8.4.2 Scenario 3: Compensation for damages following from the disapplication of legislation with a substantive defect?

415. Under a number of conditions, a private party that suffers damage from the application of legislation that is substantively incompatible with Union law, can successfully bring a case against the opposite private party to attain the effective protection of the right it derives from Union law.1 The private party that wants to have its Union right protected can for instance claim the compliance with remaining legislation, the modification of the contractual relationship, or the civil liability of the opposite party. The legal consequences of the disapplication of a provision of national origin, may translate into damages on the side of the private party that relied on the applicability of the national rule which is now disapplied. This party may wish to bring an action against the State to have these damages compensated. Let me use the cases of Laval and Kücükdeveci as an illustration.

416. The Arbetsdomstolen held the trade unions liable to pay compensation for damages to Laval. Swedex and Kücükdeveci settled the case. In harmony with what the remaining legislation required, Swedex agreed to pay an additional amount to comply with the statutory term of notice, whereas Kücükdeveci was not employed for those extra months. It can be argued that the trade unions and Swedex suffered damages due to the Member State’s failure to comply with its obligations under Union law. Yet, the following demonstrates that it is very unlikely that either one of these parties could successfully bring a claim for Member State liability.2

As stated, private parties that have been harmed by a Member State’s sufficiently serious breach of a rule of Union law that confers rights upon them, have a right to reparation of their damage. The Schutznorm criterion, namely that the rule of Union law infringed must be intended to confer rights upon those private parties3, forms a blockade for private parties such as the trade unions and Swedex to successfully bring a claim for State liability on the basis of the conditions phrased by the Court of Justice.

The Swedish legislation at stake in Laval was incompatible with Article 56 TFEU. The rights this provision confers upon private parties, namely the freedom to provide services and the right not to be discriminated against on account of nationality, were not breached in respect of the trade unions. Therefore, the trade unions do not fall within the scope of protection of Article 56 TFEU, which does not aim to protect the damages suffered by the trade unions, namely the amount payable to Laval as a result of the disapplication of the Swedish provision that is incompatible with Article 56 TFEU.

417. The same applies to Swedex: the German provision that is incompatible with Article 21 Charter discriminated employees on account of their age. Swedex is not discriminated against and does therefore not fall within the scope of protection of Article 21 Charter and Directive 2000/78. These provisions do not aim to protect against damages suffered by a private party that relied on national legislation that has to be disapplied for being incompatible with Article 21 TFEU and Directive 2000/78 – e.g. the amount that Swedex had to pay Kücükdeveci as a result of the disapplication of the German problematic provision.

418. Is there another rule of Union law that the trade unions and Swedex can rely on, that confers rights upon them and that aims to protect them against the damages suffered? I dare to doubt that. The obligation of Member States to attune their national legislation to rules of Union law and their obligation to implement directives correctly and in due time are obligations that do not confer a specific subjective right upon private parties. Therefore, those obligations cannot be invoked by private parties, like the trade unions and Swedex, that have become the victim of the Member State’s failure to comply with those obligations. Concluding, an action for Member State liability by parties like the trade unions and Swedex on the basis of the conditions formulated by the Court of Justice would thus strand at the Schutznorm requirement.4 For this reason, it would be pointless to elaborate on the other conditions for Member State liability. From the perspective of judicial protection of private parties in relation to failures of a Member State to comply with their obligations under EU law, this conclusion can be frowned upon because it reveals that EU law shows a lacuna in the set of rules in Union law that promote effective judicial protection against breaches of Union law: private parties can become the victim of a Member State’s failure to comply with Union law without having the opportunity to have their damages recovered on the basis of Union law. Hence, the only way for these parties to try to recover their damages is by employing the national regime for State liability.