State Liability

36 Pages Posted: 18 Apr 2010 Last revised: 30 Mar 2011

See all articles by Giuseppe Dari‐Mattiacci

Giuseppe Dari‐Mattiacci

University of Amsterdam; Tinbergen Institute; European Corporate Governance Institute (ECGI)

Nuno Garoupa

George Mason University - Antonin Scalia Law School

Fernando Gomez-Pomar

Universitat Pompeu Fabra

Date Written: April 16, 2010


Should states be liable towards individuals for failure to provide justice, good roads or timely administrative decisions? In this paper, we show that state liability can serve three different purposes, none of which implies that the state should be liable in tort, unless other specific conditions are met. One purpose is to provide incentives for state agencies and private individuals to act efficiently. Here, the effectiveness of liability depends on the channeling of incentives down the chain of command to the acting state employee. The second purpose of state liability is to remove incentives for private parties, when these incentives are distorted, as when compensating for wrongful conviction. The third aim of state liability is to allow a higher level of the administration to monitor the behavior of a lower level. In this case, the judicial system and private parties are means towards the end of generating information about wrongful behavior by public bodies and agencies. Within this framework, we discuss substantive and procedural aspects of state liability in torts. We provide an economic argument for court specialization in administrative law and explain why the different solutions around the world could be appropriate under local determinants.

Keywords: state liability, principal agent, wrongful conviction, vicarious liability, specialized courts, procedural administrative law

JEL Classification: K13

Suggested Citation

Dari-Mattiacci, Giuseppe and Garoupa, Nuno and Gomez-Pomar, Fernando, State Liability (April 16, 2010). European Review of Private Law, Vol. 18, No. 4, 2010, U Illinois Law & Economics Research Paper No. LE10-005, Amsterdam Center for Law & Economics Working Paper No. 2010-01, Available at SSRN:

Giuseppe Dari-Mattiacci (Contact Author)

University of Amsterdam ( email )

Postbus 15654
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Amsterdam, Noord-Holland 1001 ND

Tinbergen Institute ( email )

Burg. Oudlaan 50
Rotterdam, 3062 PA

European Corporate Governance Institute (ECGI) ( email )

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Nuno Garoupa

George Mason University - Antonin Scalia Law School ( email )

3301 Fairfax Drive
Arlington, VA 22201
United States

Fernando Gomez-Pomar

Universitat Pompeu Fabra ( email )

Ramon Trias Fargas 25-27
08005 Barcelona
(34-93) 542 16 47 (Phone)
(34-93) 542 17 31 (Fax)

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