Individuals do not have extensive rights to enforce Union law directly in the Court of Justice of the European Union. They can only do so under very strict standing conditions through the judicial review procedure (Article 263 TFEU), actions for failure to act (Article 265 TFEU) and in private actions for damages against the Union institutions (Articles 268 and 340 TFEU). Enforcement of Union law rights by individuals or legal persons (companies) therefore mainly takes place at the national level in the domestic court.
The approach taken by the court had been to state that it was national law to determine in which courts an action could be brought and what procedural rules should govern the action. On this basis, the general rule was that community rights were to be treated no less favorable than analogous domestic law rights. In this way assumed that domestic law would fully protect community rights by providing a remedy obtainable in national courts. The court stated that the effectiveness of community law could be called into question, and the protection of rights would be weakened, if individuals could not obtain compensation when community rights were undermined by violation of community law. No uniform remedy was prescribed by Union Law.
As a result, several problems may arise. In Case Von Colson v Land Nordrhein- Westfalen  ECR 1-891, the directive did not stipulate what the remedies for breach of the rights protected in the Directive should be. The remedy offered was clearly inadequate for the wrong that Ms Von Colson had suffered. However, it complied with the principle of “practical possibility”- it was neither impossible nor virtually impossible for her to receive a remedy and it may well have complied with the principle of “equivalence”- German law may not have had remedies for sex discrimination at all or may have had similarly weak remedies. European Union law rights would have no value if there was no possibility of a proper remedy of some kind. To solve this problem, the court of Justice therefore had to take the European Union law requirements of the national system of remedies one step further and insist on the adequacy, effectiveness and deterrent effect of remedies for European Union law rights.
Moreover, where as a consequence of the doctrine of horizontal direct effect the claimant can not enforce a union right against a private party and hence the wronged claimant can get no remedy at all. This usually occurs because of the failure of the member state to implement the directive in question. The Francovich case involved Directive 80/987, which provided for the approximation of the laws of the Member states relation to the protection of employees in the event of the insolvency of the their employer. The Italian government had not implement the directive, which the result that, when Francovich’s employer become insolvent, the employees had substantial arrears of salary. This directive was insufficiently precise and was not unconditional, and so did not have direct effect. Thus, Francovich and the other employees involved could not rely on the Directive in order to recovery of their lost wages. ECJ considered the question if the circumstances in which a member state could be held liable in damages for its violation of community law. Finally court stated that, as a general principle, Member States are obliged to make good damage caused to individual by violation of community law for which they are responsible.
In this case, the Court laid down three conditions for making
liable where it has failed to transpose a Directive. Italy
a) The Directive must be intended to confer rights on individuals.
b) The content of those rights must be ascertainable from the terms of the Directive.
c) There must be a causal link between the loss suffered and the
’s breach. In other words, there must be a link between the cause of the loss suffered and the breach of EU law by the Member State . Member State
Although Francovich involved the non implementation of a directive, a broad interpretation of the court’s judgment could be that there is a general right to compensation where an individual has suffered loss as a result of a breach of other community law. For example: in Kirklees MBC v Wickes Building Supplies Ltd, the House of Lords held on the basis of Francovich that if the ECJ considered s.47 of the Shops Act 1950 to be invalid as being in conflict with Art 28, the UK might be obliged to make good the loss caused to the individuals by the breach. Furthermore,
Member State could also be liable in damages for breaches of Treaty Articles, was the issue in Joined Cases C-46/93 and C-46/93 Brasserie du Pecheur v and R v Secretary of Transport ex parte Factortame (Brasserie du Pecheur/Factortame III). Germany
The Court also stated that ‘in the absence of a particular justification’, the conditions for the liability of the state would be the same as for the Community institutions under Article 215 of the Treaty, (now Article 340 TFEU). It is not strict liability.
will be liable to an individual for breach of its Union law obligations where: Member State
a) The rule of law breached is intended to confer rights on individuals
b) The breach is sufficiently serious
c) There is a direct causal link between the breach of the obligation resting on the state and the damage sustained by the parties.
As to whether the breach of Union law is sufficiently serious, the decisive point is whether the
has ‘manifestly and gravely ignored the limits on its discretion’. Member State
It is for the national courts to decide whether this is the case, but the Court listed a number of factors to be taken into account by the national court. These were:
a) The clarity and precision of the rule breached
b) The measure of discretion left by that rule to the national or Union authorities
c) Whether the infringement and the damage caused was intentional or involuntary
d) Whether any error of law was excusable or inexcusable
e) The fact that the position adopted by a Union institution may have contributed towards the omission
f) The adoption or retention of national measures or practices contrary to Union law.
It is not necessary for the Commission to have obtained a ruling under Article 263 TFEU from the
European Court that the has breached Union law. If there would have such a ruling (as had been the case in Francovich) and the Member State persisted in the breach that would automatically lead to a finding that the breach was ‘sufficiently serious’. Member State
Following this European Court ruling on the preliminary reference, the House of Lords decided in R v Secretary of State for Transport ex parte Factortame Ltd and others  4 All ER 906, that the breaches of EC law by the United Kingdom arising out of provisions in the Merchant Shipping Act 1998 were sufficiently serious to entitle Factortame Ltd and 96 others to compensation under the principle of state liability. Again, In Case 190/94 Dillenkofer v
 ECR I-4845, the Court held that the non-implementation of a Directive is always a sufficiently serious breach. Germany
The procedure for bringing an action for damages against the state will be governed by national rules. Case 392/93 l v HM Treasury ex parte British Telecommunications plc  ECR I-1631 is an interesting case concerning the incorrect transposition of a Directive. The breach was held not to be sufficiently serious because the wording of the EC Directive was unclear, and several other Member States had also unintentionally misinterpreted it.
Court extended the concept of State Liability in some cases. In Case C-424/97 Haim v Kassenzahnärztliche Vereinigung Nordrhein  ECR I-5123, a public law body separate from the state was held liable under the principle of state liability.
For the first time in Case 224/01 Köbler v Republik Österreich  ECR I-10239, the European Court ruled that it was possible for the principle of state liability to apply where the alleged infringement stemmed from a decision of a national court of last instance. The question of liability would depend on the established criteria for state liability.
Whether the infringement of Community law was sufficiently serious depended on consideration of the same factors cited in the Factortame III case: whether the national court had manifestly infringed the applicable law, that is, whether the ‘infringement was manifest’. In deciding what this meant, regard had to be given to the specific nature of the judicial function and to the legitimate requirements of legal certainty. In order to decide whether the infringement was ‘manifest’, the national court hearing a claim for damages must take account of ‘all the factors which characterise the situation put before it’. Surprisingly, on the facts presented in the particular case, there was not a ‘manifest infringement’ of EC law.
The doctrine of state liability forms part of the package of doctrines (direct effect, indirect effect) developed by the
European Court with the dual objectives of ensuring that Union law prevails and is enforced within the Member States, and on the other hand that individuals can obtain their rights under Union law. By introducing State Liability, court considered a different way of giving maximum possible effect to Community law in addition to Direct effect for breach of Community law, irrespective of whether legislation had direct effect or not. Thus it overcomes the problems inherent in the direct effect doctrine where the conditions are not fulfilled and where direct and indirect effect cannot apply.