Since 2014, the Council of State has been authorised to grant compensation for damage suffered as a result of an illegal administrative act. On 2 October 2015, the Council of State granted such compensation for the first time, in response to the withdrawal of a contested administrative act by the defendant following its suspension judgment.
The Court of Cassation annulled the Council's judgment on 15 September 2017. The cassation judgment, together with the opinion of the Advocate General preceding it, make it clear that only an annulment judgment by the Council of State can "find an illegality", necessary for the Council to grant compensation for damage. Neither a suspension judgment, nor the withdrawal of an administrative act, nor a judgment taking note of such withdrawal, constitutes the "finding of an illegality". The legal and practical consequences of this cassation judgment are far-reaching.
As part of the sixth State reform, a second paragraph was added to article 144 of the Belgian Constitution, allowing the legislator to authorise the Council of State or the federal administrative courts to rule on the civil consequences of their decisions. Until then, a claim for damages suffered as a result of an illegal government action came within the exclusive competence of the ordinary courts.
The legislator granted the Council of State such authorisation with article 6 of the Act of 6 January 2014 concerning the sixth State reform, which added an article 11bis to the Acts on the Council of State, coordinated on 12 January 1973 ("ACS"). Based on this provision, any applicant or intervening party suffering damage from an act, the annulment of which it pursues before the Council of State, can claim damages. Thus, it is the illegality of the act (and not the fault, as is the case before the ordinary courts) which gives rise to the damage.
Article 11bis of the ACS came into force on 1 July 2014. To be admissible, a claim for damages has to be connected with an application made on or after 1 July 2014, or to a judgment rendered as from that date (article 40 of the Act of 6 January 2014).
First damages award by the Council of State
In a judgment dated 2 October 2015, the Council of State awarded such damages for the first time (judgment no. 232,416).
In 2013, the applicant had introduced an annulment application and a suspension claim before the Council of State, with regard to a decision by the Interior Affairs Service refusing to grant an ID card necessary to engage in the security business (the ID card was applied for by the security company that wanted to employ him). In a judgment dated 31 October 2013 (no. 225,305), the Council of State found that decision to be illegal and suspended it. Following the suspension judgment, the Interior Affairs Service withdrew its decision and issued an ID card. In a judgment dated 24 July 2014 (no. 228,108), the Council of State rendered a decision with regard to the annulment application. Since the act in question had been withdrawn and an ID card had been issued, the Council of State merely observed that the application no longer had an object, and hence a decision was no longer needed.
Following that judgment, on 22 September 2014, the applicant introduced a damages claim before the Council of State pursuant to article 11bis of the ACS. He held that the illegality of the decision of the Interior Affairs Service had caused him damage, because the refusal to grant him an ID card resulted in lower earnings for a certain time than he could have received as a security agent.
The first question the Council of State had to decide on in its judgment on 2 October 2015 was whether the judgment to dismiss delivered on 24 July 2014 – the only judgment in the case that had been handed down after the entry into force of article 11bis – contained a finding of illegality and could constitute a ground for a damages claim. The Council answered that question in the affirmative, and in doing so it rejected the argument made by the Interior Affairs Service that the judgment of 24 July 2014 did not in itself contain a finding of illegality. Based on the parliamentary discussions preceding the Act of 6 January 2014, the Council of State held, first of all, that damages can accompany any judgment finding an illegality, and not just an annulment judgment. It then ruled that the judgment dated 24 July 2014 recognised the existence of an illegality, which was accepted as a serious ground in the suspension judgment, and hence there was a judgment at hand finding an illegality in the sense of article 11bis.
After clarifying this, the Council of State then considered the merits, namely the damages claim itself. It awarded compensation for the material damage suffered by the applicant from the illegality of the act, equalling his pecuniary loss, plus judicial interest. In doing so, the Council found that there was a causal link between the finding of an illegality and the damage suffered by the applicant. Without that illegality, the applicant would have been employed by the security company earlier and would have received more pay than he had in fact received.
The Court of Cassation's annulment judgment
On 15 September 2017, the Court of Cassation annulled the Council of State's judgment of 2 October 2015, with only a summary statement of reasons.
The Court found that the Council of State had acted illegally by regarding its own judgment, which declared the annulment appeal without object following the withdrawal of the contested administrative act, as a judgment finding an illegality in the sense of article 11bis and by concluding that the damages claim was admissible.
The cassation judgment, together with the opinion of the Advocate General, make it clear that only a judgment by the Council of State, closing the annulment procedure with a definitive settlement of the dispute concerning the legality of the contested act and explicitly establishing an illegality, issued on or after 1 July 2014, can provide the basis for compensation for damage.
However, since a suspension judgment, stating that a certain ground is serious, only contains a prima facie assessment (which is only temporary), it is not a judgment "finding an illegality". According to the Court of Cassation, in that respect it is irrelevant that the administration withdrew the administrative act with a clear reference to the suspension judgment. Similarly, the Council of State's judgment following this withdrawal, which establishes that the annulment appeal is without object, cannot form the basis of a damages claim.
What happens now?
The Council of State is obliged to pronounce judgment on the case again, taking into account the cassation judgment of 15 September 2017. In other words, the Council of State will have no choice other than to refuse to allow the compensation for damage.
This cassation judgment has clear practical implications: it is to be expected that certain authorities, when confronted with a suspension judgment which prima facie establishes an illegality in their administrative act, will withdraw their administrative act. If they do so, it is then impossible for the Council of State to order them to pay compensation. After all, according to the Court of Cassation, neither a suspension judgment, nor a withdrawal, nor a judgment following such withdrawal, constitutes a ground for compensation. If the authorities await the outcome of the annulment proceedings, there is a risk that the Council of State will determine an illegality in their administrative act, making them liable for compensation.
Until now, damages proceedings before the Council of State have proved especially useful in cases where the applicant was claiming a relatively low level of compensation. In such cases, the applicant will not be inclined to file a claim with the civil courts, because the costs of these proceedings will exceed the value of the claim. The new compensation system, created by article 11bis ACS, makes it possible for the applicant nevertheless to obtain compensation for damage suffered as a result of an illegal administrative act. The expected increase in withdrawn administrative acts following a suspension judgment will therefore adversely affect such applicants.
The question remains what the effect of the cassation judgment will be if the Council of State annuls an administrative act under an expedited procedure because the defendant failed to file a request (in a timely manner) for the continuation of the procedure, following the Auditor's report advising the annulment of the contested administrative act. In this scenario, the Council of State will annul an administrative act without establishing an illegality. Following the logic of the Court of Cassation, it is impossible for the Council of State to grant compensation for damage in this context. However, prior to the cassation judgment of 15 September 2017, the Council of State had already annulled certain administrative acts and reopened the proceedings in order to examine the claim for compensation, in exactly the same circumstances. This case law is directly contrary to the Court of Cassation's judgment of 15 September 2017.
The Constitutional Court also takes part in the discussion
Given the above, it is clear that the cassation judgment of 15 September 2017 will not be the end point of the discussion concerning the awarding of damages by the Council of State. This was recently demonstrated by the fact that the Council referred a question to the Constitutional Court for a preliminary ruling, which could possibly undermine its entire compensation system.
The Council of State wants to know whether the fact that only the applicant has the right to choose between the Council of State and the civil courts, when lodging a claim for compensation for damage suffered as a result of an illegal administrative act, violates the principle of equality. When the applicant brings his claim before the Council of State, the defendant is bound by this choice, which means (unlike what would be the case before the civil courts) that:
- he cannot appeal the Council's judgment,
- he does not have the opportunity to demonstrate that the illegality of the administrative act does not constitute a civil fault, which would render the claim for compensation unfounded, and
- he cannot appeal for cassation.
If the Constitutional Court should rule that the current compensation system does indeed violate the principle of equality on these points, the consequences would be far-reaching. It would mean that the legislator would have to fundamentally alter this system, regardless of whether such alterations are even desirable in the light of the current broader allocation of tasks between the administrative and civil courts. The only other option would then be to abolish the Council of State's competence to grant compensation for damage.