Harvard Law School

Jean Monnet Chair

Seminar and Workshop on Advanced Issues in Law and Policy
of the European Union, NAFTA and the WTO

Professor J.H.H. Weiler

Harvard Jean Monnet Working Paper 9/99

Ian B. Lee

In Search of a Theory of 
State Liability in the European Union

Harvard Law School    Cambridge, MA 02138

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No part of this paper may be reproduced in any form
Without permission of the author.

ISSN 1087-2221
© Ian B. Lee
Printed in the United States of America in 2000
Harvard Law School
Cambridge, MA 02138
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In Search of a Theory of 
State Liability in the European Union
Ian B. Lee*
Abstract: The aim of this paper is to discover the theoretical underpinnings of the case law of the European Court of Justice on Member State liability and the normative justification for such liability.  The author argues that EU Member State liability presents the same formal characteristics as constitutional tort liability, and examines the theories of justice which might underlie a system of constitutional torts with a view to assessing their ability to explain the phenomenon of EU Member State liability.  The author concludes that the theories of justice which provide a normatively adequate rationalization of constitutional tort liability are incapable of explaining the liability of Member States for violations of EU law.  In the final part of the paper, the author suggests an explanation for the discrepancy and discusses the implications of this finding for further research on the issue of State liability in the European Union.**

Outline

		Introduction

		I—Damages in the Positive Law of the European Union
			A—In the Community Courts
				1—Articles 169-171
				2—Article 215
			B—In the National Courts
				1—Before Francovich
				2—Francovich
				3—Brasserie du Pêcheur, Factortame III and Subsequent Cases

		II—Conceptualizing State Liability in the European Union
			A—Essential Features of Member State Liability
			B—Familiar Doctrines of State Liability
			C—EU Member State Liability as Constitutional Tort Liability

		III—Theories of Justice and State Liability
			A—An Economic Theory: Externalities
				1—Efficiency as Justice
				2—Basic Argument
				3—Application to State Liability Generally
				4—Application to EU Member State Liability
			B—A Non-instrumental Theory: Corrective Justice
				1—Basic Argument
				2—Application to State Liability Generally
				3—Application to EU Member State Liability
			C—A Note on Distributive Justice
			D—Overall Assessment of the Theories

		IV—The Framework Revisited: The Nature of Rights in the European Union

		Conclusion

		Appendix A – Select Bibliography
		Appendix B – Articles 169 to 171 of the Treaty of Rome

Introduction
		Why another paper on the issue of damages within the European Union?  Since the European Court of Justice handed down its landmark decision in Francovich, some eight years ago, much has been written on the subject of Member State liability, so much, indeed, as “to require apology for any more,” according to one author.  However, the bulk of the academic commentary has focused on the implications of the rules set out in Francovich and its progeny.  To date there has been little consideration of the theoretical basis and normative justification for Member State liability.  It is into this gap in the literature which this paper inserts itself.
		My search for the theoretical underpinnings of Francovich is in essence a search for the theory of justice underlying liability.  It is a normative inquiry, in that I ask whether there is a sense in which it is not simply the law, but also just, that a Member State should be required to pay a private litigant for losses caused by the State’s violation of Community law.  However, the normative exercise is not unconstrained, as the adequacy of any proposed theory will be assessed in part on the extent to which it is capable of explaining the scheme of Member State liability actually employed by the Court of Justice.
		Many authors are content to describe EU Member State liability as an extension of administrative tort liability, and to account for the phenomenon by reference to external political factors.  The most frequently-cited explanation is that a damages remedy was needed because Member States were neglecting to implement directives on time.  As Steiner writes:
With the move towards completion of the internal market by December 31, 1992, to be achieved largely through harmonisation by directive, the problem of enforcement became acute.  States were failing increasingly to implement directives on time.  Despite redoubled efforts by the Commission under Article 169 States continued to neglect their duties of implementation and even successful proceedings failed to secure compliance.  In 1989, 26 Article 169 proceedings were brought for the second time.  If the internal market programme were to succeed, something more had to be done.
		In this account of Francovich, the damages remedy filled a gap in the enforcement system for Community norms.  Provisions of the Treaties and regulations were in some cases capable of being relied on in domestic proceedings against a Member State or between private parties, even in the absence of national implementing legislation (i.e., they produced “direct effects”).  By contrast, the Court had unequivocally held that directives were not capable of producing direct effects in litigation between private parties.  Moreover, in the absence of national implementing legislation, it was often impossible to invoke the directives in domestic proceedings even against the Member States themselves, because directives were usually worded so as to leave choices to the national implementing authorities and therefore did not produce direct effects against the State.  This, so the story goes, created a potential bottleneck whereby States, by failing to enact implementing legislation, could effectively deprive their citizens of the rights which Community law intended to confer upon them.
		I do not dispute this explanation as an account of the extrinsic considerations which the Court of Justice may well have taken into account, but the question remains whether principles of justice, and not only expediency, can be found at the base of the scheme of liability developed by the Court.  Our understanding of the external context does not eliminate the necessity for a theoretical framework within which to situate the remedy of damages.  Without such a framework, the doctrinal development of remedial damages in EU law runs the risk of normative incoherence.  This is ultimately what is at stake in the search for a theory of State liability in the European Union.
		My paper is divided into four parts.  The first part of the paper describes the evolution of damages in the positive law of the European Union, culminating in the decisions of the Court of Justice in the Francovich line of cases.  In the second part of the paper, I review the essential features of EU Member State liability and conclude that it presents the same formal characteristics as liability for constitutional torts.  This finding leads me to examine, in the third part of the paper, the theories of justice which might underlie a system of constitutional torts, with a view to assessing their normative acceptability and their ability to explain the phenomenon of EU Member State liability.  I conclude that the theories of justice which provide a normatively adequate rationalization of constitutional tort liability are incapable of explaining the liability of Member States for violation of EU law.  In the fourth part of my paper, I suggest an explanation for the discrepancy and discuss the implications of this finding for further research on the issue of State liability in the European Union.

I.  Damages in the Positive Law of the European Union
		In this review of the status of damages in the positive law of the EU, I will begin by examining their availability in the Community courts, before turning to the Community law concerning awards of damages in national courts.
A.  In the Community Courts 
1.  Articles 169-71 
		The main enforcement mechanism provided for in the text of the Treaty is that found in Articles 169 to 171, reproduced in Appendix B.  These provisions permit the Commission or a Member State to initiate proceedings against a Member State in the Court of Justice.  Until 1992, the Treaty provisions provided no guidance as to the kinds of remedies available to the Court of Justice in the context of an enforcement action under these Articles.  The Treaty simply said, at Art. 171, that “if the Court of Justice finds that a Member State has failed to fulfil an obligation under this Treaty, the State shall be required to take the necessary measures to comply with the judgment of the Court of Justice.”
		That this mechanism was capable of being a basis for liability in damages was suggested in a 1973 decision of the Court of Justice:
... a judgment by the Court under Articles 169 and 171 of the Treaty may be of substantive interest as establishing the basis of a responsibility that a Member State can incur as a result of its default, as regards other Member States, the Community or private parties.
However, no subsequent decision of the Court of Justice further developed the idea of Member State liability arising under Articles 169 to 171.
		In 1992, a year after Francovich, Article 171 was amended to create the possibility of a “lump-sum payment or penalty” being ordered by the European Court of Justice following a finding of non-compliance with a judgment of the Court.  The provision now reads:
	Article 171.
1.—If the Court of Justice finds that a Member State has failed to fulfil an obligation under this Treaty, the State shall be required to take the necessary measures to comply with the judgment of the Court of Justice.  
2.—If the Commission considers that the Member State concerned has not taken such measures it shall, after giving that State the opportunity to submit its observations, issue a reasoned opinion specifying the points on which the Member State concerned has not complied with the judgment of the Court of Justice.
	If the Member State concerned fails to take the necessary measures to comply with the Court's judgment within the time‑limit laid down by the Commission, the latter may bring the case before the Court of Justice. In so doing it shall specify the amount of the lump sum or penalty payment to be paid by the Member State concerned which it considers appropriate in the circumstances.
	If the Court of Justice finds that the Member State concerned has not complied with its judgment it may impose a lump sum or penalty payment on it.
	This procedure shall be without prejudice to Article 170.
2.  Article 215 
		Although individuals cannot avail themselves of the procedure in Articles 169 to 171 so as to enforce Community law against the Member States, the Treaty does create an individual right of action against the Community itself, in Article 173, and an individual right to compensation for damage wrongfully caused by the Community, in Article 215. The latter provision reads as follows:
	Article 215.  The contractual liability of the Community shall be governed by the law applicable to the contract in question.
	In the case of non-contractual liability, the Community shall, in accordance with the general principles common to the laws of the Member States, make good any damage caused by its institutions or by its servants in the performance of their duties.
Article 178 specifies that disputes arising under the second paragraph of Article 215 shall be heard in the Court of Justice.  The Court has interpreted this as an exclusive jurisdiction.
		Although wrongdoing is not explicitly mentioned in Article 215, par. 2, as an element of liability, it seems clear from the case law of the Court of Justice that it is required.  A mere showing of Community conduct causing damage, without proof that the conduct was in some way wrongful, has never been sufficient to give rise to Community liability.   
		Moreover, where the claim is in respect of damage caused by a “legislative measure which involves choices of economic policy,” wrongdoing is not established simply by showing that the measure is contrary to Community law.  Beginning in a 1971 case known as Schöppenstedt, the Court has held that to be successful in claiming damages under Art. 215, par. 2, for legislative wrongdoing, a plaintiff must show that there has been a “sufficiently serious breach of a superior rule of law for the protection of the individual.”
		The requirement of a sufficiently serious breach has in practice been a difficult hurdle, with the standard of misconduct being fixed at a relatively high level by the Court of Justice in deference to the inherently discretionary nature of legislative measures.  According to the Court of Justice, the test for a sufficiently serious breach was whether the institution had “manifestly and gravely disregarded the limits on the exercise of its powers.”  In applying this test, the Court will consider the nature of the breach, whether the damage exceeds the normal risks of the plaintiff’s business, and the number of potential claimants.  The latter two factors in particular reflect the special nature of legislative measures: individuals are expected simply to accept a certain risk of harmful effects from legislative activity, and the smaller the affected group, the more inequitable it is for them alone to bear the burden of the legislation.
B.  In the National Courts 
		It was perhaps foreseeable that issues of national authorities’ non-compliance with Community law would arise as much before national courts as before the judicial organs of the Community.  It is true that the Treaty is essentially silent on the role of national courts in enforcing Community law and, a fortiori, it has nothing to say about remedies in the national courts.  Rather, the main enforcement mechanisms provided in the text of the Treaty, discussed above, contemplate proceedings in the Court of Justice.  However, the doctrines of direct effect and supremacy developed by the Court of Justice have made the national courts a primary arena for litigation regarding a Member State’s compliance with Community law, and so it is in the national courts that the consequences of non-compliance are likely to be first determined.  Thus, the response of national judges to domestic non-compliance is consequently a critical determinant of the practical effectiveness of Community norms: in a sense, the remedies available in the national forum are the “teeth” of the Community legal order.  As a result, just as it lay with the Court of Justice to develop the doctrines of direct effect and supremacy, so too has it fallen to the Court to ensure the effectiveness of national court enforcement of Community law by laying down standards as to the palette of remedies that must be offered by national courts.  It is not surprising, therefore, that the ECJ has had something to say on the issue of damages.

1.  Before Francovich 
		There was a hint very early on that breach of the Treaty would trigger an obligation to make good any resulting harm.  As early as 1960, several years before its classic pronouncements on supremacy and direct effect, the Court of Justice made the following remark, in a case involving the Coal and Steel Treaty:
	[S]i la Cour constate dans un arrêt qu’un acte législatif ou administratif émanant des autorités d’un État membre est contraire au droit communautaire, cet État est obligé, en vertu de l’article 86 du Traité CECA, aussi bien de rapporter l’acte dont il s’agit que de réparer les effets ilicites qu’il a pu produire ; cette obligation résulte du Traité et du protocole (sur les privilèges et immunités des Communautés européennes) qui ont force de loi dans le États membres à la suite de leur ratification et qui l’emportent sur le droit interne.
Article 86 of the Coal and Steel Treaty is the equivalent of Article 5 EC, which obliges Member States to “take all appropriate measures, whether general or particular, to ensure fulfilment of the obligations arising out of this Treaty or resulting from action taken by the institutions of the Community.”
		However, with the exception of the 1973 case referred to in the discussion of Articles 169-171, above, nothing further was heard from the Court of Justice on the issue of Member State liability until twenty years later, in Francovich. 

2.  Francovich 
		In Francovich, a group of laid-off Italian workers whose employer became insolvent and unable to meet its redundancy payments sued the Italian government for non-compliance with Directive 80/987, which provided that Member States were required to set up guarantee funds to cover precisely this type of event.  The Italian trial court referred to the ECJ certain questions arising from the workers’ claim.
		The directive was not unconditional or sufficiently precise so as to be directly effective against the Italian government, but the claimants argued in the alternative that the Member State could be held liable in damages for its failure to implement the directive.  The Court of Justice agreed in principle, on the basis that
[t]he full effectiveness of Community rules would be impaired and the protection of the rights which they grant would be weakened if individuals were unable to obtain redress when their rights are infringed by a breach of Community law for which a Member State can be held responsible.
...
A further basis ... is to be found in article 5 of the Treaty, under which the Member States are required to take all appropriate measures, whether general or particular, to ensure fulfilment of their obligations under Community law.  Among these is the obligation to nullify the unlawful consequences of a breach of Community law ... .
The Court concluded that, as a matter of Community law, a breach by a Member State of its Community legal obligations should, subject to certain conditions, give rise to liability in damages to those harmed. 
		Where the breach consisted of failing to implement a directive, the conditions for liability were as follows:
The first of those conditions is that the result prescribed by the directive should entail the grant of rights to individuals. The second condition is that it should be possible to identify the content of those rights on the basis of the provisions of the directive. Finally, the third condition is the existence of a causal link between the breach of the state' s obligation and the loss and damage suffered by the injured parties.
If these conditions were met, then there was in principle a right to compensation as a matter of Community law.  
		The Court of Justice created some doctrinal uncertainty by ruling that this right to compensation was to be exercised “in accordance with the rules of national law on liability,” so long as 
... the substantive and procedural conditions laid down by the national law of the various member-States on compensation for harm [are not] less favourable than those relating to similar internal claims and [are not] so framed as to make it virtually impossible or excessively difficult to obtain compensation.
The Court’s nod to the principle of national institutional autonomy was consistent with some of the Court’s previous case law, but it set the stage for further litigation regarding the scope left for national legislation to impose additional conditions, particularly “substantive” conditions, to the right to compensation.  This issue, among others, was addressed by the Court of Justice in the joined cases, Brasserie du Pêcheur and Factortame III.  

3.  Brasserie du Pêcheur, Factortame III and Subsequent Cases
		Brasserie du Pêcheur involved a claim by a French beer producer whose product was excluded from the German market because it did not meet the purity requirements imposed by German law.  When the ECJ ruled that the German law violated the ban on measures having an effect equivalent to quantitative restrictions on imports (Art. 30 EC), the French company brought an action in the Bundesgerichtshof (German Federal Court of Justice), claiming damages against the German government.  The German Court referred to the ECJ certain questions relating to the principles to be derived from Francovich, concerning, among other things, whether the German Court was entitled to apply the conditions of German law regarding State liability.
		The case was joined with a British case, Factortame III, the third of a series of cases involving a new system for the registration of fishing vessels in the United Kingdom.  In Factortame I, the Court ruled that the Crown’s immunity from interim relief barring enforcement of a statute could not be absolute, and that it might be required to give way in cases involving a pending challenge to the compatibility of a statute with EC law.  In Factortame II, the Court ruled that certain restrictions contained in the fishing registration statute discriminated on the basis of nationality and were therefore inconsistent with EC law.  As a result, certain persons who had been denied registration under the statute claimed compensation for the damages they had suffered as a result of being deprived of the right to fish.  This claim was the basis of Factortame III.   Since, under British law, there was no liability for losses suffered by reason of legislation, the Court of Justice was asked to rule on whether this principle could survive in light of Francovich. 
		Brasserie du Pêcheur and Factortame III were distinguishable from Francovich in that they involved State action incompatible with a Treaty provision, rather than a failure to implement a directive.  However, the Court of Justice chose to ignore this difference and simply took it for granted that the conditions articulated in Francovich could be generalized so as to apply to actions as well as omissions in respect of any category of Community law, so long as the Community norm infringed was concerned with granting rights to individuals.  
		The important questions dealt with by the Court were (1) whether the principle of Member State liability developed in Francovich applied to national legislative acts, and (2) whether the right to compensation was conditional on the existence of fault or could be made subject to other restrictions found in national law on State liability.  The Court also took the opportunity to introduce an additional requirement for liability.
		On the liability of Member States for legislative acts, the Court of Justice analogized Member State liability to international law, and stated:
[In] international law a State whose liability for breach of an international commitment is in issue will be viewed as a single entity irrespective of whether the breach which gave rise to the damage is attributable to the legislature, the judiciary or the executive.  This must apply a fortiori in the Community legal order since all State authorities including the legislature, are bound in performing their tasks to comply with the rules laid down by Community law directly governing the situation of individuals.
As a result, the Court held that the right to compensation for breach of Community existed even where the breach was caused by an act of the national legislature.
		Concerning the conditions which national law might impose on State liability, the Court of Justice all but foreclosed the possibility of additional substantive conditions.  The ECJ was not content simply to reiterate that such restrictions must not be such as to “make it impossible or extremely difficult to obtain effective reparation for loss or damage resulting from a breach of Community law.”  For greater certainty, the Court gave examples of unacceptable restrictions.  Member States could not, for instance, make reparation dependent upon the infringing law being addressed to an individual situation (a condition found in German law) or on a showing of misfeasance in public office (as in English law).  Even the introduction of “fault” as an additional condition (again, a requirement of German law), would be “tantamount to calling in question the right to reparation founded on the Community legal order.”  
		The Court, evidently, was concerned in part with ensuring that there would be a certain uniformity of remedies throughout the Community or, to put this concern another way, with preventing a divergence in the remedies available before various national courts.  This concern for uniformity did not, of course, bar the Court from articulating a new substantive condition based on Community law.  Borrowing from its case law on the liability of Community institutions under Art. 215, par. 2, the Court of Justice held that the liability of a Member State was conditioned on there being a “sufficiently serious breach.”  The Court explained the concept as follows:
[T]he decisive test for finding that a breach of Community law is sufficiently serious is whether the Member State or the Community institution concerned manifestly and gravely disregarded the limits on its discretion.
The factors which the competent court may take into consideration include the clarity and precision of the rule breached, the measure of discretion left by that rule to the national or Community authorities, whether the infringement and the damage caused was intentional or involuntary, whether any error of law was excusable or inexcusable, the fact that the position taken by a Community institution may have contributed towards the omission, and the adoption or retention of national measures or practices contrary to Community law.
On any view, a breach of Community law will be sufficiently serious if it has persisted despite a judgment finding the infringement in question to be established, or a preliminary ruling or settled case law of the Court on the matter from which it is clear that the conduct in question constituted an infringement.
		It can be seen that the Court’s opinion in the joined cases (referred to hereinafter simply as Brasserie du Pêcheur) brought some additional doctrinal clarity to the issue of compensation. Subsequent cases have resolved further issues, relating principally to the application of the “sufficiently serious breach” criterion.  For example, the Court has made it clear that a complete failure to transpose a Community obligation into national law or a transposition founded on a manifestly incorrect interpretation will be considered “sufficiently serious breaches.”  In addition, the Court has expanded upon the principle relied on in Brasserie du Pêcheur concerning the liability of the whole State and the irrelevance of international jurisdictional divisions, by ruling that, in Member States with a federal structure, the Member State will be liable for violations of rights on the part of political sub-units.
		However, neither Brasserie du Pêcheur nor the Court’s subsequent case law has shed any new light on the theoretical basis for Member State liability.  On the contrary, by analogizing Member State liability simultaneously to two quite different legal phenomena — State responsibility in international law and the non-contractual liability of the institutions of the Community — the Court may be in the process of obscuring even further the real theoretical underpinnings of Member State liability.
II.  Conceptualizing State Liability in the European Union

		As the Court of Justice’s decision in Brasserie du Pêcheur demonstrates, there are a number of ways of conceptualizing the liability of Member States for breaches of EU law.  In that ruling, the Court drew on principles of international law and on its own case law regarding the non-contractual liability of the Community.  Other authors have analogized Member State liability to ordinary civil liability, to liability for administrative misconduct or to the French no-fault doctrine of égalité devant les charges publiques (equal apportionment of public burdens). 
		In fact, however, ordinary tort liability, administrative tort liability, French no-fault liability, and liability under the international law of State responsibility each differ from Member State liability in one or more essential characteristics. And while Member State liability bears considerable resemblance to the non-contractual liability of the Community, I am doubtful that this observation advances things very much in our bid to understand the nature of Member State liability; rather, it simply poses a new problem, that of conceptualizing the Community’s own liability.
		In my view, State liability in the European Union is most readily seen as a species of constitutional tort liability.   In this part of the paper, I first describe what I believe to be the defining formal characteristics of EU Member State liability, and then explain why these features reveal State liability in the EU to be akin to liability for a constitutional tort.
A.  Essential Features of Member State Liability 
		My effort to define the essential characteristics of Member State liability proceeds from the premise that liability is a legal relationship between a payor and a payee.  The relationship consists of three elements which fully describe it: the identity of the payor, who is obliged to pay a particular sum, the identity of the payee, who is entitled to receive the same sum, and the reason for the payment.  By “reason,” I am not referring to the normative justification for the payment — that is the concern of Part III of the paper.  For the time being, my task is purely descriptive.  Accordingly, the third element of the liability relationship refers to the factual conditions which, as a matter of positive law, provide the principle on which the State is obligated to pay damages and the claimant is entitled to receive them.
		Applying this approach to the State liability in the EU, I claim that the relevant relationship is fully described by reference to the three following features:

•	The reason for the payment is a wrongful breach of rights protected by Community law, and the causation of damage.

•	The payor is the whole State, for the act of any State organ, whether legislative, administrative or judicial.

•	The payee is the injured party.

I will explain each of these elements in turn.
		The first and most complicated element is the reason for the payment.  The general principle of EU Member State liability was articulated by the Court in Francovich in the following terms:
[I]t is a principle of Community law that the Member States are obliged to pay compensation for harm caused to individuals by breaches of Community law for which they can be held responsible.
A few paragraphs later, the Court of Justice clarified what it meant by “breaches of Community law for which they can be held responsible.”  The circumstances of Francovich involved non-implementation of a directive, but the conditions spelled out by the Court of Justice have been generalized to cover violations of any category of Community norm:
The first of those conditions is that the result prescribed by the directive should entail the grant of rights to individuals. The second condition is that it should be possible to identify the content of those rights on the basis of the provisions of the directive. Finally, the third condition is the existence of a causal link between the breach of the state' s obligation and the loss and damage suffered by the injured parties.
		By combining the first and second parts of the Francovich test into one, the reason for State liability under Francovich can be seen as consisting of two conditions that must exist simultaneously.  The first is the requirement of a breach of rights conferred by Community law: all State policies will work to the detriment of someone, but if the harm does not arise from a breach of rights under Community law, the principle of liability articulated in Francovich does not apply.  The second condition is that harm must be caused by the breach: though a Member State may commit numerous breaches of Community law, only if harm is caused by the breach can liability ensue under Francovich.
		In Brasserie du Pêcheur, the Court of Justice reiterated these conditions, and added  the requirement of a sufficiently serious breach.  This requirement appears to be a fault criterion by another name.  In trying to understand the nature of the new requirement, it is important to note that the seriousness of the breach is not assessed from the perspective of the individual: the issue is not the seriousness of the injury suffered by the individual or whether an individual right was violated.  Questions relating to the impact of the Member State’s conduct on the individual are considered at other another stage, namely in applying the original Francovich test.  At the stage of determining the seriousness of a breach of Community law, the focus is on the conduct of the Member State and its relationship to the norm established by Community law.  Did the Member State deliberately violate the rule?  If not, was its error unreasonable and inexcusable?  These questions, described as an inquiry into the “seriousness of the breach” so as to differentiate them from fault criteria contained in national law, nonetheless embody notions of intentional and unintentional wrongdoing, or fault. 
 		I conclude that the reason for liability is the wrongful breach of individual rights conferred by Community law, causing damage. 
		The second defining element of a liability rule is the identity of the payor or, the party whose conduct can give rise to an obligation to pay damages.  Obviously, in the context of EU Member State liability, the potential wrongdoer and payor is the State.  Following Brasserie du Pêcheur, moreover, it is clear that liability can attach to the conduct of any State organ, whether legislative, administrative or judicial.  Moreover, in countries with a federal structure, Member State liability can arise through the acts of federal institutions or those of the political divisions.
		The final piece of the puzzle is the identity of the party entitled to receive damages.  In EU Member State liability, the potential payees are those injured by the breach of rights. 
B.  Familiar Doctrines of State Liability 
		Having articulated the defining features of EU Member State liability, I now turn to a review of the different ways of conceptualizing monetary claims against the State.  The following familiar doctrinal categories have been alluded to by commentators on EU Member State liability:
•	ordinary law of torts
•	administrative torts 
•	international law of State responsibility
In my view, none of these conceptualizations is completely satisfactory, because none of them is congruent with the phenomenon under study.  EU Member State liability differs from each of the traditional models of liability in one or more essential features.
		The law of torts or, in civilian systems, the law of civil delictual and quasi-delictual responsibility, is similar to EU Member State liability in that both kinds of liability are based on wrongdoing and causation, and both give the injured party a right to receive damages.  However, the potential payors or wrongdoers under the ordinary law of torts do not normally include the State.  Although the language of private tort law often seeps into discussions of State liability, one does not find many legal systems where States are treated as ordinary persons. 
		Instead, State liability is dealt with in most countries under special rules which come under the heading of administrative law.  This is the kind of liability to which EU Member State liability is most often compared.  Indeed, in the administrative liability regimes of some countries, one sees conditions similar to those articulated by the Court of Justice in Francovich and Brasserie du Pêcheur, for example that a mere misinterpretation of the applicable legal norm will not occasion liability, and the requirement that the norm that was violated have been intended to protect an individual right.  However, the comparison is somewhat difficult, as one point on which most legal systems seem to agree is one which distinguishes the domestic liability of public authorities dramatically from EU Member State liability: in domestic systems, there is normally no liability for legislative acts.  Thus, administrative liability is differentiated from EU Member State liability by the identity of the potential wrongdoer and payor.
		In France, the country which comes closest to recognizing liability for legislative acts, the ability to obtain compensation for legislative harm, under the doctrine of égalité devant les charges publiques, is subject to the will of the legislator.  There will be no compensation if the law or its travaux préparatoires suggest a legislative intent to preclude compensation.  
		Moreover, liability under the French doctrine of égalité differs in another fundamental respect from the legal relationship that this paper seeks to explain.  Specifically, establishing a right to compensation under the égalité doctrine does not involve showing that the State’s conduct was wrongful or that it violated rights protected by a superior order of law, but rather demonstrating that compensation is required to avoid the imposition of a special and onerous burden on the plaintiff.  The reason for compensation under the doctrine of égalité is therefore completely different from the reason underlying State liability in the European Union.
		Those authors who argue that EU Member State liability is a form of administrative tort liability tend to characterize the acts of national legislatures as being the equivalent of administrative acts, for the purposes of Community law.  For example, Green and Barav write that “the Community may be characterized as a complex legislative machinery the executive branch of which are the Member States.”  What these authors are getting at, of course, is the important role that national authorities play in implementing Community law, particularly through the transposition of directives into national legislation and the application of directly effective Community law by national courts.  
		However, one should not infer, from the fact that the effectiveness of the Community legal system depends on the cooperation of national authorities, a general conception of the Community which reduces the Member States to the equivalent of an executive branch.  The better view is that, except possibly when they are implementing Community law, the legislative, executive and judicial organs of the Member States exercise autonomous power.  Although the Member States have accepted restrictions on their freedom of action — constraints which the Court of Justice has described as limitations of their sovereignty — this does not transform all of their acts into administrative acts.  Therefore, it remains a distinction between EU Member State liability and administrative tort liability that the potential wrongdoers include not only the administrative organs of the State but also the legislative and judicial.
		Whereas whole-State liability is all but non-existent in domestic law, it is a familiar principle of international law, which thus provides a third possible optic in which to view EU Member State liability.  In fact, the Court in Brasserie justified its holding by reference to international law rather than the law of any of the Member States.  However, classical international law does not regard individuals as its subjects and, as a result, it provides a remedy not for individuals but for States.  When a breach of international law causes harm to individuals, it is the State whose nationals were injured, and not the individuals themselves, that is treated as the wronged party.  Thus, the identity of the payee is different under the international law of State responsibility than in the scheme of EU Member State liability.
		The fact that none of these traditional ways of looking at liability succeeds in describing EU Member State liability does not mean that these models cannot be useful as sources of theoretical inspiration.  It may well be that the same or a similar theory of justice underlies different forms of liability.  At the same time, if a model of liability can be identified that is more congruent with the phenomenon of EU Member State liability, then it seems more likely that the two kinds of liability draw on the same theory of justice.  In the following section, I argue that the most promising way of conceptualizing EU Member State liability is as a species of constitutional tort liability.
C.  EU Member State Liability as Constitutional Tort Liability 
		Member State liability within the EU presents the essential formal characteristics of what may be described as a constitutional tort.   Since a constitution, like Community law, typically binds all State organs, including the legislature and judiciary, and grants rights to individuals against the State, it is not difficult to imagine a system of liability in which the violation of constitutional rights by any State organ could result in State liability for the harm caused.  A scheme of constitutional tort liability of this kind would be on all fours with Francovich liability, matching it in each of its essential elements: the reason for liability would be the causation of harm by the State resulting from a breach of individual rights contained in a superior legal order; the acts of any State organ could potentially attract liability; and the liability would give rise to an individual cause of action in damages.  If it qualified liability by imposing an additional requirement of fault, it would match the system of EU Member State liability as modified by Brasserie du Pêcheur. 
		In fact, there are very few legal systems in which constitutional torts of this kind are recognized.  While all of the Member States of the EU recognize liability for unconstitutional administrative action, I have found none that recognize liability for unconstitutional legislative or judicial conduct.  
		In the case of legislation, it is settled law in most countries that there is no liability for unconstitutional legislation.  In Germany, for example, the Bundesgerichtshof (Federal Court of Justice) held in 1987 that there was no State liability for unconstitutional legislation.  In France, the principle of égalité devant les charges publiques is the only exception to an otherwise absolute rule of legislative immunity.  In France and the Netherlands, there is not even a judicial mechanism for challenging the constitutionality of a promulgated law.
		Even in the United States and Canada, where constitutionalism is supposedly practised with great devotion, constitutional tort liability seems to be very limited, and liability for unconstitutional legislation is all but excluded.  In Canada, a recent decision of the Supreme Court suggests (albeit with some equivocation) that the adoption of legislation in violation of constitutional rights does not give rise to cause of action for damages.   In the United States, the obstacle to State liability comes from the fact that a suit for damages based on a constitutional violation is seen as akin to ordinary tort liability.  Accordingly, the traditional immunity of governments and officials persists, except where it has been waived by statute or limited by the application of constitutional principles.  In the result, officials can be found liable in some situations, but the state and federal governments are largely immune. 
		A few examples of a true constitutional tort decision can be found in the case law of the Judicial Committee of the Privy Council.  For instance, in Jaundoo, a 1971 case from Guyana, the Privy Council accepted the claim of a landowner whose property had been expropriated without compensation, contrary to her fundamental rights under the Guyanese Constitution.  The Privy Council observed that pursuant to article 19 of the Constitution, a person whose constitutional rights have been contravened has a right to apply to the courts for “redress.”  Their Lordships held that such “redress” could include monetary damages, and remitted the case to the High Court for an assessment of damages.
		Jaundoo was a case involving the executive branch of government, but the Privy Council had no hesitation in applying the same principles to unconstitutional conduct by the judicial branch, in a subsequent case from Trinidad and Tobago.  The Maharaj case involved a judicial contempt order made in violation of the constitutionally protected right not to be deprived of liberty except by due process of law.  The contemnor brought an action against the Crown, under a remedial provision of the Constitution of Trinidad and Tobago essentially the same as that which had been relied on in Jaundoo.  The Privy Council held the Crown liable, reasoning that the judge’s immunity from civil liability did not preclude the liability of the State as a matter of public law.  As Lord Diplock explained,
... no change is involved in the rule that a judge cannot be made personally liable for what he has done when acting or purporting to act in a judicial capacity.  The claim for redress under s. 6(1) for what has been done by a judge is a claim against the state for what has been done in the exercise of the judicial power of the state.  This is not vicarious liability: it is a liability of the state itself.  It is not a liability in tort at all: it is a liability in the public law of the state, not of the judge himself, which has been newly created by s. 6(1) and (2) of the Constitution.
		Another place where one finds something resembling a constitutional tort is the law of the European Convention on Human Rights.  The Convention is clearly designed to confer rights on individuals, and, since the international law considers itself superior to the domestic legal order, those rights emanate from a superior order of law.  By the same token, liability can attach to the acts of any organ of government, including the legislative and judicial branches.  Moreover, the Convention deviates from the statism of classical international law by providing individuals with standing before the European Court of Human Rights, a body which has the power to grant “just satisfaction,” including monetary compensation, directly to the injured party.  Thus, in its three essential elements — payor, payee and reason for the payment — compensation under the European Convention seems conceptually similar to constitutional tort liability.
		Although the examples of true constitutional tort systems are few, there is an abundant literature, primarily American, on the subject of constitutional torts.  Given the conceptual identity between the two kinds of liability, one might think that the constitutional torts literature would provide a promising starting-point for my search for a theory of justice in support of EU Member State liability.  Part III of the paper will in effect be an experimental test of this hypothesis.  The aim will be to examine the main theories of justice which are advanced in support of constitutional tort liability, with a view to assessing their appropriateness as theories of State liability in the European Union. 
III.  Theories of Justice and State Liability

		The question to be studied in this part of the paper is whether, in light of the apparent conceptual identity between State liability in the European Union and constitutional tort liability, the theories developed to explain constitutional torts can provide a convincing account of Member State liability in the European Union.  Because my goal is to discover the possible justice underlying the legal relationship described in Part II, this part of the paper will be more normative than the preceding parts.  Nevertheless, as I have pointed out, this is not an unconstrained normative exercise.  The suitability of a particular theory will depend in part on the extent to which it adequately describes the legal phenomenon.  A good theory, in other words, will be capable of accounting for the essential features of the positive law of State liability in the EU.
		I will examine the two theories most frequently advanced as a basis for constitutional tort liability, one of them an economic theory based on the notion of externalities and the other a non-instrumental theory based on corrective justice.
A.  An Economic Theory: Externalities 
		An externalities theory of EU Member State liability suggests that the purpose of liability is to ensure that public decision-makers in each Member State internalize the costs which their decisions may impose on interests located in other Member States.  In this way, the temptation of national authorities to make decisions which benefit their own national economies at the expense of other Member States will be kept in check, and only those measures which are, on balance, beneficial for the Union as a whole will be undertaken.
		The externalities theory is an instrumental and, more specifically, an economic theory.  It is instrumental because liability serves an ulterior purpose, and it is an economic theory because this purpose is social-welfare maximization.  Before examining the theory in more detail, it is useful to explain the sense in which an economic theory can claim to be a theory of justice.
1.  Efficiency as Justice 
		In law, economic analysis has both descriptive and prescriptive aspirations; it aspires to provide both a framework for analyzing the consequences of legal rules and a solution to problems of legal choice.  With respect to its descriptive aspect, economic analysis often starts from the assumption that people are motivated by rational self-interest, and proceeds to ask what impact particular rules might have on the activities that are undertaken (allocative impact) and on the welfare of different segments of the population (distributive impact).  As for the prescriptive aspect of law and economics, the desirability, or justness, of a rule depends on its efficiency.  Here there are a number of possible approaches.  One approach is to measure a proposed legal rule against a standard of Pareto-efficiency, which means that a proposed legal rule will be considered superior to an existing rule if it improves the subjective welfare of at least one member of the community without making any other member of the community subjectively worse off.  The pure Paretian approach is inapplicable in the real world, since virtually every legal rule makes operates to the disadvantage of at least some people.  As a result, when legal economists speak of efficiency, they are usually referring to a more lenient standard, such as Kaldor-Hicks efficiency, which considers a measure to be superior to the status quo if those whose welfare is improved by the measure obtain sufficient benefit from it that they could perfectly compensate all those whose welfare is reduced by it.  
		The first applications of economic theory to legal problems were generally confined to fields where the justification for legislative or judicial intervention could reasonably be expected to be found in economics: Trebilcock cites antitrust, tax policy, and public utility regulation as key examples of these traditional applications.  Later, groundbreaking work by Coase and Calabresi extended economic analysis to private law fields such as tort and property law, where they faced competition from more traditional, moral theories, such as corrective justice.  With the writings of Becker, Posner and others, law and economics has penetrated even further into areas traditionally thought to be non-economic, such as criminal law, family law, and human rights law.  Today, there is scarcely a field of law that has not been examined from the perspective of law and economics.
		The broad application of law and economics has not been uncontroversial.  Attacking the validity of the factual assumptions underlying legal economic theory, critics argue that people cannot be counted on to act in their rational self-interest, because they do not have sufficient information, are motivated by concerns which go beyond their self-interest, and are in any event not perfectly rational.  These objections are well-taken up to a point, but they rest in part on an overstatement of the goals of legal economics.  Most economists do not claim that an analysis based on an assumption of rational self-interested behavior can completely account for all human conduct, but simply that it can help to predict, at least with partial success, the impact that legal rules might have on human behavior.  For example, the fact that possible tortfeasors are not motivated solely by a desire to avoid liability does not change the fact that many of them may take greater care in response to a more unforgiving liability regime.  
		The critics of law and economics also argue that it is normatively impoverished, and that aggregate welfare maximization is not a substitute for justice.  Some fields, such as criminal, family and constitutional law, are thought to be inherently non-economic, and the values reflected in these areas ought not to be reduced to mere factors in a utilitarian calculus.  For example, it might be feared that applying a utilitarian analysis to the protection of fundamental constitutional rights could result in the rights of a small minority being traded away to secure benefits to the majority.  Certainly under the Kaldor-Hicks model one could imagine a relatively large cost (e.g., violation of fundamental rights) imposed on a small minority being outweighed by the aggregate of small gains (e.g., administrative efficiency) to the majority.  
		In answer to this objection, one might point out that economic analysis does not inevitably lead to this kind of result.  It is open to a legal economist to reason that an individual attaches such great utility to his or her fundamental rights that under no realistic circumstances could the disutility arising from their violation be outweighed by benefits to the majority, except possibly in extremely rare circumstances where the fundamental rights of some individuals must be restricted in order to prevent some catastrophic harm that would jeopardize the fundamental rights of all.
		Clearly, however, one would need some theory to decide what utility to attach to various interests asserted as fundamental.  Theories of natural rights, for example, might be invoked at this stage.  Some utilitarian absolutists would reject the notion that utility can be assessed objectively, and would argue that the relevant value is each person's subjective assessment of the utility or disutility to him or her of a particular measure.  It may be, however, that some objective measurement of utility cannot be avoided.  To use a stark illustration, even a utilitarian analysis must recognize that a pedophile's subjective utility from his conduct has a value that is intrinsically different from (i.e., less than) the victim's utility from being left alone.  To rank these two utilities, there needs to be an external or objective value system, i.e., a theory of rights.
		In any event, economic efficiency does not pretend to be an exclusive theory of justice.  It does not preclude, for example, distributive justice as a criterion for the allocation of wealth, although it argues that certain legal rules, such as liability rules, are best understood as furthering the goal of maximizing aggregate welfare rather than assuring an equitable distribution of resources.  It would be wrong, therefore, to equate economic analysis with absolutist utilitarianism.  In its descriptive aspect, economic analysis claims to provide a partial explanation for human conduct and a means of predicting the behavioral impact of legal rules.  On the prescriptive side, legal economics provides one possible structure for assessing the desirability of legal rules by reference to their aggregate impact on the welfare of the members of the community.  The fact that other theories of justice also exist, or that the assessment of utility may require reference to an external value system, does not diminish the usefulness of the economic method of analysis.  
		It is in this spirit that I now turn to an examination of the externalities theory of liability.
2.  Basic Argument 
		A particular course of action should be undertaken if and only if it increases aggregate welfare, that is, if the benefits society obtains (“social benefits”) as a result of the activity exceed the costs the activity imposes on society (“social costs”).  However, when a rational, self-interested actor decides whether to undertake a particular course of action, she is unlikely to base her decision on the benefits and costs of the activity for society as a whole.  Rather, her inclination will be to consider only one component of the total social costs and benefits of the activity — namely, those costs and benefits which accrue to her (“private costs and benefits”) — and to ignore the costs and benefits which the activity will occasion for the rest of society (“external costs and benefits”).  She will undertake a proposed activity when it is privately profitable, that is, when the private benefits exceed the private costs, regardless of whether the activity produces a positive or negative net social benefit.  In fact, it is almost certain that some activities which produce a negative net social benefit will be privately profitable, for example, when the benefits of a proposed activity accrue primarily to the private actor while most of the costs are incurred by others.
		For an easy illustration of this phenomenon, suppose that a business person is deciding whether to build a new manufacturing plant.  From society’s standpoint, the plant should be built if the total social benefits from the plant exceed the total costs.  The social benefits of the plant would include the business person’s private benefits (the present value of her expected operating profits from the plant) plus any external benefits to the broader community, such as job creation.  The social costs of the plant would be composed of private costs to the business person (her cost of building the plant), plus any costs which the plant will impose on the rest of the community, such as damage to the environment.  However, our business person is unlikely to consider all of these benefits and costs.  Her rational, self-interested inclination would be to build the plant if the present value of her expected profits from the plant exceeds the cost of building the plant — in other words, if the private benefits of the plant exceed the private costs.  She is not likely to consider either the external cost to the community of the pollution caused by her operations, or the external benefit to the community of the employment the plant will create.  As a result, she may decide to build the plant even if the community as a whole might be better off without it.
		Tort law claims to solve the problem of externalities by requiring private actors to compensate those injured by their actions under certain circumstances.  For example, under Learned Hand’s well-known formulation of the negligence standard, an injurer must pay compensation if the cost of avoiding the harm would have been less than the expected value of the potential harm (i.e., the probability of the harm multiplied by the magnitude of the harm).  Because she may be liable for the external costs of her activities, our business person will no longer simply disregard those costs.  In the first place, she will take cost-effective preventive measures, that is, measures which, by diminishing the risk of injury, reduce expected injury costs by an amount greater than the cost of the measure.  As well, when deciding whether to build the new plant at all, she will do so if and only if her net private benefit from the plant exceeds the cost of the requisite preventive measures.
		Alternatively, under a strict liability standard, a defendant must pay compensation for the actual harm caused by her actions, regardless of whether the harm could have been cheaply avoided.  Under this standard, private actors will take the same cost-effective preventive measures as under a negligence regime.  However, their initial decision whether to engage in the activity at all will be different.  Our business person, operating under a rule of strict liability, would build her new plant if and only if her private benefits exceeded the costs of the preventive measures plus the expected value of any compensation that would have to be paid in respect of unprevented injuries. 
		It can be seen that tort liability, by internalizing all or a portion of the external costs of decisions, produces two sorts of social gains.  First, there is the gain from the taking of cost-effective preventive measures — the amount by which the cost of the preventive measures is exceeded by the reduction in expected injury costs.  Second, there is a gain from the non-occurrence of some socially detrimental conduct which is made privately unprofitable by the fact that the private actor will expect to incur additional costs in connection with preventive measures, compensation for injury, or both.
		A number of objections can be raised against the externalities theory.  First, since tort law internalizes all or a portion of the external costs and none of the external benefits of activities, it introduces a bias into decision-making, and one cannot know whether the net effect of this bias will be to increase or decrease aggregate welfare.  Second, tort law may not maximize social welfare since it leaves the computation of utility at least partly to the subjective assessment of the potential tortfeasor. 
		To understand the first objection, recall that by internalizing some or all of the external costs of activities, tort law makes activities more costly to the person who proposes to undertake them.  This is true of all activities, whether they are socially beneficial or socially detrimental.  Thus, tort liability does not eliminate only socially detrimental activities; in fact, it eliminates all activities for which the net private benefit is not sufficient to cover the external costs (or the prevention costs, in a negligence regime) of the activity.  Some of these activities would have been socially detrimental, but others would have been socially beneficial. 
		Imagine, for example, an activity that produces private benefits that slightly exceed the private costs.  Suppose that this activity also produces significant external costs, but much higher external benefits.  In the absence of a tort liability system, this activity would be undertaken because it is privately profitable.  However, under a rule of strict liability, a private actor would be required to pay a portion of the external costs of the activity, namely, the cost of preventive measures plus compensation for any unprevented injury, while not being permitted to reap the external benefits.  If these additional costs are sufficiently high, the activity will not be undertaken even though it is socially beneficial.  Substituting a negligence rule for a rule of strict liability reduces the magnitude of the problem, but does not eliminate it.  In a negligence-based tort regime, a private actor would still be required to pay a portion of the external costs of the activity, specifically, the cost of preventive measures, while being unable to appropriate any portion of the external benefits.  If the preventive measures are sufficiently costly, the activity will not be undertaken even though it is socially beneficial.
		This problem would not arise if there were some mechanism for internalizing the external benefits of an activity, so as to offset the bias introduced by tort liability.  In the absence of such a mechanism, however, the tort liability system is not unambiguously beneficial.  The cost of tort liability is the value of socially beneficial activities which are forgone because the obligation to take preventive measures or pay compensation renders them privately unprofitable.  There is no way of knowing, a priori, whether the benefits forgone will be less or greater than the sum of the gains from the taking of cost-effective precautions and the elimination of some socially detrimental conduct.  I conclude that an externalities theory is incapable of telling us whether tort liability is welfare-enhancing or welfare-impairing. 
		Now for the second objection.  Recall that the normative acceptability of an economic model depends on its incorporation of an objective value system which allows us to compare the injurer’s interest in performing the activity to the impact of the activity on other people.  Tort litigation subjects the latter part of the utility computation to judicial, and therefore presumably objective, assessment.  In deciding whether to act, potential tortfeasors will use this objective measure of the disutility imposed on other people by the activity.  However, there is no similar constraint on the potential tortfeasor’s assessment of her own utility from pursuing the activity.  In practical terms, one could imagine socially detrimental conduct being undertaken by a person who attached an excessive value to the benefit she received from it.
		Both of these objections suggest that it is unclear whether tort liability is welfare-enhancing.  Since, under an economic analysis, the justness of tort liability rests on the claim that it increases aggregate welfare, the failure of an externalities theory to demonstrate that aggregate welfare is increased by the liability rule is a major weakness of the theory.  
3.  Application to State Liability Generally 
		In addition to the general external objections to economic analysis and the internal weaknesses of externalities theory, there are two additional difficulties which arise when the theory is applied to governmental liability.  The first is a theoretical hurdle, namely that the government is not analogous to a self-interested private actor.  It turns out that this problem has a solution, and I conclude that an externalities theory is capable of explaining State liability for infringements of fundamental rights and systematically neglected interests.  The second, more practical problem is that liability rules may not actually influence the behavior of governments. 
	(a) Government Is a Social-Welfare-Maximizer
		The Objection.  The externalities argument is based on the idea of a rational, self-interested, private decision-maker who, in the normal course of events, would not be expected to take into account the effects of her actions on society at large.  It is not immediately obvious that the government can be assimilated to such a person.  Unlike private actors, government is not expected to disregard the social benefits and costs of its actions.    On the contrary, enhancing the well-being of the community is an essential duty of government.
		There are, of course, imperfections in governmental decision-making.  Governmental decision-makers may well be influenced by private motives, such as protecting their departmental budgets, job security, professional prestige, and so on.  Cohen summarizes the problem as follows:
While in a perfect world the bureaucracy may take into account all the social costs of its activity, reality may be quite different.  This may be because these costs do not come out of the bureaucratic budget, or because the bureaucrat calculates costs not in terms of willingness to pay to avoid the state activity, but in terms of “political costs.”  In that case the costs may not be related to the preferences of the members of the relevant community.   
As well, even when they are motivated to maximize social utility, government is forced by practical realities to act upon imperfect information.
	Nonetheless, I am not persuaded that we should assume that the generalization which applies to private activity (i.e., that private actors will generally disregard the social costs of their activity) can be applied with equal success to the government.  There is a difference between imperfect pursuit of social welfare-maximization, which government engages in, and the pursuit of private interest, which private actors engage in.  If we believe that governments routinely adopt policies without regard to the social costs of those policies, it is a serious problem which can only be remedied through structural reforms, such as increased transparency and accountability, and not through such a clumsy device as State liability.
	Recall, moreover, that the application of liability rules requires the judiciary to assess the external costs of the alleged tortfeasor’s conduct.  This task is difficult enough when what is being evaluated is private conduct, affecting a limited set of external interests, but it verges on the impossible when the impugned conduct is a governmental policy.  The judiciary is poorly equipped, as an institution, to make assessments of the net social cost or benefit of governmental decisions.  Compared to the legislative and executive organs of government, the courts have less flexibility, less access to technical expertise, and less capacity to investigate the social and economic impact of various policies.  It is true that the courts have evolved somewhat in North America, and that the traditional bi-polar, fact-based form of adjudication is increasingly giving way to multi-polar litigation and an inquiry into social facts and policy.  To assist in their new role, U.S. and Canadian courts have developed tools for obtaining social science data and policy advice, such as the appointment of amici curiae and the use of Brandeis briefs.  However, this trend remains a peculiarly North American phenomenon, and is regarded skeptically in many other countries.  In any event,  even in the U.S. and Canada, courts are unlikely ever to be able to do the job of legislatures and executives, i.e., maximize social welfare, as well as those two branches, and engaging in this task may detract from their effectiveness as the adjudicative branch of government. 
 	The Response.  There may be exceptions to the general rule that government adequately considers the social impact of its policies.  If some kinds of social cost are systematically disregarded or undervalued by government, then a liability rule targeted at these overlooked costs might serve a useful purpose. 
 		This argument is related to the utilitarian conception of fundamental rights, developed by Sumner in his book, The Moral Foundation of Rights. Sumner describes rights as rules which, although they appear at first glance to constrain legislatures and executive officials’ ability to promote some desired goal (such as maximizing aggregate welfare), actually make it more likely that the goal will ultimately be achieved because they prevent certain predictable errors by the decision-maker.  Sumner illustrates his point with an example taken from the context of medical experimentation.  He asks us to consider a hospital ethics committee which sets out to ensure that experiments are only conducted if the costs are outweighed by the benefits, but which suffers from deficiencies in the decision-making structure which create a systemic bias in favor of experimentation.  For this reason, the committee pre-commits to a rule of informed consent “to introduce a counterbalancing bias in favour of the subjects” of experimentation and improve the likelihood that the experiments will be authorized if they produce a net benefit, and rejected if they produce a net cost.  What applies to the hospital ethics committee, says Sumner, applies to government in general.  A government interested in the pursuit of a goal (such as welfare-maximization) might pre-commit to rights, which will sometimes prevent it from doing what might appear, at the particular moment,  to be welfare-maximizing, in order to counterbalance some bias in the public decision-making system and increase the chance that the ultimate decision will actually be welfare-maximizing.
 		Sumner does not elaborate on the kinds of interests that may be systematically undervalued, but perhaps they include the interests of disempowered minorities.  Every governmental policy has winners and losers, and the fact that a particular group is disadvantaged by a governmental measure does not mean that their interests were not taken into account, or that their disutility from the measure was not factored into the government’s social-welfare-maximization determination.  However, there may be particular groups whose interests are systematically overlooked because they lack political power.  Recall the hint dropped by Justice Stone in a footnote to his opinion in Carolene Products, that the presumption that government acts in the public interest may not be justified where a statute is “directed at particular religious,  or national, or racial minorities,” since “prejudice against discrete and insular minorities may be a special condition, which tends seriously to curtail the operation of those political processes ordinarily to be relied upon to protect minorities, and which may call for a correspondingly more searching judicial inquiry.”
		Another possibility is that government systematically undervalues certain individual rights, such as freedom of expression and freedom of religion.  Under this theory, the purpose of constitutional protection may be to lend additional weight to interests which might otherwise be undervalued by government or by a popular majority.  Posner believed, for example, that criminal law protections might be undervalued by law enforcement officials, who might systematically grant too much weight to the goals of law enforcement and insufficient weight to the rights of suspects.
		The recognition that government systematically undervalues certain interests leads, in Sumner’s analysis, to the conclusion that the entrenchment of these interests in the form of rights increases the likelihood that governmental decisions will turn out to be welfare-maximizing.  It also suggests  that a liability rule may be appropriate, to ensure that these interests are properly internalized.  The rule would be a form of strict liability for a class of systematically overlooked social costs.
		Interestingly, governmental liability targeted at these systematically undervalued interests seems to escape the main objections to the basic version of the externalities argument.  For example, recall that in the sphere of private activity, tort liability introduced a bias by internalizing the social costs but not the social benefits of action.  In the context of governmental activity, this bias would not arise.  Our baseline assumption is that governments generally consider the social benefits (as well as the social costs) of their activities, even in the absence of legal rules impacting directly on the public treasury.  Governmental liability rule in our model would be targeted at a category of social costs which are believed to be systematically undervalued by government.  Internalizing these neglected costs does not introduce a bias into governmental decision-making — it corrects one.
		The other objection to the basic externalities theory related to the fact that the decision whether to act was left to the private actor, who was thought to be less objective in her assessment of utility than, for example, a judge.  In the context of governmental action, this weakness is transformed into an advantage.  For reasons which have already been mentioned, governmental actors are better placed than judges to make assessments of utility.  Moreover, as a general rule, we do not question the objectivity of governments in the same way that we doubt the objectivity of private preferences.  It is entirely appropriate, therefore, to leave the assessment of social utility generally to the government, while creating a targeted exception for particular costs that would not otherwise be properly internalized by the government.
(b) Liability Does Not Influence Governmental Conduct
		Despite its theoretical attractiveness, a more practical objection may be raised against the application of externalities theory to governmental conduct, namely that governments are not actually influenced by liability rules.  
	As I explained, above, critics of legal economics argue that it is normatively inappropriate to place a finite value on fundamental rights.  However, even if one does not object, in principle, to an economic approach to rights, the concern that the State would disregard rights if it were permitted to pay compensation instead is heightened by the fact that the State has very deep pockets.  A State which can disregard rights by paying the victim, and which has at the same time the power to print money or raise money by taxation, may not be practically constrained against the infringement of rights.
	Cohen highlights two reasons why damages awards are likely to have negligible impact on governmental conduct.  His analysis is based on the Canadian experience, but the same phenomenon is likely to be observed elsewhere.  First, damages awards are very small in proportion to a department’s budget.  In Canada, between 1983 and 1985, there was not a single government department where aggregate damages claims exceeded 0.2 per cent (1/500) of the departmental budget.
	Second, governmental actors are not subject to the same market forces that constrain private actors.  Because of their compensation structures and the discipline imposed by capital markets, corporate managers can be expected to seek to maximize their profits by achieving an optimal balance between internal profits and accident costs.  Governmental departments are not subject to anything approaching these constraints.  Governmental managers’ compensation is all but unaffected by damages awards.  As well, damages awards are not normally paid out of the departmental budget, but out of the general Treasury.  Even if they were allocated to particular departments, the most likely result would be an increased budget allocation to ensure that existing programs would not have to be sacrificed.  Ultimately, the losses would be borne by the taxpayers, whose ability to scrutinize the efficiency of government is even more limited than the ability of shareholders to monitor the performance of corporate managers.
	Moreover, the argument that liability does not affect the conduct of government departments or legislators applies with even greater force to judicial conduct.  In light of the principle of judicial independence (including institutional financial independence), common to many countries, it is difficult to see in what way a damages award against a State could be made to influence the conduct of the judiciary.
	Despite these practical difficulties, however, there remains at least a plausible theoretical argument that the internalization of overlooked social costs is capable of justifying targeted governmental liability.
4.  Application to EU Member State Liability  
		Here is what an externalities theory of EU Member State liability would look like.  The argument would begin with the observation that the interests of people located outside a particular Member State, like the interests of discrete and insular minorities within the State, are likely to be overlooked by national governments.  While we assume, for example, that an Agriculture Ministry official in Rome will consider the effect of a proposed measure on farmers and others in all parts of Italy, and will weigh the disadvantages to some against the benefits to others, the official will not find it intuitive to consider the impact of the policy on farmers or consumers in, say, Denmark.  Certainly, the political constraints which cause public officials to act in the interest of the domestic electorate do not similarly constrain officials to consider the interests of those who are not part of the national polity.   EU Member State liability internalizes the costs of domestic policies for people in other Member States; it forces the Italian official to consider the external costs of a proposed measure as if they were costs incurred internally.
		At first glance, this theory appears to be an attractive explanation of EU Member State liability.  Indeed, the protection of market freedoms within the EU provides a partial answer to the practical problem posed in Cohen’s analysis by the lack of market constraints on government.  In the European Union, the free movement of capital and persons may make it easier for European investors and taxpayers to assess the relative performance of their government and, if necessary, to vote with their feet. 
		We might also think that this theory is normatively attractive as applied to the European Union, since it reflects an ideal of European solidarity.  The externalities theory of EU Member State liability treats the European Union as a single unit for the purpose of welfare-maximization.  Liability promotes decisions that maximize the aggregate welfare of the entire Union, and prevents decisions that increase the welfare of one country while imposing greater costs on another. 
		However, there are some important problems with the externalities theory of EU Member State liability.  For example, a practical difficulty identified by Harlow is that the prospects of deterrence through liability are reduced by the convoluted and deliberately ambiguous nature of much Community law.  
		There is also a more fundamental problem.  It may be wishful thinking to assume that Community law creates an obligation on the part of Member States to consider the costs of their policies on interests situated in other Member States.  There is in fact no such duty.  Community law does not prevent a national governmental official from taking action that may prove detrimental to the interests of people in other parts of the EU, so long as the rules imposed by the Community are respected.  For example, a government might find it beneficial, from the perspective of its own citizens, to adopt an indistinctly applicable and non-discriminatory marketing restriction, even if the restriction has a detrimental impact on producers in other EU Member States.  Community law presents no obstacle to such measures, and imposes no general requirement to consider the interests of people in other Member States. 
		If such a requirement did exist, then liability would not be conditioned on a breach of a specific provision of Community law.  Nor would it be necessary for the injured party to show that the provision was intended to confer rights on individuals.  Instead, there would be a right to compensation whenever a national policy had an adverse impact on anyone in another Member State.  Since the externalities theory fails to explain one of the essential features of EU Member State liability — the requirement of a breach of individual rights conferred by EU law — the search for a theory of State liability in the European Union must go on.
B.  A Non-Instrumental Theory: Corrective Justice 
		The other main theory of justice encountered in the literature on constitutional tort liability is the non-instrumental theory of corrective justice.  To what extent does this theory help us to explain the phenomenon of Member State liability in the European Union?
		Corrective justice explains the liability system as the law’s articulation of the moral requirement that wrongdoers make good the losses caused by their wrongdoing.  The wrongful causation of a loss creates a moral relationship between the victim and the wrongdoer which is mirrored by the legal relationship between plaintiff and defendant and which, without reference to any goals extrinsic to this moral relationship, calls for compensation.  In his explanation of negligence law, Weinrib describes the sense in which corrective justice is non-instrumental:
[T]he central elements of negligence law are regarded not as indirectly furthering some independently identifiable combination of goals, but as categories that mark an immediate normative connection between what the defendant has done and what the plaintiff has suffered.
In this way, tort law exhibits an inherent rationality which accounts simultaneously for the right of a person injured by wrongdoing to compensation by the wrongdoer, and the corresponding obligation of the wrongdoer to make good the losses caused by his wrongdoing, without reference to an external purpose.  
1.  Basic Argument 
		It was Aristotle who first described as “corrective justice” the notion that wrongful infliction of injury provided a basis for compensation distinct from relative need or merit (“distributive justice”).  In his Nicomachean Ethics, he wrote:
But the other [form of justice] is corrective, and its province is all transactions, as well voluntary as involuntary. ... [I]f the distribution be of common property, it will be made according to the proportion which the original contributions bear to each other; ... but the just which exists in transactions is something equal ... for it matters not whether a good man has robbed a bad man, or a bad man a good man, nor whether a good or bad man has committed adultery; the law looks to the difference of the hurt alone, and treats the persons, if one commits and the other suffers injury, as equal, and also if one has done and the other suffered hurt.  So that the judge endeavours to make this unjust, which is unequal, equal...
		Though Aristotle was the first to articulate the principle of corrective justice, a fuller explanation of the underlying normative principle would draw upon the Kantian concept of the right as the “totality of conditions under which the actions of one can be united with the freedom of others in accordance with a universal law,” or, in other words, the conditions under which persons interact on a basis of freedom and equality.  When a person fails to observe these conditions in her relations with other people, a disequilibrium is created that should be redressed by her payment of compensation to the injured party or parties.  The right of the victim to compensation, and the corresponding obligation of the wrongdoer to make good the loss, are independent of the relative wealth or merit of the wrongdoer and injured party; instead the right and obligation are deduced from the equal status of both parties as free and equal moral agents.
		When expressed in a doctrinal relationship, corrective justice presents itself as a liability rule in which both wrongdoing and causation are essential.  It is wrongdoing which singles out the defendant’s conduct from the rest of the chain of events which caused the plaintiff’s injury.  Thus, the requirement of wrongdoing explains why, when Able is injured by a car driven negligently by Baker, who bought the car from Charlie, it is Baker alone who is liable even though Baker’s driving and Charlie’s sale of the car to Baker were both “but-for” causes of Able’s injury.  As for the requirement of causation of harm, it is what singles out Able from all of the other people whom Baker endangered by his careless driving, as one to whom Baker owes a monetary obligation.  Thus, the simultaneous existence of wrongdoing and causation explains why the defendant is required to pay damages to the plaintiff, and why the plaintiff is entitled to receive them from the defendant.
		The symmetry of the litigation form, and the idea of private law as regulating the interaction of free and equal persons in society, make corrective justice an attractive theory of private law torts.  In fact, the principle is reflected in both the common and civil law systems of private law.  In English common law, for example, it is trite that the central conditions for liability are wrongdoing (the breach of a duty of care) and the causation of injury.  To take a civilian example, Article 1382 of the French Civil Code clearly establishes wrongful causation of injury as the basic principle of civil delictual responsibility when it declares: “Tout fait quelconque de l’homme qui cause à autrui un dommage oblige celui par la faute duquel il est arrivé à le réparer.”
		However, it is not immediately obvious that a theory based on the freedom and equality of the plaintiff and defendant can explain litigation against the State.  Indeed, the basis of corrective justice in the interaction between persons is highlighted by the fact that Aristotle titled his essay on corrective justice, “Of Justice in Transactions Between Man and Man.”  In the following paragraphs, I will explore the ways in which corrective justice might nonetheless be thought to inform a rule of State liability.
2.  Application to State Liability Generally 
		One might argue that corrective justice can be applied between citizen and State, despite its origins in the formal equality of individuals, if the State is considered an ordinary legal person.  In France, for example, where corrective justice seems to be the basis for the civil law of fault-based responsibility, it was at one time argued that the liability of the Administration could be explained by its legal personality.  In his Précis de droit administratif, Maurice Hauriou wrote, 
... les entrepreneurs légaux de la gestion administrative des affaires du public sont les personnes morales administratives c’est-à-dire les administrations publiques prises sous leur aspect de personnes morales ; de là vient que la gestion administrative entraîne à la charge de ces personnes morales des responsabilités pécuniaires.
In fact, however, it is doubtful that the theoretical difficulties in applying corrective justice to litigation against the State can be overcome simply by asserting the legal personhood of the State. As Duguit argued in response to Hauriou, the personhood of the State is artificial.  The State does not have an inherent claim to be part of the community of free and equal persons. 
		Nevertheless, the belief persists that State liability can be justified on the basis of corrective justice.  The most complete account in this regard is that of Jeffries.  I reproduce his argument here in some length to show how closely it mirrors the basic articulation of corrective justice as applied to the private law of torts:
Persons must be treated as ends in themselves, not merely as objects or instruments of government policy. ... Therefore, relations between the government and individuals are subject to the concept of right.  The rights recognized under the Constitution state conditions under which the actions of the government can be united with the freedom of the individual. ...
In this conception, government wrongdoing [that] causes individual injury should be redressed by the award of damages, without regard to the antecedent (or resulting) distribution of wealth.
...
Both causation and wrongdoing are essential to this conception. ... Defendant's wrongdoing may risk harm to many persons.  Not everyone endangered by wrongdoing, however, may demand damages.  Causation singles out a particular plaintiff — one who has been injured by the defendant's act — to make a claim on the defendant's resources. ...  Wrongdoing is also required.  Just as causation identifies why this plaintiff is entitled to recover, fault identifies why this defendant is obligated to pay.  Causation itself is inadequate to this task, for there are, in the nature of things, many causes of any injury. ... The showing of fault fills this gap.  It identifies the causal antecedent that will be regarded as legally significant. It singles out a particular defendant — one whose wrongful act has caused the plaintiff's injury — to make good the plaintiff's loss.
...
More simply, fault supplies the moral dimension to the causal relationship.  While causation traces a physical connection between doer and sufferer, it provides in itself no moral basis for coercing compensation.
 		The notion of wrongdoing or fault bears close examination in Jeffries’ argument.  In Weinrib’s account of corrective justice in private law, wrongdoing had a sense that could be derived from the form of private law litigation, which presupposed the equal rights of both litigants. Wrongdoing was simply a failure by one of the parties to respect this equality.  It is not clear that the meaning of wrongdoing in public law can similarly be deduced from the form of litigation and, as a result, the transposition of corrective justice from private law to public law leaves us searching for an alternate theory of wrongdoing.  
		Unfortunately, a theory of State wrongdoing is not a matter on which there is likely to be unanimity.  For instance, Jeffries argues that wrongdoing requires fault beyond mere unconstitutionality, but in a response to Jeffries, Nahmod points out that a mere violation of a constitutional provision could equally be considered wrongdoing by the State.  The indeterminacy of the notion of wrongdoing is highlighted by Nahmod, who states that “wrongdoing is a social construct.”  From this observation it is but one small step to Prosser’s assertion that “there is no such thing as a theory of negligence, because negligence, like the Constitution, is what we make it.”
		To make sense of the concept of State wrongdoing, it is necessary to begin with a theory of the State.  Suppose, for example, that we take the State to be, as it was described by Rousseau and Locke in the contractarian tradition, a collective body formed by the union of free and equal individuals.  What distinguishes the State from other such unions is that, through law, it can compel obedience from its individual members.  Or, perhaps more precisely, a subset of the members within the State wields governmental power and can compel obedience from each of its members in the name of the community as a whole.  The Lockean view is that the members of a community agree to be bound because only in this way can they secure the conditions for the enjoyment of their natural rights.  Without the protection of law, people’s rights would be fragile.  However, another reason individuals agree to be united under government is that other shared objectives, such as the pursuit of distributive justice and the enhancement of aggregate welfare, can be achieved through collective action.  The restrictions imposed by government on absolute liberty are the solution to the “tragedy of the commons” and other dilemmas of unconstrained voluntary action. 
		An important feature of this theory of the State is that it does not portray the State as an end in itself, but as a means by which individuals pursue their greater security and happiness.  As Chevallier notes in his essay on the rule of law, this fact provides a normative basis for the legal duty of the State to respect the rights of the individual:
L’État de droit implique en effet une certaine conception des rapports entre l’individu et l’État, qui sous-tend tout l’édifice juridique : non seulement la puissance de l’État trouve ses limites dans les droits fondamentaux reconnus aux individus, ce qui crée ainsi la possibilité d’une «opposition au pouvoir fondée sur le droit», mais encore elle a pour finalité même, pour justification ultime la garantie de ces droits; l’État de droit repose en fin de compte sur l’affirmation de la primauté de l’individu dans l’organisation sociale et politique, ce qui entraîne à la fois l’instrumentalisation de l’État, dont le but est de servir les libertés, et la subjectivisation du droit ...	
To be precise, these rights are inherent to the relationship between the individual and the State because they represent the limits of what a free individual can be required to give up in exchange for the security and material benefits of collective action. Although it is not necessary for the purposes of my argument to describe the content of these rights, one place we might look for them is in the Kantian concept which underlay the basic version of corrective justice, namely an idea of fundamental rights as the set of conditions under which persons interact on a basis of freedom and equality.  
		Two principles of liability emerge from this conception of the State and of rights.  First, when a public official (or legislator, or judge) exercises her power in a manner that denies the freedom and equality of another person, Kantian corrective justice requires the payment of damages by the official to the affected individual.  This principle reflects Duguit’s characterization of the State as
... une société où existe la différenciation entre gouvernants et gouvernés, les premiers disposant de la plus grande force, les seconds devant obéir, mais les deux devant se soumettre à une règle supérieure, la règle de droit.
The fact that some individuals wield governmental power, while others do not, does not grant the former a licence to disregard the equal rights of the latter.
		The second principle, which is more pertinent to the issue of State liability, is that where the community, through the acts of its officials (or legislators, or judges) has violated the fundamental rights of some of its members, the community as a whole should be liable for the harm caused by the infringement.  State action, even if it is undertaken in the interests of aggregate welfare maximization or distributive justice, crosses the limits of acceptable collective action when it violates one of the individual’s fundamental rights.  Since the wrong is by the State, in the sense of the entire community, it is consonant with corrective justice that the obligation to repair the resulting injury should be borne by the community, through the State.  
		These principles are not mutually exclusive.  On the contrary, it may easily be imagined that governmental wrongdoing could trigger both personal and State liability.  This could happen, for example, if an official caused damage through a violation of rights while acting in the course of her duties.  In such a case, corrective justice as between the official and the victims would require that the official bear personal responsibility for what would have been, in fact, her decision to violate the fundamental rights of another person.  But the State would also properly be held liable because the official’s act would have been on behalf of the State and, through it, the entire community.  It is possible, in this way, to find in corrective justice a rationale for State liability for harm caused by infringements of fundamental rights.
3.  Application to EU Member State Liability  
		The difficulty with applying corrective justice to the liability of Member States is that  the rights protected under EU law cannot easily be seen as being limits inherent to the relationship between the individual and the State.  
		One might perhaps retreat to an argument based on the legal personhood of Member States within the EU.  It is true that the practice of some domestic legal systems to ascribe legal personhood to the State is accentuated within the EU legal system.  For example, the EC Treaty itself was adopted by the Member States in their capacity as international legal persons.  Even more interestingly, from the standpoint of corrective justice, the ECJ has occasionally shown signs of treating the Member States as being legally equivalent to ordinary persons.  For example, in its case law on the anti-trust provisions of the Treaty, the Court of Justice has been willing to treat State enterprises as economic actors no different from a private undertaking.  Another example is the Court of Justice’s declaration in Van Gend that both individuals and States are the subjects of the European legal order.  Both of these examples are indicative of a decreased specialness of the State in the eyes of the Court of Justice.  However, as I have already explained, the fact remains that there is no inherent equality between the State and the individual, even for Member States of the European Union.  The argument for corrective justice as a theory of EU Member State liability cannot rest solely on the legal personality of the Member States.
		It might be argued, in the alternative, that EU Member State liability reflects a public law theory of corrective justice analogous to that advanced by Jeffries in relation to constitutional torts.   Corrective justice recognizes that government wrongdoing that causes individual injury should be redressed by the award of damages.  One might argue that a government that violates the individual rights conferred by EU law has committed a wrong and that, if any injury results, corrective justice requires that compensation be paid.  However, this argument is normatively empty: the violation of EU law is a wrong against an individual only because EU law says so.  As we saw, above, corrective justice in relations between the State and an individual concerns rights which are inherent to that relationship.  The violation of rights protected under EU law, even a "sufficiently serious breach" within the meaning of Brasserie du Pêcheur, cannot be seen as a transgression of the limits inherent to the relationship between an individual and a State.
C.  A Note on Distributive Justice 
		Both corrective justice and economic efficiency are identified as alternatives to distributive justice, and, for this reason, I wish to make it clear that our rejection of the corrective justice and externalities theories should not be taken as an indication that distributive justice may be at the base of EU Member State liability.
		The concern of distributive justice is the equitable allocation of societal wealth according to criteria such as merit or need.  Distributive justice is an important concern of government, but it does not appear to be the theory underlying either private law tort liability or constitutional tort liability.  In both cases, there is no reason to think that the kind of transfers contemplated by those forms of liability improve the overall fairness of the societal distribution of wealth.  To use an example given by Coleman, even a person whose wealth exceeds what she would be allocated under any possible principle of distributive justice would be entitled to claim damages under tort law from an indigent person who negligently injured her.  Similarly, as Jeffries points out in the context of injuries caused by government, constitutional tort liability cannot be rationalized as an expression of distributive justice:
Lawful government action may cause devastating harm, while even flagrant unconstitutionality may injure only slightly.  If money is collected from all members of society to compensate those injured by unconstitutional government acts, some persons gravely harmed by (lawful) government action will be made to join in compensating minor (unlawful) injuries to economically advantaged individuals. As a scheme for redistributing wealth, or merely for relieving hardship, this makes little sense.  
If payments such as these are rationally connected with a principle of justice, the relevant principle must be one of efficiency or corrective justice, and not distributive fairness. 
		The fact that constitutional tort liability does not appear to be based on distributive justice does not mean that other forms of State liability might not be.  For example, the no-fault doctrine of égalité devant les charges publiques might be seen as a mechanism for improving distributive fairness.  However, it is difficult to see a basis in distributive justice for any system in which the reason for liability is the causation of damage through a violation of rights.  In particular, distributive justice is not a theory that is capable of accounting for the phenomenon of EU Member State liability.  There is simply no basis for assuming that people whose rights under EU law were infringed are, on any measure of need or merit, deserving of a greater share of society’s resources than they would enjoy in the absence of the liability rule.
		Therefore, we cannot conclude, from the inability of corrective justice and externalities theory to explain the liability of States within the EU, that the theory underlying Member State liability is distributive justice. 
D.  Overall Assessment of the Theories 
		In the preceding sections, the two main theories of justice used to explain the phenomenon of constitutional tort liability were explored and found wanting in their application to Member State liability in the European Union.  We also saw that the inability of these theories to account for Member State liability did not mean that distributive justice was the appropriate model.  Why then did the main theories advanced in support of constitutional tort liability fail to explain EU Member State liability?  
		In each case, the failure of the main theories to explain EU Member State liability was attributable to the underlying substantive law and, more particularly, to the character of the rights conferred by EU law.  Externalities theory, for example, could explain liability for violations of minority rights or fundamental human rights, but it was not capable of explaining liability for damage caused in violation of the substantive rules set out in Community law.  Corrective justice, on the other hand, could not account for liability based on violation of norms which are not derived from principles inherent to the relationship between individuals and the collectivity.  Since the substantive rules of EU law are anything but inherent to the relationship between individuals and their Member States, corrective justice was incapable of accounting for State liability for damage arising from violations of those rules.
		In Part II of the paper, when we identified a breach of rights as one of the defining features of EU Member State liability, we did not closely examine the nature of the rights involved, but in light of the inability of either externalities theory or corrective justice to account for EU Member State liability, it is worth taking another look.  
IV.  The Framework Revisited: 
The Nature of “Rights” in the European Union

		After reading some of the landmark decisions of the European Court of Justice, one comes away with the impression that individual rights are at the front and center of concerns within the European legal system.  The Court began conveying this message from its seminal decision in Van Gend, in which it held that Community law was capable of producing direct effects, that is, creating legal rights which could be invoked by individuals in litigation before their national courts.  The critical passage is by now so well known that most European scholars can recite it from memory:
[T]he Community constitutes a new legal order of international law ... the subjects of which comprise not only Member States but also their nationals.  Independently of the legislation of Member States, Community law not only imposes obligations on individuals but is also intended to confer upon them rights which become part of their legal heritage.
The Court in Van Gend linked the concept of individual rights to that of direct effect in a way that made the two terms virtually synonymous in the language of Community law.  In subsequent cases, the Court was asked to determine whether a particular provision had direct effect, the question was often formulated as whether the provision created “individual rights which national courts were bound to protect.”  
		As well, the Court has often emphasized the importance of individual rights when setting limits to the institutional autonomy of Member States.  In Bozzetti, for example, the Court explained that “it is for the legal system of each Member State to determine which court has jurisdiction to hear disputes involving  individual rights derived from Community law, but at the same time the Member States are responsible for ensuring that those rights are effectively protected in each case.” 
		The Court of Justice’s decision in Francovich is clearly cut from the same cloth.  The Court’s justification of the principle of State liability begins with an invocation of Van Gend:
It should be borne in mind at the outset that the EEC Treaty has created its own legal system, which is integrated into the legal systems of the Member States and which their Courts are bound to apply. The subjects of that legal system are not only the Member States but also their nationals. Just as it imposes burdens on individuals, Community law is also intended to give rise to rights which become part of their legal heritage.
The Court then sets out, in three successive paragraphs, the implications of Van Gend in a way that makes it clear that the Community legal system is not concerned merely with the enforcement of rules for their own sake, but with the protection of the individual rights conferred by those rules:
Furthermore, it has been consistently held that the national Courts whose task it is to apply the provisions of Community law in areas within their jurisdiction must ensure that those rules take full effect and must protect the rights which they confer on individuals.
The full effectiveness of Community rules would be impaired and the protection of the rights which they grant would be weakened if individuals were unable to obtain redress when their rights are infringed by a breach of Community law for which a Member State can be held responsible. 
The possibility of obtaining redress from the Member State is particularly indispensable where, as in this case, the full effectiveness of Community rules is subject to prior action on the part of the state and where, consequently, in the absence of such action, individuals cannot enforce before the national Courts the rights conferred upon them by Community law.
		However, our difficulty in articulating a theory of liability that can make sense of the content of EU rules compels us to inquire more carefully into the nature of the rights which the rules protect.  As Weiler observes, the inherent appeal of fundamental rights has two roots:
The first of these two roots regards fundamental rights (and liberties) as an expression of a vision of humanity which vests the deepest values in the individual which, hence, may not be compromised by anyone. ...
The other root for the great appeal of rights and part of the justification, even if countermajoritarian, looks to them as an instrument for the promotion of the per-se value of putting constraints on power.  Modern democracy emerges, after all, also as a rejection of absolutism...
We have seen, however, that the “individual rights” conferred by Community law do not always share these roots.  Rather, the ideals reflected in Community legal rights are those expressed in Article 2 of the EC Treaty:
The Community shall have as its task, by establishing a common market and an economic and monetary union and by implementing the common policies or activities referred to in Articles 3 and 3a, to promote throughout the Community a harmonious and balanced development of economic activities, sustainable and non‑inflationary growth respecting the environment, a high degree of convergence of economic performance, a high level of employment and of social protection, the raising of the standard of living and quality of life, and economic and social cohesion and solidarity among Member States.
The rights protected under Community law give expression, not to the essence of human dignity or the inherent limits of government, but to a policy of economic prosperity through integration.  In consequence, court challenges that would anywhere else have been fundamental rights cases were in Europe cases about economic integration.  Sunday closing, discrimination based on religion or sexual orientation, and abortion are just a few examples of this phenomenon.  
		The Court of Justice’s insistence that Community law is about “individual rights” reflects, in large part, the Court’s commitment to the underlying goals of Community law.  However, it also reflects the rhetorical value of rights.  Since the end of the Second World War, we have witnessed a proliferation of international instruments, from the Universal Declaration, to the European Convention, to the International Covenants, proclaiming the universality and inalienability of the rights of humankind.  This development at the international level has been matched, in liberal democratic states, by an increased acceptance of rights as a superior source of law even within the domestic legal order.  Judicial enforcement of rights, once a frowned-upon quirk of American constitutionalism, has become a common feature of modern constitutions.  It is hardly surprising then, that the European Economic Community should aspire to a place within this new global culture of rights. The contest between national autonomy and the supremacy of Community law is more easily resolved in favor of the latter when supremacy is transformed into a question of individual rights. 
		There are some signs that things may be changing in the EU.  The Community legal order has begun to take notice of rights which do not find their ultimate justification in economic integration.  The process began some time ago, when, in the wake of the rebellion by the Bundesverfassungsgericht (German Federal Constitutional Court) against the principle of supremacy, the Court of Justice decided that it would review Community law for compliance with fundamental rights.  More recently, attention has come to be focused on the reviewability of Member State actions for compliance with fundamental rights standards.  Until now, such review has been limited to two circumstances — “agency” situations, where national authorities are essentially carrying out Community law, and “derogations,” where a national measure is prima facie inconsistent with one of the market freedoms but the Member State seeks to defend the measure by reference to an exculpatory rule.  The Court of Justice has so far been unwilling to go further,  and so, despite these developments, fundamental rights remain a constraint upon and not the essence of EU law.  As we have seen, the rights which are the essence of EU law are rights which serve an ulterior purpose: the reinforcement of the common market.

Conclusion

		At the beginning of this paper, I highlighted the importance of identifying a theoretical framework to provide normative guidance for the doctrinal development of the law of the European Union on Member State liability.  To this end, we looked in Parts I and II at the essential features of the system of State liability introduced by the European Court of Justice in Francovich, and concluded that it presented the formal characteristics of constitutional tort liability.  However, our examination in Part III of the theories of justice which may be used to support constitutional tort liability revealed that these theories are incapable of explaining the phenomenon of Member State liability in the European Union, essentially because of the nature of the rights with which the EU is concerned.  These rights, as we saw in Part IV, are instrumental in two senses: their content is justified by reference to the broader goals of the Treaties, and even the invocation of the notion of rights seems to serve an ulterior purpose.
		The discovery that despite the formal resemblance between EU Member State liability and constitutional tort liability, theories of justice traditionally applied to illuminate the liability of governments for constitutional violations do not explain the liability regime in the EU, does not dispense with the need for a theoretical framework in which to situate the latter phenomenon.  And so, given the limitations of the prevailing theoretical models, the conclusion I have reached is less an ending than an opening to further inquiry and reflection in the ongoing search for a theory of State liability in the European Union. 

Appendix A — Select Bibliography
	Selected Articles on Francovich 
Barav, A., “Damages Against the State for Failure to Implement E.C. Directives,” 141 New L.J. 1584.
Dubouis, L, “La responsabilité de l’État pour les dommages causés aux particuliers par la violation du droit communautaire,” [1992] Rev. fr. dr. adm. 1.
Duffy, P, “Damages against the State: A New Remedy for Failure to Implement Community Obligations,” 17 E.L. Rev. 133 (1992).
Caranta, R., “Governmental Liability after Francovich,” 52 Camb. L.J. 272 (1993).
Craig, P.P., “Francovich, Remedies and the Scope of Damages Liability,” 109 L.Q.R. 594 (1993).
Emiliou, N., “State Liability under Community Law: Shedding More Light on the Francovich Principle?” 21 E. L. Rev. 399 (1996).
Flynn, L, “Francovich in the National Courts,” 13 Irish L. Times and Sol. J. 16 (1995).
Hanft, J.E., “EEC Member State Liability for Failure to Implement Community Directives,” 15 Fordham Int. L. J. 1237 (1992).	
Harlow, C., “Francovich and the Problem of the Disobedient State,” 2 E.L.J. 199 (1996).
Hervey, T.L., “Francovich Liability Simplified,” 26 Indust. L.J.74 (1997).
Lang, J.T., “New Legal Effects Resulting from the Failure of States to Fulfil Obligations under European Community Law: The Francovich Judgment” 16 Fordham Int. L. J. 1 (1992).
Ogren, M.L.  “Should Member States Be Directly Liable for Nonimplementation of  European Union Directives? (Case Note),” 7 The Transnational Lawyer 583 (1994).
Parker, K. “State Liability in Damages for Breach of Comunity Law,” 108 L.Q.R. 181 (1992).
Rochère, J.D., “Member State Liability for Infringement of European Community Law,” 11 Tulane Eur. and Civ. L. Forum 1 (1996).
Ross, M., “Beyond Francovich,” 56 Mod. L.Rev. 55 (1993).
Schockweiler, F., “La responsabilité de l’autorité nationale en cas de violation du droit communautaire” [1992] R.T.D.E. 27.
Smith, F., “Causation in Francovich: The Neglected Problem,” 46 I.C.L.Q. 925 (1997).
Steiner, J., “From Direct Effects to Francovich: Shifting Means of Enforcement of Community Law,” 18 E.L.Rev. 3 (1993).
Tillotson, J., “Individual Rights and Remedies in European Community Law,” 70 Australian L.J. 747 (1996).
Van Gerven, W., “Non-Contractual Liability of Member States, Community Institutions and Individuals for Breaches of Community Law with a View to a Common Law for Europe,” 1 M.J. 6 (1994).
Van Gerven, W., “Bridging the Unbridgeable: Community and National Tort Laws After Francovich and Brasserie,” 45 I.C.L.Q. 507 (1996).
Selected Books and Articles on Constitutional Torts 

Cass, R.A., “Damage Suits Against Public Officers,” 129 U. Pa. L. Rev. 1110 (1981).
Cohen, D.S., “Regulating Regulators: The Legal Environment of the State,” 40 U. Toronto. L.J. 213 (1990).
Cohen, D.S., “Suing the State,” 40 U. Toronto L.J. 630 (1990).
Cooper-Stephenson, K., Charter Damages Claims, Toronto: Carswell, 1990.
Eisenberg, T., and Stewart Schwab, “The Reality of Constitutional Tort Litigation,” 72 Cornell L. Rev 641 (1987).
Epstein, R., “Private-Law Models for Official Immunity,” 42 Law & Contemp. Probs. 53 (1978).
Helfman, A.L., State Tort Law: Determining the Comparative Level of Local Government Immunity, Ph.D. Dissertation, U. Delaware, 1993.
Jeffries, J.C.J., Jr., “Compensation for Constitutional Torts: Reflections on the Significance of Fault,” 88 Mich. L. Rev. 82 (1989).
Mashaw, J.L., “Civil Liability of Government Officers: Property Rights and Official Accountability,” 42 Law & Contemp. Probs. 8 (1978).
Nahmod, S., “Section 1983 Discourse: The Move from Constitution to Tort,” 77 Geo. L.J. 1719 (1989).
Nahmod, S., “Constitutional Damages and Corrective Justice: A Different View,” 76 Va. L. Rev. 997 (1990).
Olson, M., “Official Liability and Its Less Legalistic Alternatives,” 42 Law & Contemp. Probs. 67 (1978).
Pilkington, M.S., “Damages as a Remedy for Infringement of the Canadian Charter of Rights and Freedoms,” 62 Can. Bar Rev. 517 (1984).
Posner, R.A., “Excessive Sanctions for Governmental Misconduct in Criminal Cases,” 57 Wash. L. Rev. 635 (1982).
Schuck, P.H., Suing Government: Citizen Remedies for Official Wrongs, New Haven: Yale U.P., 1983.
Spitzer, “Economic Analysis of Sovereign Immunity,” 50 So. Cal. L. Rev. 515 (1977).
Wells, M., “The Past and Future of Constitutional Torts,” 19 Conn. L. Rev. 53 (1986).
Wells, M., “Punitive Damages for Constitutional Torts,” 56 La. L. Rev. 841 (1996).
Whitman, C.B., “Government Responsibility for Constitutional Torts,” 85 Mich. L. Rev. 225 (1986).
Appendix B — Articles 169 to 171 of the Treaty of Rome
		Article 169. If the Commission considers that a Member State has failed to fulfil an obligation under this Treaty, it shall deliver a reasoned opinion on the matter after giving the State concerned the opportunity to submit its observations.
		If the State concerned does not comply with the opinion within the period laid down by the Commission the latter may bring the matter before the Court of Justice.
		Article 170. A Member State which considers that another Member State has failed to fulfil an obligation under this Treaty may bring the matter before the Court of Justice.
		Before a Member State brings an action against another Member State for an alleged infringement of an obligation under this Treaty, it shall bring the matter before the Commission.
		The Commission shall deliver a reasoned opinion after each of the States concerned has been given the opportunity to submit its own case and its observations on the other party's case both orally and in writing.
		If the Commission has not delivered an opinion within three months of the date on which the matter was brought before it, the absence of such opinion shall not prevent the matter from being brought before the Court of Justice.
		Article 171 [original].  If the Court of Justice finds that a Member State has failed to fulfil an obligation under this Treaty, the State shall be required to take the necessary measures to comply with the judgment of the Court of Justice.
		Article 171 [as amended in 1992]. 1. If the Court of Justice finds that a Member State has failed to fulfil an obligation under this Treaty, the State shall be required to take the necessary measures to comply with the judgment of the Court of Justice.
		2. If the Commission considers that the Member State concerned has not taken such measures it shall, after giving that State the opportunity to submit its observations, issue a reasoned opinion specifying the points on which the Member State concerned has not complied with the judgment of the Court of Justice.
		If the Member State concerned fails to take the necessary measures to comply with the Court's judgment within the time‑limit laid down by the Commission, the latter may bring the case before the Court of Justice. In so doing it shall specify the amount of the lump sum or penalty payment to be paid by the Member State concerned which it considers appropriate in the circumstances.
		If the Court of Justice finds that the Member State concerned has not complied with its judgment it may impose a lump sum or penalty payment on it.
		This procedure shall be without prejudice to Article 170.