Research Handbook on the Economics of European Union Law
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Research Handbook on the Economics of European Union Law

Edited by Thomas Eger and Hans-Bernd Schäfer

The Handbook focuses particularly on how the development of EU law negotiates the tension between market integration, national sovereignty and political democracy. The book begins with chapters examining constitutional issues, while further chapters address the establishment of a single market. The volume also addresses sovereign debt problems by providing a detailed analysis of the architecture of the EU’s monetary institutions, its monetary policy and their implications.
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Chapter 4: Can Member State Liability for the Infringement of European Law Deter National Legislators?

Hans-Bernd Schäfer


Hans-Bernd Schäfer* 1 INTRODUCTION Legislative injustice originates when a legal norm does not conform to higher-ranking law, if the legislative body through its actions or lack of action has precipitated or extended an illegal condition. For most legal orders state liability for legislative injustice does not exist or it exists only in rare and exceptional cases. The most important exception to this is EC law. Through a series of wide-reaching decisions, the European Court of Justice (ECJ) established liability for harm in the case that a national law of a member state violates EC law and an individual’s right is violated.1 The ECJ has justified its innovative decisions in particular to give full effect to European law.2 It created an instrument for European citizens that should lead to a more effective implementation of EC law within the member states and provide incentives to legislators in the member states to conform to EC law. The focus of this chapter is to examine whether and to what extent this goal can be achieved by state liability for infringement of European law by legislators in member states. The economic analysis of the incentives of liability for legislative acts of EU member states which violate superior law is undeveloped to date. Lee, who uses the concept of external effects, comes to an optimistic conclusion, which is however not supported by the reasoning in this chapter: “the temptation of national authorities to make decisions which benefit their own national economies at the expense of...

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