2.2.1. French Law: Limitations on Recovery?

Recovery of damages for economic loss caused by administrative activity seems to be confirmed by the overview in the previous section. And yet, (p.198) there is evidence of control mechanisms on the occurrence and extent of such awards.⁷⁹

Claimants face obstacles in showing that economic loss is certain.⁸⁰ Much would seem to depend upon the availability of evidence.⁸¹ But it is tempting to conclude that the notion of certainty is manipulated to keep reparation within manageable limits.⁸² Considering the potential scope of liability for profits lost owing to an unlawful act, the case reports seem to be underpopulated with such claims.⁸³ There have been few successful actions for lost profit in planning cases,⁸⁴ or for misrepresentation cases generally.⁸⁵ The same applies to other spheres:⁸⁶ CG Braibant urged the courts to be cautious in imposing liability for economic loss caused by travaux publics,⁸⁷ and the Ombudsman, le Médiateur de la République, has even remarked that the resultant case law is quite restrictive.⁸⁸ The courts (p.199) seem to require a high standard of certainty in respect of lost profits,⁸⁹ and thus successful claims are accompanied by specific elements reducing uncertainty, such as a drop in the turnover of an ongoing business,⁹⁰ or merely a delay in setting up an eventually profitable business.⁹¹

Even where actions are found to lie for economic loss, the quantum of the damages awards is often suspiciously small.⁹² For instance, a taxi driver was awarded only 52,000 Francs for having been prevented from working for a six-year period.⁹³ In the sphere of travaux publics, the courts have also been frugal in their awards: a shop owner gained only 30,000 Francs for the closure of his business on the creation of a new road.⁹⁴ Courts will be particularly vigilant when examining the sum claimed, and do not flinch from reducing figures deriving from the independent expertise,⁹⁵ or that accepted by the lower courts.⁹⁶

Concrete statistical evidence is available of the courts' parsimony in evaluating damages for economic loss. Awards for lost profits are calculated by taking a ‘modest’ percentage of the turnover,⁹⁷ namely 2 per cent of the construction cost in planning claims,⁹⁸ 1.25–1.6 per cent of the over-all contract in public procurement cases,⁹⁹ and 2 per cent of a pharmacy's turnover (when authorization was unlawfully delayed).¹⁰⁰ CG Robineau has observed that commercial risks in planning cases ‘give rise to a certain judicial prudence in evaluation of the damages’.¹⁰¹ Moreover, the courts (p.200) have explicitly reduced damages awards in other areas on the basis of the inherent element of risk in commercial activity.¹⁰² Indeed, CG Frydman has given a clue as to the reasoning underpinning this approach. In the context of calculating quantum for pure economic loss, he referred his fellow judges to the ‘desire to protect the public purse which generally underlies your case law’.¹⁰³

Liability for economic loss is also curtailed in other ways.¹⁰⁴ In respect of damages claims for loss caused by travaux publics, there is a widespread practice of reducing awards when the economic loss is ‘off-set’ by advantages deriving from the construction.¹⁰⁵ Causation¹⁰⁶ and contributory fault serve,¹⁰⁷ as in other areas of administrative liability,¹⁰⁸ as potent control devices.¹⁰⁹ Liability is also limited by means of the notion of fault in the sphere of state economic intervention. The prerequisite of faute lourde applying to both the liability of tax authorities¹¹⁰ and state regulation of economic activity has been explained by the desire to limit the need to make payments from the public purse.¹¹¹ Indeed, in the recent case of Kechichian, in which depositors of a failed bank claimed that the banking regulator, la Commission Bancaire, had failed to undertake its supervisory duties properly, the Commissaire du Gouvernement, Alain Seban, advocated in his conclusions¹¹² that the Conseil d'Etat should retain the standard of faute lourde in this area, citing as one of the reasons that in regulatory and tax cases the victims suffered solely ‘pure economic loss’ an interest which merited a lesser protection before the courts.¹¹³ The (p.201) Conseil d'Etat's decision is significant in many respects.¹¹⁴ In the context of loss, it would seem to provide a clear illustration of the French courts identifying pure economic loss as a particular category of harm, and concluding that caution should be shown in according reparation for such harm.