In this blog post, Jack Williams of Monckton Chambers discusses the consideration of Francovich damages claims in Trustees of the AFM and SAG-AFTRA Intellectual Property Rights Distribution Fund v Secretary of State for Science, Innovation and Technology [2025] EWHC 1944 (Ch) (“AFM”).
Francovich damages
As is well-known, pursuant to the Francovich rule, EU law provides that damages may be awarded against an EU Member State for breaches of EU law where three conditions are met: first, the provision of EU law that has been infringed must have been intended to confer rights on individuals; secondly, the breach must be ‘sufficiently serious’; and, thirdly, there must be a direct causal link between the breach and the damage suffered.
The Francovich rule was not transposed into domestic law as part of Retained EU Law (or now Assimilated Law) from the end of the transition period i.e. IP Completion Day. As paragraph 4 of Schedule 1 to the European Union (Withdrawal) Act 2018 provides in stark terms: “There is no right in domestic law on or after IP Completion day to damages in accordance with the rule in Francovich.”
This exclusion also applies, prima facie, both prospectively and retrospectively. Paragraph 39(1) of Schedule 8 of the 2018 Act states that the rule in paragraph 4 of Schedule 1 applies in relation to “anything occurring before [the end of the transition period] (as well as anything occurring on or after [the end of the transition period])”.
The exclusion of Francovich damages claims was, however, subject to exceptions, which I have discussed before (see here). One such exception is that the exclusion does not apply “in relation to any proceedings begun within the period of two years beginning with IP Completion day so far as the proceedings relate to anything which occurred before IP Completion day” (paragraph 39(7) of Schedule 8 to the EU(W)A 2018).
AFM
That exception has now been subject of judicial comment in AFM. The case concerned the right of performers in the music industry to equitable remuneration when sound recordings are broadcast or communicated to the public in the UK. The Claimants contended that some 33,000 performing musicians and vocalists with some connection to the US were not paid equitable remuneration in respect of UK exploitation of their performances after 2016, to which they would have been entitled but for the UK’s failure to comply with its EU law obligations. They sought Francovich damages for this alleged failure.
This blog post focuses on one aspect of the Secretary of State’s response to such claims, namely an application to strike out all Claimants’ claims for Francovich damages that relate to the period after 31 December 2020 on the basis that the EU(W)A precludes any claim made for such damages that accrued after that date.
The Judge (Richards J) refused to grant such an application on the basis that he did not consider the interpretation of paragraph 39(7) of Schedule 8 to the EU(W)A to be a relatively straightforward point of law that is susceptible to summary determination: [111]-[118].
Two competing interpretations of the paragraph 39(7) exception
Paragraph 39(7) of Schedule 8 to the EU(W)A permits Francovich damage claims to be brought “in relation to any proceedings begun within the period of two years beginning with IP Completion day so far as the proceedings relate to anything which occurred before IP Completion day”.
One the one hand, the Claimants argued for a broad interpretation of this permitting them to claim Francovich damages for the period after IP Completion day on the basis that:
- Paragraph 39(7) is not concerned with when causes of action might be said to accrue, but rather with “proceedings” that the claim must “relate to”; and
- Paragraph 39(7) also only requires that the proceedings “relate” to “anything” which occurred before IP Completion day.
Accordingly, the Claimants argued that, given that they had a Francovich damages claim for the period prior to IP Completion day and the claim also relates to an (alleged) breach of EU law prior to that date (which is, in their view, ongoing), then the conditions of paragraph 39(7) were met: [107]-[108].
On the other hand, the Secretary of State argued that any claim that US performers bring for Francovich damages in respect of losses suffered after 31 December 2020 is necessarily brought by way of a cause of action that accrued only after 31 December 2020, when loss was suffered, and, as such, a claim cannot “relate to anything which occurred before IP Completion day” for the purposes of paragraph 39(7) of Schedule 8 to the EU(W)A 2018: [106(iv)].
In response to the Claimants’ interpretation, the Secretary of State submitted that that interpretation is “unduly literal” and that “the concept of “anything that occurred prior to IP Completion day” needs to be construed in a more purposive fashion that draws on the analysis of the nature of a Francovich claim”: [112].
Comment
The Judge concluded that “there was force in many of the arguments on both sides and both sides articulated difficulties with the other’s analysis” ([113]) and, as such, considered the matter unsuitable for summary determination: [118]. This is perhaps understandable given the unduly complex and obscure nature of structure and wording of the EU(W)A 2018, and how matters appear to have been presented in the proceedings.
It is helpful, in my view, to break the analysis down into two questions.
First, when does the breach have to take place?
Paragraph 39(7) of Schedule 8 to the EU(W)A states that Francovich damages claims are permitted for two years post IP completion day “so far as the proceedings relate to anything which occurred before IP Completion day”. The “anything” clearly, in my view, requires (at least) a breach of EU law pre-dating IP Completion day.
There can be no breach of EU law (whether fresh, or continuing / ongoing) for the period after IP Completion day. The United Kingdom cannot, after that date, be in breach of EU law (or any domestic statutory duty) for not implementing an EU Directive. There is no obligation for it to implement EU Directives after this date (provisions of EU Directives that Parliament intended to incorporate directly into domestic law as part of Retained EU Law are set out in section 4 of the EU(W)A). There is thus no trigger for Francovich damages after this date. As paragraphs 215 and 411 of the explanatory notes to the EU(W)A state, paragraph 39(7) “ensures that the [Act] will not prevent individuals from continuing to seek such damages in domestic law where a breach of EU law occurred before [IP Completion day]” (emphasis added).
It therefore appears to me that Claimants’ original pleading that there was a “continuing breach of duty” ([108]) to implement the Directive properly even after IP Completion day (and that the cause of action was therefore ongoing) is bound to fail, and could have been struck out. It is therefore understandable that the Claimants sought permission to introduce a new pleading that, even if the cause of action accrued entirely before IP Completion day, thereafter it resulted in some losses being suffered after that date ([109]). This takes us to the second question.
Second, when do the losses have to be suffered?
It is worth repeating that paragraph 39(7) of Schedule 8 to the EU(W)A states that Francovich damages claims are permitted for two years post IP completion day “so far as the proceedings relate to anything which occurred before IP Completion day”. As we have seen, there must have been a breach of EU law triggering the right to Francovich damages prior to IP Completion day. But must the losses also have been suffered only prior to IP Completion day, or can they be ongoing even thereafter? In other words, is there a basis for a claim for ongoing loss and damage for a breach of EU law that took place prior to IP Completion day (namely failure to implement a directive whilst subject to EU law in this case) but continues, allegedly, to cause loss or damage even after Brexit?
This is the more tricky question, explaining why the Judge permitted the amendments to the Claimants’ pleading (as discussed above) and did not summarily determine them, despite acknowledging the oddity of the position at [112]:
“ It might well strike an observer as counter-intuitive that Parliament should have decided that there should be a right to Francovich damages to compensate for loss accruing after 31 December 2020 for an asserted failure to implement the Directive, when EUWA 2018 and the political discourse that accompanied was redolent of a wish for EU law to play a much reduced role in the law of the United Kingdom. The SoS may well be right, therefore, to argue that the concept of “anything that occurred prior to IP completion day” needs to be construed in a more purposive fashion that draws on the analysis of the nature of a Francovich claim”.
The basis for such a claim for ongoing losses in respect of an historic breach would be that, prior to Brexit, the United Kingdom ought to have implemented the Directive properly and, if it had, the Claimants would not suffer loss and damage even after Brexit. The premise for this, however, has to be that the United Kingdom would have maintained the ‘proper’ implementation of the EU Directive even after Brexit. Otherwise there would be no ongoing losses caused by the prior breach (at a time when the United Kingdom was obliged).
But not only is there no obligation to implement EU Directives after Brexit (as discussed above), there is also no obligation to maintain an EU Directive as part of domestic law since IP Completion day. The United Kingdom could repeal or amend any domestic implementing legislation (putting to one side obligations within the Withdrawal Agreement and Windsor Framework for present purposes). Extensive powers were, for example, contained in the EU(W)A 2018 (and now the Retained EU Law Act 2023) to do just that. So, even if the United Kingdom were obliged to implement the Directive properly during membership of the EU and during the transition period, there was no ongoing duty to do so after IP Completion day.
As such, it might either:
- in principle simply be impossible to satisfy the conditions of the EU(W)A or establish the third condition of the Francovich damages claim (that here must be a direct causal link between the breach and the damage suffered) for losses after IP Completion day given that the loss is not caused so much by the breach of EU law during EU membership or the transition period, but instead by separate (in)action post-dating IP Completion day; or
- in any event, be difficult to establish on the facts that alleged losses post-dating IP Completion day in respect of a breach pre-dating IP Completion Day were caused by the initial breach of EU law even if possible in principle. This may depend on evaluation of factual evidence regarding:
- what the United Kingdom would or would not have done in respect of the relevant (retained) EU law in question on or after IP Completion Day e.g. if, in a counterfactual world where the Directive had been properly implemented, it was more likely than not to repeal or amend such legislation given its post-Brexit freedoms and any differences in policy objectives; and
- the nature of the EU law in question e.g. whether its provisions (or failure to implement them) could have long-term consequences given the subject matter and impact on real-world conduct.
The Judge in AFM has neither determined nor shut out either set of arguments. It will be interesting to see how this issue develops. I suspect, given that the two-year period for bringing Francovich claims has long expired and the parties in AFM were unaware of any other ongoing Francovich damages cases, that the outcome may have limited implications beyond this case. I would welcome any insights from readers if they are aware of any other ongoing Francovich damages claims progressing through the system.
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