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No principle of State liability for breaches of EEA law attributable to the judiciary?

Some reflections of the seventh round of the Dartride saga


In a decision from January 22nd of this year, Oslo District Court stated that the principle of state liability for breaches of EU law attributable to the judiciary has no parallel in EEA law. In this blog post, we offer some comments on the arguments of the Norwegian State, the reasoning and conclusion of the District Court and the decision of the Court not to make a reference to the EFTA Court.

Authors: Matias Tvermyr Holmen and Tollef Otterdal Heggen, University of Bergen


1. Introduction

In 2018, Oslo municipality decided to deny Dartride – a company aiming to provide taxi services through a mobile application at lower prices than other market participants – the taxi permits required to provide such services.[1] This decision has provided fertile grounds for litigation on fundamental questions of EEA law. For the time being, the last iteration of this string of litigation came with a decision from the Oslo District Court on January 22nd of this year.[2] Partly due to an understanding of the principle of homogeneity which is irreconcilable with the last 25 years of case law development, the District Court stated that the principle of State liability for infringements of EU law attributable to the judiciary, established by the CJEU in Köbler, has no parallel in EEA law. Dartride’s motion for damages was therefore dismissed. In our view, some comments are warranted, both as regards the arguments of the Norwegian State, the reasoning and conclusion of the District Court and the decision of the Court not to make a reference to the EFTA Court. Before providing an overview and analysis of the case (section 3), we will give a brief overview of the previous rounds of the Dartride saga (section 2). We will then end with some reflections and concluding remarks (section 4).


2. Brief overview of the previous rounds of the Dartride saga

Following the decision of Oslo municipality not to grant Dartride the taxi permits, Dartride sued the municipality for damages before the Oslo District Court, claiming that the refusal infringed the right to free establishment enshrined in Article 31 of the EEA Agreement in a way that engaged the principle of State liability for breaches of EEA law. The District Court acquitted the municipality based on insufficient proof of a causal link between the alleged infringement and the damages sought.[3] This decision was later appealed to the Borgarting Court of Appeal, which controversially acquitted the municipality based on its finding that the Norwegian State should have been sued instead.[4] Dartride’s subsequent appeal was rejected by the Supreme Court’s Appeal Selection Committee.[5] 


Dartride then went on to sue the Norwegian State. This time, the State argued that the claim for damages was time-barred under the Norwegian Limitation Act. The Oslo District Court,[6] and later the Borgarting Court of Appeal,[7] agreed. Dartride’s subsequent appeal to the Supreme Court was then rejected.[8] Dartride then sued the Norwegian state again, alleging that the first decision of Borgarting Court of Appeal infringed EEA law in a way that engaged the principle of State liability. This brings us to the seventh iteration of the Dartride saga – the aforementioned decision of the Oslo District Court of January 22nd of this year.


In our view, there are indications that these earlier limbs of the saga can be criticised, and warrant further legal research – both as regards the courts’ interpretation and application of Norwegian procedural law, and the relationship between Norwegian law and the EEA principles of effectiveness and equivalence. In this post, however, we will focus on the last case in the saga and the question of (non-)transferal of the Köbler-doctrine to EEA law.


3. Overview and analysis of the decision of the Oslo District Court on January 22nd

3.1. The question posed and the decision not to refer

As previously mentioned, the case concerned a claim for damages based on the allegation that a decision from Borgarting Court of Appeal had infringed EEA law in a way that engaged the principle of State liability. Oslo District Court therefore needed to decide on whether the Köbler-doctrine had a parallel in EEA law.


Despite expressing “doubt” as to whether the doctrine could be transferred to EEA law, the Court chose not to avail itself of its right under Article 34 SCA to refer the question to the EFTA Court for an advisory opinion. The absence of an obligation to refer questions to the EFTA Court does not mean that it is not appropriate and beneficial to refer important and unsettled questions of EEA law to the Court, in keeping with the goal of homogeneity, the principle of sincere cooperation and the spirit of judicial dialogue. We find the decision not to do so in this case puzzling, as it has likely contributed to the weaknesses and mistakes that will be addressed in the following.


3.2. Different approaches to homogeneity

In its assessment, the District Court first briefly introduced the principle of State liability in EU law as well as the conditions for liability under the principle. The Court also pointed out that these conditions are stricter when the alleged infringement is attributable to the judiciary. The Court then went on to raise the question of whether the Köbler-doctrine can be regarded as already applicable EEA law. The reasoning of the Court in connection to this question seems to rest on an assumption that the interpretation and application of principles of EEA law can be determined by an examination of whether the EFTA Court or the Norwegian Supreme Court has “accepted” a certain interpretation and application of the principle in question. In our view, this assumption rests on a misunderstanding of EEA legal methodology.


We subscribe to the idea that homogeneity is best preserved if questions concerning homogeneity are answered in a two-step process, where the relevant legal situation in the EU is construed first, before examining the question of whether overriding reasons preclude the transferal of this legal situation to EEA law. Statements from the EFTA Court regarding homogenous interpretation and application of the disputed legal rule or principle should not be assessed separately from the principle of homogeneity, but be used as a legal source in the second step of this process. As the District Court found no decisive statements from the relevant Courts, the question of whether the Köbler-doctrine could be regarded as already applicable EEA law was answered in the negative.


The Court then moved on to the question of whether the Köbler-doctrine could be transferred to EEA law based on the principle of homogeneity. The Court’s outline of the principle of homogeneity indicates that the Court was of the opinion that homogeneity concerns primarily the interpretation of substantive EEA rules in accordance with their EU counterparts. This narrow understanding of homogeneity was largely abandoned about 20 years ago or so, and seems impossible to reconcile with the judgments of the EFTA Court in Sveinbjörnsdóttir and Karlsson, the CJEU in Rechberger and the Norwegian Supreme Court in Finanger II.[9] 

As pointed out by scholars, the aforementioned Courts have adopted a functional approach to homogeneity, in the sense that the principle of homogeneity requires that the legal effect of EEA law in the national legal systems of the Member States must be homogenous to that of EU law.[10] This functional approach to homogeneity does not entail absolute uniformity between the legal effect of EU and EEA law: the presumption of functional homogeneity can be rebutted if there are sufficient reasons for divergencies between the two legal systems.[11] Typical reasons for divergencies could for example be clear and substantial differences between the relevant legal sources and differences in the scope, aims and objectives of the EU and the EEA.[12] With reference to such reasons, the EFTA Court has determined that the principles of direct effect and supremacy have no parallel in EEA law.[13]


3.3. The Court’s application of the principle of homogeneity

If the District Court had applied the above-mentioned narrow understanding of homogeneity, the question of whether the Köbler-doctrine has an EEA parallel would have been fairly obvious, considering that there is no textual basis for an EEA principle of State liability, or for that matter, for an EU principle of State liability. The Court nevertheless went on to examine whether fundamental differences between the legal systems of the EU and the EEA precluded a homogenous interpretation of the principle of State liability. Pointing to the fact that there is no EEA parallel to the obligation to refer enshrined in Article 267 TFEU, and the fact that opinions of the EFTA Court are non-binding, the Court concluded that fundamental differences did preclude a homogenous interpretation. More specifically, the Court agreed with the Norwegian State’s assertion that transferal of the Köbler-doctrine to EEA law would create a de facto obligation to refer questions to the EFTA Court, running contrary to the intentions of the parties to the EEA Agreement. In its conclusion, the Court seemed to return to the aforementioned narrow understanding of the principle of homogeneity, by stating that there was a lack of “sufficient corresponding provisions” between EU and EEA law.


3.4. Our view on the question of transferal

We are in full agreement with the District Court when it comes to the absence of an obligation to refer cases to the EFTA Court under EEA law. We do not, however, agree that this precludes transferal of the Köbler-doctrine to EEA law. First of all, we contend that the duty to refer under Article 267 TFEU is simply one of several factors to be taken into consideration in the assessment of whether there are grounds for State liability, rather than the integral part of the justification for the applicability of this principle to the judiciary.[14] Transferring this principle to EEA law without taking this factor into account, or attaching less weight to this factor, is therefore conceivable. In other words, we are of the opinion that these differences between the EU and the EEA legal systems might warrant adaptations and divergencies in the interpretation and application of the principle, but that they cannot warrant non-transferal.[15] Furthermore, it should be noted that it is logically feasible to place blame on an actor for an omission despite this actor being under no formal obligation to act.[16] In our opinion, more or less complete homogeneity in this area is therefore by no means excluded. It should also be mentioned that the reasoning of the EFTA Court in the case of Kolbeinsson supports homogeneity and transferal, despite being somewhat unclear and not forming part of the ratio decidendi of the case. For these reasons, we are not convinced by the arguments of the District Court in favor of non-transferal and non-homogeneity. On the contrary, we are of the opinion that the abovementioned result-oriented approach to homogeneity, supported by the fundamental principles of loyalty, effective judicial protection and reciprocity, make transferal and homogeneity the most natural conclusion.[17]


3.5. No recourse to the Supreme Court, yet no decision from a Court of last instance?

Special attention is warranted for a particular part of the reasoning of the District Court. Based on one of the arguments of the Norwegian State, the District Court contended that application of the Köbler-doctrine in the case at hand would represent an extension of this doctrine, considering that the Borgarting Court of Appeal is not a court of last instance. The rationale behind the “last instance” requirement is that all national remedies must have been exhausted in an effort to repair the underlying infringement of EU law, in keeping with the principle of subsidiarity. When the Appeal Selection Board rejects an appeal to the Norwegian Supreme Court, the decision of the lower instance court eventually becomes res judicata, and all legal remedies have thus been exhausted. Such a rejection is as much of a decision of a court of last instance as a decision on the merits.[18] The opposite conclusion would entail that courts of last instance can avoid liability by simply refusing to grant leave for appeal, which obviously runs contrary to the EEA principles of loyalty and effective judicial protection.


4. Reflections and concluding remarks

In conclusion, this judgment can be seen as an example of how asking the wrong questions in the wrong order, and applying the wrong legal tests, can lead to unconvincing reasoning at best – and at worst, wrongful conclusions. We also find it worrying that the narrow understanding of homogeneity outlined above is still argued by the Norwegian State, and that this understanding was allowed to prevail in the case at hand. The borderline Kafkaesque assertion that the Köbler-doctrine would not apply anyway, because the decision of the Borgarting Court of Appeal was not made by a court of last instance, is also worthy of criticism. Furthermore, it is hard to understand that the District Court would rather answer fundamental questions of EEA law “with doubt” than hear the opinion of the EFTA Court. Dartride has lodged an appeal with Borgarting Court of Appeal against the decision of Oslo District Court. We await this eighth iteration with the hope that Borgarting will contribute to sorting out the sorry mess that has been made of fundamental EEA law principles in the Dartride saga.


 

Endnotes

[1] For more on the background for Dartride’s first lawsuit, see LB-2020-11829 (20-011829ASD-BORG/01).

[2] Case nr. 23-124975TVI-TOSL/07 (not yet published).

[3] See TOSLO-2019-72205 (not published).

[4] LB-2020-11829 (20-011829ASD-BORG/01). See also Hilde Ellingsen, “Tolga-saken og EØS-retten”, (2022) 61 Lov og Rett 216. Ellingsen represented Dartride in Borgarting Court of Appeal in the first round of the saga.

[5] HR-2021-546-U.

[6] TOSL-2021-150525.

[7] LB-2022-189531 (22-189531ASD-BORG/02.

[8] HR-2023-1162-U.

[9] HR-2005-1690-P.

[10] See, for instance, HH Fredriksen, “State liability in EU and EEA law: the same or different?” (2013) 38 EL Rev 884 pp 885-888.

[11] HH Fredriksen, “State liability in EU and EEA law: the same or different?” (2013) 38 EL Rev 884 p 886.

[12] See, for instance, Ole-Andreas Rognstad, «Om forholdet mellom EU-retten og EØS-retten» in Finn Arnesen et al, Oversikt over EØS-retten (Universitetsforlaget 2022) 30 p 49 and HH Fredriksen and Gjermund Mathisen, EØS-rett (fourth edn, Fagbokforlaget 2022) p 358.

[13] HH Fredriksen, “State liability in EU and EEA law: the same or different?” (2013) 38 EL Rev 884 p 886 with further references.

[14] In our view, this is supported by the reasoning of the CJEU in Köbler, as well as in later cases such as XC para 58 and Târşia para 40.

[15] M Elvira Méndez-Pinedo, EC and EEA Law: A Comparative Study of the Effectiveness of European Law (Europa Law Publishing 2009) p 289.

[16] See for instance Christian Franklin, “Article 3” in Arnesen et al (eds), Agreement on the European Economic Area: A Commentary (C H Beck, Hart, Nomos and Universitetsforlaget 2018) 174-175 p 37.

[17] As far as we can tell, there is a consensus among the legal scholars who have examined this question in favor of transferal and homogeneity. See, for instance, Eiríkur Jónsson and Valgerður Sólnes, “State liability in EEA law” (2022) 135 TfR 112 p 129, Thomas Christian Poulsen, “Article 45” in Arnesen et al (eds), Agreement on the European Economic Area: A Commentary (C H Beck, Hart, Nomos and Universitetsforlaget 2018) 1066 p 1071 and HH Fredriksen and Gjermund Mathisen, EØS-rett (fourth edn, Fagbokforlaget 2022) p 474. See, however, Simen Hammersvik, “Nasjonal håndheving og domstolskontroll” in Finn Arnesen et al, Oversikt over EØS-retten (Universitetsforlaget 2022) 449 p 537, who does not appear to draw a clear conclusion.

[18] Some have argued that State liability, admittedly under EU law, should encompass actions of lower courts as well, see Pål Wennerås, “State liability for decisions of courts of last instance in environmental cases”, (2004) 16 Journal of Environmental Law 329. However, Wennerås does not address the view that the Court of last instance-requirement refers to national legal remedies being exhausted.

 

Authors

Tollef Otterdal Heggen, Faculty of Law, University of Bergen

 

How to cite

Holmen, Matias Tvermyr; Heggen, Tollef Otterdal (2024): No principle of State liability for breaches of EEA law attributable to the judiciary? Some reflections of the seventh round of the Dartride saga. Blog. EFTA-Studies.org.

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