The Council of State was recently authorised to grant compensation for damage suffered as a result of an illegal administrative act. On 2 October 2015, the Council of State granted such compensation for the first time.
As part of the sixth State reform, a second paragraph was added to article 144 of the Constitution, allowing the legislator to authorise the Council of State or the federal administrative courts to rule on the civil consequences of their decisions. Until then, a claim for compensation for damage suffered as a result of an illegal government action came within the exclusive competence of the ordinary courts.
The legislator gave the Council of State such authorisation with article 6 of the Act of 6 January 2014 concerning the sixth State reform, which added an article 11bis to the Acts on the Council of State, coordinated on 12 January 1973 ("ACS") (see also: Eubelius Spotlights March 2014). Based on this provision, any applicant or intervening party suffering damage from an act, the annulation of which it pursues before the Council of State, can claim a compensatory award. Thus, it is the illegality of the act in question (and not the fault, as is the case before the ordinary courts) which gives rise to the damage. In addition, article 11bis provides that, in its decision, the Council of State can take into account the public and private interests that are present in the case. Therefore, the compensation awarded by the Council of State may possibly not amount to the reparation of the complete damage. Article 11bis of the ACS also provides that, once a claim for compensation has been made before the Council of State, the applicant or the intervening party can no longer file a tort claim in the ordinary courts for the same damage, and vice versa. The legislator clearly opted for the application of the "electa una via" rule.
Article 11bis of the ACS came into force on 1 July 2014. To be admissible, the claim for damages has to be connected to an application made since 1 July 2014, or to a judgment rendered as from that date (article 40 of the Act of 6 January 2014).
In a judgment dated 2 October 2015, the Council of State awarded such damages for the first time (judgment no. 232,416).
In 2013, the applicant had introduced an annulment application and a suspension claim before the Council of State, with regard to a decision by the Interior Affairs Service refusing to provide him with an ID card necessary to engage in the security business (the ID card was applied for by the security company that wanted to employ him). In a judgment dated 31 October 2013 (no. 225,305), the Council of State found that decision to be illegal and suspended it. Following the suspension judgment, the Interior Affairs Service withdrew its decision and issued the applicant with the ID card he had applied for. In a judgment dated 24 July 2014 (no. 228,108), the Council of State made a decision with regard to the annulment application. Given that the act in question had been withdrawn and an ID card had been awarded, the Council of State merely observed that the application no longer had an object and that there was no longer any need for a decision.
Following that judgment, on 22 September 2014, the applicant introduced a damages claim before the Council of State pursuant to article 11bis of the ACS. He held that the illegality of the decision of the Interior Affairs Service had caused him damage, because the refusal to grant him an ID card resulted in lower earnings for a certain time than what he could have received as a security agent.
The first question the Council of State had to decide on in its judgment on 2 October 2015 was whether the judgment to dismiss delivered on 24 July 2014 – the only judgment in the case that had been handed down after the entry into force of article 11bis – contained a finding of illegality and could constitute a ground for a damages claim. The Council answered that question in the affirmative, and in doing so it rejected the argument made by the Interior Affairs Service that the judgment of 24 July 2014 did not in itself contain a finding of illegality. Based on the parliamentary discussions preceding the Act of 6 January 2014, the Council of State held, first of all, that damages can accompany any judgment finding an illegality, and not just an annulment judgment. It then decided that the judgment dated 24 July 2014 recognised the existence of an illegality, which was accepted as a serious ground in the suspension judgment, and that hence there was a judgment at hand finding an illegality in the sense of article 11bis.
After clarifying this, the Council of State then considered the merits, namely the damages claim itself. It started by rejecting the claim for compensation for moral damage, because, in its opinion, this had been compensated for by the suspension as ordered by the judgment dated 31 October 2013, in combination with the subsequent withdrawal of the decision and the granting of an ID card.
The Council nevertheless awarded compensation for the material damage suffered by the applicant from the illegality of the act in question, namely his pecuniary loss, plus judicial interest. In doing so, the Council found that there was a causal link between the finding of illegality and the damage suffered by the applicant. Without that illegality, the applicant would have been employed earlier by the security company and would have received more money than he had in fact received. To calculate these damages, the Council referred to the relevant collective agreement and calculated the difference between the payment the applicant would have received during a certain period if he had he been employed by the security company and the amount he actually received during the same period.
An important element to note is that, in its decision of 2 October 2015, the Council of State did not consider it necessary to adjust the amount awarded to the applicant as damages in the light of the public interest, but granted him full compensation for the damage he suffered.
This first such decision of the Council of State seems to invalidate the fear aired in certain academic comments that the Council of State might award damages lower than those that could have been awarded by the ordinary courts, which do not have to adjust damages in the light of the public and private interests at stake, but have to order full compensation of damage. That is certainly an important element to take into account for an applicant facing the choice of claiming for damages before the Council of State or before the ordinary courts. And it should not be forgotten that a party that files a damages claim before the Council of State can no longer lodge a tort claim with the civil courts to obtain compensation for the same damage, and vice versa.
Finally, it is worth noting that, according to the information on the website of the Council of State, an appeal in cassation has been filed against the judgment of 2 October 2015.
Authors:
Danijela Vuletic
