HTTS/Council (C-123/18 P). Putting A Date On The Manifest Breach ...

The requirements to bring an action of damages against the EU are still in the making. Last week, in HTTS/Council, (C‑123/18 P), the Court of Justice, sitting in Grand Chamber, ruled that the manifest breach test has temporal limitations that must be taken into account by Union courts. When determining whether an EU institution, agency, office or body has incurred in a manifest breach, the relevant facts are only those that existed at the time in which the breach took place. In other words, the defendant cannot raise relevant developments that took happened after the date of the breach. No matter how relevant those facts may be, the defendant must stick to the circumstances of the date of the breach only.

The case was brought by HTTS, a legal person subject to the inclusion in a list of persons and entities subject to the freezing of funds. The General Court quashed the Council’s decision to include HTTS in the list and subsequently the company claimed damages against the EU. In its defence, the Council invoked facts subsequent to the inclusion of HTTS but prior to the date in which HTTS brought an action for damages. Therefore, what is the relevant date? The time in which the manifest breach has occurred, or the time in which the damages action is brought before the Union court?

The Court of Justice overruled the General Court and came to the conclusions that the sole relevant date is the time in which the manifest breach takes place. In the Court’s words:

“the existence of a sufficiently serious breach of a rule of EU law must necessarily be assessed on the basis of the circumstances in which the institution acted on that particular date.

It also follows from the foregoing that, when disputing that there is a sufficiently serious breach of that kind, an institution can rely only on the matters which it took into account for the purpose of adopting the act concerned. (paragraphs 46 and 47)”

This outcome is a serious setback for the Council, but also for any other EU institution fighting damages claims. It forces the defendant to rely on the circumstances present at the time in which the breach took place, but it also means that the centre of gravity of a damages action, which most of the time pivots on the manifest breach test, is considerably reduced to a very specific temporal point in time.

But it’s good news for applicants struggling to succeed in the burdensome effort of bringing a damages action. With HTTS/Council the parties are now in a more balanced position, and the manifest breach test, which favours the EU and puts heavy constraints on applicants, is somewhat more graspable than before.

You can read the judgment here.