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The question to be studied in this part of the paper is whether, in
light of the apparent conceptual identity between State liability in the
European Union and constitutional tort liability, the theories developed to
explain constitutional torts can provide a convincing account of Member State
liability in the European Union. Because my goal is to discover the possible
justice underlying the legal relationship described in Part II, this part of
the paper will be more normative than the preceding parts. Nevertheless, as I
have pointed out, this is not an unconstrained normative exercise. The
suitability of a particular theory will depend in part on the extent to which
it adequately describes the legal phenomenon. A good theory, in other words,
will be capable of accounting for the essential features of the positive law of
State liability in the EU.
I will examine the two theories most frequently
advanced as a basis for constitutional tort liability, one of them an economic
theory based on the notion of externalities and the other a non-instrumental
theory based on corrective justice.
An externalities theory of EU Member State liability suggests that the
purpose of liability is to ensure that public decision-makers in each Member
State internalize the costs which their decisions may impose on interests
located in other Member States. In this way, the temptation of national
authorities to make decisions which benefit their own national economies at the
expense of other Member States will be kept in check, and only those measures
which are, on balance, beneficial for the Union as a whole will be undertaken.
The externalities theory is an instrumental and, more specifically, an
economic theory. It is instrumental because liability serves an ulterior
purpose, and it is an economic theory because this purpose is social-welfare
maximization. Before examining the theory in more detail, it is useful to
explain the sense in which an economic theory can claim to be a theory of
justice.
In law, economic analysis has both descriptive and prescriptive
aspirations; it aspires to provide both a framework for analyzing the
consequences of legal rules and a solution to problems of legal choice. With
respect to its descriptive aspect, economic analysis often starts from the
assumption that people are motivated by rational self-interest, and proceeds to
ask what impact particular rules might have on the activities that are
undertaken (allocative impact) and on the welfare of different segments of the
population (distributive impact). As for the prescriptive aspect of law and
economics, the desirability, or justness, of a rule depends on its efficiency.
Here there are a number of possible approaches. One approach is to measure a
proposed legal rule against a standard of Pareto-efficiency, which means that a
proposed legal rule will be considered superior to an existing rule if it
improves the subjective welfare of at least one member of the community without
making any other member of the community subjectively worse off. The pure
Paretian approach is inapplicable in the real world, since virtually every
legal rule makes operates to the disadvantage of at least some people.68 As a result, when legal economists speak of
efficiency, they are usually referring to a more lenient standard, such as
Kaldor-Hicks efficiency, which considers a measure to be superior to the status
quo if those whose welfare is improved by the measure obtain sufficient benefit
from it that they could perfectly compensate all those whose welfare is reduced
by it.
The first applications of economic theory to legal problems were
generally confined to fields where the justification for legislative or
judicial intervention could reasonably be expected to be found in economics:
Trebilcock cites antitrust, tax policy, and public utility regulation as key
examples of these traditional applications.69 Later, groundbreaking work by Coase and
Calabresi extended economic analysis to private law fields such as tort and
property law, where they faced competition from more traditional, moral
theories, such as corrective justice.70
With the writings of Becker, Posner and others,71 law and economics has penetrated even further
into areas traditionally thought to be non-economic, such as criminal law,
family law, and human rights law. Today, there is scarcely a field of law that
has not been examined from the perspective of law and economics.
The broad
application of law and economics has not been uncontroversial. Attacking the
validity of the factual assumptions underlying legal economic theory, critics
argue that people cannot be counted on to act in their rational self-interest,
because they do not have sufficient information, are motivated by concerns
which go beyond their self-interest, and are in any event not perfectly
rational. These objections are well-taken up to a point, but they rest in part
on an overstatement of the goals of legal economics. Most economists do not
claim that an analysis based on an assumption of rational self-interested
behavior can completely account for all human conduct, but simply that it can
help to predict, at least with partial success, the impact that legal rules
might have on human behavior.72 For
example, the fact that possible tortfeasors are not motivated solely by a
desire to avoid liability does not change the fact that many of them may take
greater care in response to a more unforgiving liability regime.
The
critics of law and economics also argue that it is normatively impoverished,
and that aggregate welfare maximization is not a substitute for justice. Some
fields, such as criminal, family and constitutional law, are thought to be
inherently non-economic, and the values reflected in these areas ought not to
be reduced to mere factors in a utilitarian calculus. For example, it might be
feared that applying a utilitarian analysis to the protection of fundamental
constitutional rights could result in the rights of a small minority being
traded away to secure benefits to the majority. Certainly under the
Kaldor-Hicks model one could imagine a relatively large cost (e.g., violation
of fundamental rights) imposed on a small minority being outweighed by the
aggregate of small gains (e.g., administrative efficiency) to the majority.
In answer to this objection, one might point out that economic analysis
does not inevitably lead to this kind of result. It is open to a legal
economist to reason that an individual attaches such great utility to his or
her fundamental rights that under no realistic circumstances could the
disutility arising from their violation be outweighed by benefits to the
majority, except possibly in extremely rare circumstances where the fundamental
rights of some individuals must be restricted in order to prevent some
catastrophic harm that would jeopardize the fundamental rights of all.73
Clearly, however, one would need some
theory to decide what utility to attach to various interests asserted as
fundamental. Theories of natural rights, for example, might be invoked at this
stage. Some utilitarian absolutists would reject the notion that utility can be
assessed objectively, and would argue that the relevant value is each person's
subjective assessment of the utility or disutility to him or her of a
particular measure. It may be, however, that some objective measurement of
utility cannot be avoided. To use a stark illustration, even a utilitarian
analysis must recognize that a pedophile's subjective utility from his conduct
has a value that is intrinsically different from (i.e., less than) the victim's
utility from being left alone. To rank these two utilities, there needs to be
an external or objective value system, i.e., a theory of rights.74
In any event, economic efficiency does not
pretend to be an exclusive theory of justice. It does not preclude, for
example, distributive justice as a criterion for the allocation of
wealth,75 although it argues that certain
legal rules, such as liability rules, are best understood as furthering the
goal of maximizing aggregate welfare rather than assuring an equitable
distribution of resources. It would be wrong, therefore, to equate economic
analysis with absolutist utilitarianism. In its descriptive aspect, economic
analysis claims to provide a partial explanation for human conduct and a means
of predicting the behavioral impact of legal rules. On the prescriptive side,
legal economics provides one possible structure for assessing the desirability
of legal rules by reference to their aggregate impact on the welfare of the
members of the community. The fact that other theories of justice also exist,
or that the assessment of utility may require reference to an external value
system, does not diminish the usefulness of the economic method of analysis.
It is in this spirit that I now turn to an examination of the
externalities theory of liability.
A particular course of action should be undertaken if and only if it
increases aggregate welfare, that is, if the benefits society obtains ("social
benefits") as a result of the activity exceed the costs the activity imposes on
society ("social costs"). However, when a rational, self-interested actor
decides whether to undertake a particular course of action, she is unlikely to
base her decision on the benefits and costs of the activity for society as a
whole. Rather, her inclination will be to consider only one component of the
total social costs and benefits of the activity - namely, those costs and
benefits which accrue to her ("private costs and benefits") - and to ignore the
costs and benefits which the activity will occasion for the rest of society
("external costs and benefits"). She will undertake a proposed activity when it
is privately profitable, that is, when the private benefits exceed the private
costs, regardless of whether the activity produces a positive or negative net
social benefit. In fact, it is almost certain that some activities which
produce a negative net social benefit will be privately profitable, for
example, when the benefits of a proposed activity accrue primarily to the
private actor while most of the costs are incurred by others.
For an easy
illustration of this phenomenon, suppose that a business person is deciding
whether to build a new manufacturing plant. From society's standpoint, the
plant should be built if the total social benefits from the plant exceed the
total costs. The social benefits of the plant would include the business
person's private benefits (the present value of her expected operating profits
from the plant) plus any external benefits to the broader community, such as
job creation. The social costs of the plant would be composed of private costs
to the business person (her cost of building the plant), plus any costs which
the plant will impose on the rest of the community, such as damage to the
environment. However, our business person is unlikely to consider all of these
benefits and costs. Her rational, self-interested inclination would be to build
the plant if the present value of her expected profits from the plant exceeds
the cost of building the plant - in other words, if the private benefits of the
plant exceed the private costs. She is not likely to consider either the
external cost to the community of the pollution caused by her operations, or
the external benefit to the community of the employment the plant will create.
As a result, she may decide to build the plant even if the community as a whole
might be better off without it.
Tort law claims to solve the problem of
externalities by requiring private actors to compensate those injured by their
actions under certain circumstances. For example, under Learned Hand's
well-known formulation of the negligence standard, an injurer must pay
compensation if the cost of avoiding the harm would have been less than the
expected value of the potential harm (i.e., the probability of the harm
multiplied by the magnitude of the harm).76 Because she may be liable for the external
costs of her activities, our business person will no longer simply disregard
those costs. In the first place, she will take cost-effective preventive
measures, that is, measures which, by diminishing the risk of injury, reduce
expected injury costs by an amount greater than the cost of the measure. As
well, when deciding whether to build the new plant at all, she will do so if
and only if her net private benefit from the plant exceeds the cost of the
requisite preventive measures.
Alternatively, under a strict liability
standard, a defendant must pay compensation for the actual harm caused by her
actions, regardless of whether the harm could have been cheaply avoided. Under
this standard, private actors will take the same cost-effective preventive
measures as under a negligence regime.77
However, their initial decision whether to engage in the activity at all will
be different. Our business person, operating under a rule of strict liability,
would build her new plant if and only if her private benefits exceeded the
costs of the preventive measures plus the expected value of any compensation
that would have to be paid in respect of unprevented injuries.
It can be
seen that tort liability, by internalizing all or a portion of the external
costs of decisions, produces two sorts of social gains. First, there is the
gain from the taking of cost-effective preventive measures - the amount by
which the cost of the preventive measures is exceeded by the reduction in
expected injury costs. Second, there is a gain from the non-occurrence of some
socially detrimental conduct78 which is
made privately unprofitable by the fact that the private actor will expect to
incur additional costs in connection with preventive measures, compensation for
injury, or both.
A number of objections can be raised against the
externalities theory. First, since tort law internalizes all or a portion of
the external costs and none of the external benefits of activities, it
introduces a bias into decision-making, and one cannot know whether the net
effect of this bias will be to increase or decrease aggregate welfare. Second,
tort law may not maximize social welfare since it leaves the computation of
utility at least partly to the subjective assessment of the potential
tortfeasor.
To understand the first objection, recall that by
internalizing some or all of the external costs of activities, tort law makes
activities more costly to the person who proposes to undertake them. This is
true of all activities, whether they are socially beneficial or socially
detrimental. Thus, tort liability does not eliminate only socially detrimental
activities; in fact, it eliminates all activities for which the net private
benefit is not sufficient to cover the external costs (or the prevention costs,
in a negligence regime) of the activity. Some of these activities would have
been socially detrimental, but others would have been socially beneficial.
Imagine, for example, an activity that produces private benefits that slightly
exceed the private costs. Suppose that this activity also produces significant
external costs, but much higher external benefits. In the absence of a tort
liability system, this activity would be undertaken because it is privately
profitable. However, under a rule of strict liability, a private actor would be
required to pay a portion of the external costs of the activity, namely, the
cost of preventive measures plus compensation for any unprevented injury, while
not being permitted to reap the external benefits. If these additional costs
are sufficiently high,79 the activity will
not be undertaken even though it is socially beneficial. Substituting a
negligence rule for a rule of strict liability reduces the magnitude of the
problem, but does not eliminate it. In a negligence-based tort regime, a
private actor would still be required to pay a portion of the external costs of
the activity, specifically, the cost of preventive measures, while being unable
to appropriate any portion of the external benefits. If the preventive measures
are sufficiently costly,80 the activity
will not be undertaken even though it is socially beneficial.
This problem
would not arise if there were some mechanism for internalizing the external
benefits of an activity, so as to offset the bias introduced by tort liability.
In the absence of such a mechanism, however, the tort liability system is not
unambiguously beneficial. The cost of tort liability is the value of socially
beneficial activities which are forgone because the obligation to take
preventive measures or pay compensation renders them privately unprofitable.
There is no way of knowing, a priori, whether the benefits forgone will
be less or greater than the sum of the gains from the taking of cost-effective
precautions and the elimination of some socially detrimental conduct. I
conclude that an externalities theory is incapable of telling us whether tort
liability is welfare-enhancing or welfare-impairing. 81
Now for the second objection. Recall that
the normative acceptability of an economic model depends on its incorporation
of an objective value system which allows us to compare the injurer's interest
in performing the activity to the impact of the activity on other people. Tort
litigation subjects the latter part of the utility computation to judicial, and
therefore presumably objective, assessment. In deciding whether to act,
potential tortfeasors will use this objective measure of the disutility imposed
on other people by the activity. However, there is no similar constraint on the
potential tortfeasor's assessment of her own utility from pursuing the
activity. In practical terms, one could imagine socially detrimental conduct
being undertaken by a person who attached an excessive value to the benefit she
received from it.
Both of these objections suggest that it is unclear
whether tort liability is welfare-enhancing. Since, under an economic analysis,
the justness of tort liability rests on the claim that it increases aggregate
welfare, the failure of an externalities theory to demonstrate that aggregate
welfare is increased by the liability rule is a major weakness of the theory.
In addition to the general external objections to economic analysis and the internal weaknesses of externalities theory, there are two additional difficulties which arise when the theory is applied to governmental liability. The first is a theoretical hurdle, namely that the government is not analogous to a self-interested private actor. It turns out that this problem has a solution, and I conclude that an externalities theory is capable of explaining State liability for infringements of fundamental rights and systematically neglected interests. The second, more practical problem is that liability rules may not actually influence the behavior of governments.
The Objection. The externalities argument is based on the idea of
a rational, self-interested, private decision-maker who, in the normal course
of events, would not be expected to take into account the effects of her
actions on society at large. It is not immediately obvious that the government
can be assimilated to such a person. Unlike private actors, government is not
expected to disregard the social benefits and costs of its actions.82
On the contrary, enhancing the well-being of the community is an essential duty
of government.
There are, of course, imperfections in governmental
decision-making. Governmental decision-makers may well be influenced by private
motives, such as protecting their departmental budgets, job security,
professional prestige, and so on. Cohen summarizes the problem as follows:
While in a perfect world the bureaucracy may take into account all the social costs of its activity, reality may be quite different. This may be because these costs do not come out of the bureaucratic budget, or because the bureaucrat calculates costs not in terms of willingness to pay to avoid the state activity, but in terms of "political costs." In that case the costs may not be related to the preferences of the members of the relevant community. 83
As well, even when they are motivated to maximize social utility,
government is forced by practical realities to act upon imperfect information.
Nonetheless, I am not persuaded that we should assume that the
generalization which applies to private activity (i.e., that private actors
will generally disregard the social costs of their activity) can be applied
with equal success to the government. There is a difference between imperfect
pursuit of social welfare-maximization, which government engages in, and the
pursuit of private interest, which private actors engage in. If we believe that
governments routinely adopt policies without regard to the social costs of
those policies, it is a serious problem which can only be remedied through
structural reforms, such as increased transparency and accountability, and not
through such a clumsy device as State liability.
Recall, moreover, that
the application of liability rules requires the judiciary to assess the
external costs of the alleged tortfeasor's conduct. This task is difficult
enough when what is being evaluated is private conduct, affecting a limited set
of external interests, but it verges on the impossible when the impugned
conduct is a governmental policy. The judiciary is poorly equipped, as an
institution, to make assessments of the net social cost or benefit of
governmental decisions. Compared to the legislative and executive organs of
government, the courts have less flexibility, less access to technical
expertise, and less capacity to investigate the social and economic impact of
various policies. It is true that the courts have evolved somewhat in North
America, and that the traditional bi-polar, fact-based form of adjudication is
increasingly giving way to multi-polar litigation and an inquiry into social
facts and policy.84 To assist in their new
role, U.S. and Canadian courts have developed tools for obtaining social
science data and policy advice, such as the appointment of amici curiae and the
use of Brandeis briefs. However, this trend remains a peculiarly North American
phenomenon, and is regarded skeptically in many other countries.85 In any event, even in the U.S. and Canada,
courts are unlikely ever to be able to do the job of legislatures and
executives, i.e., maximize social welfare, as well as those two branches, and
engaging in this task may detract from their effectiveness as the adjudicative
branch of government.
The Response. There may be exceptions to the
general rule that government adequately considers the social impact of its
policies. If some kinds of social cost are systematically disregarded or
undervalued by government, then a liability rule targeted at these overlooked
costs might serve a useful purpose.
This argument is related to the
utilitarian conception of fundamental rights, developed by Sumner in his book,
The Moral Foundation of Rights.86
Sumner describes rights as rules which, although they appear at first glance to
constrain legislatures and executive officials' ability to promote some desired
goal (such as maximizing aggregate welfare), actually make it more likely that
the goal will ultimately be achieved because they prevent certain predictable
errors by the decision-maker. Sumner illustrates his point with an example
taken from the context of medical experimentation.87 He asks us to consider a hospital ethics
committee which sets out to ensure that experiments are only conducted if the
costs are outweighed by the benefits, but which suffers from deficiencies in
the decision-making structure which create a systemic bias in favor of
experimentation. For this reason, the committee pre-commits to a rule of
informed consent "to introduce a counterbalancing bias in favour of the
subjects" of experimentation and improve the likelihood that the experiments
will be authorized if they produce a net benefit, and rejected if they produce
a net cost.88 What applies to the hospital
ethics committee, says Sumner, applies to government in general. A government
interested in the pursuit of a goal (such as welfare-maximization) might
pre-commit to rights, which will sometimes prevent it from doing what might
appear, at the particular moment, to be welfare-maximizing, in order to
counterbalance some bias in the public decision-making system and increase the
chance that the ultimate decision will actually be welfare-maximizing.
Sumner does not elaborate on the kinds of interests that may be systematically
undervalued, but perhaps they include the interests of disempowered minorities.
Every governmental policy has winners and losers, and the fact that a
particular group is disadvantaged by a governmental measure does not mean that
their interests were not taken into account, or that their disutility from the
measure was not factored into the government's social-welfare-maximization
determination. However, there may be particular groups whose interests are
systematically overlooked because they lack political power. Recall the hint
dropped by Justice Stone in a footnote to his opinion in Carolene
Products, that the presumption that government acts in the public interest
may not be justified where a statute is "directed at particular religious, or
national, or racial minorities," since "prejudice against discrete and insular
minorities may be a special condition, which tends seriously to curtail the
operation of those political processes ordinarily to be relied upon to protect
minorities, and which may call for a correspondingly more searching judicial
inquiry."89
Another possibility is
that government systematically undervalues certain individual rights, such as
freedom of expression and freedom of religion. Under this theory, the purpose
of constitutional protection may be to lend additional weight to interests
which might otherwise be undervalued by government or by a popular majority.
Posner believed, for example, that criminal law protections might be
undervalued by law enforcement officials, who might systematically grant too
much weight to the goals of law enforcement and insufficient weight to the
rights of suspects.90
The recognition
that government systematically undervalues certain interests leads, in Sumner's
analysis, to the conclusion that the entrenchment of these interests in the
form of rights increases the likelihood that governmental decisions will turn
out to be welfare-maximizing. It also suggests that a liability rule may be
appropriate, to ensure that these interests are properly internalized. The rule
would be a form of strict liability for a class of systematically overlooked
social costs.
Interestingly, governmental liability targeted at these
systematically undervalued interests seems to escape the main objections to the
basic version of the externalities argument. For example, recall that in the
sphere of private activity, tort liability introduced a bias by internalizing
the social costs but not the social benefits of action. In the context of
governmental activity, this bias would not arise. Our baseline assumption is
that governments generally consider the social benefits (as well as the social
costs) of their activities, even in the absence of legal rules impacting
directly on the public treasury. Governmental liability rule in our model would
be targeted at a category of social costs which are believed to be
systematically undervalued by government. Internalizing these neglected costs
does not introduce a bias into governmental decision-making - it corrects one.
The other objection to the basic externalities theory related to the fact
that the decision whether to act was left to the private actor, who was thought
to be less objective in her assessment of utility than, for example, a judge.
In the context of governmental action, this weakness is transformed into an
advantage. For reasons which have already been mentioned, governmental actors
are better placed than judges to make assessments of utility. Moreover, as a
general rule, we do not question the objectivity of governments in the same way
that we doubt the objectivity of private preferences. It is entirely
appropriate, therefore, to leave the assessment of social utility generally to
the government, while creating a targeted exception for particular costs that
would not otherwise be properly internalized by the government.
Despite its theoretical attractiveness, a more practical objection may
be raised against the application of externalities theory to governmental
conduct, namely that governments are not actually influenced by liability
rules.
As I explained, above, critics of legal economics argue that it is
normatively inappropriate to place a finite value on fundamental rights.
However, even if one does not object, in principle, to an economic approach to
rights, the concern that the State would disregard rights if it were permitted
to pay compensation instead is heightened by the fact that the State has very
deep pockets. A State which can disregard rights by paying the victim, and
which has at the same time the power to print money or raise money by taxation,
may not be practically constrained against the infringement of rights.
Cohen highlights two reasons why damages awards are likely to have negligible
impact on governmental conduct. His analysis is based on the Canadian
experience, but the same phenomenon is likely to be observed elsewhere. First,
damages awards are very small in proportion to a department's budget. In
Canada, between 1983 and 1985, there was not a single government department
where aggregate damages claims exceeded 0.2 per cent (1/500) of the
departmental budget.
Second, governmental actors are not subject to the
same market forces that constrain private actors. Because of their compensation
structures and the discipline imposed by capital markets, corporate managers
can be expected to seek to maximize their profits by achieving an optimal
balance between internal profits and accident costs. Governmental departments
are not subject to anything approaching these constraints. Governmental
managers' compensation is all but unaffected by damages awards. As well,
damages awards are not normally paid out of the departmental budget, but out of
the general Treasury. Even if they were allocated to particular departments,
the most likely result would be an increased budget allocation to ensure that
existing programs would not have to be sacrificed. Ultimately, the losses would
be borne by the taxpayers, whose ability to scrutinize the efficiency of
government is even more limited than the ability of shareholders to monitor the
performance of corporate managers.91
Moreover, the argument that liability does not affect the conduct of government
departments or legislators applies with even greater force to judicial conduct.
In light of the principle of judicial independence (including institutional
financial independence), common to many countries, it is difficult to see in
what way a damages award against a State could be made to influence the conduct
of the judiciary.
Despite these practical difficulties, however, there
remains at least a plausible theoretical argument that the internalization of
overlooked social costs is capable of justifying targeted governmental
liability.
Here is what an externalities theory of EU Member State liability would
look like. The argument would begin with the observation that the interests of
people located outside a particular Member State, like the interests of
discrete and insular minorities within the State, are likely to be overlooked
by national governments. While we assume, for example, that an Agriculture
Ministry official in Rome will consider the effect of a proposed measure on
farmers and others in all parts of Italy, and will weigh the disadvantages to
some against the benefits to others, the official will not find it intuitive to
consider the impact of the policy on farmers or consumers in, say, Denmark.
Certainly, the political constraints which cause public officials to act in the
interest of the domestic electorate do not similarly constrain officials to
consider the interests of those who are not part of the national polity. EU
Member State liability internalizes the costs of domestic policies for people
in other Member States; it forces the Italian official to consider the external
costs of a proposed measure as if they were costs incurred internally.
At
first glance, this theory appears to be an attractive explanation of EU Member
State liability. Indeed, the protection of market freedoms within the EU
provides a partial answer to the practical problem posed in Cohen's analysis by
the lack of market constraints on government. In the European Union, the free
movement of capital and persons may make it easier for European investors and
taxpayers to assess the relative performance of their government and, if
necessary, to vote with their feet.
We might also think that this theory
is normatively attractive as applied to the European Union, since it reflects
an ideal of European solidarity. The externalities theory of EU Member State
liability treats the European Union as a single unit for the purpose of
welfare-maximization. Liability promotes decisions that maximize the aggregate
welfare of the entire Union, and prevents decisions that increase the welfare
of one country while imposing greater costs on another.
However, there are
some important problems with the externalities theory of EU Member State
liability. For example, a practical difficulty identified by Harlow is that the
prospects of deterrence through liability are reduced by the convoluted and
deliberately ambiguous nature of much Community law.92
There is also a more fundamental problem.
It may be wishful thinking to assume that Community law creates an obligation
on the part of Member States to consider the costs of their policies on
interests situated in other Member States. There is in fact no such duty.
Community law does not prevent a national governmental official from taking
action that may prove detrimental to the interests of people in other parts of
the EU, so long as the rules imposed by the Community are respected. For
example, a government might find it beneficial, from the perspective of its own
citizens, to adopt an indistinctly applicable and non-discriminatory marketing
restriction, even if the restriction has a detrimental impact on producers in
other EU Member States. Community law presents no obstacle to such
measures,93 and imposes no general
requirement to consider the interests of people in other Member States.
If
such a requirement did exist, then liability would not be conditioned on a
breach of a specific provision of Community law. Nor would it be necessary for
the injured party to show that the provision was intended to confer rights on
individuals. Instead, there would be a right to compensation whenever a
national policy had an adverse impact on anyone in another Member State. Since
the externalities theory fails to explain one of the essential features of EU
Member State liability - the requirement of a breach of individual rights
conferred by EU law - the search for a theory of State liability in the
European Union must go on.
The other main theory of justice encountered in the literature on
constitutional tort liability is the non-instrumental theory of corrective
justice. To what extent does this theory help us to explain the phenomenon of
Member State liability in the European Union?
Corrective justice explains the liability system as the law's
articulation of the moral requirement that wrongdoers make good the losses
caused by their wrongdoing. The wrongful causation of a loss creates a moral
relationship between the victim and the wrongdoer which is mirrored by the
legal relationship between plaintiff and defendant and which, without reference
to any goals extrinsic to this moral relationship, calls for compensation. In
his explanation of negligence law, Weinrib describes the sense in which
corrective justice is non-instrumental:
[T]he central elements of negligence law are regarded not as indirectly furthering some independently identifiable combination of goals, but as categories that mark an immediate normative connection between what the defendant has done and what the plaintiff has suffered.94
In this way, tort law exhibits an inherent rationality which accounts simultaneously for the right of a person injured by wrongdoing to compensation by the wrongdoer, and the corresponding obligation of the wrongdoer to make good the losses caused by his wrongdoing, without reference to an external purpose.
It was Aristotle who first described as "corrective justice" the notion that wrongful infliction of injury provided a basis for compensation distinct from relative need or merit ("distributive justice").95 In his Nicomachean Ethics, he wrote:
But the other [form of justice] is corrective, and its province is all transactions, as well voluntary as involuntary. ... [I]f the distribution be of common property, it will be made according to the proportion which the original contributions bear to each other; ... but the just which exists in transactions is something equal ... for it matters not whether a good man has robbed a bad man, or a bad man a good man, nor whether a good or bad man has committed adultery; the law looks to the difference of the hurt alone, and treats the persons, if one commits and the other suffers injury, as equal, and also if one has done and the other suffered hurt. So that the judge endeavours to make this unjust, which is unequal, equal...96
Though Aristotle was the first to articulate the principle of corrective
justice, a fuller explanation of the underlying normative principle would draw
upon the Kantian concept of the right as the "totality of conditions under
which the actions of one can be united with the freedom of others in accordance
with a universal law,"97 or, in other
words, the conditions under which persons interact on a basis of freedom and
equality. When a person fails to observe these conditions in her relations with
other people, a disequilibrium is created that should be redressed by her
payment of compensation to the injured party or parties. The right of the
victim to compensation, and the corresponding obligation of the wrongdoer to
make good the loss, are independent of the relative wealth or merit of the
wrongdoer and injured party; instead the right and obligation are deduced from
the equal status of both parties as free and equal moral agents.
When
expressed in a doctrinal relationship, corrective justice presents itself as a
liability rule in which both wrongdoing and causation are essential.98 It is wrongdoing which singles out the
defendant's conduct from the rest of the chain of events which caused the
plaintiff's injury. Thus, the requirement of wrongdoing explains why, when Able
is injured by a car driven negligently by Baker, who bought the car from
Charlie, it is Baker alone who is liable even though Baker's driving and
Charlie's sale of the car to Baker were both "but-for" causes of Able's injury.
As for the requirement of causation of harm, it is what singles out Able from
all of the other people whom Baker endangered by his careless driving, as one
to whom Baker owes a monetary obligation. Thus, the simultaneous existence of
wrongdoing and causation explains why the defendant is required to pay damages
to the plaintiff, and why the plaintiff is entitled to receive them from the
defendant.
The symmetry of the litigation form, and the idea of private
law as regulating the interaction of free and equal persons in society, make
corrective justice an attractive theory of private law torts. In fact, the
principle is reflected in both the common and civil law systems of private law.
In English common law, for example, it is trite that the central conditions for
liability are wrongdoing (the breach of a duty of care) and the causation of
injury. To take a civilian example, Article 1382 of the French Civil Code
clearly establishes wrongful causation of injury as the basic principle of
civil delictual responsibility when it declares: "Tout fait quelconque de
l'homme qui cause E0 autrui un dommage oblige celui par la faute duquel il est
arrivE9 E0 le rE9parer."
However, it is not immediately obvious that a
theory based on the freedom and equality of the plaintiff and defendant can
explain litigation against the State. Indeed, the basis of corrective justice
in the interaction between persons is highlighted by the fact that Aristotle
titled his essay on corrective justice, "Of Justice in Transactions Between Man
and Man."99 In the following paragraphs,
I will explore the ways in which corrective justice might nonetheless be
thought to inform a rule of State liability.
One might argue that corrective justice can be applied between citizen and State, despite its origins in the formal equality of individuals, if the State is considered an ordinary legal person. In France, for example, where corrective justice seems to be the basis for the civil law of fault-based responsibility, it was at one time argued that the liability of the Administration could be explained by its legal personality.100 In his PrE9cis de droit administratif, Maurice Hauriou wrote,
... les entrepreneurs lE9gaux de la gestion administrative des affaires du public sont les personnes morales administratives c'est-E0-dire les administrations publiques prises sous leur aspect de personnes morales ; de lE0 vient que la gestion administrative entraEEne E0 la charge de ces personnes morales des responsabilitE9s pE9cuniaires.101
In fact, however, it is doubtful that the theoretical difficulties in
applying corrective justice to litigation against the State can be overcome
simply by asserting the legal personhood of the State. As Duguit argued in
response to Hauriou, the personhood of the State is artificial.102 The State does not have an inherent claim to
be part of the community of free and equal persons.
Nevertheless, the
belief persists that State liability can be justified on the basis of
corrective justice.103 The most complete
account in this regard is that of Jeffries. I reproduce his argument here in
some length to show how closely it mirrors the basic articulation of corrective
justice as applied to the private law of torts:
Persons must be treated as ends in themselves, not merely as objects or instruments of government policy. ... Therefore, relations between the government and individuals are subject to the concept of right. The rights recognized under the Constitution state conditions under which the actions of the government can be united with the freedom of the individual. ...
In this conception, government wrongdoing [that] causes individual injury should be redressed by the award of damages, without regard to the antecedent (or resulting) distribution of wealth.
...
Both causation and wrongdoing are essential to this conception. ... Defendant's wrongdoing may risk harm to many persons. Not everyone endangered by wrongdoing, however, may demand damages. Causation singles out a particular plaintiff - one who has been injured by the defendant's act - to make a claim on the defendant's resources. ... Wrongdoing is also required. Just as causation identifies why this plaintiff is entitled to recover, fault identifies why this defendant is obligated to pay. Causation itself is inadequate to this task, for there are, in the nature of things, many causes of any injury. ... The showing of fault fills this gap. It identifies the causal antecedent that will be regarded as legally significant. It singles out a particular defendant - one whose wrongful act has caused the plaintiff's injury - to make good the plaintiff's loss.
...
More simply, fault supplies the moral dimension to the causal relationship. While causation traces a physical connection between doer and sufferer, it provides in itself no moral basis for coercing compensation.104
The notion of wrongdoing or fault bears close examination in Jeffries'
argument. In Weinrib's account of corrective justice in private law, wrongdoing
had a sense that could be derived from the form of private law litigation,
which presupposed the equal rights of both litigants. Wrongdoing was simply a
failure by one of the parties to respect this equality. It is not clear that
the meaning of wrongdoing in public law can similarly be deduced from the form
of litigation and, as a result, the transposition of corrective justice from
private law to public law leaves us searching for an alternate theory of
wrongdoing.
Unfortunately, a theory of State wrongdoing is not a matter on
which there is likely to be unanimity. For instance, Jeffries argues that
wrongdoing requires fault beyond mere unconstitutionality, but in a response to
Jeffries, Nahmod points out that a mere violation of a constitutional provision
could equally be considered wrongdoing by the State.105 The indeterminacy of the notion of wrongdoing
is highlighted by Nahmod, who states that "wrongdoing is a social
construct."106 From this observation it
is but one small step to Prosser's assertion that "there is no such thing as a
theory of negligence, because negligence, like the Constitution, is what we
make it."107
To make sense of the
concept of State wrongdoing, it is necessary to begin with a theory of the
State. Suppose, for example, that we take the State to be, as it was described
by Rousseau and Locke in the contractarian tradition, a collective body formed
by the union of free and equal individuals. What distinguishes the State from
other such unions is that, through law, it can compel obedience from its
individual members. Or, perhaps more precisely, a subset of the members within
the State wields governmental power and can compel obedience from each of its
members in the name of the community as a whole. The Lockean view is that the
members of a community agree to be bound because only in this way can they
secure the conditions for the enjoyment of their natural rights. Without the
protection of law, people's rights would be fragile. However, another reason
individuals agree to be united under government is that other shared
objectives, such as the pursuit of distributive justice108 and the enhancement of aggregate welfare, can
be achieved through collective action. The restrictions imposed by government
on absolute liberty are the solution to the "tragedy of the commons"109 and other dilemmas of unconstrained voluntary
action.110
An important feature of
this theory of the State is that it does not portray the State as an end in
itself, but as a means by which individuals pursue their greater security and
happiness. As Chevallier notes in his essay on the rule of law, this fact
provides a normative basis for the legal duty of the State to respect the
rights of the individual:
L'C9tat de droit implique en effet une certaine conception des rapports entre l'individu et l'C9tat, qui sous-tend tout l'E9difice juridique : non seulement la puissance de l'C9tat trouve ses limites dans les droits fondamentaux reconnus aux individus, ce qui crE9e ainsi la possibilitE9 d'une ABopposition au pouvoir fondE9e sur le droitBB, mais encore elle a pour finalitE9 mEAme, pour justification ultime la garantie de ces droits; l'C9tat de droit repose en fin de compte sur l'affirmation de la primautE9 de l'individu dans l'organisation sociale et politique, ce qui entraEEne E0 la fois l'instrumentalisation de l'C9tat, dont le but est de servir les libertE9s, et la subjectivisation du droit ...111
To be precise, these rights are inherent to the relationship between the
individual and the State because they represent the limits of what a free
individual can be required to give up in exchange for the security and material
benefits of collective action. Although it is not necessary for the purposes of
my argument to describe the content of these rights, one place we might look
for them is in the Kantian concept which underlay the basic version of
corrective justice, namely an idea of fundamental rights as the set of
conditions under which persons interact on a basis of freedom and equality.
Two principles of liability emerge from this conception of the State and
of rights. First, when a public official (or legislator, or judge) exercises
her power in a manner that denies the freedom and equality of another person,
Kantian corrective justice requires the payment of damages by the official to
the affected individual. This principle reflects Duguit's characterization of
the State as
... une sociE9tE9 oF9 existe la diffE9renciation entre gouvernants et gouvernE9s, les premiers disposant de la plus grande force, les seconds devant obE9ir, mais les deux devant se soumettre E0 une rE8gle supE9rieure, la rE8gle de droit.112
The fact that some individuals wield governmental power, while others do
not, does not grant the former a licence to disregard the equal rights of the
latter.
The second principle, which is more pertinent to the issue of
State liability, is that where the community, through the acts of its officials
(or legislators, or judges) has violated the fundamental rights of some of its
members, the community as a whole should be liable for the harm caused by the
infringement. State action, even if it is undertaken in the interests of
aggregate welfare maximization or distributive justice, crosses the limits of
acceptable collective action when it violates one of the individual's
fundamental rights. Since the wrong is by the State, in the sense of the entire
community, it is consonant with corrective justice that the obligation to
repair the resulting injury should be borne by the community, through the
State.
These principles are not mutually exclusive. On the contrary, it
may easily be imagined that governmental wrongdoing could trigger both personal
and State liability. This could happen, for example, if an official caused
damage through a violation of rights while acting in the course of her duties.
In such a case, corrective justice as between the official and the victims
would require that the official bear personal responsibility for what would
have been, in fact, her decision to violate the fundamental rights of another
person.113 But the State would also
properly be held liable because the official's act would have been on behalf of
the State and, through it, the entire community. It is possible, in this way,
to find in corrective justice a rationale for State liability for harm caused
by infringements of fundamental rights.
The difficulty with applying corrective justice to the liability of
Member States is that the rights protected under EU law cannot easily be seen
as being limits inherent to the relationship between the individual and the
State.
One might perhaps retreat to an argument based on the legal
personhood of Member States within the EU. It is true that the practice of some
domestic legal systems to ascribe legal personhood to the State is accentuated
within the EU legal system. For example, the EC Treaty itself was adopted by
the Member States in their capacity as international legal persons. Even more
interestingly, from the standpoint of corrective justice, the ECJ has
occasionally shown signs of treating the Member States as being legally
equivalent to ordinary persons. For example, in its case law on the anti-trust
provisions of the Treaty, the Court of Justice has been willing to treat State
enterprises as economic actors no different from a private undertaking.114 Another example is the Court of Justice's
declaration in Van Gend that both individuals and States are the
subjects of the European legal order. Both of these examples are indicative of
a decreased specialness of the State in the eyes of the Court of Justice.
However, as I have already explained, the fact remains that there is no
inherent equality between the State and the individual, even for Member
States of the European Union. The argument for corrective justice as a theory
of EU Member State liability cannot rest solely on the legal personality of the
Member States.
It might be argued, in the alternative, that EU Member
State liability reflects a public law theory of corrective justice analogous to
that advanced by Jeffries in relation to constitutional torts. Corrective
justice recognizes that government wrongdoing that causes individual injury
should be redressed by the award of damages. One might argue that a government
that violates the individual rights conferred by EU law has committed a wrong
and that, if any injury results, corrective justice requires that compensation
be paid. However, this argument is normatively empty: the violation of EU law
is a wrong against an individual only because EU law says so. As we saw, above,
corrective justice in relations between the State and an individual concerns
rights which are inherent to that relationship. The violation of rights
protected under EU law, even a "sufficiently serious breach" within the meaning
of Brasserie du PEAcheur, cannot be seen as a transgression of the
limits inherent to the relationship between an individual and a State.
Both corrective justice and economic efficiency are identified as
alternatives to distributive justice,115
and, for this reason, I wish to make it clear that our rejection of the
corrective justice and externalities theories should not be taken as an
indication that distributive justice may be at the base of EU Member State
liability.
The concern of distributive justice is the equitable allocation
of societal wealth according to criteria such as merit or need.116 Distributive justice is an important concern
of government, but it does not appear to be the theory underlying either
private law tort liability or constitutional tort liability. In both cases,
there is no reason to think that the kind of transfers contemplated by those
forms of liability improve the overall fairness of the societal distribution of
wealth. To use an example given by Coleman, even a person whose wealth exceeds
what she would be allocated under any possible principle of distributive
justice would be entitled to claim damages under tort law from an indigent
person who negligently injured her.117
Similarly, as Jeffries points out in the context of injuries caused by
government, constitutional tort liability cannot be rationalized as an
expression of distributive justice:
Lawful government action may cause devastating harm, while even flagrant unconstitutionality may injure only slightly. If money is collected from all members of society to compensate those injured by unconstitutional government acts, some persons gravely harmed by (lawful) government action will be made to join in compensating minor (unlawful) injuries to economically advantaged individuals. As a scheme for redistributing wealth, or merely for relieving hardship, this makes little sense.118
If payments such as these are rationally connected with a principle of
justice, the relevant principle must be one of efficiency or corrective
justice, and not distributive fairness.
The fact that constitutional tort
liability does not appear to be based on distributive justice does not mean
that other forms of State liability might not be. For example, the no-fault
doctrine of E9galitE9 devant les charges publiques might be seen as a
mechanism for improving distributive fairness. However, it is difficult to see
a basis in distributive justice for any system in which the reason for
liability is the causation of damage through a violation of rights. In
particular, distributive justice is not a theory that is capable of accounting
for the phenomenon of EU Member State liability. There is simply no basis for
assuming that people whose rights under EU law were infringed are, on any
measure of need or merit, deserving of a greater share of society's resources
than they would enjoy in the absence of the liability rule.
Therefore, we
cannot conclude, from the inability of corrective justice and externalities
theory to explain the liability of States within the EU, that the theory
underlying Member State liability is distributive justice.
In the preceding sections, the two main theories of justice used to
explain the phenomenon of constitutional tort liability were explored and found
wanting in their application to Member State liability in the European Union.
We also saw that the inability of these theories to account for Member State
liability did not mean that distributive justice was the appropriate model. Why
then did the main theories advanced in support of constitutional tort liability
fail to explain EU Member State liability?
In each case, the failure of
the main theories to explain EU Member State liability was attributable to the
underlying substantive law and, more particularly, to the character of the
rights conferred by EU law. Externalities theory, for example, could explain
liability for violations of minority rights or fundamental human rights, but it
was not capable of explaining liability for damage caused in violation of the
substantive rules set out in Community law. Corrective justice, on the other
hand, could not account for liability based on violation of norms which are not
derived from principles inherent to the relationship between individuals and
the collectivity. Since the substantive rules of EU law are anything but
inherent to the relationship between individuals and their Member States,
corrective justice was incapable of accounting for State liability for damage
arising from violations of those rules.
In Part II of the paper, when we
identified a breach of rights as one of the defining features of EU Member
State liability, we did not closely examine the nature of the rights involved,
but in light of the inability of either externalities theory or corrective
justice to account for EU Member State liability, it is worth taking another
look.
68 See R. Posner, Economic Analysis of Law, at p. 14-15 (5th ed., 1998).
69 M.J. Trebilcock, "Economic Analysis of Law," Canadian Perspectives on Legal Theory, R.F. Devlin, ed., at p. 103 (1991). See also Posner, Economic Analysis of Law, at p. 25.
70 R. Coase, "The Problem of Social Cost," 3 J. L. and Econ. 1 (1960); G. Calabresi and D. Melamed, "Property Rules, Liability Rules and Inalienability: One View of the Cathedral," 85 Harv. L.Rev. 1089 (1972).
71 See, e.g., G.S. Becker, The Economic Approach to Human Behavior (Chicago: U. Chi. P., 1978); "An Economic Analysis of Marital Instability," 85 J. Pol. Econ. 1141 (1977); "Crime and Punishment: An Economic Approach," 76 J. Pol. Econ. 169 (1968); Posner, op. cit..
72 See R. Posner, Economic Analysis of Law, at p. 18 (5th ed., 1998); D. Baird, "The Future of Law and Economics: Looking Forward," 64 U. Chi. L. Rev. 1129, at pp. 1131-32 (1997).
73 This approach was taken, for example, in a number of American constitutional cases: a famous and now discredited example is Korematsu v. U.S., 323 U.S. 214 (1944) (internment of persons of Japanese ancestry during World War II). Another well-known example is U.S. v. The Progressive, Inc., 467 F.Supp. 990 (W.D. Wisc., 1979), recons. den., 486 F.Supp. 5 (W.D. Wisc., 1979), app. dism., 610 F.Supp. 819 (7th Cir., 1979). Here, a federal district court granted an injunction against the publication of instructions for building a hydrogen bomb, saying that while a prior restraint on publication represented a "drastic and substantial" infringement of the freedom of speech, "[a] mistake in ruling against the United States could pave the way for thermonuclear annihilation for us all. In that event, our right to life is extinguished and the right to publish becomes moot" (p. 996).
74 Several authors have noticed the need for an antecedent theory of rights in a framework of social welfare maximization. See, e.g., C.G. Veljanovski, "Wealth Maximization, Law and Ethics - On the Limits of Economic Efficiency," 1 Int. Rev. L. and Econ. 5, at p. 20 (1981); W.J. Samuels, "Book Review - Maximization of Wealth as Justice: An Essay on Posnerian Law and Economics as Policy Analysis," 9 Tex. L. Rev., at p. 155 (1981); N. Mercuro and T.P. Ryan, Law, Economics and Public Policy (Greenwich, Conn.: JAI, 1984), at p. 132. Even Posner seems now to agree that social welfare maximization rests on tacit assumptions about the relative value of various components of social welfare: see R. Posner, Overcoming Law (Cambridge: Harvard U.P., 1995).
75 See Posner, Economic Analysis of Law, at p. 30.
76 U.S. v. Carroll Towing Co., 159 F.2d 169, at p. 173 (2d Cir. 1947).
77 It can be demonstrated that, as a first approximation, strict liability and negligence lead to the same conduct on the part of potential injurers. This is because, in determining what measurers to take to avoid incurring liability in a regime of strict liability, a potential injurer will compare the costs of avoiding the harm with the likelihood that she will in fact cause harm and have to pay damages. This calculus is identical to Learned Hand's negligence formula and, as a result, we would expect potential injurers to act in the same way regardless of whether negligence or strict liability is the rule. See R. Posner, Tort Law: Cases and Economic Analysis, at p. 4 (1982).
78 By "socially detrimental," I mean conduct which produces a negative net social benefit. Conversely, "socially beneficial" refers to conduct which produces a positive net social benefit.
79 That is, if they exceed the net private benefit from the activity.
80 Again, if their cost exceeds the net private benefit from the activity.
81 Few legal economists seem to acknowledge this difficulty with the externalities theory of tort law. Some authors have made a similar argument against the personal liability of government officials, but the problem arises with equal force in the general law of torts. In the context of bureaucratic liability, see J.L. Mashaw, "Civil Liability of Government Officers: Property Rights and Official Accountability," 42 L. and Contemp. Prob. 8, at pp. 26-27 (1978); R. Posner, "Excessive Sanctions for Governmental Misconduct in Criminal Cases," 57 Wash. L.Rev. 635, at p. 640 (1982); D. Cohen, "Regulating Regulators: The Legal Environment of the State," 40 U. Toronto. L.J. 213, at p. 225 (1990).
84 See A. Chayes, "The Role of the Judge in Public Law Adjudication," 89 Harv. L. Rev. 1281 (1976).
85 But see A. Stone, The Birth of Judicial Politics in France (Princeton: Princeton U.P., 1992).
86 Oxford: Clarendon Press, 1987.
89 United States v. Carolene Products (1938), 304 U.S. 144, at fn. 4.
90 Posner, "Excessive Sanctions," supra.
91 In their classic work, The Modern Corporation and Private Property, at p. 124 (1932), A. Berle and G. Means argue that corporate managers are effectively unconstrained because shareholders have insufficient incentive and opportunity to monitor them. See, for an explanation of the same phenomenon in relation to government, Cohen, supra, at pp. 252ff.
93 Cases C-297 and 268/91, Keck and Mithouard, [1995] 1 C.M.L.R. 101.
94 E.J. Weinrib, "Causation and Wrongdoing," 63 Chi.-Kent L. Rev. 407, at p. 409 (1987).
95 Aristotle, Nicomachean Ethics, Book V., ch. IV, R.W. Browne trans. 1914. See also Weinrib, "Causation," supra, at p. 449; E.J. Weinrib, The Idea of Private Law (Cambridge: Harvard U.P., 1995), at pp. 56ff. On the distinction between distributive and corrective justice, see also J.L. Coleman, Risks and Wrongs (Cambridge, U.K.: Cambridge U.P., 1992), at pp. 304-305.
97 Weinrib, "Causation," at p. 449, citing I. Kant, The Metaphysical Elements of Justice (J. Ladd trans. 1975), at p. 34. See also Weinrib, Private Law, at pp. 81-82.
98 Weinrib, "Causation." See also Coleman, supra, at p. 324.
100 M. Deguergue, Jurisprudence et doctrine dans l'E9laboration du droit de la responsabilitE9 administrative (Paris: LGDJ, 1994), at p. 72.
101 PrE9cis de droit administratif, 9e E9d., 1919, p. 521.
102 L. Duguit, L'C9tat, le droit objectif et la loi positive, 1901, p. 5.
103 See J.J. Jeffries, Jr., "Compensation for Constitutional Torts: Reflections on the Significance of Fault," 88 Mich. L. Rev. 82; S. Nahmod, "Constitutional Damages and Corrective Justice: A Different View," 76 Va. L. Rev. 997 (1990); R.H. Fallon, Jr., and D.J. Meltzer, "New Law, Non-Retroactivity and Constitutional Remedies," 104 Harv. L. Rev. 1731, at p. 1793 (1991); K. Cooper-Stephenson, Charter Damages Claims (Toronto: Carswell, 1990), at p. 58.
104 Jeffries, at pp. 94-96, footnotes omitted.
105 Nahmod, supra, at p. 1011.
106 Nahmod, supra, at p. 1009.
107 Prosser, "Palsgraf Revisited", 52 Mich. L. Rev. 1, at pp. 15, 17.
108 See Coleman, supra, at p. 312.
109 This phenomenon was first named by G. Harden in "The Tragedy of the Commons," 162 Science 1243 (1968), who observed that shared pastures tended to be overgrazed. The theory developed to explain this phenomenon also explains more generally why, in the absence of regulation, rational, self-interested individual behavior with respect to common resources leads to their overuse and depletion.
110 Another commonly invoked example is the public good problem. In the absence of coercive governmental action, such as the raising of taxes, certain socially beneficial goods would be underproduced because it is not feasible to exclude "free riders", that is, to limit the enjoyment of the goods to the people who pay for them. Thus, although everyone benefits from the existence of traffic lights, a rational, self-interested person would decline to contribute to a fund for their installation, because, once they have been installed, she benefits fully from them regardless of whether or not she contributed. See J. Rawls, A Theory of Justice (Cambridge: Harvard U.P., 1971), at pp. 267-68; Coleman, supra, at p. 312.
111 J. Chevallier, L'C9tat de droit (Montchrestien, E.J.A. 1992), at p. 59-60.
113 I do not deny that there may be reasons unrelated to corrective justice for granting immunity to such an official.
114 Case 1155/73, Saachi, [1974] E.C.R. 409. Article 90(2), however, creates an exception for undertakings entrusted with the operation of services of general economic interest or having the character of a revenue-producing monopoly, where the antitrust rules would obstruct the performance of the tasks assigned to them. See J. Maitland-Walker, Competition Laws of Europe (London: Butterworths, 1995), at p. 4.
115 See, e.g., Posner, Economic Analysis of Law, supra, at p. 30; Weinrib, Private Law, supra, at pp. 56ff; Coleman, supra, at pp. 304-305.
116 A theory of distributive justice is at the base of Rawls' "second principle", namely that "[s]ocial and economic inequalities are to be arranged so that they are both (a) to the greatest benefit of the least advantaged, consistent with the just savings principle, and (b) attached to offices and positions open to all under conditions of fair equality of opportunity." See Rawls, supra, at p. 302.
117 Coleman, supra, at p. 304.
118 Jeffries, supra, at p. 91.
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