EU claims for damages because no environmental assessment

15 March 2013 by David Hart KC

Leth v. Austria,  CJEU, 14 March 2013  read judgment

You live very close to an airport. The airport expands without carrying out an Environmental Impact Assessment as required by the EIA Directive.  You want to sue the state for loss in value of your property. Can you claim? This is the strikingly simple question the subject of this judgment of the Court of Justice of the EU. And on the day the HS2 ruling came out (post to follow shortly, but compensation consultation unlawful) it is an interesting question to look at.

Ms Leth lives within the security zone of Vienna-Schwechat airport. The airport has been repeatedly expanded since Austria joined the EU in 1995. None of these expansions have received EIA as they should have done. Bold as brass, the Minister-President of the relevant region stated in 2001 that no EIA was required for any continuing development and certain extensions of the airport. The European Commission do not seem to have responded to the throwing down of this gauntlet – or if they did, it is not recorded in the judgment. Belgium has done likewise – see my summary post here.

But Ms Leth picked up the Minister-President’s glove. In 2009, she sued Austria and the relevant region for EUR 120,000 for the decrease in the value of her property, and for a declaration that the defendants would be liable if they carried out any further expansion without EIA. After various court appearances in Austria, an appellate court thought it was time to ask the EU court whether such economic losses were covered by the EIA Directive.

The CJEU agreed with the defendants that the Directive did not require an assessment of the effect of the proposal upon property prices. EIA, and its Article 3, does require assessment of direct and indirect effects of the proposal upon humans and the environment, as well as on “material assets” and cultural heritage. But “material assets” does not include the value of property, so the process does not involve looking at the loss of such value, so the Court decided.

But that was not the end of the story. Ms Leth was relying on a breach of EU law by the defendants. There are rules (going back to Francovich, as every law student will know) under which losses can be claimed from the state for such breaches.

In that respect, the Court has repeatedly held that individuals who have been harmed have a right to reparation if three conditions are met: (1) the rule of European Union law infringed must be intended to confer rights on them; (2) the breach of that rule must be sufficiently serious; and (3) there must be a direct causal link between that breach and the loss or damage sustained by the individuals.

[my numbering]

As for (1), previous EU case law (such as Wells) had decided that the EIA Directive was intended to confer rights on individuals, namely the right to have the environmental effects of a proposal assessed by the state.  Hence the Court in Leth noted:

As regards a right to compensation for such pecuniary damage, it follows from the Court’s settled case-law that, under the principle of sincere cooperation laid down in Article 4(3) TEU, Member States are required to nullify the unlawful consequences of a breach of European Union law. In that regard, the Court has already held that, 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 is for the national court to determine whether it is 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 agrees, whether it is possible for the latter to claim compensation for the harm suffered (see Wells, paragraphs 66 to 69).

And the Court picked up and ran with the words I have emboldened. Because it did not matter that money losses were not within the contemplation of the Directive, if the effects (i.e. noise) which caused those money losses were or should have been looked at in the assessment process.

So far so good for Ms Leth. Condition (1) for state liability was thus met – the Directive did confer rights on individuals. But Conditions (2) and (3) still remained for decision. The Court was understandably wary about saying too much about these, because these are ultimately a matter for national courts to decide. Condition 2 (sufficiently serious breach) will depend in part on whether there was some tricky point of interpretation which a member state might have got wrong in all good faith (in which case unlikely to be any liability) or – as would appear – it was just a brazen piece of ignoring EU rules (in which liability would be assured).

Condition 3 (direct causation of her damage) is far more tricky. The Advocate-General in her opinion canvassed the idea that causation might be proved if the failure to involve public participation rules might have meant that, say, someone bought a house which they would not otherwise have bought or (on different facts) failed to take preventative measures to avoid toxic emissions – what the A-G described in [50] as the warning function of the Directive. But the Court did not so limit possible causation. Ultimately, Ms Leth will have to show that she would have modified her behaviour or that the project would not have proceeded in the form it did (less flight movements or better noise attenuation or  that it would not have proceeded at all), had a proper EIA been carried out. This is against the context that a project can proceed even if adverse environmental effects are identified by it. Put simply, can she show she would have had a less noisy (and hence more valuable) property had Austria followed the rules?

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