State liability is the legal safety net that lets citizens and companies claim compensation when a government breaks EU law through its own legislation, and the European Commission has now concluded that Spain still has not built that net properly. In its October 2026 infringement package, dated 1 October, the Commission referred Spain to the Court of Justice of the EU for failing to comply with the Court’s judgment of 28 June 2022. The case is registered as INFR(2017)4004, and the contested Spanish legislation remains unamended.
The dispute has a long history. The Commission opened the infringement procedure in June 2017, issued a reasoned opinion in January 2018 after Spain insisted that its system already complied with EU law, and took the country to the Court under Article 258 of the Treaty on the Functioning of the European Union in 2019. The core complaint concerned how Spanish rules treated damage caused when the legislature adopts a law that contradicts EU law.
According to the Commission, Spanish law made compensation depend on several cumulative conditions. An injured party first needed a Court of Justice judgment declaring the Spanish legislative act contrary to EU law. The claimant also needed a final judgment, at any instance, rejecting their appeal against the administrative decision that caused the harm, and had to have raised the EU-law breach in that appeal. The Commission argued that these hurdles make awards excessively difficult, which offends the principle of effectiveness.
A second strand of the complaint rested on the principle of equivalence. The Commission pointed out that liability for breaches of EU law was treated less favourably than liability for breaches of the Spanish Constitution. EU law requires national remedies for EU rights to be no harder to obtain than remedies for comparable domestic rights, and the Commission’s position is that Spain fell short on both tests.
A repeat referral over state liability is a significant escalation. Article 260 of the Treaty allows the Court to impose financial sanctions on a member state that fails to comply with one of its judgments, either as a lump sum, a periodic penalty payment, or both. The package describes the step as a new referral to the Court. It does not state what penalty the Commission will request, so the amounts will only become clear when the formal application is lodged.
The stakes reach well beyond Madrid. State liability, built up in the Court’s case law since the Francovich ruling of 1991, gives EU rights real force in national courts. Businesses and individuals who lose money because a national law breached EU rules rely on the ability to claim damages. If procedural conditions are stacked too high, the right exists on paper only, and for companies operating across the single market, predictable remedies are part of the investment climate.
Other member states will read the case closely, because many national systems attach conditions to state liability claims. The Court’s answer will help define how far state liability rules may go before they undermine the effectiveness of EU law, and it will give national judges a clearer benchmark when they assess compensation claims.
For now, the Spanish file shows that state liability remains one of the Commission’s most persistent enforcement themes. Nine years have passed between the first formal steps and this second court referral. Madrid can still amend its legislation before the Court rules, which would allow the Commission to close the case, but the October 2026 decision signals that Brussels is no longer willing to wait.
