In 2006, Gascogne Sack Deutschlandand Gascogne sought to annul a European Commission decision fining them €13.2million for participation in a cartel in the industrial plastic bags sector.However, it wasn’t until November 2011, 5 years and 9 months later, that the EUGeneral Court (GC) delivered its judgment and dismissed theiractions.
The companies sought approximately€5 million in damages from the EU as compensation for both material andnon-material harm caused by the inordinate length of the proceedings. In itsfirst decision on this issue, the GC noted that non-contractual liability maybe incurred by the EU when three cumulative conditions arefulfilled:
- First, an EU institution must act unlawfullyThe GC held that a period of almost 6 years was not justified by the specific circumstances of the cases and breached the right to adjudication within a reasonable period, as enshrined in the EU Charter of Fundamental Rights. In reaching this conclusion, the GC considered the appropriate length of proceedings, bearing in mind the complexity of competition law and other parallel actions. The GC also uncovered a 20 month period of inactivity.
- Second, actual damage must be sufferedThe GC accepted that bank costs in relation to the fine paid by Gascogne during the 20 months of inactivity amounted to actual damage. However, the GC rejected other claims of actual damage, including losses due to the payment of statutory interest applied to the Commission’s fine.
- Third, there must be a causal link between the unlawful conduct of the EU and the actual damage
This condition was satisfied as bank costs paid by Gascogne during the 20 months of inactivity would not have arisen had the proceedings before the GC been more efficient.
The GC partiallyupheld the actions of the two companies, awarding damages of approximately€47,000 to Gascogne for material harm suffered due to the additional bankcosts. The companies were also awarded €5,000 each for non-material harm causedby the excessive uncertainty created by the lengthy proceedings.
This is the firsttime that the EU courts have awarded damages for a breach of a company’sfundamental right to timely court proceedings. The right is well establishedbefore the European Court of Human Rights, and the Irish Supreme Court recentlyrecognised, in principle, that damages would be available for breach of theright (Nash v DPP).
Damages themselvesare of course not the primary goal, and it is notable that the compensationawarded in this case fell well below the millions sought. Recent reformsof the GC – including an increased number of judges and greater flexibility inthe use of chambers – are intended to combat the excessive duration ofproceedings and to allow the delivery of judgments within a reasonabletime.
Contributed by Claire Waterson
