Köbler v. Republik Österreich (Case C-224/01)

Before the Court of Justice of the European

Communities

ECJ Presiding, RodrÍguez Iglesias P.; Puissochet, Wathelet,

Schintgen and Timmermans ( Rapporteur) PP.C.; Gulmann, Edward, La

Pergola, Jann, Skouris, Macken, Colneric, von Bahr, Cunha Rodrigues and

Rosas JJ. Philippe Léger, Advocate General

September 30, 2003

H1 Member States--liability--breach of Community law causing damage to individuals--attributable to national court of last instance--legal certainty-- res judicata--judicial independence and authority of national courts--such principles not undermined by state liability principle--conditions of state liability--rule of law infringed intended to confer rights on individuals-- breach sufficiently serious--direct causal link between breach and loss or damage sustained--account to be taken of specific nature of judicial function-- exceptional case--national court manifestly infringing applicable law-- Community law not excluding less strict national law rules on State liability-- Community law and national law-respective roles in determining right to and conditions of reparation--migrant workers--remuneration of university professors--indirect discrimination--length--of--service increment system amounting to breach of Art.39 EC and Art.7(1) of Regulation 1612/68--not justified by pressing reasons of public interest--incorrect interpretation of Community law by court of last instance--no State liability established--no manifest infringement of Community law H2 Reference from Austria by the Landesgericht für Zivilrechtssachen Wien (Regional Civil Court, Vienna) under Art.234 EC. H3 K had worked as a university professor in Austria since 1986. On the basis of 15 years' university teaching in various Member States, he applied for a special length-of-service increment pursuant to an Austrian law. His application was rejected, because the legislation made the grant of that increment conditional on 15 years' service as a professor in Austrian universities only. He appealed

against that decision, claiming indirect discrimination contrary to the principle of freedom of movement for workers and the Verwaltungsgerichtshof (Austrian Supreme Administrative Court) made a reference to the Court of Justice. The Court meanwhile delivered a judgment in a comparable case ( Case C-15/96 Schoning-Kougebetopoulou). In the light of that judgment, the Verwaltungsgericht withdrew its question and after further argument found that the increment at issue was a loyalty bonus justifying a derogation from the principle of freedom of movement *1004 for workers, so that the rejection of K's application was not contrary to Community law. K took the view that that decision of the Austrian court infringed a number of Community law provisions and thereby caused him loss. He therefore brought an action for damages against the State before the Landesgericht in Vienna, which also made a reference to the Court of Justice. The national court asked whether the principle of State liability for loss or damage caused to individuals by a breach of Community law was to extend to the case of a breach for which a Supreme Court was responsible, when national law precluded State liability in such a case. Held: State liability principle applicable where court of last instance responsible for breach of Community law H4 (a) The principle of liability on the part of a Member State for damage caused to individuals as a result of breaches of Community law for which the State was responsible was inherent in the system of the Treaty. That principle applied to any case in which a Member State was in breach of Community law, whichever was the authority of the Member State whose act or omission was responsible for the breach. In international law a State which incurred liability for breach of an international commitment was viewed as a single entity, irrespective of whether the breach which gave rise to the damage was attributable to the legislature, the judiciary or the executive. That principle had a fortiori to apply in the Community legal order since all State authorities, including the legislature, were bound in performing their tasks to comply with the rules laid down by Community law which directly governed the situation of individuals. [30]-[32] Francovich and Others (C 6 & 9/90): [1991] E.C.R. I-5357; [1993] 2 C.M.L.R. 66; Brasserie du Pêcheur and Factortame (C 46 & 48/93): [1996] E.C.R. I-1029; [1996] 1 C.M.L.R. 889; British Telecommunications (C-392/93): [1996] E.C.R. I-1631; [1996] 2 C.M.L.R. 217; Hedley Lomas (C-5/94): [1996] E.C.R. I-2553; [1996] 2 C.M.L.R. 391; Dillenkofer and Others (C 178-179, 188, 189 & 190/94): [1996] E.C.R. I-4845; [1996] 3 C.M.L.R. 469; Norbrook Laboratories (C-127/95): [1998] E.C.R. I-1531; [1998] 3 C.M.L.R. 809; Haim ( C-424/97): [2000] E.C.R. I-5123; [2002] 1 C.M.L.R. 11; Konle ( C-302/97): [1999] E.C.R. I-3099; [2000] 2 C.M.L.R. 963, followed. H5 (b) In the light of the essential role played by the judiciary in the protection of the rights derived by individuals from Community rules, the full effectiveness of those rules would be called in question and the protection of those rights would be weakened if individuals were precluded from being able, under certain conditions, to obtain reparation when their rights were affected by an infringement of Community law attributable to a decision of a court of a Member

State adjudicating at last instance. Such a court was by definition the last judicial body before which individuals might assert the rights conferred on them by Community law. Since an infringement of those rights by a final decision of that court could not thereafter normally be corrected, individuals could not be deprived of the possibility of rendering the State liable in order to obtain legal protection of their rights. Moreover, it was, in particular, to prevent rights conferred on individuals by Community law from being infringed that under the third paragraph of Art.234 EC *1005 a court against whose decisions there was no judicial remedy under national law was required to make a reference to the Court of Justice. Consequently individuals had to have the possibility of obtaining redress in the national courts for the damage caused by the infringement of those rights owing to a decision of a court adjudicating at last instance. [33]-[36] Brasserie du Pêcheur and Factortame (C 46 & 48/93): [1996] E.C.R. I-1029; [1996] 1 C.M.L.R. 889, followed. State liability for judicial decisions not calling into question res judicata principle H6 In order to ensure both stability of the law and legal relations and the sound administration of justice, it was important that judicial decisions which had become definitive after all rights of appeal had been exhausted or after expiry of the time-limits provided for in that connection could no longer be called in question. However, it should be borne in mind that recognition of the principle of State liability for a decision of a court adjudicating at last instance did not in itself have the consequence of calling in question that decision as res judicata. Proceedings seeking to render the State liable did not have the same purpose and did not necessarily involve the same parties as the proceedings resulting in the decision that had acquired the status of res judicata. The applicant in an action to establish the liability of the State would, if successful, secure an order against it for reparation of the damage incurred but not necessarily a declaration invalidating the status of res judicata of the judicial decision which was responsible for the damage. In any event, the principle of State liability inherent in the Community legal order required such reparation, but not revision of the judicial decision which was responsible for the damage. It followed that the principle of res judicata did not preclude recognition of the principle of State liability for the decision of a court adjudicating at last instance. [38]-[40] Eco Swiss ( C-126/97): [1999] E.C.R. I-3055; [2000] 5 C.M.L.R. 816, followed. State liability for judicial decisions not undermining independence of court adjudicating at last instance H7 The principle of liability in question concerned not the personal liability of the judge but that of the State. The possibility that under certain conditions the State might be rendered liable for judicial decisions contrary to Community law did not appear to entail any particular risk that the independence of a court adjudicating at last instance would be called in question. [42] No diminution of authority of court adjudicating at last instance H8 The existence of a right of action that afforded, under certain conditions, reparation of the injurious effects of an erroneous judicial decision could be regarded as enhancing the quality of a legal system and thus in the long run the authority of the judiciary, rather than as creating a possible risk of diminution of

the authority of a court adjudicating at last instance. [43] *1006 Obligation on Member States to identify competent court to adjudicate on questions of State liability H9 Given that, for reasons essentially connected with the need to secure for individuals protection of the rights conferred on them by Community rules, the principle of State liability inherent in the Community legal order had to apply in regard to decisions of a national court adjudicating at last instance, it was for the Member States to enable those affected to rely on that principle by affording them an appropriate right of action. Application of that principle could not be compromised by the absence of a competent court. In the absence of Community legislation, it was for the internal legal order of each Member State to designate the competent courts and lay down the detailed procedural rules for legal proceedings intended fully to safeguard the rights which individuals derived from Community law. It was not for the Court to become involved in resolving questions of jurisdiction to which the classification of certain legal situations based on Community law might give rise in the national judicial system [44]-[47] Rewe (33/76): [1976] E.C.R. 1989; [1977] 1 C.M.L.R 533; Comet (45/76): [1976] E.C.R. 2043; [1977] 1 C.M.L.R 533; Just (68/79): [1980] E.C.R. 501; [1981] 2 C.M.L.R 714; Frankovich and Others (C 6 & 9/90): [1991] E.C.R. I-5357; [1993] 2 C.M.L.R. 66; Peterbroeck (C-312/93): [1995] E.C.R. I-4599; [1996] 1 C.M.L.R. 793; Dorsch Consult ( C-54/96): [1997] E.C.R. I-4961; [1998] 2 C.M.L.R. 237; SEIM, ( C-446/93): [1996] E.C.R. I-73, followed. Conditions governing State liability H10 The three conditions to be satisfied for a Member State to be required to make reparation for loss and damage caused to individuals as a result of breaches of Community law for which the State was responsible also applied in relation to loss or damage caused by a decision of a national court adjudicating at last instance. These are: (i) the rule of law infringed must be intended to confer rights on individuals; (ii) the breach must be sufficiently serious; and (iii) there must be a direct causal link between the breach of the obligation incumbent on the State and the loss or damage sustained by the injured parties. [51]-[52] Haim (C-424/97): [2000] E.C.R. I-5123; [2002] 1 C.M.L.R. 11, followed. Need to take account of the specific nature of the judicial function H11 In relation to the second of those conditions, regard had to be had to the specific nature of the judicial function and to the legitimate requirements of legal certainty, such that state liability could be incurred only in the exceptional case where the court had manifestly infringed the applicable law. The factors to be taken into account included, in particular, the degree of clarity and precision of the rule infringed, whether the infringement was intentional, whether the error of law was excusable or inexcusable, the position taken, where applicable, by a Community institution, and non-compliance by the court in question with its obligation to make a reference for a preliminary ruling under the third paragraph of Art.234 EC. An infringement of Community law would be sufficiently serious where the decision concerned was made in manifest breach of the case law of the Court in the matter. [53]-[56] *1007 Brasserie du Pêcheur and Factortame (C 46 & 48/93): [1996] E.C.R. I-

1029; [1996] 1 C.M.L.R. 889, followed. Community law not excluding less strict national law rules on State liability H12 Although the three conditions to establish State liability under Haim were necessary and sufficient to found a right in favour of individuals to obtain redress, that did not mean that the State could not incur liability under less strict conditions on the basis of national law. [57] Brasserie du Pêcheur and Factortame (C 46 & 48/93): [1996] E.C.R. I-1029; [1996] 1 C.M.L.R. 889, followed. Respective roles of Community and national law in determining right to and conditions of reparation H13 Subject to the existence of a right to obtain reparation, which was founded directly on Community law where the three conditions were met, it was on the basis of rules of national law on liability that the State had to make reparation for the consequences of the loss and damage caused, with the proviso that the conditions for reparation of loss and damage laid down by the national legislation should not be less favourable than those relating to similar domestic claims and should not be so framed as to make it in practice impossible or excessively difficult to obtain reparation. [58] Francovich and Others (C 6 & 9/90): [1991] E.C.R. I-5357; [1993] 2 C.M.L.R. 66; Norbrook Laboratories (C-127/95): [1998] E.C.R. I-1531; [1998] 3 C.M.L.R. 809, followed. Length-of service increment system constituting obstacle to freedom of movement for workers contrary to Art.48 (now Art.39) EC. H14 A system for granting a special length-of-service increment which precluded any possibility of taking into account periods of activity completed by a university professor in a Member State other than Austria was likely to constitute an obstacle to freedom of movement for workers, prohibited in principle by Art.48 of the Treaty and Art.7(1) of Regulation 1612/68. Firstly, such a system operated to the detriment of migrant workers who were nationals of Member States other than Austria where those workers were refused recognition of periods of service completed by them in those States in the capacity of university professor on the sole ground that those periods were not completed in an Austrian university. Secondly, absolute refusal to recognise periods served as a university professor in a Member State other than Austria impeded freedom of movement for workers established in Austria inasmuch as it was such as to deter them from leaving the country to exercise that freedom. On their return to Austria, their years of experience as a university professor in another Member State were not taken into account for the purposes of the special length-of-service increment. [72]-[74] Commission v Greece (C-187/96): [1998] E.C.R. I-1095, followed. No justification of increment system for pressing reasons of public interest H15 Such a measure could be accepted only if it pursued a legitimate aim compatible with the Treaty and was justified by pressing reasons of public interest. But even if *1008 that were so, application of that measure would still have to be such as to ensure achievement of the aim in question and not go beyond what was necessary for that purpose. Although it could not be excluded that an objective of rewarding workers' loyalty to their employers in the context of

policy concerning research or university education might constitute a pressing reason of public interest, given the particular characteristics of the measure at issue in the main proceedings, the obstacle it entailed could not be justified in the light of such an objective. Firstly, the professors although all employees of the Austrian State, were assigned to different universities. On the employment market for university professors, the various Austrian universities were in competition not only with the universities of other Member States and those of non-Member States but also amongst themselves. The measure at issue in the main proceedings therefore did nothing to promote the loyalty of a professor to the particular Austrian university where he performed his duties. Secondly, the special length-of-service increment was likely to have consequences in regard to the choice made by those professors between a post in an Austrian university and a post in the university of another Member State. Accordingly, it did not solely have the effect of rewarding the employee's loyalty to his employer. It also led to a partitioning of the market for the employment of university professors in Austria and ran counter to the very principle of freedom of movement for workers. [77]-[87] Kraus (C-19/92): [1993] E.C.R. I-1663; [1994] 1 C.M.L.R. 873; Gebhard (C-55/94): [1995] E.C.R. I-4165; [1996] 1 C.M.L.R 603; Bosman (C-415/93): [1995] E.C.R. I-4921; [1996] 1 C.M.L.R. 645, followed. Application of State liability principle to case at issue H16 It was, in principle, for the national courts to apply the criteria for establishing the liability of Member States for damage caused to individuals by breaches of Community law, in accordance with the guidelines laid down by the Court for the application of those criteria. None the less, in the case at hand the Court had available to it all the materials enabling it to establish whether the conditions necessary for liability of the Member State to be incurred were fulfilled. [100]-[101] Brasserie du Pêcheur and Factortame (C 46 & 48/93): [1996] E.C.R. I-1029; [1996] 1 C.M.L.R. 889; British Telecommunications (C-392/93): [1996] E.C.R. I-1631; [1996] 2 C.M.L.R. 217; Denkavit and Others (C 283, 291 amp; 292/94): [1996] E.C.R. I-5063; Konle ( C-302/97): [1999] E.C.R. I-3099; [2000] 2 C.M.L.R. 963, followed. Direct effect of Community provisions on free movement of workers. H17 The rules of Community law whose infringement was at issue in the main proceedings were Arts 48 (now Art.39) EC and 7(1) of Regulation 1612/68. Those provisions were intended to confer rights on individuals. [102]-[103] Breach insufficiently serious to give rise to liability H18 (a) The Verwaltungsgerichtshof inferred from the judgment in Schöning-Kougebetopoulou that the length-of-service increment system could be justified as a loyalty bonus even if it was in itself contrary to Art.48 (now Art.39) EC. However *1009 the Court did not express a view in its ruling in Schöning-Kougebetopoulou on whether and if so under what conditions the obstacle to freedom of movement for workers constituted by a loyalty bonus could be justified. Thus, the inferences drawn by the Verwaltungsgerichtshof from that judgment were based on an incorrect reading of it. That court was not entitled to

take the view that resolution of the point of law at issue was clear from the settled case-law of the Court or left no room for any reasonable doubt. It was therefore obliged under the third paragraph of Art.177 (now Art.234) EC to maintain its request for a preliminary ruling. Moreover, since a measure such as the special length-of-service increment, even if it might be classified as a loyalty bonus, in fact entailed an obstacle to freedom of movement for workers contrary to Community law, the Verwaltungsgerichtshof infringed Community law in deciding otherwise. [115]-[119] CILFIT and Others ( 283/81): [1982] E.C.R. 3415; [1983] 1 C.M.L.R. 472, followed H19 (b) However, the infringement of Community rules at issue could not be characterised as manifest. Community law did not expressly cover the point whether a measure for rewarding an employee's loyalty to his employer which entailed an obstacle to freedom of movement for workers, could be justified and thus be in conformity with Community law. In the circumstances, the fact that the national court in question ought to have maintained its request for a preliminary ruling was not of such a nature as to invalidate that conclusion. [121]-[123] H20 Cases referred to in the judgment: Before the European Courts: 1. Brasserie du Pêcheur SA v Germany, R v Secretary of State for Transport, Ex parte Factortame Limited and Others (C 46 & 48/93), March 5, 1996: [1996] E.C.R. I-1029; [1996] 1 C.M.L.R. 889. 2. CILFIT Srl and Others v Ministro della Sanita (283/81), October 6, 1982: [1982] E.C.R. 3415; [1983] 1 C.M.L.R. 472. 3. Comet BV v Produktschap Voor Siergswagen (45/76), December 16, 1976: [1976] E.C.R. 2043; [1977] 1 C.M.L.R 533. 4. Commission of the European Communities v Greece ( C-187/96), March 12 1998: [1998] E.C.R. I-1095. 5. Denkavit International BV and Others v Bendesamt für Finanzen ( C 283, 291 & 292/94), October 17, 1996: [1996] E.C.R. I-5063. 6. Dillenkofer and Others v Germany( C 178-179, 188, 189 & 190/94), October 8, 1996: [1996] E.C.R. I-4845; [1996] 3 C.M.L.R. 469. 7. Dorsch Consult Ingenieurgesellschaft mbH v Bundesbaugesellschaft mbH ( C-54/96), September 17, 1997: [1997] E.C.R. I-4961; [1998] 2 C.M.L.R. 237. 8. Eco Swiss China Time Ltd v Benetton International NV ( C-126/97), June 1, 1999: [1999] E.C.R. I-3055; [2000] 5 C.M.L.R. 816. 9. Eurico Italia Srl and Others v Ente Nazionale Risi (C 332-333 & 335/92), March 3, 1994: [1994] E.C.R. I-711; [1994] 2 C.M.L.R 580. 10. Francovich and Another v The Republic (Italy) (C 6 & 9/90), November 19, 1991: [1991] E.C.R. I-5357; [1993] 2 C.M.L.R. 66. *1010 11. Gebhard v Consiglio dell'ordine degli Avvocati e Procuratori di Milano (C-55/94), November 30, 1995: [1995] E.C.R. I-4165; [1996] 1 C.M.L.R 603. 12. Haim v Kassenzahnärztliche Vereinigung (C-424/97), July 4, 2000: [2000] E.C.R. I-5123; [2002] 1 C.M.L.R. 11. 13. Hans Just I/S v Danish Ministry For Fiscal Affairs (68/79), February 27, 1980:

[1980] E.C.R. 501; [1981] 2 C.M.L.R 714. 14. Hessische Knappschaft v Maison Singer et Fils (44/65), December 9, 1965: [1965] E.C.R. 965; [1966] C.M.L.R 82. 15. Kalliope Schöning-Kougebetopoulou v Freie und Hansestadt Hamburg (C-15/96), January 15, 1998: [1998] E.C.R. I-47; [1998] 1 C.M.L.R. 31. 16. Konle v Austria (C-302/97), June 1, 1999: [1999] E.C.R. I-3099; [2000] 2 C.M.L.R. 963. 17. Kraus v Land Baden-Württemburg (C-19/92), March 31, 1993: [1993] E.C.R. I-1663; [1994] 1 C.M.L.R. 873. 18. Norbrook Laboratories Limited v Ministry of Agriculture, Fisheries and Food (C-127/95), April 2, 1998: [1998] E.C.R. I-1531; [1998] 3 C.M.L.R. 809. 19. Österreichischer Gewerkschaftsbund, Gewerkschaft Öffentlicher Dienst v Austria (C-195/98), November 30, 2000: [2000] E.C.R. I-10497; [2002] 1 C.M.L.R. 14. 20. Peterbroeck Van Campenhout & CIE SCS v Belgium (C-312/93), December 14, 1995: [1995] E.C.R. I-4599; [1996] 1 C.M.L.R. 793. 21. R v HM Treasury, Ex parte British Telecommunications plc (C-392/93), March 26, 1996: [1996] E.C.R. I-1631; [1996] 2 C.M.L.R. 217. 22. R v Ministry of Agriculture, Fisheries and Food, Ex parte Hedley Lomas (Ireland) Ltd (C-5/94), May 23, 1996: [1996] E.C.R. I-2553; [1996] 2 C.M.L.R. 391. 23. Rewe-Zentralfinanz eG and Rewe-Zentral AG v Landwirtschaftskammer für das Saarland (33/76), December 16, 1976: [1976] E.C.R. 1989; [1977] 1 C.M.L.R 533. 24. SEIM v Subdirector-Geral das Alfandegas (C-446/93), January 18, 1996: [1996] E.C.R. I-73 25. Union Royale Belge des Sociétés de Football Association (ASBL) and Others v Bosman (C-415/93), December 15, 1995: [1995] E.C.R. I-4921; [1996] 1 C.M.L.R. 645. Before the European Court of Human Rights 26. Dulaurans v France ( 34553), March 21, 2000: (2001) 33 E.H.R.R. 45. H21 Further cases referred to by the Advocate General: Before the European Courts: 27. Allué and Others v Universita degli Studi di Venezia (C 259, 331 & 332/91), August 2, 1993: [1993] E.C.R. I-4309. 28. Amministrazione delle Finanze dello Stato v Denkavit Italiana Srl (61/79), March 27, 1980: [1980] E.C.R. 1205; [1981] 3 C.M.L.R. 694. 29. Amministrazione delle Finanze dello Stato v San Giorgio (199/82), November 9, 1983: [1983] E.C.R. 3595; [1985] 2 C.M.L.R. 658. 30. Amministrazione delle Finanze dello Stato v Simmenthal SpA (No.2) (106/77), March 9, 1978: [1978] E.C.R. 629; [1978] 3 C.M.L.R. 263. 31. Arcaro ( C-168/95), September 26, 1996: [1996] E.C.R. I-4705; [1997] 1 C.M.L.R. 179 *1011 . 32. Baustahlgewebe GmbH v Commission of the European Communities (C-

185/95 P), December 17, 1998: [1998] E.C.R. I-8417; [1999] 4 C.M.L.R. 1203. 33. Benedetti vMunari Filli SAS (52/76), February 3, 1977: [1977] E.C.R. 163 34. Bozzetti v Invernizzi SpA (179/84), July 9, 1985: [1985] E.C.R. 2301; [1986] 2 C.M.L.R. 246. 35. Brinkmann Tabakfabriken GmbH v Skatteministeriet (C-319/96), September 24, 1998: [1998] E.C.R. I-5255; [1998] 3 C.M.L.R. 673. 36. Commission of the European Communities v Austria (C-424/99), November 27, 2001: [2001] E.C.R. I-9285. 37. Commission of the European Communities v Belgium (Re Stamp Tax on Timber) (77/69), May 5, 1970: [1970] E.C.R. 237; [1974] 1 C.M.L.R. 203. 38. Commission of the European Communities v Belgium (Re Stock Exchange Listing Directives) ( 390/85), February 12, 1987: [1987] E.C.R. 761; [1988] 1 C.M.L.R. 146. 39. Commission of the European Communities v Belgium (9/86), March 12, 1987: [1987] E.C.R. 1331. 40. Commission of the European Communities v Greece (C-187/96), March 12, 1998: [1998] E.C.R. I-1095. 41. Commission of the European Communities v Italy (8/70), November 18, 1970: [1970] E.C.R. 961. 42. Commission of the European Communities v Italy (Re Commercial Seed Certification) (52/75), February 26, 1976: [1976] E.C.R. 277; [1976] 2 C.M.L.R. 320. 43. Commission of the European Communities v Luxembourg (Re Maternity Allowances) (C-111/91), March 10, 1993: [1993] E.C.R. I-817; [1994] 2 C.M.L.R. 781. 44. Commission of the European Communities v Portugal (C-276/98), March 8, 2001: [2001] E.C.R. I-1699. 45. Commission of the European Communities v Spain (C-352/01), November 7, 2002: [2002] E.C.R. I-10263. 46. Costa v Ente Nazionale per L'energia Elettrica (ENEL) (6/64), February 24, 1964: [1964] E.C.R. 585; [1964] C.M.L.R. 425. 47. Edilizia Indistriale Siderurgica Srl (EDIS) v Ministero delle Finanze (C-231/96), September 15, 1998: [1998] E.C.R. I-4951; [1999] 2 C.M.L.R. 995. 48. El Corte Inglés SA v Rivero (C-192/94), March 7, 1996: [1996] E.C.R. I-1281; [1996] 2 C.M.L.R. 507. 49. Faccini Dori v Recreb Srl (C-91/92), July 14, 1994: [1994] E.C.R. I-3325; [1995] 1 C.M.L.R. 665. 50. FG Roders BV and Others v Inspecteur der Invoerrechten en Accijnzen (C 367-377/93), August 11, 1995: [1995] E.C.R. I-2229. 51. Foglia v Novello (No.2) (244/80), December 16, 1981: [1981] E.C.R. 3045; [1982] 1 C.M.L.R. 585. 52. Foreningen af Arbejdsledere i Danmark v Daddy's Dance Hall A/S (324/86), February 10, 1988: [1988] E.C.R. 739; [1989] 2 C.M.L.R. 517. *1012 53. Gözütok and Brügge, Re (C 187 & 385/01), February 11, 2003: [2003] E.C.R. I-1345; [2003] 2 C.M.L.R. 2. 54. Heininger v Bayerische Hypo- und Vereinsbank AG (C-481/99), December

13, 2001: [2001] E.C.R. I-9945; [2003] 2 C.M.L.R. 42. 55. Johnston v Chief Constable of the Royal Ulster Constabulary (222/84), May 15, 1986: [1986] E.C.R. 1651; [1986] 3 C.M.L.R. 240. 56. Kerafina--Keramische und Finanz-Holding AG and Vioktimatiki AEBE v The Republic (Greece) and Another (C 134-135/91), November 12, 1992: [1992] E.C.R. I-5699; [1993] 2 C.M.L.R. 277. 57. Kofisa Italia Srl v Ministero delle Finanze (C-1/99), January 11, 2001: [2001] E.C.R. I-207; [2003] 1 C.M.L.R. 29. 58. Laboratoires Pharmaceutiques Bergaderm SA v Commission of the European Communities (C-352/98 P), July 4, 2000: [2000] E.C.R. I-5291. 59. Larsy v Institut National d'Assurances Sociales pour Travailleurs Independants (INASTI) (C-118/00), June 28, 2001: [2001] E.C.R. I-5063. 60. Levez v TH Jennings (Harlow Pools) Ltd (C-326/96), December 1, 1998: [1998] E.C.R. I-7835; [1999] 2 C.M.L.R. 363. 61. Limburgse Vinyl Maatschappij and Others v Commission of the European Communities (Re PVC Cartel II) (C 238, 244, 245, 247, 250-252 and 254/99 P), October 15, 2002: [2002] E.C.R. I-8375; [2003] 4 C.M.L.R. 10. 62. Marks & Spencer plc v Commissioners of Customs and Excise (C-62/00), July 11, 2002: [2002] E.C.R. I-6325; [2002] 3 C.M.L.R. 9. 63. Marleasing SA v La Comercial Internacional de Alimentacion SA (C-106/89), November 13, 1990: [1990] E.C.R. I-4135; [1992] 1 C.M.L.R. 305. 64. Marshall v Southampton and South West Hampshire Area Health Authority (Teaching) (152/84), February 26, 1986: [1986] E.C.R. 723; [1986] 1 C.M.L.R. 688. 65. Masterfoods Ltd v HB Ice Cream Ltd (C-344/98), December 14, 2000: [2000] E.C.R. I-11369; [2001] 4 C.M.L.R. 14. 66. Mayeur v Association Promotion de l'Information Messine (APIM) (C-175/99), September 26, 2000: [2000] E.C.R. I-7755; [2002] 3 C.M.L.R. 22. 67. Milac GmbH Gross- und Aussenhandel vHauptzollamt Freiburg (8/78), July 13, 1978: [1978] E.C.R. 1721. 68. Milch-, Fett- und Eierkontor GmbH v Hauptzollamt Saarbrucken (29/68), June 24, 1969: [1969] E.C.R. 165; [1969] C.M.L.R. 390. 69. Murphy and Others v Board Telecom Eireann (157/86), February 4, 1988: [1988] E.C.R. 673; [1988] 1 C.M.L.R. 879. 701. NV Algemene Transport- en Expeditie Onderneming van Gend en Loos v Nederlandse Administratie der Belastingen (26/62), February 5, 1963: [1963] E.C.R. 1; [1963] C.M.L.R. 105. 71. Officier Van Justitie v Kolpinghuis Nijmegen BV (80/86), October 8, 1987: [1987] E.C.R. 3969; [1989] 2 C.M.L.R. 18. 72. O'Flynn v Adjudication Officer (C-237/94), May 23, 1996: [1996] E.C.R. I-2617; [1996] 3 C.M.L.R. 103. 73. Oleificio Borelli SpA v Commission of the European Communities (C-97/91), December 3, 1992: [1992] E.C.R. I-6313. *1013 74. Palmisani v Istituto Nazionale della Previdenza Sociale (INPS) (C-261/95), July 10, 1997: [1997] E.C.R. I-4025; [1997] 3 C.M.L.R. 1356. 75. Preston and Others v Wolverhampton Healthcare NHS Trust and Others (C-

78/98), May 16, 2000: [2000] E.C.R. I-3201; [2000] 2 C.M.L.R. 837. 76. Pretore di Salò v Persons Unknown (14/86), June 11, 1987: [1987] E.C.R. 2545; [1989] 1 C.M.L.R. 71. 77. R v Secretary of State for Transport, Ex parte Factortame Limited and Others (C-213/89), June 19, 1990: [1990] E.C.R. I-2433; [1990] 3 C.M.L.R. 1. 78. Rechberger and Others v Austria (C-140/97), June 15, 1999: [1999] E.C.R. I-3499; [2000] 2 C.M.L.R. 1. 79. Re the Accession of the Community to the European Human Rights Convention (Opinion 2/94), March 28, 1996: [1996] E.C.R. I-1759; [1996] 2 C.M.L.R. 265. 80. Salgoil SpA v Foreign Trade Ministry of the Italian Republic ( 13/68), December 19, 1968: [1968] E.C.R. 453; [1969] C.M.L.R. 181. 81. SEIM v Subdirector-Geral das Alfandegas (C-446/93), January 18, 1996: [1996] E.C.R. I-73. 82. Siples Srl v Ministero Delle Finanze (C-226/99), January 11, 2001: [2001] E.C.R. I-277. 83. Scholz v Opera Universitaria di Cagliari (C-419/92), February 23, 1994: [1994] E.C.R. I-505; [1994] 1 C.M.L.R. 873. 84. Société Bautiaa and Société Française Maritime v Directeur des Services Fiscaux des Landes (C 197 & 252/94), February 13, 1996: [1996] E.C.R. I-505. 85. Sotgiu v Deutsche Bundepost ( 152/73), February 12, 1974: [1974] E.C.R. 153. 86. Sweden v Stockholm Lindöpark AB ( C-150/99), January 18, 2001: [2001] E.C.R. I-493; [2001] 2 C.M.L.R. 16. 87. Unión de Pequeños Agricultores v Council of the European Union (C-50/00 P), July 25, 2002: [2002] E.C.R. I-6677; [2002] 3 C.M.L.R. 1. 88. Ursaff v Srl Hostellerie Le Manoir (C-27/91), November 21, 1991: [1991] E.C.R. I-5531. 89. Van Duyn v Home Office (41/74), December 4, 1974: [1974] E.C.R. 1337; [1975] 1 C.M.L.R. 1. 90. Van Schijndel and Van Veen v Stichting Pensioenfonds Voor Fysiotherapeuten (C 430-431/93), December 14, 1995: [1995] E.C.R. I-4705; [1996] 1 C.M.L.R. 801. 91. Von Colson and Kamann v Land Nordhein-Westfalen (14/83), April 10, 1984: [1984] E.C.R. 1891; [1986] 2 C.M.L.R. 430 92. Vougioukas v Idrima Koinonikon Asphalisseon (C-443/93), November 22, 1995: [1995] E.C.R. I-4033. 93. Wagner Miret v Fondo de GarantÍa Salarial (C-334/92), December 16, 1993: [1993] E.C.R. I-6911; [1995] 2 C.M.L.R. 49. 94. Wünsche Handelsgesellschaft Gmbh & Co v Germany ( 69/85), March 5, 1986: [1986] E.C.R. 947. 95. Zuckerfabrik Süderdithmarschen AG v Hauptzollamt Itzehoe, Zuckerfabrik Soest GmbH v Hauptzollamt Paderborn ( C 143/88 & 92/89), February 21, 1991: [1991] E.C.R. I-415; [1993] 3 C.M.L.R. 1. *1014 Before the European Commission and Court of Human Rights 96. André Desmots v France ( 41358/98), March 23, 1999: not yet reported.

97. Coëme and Others v Belgium (32492/96, 32547/96, 33209/96 and 33210/96), June 22, 2000: not yet reported. 98. De Cubber v Belgium (A/86), October 26, 1984: (1985) 7 E.H.R.R. 236. 99. Hauschildt v Denmark (A/154), May 24, 1989: (1990) 12 E.H.R.R. 266. 100. Lambert Bakker v Austria (43454/98), 13 June 2002; not yet reported. 101. McGonnell v United Kingdom (28488/95), February 8, 2000: (2000) 30 E.H.R.R. 289. 102. Piersak (A/11): October 1, 1982: not yet reported. 103. Nicolas Calena Santiago v Spain ( 60350/00), 4 October 2001: not yet reported. 104. Peter Moosbrugger v Austria ( 44861/98), January 25, 2000: not yet reported. 105. Sunday Times v United Kingdom (A/30), April 26, 1979: (1979-80) 2 E.H.R.R. 245. Before the French Courts 106. March 16, 1990 (Bull. civ. Ass. Plén. No.3). 107. January 22, 2002 (Bull. civ. 2002, V, No 25, p.22). Before the German Courts 108. April 9, 2002: Case XI ZR 91/99 [2002] NJW. H22 Representation A König, Rechtsanwalt, for Mr Köbler. M Windisch and E Riedl (in the oral proceedings only), acting as Agent, for the Republic of Austria. H Dossi and E Riedl (in the oral proceedings only), both acting as Agents, for the Austrian Government. A Dittrich and W-D Plessing, acting as Agents, for the German Government. R Abraham, G de Bergues, and C Isidoro, acting as Agents, for the French Government. HG Sevenster, acting as Agent, for the Netherlands Government. JE Collins, acting as Agent, and D Andersen Q.C. and M. Hoskins, Barrister, for the United Kingdom Government. J Sack and H Kreppel, acting as Agents, for the Commission of the European Communities.

Opinion AG1 [FN1]Can a Member State be rendered liable for breach of Community law where that breach is committed by a supreme court? Is the Member State in question required to compensate individuals for the resulting loss or damage? If so, what are the conditions which give rise to such liability? FN1 Opinion Of AG Léger, delivered on April 8, 2003. AG2 Such are, in substance, the delicate questions which the Landesgericht für

Zivilrechtssachen Wien (Regional Civil Court, Vienna) (Austria) has referred to the Court in these proceedings. [FN2] For the first time, the Court is requested to clarify *1015 the scope of the principle that a State is liable for loss or damage caused to individuals by breaches of Community law attributable to the State. That principle was established by the Court in Francovich and Others [FN3] and has been considerably developed since Brasserie du Pêcheur and Factortame [FN4] in respect of State liability for acts or omissions of the legislature or administrative authorities. FN2 Earlier, these delicate questions had not failed to provoke lively interest amongst academic writers. See, in particular, H Toner, "Thinking the unthinkable? State Liability for Judicial Acts after Factortame (III)" in (1997) 17 Yearbook of European Law, 165; and G Anagnostaras, "The principle of State Liability for Judicial Breaches: the impact of European Community Law" (2001) 7/2 European Public Law 281. FN3 Francovich and Others (C 6 & 9/90): [1991] E.C.R. I-5357; [1993] 2 C.M.L.R. 66. FN4 Brasserie du Pêcheur and Factortame (C 46 & 48/93): [1996] E.C.R. I-1029; [1996] 1 C.M.L.R. 889. AG3 It is interesting to note that, in parallel, the Court is seised of an action for failure to fulfil obligations in Case C-129/00 Commission v Italy, [FN5] which particularly calls in question a dominant line of cases decided in the national courts, specifically the Corte suprema di cassazione (Supreme Court of Cassation) (Italy). That case requires the Court to consider issues analogous to those raised in these proceedings: must a Member State be answerable for the acts adopted by its courts (or by some of them) and, if so, to what extent? In addition, the Court is also seised of a request from the Netherlands for a preliminary ruling [FN6] on whether a national administrative body is required, under Community law, to reopen one of its decisions which has been confirmed by a final judicial decision, where the interpretation of the relevant Community legislation on which that administrative decision was based is belied by the Court in a subsequent preliminary ruling. That question referred for a preliminary ruling is worth mentioning although the issues are relatively different from those which concern us in the present case. I shall soon be delivering my Opinion in that case. FN5 A case pending before the Court, which concerns the arrangements for reimbursement of national taxes which were levied unlawfully, because they were in breach of Community law. FN6 Kühne & Heitz ( C-453/00): pending before the Court.

I -- The national legal framework

A -- The principle of State liability AG4 In Austrian law, the principle of State liability is enshrined in the Federal Constitution [FN7] and defined by the Federal Law of December 18, 1948. [FN8] Paragraph 2 of that law provides: "(1) It is not necessary to designate a specific body upon an application for damages; it is sufficient to establish that the loss or damage could have been caused only by breach of the law by a person acting on behalf of the defendant. FN7 Art.23(1) of the Federal Constitution provides that "the Federation, the Länder, the districts, the communes and the other public-law authorities and bodies shall be liable for the loss or damage which persons acting on their behalf in execution of the laws have by culpable and unlawful conduct inflicted on whatever person". FN8 Federal Law governing the liability of the Federation, the Länder, the districts, the communes and the other public-law authorities and bodies for loss or damage resulting from the execution of the laws: [1949] BGBl. 20. (2) There shall be no right to redress where the injured party could have avoided the loss or damage by means of a legal remedy, in particular an appeal to the Verwaltungsgerichtshof [Austria [FN9]]. FN9 That court, entitled "Administrative Court", is the only court with jurisdiction in administrative matters. It intervenes following an internal administrative review. Its decisions are not subject to appeal. Although it is not superior to any other court in the field within its jurisdiction, it plays the role of a supreme court (hereinafter otherwise known as "the supreme administrative court").

*1016 (3) A decision of the Verfassungsgerichtshof [Austria [FN10]], the Oberster Gerichtshof [Austria [FN11]] or the Verwaltungsgerichtshof shall not give rise to a right to redress." FN10 This is the constitutional court. FN11 This is the supreme court in civil and commercial, social security, employment law and criminal law matters. Within that court system, it is superior to other courts of first or second instance. AG5 It follows from those provisions that the liability of the Austrian State is expressly precluded in respect of loss or damage caused to individuals by decisions of supreme courts. AG6 Moreover, disputes concerning State liability come within the inherent jurisdiction of the courts of first instance in civil and commercial matters (Landesgericht (regional court) (Austria), Handelsgericht Wien (commercial court, Vienna) (Austria)).

B -- The special length-of-service increment for university professors AG7 Paragraph 50a of the 1956 Gehaltsgesetz (salary law), [FN12] as amended in 2001, [FN13] provides that a university professor is eligible for a special length-of-service increment to be taken into account in the calculation of his retirement pension. The grant of that increment is conditional, in particular, on completion of 15 years' service as a professor at Austrian universities. FN12 [1956] BGBl. 54. FN13 [2001] BGBl. I 34.

II -- Facts and main proceedings AG8 Mr Köbler has been employed since March 1, 1986 under a public-law contract with the Austrian State in the capacity of ordinary university professor in Innsbruck (Austria). By letter of February 28, 1996 to the competent administrative authority, he applied for the special length-of-service increment for university professors. In support of his application, he relied on completion of 15 years' service as an ordinary professor at universities in various Member States of the European Community, in particular Austria. That application was rejected on the ground that Mr Köbler did not fulfil the length-of-service conditions under para.50a of the 1956 salary law, namely completion of the required service exclusively at Austrian universities. AG9 Mr Köbler thus appealed against that decision to the Verwaltungsgerichtshof. He claimed that the length-of-service conditions imposed by that law for eligibility for the increment at issue amount to indirect discrimination contrary to the principle of freedom of movement for workers guaranteed by Art.48 of the EC Treaty (now, after amendment, Art.39 EC) and by Regulation 1612/68 of the Council of October 15, 1968 on freedom of movement for workers within the Community. [FN14] FN14 [1968] O.J. Spec. Ed.(II), p.475. AG10 In the light of such an argument, the supreme administrative court referred a question to the Court for a preliminary ruling in order to ascertain whether Art.48 of the Treaty and Arts 1 to 3 of Regulation 1612/68 are to be interpreted as meaning that, under a pay scheme which provides that salary is dependent, inter alia, on length of service, activities of equal value previously undertaken in another *1017 Member State must be treated in the same way as activities previously undertaken in the country under consideration. [FN15] FN15 See the order for reference in Köbler (C-382/97). AG11 By letter of March 11, 1998, the Court asked the supreme administrative court whether it deemed it necessary to maintain its question submitted for a preliminary ruling in the light of the judgment of January 15, 1998 in Schöning-

Kougebetopoulou [FN16] which had been delivered in the meantime. The national court requested the parties to give their views on the matter, since at first sight the legal issue which was the subject-matter of the question submitted for a preliminary ruling had been resolved by that judgment of the Court in a sense favourable to Mr Köbler's claims. On June 24, 1998, the national court finally withdrew its request for a preliminary ruling, and then dismissed Mr Köbler's application on the ground that the special length-of-service increment is a loyalty bonus which objectively justifies a derogation from the Community law provisions on freedom of movement for workers. FN16 Schöning-Kougebetopoulou ( C-15/96): [1998] E.C.R. I-47; [1998] 1 C.M.L.R. 31. AG12 On January 2, 2001, Mr Köbler brought an action for damages against the Republic of Austria before the Landesgericht für Zivilrechtssachen Wien. [FN17] He submits that the judgment of June 24, 1998 of the supreme administrative court infringed directly applicable provisions of Community law. In his submission, the Court's case law does not treat the increment at issue in the same way as a loyalty bonus. As a consequence, he seeks compensation for the loss which he has unlawfully sustained as a result of the judicial decision in question which refused to grant the special length-of-service increment which he is entitled to claim under Community law. The Republic of Austria opposes that application for compensation on the ground that the judgment of the supreme administrative court is not contrary to Community law and that, in any event, a decision of a supreme court (such as the Verwaltungsgerichtshof) cannot give rise to State liability. It states that such liability is expressly excluded under Austrian law, a provision which is not contrary, in its submission, to the requirements of Community law. FN17 This is a court of first instance in civil and commercial matters.

III -- The questions referred for a preliminary ruling AG13 Having regard to the arguments put forward by the parties, the Landesgericht für Zivilrechtssachen Wien decided to stay proceedings and to refer the following questions to the Court for a preliminary ruling: "(1) Is the case law of the Court of Justice to the effect that it is immaterial as regards State liability for a breach of Community law which institution of a Member State is responsible for that breach [FN18] also applicable when the conduct of an institution purportedly contrary to Community law is a decision of a supreme court of a Member State, such as, as in this case, the Verwaltungsgerichtshof? FN18 See Brasserie du Pêcheur and Factortame, cited above. (2) If the answer to Question 1 is yes: Is the case law of the Court of Justice according to which it is for the legal system

of each Member State to determine which court or tribunal has jurisdiction to hear disputes involving individual rights *1018 derived from Community law [FN19] also applicable when the conduct of an institution purportedly contrary to Community law is a judgment of a supreme court of a Member State, such as, in this case, the Verwaltungsgerichtshof? FN19 See, inter alia, Dorsch Consult ( C-54/96): [1997] E.C.R. I-4961; [1998] 2 C.M.L.R. 237. (3) If the answer to Question 2 is yes: Does the legal interpretation given in the abovementioned judgment of the Verwaltungsgerichtshof, according to which the special length-of-service increment is a form of loyalty bonus, breach a rule of directly applicable Community law, in particular the prohibition on indirect discrimination in Art.48 [of the Treaty] and the relevant settled case law of the Court of Justice? (4) If the answer to Question 3 is yes: Is this rule of directly applicable Community law such as to create a subjective right for the applicant in the main proceedings? (5) If the answer to Question 4 is yes: Does the Court ... have sufficient information in the content of the order for reference to enable it to rule itself as to whether the Verwaltungsgerichtshof in the circumstances of the main proceedings described has clearly and significantly exceeded the discretion available to it, or is it for the referring Austrian court to answer that question?"

IV -- The subject-matter of the questions referred for a preliminary ruling AG14 The national court essentially raises four series of questions. The first relates to the possible extension of the principle established by case law, that a State is liable for loss or damage caused to individuals by breaches of Community law, to the situation where a supreme court is responsible for that breach. [FN20] The second concerns the substantive conditions which give rise to such liability. [FN21] The third relates to the determination of which court or tribunal has jurisdiction to assess whether those substantive conditions are fulfilled. [FN22] The fourth seeks to ascertain whether, in the present case, those substantive conditions are fulfilled. [FN23] FN20 First question in the order for reference. FN21 This is what is apparent, in substance, from the first, third and fourth questions in the order for reference. FN22 Second and fifth questions in the order for reference. FN23 Third and fourth questions in the order for reference. AG15 It is important to emphasise that all those questions concern exclusively

supreme courts and not ordinary courts. As a consequence, I will restrict my analysis to the position of supreme courts and will not consider that of ordinary courts. AG16 It is appropriate to examine first of all the question of principle. The answer to that question will determine whether it is necessary to examine the subsequent questions.

*1019 V -- The principle of State liability for breach of Community law by a supreme court

A -- The observations of the parties

AG17 According to Mr Köbler, it follows from Brasserie du Pêcheur and Factortame that a Member State can be rendered liable for breach of Community law, whatever be the organ of the State responsible for the breach. It is not relevant whether this organ is part of the legislature, executive or judiciary. Moreover, the liability of the State for its judicial activities cannot be limited to the ordinary courts, to the exclusion of supreme courts, because that would enable Member States to organise their judicial systems in such a way as to avoid all liability and would thus run the risk of leading to national situations which were divergent in respect of the judicial protection of individuals. AG18 According to both the Republic of Austria and the Austrian Government, Community law cannot preclude the existence of legislation expressly excluding the liability of the State for breach of law -- including Community law -- by its supreme courts. Such legislation does not make the implementation of Community law impossible or excessively difficult so long as parties are able to rely on Community law before the supreme courts. It is justified by requirements of legal certainty relating to the need to bring disputes to a final conclusion. Furthermore, the establishment of a principle that the State is liable for the acts or omissions of its supreme courts presupposes that the Community can also be rendered liable for the acts or omissions of the Court of Justice, which is difficult to envisage since the Court would become both judge and party to the proceedings. AG19 That view is broadly shared by the French and United Kingdom Governments. AG20 According to the French Government, by the judgment in Brasserie du Pêcheur and Factortame the Court neither expressly nor impliedly included judicial organs amongst the organs which may render the State liable for breach of Community law. The fundamental principle of respect for res judicata precludes the establishment of a mechanism which renders the State liable in respect of the content of a supreme court's decision. That principle should prevail over the right to redress. Furthermore, the system of legal remedies established in the Member States, which is supplemented by the mechanism of references for a preliminary ruling under Art.234 EC, offers individuals a sufficient safeguard against the risk of an error of interpretation of Community law. In the alternative, the French Government stated at the hearing that State liability for the acts or omissions of supreme courts should be subject to special rules which are

particularly restrictive and radically different from the rules governing State liability for legislative or administrative acts, having regard to the specific nature of the conditions under which the judicial function is exercised. AG21 According to the United Kingdom Government, it is clear from Brasserie du Pêcheur and Factortame that the Court seemed prepared to countenance the possibility of the State incurring liability for judicial acts. However, the imposition on the State of liability for acts or omissions of its judicial organs can be envisaged only very restrictively. That restrained approach is all the more necessary in the light of the Court's case law on the Community's non-contractual liability for the failure of the Court of First Instance to satisfy the requirements of a fair hearing *1020 within a reasonable time. Furthermore, any acceptance of such a system of State liability would be contrary to the fundamental principles of legal certainty and, in particular, the acceptance of res judicata, the reputation and independence of the judiciary and the nature of the relationship between the Court of Justice and the national courts. Lastly, according to the United Kingdom Government, it would be questionable to have proceedings on the liability of the State for acts or omissions of its judicial organs heard by the national courts of that State in the light of the requirements of impartiality, unless those courts were to make references to the Court of Justice for a preliminary ruling on the matter, which would amount to establishing an appeal before the Court, contrary to the wishes of the framers of the EC Treaty. AG22 The German and Netherlands Governments do not oppose the idea of the liability of the State for the acts or omissions of its supreme courts. However, at the hearing, the Netherlands Government submitted that it is a matter governed by national law, not Community law, and that, in any event, such State liability should be limited to very exceptional cases. The German Government also argues in favour of exceptional rules governing liability based on those existing in German law. AG23 According to the Commission of the European Communities, the principle of State liability for any type of public authority stems from both the Treaty ( Art.10 EC and the second and third paragraphs of Art.249 EC) and the Court's settled case law according to which it is for each Member State to ensure that individuals obtain redress for loss and damage caused to them by non-compliance with Community law, whichever public authority is responsible for the breach.

B -- Analysis AG24 I shall examine, first, whether in such circumstances Community law imposes on Member States an obligation to make reparation vis-à-vis individuals and, second, whether the obstacles raised by some of the parties to these proceedings preclude the recognition of such an obligation.

1. Does Community law impose on Member States an obligation to make good the

loss or damage caused to individuals by breach of Community law by a supreme

court? AG25 I take the view that this question should be answered in the affirmative. [FN24] That reply is based on three series of arguments relating to, first, the broad scope given by the Court to the principle of State liability for breach of Community law, second, the decisive role of the national court in the implementation of Community law, in particular where it is acting as a supreme court, and, third, the situation *1021 obtaining in the Member States, in particular in the light of the requirements for protection of fundamental rights. FN24 I have already briefly expressed my view to that effect in my Opinion in Hedley Lomas (C-5/94): [1996] E.C.R. I-2553; [1996] 2 C.M.L.R. 391, point 114.

(a) The scope of the principle established by case law of State liability for breach of Community law

AG26 The scope of the principle of State liability for breach of Community law must be analysed having regard to the Court's two abovementioned leading judgments on the subject, namely, Francovich and Others and Brasserie du Pêcheur and Factortame.

(i) Francovich and Others AG27 The principle of State liability was established by the Court in Francovich and Others in a particular situation distinguished by failure to transpose a directive without direct effect, which prevents individuals from invoking before the national courts the rights conferred on them by that directive. [FN25] In spite of the specific nature of the situation in question, which was particularly "pathological", the Court expressed itself in very general terms: "it is a principle of Community law that the Member States are obliged to make good loss and damage caused to individuals by breaches of Community law for which they can be held responsible". [FN26] No details were given about the State organ responsible for the loss or damage. FN25 Council Directive 80/987: [1980] O.J. L283/23. FN26 Para.[37]. AG28 That conclusion is based on an analysis whose scope is also very general. According to the Court, "the principle whereby a State must be liable for loss and damage caused to individuals as a result of breaches of Community law for which the State can be held responsible is inherent in the system of the Treaty". [FN27] That principle is somehow consubstantial with the system of the Treaty, it is necessarily attached to it. That indissoluble and irreducible link between the principle of State liability and the system of the Treaty results from the specific nature of the Community legal order.

FN27 Ibid., para.[35]. That phrase has been repeated verbatim by the Court in, inter alia, Brasserie du Pêcheur and Factortame, cited above, para.[31]; British Telecommunications (C-392/93): [1996] E.C.R. I-1631; [1996] 2 C.M.L.R. 217, para.[38]; Hedley Lomas, cited above, para.[24]; Dillenkofer and Others (C 178-179 & 188-190/94): [1996] E.C.R. I-4845; [1996] 3 C.M.L.R. 469, para.[20]; Denkavit and Others (C 283, 291 & 292/94): [1996] E.C.R. I-5063, para.[47]; Norbrook Laboratories (C-127/95): [1998] E.C.R. I-1531; [1998] 3 C.M.L.R. 809, para.[106]; Brinkmann (C-319/96): [1998] E.C.R. I-5255; [1998] 3 C.M.L.R. 673, para.[24]; Haim (C-424/97): [2000] E.C.R. I-5123; [2002] 1 C.M.L.R. 11, para.[26]; Stockholm Lindöpark (C-150/99): [2001] E.C.R. I-493; [2001] 2 C.M.L.R. 16, para.[36]; and Larsy (C-118/00): [2001] E.C.R. I-5063, para.[34]. AG29 The Court recalls that "the EEC Treaty has created its own legal system, which is integrated into the legal systems of the Member States and which their courts are bound to apply. The subjects of that legal system are not only the Member States but also their nationals. Just as it imposes burdens on individuals, Community law is also intended to give rise to rights which become part of their legal patrimony. Those rights arise not only where they are expressly granted by the Treaty but also by virtue of obligations which the Treaty imposes in a clearly defined manner both on individuals and on the Member States and the Community institutions". [FN28] FN28 Francovich and Others, cited above para.[31]. The Court refers to Van Gend & Loos (26/62): [1963] E.C.R. 1; [1963] C.M.L.R. 105; Costa (6/64): [1964] E.C.R. 585; [1964] C.M.L.R. 425. AG30 Furthermore, it has been "consistently held that the national courts whose task it is to apply the provisions of Community law in areas within their jurisdiction must *1022 ensure that those rules take full effect and must protect the rights which they confer on individuals". [FN29] FN29 Francovich and Others, cited above, para.[32]. The Court refers to Simmenthal (106/77): [1978] E.C.R. 629; [1978] 3 C.M.L.R. 263, para.[16]; and Factortame and Others (C-213/89): [1990] E.C.R. I-2433; [1990] 3 C.M.L.R. 1, para.[19]. AG31 The Court deduces from those two premisses that "[t]he full effectiveness of Community rules would be impaired and the protection of the rights which they grant would be weakened if individuals were unable to obtain redress when their rights are infringed by a breach of Community law for which a Member State can be held responsible." [FN30] FN30 Francovich and Others, cited above, para.[33]. AG32 Secondarily, the Court states that, under Art.5 of the EC Treaty (now Art.10 EC), the Member States are required to nullify the unlawful consequences

of a breach of Community law. [FN31] FN31 Ibid., para.[36]. AG33 A number of lessons can be drawn from that reasoning. AG34 First of all, as Advocate General Tesauro pointed out in his Opinion in Brasserie du Pêcheur and Factortame, "in Francovich the Court did not confine itself to leaving it to national law to draw all the legal inferences from the infringement of provisions of Community law, but held that Community law itself imposed on the State an obligation to make reparation vis-à-vis individuals". [FN32] FN32 Point 22. AG35 Furthermore, that obligation to make reparation constitutes a fundamental principle of Community law, which is as fundamental as that of the primacy of Community law or direct effect. Like those two principles, the obligation on the State to make good the loss or damage caused to individuals by breach of Community law helps to ensure the full effectiveness of Community law through effective judicial protection of the rights which individuals derive from the Community legal order. Indeed, the principle of State liability constitutes the necessary extension of the general principle of effective judicial protection or of the "right to challenge a measure before the courts", whose importance has been regularly underlined by the Court and whose scope has been constantly extended through its case law. AG36 In my view, the reasoning of the Court in Francovich and Others is fully transferable to the case of a breach of Community law by a supreme court. The full effectiveness of rules of Community law would be impaired and the protection of the rights which they grant would be weakened if individuals were unable to obtain redress when their rights are infringed by a breach of Community law for which a supreme court is responsible. AG37 In order to obtain effective judicial protection of the rights which they derive from Community law it is not sufficient for individuals to be entitled to invoke Community law before a supreme court or for that court to be required to apply Community law correctly. It is also necessary, if a supreme court renders a decision contrary to Community law, for individuals to be in a position to obtain redress, at least where certain conditions are fulfilled. AG38 Where there is no possibility of an appeal against a decision of a supreme court, an action for damages alone serves -- in the final analysis -- to ensure that the right infringed is restored and, finally, to ensure that the effective judicial protection of *1023 the rights which individuals derive from Community law is of an appropriate level. [FN33] FN33 In this respect, the question of the liability of the State for the acts of its supreme courts raises issues which are appreciably different from those of the liability of the State for the acts of its ordinary courts or its courts in general.

AG39 In that regard, it is important to bear in mind that, in spite of the considerable advantages which State liability may have for individuals, "reinstating [the] financial content [of the individual's right] is something less, a minimum remedy compared with full substantive reinstatement, which remains the optimum means of protection". [FN34] Nothing is worth as much as the immediate, direct and substantive protection of the rights which individuals derive from Community law. FN34 See the Opinion of Advocate General Tesauro in Brasserie du Pêcheur and Factortame, cited above, point 34. AG40 As a consequence, I am of the opinion that the principle of State liability for breach of Community law must be extended to the situation where that breach is committed by a supreme court. That conclusion is all the more inevitable in the light of Brasserie du Pêcheur and Factortame.

(ii) Brasserie du Pêcheur and Factortame AG41 In Brasserie du Pêcheur and Factortame, the Court deduced from its decision in Francovich and Others that the principle of State liability -- since it is inherent in the system of the Treaty -- holds good for any breach of Community law, whatever be the organ of the State whose act or omission was responsible for the breach. [FN35] FN35 Para.[32], in conjunction with para.[31]. That expression has been repeated and extended by the Court in Konle ( C-302/97): [1999] E.C.R. I-3099; [2000] 2 C.M.L.R. 963, para.[62], Haim, cited above, para.[27], and Larsy, cited above, para.[35], in the following terms: "[i]t is for each Member State to ensure that individuals obtain reparation for loss and damage caused to them by non-compliance with Community law, whichever public authority is responsible for the breach and whichever public authority is in principle, under the law of the Member State concerned, responsible for making reparation". That clarification is addressed in particular to the federal Member States. AG42 By that statement, the Court is no longer acting on the basis only of the system of the Treaty. It is also acting on the basis of the need for Community law to be uniformly applied and on the useful comparison with State responsibility in international law. AG43 As regards the uniform application of Community law, the Court has held that "in view of the fundamental requirement of the Community legal order that Community law be uniformly applied ..., the obligation to make good damage caused to individuals by breaches of Community law cannot depend on domestic rules as to the division of powers between constitutional authorities". [FN36] In my view, that fundamental requirement of the Community legal order is imposed on judicial authorities with the same force as on parliamentary authorities. The guarantee of compliance with Community law -- in which the mechanism of State

liability plays a large part [FN37] -- cannot vary at the will of the Member States, according to the domestic rules on the division of powers between constitutional authorities or those on the powers of State institutions and the conditions for the exercise of such powers. FN36 Brasserie du Pêcheur and Factortame, cited above, para.[33]. See, also, Zuckerfabrik Süderdithmarschen and Zuckerfabrik Soest (C 143/88 & 92/89): [1991] E.C.R. I-415; [1993] 3 C.M.L.R. 1, para.[26]. FN37 The Court did not fail to point out, in the famous Van Gend & Loos judgment, that "[t]he vigilance of individuals concerned to protect their rights amounts to an effective supervision in addition to the supervision entrusted by Arts 169 and 170 to the diligence of the Commission and of the Member States" (p.13 in E.C.R.; p.130 in C.M.L.R.). AG44 As to State responsibility in international law, the Court has held that, "in international law a State whose liability for breach of an international commitment *1024 is in issue will be viewed as a single entity, irrespective of whether the breach which gave rise to the damage is attributable to the legislature, the judiciary or the executive". [FN38] The Court held further that this must apply a fortiori in the Community legal order since a major interest is taken in the legal situation of individuals. [FN39] FN38 Brasserie du Pêcheur and Factortame, cited above, para.[34]. FN39 In Community law, State liability can be -- directly -- put in issue by individuals. This is not the case in international law, because it is the State, in the name of the diplomatic protection of its nationals, which takes account of the interests of individuals. State liability is thus only indirectly put in issue by individuals. AG45 In doing so, as the French Government submitted, the Court intended to refer to the principle of State unity. It is now important to draw from that all the appropriate conclusions in respect of State liability for the acts or omissions of a supreme court. It is commonly accepted in international law that that principle, which is customary in nature, has a double meaning. AG46 In the first place, that principle means that an unlawful act is necessarily attributed to the State, and not to the State organ which committed it. Only the State is a person recognised as having rights and duties in international law, to the exclusion of its organs. On that basis, only the State can be rendered liable. [FN40] That principle is not unknown to Community law [FN41] or indeed to national law. [FN42] As I stated in my Opinion in Hedley Lomas, "[Community law] sees only one liable party (the State), just as, in proceedings for failure to fulfil Treaty obligations, it sees only one defendant (the State)". [FN43] It follows that "[i]t is not a specific organ of the State but rather the Member State qua State which must provide compensation". [FN44]

FN40 See, on that subject, Nguyen Quoc Dinh, Droit international public (LGDJ, 6th ed.), entirely reworked by P Daillier and A Pellet (1999, pp.740-751; and I Brownlie, System of the Law of Nations: State Responsibility, Part I (Clarendon Press Oxford, 1983), p.144. FN41 See fn.42 to the Opinion of Advocate General Tesauro in Brasserie du Pêcheur and Factortame, cited above. FN42 On the basis of that principle, a number of French administrative courts have held the State liable for breach of Community law, while at the same time not expressly approving the principle of such liability for the acts or omissions of the legislature. See, to that effect, my Opinion in Hedley Lomas, cited above, points 118 to 125. FN43 Point 126 in conjunction with point 113. FN44 Ibid., point 112. AG47 In the second place, the rule of State unity means that the State is liable for the loss or damage which it causes by any act or omission contrary to its international obligations, whichever State authority is responsible for it. That principle is clearly set out in Art.4(1) of the draft articles on the responsibility of States, which were drawn up by the International Law Commission and approved, on January 28, 2002, by a resolution of the General Assembly of the United Nations. [FN45] That provision states that "[t]he conduct of any State organ [FN46] shall be considered an act of that State under international law, whether the organ exercises legislative, executive, judicial or any other functions, whatever position it holds in the organisation of the State, and whatever its character as an organ of the central government or of a territorial unit of the State". [FN47] FN45 See the Annex to the Resolution (Doc A/Res/56/83). FN46 A State organ is defined in Art.4(2) as including any person or entity which has that status in accordance with the internal law of the State. FN47 Those provisions should be compared with those provisionally adopted in 1973 in the same forum, according to which "[t]he conduct of an organ of the State shall be considered as an act of that State under international law, whether that organ belongs to the constituent, legislative, executive, judicial or other power, whether its functions are of an international or an internal character, and whether it holds a superior or a subordinated position in the organisation of the State". See (1973) 2 Yearbook of the International Law Commission 197. AG48 *1025 On that subject, it is interesting to note that the international

responsibility of a State has already been acknowledged -- relatively early -- in cases where the content of a definitive judicial decision infringed the international obligations of the State in question. [FN48] Such cases are regarded, under international law, as a denial of justice, that is, a breach of the customary -- and more and more treaty-based -- obligation of judicial protection by the State of foreign nationals. [FN49] FN48 Italian-Venezuelan Tribunal, award of May 3, 1930, Martini ( 2 RIAA 975). That award was made in the context of a difference relating to the performance of a contract for a coal-mining concession granted by the Republic of Venezuela to an Italian undertaking. The Venezuelan State was held liable by reason of a decision of the Federal Court of Cassation (Venezuela) which was held to be partially incompatible with an international arbitral award made in accordance with an international agreement to which that State was a party. FN49 The concept of "denial of justice" covers various cases such as the refusal to allow foreigners access to the courts, excessive delay or conversely the unusually expedited conduct of proceedings, manifestly malicious conduct vis-à-vis an applicant or a foreign national, a definitive judgment which is incompatible with the international obligations of the State or manifestly unjust, and the refusal to enforce a judgment in favour of a foreigner (see Nguyen Quoc Dinh, cited above). AG49 The system established by the European Convention for the Protection of Human Rights and Fundamental Freedoms ("the ECHR") brings an interesting light to bear on the issue of State liability for the acts or omissions of a supreme court. Before the European Court of Human Rights, individuals may directly put in issue State liability for the acts or omissions of a national court, on the basis of failure to fulfil the requirements of a fair hearing -- in procedendo --, but also on the basis of breach of a substantive rule -- in iudicando -- such as adversely to affect the very content of the judicial decision. [FN50] By means of such proceedings, individuals may be eligible for compensation in the form of "just satisfaction". As certain governments have stated, it is interesting to note that the rule whereby all domestic remedies must have been exhausted means that the judicial decision at issue is that of a supreme court. On the other hand, it is not clear that Art.13 of the ECHR imposes on the Contracting States the obligation to make available to individuals a domestic remedy -- including an action for damages -- against a judicial decision. [FN51] FN50 That is the case, in particular, in respect of disputes on family matters and status in civil law (pursuant to Art.8 of the European Convention on Human Rights), disputes on the right to property (under Art.1 of Protocol (No.1)) or disputes relating to freedom of expression (under Art.10 of that convention). As regards freedom of expression, see, inter alia, the judgment of the European Court of Human Rights in Sunday Times v United Kingdom ( A/30): (1979-80) 2 E.H.R.R. 245, in respect of a House of Lords decision which, by applying the

concept of contempt of court, prohibited the publication of newspaper articles about a medicinal product during the course of the proceedings to which that product had given rise. FN51 See, on that point, L-E Pettiti, E Decaux and P-H Imbert, Commentaire article par article de la convention européenne des droits de l'homme, (Economica, 2nd ed., 1999), p.462. AG50 Those explanations about State unity in international law are well known in Community law. It is in that context that we can place the principle, referred to in para.[34] of Brasserie du Pêcheur and Factortame, that "in the Community legal order ... all State authorities, including the legislature, are bound in performing their tasks to comply with the rules laid down by Community law". It is on the basis of that principle that the Court stated, in para.[35] of that judgment, that "[t]he fact that, according to national rules, the breach complained of is attributable to the legislature cannot affect the requirements inherent in the protection of the rights of individuals who rely on Community law and, in this instance, the right to obtain redress in the national courts for damage caused by that breach". AG51 It follows from all these arguments that, by the judgment in Brasserie du Pêcheur and Factortame, the Court did not merely expressly acknowledge, in the *1026 Community legal order, the principle of State liability for the acts or omissions of the legislature. In fact, it also -- impliedly, but necessarily -- extended that principle to judicial acts, in any event to those of supreme courts. [FN52] The present proceedings thus give the Court the opportunity to state explicitly what it has already implied. FN52 See, also, to that effect, A Barav, "Responsabilité et irresponsabilité de l'État en cas de méconnaissance du droit communautaire" Liber Amicorum Jean Waline, p.435; D Simon, "La responsabilité de l'État saisie par le droit communautaire" AJDA, July-August 1996, p.494, and L Dubouis, "La responsabilité de l'État législateur pour les dommages causés aux particuliers par la violation du droit communautaire et son incidence sur la responsabilité de la Communauté" RFDA, May-June 1996, p.585. AG52 In any event, even if that reading of Brasserie du Pêcheur and Factortame is not adopted, I do not see how the Court could rule otherwise than in favour of State liability for acts or omissions of a supreme court. In addition to the fact that it would fit harmoniously into the extension of the Court's case law which has just been broadly outlined, the acknowledgement of such liability seems to be the corollary of the mission -- of the utmost importance -- conferred on the supreme courts in the direct, immediate and effective protection of the rights which individuals derive from Community law. The situation which obtains in the Member States, in particular in the light of the requirements of protection of fundamental rights, also points in that direction.

(b) The decisive role of the national court in the implementation of Community

law AG53 Established by law, the European Communities have been developed and consolidated essentially through law. Since the national courts have the function of applying the law, including Community law, they inevitably constitute an essential cog in the Community legal order. At the "crossroads" of a number of legal systems, their role is to make an important contribution to the effective application of Community law and, eventually, to the development of the process of European integration. Accordingly, we can understand why the Court has always, throughout its case law, underlined the decisive role of the national courts in the implementation of Community law. We can also detect the progressive development of a real "Community judicial ethic". [FN53] As A Barav has noted, "both the primacy of Community law and its direct effect constitute, above all, instructions to the national courts". [FN54] By virtue of those two principles, [FN55] a national court is required to play the role of both judge in a conflict of -- national and Community -- norms and "natural" protector of the rights which individuals derive from Community law. FN53 That expression was employed by F Grévisse and J-C Bonichot in "Les incidences du droit communautaire sur l'organisation et l'exercice de la fonction juridictionnelle dans les États membres" L'Europe et le droit, Mélanges en hommage à Jean Boulouis, Dalloz, 1991, p.297 et seq. FN54 A Barav, "La plénitude de compétence du juge national en sa qualité de juge communautaire" L'Europe et le droit, Mélanges en hommage à Jean Boulouis, Dalloz, 1991, p.1 et seq. FN55 These two fundamental principles of the Community legal order were established by the Court in the famous cases of Van Gend & Loos and Costa, both cited above. AG54 The function of the national court involves a dual obligation: to interpret, as far as possible, its national law in accordance with Community law and, where that is not possible, to disapply the national law which is contrary to Community law. *1027 [FN56] FN56 I will not refer to the role of the national court in respect of the assessment of the validity of a measure of secondary Community law. I will concentrate on the situation at issue in the main proceedings, namely the application by the national court of its national law which is alleged to be contrary to Community law. AG55 As regards the obligation of interpretation in conformity with Community law, it has been established by the Court both in respect of primary Community

law (the Treaty provisions) [FN57] and secondary Community law (in particular directives). In that regard, the Court has held that the Member States' obligation under a directive to achieve the result envisaged by the directive and their duty under Art.5 of the Treaty to take all appropriate measures, whether general or particular, to ensure fulfilment of that obligation are binding on all the authorities of the Member States, including, for matters within their jurisdiction, the courts. It has concluded that, "in applying domestic law [whether its provisions predate or are subsequent to the directive] the national court called upon to interpret that law is required to do so, as far as possible, in the light of the wording and purpose of the directive in order to achieve the result pursued by the directive and thereby comply with the third paragraph of Art.189 of the EC Treaty (now the third paragraph of Art.249 EC)". [FN58] The Court has held that "[t]he principle of interpretation in conformity with directives must be followed [by a national court] in particular where a [Member State] considers ... that the pre-existing provisions of its national law satisfy the requirements of the directive concerned" [FN59] with the result that it did not believe it necessary to transpose the directive into national law. FN57 See, in particular, Murphy and Others (157/86): [1988] E.C.R. 673; [1988] 1 C.M.L.R. 879, para.[11]. FN58 See, in particular, Von Colson and Kamann (14/83): [1984] E.C.R. 1891; [1986] 2 C.M.L.R. 430, para.[26]; Marleasing (C-106/89): [1990] E.C.R. I-4135; [1992] 1 C.M.L.R. 305, para.[8]; Faccini Dori ( C-91/92): [1994] E.C.R. I-3325; [1995] 1 C.M.L.R. 665, para.[26]; Arcaro ( C-168/95): [1996] E.C.R. I-4705; [1997] 1 C.M.L.R. 179, para.[41]; and Marks & Spencer (C-62/00): [2002] E.C.R. I-6325; [2002] 3 C.M.L.R. 9, para.[24]. FN59 Wagner Miret ( C-334/92): [1993] E.C.R. I-6911; [1995] 2 C.M.L.R. 49, para.[21]. AG56 The only restriction on the national court, in that exercise of interpretation in conformity with Community law, is not to impose on an individual an obligation laid down by a directive which has not been transposed or to determine or aggravate, on the basis of the directive and in the absence of a law enacted for its implementation, the liability in criminal law of persons who act in contravention of that directive's provisions. [FN60] FN60 Arcaro, cited above, para.[42], referring to Kolpinghuis Nijmegen (80/86): [1987] E.C.R. 3969; [1989] 2 C.M.L.R. 18, paras [13] and [14]. AG57 As regards the obligation to disapply national law which is contrary to Community law, it was vigorously asserted by the Court in Simmenthal. On the basis of the principles of direct applicability and the primacy of Community law, the Court laid down the requirement that "a national court which is called upon, within the limits of its jurisdiction [as an organ of a Member State], to apply

provisions of Community law is under a duty to give full effect to those provisions, if necessary refusing of its own motion to apply any conflicting provision of national legislation, even if adopted subsequently, and it is not necessary for the court to request or await the prior setting aside of such provision by legislative or other constitutional means". [FN61] FN61 Para.[24] in conjunction with para.[16]. Some indications to that effect could already be seen in Salgoil (13/68): [1968] E.C.R. 453; [1969] C.M.L.R. 181. AG58 It is clear from Simmenthal that the national court is bound by a major obligation, comparable to an obligation to achieve a certain result. It must ensure the immediate protection of the rights which individuals derive from the *1028 Community legal order. That requirement of immediacy in the protection of the rights conferred by Community law satisfies a dual purpose of effectiveness: effectiveness of protection and, as a consequence, effectiveness of the legal rule itself. AG59 In that regard, it has been pointed out that, although the national court, like any organ of a Member State, is required to apply Community law, its mission is "all the more crucial because, faced with the final stage of the rule's execution, it is the guarantor of compliance with that rule". [FN62] Its position is all the more "strategic" because it is incumbent upon it to assess the relationship of its domestic law with Community law and to draw the necessary conclusions. Thus the national judge is no longer necessarily, as Montesquieu was able to say in earlier times, "the mouthpiece of the law". On the contrary, he is required to cast a critical eye over his domestic law in order to ensure, before applying it, that it is in conformity with Community law. If he takes the view that his national law cannot be interpreted in conformity with Community law, he is required to disapply it and even to apply provisions of Community law in place of his national law by means of a substitution of norms, unless that -- also -- results in an aggravation of the legal position of individuals. [FN63] FN62 See M Wathelet and S Van Raepenbusch, "La responsabilité des États membres en cas de violation du droit communautaire. Vers un alignement de la responsabilité de l'État sur celle de la Communauté ou l'inverse?" (1997) 1- 2 Cahiers de droit européen, pp.13, 17. FN63 It follows from Pretore di Salò ( 14/86): [1987] E.C.R. 2545; [1989] 1 C.M.L.R. 71, para.[20], that a directive "cannot, of itself and independently of a national law adopted by a Member State for its implementation, have the effect of determining or aggravating the liability in criminal law of persons who act in contravention of the provisions of that directive". See, also, Marshall (152/84): [1986] E.C.R. 723; [1986] 1 C.M.L.R. 688, para.[48]; and Kolpinghuis Nijmegen, cited above, paras [9] and [13]. The Court has stated that this case law seeks to prevent a Member State from taking advantage of its own failure to comply with Community law. See Faccini Dori, cited above, para.[22]; El Corte Inglés (C-192/94): [1996] E.C.R. I-1281; [1996] 2 C.M.L.R. 507, para.[16]; and Arcaro,

cited above, paras [36] and [42]. AG60 That case law has played a large role in developing the function of the courts, in reinforcing their authority within the State at the expense, in certain national legal systems, of constitutional developments. At the same time, this means that the courts must make the necessary effort to adapt to a legal environment which has been extended and made more complex as a result of the difficulties which may be caused by the relationship between domestic law and Community law. However, it should be pointed out that the national courts are not left entirely to themselves, they may be assisted in their task by the Court, thanks to the system of judicial cooperation provided by the procedure of references for a preliminary ruling. AG61 As an extension of Simmenthal, the Court held in Factortame and Others [FN64] that the national court must set aside any obstacle of national law which precludes it from granting, if necessary, interim relief designed to protect rights which individuals claim to derive from Community law. That case involved granting interim relief pending the delivery by the national court of a decision as to the substance on whether the rights relied on by individuals on the basis of Community law existed, that fact being itself conditional on the Court's reply to a question referred by that national court for a preliminary ruling on the interpretation of the rules of Community law concerned. That judgment demonstrates the Court's interest in preventing individuals sustaining -- seemingly irreparable -- loss or damage as a result of the national court's application of domestic rules whose *1029 conformity with Community law might reasonably be called in question. The requirement of immediate protection for rights which individuals derive from the Community legal order is far from negligible, since the Court entrusts the national judge with a mission which is particularly effective and efficient, making him more like a judge hearing an application for interim measures. FN64 Para.[23]. AG62 The involvement of the national courts in the protection of rights derived from the Community legal order can be seen with particular clarity in disputes over the recovery of sums overpaid. As early as 1983, the Court held that the "entitlement to the repayment of charges levied by a Member State contrary to the rules of Community law is a consequence of, and an adjunct to, the rights conferred on individuals by the Community provisions prohibiting charges having an effect equivalent to customs duties or, as the case may be, the discriminatory application of internal taxes". [FN65] That entitlement to repayment requires the availability at national level of an appropriate remedy which enables individuals to recover in total the sums which they have wrongly and in fact paid. It also means, as a corollary, that the national courts have an obligation to enjoin the administrative authorities to repay the sums at issue to the persons concerned. FN65 San Giorgio ( 199/82): [1983] E.C.R. 3595; [1985] 2 C.M.L.R. 658, para.

[12]. AG63 That case law represents an important step forward in the definition of the function of national courts. Not only are they required to sidestep provisions of their domestic law -- which are contrary to Community law -- in order to allow applications for reimbursement (as an extension of Simmenthal), but they are also obliged to enjoin the administrative authorities to effect the reimbursement. [FN66] FN66 This mechanism of a court injunction to the administrative authorities was far from being recognised in a number of Member States on account of the traditional principle of the separation of powers. AG64 A decisive and complementary step was taken with Francovich and Others and Brasserie du Pêcheur and Factortame. As we know, the Court established the principle of State liability for loss or damage caused to individuals by breaches of Community law attributable to the State. It follows that individuals are entitled to redress by putting in issue -- before the national courts -- the liability of the State. That mechanism of liability is a necessary supplement to that of the recovery of sums overpaid, in cases where the loss or damage caused by a State organ is not the result of the execution of an order to pay a sum of money and therefore cannot be made good by the restitution of such a sum. It also makes it possible to overcome the limits of the obligation of interpretation in conformity with Community law and of the legal scope of directives. [FN67] FN67 The Court has stated that, "[i]f the result prescribed by the directive cannot be achieved by way of interpretation, ... in terms of the judgment in ... Francovich and Others, cited above, Community law requires the Member States to make good damage caused to individuals through failure to transpose a directive". See, in particular, Faccini Dori, para.[27], and El Corte Inglés, para.[22], both cited above. Those judgments were given in cases where a directive could not have direct effect because of the absence of horizontal direct effect (that is, in relations between individuals). AG65 Finally, it should be borne in mind that, in certain cases, the national courts are obliged to raise of their own motion a plea in law based on the Community legal order, if none of the parties has relied on it. [FN68] FN68 The Court has held that Community law precludes, in certain circumstances (in particular in the absence of a second court), the application of a national procedural rule which prevents the national court, seised of a matter falling within its jurisdiction, from considering of its own motion whether a measure of domestic law is compatible with a provision of Community law when the latter provision has not been invoked by the litigant within a certain period. See Peterbroeck ( C-312/93): [1995] E.C.R. I-4599; [1996] 1 C.M.L.R. 793 *1030 , para.[21]. Furthermore, the Court has held that where, by virtue of domestic

law, courts or tribunals must raise of their own motion points of law based on binding domestic rules which have not been raised by the parties, such an obligation also exists where binding Community rules are concerned. It stated further that the same is true where domestic law confers on courts and tribunals a mere discretion -- and not an obligation -- to apply of their own motion binding rules of law. See Van Schijndel and Van Veen ( C 430- 431/93): [1995] E.C.R. I-4705; [1996] 1 C.M.L.R. 801, paras [13] and [14]. AG66 It can easily be inferred from all this case law that the Court confers on the national courts an essential role in the implementation of Community law and in the protection of the rights derived from it for individuals. Indeed people like to call the national courts, according to an expression commonly employed, "Community courts of ordinary jurisdiction". That expression must not be understood literally, but symbolically: where a national court is called upon to apply Community law, it is in its capacity as an organ of a Member State, [FN69] and not as a Community organ, as a result of dual functions. FN69 Simmenthal, cited above, para.[16]. AG67 That essential role of the national courts in the application of Community law has ultimately resulted in the recognition of a "right to challenge a measure before the courts" and in its being enshrined as a general principle of Community law. The Court has held that "judicial control ... reflects a general principle of law which underlies the constitutional traditions common to the Member States [and which] is also laid down in Arts 6 and 13 of the European Convention for the Protection of Human Rights and Fundamental Freedoms". [FN70] FN70 Johnston ( 222/84): [1986] E.C.R. 1651; [1986] 3 C.M.L.R. 240, para. [18]. The fundamental nature of such a principle has been recalled on a number of occasions. See, inter alia, Oleificio Borelli v Commission ( C-97/91): [1992] E.C.R. I-6313, para.[14]; Kofisa Italia ( C-1/99): [2001] E.C.R. I-207; [2003] 1 C.M.L.R. 29, para.[46]; Siples ( C-226/99): [2001] E.C.R. I-277, para.[17]; Commission v Austria (C-424/99): [2001] E.C.R. I-9285, para.[45]; and Unión de Pequeños Agricultores v Council (C-50/00 P): [2002] E.C.R. I-6677; [2002] 3 C.M.L.R. 1, para.[39]. AG68 That concept of a "right to challenge a measure before the courts" is the corollary of the rule of law. As Advocate General Darmon stated in his Opinion in Johnston, "[a]lthough the principle of legality is the cornerstone of the rule of law, it does not exclude consideration of the demands of public order. Indeed, they must be accommodated in order to ensure the survival of the State, whilst at the same time arbitrary action must be prevented. Review by the courts is a fundamental safeguard against such action: the right to challenge a measure before the courts is inherent in the rule of law". [FN71] He concluded that, "[f]ormed of States based on the rule of law, the European Community is necessarily a Community of law. It was created and works on the understanding

that all Member States will show equal respect for the Community legal order". [FN72] It can be concluded that the "right to challenge a measure before the courts" is both "a victory over and an instrument of the rule of law". [FN73] FN71 Point 3. FN72 Ibid.. FN73 See J Rideau, Le droit au juge dans l'Union européenne (LGDJ, Paris, 1998), and, more specifically, F Picod, "Le droit au juge en droit communautaire" pp.141-170. AG69 These considerations are now, significantly, taken up in Art.6(1) of the Treaty on European Union, resulting from the Maastricht Treaty, which states that "[t]he Union is founded on the principles of liberty, democracy, respect for human rights and fundamental freedoms, and the rule of law, principles which are common to the Member States". AG70 I take the view that equal respect by the Member States for the Community legal order, in accordance with the requirements of a Community based on the rule of *1031 law, formed of States based on the rule of law, means that the Member States are to be held liable for breaches of Community law, irrespective of whether the organ responsible was the legislature, the executive or the judiciary. It is impossible to see how a Member State could prima facie escape all liability for the acts or omissions of its supreme courts when, specifically, those courts are responsible for applying and ensuring compliance with Community law. That would amount to an insuperable paradox. It follows that, although the specific nature of the judicial function, when compared with that of the administrative authorities or the legislature, may provide justification for establishing special rules governing liability, it can in no way justify prima facie the exclusion of the principle that a State is liable for the acts or omissions of its supreme courts. AG71 This conclusion is commensurate with the leading role played by the supreme courts in the application of Community law. AG72 In accordance with their traditional functions of ensuring that the law is uniformly interpreted, the supreme courts are responsible for ensuring that the other national courts apply Community law correctly and effectively. To that end, it is incumbent upon them to pay very particular attention to the conformity of domestic law with Community law and to draw all necessary conclusions. AG73 Moreover, experience shows that the supreme courts are regularly faced with situations which justify such analysis and are thus required to interpret national provisions in conformity with Community law, and even to disapply those provisions by reason of their incompatibility or their inconsistency with Community law. The Court's case law on the legal issue concerned certainly provides some useful pointers in that regard. [FN74] Furthermore, certain supreme courts do not hesitate to show great vigilance in respect of the obligation to raise of their own motion the application of Community law. [FN75]

FN74 This is what is shown, in particular, by the case law of the Cour de cassation (Court of Cassation) (France) on the maintenance of employment contracts when the legal situation of the employer is modified. The provisions to that effect in Art.L.122-12 of the Code du travail ( Employment Code) have been interpreted by the Cour de cassation, by dint of a reversal of precedent, in an extensive manner which is consistent with the interpretation by the Court of Council Directive 77/187 of February 14, 1977 on the approximation of the laws of the Member States relating to the safeguarding of employees' rights in the event of transfers of undertakings, businesses or parts of businesses: [1977] O.J. L61/26. See the judgment of the Cour de cassation of March 16, 1990 (Bull. civ. Ass. Plén. No 3), subsequent to the ruling in Tellerup ( 324/86): [1988] E.C.R. 739, and a number of judgments of the Cour de cassation, in particular that of January 22, 2002 (Bull. civ. 2002, V, No 25, p. 22), subsequent to the ruling in Mayeur ( C-175/99): [2000] E.C.R. I-7755; [2002] 3 C.M.L.R. 22. We can also cite the example of the case law of the Bundesgerichtshof (Federal Court of Justice) (Germany) on the right to rescind doorstep contracts. The provisions to that effect in German law have been interpreted extensively in accordance with the interpretation by the Court of Council Directive 85/577 of December 20, 1985 to protect the consumer in respect of contracts negotiated away from business premises: [1985] O.J. L732/31. See the judgment of the Bundesgerichtshof of April 9, 2002: Case XI ZR 91/99 [2002] NJW, subsequent to the ruling in Heininger ( C-481/99): [2001] E.C.R. I-9945; [2003] 2 C.M.L.R. 42. FN75 The Court has held that the requirement to raise of its own motion the application of Community law is not mandatory where the national court would thereby be obliged to go beyond the ambit of the dispute defined by the parties or to examine facts which have not been argued before it (see Van Schijndel and Van Veen, cited above, paras [20] to [22]). This last point concerns essentially the supreme courts since they generally have jurisdiction to adjudicate only on matters of law, and not fact. That being so, the limits to the jurisdiction of the supreme courts do not prevent a number of them from exercising review "upstream" on mixed grounds of fact and law by reproving a lower court for having failed sufficiently to examine whether, in the light of a number of facts which the supreme courts themselves cannot appraise, the application of Community law should lead to a different outcome. See, on that subject, G Canivet, "Le rôle de la Cour de cassation française dans la construction d'une Europe du droit" in L'Europe du droit, Conférence des notariats de l'Union européenne (Brussels, 2002), p.153. AG74 In addition, it should be borne in mind that the framers of the Treaty gave to the supreme courts a decisive role in the implementation of the mechanism of judicial *1032 cooperation provided by the preliminary ruling procedure. Article 234 EC states that, unlike the other national courts or tribunals which have a mere discretion to refer a question to the Court for a preliminary ruling, courts or tribunals against whose decisions there is no judicial remedy are obliged to do

so. [FN76] FN76 This general scheme has been modified in part in respect of certain particular fields which, under the Treaty of Amsterdam, have come within the scope of Community law. This is true of all the fields under Title IV of the EC Treaty (visas, asylum, immigration, judicial cooperation in civil matters). Article 68(1) EC provides that courts or tribunals against whose decisions there is no judicial remedy are alone to have jurisdiction to refer questions to the Court for a preliminary ruling in those new fields of Community law. That exclusive jurisdiction is coupled with the establishment of an obligation for them to make such a reference. That system strengthens still further the leading position of the supreme courts in the application of Community law. AG75 The importance of the obligation to make a reference, imposed by Art.234 EC, was forcefully pointed out by the Court in CILFIT and Others. [FN77] The establishment of such an obligation seeks to prevent the occurrence within the Community of divergences in judicial decisions on questions of Community law. [FN78] It is the supreme courts which are responsible for referring questions for a preliminary ruling in order to prevent the extension or occurrence of divergences in judicial decisions between the Member States and, in particular, between the ordinary courts of the State in which they exercise their functions. FN77 CILFIT and Others (283/81): [1982] E.C.R. 3415; [1983] 1 C.M.L.R. 472. FN78 Ibid., para.[7]. AG76 All these arguments show to what extent the role of the national courts -- and, above all, that of the supreme courts -- is decisive in the application of Community law and in the protection of the rights derived from it for individuals. That decisive role necessarily means, as a quid pro quo, accepting a principle of State liability for the acts or omissions of supreme courts. In order to be further persuaded of this -- if that is necessary -- it is sufficient to take cognisance of the state of the domestic law of the Member States in this regard.

(c) The state of the domestic law of the Member States on State liability for the acts or omissions of courts

AG77 To my understanding, all the Member States accept the principle of State liability for judicial acts. All -- except for the moment Ireland [FN79] -- accept that principle in respect of judgments themselves where they infringe legal rules applicable in their territory, in particular where there is a breach of fundamental rights. FN79 Pending the enactment of a bill (European Convention on Human Rights Bill, 2001). AG78 However, the scope of that principle varies according to the nature of the

legal rule infringed and/or the source of the judgment. AG79 As regards the nature of the legal rule, only the United Kingdom and the Netherlands clearly limit the scope of State liability to cases of infringement of the rules laid down in Art.5 (deprivation of liberty) or Art.6 of the ECHR (relating to the guarantees of a fair hearing in procedendo, that is while the judgment is being prepared, and not the guarantees in iudicando, that is those relating to the content of the judgment itself). AG80 All the other Member States [FN80] -- excluding Greece, Portugal and France principle of State liability irrespective of the nature of the legal rule infringed. FN80 Belgium, Denmark, Germany, Spain, Italy, Luxembourg, Austria, Finland and Sweden. AG81 As regards the source of the judgment, only the Republic of Austria and Sweden limit State liability to the decisions of ordinary courts, excluding those of supreme *1033 courts. The Swedish legislation excluding State liability for the acts or omissions of supreme courts seems to have been the result of the absence of an appropriate national court or tribunal to hear any action for damages of that type. However, that exclusion of liability does not apply where a decision has been reversed or amended by the supreme court itself. AG82 It follows from this comparative legal analysis that, in spite of the divergences which exist today, the principle of State liability -- for a judgment of a supreme court in breach of a legal rule -- is generally acknowledged by the Member States, or at least a strong tendency in that direction can be detected. AG83 That acknowledgement is found not only in written rules (whether constitutional or legislative), but also in case law. It is interesting to note that Belgium is the only Member State which has acknowledged, in its case law, the general principle of the liability of the State for the actions of its courts. That principle was laid down by a judgment of the Cour de cassation (Belgium) of December 19, 1991, De Keyser, [FN81] in proceedings between an individual and the Belgian State as a result of a judgment which had become res judicata, on the ground that that judgment declared the automatic bankruptcy of a company, in breach of the principles requiring a fair and public hearing. That supreme court held that "the principles of the separation of powers, the independence of the judiciary and its judges and res judicata do not imply that the State generally escapes the obligation under the legislative provisions cited above ( Arts 1382 and 1383 of the Civil code) to make good loss or damage caused to third parties as a result of its wrongful conduct or that of its organs in the administration of the public service of justice, in particular in the performance of acts which constitute the direct object of the judicial function". FN81 (1991) Journal des tribunaux 141. See, also, the interesting Opinion of Advocate General Velu in that case: (1992) Journal des tribunaux at 142-152, and the commentaries on that judgment in European legal writings (in particular in (1994) 2 European Review of Private Law pp.111-140.

AG84 Lastly, it is interesting to note that, in Italy, this principle of liability, laid down in legislation, has been recently applied by decision of the Tribunale di Roma (District Court, Rome) (Italy) of June 28, 2001 to a case in which the Corte suprema di cassazione had acted in breach of Community law. [FN82] FN82 Giurisprudenza di merito, 2002, p.360. AG85 It follows from this comparative legal analysis that the principle of State liability for the acts or omissions of supreme courts can be acknowledged as a general principle of Community law. It is settled case law that, in order to acknowledge the existence of a general principle of law, the Court does not require that the rule be a feature of all the national legal systems. Similarly, the fact that the scope and the conditions of application of the rule vary from one Member State to another is not material. The Court merely finds that the principle is generally acknowledged and that, beyond the divergences, the domestic laws of the Member States show the existence of common criteria. [FN83] FN83 See, on that subject, my Opinion in Commission v CEMR ( C-87/01 P): not yet reported, points 51 to 53. AG86 It follows from all these arguments about the scope of the principle of State liability, the role of the national courts and the state of the domestic law of the Member States that Community law imposes on those States an obligation to make reparation for breach of Community law by a supreme court. That conclusion *1034 cannot be undermined by the supposed obstacles raised by some of the parties to the present proceedings.

2. The obstacles raised by some of the parties to the present proceedings are

not such as to preclude State liability for breach of Community law by a supreme court

AG87 A number of obstacles have been put forward by the Republic of Austria and the Austrian, French and United Kingdom Governments. These obstacles relate to the independence of the judiciary, the comparison of the rules governing Member State liability with those governing Community liability, res judicata and the impartiality of the national courts which would adjudicate on such actions for damages. I will examine these various arguments in the order indicated.

(a) The independence of the judiciary AG88 It should be recalled that the argument based on the independence of the judiciary is irrelevant in Community law, as in international law. As we know, under international law, a State cannot rely on the particular characteristics of its constitutional organisation in order to escape liability. That situation is only a particular expression of the general principle that "[a] party may not invoke the

provisions of its internal law as justification for its failure to perform a treaty". [FN84] It follows that "the conduct of an organ of a State -- even an organ independent of the executive power -- must be regarded as an act of that State". [FN85] FN84 See Art.27 of the Vienna Convention on the Law of Treaties 1969. FN85 See the advisory opinion of the International Court of Justice of April 29, 1999 relating to a difference between the United Nations Organisation and the Malaysian State further to failure by the authorities of that State, in particular the judicial authorities, to observe the immunity from legal process of a person entitled to claim it on the basis of the 1946 Convention on the Privileges and Immunities of the United Nations (para.63). AG89 The same is true under Community law. The Court consistently repeats "that a Member State may not plead provisions, practices or circumstances existing in its internal legal system in order to justify a failure to comply with the obligations and time limits under Community directives". [FN86] It concludes, according to settled case law, that "the liability of a Member State under Art.169 arises whatever the agency of the State whose action or inaction is the cause of the failure to fulfil its obligations, even in the case of a constitutionally independent institution". [FN87] FN86 See, in particular, Commission v Italy ( 52/75): [1976] E.C.R. 277; [1976] 2 C.M.L.R. 320, para.[14]; Commission v Belgium ( 390/85): [1987] E.C.R. 761; [1988] 1 C.M.L.R. 146, para.[7]; Commission v Belgium (9/86): [1987] E.C.R. 1331, para.[5]; and, more recently, Commission v Portugal (C-276/98): [2001] E.C.R. I-1699, para.[20]; and Commission v Spain (C-352/01): [2002] E.C.R. I-10263, para.[8]. FN87 See, in particular, Commission v Belgium (77/69): [1970] E.C.R. 237; [1974] 1 C.M.L.R. 203, para.[15]; and Commission v Italy (8/70): [1970] E.C.R. 961, para.[9], concerning a failure to fulfil obligations as a result of parliamentary action. This should be compared with the Court's settled case law on a national court's duty to interpret its domestic law in a manner consistent with a directive on the ground that "the Member States' obligation under a directive to achieve the result envisaged by the directive and their duty under Art.5 of the EC Treaty to take all appropriate measures, whether general or particular, to ensure fulfilment of that obligation are binding on all the authorities of the Member States, including, for matters within their jurisdiction, the courts" (see Marks & Spencer, cited above, para.[24]. See also Masterfoods and HB (C-344/98): [2000] E.C.R. I-11369; [2001] 4 C.M.L.R. 14, para.[49]. AG90 Moreover, it might be asked whether the question of the independence of the judiciary should not be raised more in the context of the establishment of rules governing the personal liability of judges than in the context of rules

governing the liability of the State. *1035 [FN88] FN88 This was the view of the Cour de cassation (Belgium) in De Keyser, in accordance with the Opinion of Advocate General Velu on that point: (1992) Journal des tribunaux p.142. AG91 In addition, it must be pointed out that such arguments -- however legitimate they may be -- have not, in a fair number of Member States, prevented the establishment of such rules governing State liability.

(b) The parallel between the rules governing Member State liability and those

governing Community liability AG92 It is true that the definition of the substantive conditions governing the system of rules on Member State liability is not without effect on those governing Community liability. In that regard, the Court's case law has been responsible for aligning those conditions, as illustrated in particular by Brasserie du Pêcheur and Factortame, [FN89] in respect of Member State liability, and then Bergaderm and Goupil v Commission, [FN90] in respect of Community liability. FN89 Para.[42]. FN90 Bergaderm and Goupil v Commission (C-352/98 P): [2000] E.C.R. I-5291, paras [39] to [47]. AG93 Moreover, the functioning of the Community system of justice has already been called in question on the ground that the Court of First Instance infringed the principle that decisions are to be adopted within a reasonable time. [FN91] That claim was examined by the Court, in its capacity as supreme court in the Community legal order. FN91 See, on that subject, Baustahlgewebe v Commission (C-185/95 P): [1998] E.C.R. I-8417; [1999] 4 C.M.L.R. 1203; and Limburgse Vinyl Maatschappij and Others v Commission (C 238, 244, 245, 247, 250-252 and 254/99 P): [2002] E.C.R. I-8375. AG94 However, we cannot infer that the rules governing Member State liability and the rules in respect of the Community must develop in strict parallel. As Community law now stands, the Community cannot be rendered liable on account of a decision of the Court of Justice, since it is the supreme court in the Community legal order. It would no doubt be different, in particular, if the European Community, or the European Union, were a signatory to the ECHR and agreed to be subject to review by the European Court of Human Rights in respect of the protection of fundamental rights in the application of Community law. [FN92]

FN92 See, on that subject, the Opinion of the Court of March 28, 1996 concerning a proposal for accession by the Community to the European Convention on Human Rights (Opinion 2/94: [1996] E.C.R. I-1759; [1996] 2 C.M.L.R. 265, paras [20], [21], [34] and [35]).

(c) Respect for res judicata AG95 It is necessary to clarify the meaning of this concept before determining the effect which can reasonably be given to it. AG96 Res judicata pro veritate habetur: a matter adjudicated is held to be true. That principle of Roman law is recognised by all the Member States [FN93] and the Community legal order. It means that a judicial decision -- by which a dispute has been resolved -- cannot be challenged, except by way of the judicial remedies prescribed by law. It follows that, where all remedies have been exhausted, such a decision (with legal authority) can no longer be challenged by the commencement of the same type of proceedings (it thus has the force of res judicata). As a number of governments have submitted, that principle is based on the need to ensure stability in legal relations by avoiding the endless reexamination of disputes. It is *1036 thus the result of a dual requirement: legal certainty and the sound administration of justice. FN93 See Opinion of Advocate General Jacobs in Peterbroeck, cited above, point 23. That rule is also shared by the Member States in the field of criminal law in the form of the non bis in idem principle (see Gözü;tok and Brügge ( C 187 & 385/01): [2003] E.C.R. I-1345; [2003] 2 C.M.L.R. 2. AG97 What conclusion can be drawn in the context of the application of Community law? Are the Member States entitled to rely on the principle of res judicata in order to oppose an action for damages against the State on the basis of a decision of a supreme court in breach of Community law? In the absence of Community legislation on the matter, the answer must be sought within the area of the procedural autonomy of the national systems and the necessary limitations associated with it relating to respect for the principle of equivalence and effectiveness. AG98 First of all, it should be borne in mind that, according to settled case law, "[i]n principle, it is for the national courts to ascertain whether the procedural rules intended to ensure that the rights derived by individuals from Community law are safeguarded under national law comply with the principle of equivalence", [FN94] that is to say, that the rules are not less favourable than those relating to similar domestic claims. The national courts are in the best position to make such an appraisal since it requires a relatively detailed knowledge of national procedural rules. None the less, the Court generally takes the trouble to make some observations on that point in order to guide the national courts in their task. [FN95] FN94 See, in particular, Palmisani (C-261/95): [1997] E.C.R. I-4025; [1997] 3 C.M.L.R. 1356, para.[33]; Levez ( C-326/96): [1998] E.C.R. I-7835; [1999] 2

C.M.L.R. 363, para.[39]; and Preston and Others (C-78/98): [2000] E.C.R. I-3201; [2000] 2 C.M.L.R. 837, para.[56]. FN95 Ibid. AG99 As we know, a number of Member States have acknowledged the right of individuals to bring an action in damages against the State on the basis of the breach of a rule of national law by a decision of a supreme court. In accordance with the principle of equivalence, those Member States are obliged to treat in the same way a similar action on the basis of Community law. AG100 Furthermore, and in any event, it should be noted that no Member State is entitled to confer on the principle of res judicata a broader scope in respect of actions for damages on the basis of Community law than in respect of those on the basis of national law. AG101 According to the prevailing traditional definition, the legal authority of a judicial decision -- and, as a consequence, res judicata -- is applicable only in certain circumstances, where there is a threefold identity -- of subject-matter, legal basis and parties -- between a dispute already resolved and a subsequent dispute. The legal authority of a decision is thus in principle relative and not absolute. [FN96] As a consequence, it must be stated that a dispute -- such as the dispute in the main proceedings -- which relates to a claim for reparation of loss or damage caused by a breach of Community law and is brought against the State does not fulfil that requirement of threefold identity (which is cumulative, not alternative). FN96 The legal authority of a decision is in principle relative. In French law, see Art.1351 *1037 of the Code civil; D Tomasin, Essai sur l'autorité de la chose jugée en matière civile (including elements of comparative law) (Paris, 1975); and Couchez, "Procédure civile" (Armand Colin, 11th ed., 2000), p.165. In Spanish law, see A Oliva Santos, Sobre la cosa juzgada (Civil, contencioso-administrativa y penal, con examen de la jurisprudencia del Tribunal Constitucional) (Editorial Centro de Estudios Ramón Areces, SA), pp.44-57. In German law, see paras 322 ZPO and 121 VmGo. In Austrian law, see para.411 ZPO. "Absolute" legal authority ( autorité absolue de la chose jugée) applies generally only to decisions which annul an act in the context of a review of legality. See, in particular, R Chapus, Droit du contentieux administratif (2nd ed., Montchrestien, Paris, 1990), pp.587-600. That rule can be compared to that applicable in the Community legal order in the context of actions for annulment on the basis of Art.230 EC. AG102 Moreover, that is why the rule of the legal authority of a judicial decision has not prevented a number of Member States from establishing rules governing State liability for the content of judicial decisions. AG103 It follows that, by reason of the principle of equivalence, the Member States are not entitled to rely on the principle of res judicata to oppose prima facie such an action for damages against the State. That is all the more true in

the light of the principle of effectiveness. [FN97] FN97 The principle of effectiveness means that the procedural rules for actions intended to ensure protection of the rights which individuals derive from Community law must not be framed in such a way as to render impossible in practice or excessively difficult the exercise of those rights. AG104 It should be borne in mind that Member States are obliged to make good loss and damage caused to individuals by breaches of Community law attributable to those States. That principle was laid down by the Court in Francovich and Others [FN98] and has been consistently reasserted since then, in particular in Brasserie du Pêcheur and Factortame. [FN99] Member States are therefore obliged not to make it in practice impossible or excessively difficult to exercise the right to redress, which is a right conferred by the Community legal order. It is clear that the exclusion of a judicial remedy designed to obtain redress tends to deny the existence of such a right and therefore necessarily runs counter to the principle of effectiveness which limits the procedural autonomy of the Member States. FN98 Para.[37]. FN99 Para.[36]. AG105 It follows that the principle of res judicata cannot preclude the establishment of an obligation on the part of the Member States to make good loss or damage caused by a decision of a supreme court in breach of Community law. [FN100] FN100 That conclusion is not contrary to the Court's finding in Eco Swiss ( C-126/97): [1999] E.C.R. I-3055; [2000] 5 C.M.L.R. 816, paras [43] to [48]. In that case, the domestic procedural rules at issue restricted the possibility of applying for annulment of an arbitration award whose validity was challenged on the basis of Art.85 EC, that award proceeding upon an interim arbitration award which had acquired the force of res judicata since no application for annulment had been made in respect thereof within a certain time limit. Although the Court recognised that procedural rule, on the basis of the principles governing the national judicial system, such as the principle of legal certainty and acceptance of res judicata, which is an expression of that principle, it cannot be concluded from that that the same should be true in an action for damages, because neither its purpose nor necessarily its effect is to reverse, vary or set aside a judicial decision. AG106 That conclusion is all the more necessary in the light of the principle of the primacy of Community law. A national rule, such as that of respect for res judicata, cannot be enforced against an individual in order to defeat an action for damages on the basis of Community law.

(d) Guarantees of the national courts' impartiality

AG107 I accept that it is legitimate to wonder whether the national courts -- which would have to hear and adjudicate on actions for damages against the State as a result of a decision of a supreme court -- would offer sufficient guarantees of impartiality in the light of the requirements imposed by Art.6(1) of the ECHR. *1038 [FN101] FN101 This requirement of judicial impartiality is also an element of the Charter of Fundamental Rights of the European Union ( Art.47). AG108 It is the settled case law of the European Court of Human Rights that "[t]he existence of impartiality ... must be determined according to a subjective test, that is on the basis of the personal conviction of a particular judge in a given case, and also according to an objective test, that is ascertaining whether the judge offered guarantees sufficient to exclude any legitimate doubt in this respect", and that "in this connection, even appearances may be of a certain importance". [FN102] FN102 See, in particular, Piersak ( A/11): of October 1, 1982, para.[31]; De Cubber ( A/86): (1985) 7 E.H.R.R. 236; Hauschildt ( A/154): (1990) 12 E.H.R.R. 266, para.[46]), or McGonnell ( 28488/95): (2000) 30 E.H.R.R. 289. See, on that subject, my Opinion in Baustahlgewebe v Commission, cited above, point 67. AG109 That being so, this delicate question is no doubt not unprecedented for the Member States which have already established a system of State liability for the acts or omissions of courts, including supreme courts. AG110 Furthermore, as we shall see below, it is not for the Court to adjudicate on the determination of which courts have jurisdiction in the matter, since that question falls, as a matter of privilege, within the sphere of Member State autonomy. AG111 Lastly, a guarantee of impartiality could be identified in the mechanism of judicial cooperation provided by the preliminary ruling procedure. Indeed in order to dispel any reasonable doubt as to its impartiality, the national court might choose to refer a question for a preliminary ruling and thus entrust to the Court the responsibility of examining whether the supreme court concerned has in fact acted in breach of Community law and, if so, to what extent. Recourse to such a procedure would offer a dual advantage since it would make it possible both to dispel any reasonable doubt as to the impartiality of the national court and to give guidance to that court in this delicate exercise by avoiding the risk of error in the appraisal of an alleged error. AG112 In such circumstances, the role which the Court would be invited to assume -- as an international court independent of the national courts -- could be compared to that of the European Court of Human Rights in the examination of individual complaints. However, it would be excessive to infer that such a situation would lead to the establishment of a final remedy, that is to make the Court a final court of appeal. It is not a question of making a reference for a

preliminary ruling automatic, but rather of pointing out that such a reference is possible. I do not regard this type of reference as anything other than the expression of a mechanism of judicial cooperation founded on the logic of dialogue and mutual trust between courts. AG113 That argument as to the guarantees of the national courts' impartiality is no more able than the arguments based on the independence of the judiciary, the parallel with the rules governing the liability of the Community or res judicata to preclude the acknowledgement of the principle of State liability for breaches of Community law by a supreme court. AG114 As a consequence, the answer to the first question submitted for a preliminary ruling must be that the principle that the Member States are required to make good loss or damage caused to individuals by breaches of Community law attributable to those States is applicable where a supreme court is responsible for the alleged breach.

*1039 VI The substantive conditions determining imposition of State liability for breach of Community law by a supreme court

AG115 Before making any remarks about the present case, it is important to outline the general characteristics of the rules governing State liability for the acts or omissions of a supreme court.

A Observations of the parties AG116 The parties which have taken a position on this point have argued in favour of rules governing liability which are specific, restrictive and limited to exceptional, or very exceptional, cases. AG117 According to the German Government, State liability is dependent on the supreme court's decision being objectively indefensible and the result of an intentional breach of Community law. AG118 According to the Netherlands Government, State liability should arise in the case of a manifest and grave breach of the obligation to make a reference for a preliminary ruling, in the context of preparing the judicial decision. It states that an alleged breach of the obligation to make such a reference should be assessed in the light of the situation obtaining when the judicial decision is adopted. That view is in some respects the same as Mr Köbler's. AG119 According to the Commission, State liability should be associated with a sufficiently serious breach of Community law, in a case where a supreme court commits a manifest abuse of its power or obviously misconstrues the meaning and scope of Community law. Such a breach includes, in particular, the case of a breach of the obligation to make a reference for a preliminary ruling.

B Analysis AG120 At this point, one question comes immediately to mind: is the definition of the substantive conditions determining such liability a matter of national law or Community law?

AG121 I am of the opinion that a simple reference to national law would have considerable drawbacks in terms of coherence in the effective protection of the rights derived by individuals from Community law, which include the right to redress. As Advocate General Tesauro pointed out in his Opinion in Brasserie du Pêcheur and Factortame, "a mere reference to national law would be in danger of endorsing a discriminatory system, in so far as for a given infringement Community citizens would receive different protection, some none at all". [FN103] He drew the following conclusion: "[i]n order for protection in damages to be assured in all the Member States in at least a homogeneous -- if not exactly uniform -- manner, it is vital that it should be Community law itself which lays down at least the minimum conditions determining the right to compensation". [FN104] I can only share those views. That is the exercise which the Court undertook in Brasserie du Pêcheur and Factortame, in respect of State liability for the acts or omissions of the legislature, refining the rule in Francovich and Others. FN103 Point 49. FN104 Point 50. AG122 It is thus necessary to examine the minimum "Community" conditions to be satisfied if the State is to be rendered liable for the acts or omissions of its supreme *1040 courts. Is it enough purely and simply to transpose the conditions which have been laid down by the Court in respect of the legislature or the administrative authorities? In my view, the answer to that question must be no, because of the specific nature of the judicial function. None the less, it is important to maintain a certain coherence with the systems of rules which have been defined for those other two State organs and which have been applied on several occasions. AG123 According to an expression which has become customary, the Court has laid down a principle that "Community 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 the injured parties". [FN105] It is important to determine the meaning and scope of those three substantive conditions under which the State is liable for the acts or omissions of supreme courts, noting that these are minimum conditions. They do not prevent the State incurring liability under less strict conditions on the basis of national law. [FN106] FN105 See Brasserie du Pêcheur and Factortame, cited above, para.[51]. FN106 Ibid., paras [66] and [74].

1. The nature of the rule infringed AG124 It is commonly acknowledged that the requirement that the rule infringed

must be intended to confer rights on individuals does not necessarily mean that the rule concerned must be directly effective. It is sufficient for that rule to entail the grant of rights to individuals and for the content of those rights to be identifiable with sufficient precision (on the basis of the provisions of the rule in question). [FN107] The direct effect of the legal rule at issue is not necessary, but sufficient to fulfil that requirement. In my opinion, that requirement in respect of State liability for the acts or omissions of the legislature or the administrative authorities is transposable to liability for the acts or omissions of supreme courts. FN107 See, in particular, Francovich and Others, paras [40] and [44]; Dillenkofer and Others, paras [33] to [46], both cited above; and Rechberger and Others ( C-140/97): [1999] E.C.R. I-3499; [2000] 2 C.M.L.R. 1, paras [22] and [23]. AG125 Furthermore, I take the view that State liability for the acts or omissions of a supreme court cannot be limited to the case of infringement of a higher-ranking rule, to the exclusion of all other rules. A number of arguments point in that direction. AG126 First of all, the decision as to whether a legal rule is higher-ranking is far from easy, in particular in a legal system such as the Community legal order which has no hierarchy of norms. [FN108] FN108 See, to that effect, Opinion of Advocate General Tesauro in Brasserie du Pêcheur and Factortame, cited above, points 71 and 72. AG127 Furthermore, that condition that the legal rule infringed must be higher-ranking, which was laid down by the Court a number of years ago in respect of the non-contractual liability of the Community, has been recently abandoned by means of Bergaderm and Goupil v Commission, so that we can now speak of an alignment of the two systems of liability (Community and Member States). [FN109] FN109 Para.[42]. AG128 Finally, having regard to that aim of coherence between the systems of rules governing liability, it would be at least curious to introduce such a requirement *1041 now. Just as "[t]he protection of the rights which individuals derive from Community law cannot vary depending on whether a national authority or a Community authority is responsible for the damage", [FN110] the same should be true between the various organs of the State, subject to certain modifications associated with the specific function in question. FN110 See Brasserie du Pêcheur and Factortame, cited above, para.[42]. AG129 Now that the nature of the rule of Community law infringed has been clarified, it is next necessary to determine the conditions to be satisfied by the breach of Community law if it is to be capable of giving rise to reparation.

2. The nature of the breach of Community law AG130 It follows from Francovich and Others that "although Community law imposes State liability, the conditions under which that liability gives rise to a right to reparation depend on the nature of the breach of Community law giving rise to the loss and damage". [FN111] FN111 Para.[38]. AG131 That condition relating to the nature of the breach at issue was clarified by the Court in Brasserie du Pêcheur and Factortame. Extending its case law on the conditions for the non-contractual liability of the Community for its legislative activity, the Court drew a distinction between the following two situations. AG132 First, where, at the time when it committed the infringement, the Member State in question was not called upon to make any legislative choices and had only considerably reduced, or even no, discretion, the mere infringement of Community law may be sufficient to establish the existence of a sufficiently serious breach. That is the case where Community law imposes on the national legislature, in a field governed by Community law, obligations of result or obligations to take action (such as to transpose a directive within a certain time limit) [FN112] or to refrain from taking action. That broad definition of State liability has been adopted on several occasions by the Court, in particular in respect of failure to transpose a directive, [FN113] transposition in breach of the temporal effects of a directive, [FN114] refusal by the administrative authorities to issue an export licence when the grant of such a licence should have been quasi-automatic having regard to the existence of harmonising directives in the field concerned. [FN115] FN112 See Francovich and Others, cited above, para.[46] referring to the failure to transpose in that case. FN113 Dillenkofer and Others, cited above, para.[26]. FN114 Rechberger and Others, cited above, para.[51]. FN115 Hedley Lomas, cited above, paras [18], [28] and [29]. AG133 Second, where a Member State takes action in a field in which it has a broad discretion, it can incur liability only in case of a sufficiently serious breach, that is, where, in the exercise of its legislative function, it has manifestly and gravely disregarded the limits on the exercise of its powers. [FN116] FN116 Brasserie du Pêcheur and Factortame, cited above, paras [45, [47], [51] and [55]. AG134 However, it may be asked whether such a distinction is currently relevant

having regard to recent developments in the Court's case law on State liability for the acts or omissions of the legislature or the administrative authorities. AG135 In the first situation outlined in Brasserie du Pêcheur and Factortame, that is to say, where the Member States have considerably reduced, or even no, discretion, the Court's assessment of whether there is a sufficiently serious breach depends *1042 less and less on the finding of a mere infringement of Community law. It is based, by contrast, more and more on criteria comparable to those which apply in the second situation outlined in Brasserie du Pêcheur and Factortame, that is to say, where the Member States have a broad discretion. AG136 Thus the Court held that "a mere infringement of Community law by a Member State may, but does not necessarily, constitute a sufficiently serious breach". [FN117] It held further that, "[i]n order to determine whether such an infringement of Community law constitutes a sufficiently serious breach, a national court hearing a claim for reparation must take account of all the factors which characterise the situation put before it". [FN118] It stated that "[t]hose factors include, in particular, the clarity and precision of the rule infringed, [FN119] whether the infringement and the damage caused was intentional or involuntary, whether any error of law was excusable or inexcusable, and the fact that the position taken by a Community institution may have contributed towards the adoption or maintenance of national measures or practices contrary to Community law". [FN120] It is striking that those factors are identical, in every respect, to those set out in Brasserie du Pêcheur and Factortame, in a situation where it was found that the legislature had a broad discretion. [FN121] FN117 Haim, cited above, para.[41]. The dispute in the main proceedings arose between a dental practitioner and a German association of dental practitioners of social security schemes as a result of that association's refusal to enrol him on the register of dental practitioners so that he could then be eligible for appointment as a dental practitioner under a social security scheme. Mr Haim brought an action for the liability of the State for the acts of the administrative authorities in order to obtain compensation for the loss of earnings which he claimed to have unlawfully suffered. The Court did not state whether this case fell within the first or second situation outlined in Brasserie du Pêcheur and Factortame. It left the national court to decide that point, its being made clear that the existence and scope of the discretion of the Member State concerned must be determined by reference to Community law and not by reference to national law (para.[40]). FN118 Ibid., para.[42] FN119 That factor was also taken into account in Rechberger and Others, cited above, paras [50] and [51], in respect of the transposition of a directive in breach of its temporal effects (to be compared with Dillenkofer and Others), and in Stockholm Lindöpark, cited above, paras [39] and [40]. In those two judgments, the Court stated that the Member State concerned did not have a legislative choice. It was thus indeed a case of the first situation outlined in Brasserie du

Pêcheur and Factortame. FN120 Haim, cited above, para.[43]. FN121 Para.[56]. AG137 That case law was confirmed by Larsy, [FN122] in respect of the grant by the Belgian administrative authorities of a retirement pension to a self-employed worker. The Court was careful to state that, in that case, the competent national institution had no substantive choice. [FN123] FN122 Para.[39]. FN123 Para.[41]. AG138 In these circumstances, as the Court's case law stands at present, I am of the opinion that it is not necessary to determine whether, in the exercise of the judicial function, the State has a broad discretion or not. On the other hand, it is important to determine whether the factors adopted by the Court in order to evaluate whether there is a sufficiently serious breach of Community law, for which the legislature or the administrative authorities are responsible, can be totally or partially transposed to the case of a breach for which a supreme court is responsible. AG139 In my opinion, the decisive factor is whether the error of law at issue is excusable or inexcusable. That characterisation can depend either on the clarity and precision of the legal rule infringed, or on the existence or the state of the Court's case law on the matter. A number of examples can be given to that effect. AG140 *1043 Accordingly, the State can be rendered liable, for example, where a supreme court gives a decision contrary to provisions of Community law although their meaning and scope are clear. That would be the case where the wording of the provisions in question was clear and precise in every respect and unambiguous, so that it ultimately leaves no room for interpretation, but only straightforward application. AG141 The State can also be rendered liable, for example, where a supreme court gives a decision which manifestly infringes the Court's case law, as it stands on the day when the judgment at issue is delivered. The judgments of the Court, in particular preliminary rulings, are necessarily binding on the national courts as to the interpretation of provisions of Community law. [FN124] The national courts cannot disregard the case law of the Court. They are entitled only to refer a question for a preliminary ruling in order to obtain useful guidance in order to resolve a dispute pending before them. [FN125] FN124 See, in particular, Milch-, Fett- und Eierkontor (29/68): [1969] E.C.R. 165; [1969] C.M.L.R. 390, para.[3]; and Benedetti (52/76): [1977] E.C.R. 163, para.[26].

FN125 A national court may or must refer a question for a preliminary ruling, even if it has already referred one in connection with the same dispute. That possibility was made clear by Milch-, Fett- und Eierkontor, cited above, para.[3]. The Court stated that a further reference for a preliminary ruling can be justified "when the national court encounters difficulties in understanding or applying the judgment, when it refers a fresh question of law to the Court, or again when it submits new considerations which might lead the Court to give a different answer to a question submitted earlier" (see Pretore di Salò, cited above, para.[12], and the order in Wü;nsche ( 69/85): [1986] E.C.R. 947, para.[15]). That mechanism has been used on several occasions by the national courts. See, in particular, Milac ( 8/78): [1978] E.C.R. 1721; Foglia ( 244/80): [1981] E.C.R. 3045; [1982] 1 C.M.L.R. 585; Kerafina -- Keramische und Finanz-Holding and Vioktimatiki ( C 134-135/91): [1992] E.C.R. I-5699; [1993] 2 C.M.L.R. 277, and Denkavit and Others, cited above. AG142 By contrast, the State cannot be rendered liable on the basis of a decision of a supreme court which is contrary to a judgment of the Court which was delivered after the national decision, when that decision was consistent with the Court's case law as it stood at that date, a fortiori where there was every reason to believe that the Court's case law was stable. In such a case, if there is an error, the supreme court cannot be criticised for having failed to fulfil any of its obligations, because it rightly decided on the basis of the case law as it stood at the time of its decision. In my opinion, that analysis is not incompatible with the temporal effects of preliminary rulings on interpretation. AG143 As we know, the Court has consistently held [FN126] that the interpretation which it gives to a rule of Community law clarifies and defines the meaning and scope of that rule as it ought to have been understood and applied from the time of its coming into force, so that the rule thus interpreted may, and must, be applied by the courts even to legal relationships arising and established before the judgment ruling on the request for interpretation is given. However, in my opinion, it is also necessary for such legal relationships not to have been definitively confirmed by a judicial decision, a fortiori where that is a decision against which there is no remedy. If the legal relationships at issue have been definitively confirmed by a decision of a supreme court, the principle of legal certainty precludes the liability of the State on that head. [FN127] FN126 See, in particular, Denkavit Italiana (61/79): [1980] E.C.R. 1205; [1981] 3 C.M.L.R. 694 *1044 , para.[16]; Roders and Others (C 367- 377/93): [1995] E.C.R. I-2229, para.[42]; Bautiaa and Société Française Maritime ( C 197 & 252/94): [1996] E.C.R. I-505, para.[47]; and Edis (C-231/96): [1998] E.C.R. I-4951; [1999] 2 C.M.L.R. 995, para.[15]. FN127 It is indeed in the interest of legal certainty that the Court has acknowledged certain limits to the temporal effects of its judgments, relating to reasonable limitation periods for bringing proceedings (see Edis, cited above,

para.[20], and the case law to which it refers). It is interesting to note that in that case Advocate General Ruiz-Jarabo Colomer pointed out, in point 24 of his Opinion, that the Court's "judgments ... are not endowed with a kind of supra-temporal effect". He stated that "[o]n the contrary, their effects must apply to those legal situations which, under domestic law, are still open to challenge or review and which, accordingly, may be the subject of a decision of a judicial authority". AG144 Finally, in my opinion, State liability cannot be prima facie precluded in the case of a supreme court's manifest disregard for its obligation to make a reference for a preliminary ruling where, for example, there is no case law of the Court on the point of law at issue at the time when the national court gives its decision. AG145 To this day, the Court has never given a specific ruling on that subject. [FN128] FN128 In 1975, in its suggestions on the European Union, the Court expressed the view that it would be timely to provide -- in the Treaty -- for an appropriate guarantee to protect the rights of individuals in the event of a breach of Art.177 of the EC Treaty (now Art.234 EC). However, it left open the question whether that guarantee should be an appeal before the Court by the parties to the main proceedings, mandatory proceedings for failure to fulfil an obligation or an action for reparation against the State concerned at the request of the injured party: EC Bulletin, Supplement 9/75, p.18. AG146 As we know, the obligation to make a reference for a preliminary ruling is fundamental. It contributes greatly to the guarantees that Community law will be uniformly applied and the rights which individuals derive from the Community legal order will be effectively protected. Those considerations were in the Court's mind when it determined, in CILFIT and Others, [FN129] the scope of the obligation to make a reference for a preliminary ruling imposed by the Treaty. FN129 Paras [13] to [17]. AG147 Furthermore, the obligation to make a reference for a preliminary ruling tends to form part of the analysis of the "right to challenge a measure before the courts" (or the "right to obtain a judicial determination"). According to the settled case law of the European Court of Human Rights, although "[t]he right to have a preliminary question referred to ... the Court of Justice is not absolute ..., it is not completely impossible that, in certain circumstances, refusal by a domestic court trying a case at final instance might infringe the principle of fair trial, as set forth in Art.6(1) of the Convention, in particular where such refusal appears arbitrary". [FN130] Moreover, as was stated at the hearing, this corollary of the "right to obtain a judicial determination" takes a particular form in Germany. [FN131] FN130 See, in particular, decisions of March 23, 1999 on the admissibility of the

application in André Desmots v France (41358/98): not yet reported, para. [2]; of January 25, 2000 in Peter Moosbrugger v Austria ( 44861/98): not yet reported, para.[2], and judgment on the merits of June 22, 2000 in Coëme and Others v Belgium ( 32492/96, 32547/96, 33209/96 and 33210/96): not yet reported, para.[114]; and decisions of 4 October 2001 on admissibility in Nicolas Calena Santiago v Spain ( 60350/00): not yet reported, and of 13 June 2002, on the admissibility of the application in Lambert Bakker v Austria ( 43454/98): not yet reported, para.[2]. In all those cases, the European Court of Human Rights held that the absence of a reference for a preliminary ruling was not vitiated by arbitrariness. FN131 The German Constitutional Court considers that the Court of Justice is a "legally appointed judge" of the parties for the purpose of Art.101 of the German Constitution. It follows that, where a supreme court does not make a reference for a preliminary ruling, in breach of Art.234(3) EC, the Constitutional Court has jurisdiction to quash such a judgment on the ground of breach of the Constitution. See, for example, the order of January 9, 2001 of the Bundesverfassungsgericht (Federal Constitutional Court) concerning a decision of the Bundesverwaltungsgericht (Federal Administrative Court) on equality for men and women in the medical profession ( BvR 1036/99). AG148 In those circumstances, it is logical and reasonable to consider that manifest breach by a supreme court of an obligation to make a reference for a preliminary ruling is, in itself, capable of giving rise to State liability. AG149 However, in such circumstances there is a risk, in putting in issue State liability, of encountering certain difficulties in adducing proof of a direct causal link between breach of the obligation to make a reference and the damage pleaded. That proof of the causal link requires that the individual be in a position to establish that *1045 the failure to make a reference necessarily caused him actual and certain, not hypothetical, damage which would not have occurred if the supreme court had decided to refer a question for a preliminary ruling. AG150 That evidence will no doubt be relatively easy to adduce where damage is purely non-material, consisting in the loss of an opportunity to have one's claims succeed. [FN132] FN132 See, on that subject, the case law of the European Court of Human Rights in connection with the examination of individual complaints based on breach of Art.6 of the ECHR (in particular Coëme v Belgium, cited above, paras [155] to [158]). According to the European Court of Human Rights, it is not possible to speculate on what would have been the outcome of proceedings in conformity with Art.6 of that convention and thus to allow a claim for reparation of material damage. By contrast, taking account of the seriousness of the non-material damage sustained, it accepts that the mere finding of breach of the abovementioned provisions is insufficient and justifies the award of a certain sum by way of reparation.

AG151 The same will probably not be true of material damage. Proof of the causal link between such damage and breach of the obligation to make a reference requires that the individual claiming to be injured establish that the decision of the supreme court would have upheld his claims if it had in fact referred a question for a preliminary ruling. Unless the Court delivers a judgment on the point of law in question soon after the decision of the supreme court is given and that judgment supports the individual's claims, it is difficult to imagine how proof of such a causal link could be adduced. AG152 In my opinion, it would be excessive to require a national court, which was seised of an action for reparation of alleged material damage, to refer a question to the Court for a preliminary ruling in order to know the response which it might have given if it had in fact been seised of such a question. AG153 These arguments and the examples which have been given show that, in order to assess whether a supreme court has committed a sufficiently serious breach capable of giving rise to State liability, it is important to ascertain whether that court has made an error of law which is excusable or inexcusable. AG154 I take the view, in this context, that it is neither necessary nor appropriate to pay particular attention to factors such as the position of the Community institutions or whether the breach of Community law was intentional or involuntary. AG155 As regards the position of the Community institutions (at least that of the Commission), contrary to what is true for State liability for the acts or omissions of the legislature or the administrative authorities, it is difficult to accept that this factor is relevant in assessing whether the State must be made liable for the acts or omissions of a supreme court. Supreme courts are not in the best position to have cognisance of the Commission's conduct, such as its bringing infringement proceedings which call in question, for example, the consistency of national law provisions with Community law. AG156 As regards whether the breach of Community law was intentional or involuntary, it must be acknowledged that it would be particularly difficult to adjudicate on whether a subjective element existed, a fortiori where, as is very likely, the judgment in question was collegiate. Furthermore, in my view, it would be delicate to ask a national judge to ascertain whether one of his brethren had acted on the basis of a malicious intention to infringe a rule of law.

*1046 3. The direct causal link between the breach of the obligation resting on the State and the damage sustained by the injured parties

AG157 This aspect has already been tackled in respect of breach of the obligation to make a reference for a preliminary ruling. It is sufficient for there to be a direct causal link between the breach concerned and actual and certain damage of a pecuniary or non-material kind. AG158 As a consequence, it is necessary to tell the referring court that, where a supreme court is responsible for a breach of Community law by a Member State, injured individuals have a right to redress if the purpose of the rule of Community law infringed is to confer rights on them, the breach is sufficiently serious and there is a direct causal link between that breach and the loss or damage

sustained by the individuals. Subject to that reservation, the State must make reparation in accordance with the domestic rules on liability for the consequences of the loss or damage caused by the breach of Community law attributable to the State, provided that the conditions laid down by national law are neither less favourable than those relating to similar domestic claims nor such as to make it in practice impossible or excessively difficult to obtain redress.

VII -- The determination of the court or tribunal with jurisdiction to assess the merits of the action for damages

AG159 This point concerns both the determination of the competent national court or tribunal and the respective roles of the national court and the Court of Justice in assessing the merits of an action for damages brought against the State on the basis of its liability for the acts or omissions of a supreme court.

A -- Determination of the competent national court or tribunal AG160 By its second question, the national court seeks essentially to ascertain whether the Member States are free to determine which national court or tribunal has jurisdiction to hear an action for damages brought against the State on the basis of its liability for the acts or omissions of a supreme court. AG161 It must be noted that, according to settled case law, "it is for the legal system of each Member State to determine which court or tribunal has jurisdiction to hear disputes involving individual rights derived from Community law. However, it is the Member States' responsibility to ensure that those rights are effectively protected in each case". [FN133] The Court concluded that "[s]ubject to that reservation, it is not for the Court to involve itself in the resolution of questions of jurisdiction ... in the national judicial system". [FN134] FN133 That principle was laid down in Bozzetti ( 179/84): [1985] E.C.R. 2301; [1986] 2 C.M.L.R. 246, para.[17], referring on that point to Salgoil (particularly p.675). It was confirmed, in particular, in SEIM ( C-446/93): [1996] E.C.R. I-73, para.[32]; and Dorsch Consult (cited by the referring court). FN134 Ibid.. AG162 In response to the referring court's question on this point, it is important to state that that principle of institutional autonomy, subject to the reservation that effective judicial protection be ensured, is also applicable to any actions for damages brought by individuals against the Member States on the basis of their liability for the acts or omissions of a supreme court.

*1047 B -- The respective roles of the Court of Justice and national courts in assessing the merits of the action for damages

AG163 By its fifth question, the referring court seeks essentially to ascertain whether it is for that court to assess in the particular case the merits of the action

for damages or whether that task is for the Court. AG164 It should be borne in mind that, in Brasserie du Pêcheur and Factortame, the Court held that it "cannot substitute its assessment for that of the national courts, which have sole jurisdiction to find the facts in the main proceedings and decide how to characterise the breaches of Community law at issue". [FN135] Nevertheless, it held that it would be "helpful to indicate a number of circumstances which the national courts might take into account". [FN136] That case law has been confirmed on several occasions. [FN137] It is fully applicable in the case of an action putting in issue State liability for breach of Community law by a supreme court. I will therefore do no more than make a few observations on the present case. FN135 Para.[58]. FN136 Ibid.. FN137 See, in particular, Konle, para.[59], Haim, para.[44], and Stockholm Lindöpark, para.[38], all cited above.

VIII -- The present case AG165 By its third and fourth questions, the national court seeks essentially to ascertain whether in the present case the substantive conditions determining imposition of State liability are fulfilled. AG166 As a preliminary point it should be noted that the rule of law purportedly infringed, namely Art.48 of the Treaty, is directly effective and its purpose is therefore necessarily to confer rights on individuals. [FN138] That article sets out in para.1 the principle of freedom of movement for workers. That freedom is to entail in particular, in the words of Art.48(2), the abolition of any discrimination based on nationality between workers of the Member States as regards employment, remuneration and other conditions of work and employment. Those Treaty rules were implemented and amplified by Regulation No 1612/68. FN138 See, in particular, Van Duyn ( 41/74): [1974] E.C.R. 1337; [1975] 1 C.M.L.R. 1, paras [5] to [8]; and Bosman ( C-415/93): [1995] E.C.R. I-4921; [1996] 1 C.M.L.R. 645, para.[129]. AG167 Furthermore, it should be stated that the Court has held that the principle of non-discrimination, laid down in Art.39(2) EC and implemented by Regulation 1612/68, applies to "[a]ny Community national, irrespective of his place of residence and his nationality, who has exercised the right to freedom of movement for workers and has been employed in another Member State". [FN139] As a consequence, according to the Court, the fact that an individual who relies on the principle of non-discrimination is a national of the Member State in question, and not of another Member State, has no bearing on the application of such a principle. [FN140] According to that case law, Mr Köbler was therefore entitled to rely on the principle of non-discrimination against

workers, laid down by Art.39(2) EC. FN139 See Vougioukas ( C-443/93): [1995] E.C.R. I-4033, paras [38] to [42]. See also Scholz ( C-419/92): [1994] E.C.R. I-505; [1994] 1 C.M.L.R. 873, para.[9]. FN140 Scholz, cited above, para.[8]. AG168 Furthermore, according to settled case law, that principle prohibits not only overt discrimination by reason of nationality but also all covert forms of discrimination which, by the application of other criteria of differentiation, lead in *1048 fact to the same result. [FN141] In O'Flynn, the Court stated that "conditions imposed by national law must be regarded as indirectly discriminatory where, although applicable irrespective of nationality, they affect essentially migrant workers ... or the great majority of those affected are migrant workers ..., where they are indistinctly applicable but can more easily be satisfied by national workers than by migrant workers ... or where there is a risk that they may operate to the particular detriment of migrant workers". [FN142] FN141 See, in particular, Sotgiu ( 152/73): [1974] E.C.R. 153, para.[11]; Le Manoir ( C-27/91): [1991] E.C.R. I-5531, para.[10]; Commission v Luxembourg (C-111/91): [1993] E.C.R. I-817; [1994] 2 C.M.L.R. 781, para.[9]; Scholz, cited above, para.[7], and O'Flynn ( C-237/94): [1996] E.C.R. I-2617; [1996] 3 C.M.L.R. 103, para.[17]. FN142 Para.[18]. AG169 In the light of this case law, that is manifestly true of the condition for granting the special length-of-service increment depending on completion of 15 years' service as a professor at -- exclusively -- Austrian universities. It must be stated that there is a risk that that condition may operate to the particular detriment of migrant workers, that is to the detriment of workers who have exercised their right to freedom of movement. That is true of those who, like Mr Köbler, have left their Member State of origin and gone to work in another Member State and then return to the first State to pursue their career. AG170 In my opinion, it is difficult to accept that the Verwaltungsgerichtshof made an excusable error when it held that the requirement of such a condition, which is indirectly discriminatory, was reasonably justified by the wish to reward an employee's loyalty to his employer. AG171 Even if that purported justification were applicable in the present case, on the ground that Austrian universities are covered by one employer, unlike in Schöning-Kougebetopoulou, the supreme court should have checked whether the length-of-service condition in question was proportionate to such an objective. I would point out that the Court has frequently stressed that general requirement of proportionality. [FN143] It was also careful to point it out in para.[21] of the ruling in Schöning-Kougebetopoulou, which it forwarded to the supreme court in response to its order for reference, even though, in that case,

the Court held that the purported justification based on reward of an employee's loyalty to a particular employer was not material. In that case, it was therefore not necessary, in order to resolve the dispute in the main proceedings, to assess the proportionality between the length-of-service condition at issue and such a justification. [FN144] FN143 See, in particular, Allué and Others (C 259, 331 & 332/91): [1993] E.C.R. I-4309, para.[15]; O'Flynn, cited above, para.[19], and the judgment of March 12, 1998 -- delivered a few months before the Verwaltungsgerichtshof gave its decision -- in Commission v Greece ( C-187/96): [1998] E.C.R. I-1095, para.[19]. FN144 See Schöning-Kougebetopoulou, cited above, paras [26] and [27]. AG172 In the present case, it is regrettable that the Verwaltungsgerichtshof did not check whether the principle of proportionality had been complied with. It is difficult to consider that the length-of-service condition at issue is proportionate to any justification of that kind. Without any doubt, it goes beyond what is necessary to achieve the objective relied on. [FN145] FN145 Moreover, that is what the Court held subsequently in respect of Austrian legislation which was less restrictive of freedom of movement for persons. Under that legislation previous periods of employment spent in other Member States are taken into account in determining the pay of teachers, but under stricter conditions than those applicable to periods spent in Austria. After rejecting the alleged justification based on the reward of loyalty, given the large number of employers, the Court was careful to state that, in any event, the discriminatory restriction at issue was not proportionate to such an objective (see Österreichischer Gewerkschaftsbund (C-195/98): [2000] E.C.R. I-10497 *1049 ; [2002] 1 C.M.L.R. 14, para.[50]). AG173 Furthermore, that supreme court should have maintained the question it had referred for a preliminary ruling, even if that meant supplementing it in order to obtain some clarification on the scope of Schöning-Kougebetopoulou. If we apply the rule in CILFIT and Others, it is difficult to consider that the supreme court was in fact convinced, first, that the application -- even if correct -- of Community law was so obvious as to leave no scope for any reasonable doubt as to the manner in which the point of law raised was to be resolved and, second, that the matter was equally obvious to the courts of the other Member States and to the Court of Justice. [FN146] FN146 CILFIT and Others, cited above, para.[16]. AG174 As a consequence, the answer to the questions referred by the national court must be that Art.39 EC is to be interpreted as having the purpose of conferring rights on individuals. In circumstances such as those of the main proceedings, it can be considered that the error made by the

Verwaltungsgerichtshof as to the meaning and the scope of that article of the Treaty is inexcusable, and thus capable of giving rise to State liability.

IX -- Conclusion AG175 Having regard to all these considerations, I propose that the Court give the following answers to the questions referred by the Landesgericht für Zivilrechtssachen Wien for a preliminary ruling: (1) The principle that the Member States are required to make good loss or damage caused to individuals by breaches of Community law attributable to those States is applicable where a supreme court is responsible for the alleged breach. (2) Where a supreme court is responsible for a breach of Community law by a Member State, injured individuals have a right to redress if the purpose of the rule of Community law infringed is to confer rights on them, the breach is sufficiently serious and there is a direct causal link between that breach and the loss or damage sustained by the individuals. Subject to that reservation, the State must make reparation in accordance with the domestic rules on liability for the consequences of the loss or damage caused by the breach of Community law attributable to the State, provided that the conditions laid down by national law are neither less favourable than those relating to similar domestic claims nor such as to make it in practice impossible or excessively difficult to obtain redress. (3) The principle that it is for the legal system of each Member State to determine which court or tribunal has jurisdiction to hear disputes involving individual rights derived from Community law, subject to the reservation that effective judicial protection be ensured, is applicable to actions for damages brought by individuals against a Member State on the basis of an alleged breach of Community law by a supreme court. (4) The national courts have sole jurisdiction to assess whether the substantive conditions for imposing State liability for the acts or omissions of a supreme court are fulfilled, in particular to determine whether the error of law which is the cause of the breach of Community *1050 law in question is excusable or inexcusable. In that assessment, they may take account of the observations made by the Court in that regard. (5) Article 39 EC is to be interpreted as having the purpose of conferring rights on individuals. In circumstances such as those of the main proceedings, it can be considered that the error made by the supreme court concerned as to the meaning and the scope of that article of the Treaty is inexcusable, and thus capable of giving rise to State liability. JUDGMENT 1 By an order of May 7, 2001, received at the Court on June 6, 2001, the Landesgericht für Zivilrechtssachen Wien (Regional Civil Court, Vienna) referred to the Court for a preliminary ruling under Art.234 EC a question on the interpretation of, first, Art.48 of the EC Treaty (now, after amendment, Art.39 EC) and, secondly, the judgments of the Court in Joined Cases C-46/93 and C-48/93

[FN147] and Case C-54/96. [FN148] FN147 Brasserie du Pêcheur and Factortame (C 46 & 48/93): [1996] E.C.R. I-1029; [1996] 1 C.M.L.R. 889. FN148 Dorsch Consult (C-54/96): [1997] E.C.R. I-4961; [1998] 2 C.M.L.R. 237. 2 Those questions were raised in the course of an action for a declaration of liability brought by Mr Köbler against the Republic of Austria for breach of a provision of Community law by a judgment of the Verwaltungsgerichtshof (Supreme Administrative Court), Austria. Legal framework 3 Article 48(3) of the Gehaltsgesetz 1956 (law on salaries of 1956 [FN149]), as amended in 1997 [FN150] (hereinafter "the GG"), provides: "In so far as may be necessary in order to secure the services of a scientific expert or an artist from the country or from abroad, the Federal President may grant a basic salary higher than that provided for in Art.48(2) on appointment to a post as a university professor (Art.21 of the Bundesgesetz über die Organisation der Universitäten (Federal law on the organisation of universities, [1993] BGBl. 805, hereinafter 'the UOG 1993') or as an ordinary professor of universities or of an institution of higher education." FN149 [1956] BGBl. 54. FN150 [1997] BGBl. I 109. 4 Article 50a(1) of the GG is worded as follows: "A university professor (Art.21 of the UOG 1993) or an ordinary professor at a university or an institution of higher education who has completed 15 years service in that capacity in Austrian universities or institutions of higher education and who for four years has been in receipt of the length-of-service increment provided for in Art.50(4) shall be eligible, with effect from the date *1051 on which those two conditions are fulfilled, for a special length-of-service increment to be taken into account in the calculation of his retirement pension the amount of which shall correspond to that of the length-of-service increment provided for in Art.50(4)." Dispute in the main proceedings 5 Mr Köbler has been employed since March 1, 1986 under a public law contract with the Austrian State in the capacity of ordinary university professor in Innsbruck (Austria). On his appointment he was awarded the salary of an ordinary university professor, tenth step, increased by the normal length-of-service increment.

6 By letter of February 28, 1996, Mr Köbler applied under Art.50a of the GG for the special length-of-service increment for university professors. He claimed that, although he had not completed 15 years' service as a professor at Austrian universities, he had completed the requisite length of service if the duration of his service in universities of other Member States of the European Community were taken into consideration. He claimed that the condition of completion of 15 years service solely in Austrian universities -- with no account being taken of periods of service in universities in other Member States -- amounted to indirect discrimination unjustified under Community law. 7 In the dispute to which Mr Köbler's claim gave rise, the Verwaltungsgerichtshof, Austria, referred to the Court, by order of October 22, 1997, a request for a preliminary ruling which was registered at the Registry of the Court under Case number C-382/97. 8 By letter of March 11, 1998, the Registrar of the Court asked the Verwaltungsgerichtshof whether, in the light of the judgment of January 15, 1998 in Case C-15/96 [FN151], it deemed it necessary to maintain its request for a preliminary ruling. FN151 Schöning-Kougebetopoulou: [1998] E.C.R. I-47; [1998] 1 C.M.L.R. 31. 9 By order of March 25, 1998 the Verwaltungsgerichtshof asked the parties for their views on the request by the Registrar of the Court, since on a provisional view the legal issue which was the subject-matter of the question submitted for a preliminary ruling had been resolved in favour of Mr Köbler. 10 By order of June 24, 1998, the Verwaltungsgerichtshof withdrew its request for a preliminary ruling and, by a judgment of the same date, dismissed Mr Köbler's application on the ground that the special length-of-service increment was a loyalty bonus which objectively justified a derogation from the Community law provisions on freedom of movement for workers. 11 That judgment of June 24, 1998 states in particular: "... In its order for reference of October 22, 1997 [in Case C-382/97] the Verwaltungsgerichtshof took the view that the 'special length-of-service increment for ordinary university professors' is in the nature of neither a loyalty bonus nor a reward, but is rather a component of salary under the system of career advancement. That interpretation of the law, which is not binding on the parties to proceedings before the Verwaltungsgerichtshof, cannot be upheld. ... It is thus clear that the special length-of-service increment under para.50a of the 1956 salary law is unrelated to the 'market value assessment' to be undertaken in the course of the appointment procedure, but, rather, its purpose must be seen as the provision of a positive incentive to academics in a very mobile labour market to spend their career in Austrian universities. It cannot therefore be a component of salary as such and, because of its function as a loyalty bonus, requires a certain length of service as an ordinary university professor at Austrian universities as a precondition for eligibility. The treatment of the special length-of-

service increment as a component of monthly earnings and the consequent permanent character of the loyalty bonus do not essentially preclude the above interpretation. Since, in Austria, -- in so far as this is of relevance in the present case -- the legal personality of the universities is vested in the Federal State alone, the rules in Paragraph 50a of the 1956 salary law apply to only one employer -- in contrast to the situation in Germany contemplated in the judgment of the Court of Justice in Case C-15/96 Kalliope Schöning-Kougebetopoulou. [FN152] Previous periods of service are taken into account in reckoning length of service, as the plaintiff demands, in the course of the assessment of market value in the appointment procedure. There is no provision for any further account to be taken of such previous periods of service in the special length-of-service increment even for Austrian academics who resume teaching in Austria after spending time working abroad and such provision would not be consistent with the notion of rewarding many years' loyalty to an employer deemed by the Court of Justice to justify a rule which in itself breaches the prohibition on discrimination. FN152 Cited above. As the claim which the complainant seeks to assert here is for a special length of service increment under Paragraph 50a of the 1956 salary law which is a statutory loyalty bonus and as such is recognised by the Court of Justice as justification for legislation conflicting with the prohibition on discrimination, the complaint based on breach of that prohibition on discrimination is unfounded; it should be dismissed ..." 12 Mr Köbler brought an action for damages before the referring court against the Republic of Austria for reparation of the loss which he allegedly suffered as a result of the non-payment to him of a special length-of-service increment. He maintains that the judgment of the Verwaltungsgerichtshof of June 24, 1998 infringed directly applicable provisions of Community law, as interpreted by the Court in the judgments in which it held that a special length-of-service increment does not constitute a loyalty bonus. 13 The Republic of Austria contends that the judgment of the Verwaltungsgerichtshof of June 24, 1998 does not infringe the directly applicable Community law. Moreover, in its view, the decision of a court adjudicating at last instance such as the Verwaltungsgerichtshof cannot found an obligation to afford reparation as against the State. *1053 The questions referred 14 Taking the view that in the case before it the interpretation of Community law was not free from doubt and that such interpretation was necessary in order for it to give its decision, the Landesgericht für Zivilrechtssachen Wien decided to stay proceedings and to refer the following questions to the Court for a preliminary ruling: "(1) Is the case law of the Court of Justice to the effect that it is immaterial as

regards State liability for a breach of Community law which institution of a Member State is responsible for that breach [FN153] also applicable when the conduct of an institution purportedly contrary to Community law is a decision of a supreme court of a Member State, such as, as in this case, the Verwaltungsgerichtshof? FN153 Brasserie du Pêcheur and Factortame ( C 46 & 48/93): cited above. (2) If the answer to Question 1 is yes: Is the case law of the Court of Justice according to which it is for the legal system of each Member State to determine which court or tribunal has jurisdiction to hear disputes involving individual rights derived from Community law [FN154] also applicable when the conduct of an institution purportedly contrary to Community law is a judgment of a supreme court of a Member State, such as, in this case, the Verwaltungsgerichtshof? FN154 See, inter alia, Dorsch Consult ( C-54/96): cited above. (3) If the answer to Question 2 is yes: Does the legal interpretation given in the abovementioned judgment of the Verwaltungsgerichtshof, according to which the special length-of-service increment is a form of loyalty bonus, breach a rule of directly applicable Community law, in particular the prohibition on indirect discrimination in Art.48 [of the Treaty] and the relevant settled case law of the Court of Justice? (4) If the answer to Question 3 is yes: Is this rule of directly applicable Community law such as to create a subjective right for the applicant in the main proceedings? (5) If the answer to Question 4 is yes: Does the Court ... have sufficient information in the content of the order for reference to enable it to rule itself as to whether the Verwaltungsgerichtshof in the circumstances of the main proceedings described has clearly and significantly exceeded the discretion available to it, or is it for the referring Austrian court to answer that question?" First and second questions 15 By its first and second questions, which must be examined together, the referring court is essentially asking whether the principle according to which Member States are obliged to make good damage caused to individuals by infringements of Community law for which they are responsible is also applicable where the alleged infringement stems from a decision of a court adjudicating at last instance and *1054 whether, if so, it is for the legal system of each Member State to designate the court competent to adjudicate on disputes relating to such reparation. Observations submitted to the Court

16 Mr Köbler, the German and Netherlands Governments and the Commission consider that a Member State can be rendered liable for breach of Community law owing to a fault attributable to a court. However, those governments and the Commission consider that that liability should be limited and subject to different restrictive conditions additional to those already laid down in the Brasserie du Pêcheur and Factortame judgment. 17 In that connection the German and Netherlands Governments claim that there is a "sufficiently serious breach" for the purposes of that judgment only if a judicial decision disregarded the applicable Community law in a particularly serious and manifest way. According to the German Government, breach of a rule of law by a court is particularly serious and manifest only where the interpretation or non-application of Community law is, first, objectively indefensible and, secondly, must be subjectively regarded as intentional. Such restrictive criteria are justified in order to safeguard both the principle of res judicata and the independence of the judiciary. Moreover, a restrictive regime of State liability for damage caused by mistaken judicial decisions is in keeping, in the German Government's view, with a general principle common to the laws of the Member States as laid down in Art.288 EC. 18 The German and Netherlands Governments maintain that the liability of the Member State should remain limited to judicial decisions against which no appeal lies, in particular because Art.234 EC imposes an obligation to make a reference for a preliminary ruling only on courts called upon to make such decisions. The Netherlands Government considers that State liability can be incurred only in the event of a manifest and serious infringement of that obligation to make a reference. 19 The Commission submits that a limitation of State liability on account of judicial decisions exists in all the Member States and is necessary in order to safeguard the authority of res judicata of final decisions and thus the stability of the law. For that reason it advocates that the existence of a sufficiently serious breach of Community law should be recognised only where the national court is manifestly abusing its power or discernibly disregarding the meaning and scope of Community law. In the present case, the alleged fault by the Verwaltungsgerichtshof is excusable and that fact is one of the criteria enabling it to be concluded that there has not been a "sufficiently serious breach" of the law. [FN155] FN155 Haim ( C-424/97): [2000] E.C.R. I-5123; [2002] 1 C.M.L.R. 11, para. [43]. 20 For their part the Republic of Austria and the Austrian Government (hereinafter together referred to as "the Republic of Austria"), and the French and United Kingdom Governments, maintain that the liability of a Member State cannot be incurred in the case of a breach of Community law attributable to a court. They rely on arguments based on res judicata, the principle of legal certainty, the independence of the judiciary, the judiciary's place in the Community legal order and the comparison with procedures available before the

Court to render the Community liable under Art.288 EC. 21 *1055 The Republic of Austria claims in particular that a re-examination of the legal appraisal by a court adjudicating at last instance would be incompatible with the function of such a court since the purpose of its decisions is to bring a dispute to a definitive conclusion. Moreover, since the Verwaltungsgerichtshof conducted a detailed examination of Community law in its judgment of June 24, 1998, it would be consonant with Community law to preclude another possibility of bringing proceedings before an Austrian court. Moreover, the Republic of Austria maintains that the conditions for rendering a Member State liable cannot differ from those applicable to the liability of the Community in comparable circumstances. Since the second paragraph of Art.288 EC cannot be applied to an infringement of Community law by the Court of Justice, because in such a case it would be required to determine a question concerning damage which it itself had caused, so as to render it judge and party at the same time, nor can the liability of the Member States be incurred in respect of damage caused by a court adjudicating at last instance. 22 Moreover, the Republic of Austria contends that Art.234 EC is not intended to confer rights on individuals. In the context of a preliminary-reference procedure pending before the Court the parties to the main proceedings can neither amend the questions referred for a preliminary ruling nor have them declared irrelevant. [FN156] Moreover, only the infringement of a provision intended to confer rights on individuals is capable in a proper case of rendering the Member State liable. Accordingly, that liability cannot be incurred in the case of an infringement of Art.234 EC by a court adjudicating at last instance. FN156 Singer (44/65): [1965] E.C.R. 965; [1966] C.M.L.R 82. 23 The French Government claims that a right to reparation on the ground of an allegedly mistaken application of Community law by a definitive decision of a national court would be contrary to the principle of res judicata, as upheld by the Court in Case C-126/97. [FN157] That government claims in particular that the principle of res judicata constitutes a fundamental value in legal systems founded on the rule of law and the observance of judicial decisions. However, if State liability for infringement of Community law by a judicial body were recognised, that would be to call in question the rule of law and observance of such decisions. FN157 Eco Swiss: [1999] E.C.R. I-3055; [2000] 5 C.M.L.R. 816. 24 The United Kingdom Government states that, as a matter of principle and save where a judicial act infringes a fundamental right protected by the European Convention for the Protection of Human Rights and Fundamental Freedoms (the ECHR), signed in Rome on November 4, 1950, no action in damages can be brought against the Crown in respect of judicial decisions. It adds that the principle on which the principle of State liability is based, namely that rights conferred by Community rules must be effectively protected, is far from being

absolute and cites in that regard the application of fixed limitation periods. That principle would be capable of founding a remedy in damages against the State only in rare cases and in respect of certain strictly defined national judicial decisions. The advantage to be gained from acknowledging that damages may be obtained in respect of judicial decisions is therefore correspondingly small. The United Kingdom Government *1056 considers that that advantage must be weighed against certain powerful policy concerns. 25 In that regard it cites, first, the principles of legal certainty and res judicata. The law discourages re-litigation of judicial decisions except by means of an appeal. That is both to protect the interests of the successful party and to further the public interest in legal certainty. The Court has in the past shown itself willing to limit the principle of effective protection in order to uphold the basic principles of the national judicial system, such as the principle of legal certainty and acceptance of res judicata, which is an expression of that principle. [FN158] Acknowledgment of State liability for a mistake by the judiciary would throw the law into confusion and would leave the litigating parties perpetually uncertain as to where they stood. FN158 Ibid., paras [43]-[48]. 26 Secondly, the United Kingdom Government submits that the authority and reputation of the judiciary would be diminished if a judicial mistake could in the future result in an action for damages. Thirdly, it maintains that the independence of the judiciary within the national constitutional order is a fundamental principle in all the Member States but one which can never be taken for granted. Acceptance of State liability for judicial acts would be likely to give rise to the risk that that independence might be called in question. 27 Fourthly, inherent in the freedom given to national courts to decide matters of Community law for themselves is the acceptance that those courts will sometimes make errors that cannot be appealed or otherwise corrected. That is a disadvantage which has always been considered acceptable. In that regard the United Kingdom Government points out that, in the event that the State could be rendered liable for a mistake by the judiciary, with the result that the Court could be called upon to give a preliminary ruling on that point, the Court would be empowered not only to pronounce upon the correctness of judgments of national supreme courts but to assess the seriousness and excusability of any error into which they had fallen. The consequences of this for the vital relationship between the Court and the national courts would clearly not be beneficial. 28 Fifthly, the United Kingdom Government points to the difficulties in determining the court competent to adjudicate on such a case of State liability, particularly in the United Kingdom where there is a unitary court system and a strict doctrine of stare decisis. Sixthly, it maintains that, if State liability for a mistake by the judiciary can be incurred, the same conditions for the liability of the Community for mistakes by the Community judicature would have to apply. 29 Specifically in regard to the second question, Mr Köbler and the Austrian and German Governments submit that it is for the legal system of each Member State

to designate the court competent to adjudicate on disputes involving individual rights derived from Community law. That question should therefore be answered in the affirmative. Reply by the Court Principle of State liability 30 First, as the Court has repeatedly held, the principle of liability on the part of a Member State for damage caused to individuals as a result of breaches *1057 of Community law for which the State is responsible is inherent in the system of the Treaty. [FN159] FN159 Francovich and Others (C 6 & 9/90): [1991] E.C.R. I-5357; [1993] 2 C.M.L.R. 66, para.[35]; Brasserie du Pêcheur and Factortame, cited above, para.[31]; British Telecommunications (C-392/93): [1996] E.C.R. I-1631; [1996] 2 C.M.L.R. 217, para.[38]; Hedley Lomas (C-5/94): [1996] E.C.R. I-2553; [1996] 2 C.M.L.R. 391, para.[24]; Dillenkofer and Others ( C 178-179, 188, 189 & 190/94): [1996] E.C.R. I-4845; [1996] 3 C.M.L.R. 469, para.[20]; Norbrook Laboratories ( C-127/95): [1998] E.C.R. I-1531; [1998] 3 C.M.L.R. 809, para.[106] and Haim, cited above, para.[26]. 31 The Court has also held that that principle applies to any case in which a Member State breaches Community law, whichever is the authority of the Member State whose act or omission was responsible for the breach. [FN160] FN160 Brasserie du Pêcheur and Factortame, cited above, para.[32]; Konle ( C-302/97): [1999] E.C.R. I-3099; [2000] 2 C.M.L.R. 963, para.[62], and Haim, cited above, para.[27]. 32 In international law a State which incurs liability for breach of an international commitment is viewed as a single entity, irrespective of whether the breach which gave rise to the damage is attributable to the legislature, the judiciary or the executive. That principle must apply a fortiori in the Community legal order since all State authorities, including the legislature, are bound in performing their tasks to comply with the rules laid down by Community law which directly govern the situation of individuals. [FN161] FN161 Brasserie du Pêcheur and Factortame, cited above, para.[34]. 33 In the light of the essential role played by the judiciary in the protection of the rights derived by individuals from Community rules, the full effectiveness of those rules would be called in question and the protection of those rights would be weakened if individuals were precluded from being able, under certain conditions, to obtain reparation when their rights are affected by an infringement of Community law attributable to a decision of a court of a Member State

adjudicating at last instance. 34 It must be stressed, in that context, that a court adjudicating at last instance is by definition the last judicial body before which individuals may assert the rights conferred on them by Community law. Since an infringement of those rights by a final decision of such a court cannot thereafter normally be corrected, individuals cannot be deprived of the possibility of rendering the State liable in order in that way to obtain legal protection of their rights. 35 Moreover, it is, in particular, in order to prevent rights conferred on individuals by Community law from being infringed that under the third paragraph of Art.234 EC a court against whose decisions there is no judicial remedy under national law is required to make a reference to the Court of Justice. 36 Consequently, it follows from the requirements inherent in the protection of the rights of individuals relying on Community law that they must have the possibility of obtaining redress in the national courts for the damage caused by the infringement of those rights owing to a decision of a court adjudicating at last instance. [FN162] FN162 See in that connection Brasserie du Pêcheur and Factortame, cited above, para.[35]. 37 Certain of the governments which submitted observations in these proceedings claimed that the principle of State liability for damage caused to individuals by infringements of Community law could not be applied to decisions of a national *1058 court adjudicating at last instance. In that connection arguments were put forward based, in particular, on the principle of legal certainty and, more specifically, the principle of res judicata, the independence and authority of the judiciary and the absence of a court competent to determine disputes relating to State liability for such decisions. 38 In that regard the importance of the principle of res judicata cannot be disputed. [FN163] In order to ensure both stability of the law and legal relations and the sound administration of justice, it is important that judicial decisions which have become definitive after all rights of appeal have been exhausted or after expiry of the time-limits provided for in that connection can no longer be called in question. FN163 Eco Swiss, cited above, para.[46]. 39 However, it should be borne in mind that recognition of the principle of State liability for a decision of a court adjudicating at last instance does not in itself have the consequence of calling in question that decision as res judicata. Proceedings seeking to render the State liable do not have the same purpose and do not necessarily involve the same parties as the proceedings resulting in the decision which has acquired the status of res judicata. The applicant in an action to establish the liability of the State will, if successful, secure an order against it for reparation of the damage incurred but not necessarily a declaration invalidating the status of res judicata of the judicial decision which was

responsible for the damage. In any event, the principle of State liability inherent in the Community legal order requires such reparation, but not revision of the judicial decision which was responsible for the damage. 40 It follows that the principle of res judicata does not preclude recognition of the principle of State liability for the decision of a court adjudicating at last instance. 41 Nor can the arguments based on the independence and authority of the judiciary be upheld. 42 As to the independence of the judiciary, the principle of liability in question concerns not the personal liability of the judge but that of the State. The possibility that under certain conditions the State may be rendered liable for judicial decisions contrary to Community law does not appear to entail any particular risk that the independence of a court adjudicating at last instance will be called in question. 43 As to the argument based on the risk of a diminution of the authority of a court adjudicating at last instance owing to the fact that its final decisions could by implication be called in question in proceedings in which the State may be rendered liable for such decisions, the existence of a right of action that affords, under certain conditions, reparation of the injurious effects of an erroneous judicial decision could also be regarded as enhancing the quality of a legal system and thus in the long run the authority of the judiciary. 44 Several governments also argued that application of the principle of State liability to decisions of a national court adjudicating at last instance was precluded by the difficulty of designating a court competent to determine disputes concerning the reparation of damage resulting from such decisions. 45 In that connection, given that, for reasons essentially connected with the need to secure for individuals protection of the rights conferred on them by Community rules, the principle of State liability inherent in the Community legal order must apply in regard to decisions of a national court adjudicating at last instance, it is for *1059 the Member States to enable those affected to rely on that principle by affording them an appropriate right of action. Application of that principle cannot be compromised by the absence of a competent court. 46 According to settled case law, in the absence of Community legislation, it is for the internal legal order of each Member State to designate the competent courts and lay down the detailed procedural rules for legal proceedings intended fully to safeguard the rights which individuals derive from Community law. [FN164] FN164 Rewe ( 33/76): [1976] E.C.R. 1989; [1977] 1 C.M.L.R 533, para.[5]; Comet ( 45/76): [1976] E.C.R. 2043; [1977] 1 C.M.L.R 533, para.[13]; Just ( 68/79): [1980] E.C.R. 501; [1981] 2 C.M.L.R 714, para.[25]; Frankovich and Others, cited above, para.[42]; and Peterbroeck ( C-312/93): [1995] E.C.R. I-4599; [1996] 1 C.M.L.R. 793, para.[12]. 47 Subject to the reservation that it is for the Member States to ensure in each case that those rights are effectively protected, it is not for the Court to become involved in resolving questions of jurisdiction to which the classification of certain

legal situations based on Community law may give rise in the national judicial system. [FN165] FN165 Seim ( C-446/93): [1996] E.C.R. I-73, para.[32]; and Dorsch Consult, cited above, para.[40]. 48 It should be added that, although considerations to do with observance of the principle of res judicata or the independence of the judiciary have caused national legal systems to impose restrictions, which may sometimes be stringent, on the possibility of rendering the State liable for damage caused by mistaken judicial decisions, such considerations have not been such as absolutely to exclude that possibility. Indeed, application of the principle of State liability to judicial decisions has been accepted in one form or another by most of the Member States, as the Advocate General pointed out at points 77 to 82 of his Opinion, even if subject only to restrictive and varying conditions. 49 It may also be noted that, in the same connection, the ECHR and, more particularly, Art.41 thereof enables the European Court of Human Rights to order a State which has infringed a fundamental right to provide reparation of the damage resulting from that conduct for the injured party. The case law of that court shows that such reparation may also be granted when the infringement stems from a decision of a national court adjudicating at last instance. [FN166] FN166 Dulaurans v France ( 34553): (2001) 33 E.H.R.R. 45. 50 It follows from the foregoing that the principle according to which the Member States are liable to afford reparation of damage caused to individuals as a result of infringements of Community law for which they are responsible is also applicable where the alleged infringement stems from a decision of a court adjudicating at last instance. It is for the legal system of each Member State to designate the court competent to adjudicate on disputes relating to such reparation. Conditions governing State liability 51 As to the conditions to be satisfied for a Member State to be required to make reparation for loss and damage caused to individuals as a result of breaches of Community law for which the State is responsible, the Court has held that these are threefold: 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 incumbent on the State and the loss or damage sustained by the injured parties. *1060 [FN167] FN167 Haim, cited above, para.[36]. 52 State liability for loss or damage caused by a decision of a national court adjudicating at last instance which infringes a rule of Community law is governed

by the same conditions. 53 With regard more particularly to the second of those conditions and its application with a view to establishing possible State liability owing to a decision of a national court adjudicating at last instance, regard must be had to the specific nature of the judicial function and to the legitimate requirements of legal certainty, as the Member States which submitted observations in this case have also contended. 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. 54 In order to determine whether that condition is satisfied, the national court hearing a claim for reparation must take account of all the factors which characterise the situation put before it. 55 Those factors include, in particular, the degree of clarity and precision of the rule infringed, whether the infringement was intentional, whether the error of law was excusable or inexcusable, the position taken, where applicable, by a Community institution and non-compliance by the court in question with its obligation to make a reference for a preliminary ruling under the third paragraph of Art.234 EC. 56 In any event, an infringement of Community law will be sufficiently serious where the decision concerned was made in manifest breach of the case law of the Court in the matter. [FN168] FN168 See to that effect Brasserie du Pêcheur and Factortame, cited above, para.[57]. 57 The three conditions mentioned at para.[51] hereof are necessary and sufficient to found a right in favour of individuals to obtain redress, although this does not mean that the State cannot incur liability under less strict conditions on the basis of national law. [FN169] FN169 Ibid., para.[66]. 58 Subject to the existence of a right to obtain reparation which is founded directly on Community law where the conditions mentioned above are met, it is on the basis of rules of national law on liability that the State must make reparation for the consequences of the loss and damage caused, with the proviso that the conditions for reparation of loss and damage laid down by the national legislation must not be less favourable than those relating to similar domestic claims and must not be so framed as to make it in practice impossible or excessively difficult to obtain reparation. [FN170] FN170 Francovich and Others, cited above, paras [41]-[43]; and Norbrook Laboratories, cited above, para.[111]. 59 In the light of all the foregoing, the reply to the first and second questions must be that the principle that Member States are obliged to make good damage

caused to individuals by infringements of Community law for which they are responsible is also applicable where the alleged infringement stems from a decision of a court adjudicating at last instance where the rule of Community law infringed is intended to confer rights on individuals, the breach is sufficiently serious and there is a direct causal link between that breach and the loss or damage sustained by the injured parties. In order to determine whether the infringement is sufficiently serious when the infringement at issue stems from such a decision, the competent national court, taking into account the specific nature of the judicial function, must determine *1061 whether that infringement is manifest. It is for the legal system of each Member State to designate the court competent to determine disputes relating to that reparation. Third question 60 At the outset it must be recalled that the Court has consistently held that, in the context of the application of Art.234 EC, it has no jurisdiction to decide whether a national provision is compatible with Community law. The Court may, however, extract from the wording of the questions formulated by the national court, and having regard to the facts stated by the latter, those elements which concern the interpretation of Community law, for the purpose of enabling that court to resolve the legal problems before it. [FN171] FN171 See, inter alia, the judgment in Eurico Italia and Others (C 332-333 & 335/92): [1994] E.C.R. I-711; [1994] 2 C.M.L.R 580, para.[19]. 61 In its third question the national court essentially seeks to ascertain whether Art.48 of the Treaty and Art.7(1) of Regulation 1612/68 [FN172] of the Council of October 15, 1968 on freedom of movement for workers within the Community are to be interpreted as meaning that they preclude the grant, under conditions such as those laid down in Art.50a of the GG, of a special length-of-service increment which, according to the interpretation of the Verwaltungsgerichtshof in its judgment of June 24, 1998, constitutes a loyalty bonus. FN172 [1968] O.J. Spec. Ed. (II), p.475. Observations submitted to the Court 62 First, Mr Köbler claims that the special length-of-service increment provided for in Art.50 of the GG is not a loyalty bonus but an ordinary element of salary, as the Verwaltungsgerichtshof initially acknowledged. Moreover, until the judgment of the Verwaltungsgerichtshof of June 24, 1998 no Austrian court considered that the abovementioned allowance constituted a loyalty bonus. 63 Next, even on the supposition that that allowance is a loyalty bonus and such a bonus could justify indirect discrimination, Mr Köbler maintains that there is no settled and certain case law of the Court on this point. In those circumstances the Verwaltungsgerichtshof acted ultra vires in withdrawing its request for a

preliminary ruling and in reaching its determination alone since the interpretation and definition of concepts of Community law is exclusively a matter for the Court. 64 Finally, Mr Köbler submits that the criteria governing the grant of the special length-of-service increment preclude any justification for the indirect discrimination which it applies against him. That allowance is payable irrespective of the question as to the Austrian university in which the claimant has performed his duties and it is not even a requirement that the claimant should have taught for 15 years continuously in the same discipline. 65 Stating that the Court cannot interpret national law, the Republic of Austria maintains that the third question must be construed as meaning that the referring court wishes to obtain an interpretation of Art.48 of the Treaty. In that regard it claims that that provision does not preclude a system of remuneration which enables account to be taken of the qualifications acquired with other national or *1062 foreign employers by a candidate for a post with a view to determining his salary and which, moreover, provides for an allowance which may be termed a loyalty bonus, eligibility for which is linked to a specific period of service with the same employer. 66 The Republic of Austria explains that, in the light of the fact that Mr Köbler, as an ordinary university professor, is in an employment relationship governed by public law, his employer is the Austrian State. Therefore, a professor passing from one Austrian university to another does not change employer. The Republic of Austria points out that there are also private universities in Austria. The professors teaching there are employees of those establishments and not of the State with the result that their employment relationship is not governed by the GG. 67 The Commission contends for its part that Art.50a of the GG discriminates, in breach of Art.48 of the Treaty, between periods of service completed in Austrian universities and those completed in the universities of other Member States. 68 According to the Commission, the Verwaltungsgerichtshof in its final assessment clearly misconstrued the scope of the judgment in Schöning-Kougebetopoulou. [FN173] In the light of the fresh elements of national law, the Commission considers that that court ought to have persisted with its request for a preliminary ruling at the same time as reformulating it. In fact, the Court has never expressly adjudged that a loyalty bonus can justify a discriminatory provision in regard to the workers of other Member States. FN173 Cited above 69 Moreover, the Commission claims that, even if the special length-of-service increment at issue in the main proceedings is to be regarded as a loyalty bonus, it cannot justify an impediment to freedom of movement for workers. It considers that, in principle, Community law does not preclude an employer from seeking to retain qualified employees by offering increases in salary or bonuses to its staff depending on length of service in the undertaking. None the less, the loyalty bonus provided for in Art.50a of the GG is to be distinguished from bonuses which produce their effects solely within the undertaking inasmuch as it operates

at the level of the Member State concerned to the exclusion of the other Member States and thus directly affects freedom of movement of teachers. Moreover, the Austrian universities are not only in competition with the establishments of the other Member States but also amongst themselves. Yet, the provision mentioned does not produce effects in regard to the latter type of competition. Reply by the Court 70 The special length-of-service increment granted by the Austrian State qua employer to university professors under Art.50a of the GG secures a financial benefit in addition to basic salary the amount of which is already dependent on length of service. A university professor receives that increment if he has carried on that profession for at least 15 years with an Austrian university and if, furthermore, he has been in receipt for at least four years of the normal length-of-service increment. 71 Accordingly, Art.50a of the GG precludes, for the purpose of the grant of the special length-of-service increment for which it provides, any possibility of taking *1063 into account periods of activity completed by a university professor in a Member State other than the Republic of Austria. 72 Such a regime is clearly likely to impede freedom of movement for workers in two respects. 73 First, that regime operates to the detriment of migrant workers who are nationals of Member States other than the Republic of Austria where those workers are refused recognition of periods of service completed by them in those States in the capacity of university professor on the sole ground that those periods were not completed in an Austrian university. [FN174] FN174 See, in that connection, with regard to a comparable Greek provision, Commission v Greece (C-187/96): [1998] E.C.R. I-1095, paras [20] and [21]. 74 Secondly, that absolute refusal to recognise periods served as a university professor in a Member State other than the Republic of Austria impedes freedom of movement for workers established in Austria inasmuch as it is such as to deter the latter from leaving the country to exercise that freedom. In fact, on their return to Austria, their years of experience in the capacity of university professor in another Member State, that is to say in the pursuit of comparable activities, are not taken into account for the purposes of the special length-of-service increment provided for in Art.50a of the GG. 75 Those considerations are not altered by the fact relied on by the Republic of Austria that, owing to the possibility afforded by Art.48(3) of the GG to grant migrant university professors a higher basic salary in order to promote the recruitment of foreign university professors, their remuneration is often more than that received by professors of Austrian universities, even after account is taken of the special length-of-service increment. 76 In fact, on the one hand, Art.48(3) of the GG offers merely a possibility and does not guarantee that a professor from a foreign university will receive as from

his appointment as a professor of an Austrian university a higher remuneration than that received by professors of Austrian universities with the same experience. Secondly, the additional remuneration available under Art.48(3) of the GG upon appointment is quite different from the special length-of-service increment. Thus, that provision does not prevent Art.50a of the GG from having the effect of occasioning unequal treatment in regard to migrant university professors as opposed to professors of Austrian universities and thus creates an impediment to the freedom of movement of workers secured by Art.48 of the Treaty. 77 Consequently, a measure such as the grant of a special length-of-service increment provided for in Art.50a of the GG is likely to constitute an obstacle to freedom of movement for workers prohibited in principle by Art.48 of the Treaty and Art.7(1) of Regulation 1612/68. Such a measure could be accepted only if it pursued a legitimate aim compatible with the Treaty and were justified by pressing reasons of public interest. But even if that were so, application of that measure would still have to be such as to ensure achievement of the aim in question and not go beyond what is necessary for that purpose. [FN175] FN175 See, inter alia, Kraus ( C-19/92): [1993] E.C.R. I-1663; [1994] 1 C.M.L.R. 873, para.[32]; Gebhard ( C-55/94): [1995] E.C.R. I-4165; [1996] 1 C.M.L.R 603, para.[37]; and Bosman ( C-415/93): [1995] E.C.R. I-4921; [1996] 1 C.M.L.R. 645, para.[104]. 78 In its judgment of 24 June 1998 the Verwaltungsgerichtshof held that the special length-of-service increment provided for in Art.50a of the GG constituted under *1064 national law a bonus seeking to reward the loyalty of professors of Austrian universities to their sole employer, namely the Austrian State. 79 Accordingly, it is necessary to examine whether the fact that under national law that benefit constitutes a loyalty bonus may be deemed under Community law to indicate that it is dictated by a pressing public-interest reason capable of justifying the obstacle to freedom of movement that the bonus involves. 80 The Court has not yet had the opportunity of deciding whether a loyalty bonus can justify an obstacle to freedom of movement for workers. 81 At paras [27] of the judgment in Schöning-Kougebetopoulou, [FN176] and [49] of the judgment in Case C-195/98, [FN177] the Court rejected the arguments advanced in that regard by the German and Austrian Governments respectively. Indeed, the Court there stated that the legislation at issue was not on any view capable of seeking to reward the employee's loyalty to his employer, because the increase in salary which that worker received in respect of his length of service was determined by the years of service completed with a number of employers. Since, in the cases giving rise to those judgments, the increase in salary did not constitute a loyalty bonus, it was not necessary for the Court to examine whether such a bonus could in itself justify an obstacle to freedom of movement for workers. FN176 Cited above,

FN177 Österreichischer Gewerkschaftsbund [2000] E.C.R. I-10497; [2002] 1 C.M.L.R. 14. 82 In the present case the Verwaltungsgerichtshof held in its judgment of June 24, 1998 that the special length-of-service increment provided for in Art.50a of the GG rewards an employee's loyalty to a single employer. 83 Although it cannot be excluded that an objective of rewarding workers' loyalty to their employers in the context of policy concerning research or university education constitutes a pressing public-interest reason, given the particular characteristics of the measure at issue in the main proceedings, the obstacle which it entails clearly cannot be justified in the light of such an objective. 84 First, although all the professors of Austrian public universities are the employees of a single employer, namely the Austrian State, they are assigned to different universities. However, on the employment market for university professors, the various Austrian universities are in competition not only with the universities of other Member States and those of non-Member States but also amongst themselves. As to that second kind of competition the measure at issue in the main proceedings does nothing to promote the loyalty of a professor to the Austrian university where he performs his duties. 85 Secondly, although the special length-of-service increment seeks to reward workers' loyalty to their employer, it also has the effect of rewarding the professors of Austrian universities who continue to exercise their profession on Austrian territory. The benefit in question is therefore likely to have consequences in regard to the choice made by those professors between a post in an Austrian university and a post in the university of another Member State. 86 Accordingly, the special length-of-service increment at issue in the main proceedings does not solely have the effect of rewarding the employee's loyalty to his employer. It also leads to a partitioning of the market for the employment of university professors in Austria and runs counter to the very principle of freedom of movement for workers. 87 *1065 It follows from the foregoing that a measure such as the special length-of-service increment provided for in Art.50a of the GG results in an obstacle to freedom of movement for workers which cannot be justified by a pressing public-interest reason. 88 Accordingly, the reply to the third question referred for a preliminary ruling must be that Arts 48 of the Treaty and 7(1) of Regulation 1612/68 are to be interpreted as meaning that they preclude the grant, under conditions such as those laid down in Art.50a of the GG, of a special length-of-service increment which, according to the interpretation of the Verwaltungsgerichtshof in its judgment of June 24, 1998, constitutes a loyalty bonus. Fourth and fifth questions 89 By its fourth and fifth questions, which must be dealt with together, the national court is essentially seeking to ascertain whether, in the main

proceedings, the liability of the Member State is incurred owing to an infringement of Community law by the judgment of the Verwaltungsgerichtshof of June 24, 1998. Observations submitted to the Court 90 In regard to the fourth question, Mr Köbler, the German Government and the Commission claim that Art.48 of the Treaty is directly applicable and creates for individuals subjective rights which the authorities and national courts are required to safeguard. 91 The Republic of Austria maintains that it is appropriate to give a reply to the fourth question only if the Court does not reply to the preceding questions in the manner suggested by it. Inasmuch as the fourth question was raised only in the event of an affirmative reply to the third question, which it regards as inadmissible, it proposes that the Court should not reply to that fourth question. Moreover, it claims that it is unclear since the order for reference contains no reasoning in regard to it. 92 As regards the fifth question, Mr Köbler maintains that the reply to it should be in the affirmative since the Court has to hand all the materials enabling it to rule itself on whether in the main proceedings the Verwaltungsgerichtshof clearly and significantly exceeded the discretion available to it. 93 The Republic of Austria considers that it is for the national courts to apply the criteria concerning the liability of the Member States for loss or damage caused to individuals by infringements of Community law. 94 None the less, in the event that the Court should itself reply to the question whether the liability of the Republic of Austria is incurred, it maintains, first, that Art.177 of the EC Treaty (now Art.234 EC) is not intended to confer rights on individuals. It considers therefore that that condition governing liability is not satisfied. 95 Secondly, it is undeniable that, in the context of a dispute pending before them, the national courts have a large margin of discretion in determining whether or not they are obliged to formulate a request for a preliminary ruling. In that regard the Republic of Austria maintains that, since in its judgment in Schöning-Kougebetopoulou the Court considered that loyalty bonuses are not, in principle, contrary to *1066 the provisions relating to freedom of movement for workers, the Verwaltungsgerichtshof rightly concluded that, in the case before it, it was entitled itself to decide the questions of Community law. 96 Thirdly, should the Court acknowledge that the Verwaltungsgerichtshof did not observe Community law in its judgment of June 24, 1998, the conduct of that court could not in any event be characterised as a sufficiently serious breach of that law. 97 Fourthly, the Republic of Austria claims that there cannot be any causal link between the withdrawal by the Verwaltungsgerichtshof of the request for a preliminary ruling addressed to the Court and the damage actually alleged by Mr Köbler. Those arguments are in fact based on the plainly unacceptable supposition that, if the request had been maintained, the preliminary ruling by the

Court would necessarily have upheld Mr Köbler's arguments. In other words, underlying those arguments is the implication that the damage constituted by non-payment of the special length-of-service increment for the period from January 1, 1995 to February 28, 2001 would not have occurred if the request for a preliminary ruling had been maintained and had resulted in a decision of the Court. However, it is neither possible for a party to the main proceedings to found arguments on a prejudgment as to what the Court would have decided in the case of a request for a preliminary ruling, nor is it permissible to claim damage under that head. 98 For its part, the German Government maintains that it is for the national court to determine whether the conditions governing the liability of the Member State are satisfied. 99 The Commission considers that the liability of the Member State is not incurred in the main proceedings. In fact, although in its view the Verwaltungsgerichtshof in its judgment of June 24, 1998 misinterpreted the Schöning-Kougebetopoulou judgment [FN178] and, moreover, infringed Art.48 of the Treaty in ruling that Art.50a of the GG was not contrary to Community law, that infringement is in some way excusable. FN178 Cited above Reply by the Court 100 It is clear from the case law of the Court that it is, in principle, for the national courts to apply the criteria for establishing the liability of Member States for damage caused to individuals by breaches of Community law, [FN179] in accordance with the guidelines laid down by the Court for the application of those criteria. [FN180] FN179 Brasserie du Pêcheur and Factortame, cited above, para.[58]. FN180 Ibid., paras [55]-[57]; British Telecommunications, cited above, para. [411]; Denkavit and Others ( C 283, 291 & 292/94): [1996] E.C.R. I-5063, para.[49]; and Konle, cited above, para.[58]. 101 None the less, in the present case the Court has available to it all the materials enabling it to establish whether the conditions necessary for liability of the Member State to be incurred are fulfilled. The rule of law infringed, which must confer rights on individuals 102 The rules of Community law whose infringement is at issue in the main proceedings are, as is apparent from the reply to the third question, Arts 48 of the Treaty and 7(1) of Regulation 1612/68. Those provisions specify the consequences resulting from the fundamental principle of freedom of movement for workers *1067 within the Community by way of the prohibition of any

discrimination based on nationality as between the workers of the Member States, in particular as to remuneration. 103 It cannot be disputed that those provisions are intended to confer rights on individuals. The sufficiently serious nature of the breach 104 The course of the procedure which led to the judgment of the Verwaltungsgerichtshof of June 24, 1998 should be kept in view. 105 In the dispute pending before it between Mr Köbler and the Bundesminister für Wissenschaft, Forschung und Kunst (Federal Minister for Science, Research and Art) concerning the latter's refusal to grant Mr Köbler the special length-of-service increment provided for in Art.50a of the GG, that court, by order of October 22, 1997 registered at the Registry of the Court under Case number C-382/97, referred to the Court for a preliminary ruling a question on the interpretation of Art.48 of the Treaty and Arts 1 to 3 of Regulation 1612/68. 106 The Verwaltungsgerichtshof states in that order, inter alia, that in order to decide the issue pending before it: "it is essential to know whether it is contrary to Community law under Art.48 of the EC Treaty ... for the Austrian legislature to make the grant of the 'special length-of-service increment for ordinary university professors', which is in the nature of neither a loyalty bonus nor a reward, but is rather a component of salary under the advancement system, dependent on 15 years service at an Austrian university". 107 First, that order for reference reveals without any ambiguity that the Verwaltungsgerichtshof considered at that time that under national law the special length-of-service increment in question did not constitute a loyalty bonus. 108 Next, it follows from the written observations of the Austrian Government in Case C-382/97 that, in order to demonstrate that Art.50a of the GG was not capable of infringing the principle of freedom of movement for workers enshrined in Art.48 of the Treaty, that Government merely contended that the special length-of-service increment provided for by that provision constituted a loyalty bonus. 109 Finally, the Court had already held at paras [22] and [23] of its Schöning-Kougebetopoulou judgment, [FN181] that a measure which makes a worker's remuneration dependent on his length of service but excludes any possibility for comparable periods of employment completed in the public service of another Member State to be taken into account is likely to infringe Art.48 of the Treaty. FN181 Cited above. 110 Given that the Court had already adjudged that such a measure was such as to infringe that provision of the Treaty and also that the only justification cited in that regard by the Austrian Government was not pertinent in the light of the order for reference itself, the Registrar of the Court, by letter of March 11, 1998, forwarded a copy of the judgment in Schöning-Kougebetopoulou to the Verwaltungsgerichtshof so that it could examine whether it had available to it the

elements of interpretation of Community law necessary to determine the dispute pending *1068 before it and asked it whether, in the light of that judgment, it deemed it necessary to maintain its request for a preliminary ruling. 111 By order of March 25, 1998, the Verwaltungsgerichtshof asked the parties to the dispute before it for their views on the request by the Registrar of the Court, observing, on a provisional basis, that the point of law forming the subject-matter of the preliminary-reference procedure in question had been resolved in favour of Mr Köbler. 112 By order of June 24, 1998, the Verwaltungsgerichtshof withdrew its reference for a preliminary ruling, taking the view that it was no longer necessary to persist with that request in order to resolve the dispute. It stated that the decisive question in the present case was whether the special length-of-service increment provided for in Art.50a of the GG was a loyalty bonus or not and that that question had to be decided in the context of national law. 113 In its judgment of June 24, 1998 the Verwaltungsgerichtshof held that, "in its order for reference of October 22, 1997, it had taken the view that the 'special length of service increment for ordinary university professors' is in the nature neither of a loyalty bonus nor of a reward", and that "that interpretation of the law, which is not binding on the parties to proceedings before the Verwaltungsgerichtshof, cannot be upheld". The Verwaltungsgerichtshof then comes to the conclusion that that benefit is in fact a loyalty bonus. 114 It follows from the foregoing that, after the Registrar of the Court had asked the Verwaltungsgerichtshof whether it was maintaining its request for a preliminary ruling, the latter reviewed the classification under national law of the special length-of-service increment. 115 Following that reclassification of the special length-of-service increment provided for in Art.50a of the GG, the Verwaltungsgerichtshof dismissed Mr Köbler's action. In its judgment of June 24, 1998 it inferred from the judgment in Schöning-Kougebetopoulou that since that benefit was to be deemed a loyalty bonus, it could be justified even if it was in itself contrary to the principle of non-discrimination laid down in Art.48 of the Treaty. 116 However, as is clear from paras [80] and [81] hereof, the Court did not express a view in the judgment in Schöning-Kougebetopoulou on whether and if so under what conditions the obstacle to freedom of movement for workers constituted by a loyalty bonus could be justified. Thus the inferences drawn by the Verwaltungsgerichtshof from that judgment are based on an incorrect reading of it. 117 Accordingly, since the Verwaltungsgerichtshof amended its interpretation of national law by classifying the measure provided for in Art.50a of the GG as a loyalty bonus after the judgment in Schöning-Kougebetopoulou had been sent to it and since the Court had not yet had the opportunity of expressing a view on whether the obstacle to freedom of movement for workers constituted by a loyalty bonus could be justified, the Verwaltungsgerichtshof ought to have maintained its request for a preliminary ruling. 118 That court was not entitled to take the view that resolution of the point of law at issue was clear from the settled case law of the Court or left no room for any

reasonable doubt. [FN182] It was therefore obliged under the third paragraph of Art.177 of the Treaty to maintain its request for a preliminary ruling. FN182 CILFIT and Others ( 283/81): [1982] E.C.R. 3415; [1983] 1 C.M.L.R. 472 *1069 , paras [14] and [16]. 119 Moreover, as is clear from the reply to the third question, a measure such as the special length-of-service increment provided for in Art.50a of the GG, even if it may be classified as a loyalty bonus, entails an obstacle to freedom of movement for workers contrary to Community law. Accordingly, the Verwaltungsgerichtshof infringed Community law by its judgment of June 24, 1998. 120 It must therefore be examined whether that infringement of Community law is manifest in character having regard in particular to the factors to be taken into consideration for that purpose as indicated in paras [55] and [56] above. 121 In the first place, the infringement of Community rules at issue in the reply to the third question cannot in itself be so characterised. 122 Community law does not expressly cover the point whether a measure for rewarding an employee's loyalty to his employer, such as a loyalty bonus, which entails an obstacle to freedom of movement for workers, can be justified and thus be in conformity with Community law. No reply was to be found to that question in the Court's case law. Nor, moreover, was that reply obvious. 123 In the second place, the fact that the national court in question ought to have maintained its request for a preliminary ruling, as has been established at para.[118] hereof, is not of such a nature as to invalidate that conclusion. In the present case the Verwaltungsgerichtshof had decided to withdraw the request for a preliminary ruling, on the view that the reply to the question of Community law to be resolved had already been given in the judgment in Schöning-Kougebetopoulou. [FN183] Thus, it was owing to its incorrect reading of that judgment that the Verwaltungsgerichtshof no longer considered it necessary to refer that question of interpretation to the Court. FN183 Cited above. 124 In those circumstances and in the light of the circumstances of the case, the infringement found at para.[119] hereof cannot be regarded as being manifest in nature and thus as sufficiently serious. 125 It should be added that that reply is without prejudice to the obligations arising for the Member State concerned from the Court's reply to the third question referred. 126 The reply to the fourth and fifth questions must therefore be that an infringement of Community law, such as that stemming in the circumstances of the main proceedings from the judgment of the Verwaltungsgerichtshof of June 24, 1998, does not have the requisite manifest character for liability under Community law to be incurred by a Member State for a decision of one of its courts adjudicating at last instance.

Costs 127 The costs incurred by the Austrian, German, French, Netherlands and United Kingdom Governments, and by the Commission, which have submitted observations to the Court, are not recoverable. Since these proceedings are, for the parties to the main proceedings, a step in the proceedings pending before the national court, the decision on costs is a matter for that court. R1 Order On those grounds, THE COURT, in answer to the questions referred to it by the Landesgericht für Zivilrechtssachen Wien by order of May 7, 2001, *1070 Hereby Rules: 1. The principle that Member States are obliged to make good damage caused to individuals by infringements of Community law for which they are responsible is also applicable where the alleged infringement stems from a decision of a court adjudicating at last instance where the rule of Community law infringed is intended to confer rights on individuals, the breach is sufficiently serious and there is a direct causal link between that breach and the loss or damage sustained by the injured parties. In order to determine whether the infringement is sufficiently serious when the infringement at issue stems from such a decision, the competent national court, taking into account the specific nature of the judicial function, must determine whether that infringement is manifest. It is for the legal system of each Member State to designate the court competent to determine disputes relating to that reparation. 2. Article 48 of the EC Treaty (now, after amendment, Art.39 EC) and Art.7(1) of Regulation 1612/68 of the Council of October 15, 1968 on freedom of movement for workers within the Community are to be interpreted as meaning that they preclude the grant, under conditions such as those laid down in Art.50a of the Gehaltsgesetz 1956 (law on salaries of 1956), as amended in 1997, of a special length-of-service increment which, according to the interpretation of the Verwaltungsgerichtshof (Austria) in its judgment of June 24, 1998, constitutes a loyalty bonus. 3. An infringement of Community law, such as that stemming in the circumstances of the main proceedings from the judgment of the Verwaltungsgerichtshof of June 24, 1998, does not have the requisite manifest character for liability under Community law to be incurred by a Member State for a decision of one of its courts adjudicating at last instance.

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