Leiden Law Blog

The case of Jutta Leth and multilevel civil liability for the violation of EU law

The case of Jutta Leth and multilevel civil liability for the violation of EU law

Violating a statutory provision not only potentially triggers criminal prosecution or some form of administrative sanctioning, but also civil liability. Several EU Member States rely on the so-called Schutznorm doctrine in this respect. Establishing liability for the violation of a statutory provision requires, in addition to a causal link between violation and damage, the damage to be within the protective scope of the violated provision. In the case of Jutta Leth, who sued the Republic of Austria for extending an airport without carrying out a so-called environmental impact assessment prescribed by statute, for instance, the Vienna Higher Regional Court decided that her damage wasn’t, as her claim consisted of ‘purely pecuniary damage’. Leth claimed compensation for the decrease in value of her home, located in the security zone of the extended airport, mainly because of aircraft noise.

The case of Leth matters, because the statutory provisions prescribing the impact assessment were the transposition of the (amended) European Directive 85/337/EEC on environmental impact assessments (consolidated text). The Austrian Supreme Court therefore called the Court of Justice of the EU (CJEU) to help: did the environmental impact assessment also serve ‘to protect an individual against pecuniary damage as a result of a decrease in the value of its property’? The CJEU commenced its answer by holding that the impact assessment encompassed the effects on ‘material assets’, but not their ‘pecuniary value’, because that didn’t follow from the wording of the Directive, nor from its purpose: ‘protection of the environment and the quality of life’ (par. 28). This didn’t preclude, though, the CJEU continued somewhat surprisingly, that pecuniary damage could be within the protective scope of the Directive, in so far as such damage is the ‘direct economic consequence of the environmental effects of a public or private project’ (par. 36). The CJEU explained its criterion as follows (par. 35):

‘In circumstances where exposure to noise resulting from a project covered by Article 4 of Directive 85/337 has significant effects on individuals, in the sense that a home affected by that noise is rendered less capable of fulfilling its function and the individuals’ environment, quality of life and, potentially, health are affected, a decrease in the pecuniary value of that house may indeed be a direct economic consequence of such effects on the environment, this being a matter which must be examined on a case-by-case basis.’

To that explanation, which I guess isn’t going to win any prize for clarity, the CJEU added that ‘certain competitive disadvantages’, on the contrary, are the kind of ‘economic damage’ that doesn’t pass the criterion of the ‘direct economic consequence’ (par. 36). If I get this all right, Leth’s damage, consisting in the decrease in value of her home, could be within the protective scope of the Directive on environmental impact assessments, in so far as this decrease can be considered (i) a ‘direct economic consequence’ of (ii) the effects of the noise coming with the extension of the Vienna-Schwechat airport on (iii) the capability of her home ‘fulfilling its function’, her environment and ‘quality of life and, potentially, health’. Thus the CJEU left the door for Leth open, while leaving the actual construction of a possible right to compensation to ‘the rules of national law on liability’, within the boundaries of the principles of equivalence and effectiveness (par. 39).

Yet civil liability of the Republic of Austria for not carrying out the environmental impact assessment isn’t a matter of course, also if the Austrians would now find that the damage of Leth is within the Directive’s protective scope. The CJEU added to the foregoing that the procedural nature of the Directive has to be taken into account. It leaves public authorities room for policy in balancing the interests that come with extending the airport and the protection of the environment. Even if the Austrian public authorities would have carried out the environmental impact assessment, Leth could therefore still have suffered the damage. To be sure, the CJEU identified this problem of causation within the framework of Member State liability for a (sufficiently serious) violation of EU law, to which it had switched further down its decision, and more particularly, the requirement of a ‘direct causal link’ between violation and damage. However, the same problem of causation could also be an issue on the level of Austrian law. On the level of EU law itself, anyhow, it bars Francovich liability for Leth’s damage altogether. The CJEU at least seems to end up concluding so (par. 48):

‘The fact that an environmental impact assessment has not been carried out, in breach of the requirements of that directive, does not, in principle, by itself, according to European Union law, and without prejudice to rules of national law which are less restrictive as regards State liability, confer on an individual a right to compensation for purely pecuniary damage caused by the decrease in the value of his property as a result of the environmental effects of that project.’

Although also at the level of EU law the CJEU didn’t close the door entirely:

'However, it is for the national court to determine whether the requirements of European Union law applicable to the right to compensation, including the existence of a direct causal link between the breach alleged and the damage sustained, have been satisfied.’

Let’s hope the Austrians can still see the trees for the wood, handling the CJEU’s complicated criterion of the ‘direct economic consequence’ and finding its way in the multilevel civil liability for the violation of the EU Directive on environmental impact assessments.

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