Germany infringed Community law by denying licensed and supervised private bookmakers from other Member States access to the German market mainly for fiscal reasons. Prohibition orders issued against betting shops transmitting bets to these bookmakers and the court orders upholding these orders, without taking Community law into consideration at all or at least not to the necessary extent, were unlawful as well.
As we already mentioned in our newsletter „German Gaming Law updated“ two years ago, the German government is therefore liable for damages. Governmental liability should apply to current cases as well, as Community law – unlike German law (in the Act on the Federal Constitutional Court, Bundesverfassungsgerichtsgesetz) – does not provide for transitional periods, de facto accepting an illegal status of the infringement of Community law for almost two years. The current legal situation in Germany is still discriminatory with regard to bookmakers from other Member States. ODDSET, the state sports-betting offer, is still being massively advertised for (especially with regard to the FIFA World Cup).
Government liability is based on the duties assumed by ratifying the EC Treaty. As a member of the European Union Germany is obliged to guarantee full effect of Community law. The freedom to provide services and the freedom of establishment as essential guarantees are included. Germany’s position as a „guarantor“ is the result of the principle of faithfulness to the Community as established in Article 10 EC Treaty. The European Court of Justice (ECJ) has already acknowledged Community law based governmental liability for some time. In several decisions, rendered in the 90’s, the ECJ pointed out, that the principle of governmental liability for damages to individuals resulting from infringements of Community law to be attributed to state authorities, follows from the nature of the legal system established by the EC Treaty.
According to the case law of the ECJ, the principle of governmental liability is applicable to executive, legislative as well as judicial torts:
– If Germany is not faithful to the treaty, its authorities preventing companies from other Member States from exercising the freedom to provide services and the freedom of establishment (e.g. by issuing prohibition orders), Germany commits an „executive tort“.
– If German court decisions are incompatible with Community Law, this might represents „judicial tort“.
– A national legal situation, breaching Community law, may result in liability for „legislative tort“ (cp. ECJ, „Brasserie du Pêcheur“ regarding the foreclosure of the German beer market by German law).
Community law based governmental liability may be invoked by any individual or corporate body from an EU Member State. A claim for damages against a Member State requires that the Community law provision that was infringed in a way to be attributed to the state or its authorities, must entail creation of rights to the injured party, that the infringement of the provision is qualified and that there is a direct causal link. Limitation of liability may not directly limit the practical effectiveness of Community law. This is indicated by the general principles of effective legal protection and fair access to the courts. The damage to be claimed includes lost profits.