Francovich claims are dead! Long live Francovich claims?

This post, written by Jack Williams of Monckton Chambers, examines the availability and status of claims for Francovich damages during and after the transition period.

What is the new rule?

Paragraph 4 of Schedule 1 of the European Union (Withdrawal) Act 2018 (the “EUWA”) provides that there is generally ‘no right in domestic law on or after [the end of the transition period] to damages in accordance with the rule in Francovich‘. As is well known, the rule in Francovich provides a cause of action in damages against an EU Member State for a breach of EU law.

Whilst it may be thought to be slightly peculiar that the legislation refers to the principle of state liability in damages by reference to one case, Joined Cases C-6/90 and C-9/90 Francovich and Bonifaci, paragraph 5(1) of Schedule 1 to the EUWA immediately clarifies that the reference to ‘the rule in Francovich’ is to be read as a reference to that rule ‘so far as it would otherwise continue to be, or form part of domestic law on or after [the transition period] in accordance with this Act’. That is a helpful clarification because, as is well known, the rule in Francovich was subsequently extended and elaborated on by the CJEU. In Joined Cases C-46/93 and C-48/93 Brasserie du Pêcheur and Factortame, for example, the CJEU articulated the test for when a Member State must compensate individuals for damage that they suffer as a result of the State’s breach of EU law as follows:

‘[Union] law confers a right to reparation where three conditions are met: the rule of law infringed must be intended to confer rights on individuals; the breach must be sufficiently serious; and there must be a direct causal link between the breach of the obligation resting on the State and the damage sustained by injured parties.‘

Importantly, the exclusion of the right to Francovich damages in Schedule 1 of the EUWA applies both prospectively and retrospectively. Paragraph 39(1) of Schedule 8 (i.e. some seven schedules later) 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])‘. 

This wording manifests a clear legislative intention to prevent both new Francovich claims for breaches of EU law or EU retained law arising in the first place and to extinguish, subject to certain exceptions, Francovich damages claims which had accrued before, as well as after, the end of the transition. This express wording is therefore important: it reverses the usual effect of section 16(1) of the Interpretation Act 1978, which would otherwise have saved such accrued rights vis-à-vis breaches of EU law.

The exceptions to the rule

The rule in paragraph 4 of Schedule 1 to the EUWA generally excludes any right to damages in accordance with the rule in Francovich and subsequent relevant cases. This rule is, however, subject to exceptions.

Whilst it is not an exception to the rule per se, it is worth first noting that the rule does not affect any retained statutory rights to claim damages in respect of breaches of retained EU law (for example, under regulations 97 and 98 of the Public Contracts Regulations 2015) or the case law which applies to the interpretation of any such provisions. It is therefore important for prospective claimants to consider the provisions of any relevant retained EU law to see if a specific damages regime still applies, even though that regime may ultimately rely on Francovich principles (such as the Public Contracts Regulations 2015: see Energy Solutions EU Ltd v Nuclear Decommissioning Authority [2017] UKSC 34).

Paragraph 39 of Schedule 8 makes provision for exceptions to the general exclusion of Francovich damages claims.

First, paragraph 39(2) of Schedule 8 states that the exclusion does ‘not affect any decision of a court or tribunal made before [the end of the transition period]‘. Moreover, paragraph 39(3) of Schedule 8 provides that the exclusion does ‘not apply in relation to any proceedings begun, but not finally decided, before a court or tribunal in the United Kingdom before [the end of the transition period]‘. So, for example, a Francovich claim commenced before the end of the transition period can be decided by a court or tribunal after the transition period.

Any prospective claimant with a claim for Francovich damages would thus be well-advised to issue a claim before the end of the transition period (presently 31 December 2020). There is otherwise a significant risk that they lose the right entirely (on account of paragraph 39(1) of Schedule 8 as discussed above) or, at best, have the usual limitation period reduced (on account of paragraph 39(7) of Schedule 8 for reasons discussed below). 

Second, paragraph 39(7) of Schedule 8 states that the exclusion ‘does not apply in relation to any proceedings begun within the period of two years beginning with [the end of the transition period] so far as the proceedings relate to anything which occurred before [the end of the transition period]‘. This means that, for alleged infringements pre-dating the end of the transition period, a claim for Francovich damages for breach of EU law can be brought within two years after the end of the transition period.

Paragraphs 215 and 411 of the Explanatory Notes for the EUWA state that: ‘This [i.e. paragraph 39(7) of Schedule 8] ensures that the Bill will not prevent individuals from continuing to seek such damages in domestic law where a breach of EU law occured [sic] before [the end of the transition period].‘

Whilst true, this is somewhat of an optimistic gloss, however. As established in a long line of case law and recently confirmed by the Court of Appeal in Arriva v Department for Transport [2019] EWCA Civ 2259, a claim for Francovich damages is a private law cause of action in tort (breach of statutory duty) and is subject to the six year limitation period in section 2 of the Limitation Act 1980. The effect of Schedules 1 and 8 of the EUWA is therefore to reduce the limitation period for such claims.

Third, the exclusion does not apply ‘in relation to any conduct which occurred before [the end of the transition period] which gives rise to any criminal liability‘. This is likely to be a minor exception.

Possible revival of Francovich claims?

The exclusion of claims for Francovich damages therefore applies to “anything occurring before exit day (as well as anything occurring on or after exit day)‘ (paragraph 39(1) of Schedule 8) unless an exception applies, including the two key ones that (i) a claimant has brought his or her claim before the end of the transition period (in which case a court can still rule favourably afterwards), or (ii) a claimant brings his or her claim within two years after the transition period vis-à-vis infringements pre-dating the end of the transition period.

In practice, the net effect of this is a trap for the unwary potential claimant: pre-existing causes of action for breaching EU law are liable to be extinguished without being actioned within the (greatly reduced) time permitted.

There perhaps remains a slight glimmer of hope, though, for any claimant who fails to act within the two-year period after the end of the transition. As causes of action are protected possessions under Article 1 of Protocol 1 of the ECHR, it may be possible to argue that the provisions in the EUWA should be ‘read down’ in accordance with the Human Rights Act 1998. That revival of Francovich claims for a longer period after the transition period would require a somewhat creative and highly ambitious interpretation of the relevant provisions, however. Moreover, it would seem difficult to rely on any retained EU law to argue that the EUWA itself is contrary to EU (or retained EU) law: not only would that require retained EU law to be superior to the EUWA itself such that it could invalidate provisions in the Act, in any event it would also necessitate a careful consideration of the nature of the EU (or retained EU) law in question. General principles, for example, cannot be used to disapply the provisions (paragraph 3 of Schedule 1 of the EUWA).

It would thus be advisable to bring any claim before the end of the transition or within the two-year period expressly provided in Schedule 8 the EUWA.

Share this post on social media: