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Comments on the Judgment of the Court of Justice of the European Union Declaring Non-Compliance with the Requirements of the Spanish Regulation to Initiate the Procedure of Patrimonial Responsibility of Public Administrations

Salvador Balcells i Iranzo's picture
Published: 30/06/22 - Country: Spain

Yesterday, June 28, 2022, the Court of Justice of the European Union (CJEU) has issued a judgment in case C-278/2020 for infringement of the Spanish legislator with respect to Union law in relation to the requirements demanded to initiate the procedure of patrimonial responsibility of the Public Administrations, contained in some of the sections of articles 32 and 34 of Law 40/2015 and article 67 of Law 39/2015.

As a result of said ruling, the CJEU has ruled:

Declare that the Kingdom of Spain has failed to comply with its obligations under the principle of effectiveness by adopting and maintaining in force articles 32, sections 3 to 6, and 34, section 1, second paragraph, of Law 40/2015 , of October 1, of the Legal Regime of the Public Sector, and article 67, section 1, third paragraph, of Law 39/2015, of October 1, of the Common Administrative Procedure of Public Administrations, to the extent that Said provisions subject the compensation of the damages caused to individuals by the Spanish legislator as a consequence of the infringement of the Law of the Union”.

Specifically, the requirements that fail to comply with the principle of effectiveness would be:

  • Requirement that there be a judgment of a Court of Justice that has declared the character contrary to Union Law of the rule with the rank of applied law.

Here the Court of Justice recalls that subjecting the reparation, by a Member State, of the damage that it has caused to an individual by infringing Union Law to the requirement of a prior declaration, by a Court of Justice, of the breach of the Law of the Union attributable to said Member State, is contrary to the principle of effectiveness of this Law.

The reparation of the damage caused by an infringement of Union law attributable to a Member State cannot be subordinated to the requirement that a ruling issued by a Court of Justice pre-judicially declare the existence of said infringement.

Consequently, compensation for the damage caused by a Member State, including by the national legislator, as a result of an infringement of Union law cannot be made subordinate, in any event, without violating the principle of effectiveness, to the requirement that the The Court of Justice has previously issued a ruling declaring non-compliance with Union Law by the Member State in question or resulting in the incompatibility with Union Law of the act or omission that caused the damage .

  • Requirement that the injured individual has obtained, in any instance, a final judgment dismissing an appeal against the administrative action that caused the damage, without establishing any exception for cases in which the damage derives directly from an act or omission of the legislator , contrary to Union Law, when there is no challengeable administrative action.

Second, as regards the liability of a Member State for a breach of Union law, the injured person must provide proof that he has taken reasonable care to avoid the damage or limit its magnitude; On the other hand, it would be contrary to the principle of effectiveness to force the injured parties to systematically exercise all the actions available to them even if this causes them excessive difficulties or they cannot reasonably be required to exercise them.

Consequently, although Union law does not preclude the application of a national rule that establishes that an individual cannot obtain compensation for damage that he has not avoided by bringing legal action, this is only possible as long as the exercise of said legal action does not cause excessive difficulties to the injured party or when said exercise can reasonably be required of him.

However, when the damage derives from an act or omission of the legislator contrary to Union Law, without there being an administrative action that the individual can challenge, the requirement that the individual has obtained a final judgment in an appeal against the action The administrative procedure makes it impossible to obtain compensation, since the injured individual would not be able to file an appeal before a court.

  • Requirement of a limitation period of one year from the publication in the Official Journal of the European Union of the judgment of the Court of Justice that declares the character contrary to Union Law of the rule with the rank of applied law, without covering those cases in which which there is no such sentence.

Thirdly, with regard to the limitation period of one year from the publication in the Official Gazette of the judgment of the Court of Justice declaring that the rule is contrary to Union Law, given that the reparation of the damage caused as a consequence of an infringement of Union law cannot be subject to the requirement that such a judgment exists, the Court of Justice declares that the publication of such a judgment in the Official Journal cannot constitute the only possible starting point for the limitation period of the action whose purpose is to demand the responsibility of the national legislator for the infractions of the Law of the Union that are attributable to it.

  • Requirement that only damages produced in the five years prior to the date of said publication are compensable, unless the sentence provides otherwise.

Finally, as regards the requirement that only damages occurring in the five years prior to the date of publication of a judgment of the Court of Justice declaring a breach of Union law by the Member State in question are compensable or from which the incompatibility with Union Law results from the act or omission that caused such damage, this requirement places obstacles in the way of the injured individuals being able, in all cases, to obtain adequate compensation for their damage. Although it is up to the internal legal system of each Member State to determine the amount of compensation and the rules relating to the assessment of the damage caused by an infringement of Union Law, compensation for damage caused to individuals by infringement of the Law of the Union must be adequate to the damage suffered.

From now on, Spain must comply with the provisions of the ruling as soon as possible. If the Commission considers that the Member State has failed to comply with the ruling, it can file a new appeal requesting financial penalties. However, in the event that the measures taken to adapt domestic law to a directive have not been communicated to the Commission, the Court of Justice, on a proposal from the Commission, could impose sanctions on the basis of the first judgment.

In our opinion, the possible practical consequences that the sentence may generate (for example, among others, its application is already being analyzed by those affected by the repealed regulation that affected form 720 who did not appeal within the term) will be subject to the obligatory new regulation that will emerge shortly in application of the ruling by the Spanish legislature.

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Salvador Balcells i Iranzo's picture

One of the things Mr. Balcells like most about his job is when you get a safe, legal and fair tax situation for the sake of the taxpayer's tranquility and economy, both in previous structuring and planning, and when certain criteria have to be defended before Tax administration.

As a lawyer, he always try to put himself in the place of the one who asks for advice, so that all the options or alternatives that are considered as solutions, are those that would adopt at a personal level if the interested party is himself.