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Subsidiarity is the principle which the European Community has begun applying to consider whether federal legislation is necessary, or whether action by the Member States will suffice. This article considers whether subsidiarity should constrain the Court of Justice's jurisprudence as well. It begins by analyzing the federalism problems posed by the Court's case law concerning remedies for the violation of Community law, in particular the doctrine holding Member States liable in damages for failing properly to implement Community directives. After concluding that the Court is required to review this jurisprudence for consistency with the subsidiarity principle, and that the Court's existing compensation and rights-centered rationale is largely insufficient, the article develops a two-fold argument for sustaining Member State liability even under the subsidiarity principle: such liability is essential to deterring Member State cheating on implementation, and encourages the development of directives that delegate rather than precisely prescribe regulatory content. The article concludes by describing possible modifications to prevailing liability doctrine in order to render it more consistent with the subsidiarity and proportionality principles.

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