3.2.4.3. Causation

State liability cases often raise very complex questions concerning the causal link between the impugned act and the claimant's loss. This is evident in many of the recent cases. In the social welfare sphere, the courts have underlined the difficulties of showing that local authorities' negligent treatment of children in care actually caused compensable damage.¹⁴⁵ In educational negligence cases, it is difficult to show that but for the educator's wrongful act he or she would have made better educational progress, obtained better results, and enjoyed enhanced career prospects.¹⁴⁶ Moreover, in many social welfare and educational cases, the delay in bringing claims and the consequent absence or inadequacy of the records will pose an extra burden upon the claimants from an evidential point of view in gathering the necessary evidence and provides a natural obstacle to actions.¹⁴⁷

Other examples abound.¹⁴⁸ In a recent case concerning the failure of a highway authority to provide for additional advance warning signs at a dangerous road junction,¹⁴⁹ the Court of Appeal adopted a more liberal (p.282) approach to duty than in previous cases,¹⁵⁰ underlining that it was possible to restrict claims through the use of breach and causation. Another interesting example is found in damages claims under the Human Rights Act 1998 in respect of which causation may also prove to be a formidable control mechanism. A strand of the case law of the European Court of Human Rights illustrates a strict approach to causation.¹⁵¹ As the Law Commission has noted in its recent report on this topic, the ‘Strasbourg Court normally applies a strict causation test which bars the majority of claims for damages, in particular those for pecuniary loss’.¹⁵²

In providing for control mechanisms at the level of causation, inspiration may also perhaps be drawn from the French cases. This may particularly be the case in relation to the liability of regulators, a topic which is currently occupying the English courts.¹⁵³ In two cases concerning state liability for inadequacies in the supervision of banks, the French courts have used causation as effective control mechanisms. In El Shikh, depositors complained that the French Commission Bancaire had been at fault in the manner in which it had undertaken the supervision of the Bank of Credit and Commerce International (BCCI).¹⁵⁴ It was alleged inter alia that the BCCFs banking licence should have been withdrawn, and that the primary supervisory body, the Commission Bancaire, had failed to react promptly and in an appropriate manner to irregularities it had discovered during investigations at the Bank. The claim against the French state by the BCCI depositors failed.¹⁵⁵ Indeed, the court rejected the claims on the basis that the causal link between the alleged faults and the claimants' loss was not established. The Bank's collapse was primarily due to the fraudulent activities of its employees at the BCCI group level, and particularly at the Bank's principal place of business in London. There was no direct causal link between the allegedly deficient supervision of the French branches of BCCI for which the French supervisory authorities were responsible and the claimants' loss.

Another recent French case shows how the test of causation has been (p.283) deployed as a control mechanism. In Kechichian,¹⁵⁶ which concerned the inadequate supervision by the Commission Bancaire of another bank, the United Banking Corporation, the Conseil d'Etat reduced the liability of the state in line with the part the Commission Bancaire was adjudged to have played in the failure of the bank,¹⁵⁷ which was held to represent solely ten per cent of the ultimate loss. Moreover, the lower court's solution—though it proved unattractive to the Conseil d'Etat—might also be of interest from a comparative law perspective. The Cour Administrative d'Appel de Paris had in fact found that the inadequate supervision of the bank played a causally significant role in its failure.¹⁵⁸ But it considered that that had deprived the investors of only a chance of avoiding the bank's collapse. So, the damages award was assessed as 20 per cent of the losses of each depositor.

On the basis of these French cases, one might challenge the orthodox belief in English law that changes at the fault or duty level inevitably must result in an uncontrollable extension of liability in general. The approach of the French administrative courts illustrates how other control mechanisms can be honed. A move away from joint and several liability in English law would certainly reduce the fears of deep-pocketed public authorities from being targeted by claimants, but would be a radical evolution of the law.¹⁵⁹ The doctrine of loss of a chance may well be a more realistic tool for the English courts in evaluating the quantum of loss suffered by depositors. We have seen that the courts have been more open to this form of reasoning in damages actions for the lost opportunity of financial gain than for personal injury cases,¹⁶⁰ and the forthcoming trial in Three Rivers v Bank of England¹⁶¹ may prove an opportunity to explore the use of this doctrine in the sphere of financial regulators.