State aid damages claim unsuccessful yet again – and time to bring such a claim is running out – by Aidan Robertson QC

As Falk J observed in 2019 in Credit Suisse v HMRC [2019] EWHC 1922 (Ch)[1] at [95] when rejecting a claim for damages following a full trial of the action, there is no recorded instance of damages being awarded by a court in the UK for breach of the EU State aid rules. That remains the case following the judgment handed down on 25 November 2020 in The Durham Company Ltd (t/a Max Recycle) v Durham County Council [2020] EWHC 3200 (Ch).[2]  HHJ Keyser QC, sitting as a judge of the High Court in the Competition List of the Business and Property Courts (Chancery Division) granted Durham County Council ‘reverse’ summary judgment on its defence against a claim for damages, as well as declaratory and injunctive relief.

The claimant, Max Recycle, runs a commercial waste collection and recycling business in north east England. It claimed that it was being undercut by the Council’s statutory commercial waste collection services which are provided for a ‘reasonable charge’ in discharge of its duty under section 45 Environmental Protection Act 1990. Max Recycle claimed that the Council was using its public sources of revenue to cross-subsidise those commercial waste collection services and that this alleged cross-subsidy constituted unlawful State aid as it had not been notified to the European Commission as required by the last sentence of Article 108(3) of the Treaty on the Functioning of the European Union.

The Council’s defence was that any alleged breach of the State aid rules was not, on any view, sufficiently serious under the EU Francovich principle and therefore did not give rise to a claim for damages. The Court agreed. If there were any breach, it was not an inexcusable breach for Francovich purposes and so did not give rise to a right to claim damages.

Max Recycle’s alternative claim that it did not need, as a matter of law, to plead a sufficiently serious breach based on dicta in the judgment of Morison J in Betws Anthracite Ltd v DSK Anthrazit Ibbenburen GmbH [2003] EWHC 2403 (Comm)[3], [2004] 1 CMLR 12, was also rejected: the Francovich criteria apply to any claim for damages so far as State liability is concerned.

Max Recycle’s claims for declaratory and injunctive relief were also rejected because by the time of any trial of the claim the EU State aid rules would have ceased to apply to the Council and so such relief would be devoid of purpose.

An additional limitation point about the availability of Francovich damages is worth noting (although it did not arise in this case).  Francovich damages claims are now subject to a special limitation period expiring in December 2022. This is because Francovich liability was abolished under the European Union (Withdrawal) Act 2018 with effect from 11pm on 31st December 2020 by Schedule 1, paragraph 4. Any Francovich claims relating to the period before that date are now subject to a limitation period expiring two years from that date under Schedule 8, paragraph 39(7) of that Act.


Brick Court Chambers, London




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