EU Ordered to Pay Damages to Two Companies for Breach of Fundamental Right to Timely Court Proceedings
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The EU General Court has ordered the EU to pay €50,000 in damages to two companies for the excessive and unjustified length of their proceedings before the General Court
In 2006, Gascogne Sack Deutschland
and Gascogne sought to annul a European Commission decision fining them €13.2
million for participation in a cartel in the industrial plastic bags sector.
However, it wasn't until November 2011, 5 years and 9 months later, that the EU
General Court (GC) delivered its judgment and dismissed their
actions.
The companies sought approximately
€5 million in damages from the EU as compensation for both material and
non-material harm caused by the inordinate length of the proceedings. In its
first decision on this issue, the GC noted that non-contractual liability may
be incurred by the EU when three cumulative conditions are
fulfilled:
- First, an EU institution must act unlawfully
The GC held that a period of almost 6 years was not justified by the specific
circumstances of the cases and breached the right to adjudication within a
reasonable period, as enshrined in the EU Charter of Fundamental Rights. In
reaching this conclusion, the GC considered the appropriate length of
proceedings, bearing in mind the complexity of competition law and other
parallel actions. The GC also uncovered a 20 month period of
inactivity.
- Second, actual damage must be suffered
The GC accepted that bank costs in relation to the fine paid by Gascogne
during the 20 months of inactivity amounted to actual damage. However, the GC
rejected other claims of actual damage, including losses due to the payment of
statutory interest applied to the Commission's fine.
- Third, there must be a causal link between the unlawful conduct of
the EU and the actual damage
This condition was satisfied as bank
costs paid by Gascogne during the 20 months of inactivity would not have arisen
had the proceedings before the GC been more efficient.
The GC partially
upheld the actions of the two companies, awarding damages of approximately
€47,000 to Gascogne for material harm suffered due to the additional bank
costs. The companies were also awarded €5,000 each for non-material harm caused
by the excessive uncertainty created by the lengthy proceedings.
This is the first
time that the EU courts have awarded damages for a breach of a company's
fundamental right to timely court proceedings. The right is well established
before the European Court of Human Rights, and the Irish Supreme Court recently
recognised, in principle, that damages would be available for breach of the
right (Nash v DPP).
Damages themselves
are of course not the primary goal, and it is notable that the compensation
awarded in this case fell well below the millions sought. Recent reforms
of the GC – including an increased number of judges and greater flexibility in
the use of chambers – are intended to combat the excessive duration of
proceedings and to allow the delivery of judgments within a reasonable
time.
Contributed by Claire Waterson
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