Barbara Hewson sees a battle ahead after Factortame III.

Barbara Hewson is a barrister at 12 Gray's Inn Square.

On 5 March, the European Court of Justice (ECJ) ruled in two article 177 references, Brasserie du Pecheur SA v Federal Republic of Germany (case C-46/93) and R v Secretary of State for Transport (case C-48/93, known as Factortame III). In both cases damages were being sought from member states who had legislated in a manner incompatible with community law.

The ECJ was asked to clarify the conditions under which a member state may incur liability for damage to individuals by breaches of community law. It gave important guidance on the principles that apply. First, it reiterated that when community law is infringed by a member state's legislature, liability will arise to compensate individuals injured by it.

Next, in situations where (as in these cases) a national legislature has a wide discretion to make legislative choices, and breaches community law, compensation is subject to three conditions: the community law breached was intended to confer rights on individuals; the breach is "sufficiently serious" (that is, there has been a "manifest and grave" disregard of community rules); and there is a direct casual link between the breach and the damage sustained.

In deciding whether a breach is "sufficiently serious", courts will have to investigate matters such as the clarity of the rule breached; whether the infringement was voluntary; and whether any error of law was excusable.

In addition, member states' liability cannot be made conditional on fault (intentional or negligent). The English concept of misfeasance in public office is rejected.

In assessing damages, national courts must treat claims no less favourably than similar claims under domestic law. They may not set criteria which make it impossible or excessively difficult to recover damages.

The UK courts now face the novel task of deciding whether UK breaches of community law are "sufficiently serious". Predictably, the UK Government refuses to accept that there was a "grave and manifest disregard" of community law here. It will be interesting to see what evidence the Government proposes to give in its defence.