Commentary on Joined Cases Andrea Francovich and Danila Bonifaci (1991) (C-6/90 & C-9/90)

Joined Cases

 Andrea Francovich and Danila Bonifaci (1991)

(C-6/90 & C-9/90)

Introduction

The European Court of Justice (ECJ) has developed a general principle of state responsability when it comes to non-compliance of European law. This state liability derives from the fact that the European Member States are responsible for the creation and above all the implementation and the enforcement of European Law. The enforcement of this principle of state liability for the violation of the rights granted to European citizens has been carried throughout the national courts of the Member States. Many European Union (EU) rights, particularly those in the many directives in the fields of employment and industrial relations, are enforced through the doctrine of direct effect1 of directives: the state and emanations of the state are liable, even where responsibility for the non-implementation of the EU directive lies with other organs of the State. The ‘useful effect’2 rationale for direct effect requires a remedy where private individuals fail to respect provisions of EU law. To circumvent the limitations of the doctrine of horizontal direct effect, the ECJ developed a general principle of state responsibility for compliance with EU law.

1. Background of the cases

In October 1980 the Insolvency Protection directive  80/897EEC3 was implemented by the Council of the European Union, its goal was to assure a minimum protection for all European workers in case of bankruptcy of a company. EU member states were expected to enact provisions in their national law to give a minimum level insurance for employees who had wages unpaid if their employers went insolvent. Mr Francovich had been working in Venice for CDN Elettronica SnC, was owed 6 million Lira, and Mr Bonifaci and 33 of his colleagues were owed 253 million Lira together after their company, Gaia Confezioni Srl, had gone bankrupt. The Insolvency protection directive was meant to be implemented by the Members States of the European Union into their national legal framework by 1983. Five years later they had been paid nothing as the liquidators of the companies informed them that there was no money left.

Then then decided to brought a claim against the Italian State in front of the national court of Italia, claiming that because the Italian State had failed to implement the Insolvency Protection directive, the state was responsible for  their losses and was therefore entitled to compensate their losses by paying damages. The national court suspended the case and referred to the ECJ for  ruling.

1. Arguments of the parties

The applicants are Andrea Francovich, Danila Bonifaci and Others. The defendant is the Italian Republic.

1. Arguments of the applicants

The applicants brought their claim against the Italian State on three grounds:

1. The Italian state had breached their substantive rights contained in the directive.
2. The rights contained in the directive were directly effective
3. The Italian State had failed to implement the directive in its national legal framework.

In applicant’s view the direct effect conferred to the directive was entitling them to seek damages from the Italian State. The direct effect is a principle of EU law, It enables individuals to immediately invoke a European provision before a national or European court. This principle arise from Van Gend en Loos  decisions and relates only to certain European acts such as regulations, directives, treaty provisions and decisions. Furthermore, it is subject to several conditions: the provision must be sufficiently clear and precisely stated ; it must be unconditional and not dependent on any other legal provisions and it must confer  specific right upon which a citizen based a claim.

Thus the applicants claimed that the rights in the directive were directly effective according to the requirements of the  Van Gend en Loos’s case, and that they had been deprived of their rights conferred by the directive because of the failure of the Italian State to implement it. The applicants claimed that therefore the Italian State was responsible for the deprivation of their rights because of its failure to implement the directive and that they were entitled to seek damages directly to the State.

b. Arguments of the defendant

The Italian government argued that the provisions of the directive on Insolvency Protection couldn’t be considered as being unconditional and sufficiently precise4. They added that if the directive was to be regarded as unconditional and precise, the national court would be obliged to ensure that all the conditions set out in the directive were met in order for individuals to be able to enforce their rights.

They argued that there was only one of the conditions that was met and that it was insufficient to consider that the directive had a direct effect. They added that  Members State liability was not part of the Communitarian Law.

1. Analysis and ruling of the Court

The first question asked by the Italians courts raised two issues that the court examined separately. The first issue was whether the directive defined rights that have direct effect. The second issue was the liability of the Member State for damages arising from violations of Community law. The second and third questions concerned the guaranties of salary repayment  the State must provide if the directive directly confers rights upon individuals.

The Court began by stating that individuals could not rely upon the Insolvency Directive on the ground that it had direct effect. In making this determination, the Court of Justice argued that a directive only can have direct effect when the provisions appear to be unconditional and sufficiently precise5, and when those provisions define rights that individuals are able to assert against the Member State before the national courts. In applying this principle, the Court in Francovich examined the identity of the beneficiaries, the contents of the guaranty, and the identity of the party providing the guaranty. The Court found that the directive identified the beneficiaries and, by employing the minimum guaranty specified by the directive, was unconditional and sufficiently precise with regard to the content of the guaranty. The Court held, however, that the provisions of the directive do not specify the identity of the party that owes the guaranty. The Court thus held that the Member State cannot be considered the debtor merely on the ground that it did not implement the directive within the specified period. The Court concluded that the directive does not have direct effect.

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