Francovich (1991): Establishing the Principle of State Liability

“If a Member State fails to properly implement EU law and an individual suffers loss, the State must compensate that loss.” This principle was first articulated in Francovich.

Hello, students of EU law. Today we look at Francovich (1991). When I first read this case, I thought, “The State owes a direct duty to individuals?” Soon it clicked: to secure the effectiveness of EU law, there must be a mechanism protecting individuals when a State fails to comply. This piece explains how the Court built a new doctrine—state liability—through the Francovich judgment.

Contents

Background and Facts Core Issue: State Responsibility The Court’s Judgment and Reasoning Impact on the EU Legal Order Criticism and Academic Debate Contemporary Significance and Takeaways

Background and Facts

Italian citizen Franco Francovich lost unpaid wages when his employer went bankrupt. Italy had not transposed the EU Directive on the protection of employees (80/987/EEC) into national law. That directive required a State-run guarantee fund to cover employees’ wages when an employer became insolvent. Francovich and colleagues claimed damages, arguing that the State’s failure to implement the directive caused their loss.

Core Issue: State Responsibility

The key question: When a Member State fails to implement a directive and individuals suffer loss, does the State owe compensation? This was a new problem that could not be solved by direct effect or supremacy alone.

Side	Claim	Core Reasoning
Francovich and other workers	State liability affirmed	Failure to implement the directive violated their right to guaranteed wages; the State must compensate.
Italian Government	State liability denied	Non-implementation does not create a direct legal relationship between individuals and the State.

The Court’s Judgment and Reasoning

The Court of Justice (CJEU) established the principle of State liability for the first time. To ensure the effectiveness of EU law, where a Member State fails to implement a directive and individuals suffer loss, the State must make good that loss. The core reasoning:

• Individuals must enjoy effective protection of their EU rights (effet utile).
• Where a Member State’s failure to fulfil its obligations causes loss to individuals, the State is liable.
• This both safeguards the authority of EU law and allows individuals to exercise real, practical rights.

Impact on the EU Legal Order

Beyond a single dispute, Francovich created the new doctrine of state liability. It became a key tool for securing the effectiveness of EU law, opening a route for individuals to seek redress directly against a State that fails its obligations. The criteria were later developed in Brasserie du Pêcheur and Factortame III, significantly strengthening enforcement of EU law.

Criticism and Academic Debate

The ruling sparked debate in scholarship and practice. While welcomed for enhancing individual protection, critics argued it excessively constrained States’ legislative and administrative autonomy.

Perspective	Main Argument
Critical	Imposes excessive liability on States, chilling legislative autonomy.
Supportive	Makes individual rights real and enables effective enforcement of EU law.

Contemporary Significance and Takeaways

Today, Francovich is hailed as a landmark redefining the individual–State relationship. Beyond compensation, it sends a strong message: Member States are accountable as faithful implementers of EU law. Key takeaways:

• Ensures the effectiveness of EU law by recognizing state liability.
• Integrates individual rights and remedies within the EU legal system.
• Provides a strong deterrent against State breaches of EU law.

Frequently Asked Questions (FAQ)

Q What was the Francovich case about?

Italy failed to implement an employee-protection directive, workers did not receive wages, and they sued the State for damages.

Q What was the core issue?

Whether a State is liable to compensate individuals for loss caused by its failure to implement an EU directive.

Q How did the CJEU rule?

It established the principle of state liability: where non-implementation causes loss, the State must compensate.

Q Why is this case important?

It secures the effectiveness of EU law and opens a path for individuals to claim against the State.

Q How does it relate to later cases?

In Brasserie du Pêcheur and Factortame III, the scope and conditions of state liability were further specified.

Q Is it still applied today?

Yes. Francovich remains the starting point for state liability, providing the basic framework for holding States to account for breaches of EU law.

In Closing

Francovich (1991) makes one thing clear: even the State is accountable under EU law. What strikes me is how state liability fills the gaps where direct effect or supremacy alone can’t deliver remedies. In practice I keep three things in mind: the existence of a rule intended to protect, a causal link between the breach and the loss, and the reality of the damage. When those three align, individuals can find a path to redress even in the vacuum created by non-implementation. If you’re litigating state liability in your jurisdiction, drop the facts and the directive’s purpose in the comments—we’ll turn them into a checklist and sharpen the argument together. 🙂