Case C‑420/11, Leth

Court holds that not carrying out environmental impact assessment of project in breach of EU law, does not by itself render State liable for purely pecuniary damage

>> Since the accession of Austria to the European Union, on 1 January 1995, the authorities of the defendants in the main proceedings had, without carrying out environmental impact assessments, consented to and completed several projects relating to the development and extension of Vienna-Schwechat airport. By decision of 21 August 2001, the Minister-President of Land Niederösterreich expressly stated that no environmental impact assessment procedure was necessary in relation to the continued development and certain extensions of that airport.

At the time when those projects were carried out, Ms Leth was already living within the security zone of that airport. She brought an action against the Austrian State and Land Niederösterreich (the State of Lower Austria) before the Austrian courts, in which she sought payment of €120,000 as compensation for the decrease in the value of her house, resulting from, in particular, aircraft noise, as well as a declaration that the Austrian State and Land Niederösterreich would be liable for any future damage. She based those claims on, inter alia, a breach of the EIA Directive (Directive 85/337), which requires that an assessment be carried out as to the environmental impact of public or private projects that were liable to have a major effect in that regard.

The referring court inter alia asked whether Article 3 of Directive 85/337 must be interpreted as meaning that the fact that an environmental impact assessment had not been carried out, in breach of Directive 85/337, conferred on an individual a right to compensation for pecuniary damage caused by a decrease in the value of his property resulting from the environmental effects of the project under examination.

The Court reiterated that an individual might, where appropriate, rely on the duty to carry out an environmental impact assessment under Article 2(1) of Directive 85/337, read in conjunction with Articles 1(2) and 4 thereof (see Case C‑201/02 Wells [2004]) .

The Court held that the EIA  directive thus conferred on the individuals concerned a right to have the environmental effects of the project under examination assessed by the competent services and to be consulted in that respect.

The Court held that the prevention of pecuniary damage, in so far as that damage was the direct economic consequence of the environmental effects of a public or private project, was covered by the objective of protection pursued by Directive 85/337. The Court found that as such economic damage was a direct consequence of such effects, it must be distinguished from economic damage which did not have its direct source in the environmental effects and which, therefore, was not covered by the objective of protection pursued by that directive, such as, inter alia, certain competitive disadvantages.

The Court reiterated that under the principle of sincere cooperation laid down in Article 4(3) TEU, Member States were required to nullify the unlawful consequences of a breach of European Union law. In order to remedy the failure to carry out an environmental impact assessment of a project within the meaning of Article 2(1) of Directive 85/337, it was for the national court to determine whether it was possible under national law for a consent already granted to be revoked or suspended in order to subject the project in question to an assessment of its environmental impacts, in accordance with the requirements of Directive 85/337, or alternatively, if the individual so agreed, whether it was possible for the latter to claim compensation for the harm suffered (see Case C‑201/02 Wells [2004]) .

The Court held that the detailed procedural rules that were applicable were a matter for the domestic legal order of each Member State, under the principle of procedural autonomy of the Member States, provided that they were not less favorable than those governing similar domestic situations (principle of equivalence) and that they did not render impossible in practice or excessively difficult the exercise of rights conferred by the European Union legal order (principle of effectiveness).

The Court argued that it was on the basis of the rules of national law on liability that the Member State must make reparation for the consequences of the loss or damage caused, provided that the conditions for reparation of that loss or damage laid down by national law ensure compliance with the principles of equivalence and effectiveness recalled in the previous paragraph (see Joined Cases C-46/93 and C‑48/93 Brasserie du Pêcheur and Factortame [1996]).

The Court however stressed that European Union law conferred on individuals, under certain conditions, a right to compensation for damage caused by breaches of European Union law. It held that the principle of State liability for loss or damage caused to individuals was a result of breaches of European Union law for which the State could be held responsible was inherent in the system of the treaties on which the European Union was based (see Case C‑429/09 Fuß [2010]).

The Court repeated that individuals who hadbeen harmed had a right to reparation if three conditions were met: the rule of European Union law infringed must be intended to confer rights on them; the breach of that rule must be sufficiently serious; and there must be a direct causal link between that breach and the loss or damage sustained by the individuals (see, for instance, C‑568/08 Combinatie Spijker Infrabouw-De Jonge Konstruktie and Others [2010] ).

The Court held that those three conditions were necessary and sufficient to found a right in individuals to obtain redress on the basis of European Union law directly, although this did not mean that the Member State concerned could not incur liability under less strict conditions on the basis of national law. It was, in principle, for the national courts to apply the criteria, directly on the basis of European Union law, for establishing the liability of Member States for damage caused to individuals by breaches of European Union law, in accordance with the guidelines laid down by the Court for the application of those criteria (see Case C‑446/04 Test Claimants in the FII Group Litigation [2006]).

The Court thus summarized that the existence of a direct causal link between the breach in question and the damage sustained by the individuals was, in addition to the determination that the breach of European Union law was sufficiently serious, an indispensable condition governing the right to compensation. The existence of that direct causal link was also a matter for the national courts to ascertain, in accordance with the guidelines laid down by the Court.

The Court held that to that end, the nature of the rule breached must be taken into account. In the present case, that rule prescribed an assessment of the environmental impact of a public or private project, but did not lay down the substantive rules in relation to the balancing of the environmental effects with other factors or prohibit the completion of projects which were liable to have negative effects on the environment. Those characteristics suggested that the breach of Article 3 of Directive 85/337 - in the present case, the failure to carry out the assessment prescribed by that article - did not, in principle, by itself constitute the reason for the decrease in the value of a property.

The Court thus concluded that the fact that an environmental impact assessment was not carried out, in breach of the requirements of Directive 85/337, did not, in principle, by itself 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 environmental effects. The Court added, it was ultimately for the national court, which alone has jurisdiction to assess the facts of the dispute before it, to determine whether the requirements of European Union law applicable to the right to compensation, in particular the existence of a direct causal link between the breach alleged and the damage sustained, have been satisfied.