European Union: Court Of Justice Of European Union Sets Aside General Court Judgments Granting Damages For Excessively Long Judicial Proceedings

Last Updated: 25 February 2019
Article by Martin Favart

On 13 December 2018, the Court of Justice of the European Union ("ECJ") delivered three judgments on separate appeals brought against judgments of the General Court ("GC") by Gascogne Sack Deutschland ("Gascogne"), Kendrion and Plasticos Españoles (together with its parent company Armando Álvarez) in relation to actions claiming damages for alleged excessive duration of previous proceedings before the GC concerning the Industrial Bags cartel case (Joined Cases C-138/17P and C-146/17P; Case C-150/17P and Case C-174/17P).

In 2006, the claimants brought a series of actions before the GC seeking annulment of the European Commission's 2005 decision fining a cartel in the industrial bags sector. While both the GC and the ECJ ultimately dismissed the actions for annulment in their entirety, the ECJ took the view that the duration of the proceedings before the GC – over five years and nine months – was excessive and sufficiently serious to give rise to liability on the part of the EU.

Following this ECJ judgment, the claimants relied on Article 218 of the Treaty on the Functioning of the European Union ("TFEU") in bringing a new set of tort actions against the EU before the GC for damages relating to the material and non-material harm suffered as a result of the excessively long duration of the initial proceedings before the GC. In its judgments, the GC first recalled the three cumulative conditions to be met in determining whether the EU incurred non-contractual liability, namely: (i) the conduct of the institution must be unlawful; (ii) actual damage must have been suffered; and (iii) there must be a causal link between the unlawful conduct and the damage suffered. Having found the three conditions to be fulfilled, the GC granted compensatory damages of between € 47,000 and € 588,000 for the costs incurred by the claimants in relation to the bank guarantee they had provided to secure payment of the 2005 fine during the excessively long proceedings (material harm) and € 10,000 and € 6,000 to Gascogne and Kendrion respectively for non-material harm suffered (see VBB on Competition Law, Volume 2017, No. 2, available at These GC judgments are noteworthy insofar as they mark the first time the EU has been ordered to pay damages for the excessive length of judicial proceedings.

Both the claimants and the EU lodged appeals, or cross-appeals, against the GC judgments. The latest ECJ judgments set aside the decisions by the GC to award compensation for material damages suffered by the claimants as a result of the GC's original breach of its obligation to adjudicate within a reasonable time, and dismisses the claimants' appeals on all points.

In its judgments, the ECJ considered that the GC had failed to establish that the third condition for non-contractual liability had been met – i.e., that there was a sufficient causal link between the breach of the obligation to adjudicate within a reasonable time and the damage resulting from the payment of bank guarantee fees during the period by which the reasonable time was exceeded. The ECJ noted that when a decision requiring the payment of a fine is coupled with the option of lodging a security pending the outcome of an action brought against that decision, the loss consisting of the guarantee fees results from the interested party's own choice to provide such a guarantee rather than fulfil its payment obligation immediately.

With this in mind, the ECJ held that the decision to provide and maintain a bank guarantee is a matter for which the undertakings concerned have discretion in light of their financial interests. Therefore, although the GC breached its obligation to adjudicate within a reasonable time, and the claimants suffered material damage in connection with said breach, it could not be established that the breach was the determining cause of the damage suffered by the claimants.

Furthermore, the ECJ judgments address Kendrion and Gascogne's appeals relating to the GC's alleged miscalculation of non-material damages awarded, dismissing these in their entirety. Specifically, the ECJ upheld the GC's decision to award symbolic damages of € 10,000 and € 6,000 for non-material harm suffered as a result of the uncertainty created by the excessive length of the original proceedings before the GC. In so finding, the ECJ ruled that although the length of the original proceedings was not justifiable, once the GC has established the existence of damage, it is the GC alone that has jurisdiction to assess the means and extent of compensation for that damage. Therefore, insofar as the GC's decision on damages for non-material harm was sufficiently reasoned and based on clear criteria, there was no basis for alleging that the GC had erred in law in only granting symbolic damages.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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