The Spanish Supreme Court (TS) found the State, as legislator, to be financially liable in relation to the imposition of an administrative penalty in application of a legal provision that was subsequently found to be contrary to European Union law (Supreme Court decision of March 10, 2021)
The Catalan Government (Generalitat) imposed a fine of 20,001 Euros for infringement of the State Law on the Regulation of Retail Trade (LOCM) on a company belonging to the MEDIA MARKT group. Specifically, it was considered that the infringement provided for in Article 65.c) LOCM in relation to Article 14 of the same law, relating to the prohibition of so-called “sales at loss”, had been committed. This sanction was the subject of a an appeal for judicial review before the administrative court, which dismissed it.
Subsequently, in October 2017, the CJEU declared that EU law precluded a provision such as Article 65(c) LOCM (CJEU C-295/16). Within one year of the publication of the aforementioned judgment in the OJEU, the company lodged before the Generalitat a claim for compensation of damages against the State as legislator. This claim was transferred to the Spanish Central Government, which rejected it by means of an agreement of the Cabinet of Ministers, against which an application for judicial review was lodged.
In this context, the TS upheld the appeal and recognised the claimant company’s right to be compensated for the value of the penalty imposed, given that there had been an assumption of financial liability on the part of the State as legislator for infringement of European Union (EU) law. The TS considers, unlike the Cabinet, that there has indeed been a sufficiently serious breach of EU law, given that there was previous CJEU case law indicating that the provisions of the LOCM in question did not comply with Directive 2005/29/EC.
In short, as long as the requirements of the Public Sector Legal Regime Act are met (the appropriateness of which is not addressed in this summary), the claim for financial liability of the State as legislator proves to be a mechanism for reversing the financial effects of administrative sanctions that have become final, if the legal precept that supported their imposition is subsequently found to be contrary to EU law.