EU Liability and Judicial (Un)predictability: An Appraisal of the Test for a Serious Breach of Law under Article 340(2) TFEU

A liability regime should be administered in a way that induces public authorities to perform more diligently, without undesirably paralysing their proactivity. A decisive factor in striking this balance is controlling the predictability of liability itself, as determined by the conditions set out by courts for damages to be awarded. The article examines the multi-step test developed by EU courts to rule on the whether a breach of law by an EU authority is sufficiently serious under art.340(2) TFEU, from the perspective of its transparency and predictability. Analysing settled and recent case law, we find that the current test establishes selective unpredictability as to whether a serious breach will be found. EU courts weigh up opaque factors such as the legal or technical complexity of the situation to qualify a mistake as “excusable”. The article foregrounds that selective unpredictability gives EU judges the strategic flexibility to limit the over-deterring effects of liability and argues that EU courts do not provide meaningful guidance on how they ultimately qualify a mistake as “excusable” under the standard of ordinary diligence. We thus propose a new standard to improve the predictability of the test, reflecting on what type of mistakes should be considered unacceptable in a liability regime designed to foster administrative diligence and proactivity.