Financial Liability of the EU for Violations of WTO Law: A Legislative Proposal Benefiting ‘Innocent Bystanders’

In this paper we discuss whether the EU may be held liable by individuals for damages they suffer due to a violation of world trade organization (WTO) law by the EU. We focus on European companies whose exports to a third country are suddenly blocked as a result of WTO-authorized retaliation by that country against the EU, for as long as the EU fails to adjust those measures which have been found to infringe WTO law.

Typically, the affected European companies are in no way involved in the trade dispute between the EU and a third country, as the dispute normally relates to a completely different sector. The problem that arises here has also been referred to as 'collateral damage', or damage to 'innocent bystanders'. In view of disappointing developments in the European Courts' case law, we propose a legislative solution to compensate innocent bystanders.