State liability is generally understood as the liability of the state and other public bodies for damages that are sustained in the course of performing official duties. A distinction can be made between two basic types of liability: liability of the state for a wrongful act of state and compensation for disadvantages incurred through the lawful exercise of state authority.
The aliability oft he state towards its citizens for wrongful acts of state is an essential characteristic of a constitutional state, or a state governed by law and order. State liability supplements the principle of the lawfulness oft he administration (Art. 20 sec. 3 of the German Constitution) and the guarantee of legal protection contained in Art. 19 Sec. 4 of the German Constitution.
The classic form of state liability for unlawfulness is regulates by par. 839 of the German Civil Code in conjunction with Art. 34 of the German Constitution. It derives from the unlawful and negligent behavior of a civil servant in the performance of his official duties and provides for monetary damage compensation.
The second pillar of liability for unlawful acts is comprised of the damages sustained by a party through the unlawful unfringement of the state upon his property rights (damage claim based on unlawful expropriation) or his immaterial rights (damage claim based on unlawful infringement of immaterial rights). As opposed to the liability of the state for unlawful acts, these damage claims do not require any fault or negligence on the part of the state.
The third pillar is comprised of provisions contained in various laws that provide the basis for special types of actions brought against the state, such as those based on strict-liability torts. In some of the new German states the public liability law of the former German Democratic Republic, which was adapted as state law in more or less modified form, is still in force. It provides for no-fault liability.
The remaining liability gaps have been partially closed by case law an the judicial rulings that provide a legal basis for damage suits. Such judge-made laws deal primarily with liability for the breach of obligations stemming from „administrative law relationships under the law of obliagtions“ and the right to remedial action guaranteed by public law.
State obligation to provide compensation, however, does not only exist in cases involving unlawful sovereign acts. If the state legally infringes upon the rights of an individual that are protected by law, then, as a general rule, the encumbrances resulting from such an action are to be compensated for.
In the case of expropriation, Art. 14 sec. 3 of the German Constitution provides for the payment of expropriation compensation. If the parties concerned are subject to disadvantages as a result of a lawful act of state that do not amount to expropriation in the classical sense but still surpass the limit of what can be considered as a reasonable sacrifice, compensation is to be made for the expropriating infringement.
The various laws in which claims against the state are anchored overlap and complement each other; in some cases they rule each other out. The law of state compensations does not exist as a closed and harmonious system but is more like „chaos with tradition“. Characteristically state liability law is a complex, barely coordinated and overlapping body of written and unwritten legal rules.
In addition, in state liability proceedings two legal worlds collide. In a civil process, issues relevant to administrative law are dealt with on the basis of civil law liability standards. That naturally causes considerable difficulties on the level of substantive law as well on the procedural level.
For more information see
the practical manual key aspects of german business law and the chapter Liability of the State
Translations of german statutes / ordinances are available here.
Section 839 of the German Civil Code (BGB)
Liability in case of breach of official duty
(1) If an official intentionally or negligently breaches the official duty incumbent upon him in relation to a third party, then he must compensate the third party for damage arising from this. If the official is only responsible because of negligence, then he may only be held liable if the injured person is not able to obtain compensation in another way.
(2) If an official breaches his official duties in a judgment in a legal matter, then he is only responsible for any damage arising from this if the breach of duty consists in a criminal offence. This provision is not applicable to refusal or delay that is in breach of duty in exercising a public function.
(3) Liability for damage does not arise if the injured person has intentionally or negligently failed to avert the damage by having recourse to appeal.
Article 34 of the Basic Law for the Federal Republic of Germany (GG)
[Liability for violation of official duty]
If any person, in the exercise of a public office entrusted to him, violates his official duty to a third party, liability shall rest principally with the state or public body that employs him. In the event of intentional wrongdoing or gross negligence, the right of recourse against the individual officer shall be preserved. The ordinary courts shall not be closed to claims for compensation or indemnity.