Friday 15 April 2016

Oceano meets Francovich: AG Wahl on state liability and unfair terms

Yesterday, AG Wahl turned in his opinion in case C-168/15 (here, in French), a Slovakian controversy concerning a seemingly exploitative credit relationship against which the court invested with the execution of an arbitration award had failed to grant relief to the consumer. 

In particular, the consumer claimed, the Court had failed to apply ex officio review of a series of possibly unfair terms- including an arbitration clause.While the execution proceedings, whose first instance she had successfully appealed, were still pending, the consumer also demanded compensation for the first court's alleged violation of EU law. 

Now, not all our readers may remember that since the Court's landmark decision in Francovich, Member States can be held liable in civil liability for failure to (correctly) implement EU secondary law. Later, the Court specified that this liability extends to Courts failing to correctly apply said legislation. 

Asked whether a similar liability would also have to arise in this case, the AG articulated an extensive analysis which examines under which conditions this would be the case. 

First, it should be a case in which the affected judicial decision cannot be remedied in higher instance. 

Second, the violation of EU law should concern a sufficiently clearly established obligation. 

Third, the Court's violation should have been sufficiently qualified by fault or negligence, meaning that only if the court had been in a position to know the facts of the case which would give rise to suspicions concerning the terms' validity would its failure to perform ex officio scrutiny entail state liability. 

The opinion highlights a certain tension between the nature and rationale of the obligation to perform control ex officio and the necessary limitations of state liability, which would be very easily engaged if any failure to perform such control would trigger a claim for compensation. We will see where the Court will settle this balancing.