Insights

On 11^th January 2024, the Court of Justice of the European Union (“CJEU”) dismissed the action for compensation of damages of €176.1 million brought by Dyson. The applicant in this case is a household appliance company that produces ‘cyclonic’ vacuum cleaners which have a bagless system and alleged the misapplication of the concept of “sufficiently serious breach” of a rule of European Union (“EU”) law by the General Court.

Article 340 of the Treaty of the Functioning of the European Union (“TFEU”) indicates the requirement of a “sufficiently serious breach of rule of law” in order for the EU to incur non-contractual liability.

Background to the case

Pursuant to Directive 2010/30 (“Directive”), in 2013, the European Commission (“Commission”), adopted a testing method for energy labelling of vacuum cleaners so that consumers may be well informed when purchasing such items which have a high impact on energy consumption. To this extent, the Commission based the testing method on the energy performance of the vacuum cleaners on an empty container, meaning without the bag in the vacuum cleaner. Dyson argued that this testing method placed its ‘cyclonic’ vacuum cleaners at a disadvantage, since in reality, vacuum cleaners are not used with an empty receptacle and they further argued that the performance of a vacuum decreases as its bag fills up.

In 2018, the General Court held that indeed the Commission failed to make use of a testing method which took account the actual conditions of use of vacuum cleaners and annulled the testing method since the energy labelling misled consumers across Europe.  Dyson also sought compensation of €176.1 million for the damages it suffered from the Commission’s testing method, which put its ‘cyclonic vacuum’ at a disadvantage across the European market. The General Court dismissed this action for compensation and, Dyson lodged an appeal with the CJEU against this decision.

Analysis of the CJEU on the General Court’s contested decision

Dyson put forward seven grounds for their appeal. The first four grounds related to the General Court’s findings that the infringement of Article 10(1) of the Directive did not result in a sufficiently serious breach of a rule of EU law. Article 10(1) of the Directive is the article which previously gave the Commission power to lay down rules and create regulated acts relating to energy labelling so that end-users may make better informed purchasing decisions. Through this article it then created the testing method on vacuum cleaners.

The appellant’s last three grounds of appeal concerned the General Court’s findings that the alleged infringement of the principle of equal treatment, the principle of sound administration and the duty to act diligently were not sufficiently serious.

Dyson claimed that the General Court did not clearly state its reasoning on its assessment of the infringement of Article 10(1) of the Directive with the adoption of the testing method. The CJEU quoted the General Court’s findings that the Commission had not manifestly disregarded the limits of its discretion through the testing method it adopted and dismissed the argument brought by the appellant.

It was further argued by Dyson that the General Court misapplied the concept of a “sufficiently serious breach” of EU law in relation to the infringement of Article 10(1) of the Directive. The CJEU noted that to determine such a breach, reference must be made to the factual context in which the applicable institutions act and pointed out that the General Court had taken this into account.

The complexity of the subject that is to be regulated is also a relevant aspect when determining whether a breach of EU law may be classified as sufficiently serious. In its arguments, Dyson submitted that the General Court did not consider the scientific validity of the testing method that was put forward by the Commission. The CJEU also dismissed this argument and stated that the General Court had pointed out the possibility of the Commission’s use of a scientific validity of the results obtained from the testing method and that this consideration was enough to not classify the infringement as sufficiently serious.

On the last three grounds of appeal, Dyson brought in three pleas of action for damages relating to (1) the principles of equal treatment and sound administration, (2) the duty to act diligently and (3) the freedom to conduct a business. The CJEU concluded that the last three grounds of appeal corresponded to the initial alleged damages by Dyson which surround the same assessments and context and therefore, these grounds of appeal were rejected in its entirety.

Concluding remarks

 The CJEU upheld the judgement of the General Court and set aside all the arguments which were put forward by Dyson and, the action for compensation brought by Dyson was dismissed definitively. Although Dyson was not successful in this regard, it appears that the Commission has already began work on creating new energy labelling rules for vacuum cleaners which will address Dyson’s concerns.^[1]

 Disclaimer: Ganado Advocates is responsible for contributing to this law report but was not in any way involved as legal advisor for the parties in the judgement being covered in this law report.

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[1] https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/12833-Energy-labelling-requirements-for-vacuum-cleaners_en