability by pointing to its internal separation of powers. The principle can apply whichever State organ caused the breach, including a legislature that enacted or retained incompatible legislation and an administrative authority that misapplied EU law.
It can also extend to a final-instance national court. In Köbler, Case C-224/01, the Court held that the same three conditions apply, but legal certainty and the judicial function require an exceptional threshold:
State liability for an infringement of Community law by a decision of a national court adjudicating at last instance can be incurred only in the exceptional case where the court has manifestly infringed the applicable law. —
Relevant factors include the clarity of the rule, whether the error was excusable, the position of an EU institution, and failure to comply with the obligation to request a preliminary ruling. A decision made in manifest breach of Court of Justice case law is sufficiently serious. A successful damages action orders compensation from the State; it does not necessarily reopen the earlier final judgment.
National law supplies the procedure, within EU limits
EU law creates the right to reparation, but national law supplies the court, procedure, limitation periods, evidential rules, and valuation methods. Two constraints remain:
- equivalence: the EU claim cannot be treated less favourably than a similar domestic claim; and
- effectiveness: the rules cannot make compensation impossible or excessively difficult in practice.
Compensation must match the loss sufficiently to make the EU right effective. A State cannot categorically exclude lost profit if that makes commercial recovery practically impossible. Courts may examine whether the claimant reasonably mitigated the loss.
A practical assessment
A potential claim should be tested in this order:
- Identify the exact EU provision and the version in force when the alleged breach occurred.
- Explain the individual right that the provision was intended to protect.
- Identify the State act or omission and the organ responsible.
- Assess seriousness by reference to clarity, discretion, excusability, and existing Court of Justice authority.
- Prove a direct causal chain from the breach to a specific, evidenced loss.
- Check the competent court, limitation period, available heads of damage, evidence rules, and mitigation requirements under national law.
- Test those national rules against equivalence and effectiveness.
This sequence matters. A clear infringement may fail as a damages claim if the provision did not confer the asserted right or if the loss would have occurred anyway.
Conclusion
A Member State owes damages for breaching EU law when a rights-conferring EU rule was breached sufficiently seriously and that breach directly caused the claimant's loss. Seriousness turns on whether the State manifestly and gravely exceeded the discretion available to it. Complete failure to transpose a directive on time is the clearest case; final-instance judicial errors require an exceptional, manifest infringement.
The EU test creates the right, while national law provides much of the machinery. That machinery may regulate proof, time limits, mitigation, and valuation, but it cannot hollow out the EU remedy.
Sources
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This article provides general legal information, not advice for a specific matter. Laws, facts and procedural deadlines may change the result. Follow the linked primary sources and obtain local advice before acting.