Compensatory damages for breach of Article 81

Abstract:

In Courage Limited v. Crehan, Morritt, Schiemann and Mance L.JJ. of the English Court of Appeal were required to determine whether the party to a contract in breach of Article 81 could recover compensatory damages under that contract. On 27 May, 1999, Morritt L.J. gave the judgment of the Court, finding that English law allowed neither compensatory damages nor restitution to be recovered, but making an Article 234 reference for a preliminary ruling for the position in EC law. In Case C-453/99 Courage Ltd v. Bernard Crehan and Bernard Crehan v. Courage Ltd and Others, delivered on September 20, 2001, the Court of Justice held that national law could not place an absolute bar upon recovery as this would frustrate the purpose of Article 81. In this note, we argue that the English Court of Appeal mis-applied national law principles governing recovery in actions where an illegal contract forms the background matrix to the action. National courts will have to confront the difficult second-order issues involving when such recovery should be allowed and the differences between awards of compensatory damages and restitution. This note seeks to provide a framework in which to understand those issues and a possible means for explaining them.

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