OPINION OF ADVOCATE GENERAL
MAZÁK
delivered on 16 December 2010 (1)
Case C‑407/09
European Commission
v
Hellenic Republic
(Failure to comply with a judgment of the Court – Financial penalties – Imposition of a lump sum payment)
1. This action was brought by the Commission of the European Communities against the Hellenic Republic pursuant to Article 228 EC (corresponding now to Article 260 TFEU), for alleged failure to comply with the judgment of the Court in Case C-26/07 Commission v Greece (2) (‘the 2007 judgment’). In that judgment, the Court held that, by failing to adopt, within the period prescribed, the laws, regulations and administrative provisions necessary to comply with Council Directive 2004/80/EC of 29 April 2004 relating to compensation to crime victims, (3) the Hellenic Republic had failed to fulfil its obligations under that directive.
2. The Commission asks the Court to declare that the defendant has failed to fulfil its obligations under Article 228(1) EC, and to order the defendant to pay a lump sum. (4) The Hellenic Republic calls for the action to be dismissed.
Pre-litigation procedure
3. On 29 February 2008, seven months after the 2007 judgment was delivered, the Commission sent a letter of formal notice to the Hellenic Republic asking it to produce, within two months, the measures adopted to comply with that judgment.
4. In replying by letter dated 10 September 2008, the Hellenic Republic failed to comply with the time-limit set by the Commission. In its reply, it indicated that the draft law intended to put an end to the infringement found by the 2007 judgment was in the final stage of being drawn up. (5)
5. On 23 September 2008, the Commission sent the Hellenic Republic a reasoned opinion, calling upon it to take the necessary measures to comply with the 2007 judgment within two months.
6. The Hellenic Republic once again failed to comply with the time-limit set by the Commission. It did not reply until 22 June 2009, when it stated that the draft law transposing Directive 2004/80 would be tabled in a summer session of the Greek parliament.
7. On 25 June 2009, the Commission decided to bring an action against the Hellenic Republic before the Court of Justice. The action was finally brought on 20 October 2009, when the Commission asked the Court to find that the Hellenic Republic had failed to fulfil its obligations and to order the Hellenic Republic to pay a penalty payment and a lump sum.
8. During the period between the decision by the Commission to bring an action and the initiation of those proceedings, the Hellenic Republic sent two letters to the Commission containing details of the progress made in the legislative process concerning the law to transpose Directive 2004/80. Finally, by letter dated 10 September 2009, the Hellenic Republic informed the Commission of the suspension of the legislative process because early parliamentary elections had been called.
Developments in the course of the present proceedings
9. The Hellenic Republic transposed Directive 2004/80 by Law No 3811/2009, published on 18 December 2009 in the Official Gazette of the Hellenic Republic (FEK A’ 231).
10. The Commission was notified of this law by letter dated 22 December 2009. Despite this notification, and relying on its communication of 13 December 2005 on the application of Article 228 EC (6) (‘the 2005 communication’), the Commission decided not to withdraw its action. In its reply, it stated that it was no longer seeking the imposition of a penalty payment but that it was maintaining its claim for payment of a lump sum.
The infringement
11. In the present case, it is quite clear that the Hellenic Republic, by failing to take the necessary measures to comply with the 2007 judgment, has failed to fulfil its obligations under Article 260(1) TFEU. It matters little that the Member State concerned finally adopted the required measures after the action was brought.
12. This finding is required in light of the settled case-law according to which the question whether a Member State has failed to fulfil its obligations must be determined by reference to the situation prevailing in the Member State at the end of the period laid down in the reasoned opinion, and the Court cannot take account of any subsequent changes. (7)
13. In the present case, compliance with the 2007 judgment involved adoption by the Hellenic Republic of the necessary measures to comply with Directive 2004/80. It is beyond dispute that the Hellenic Republic did not adopt those measures until December 2009, when Law No 3811/2009 was enacted, whereas the reasoned opinion setting a time-limit of two months for compliance with the 2007 judgment was dated 23 September 2008.
14. The case-law mentioned above also rules out the argument advanced by the Hellenic Republic that the action should be dismissed in view of its constant close collaboration with the Commission throughout the pre-litigation procedure and of the fact that it complied with the 2007 judgment before delivery of the judgment in the present case.
15. I consider that these circumstances may be taken into account, if appropriate, in assessing the need to impose financial penalties and their amount, but not in establishing whether the Member State has failed to fulfil its obligations as alleged.
16. In this connection, I would add that it is possible to speak of ‘constant close collaboration’ on the part of the Hellenic Republic with the Commission only from the point at which the Commission decided to bring the present action. In my view, the belated replies from the Greek authorities both to the letter of formal notice and to the reasoned opinion certainly do not demonstrate this kind of collaboration.
The financial penalty
Arguments of the parties
17. Originally, the Commission asked the Court to order the Hellenic Republic to pay both a penalty payment and a lump sum. As noted in point 10 of this Opinion, the Commission withdrew its claim for a penalty payment following compliance with the 2007 judgment after the present action was brought, while maintaining its claim for payment of a lump sum.
18. The Commission considers that the imposition of a lump sum is justified, in the present case, by the duration of the infringement (29 months) and its very serious consequences for public and private interests, given that the failure to transpose Directive 2004/80 into Greek law obstructed achievement of the fundamental objective of freedom of movement for persons in a single area of freedom, security and justice.
19. The Commission also refers to the aggravating circumstances surrounding the alleged breach of obligations, such as, firstly, the clarity of the 2007 judgment and the provisions of Directive 2004/80 which thus present no difficulties of interpretation, secondly, the lack of any particular difficulties associated with the procedure for transposing Directive 2004/80 and, thirdly, the late response of the Greek authorities to the reasoned opinion.
20. With regard to the amount of the lump sum, the Commission proposed a daily lump sum of EUR 10 512 for each day of delay from the date on which the 2007 judgment was delivered until the date of delivery of judgment in the present case, or the date on which the measures necessary to comply with the 2007 judgment were taken if that occurred earlier. (8)
21. In accordance with the 2005 communication, this daily lump sum is calculated by multiplying a flat-rate amount, set at EUR 200, by a coefficient for seriousness (in this case, 12 on a scale from 1 to 20) and by a factor set for each country (the ‘n’ factor) which takes account of both the ability to pay of the Member State concerned, represented by its gross domestic product, and the number of votes it has in the Council of the European Union (stated to be 4.38 in the case of the Hellenic Republic).
22. At the hearing, the Commission reduced the daily lump sum proposed initially to EUR 10 248 because of the adjustment to the ‘n’ factor laid down in the Commission communication of 14 September 2010 concerning the application of Article 260 TFEU and the updating of data used to calculate lump sum and penalty payments to be proposed by the Commission to the Court of Justice in infringement proceedings (9) (‘the 2010 communication’). This adjustment was based on the economic data available for 2008. For the Hellenic Republic, the ‘n’ factor was set at 4.27 instead of 4.38. (10)
23. The Hellenic Republic has contested the imposition of a lump sum, for several reasons.
24. Firstly, the Hellenic Republic complied with the 2007 judgment before delivery of the judgment pursuant to Article 260 TFEU and, in any event, within a reasonable period given the economic difficulties that it was and still is facing.
25. Secondly, there is no risk of a repeat infringement. Thirdly and finally, the alleged breach of obligations cannot be regarded as particularly serious, given that, quite apart from the specific provisions adopted in December 2009, Greek law provides for compensation to injured persons in general and Directive 2004/80 applies only to a limited number of cases, so that the effects of failure to comply with the 2007 judgment on public and private interests are not direct and are in any event uncertain.
26. The Hellenic Republic has stressed that the delay in transposing Directive 2004/80, and hence in complying with the 2007 judgment, was principally and objectively attributable to the need to find the necessary financial resources.
27. In the alternative, if the Court should decide to order it to pay a lump sum, the Hellenic Republic has proposed that the amount be reduced to the minimum lump sum specified for it by the 2005 communication, namely EUR 2 190 000. At the hearing, it added that it was also asking to be allowed to pay in instalments, without interest.
28. According to the Hellenic Republic, in order to rule on the amount of the lump sum to be paid, the Court must take account of all the circumstances of the case and particularly its ability to pay, including its present situation.
29. In this connection, the Hellenic Republic mainly disputes the ‘n’ factor used by the Commission to express Member States’ ability to pay, which is based on gross domestic product and the number of votes the Member State concerned has in the Council. Although the 2010 communication reduced this factor for the Hellenic Republic in light of the economic data for 2008, the factor does not reflect the current economic reality, given that the gross domestic product for 2009 and 2010 is different again.
30. Moreover, matters such as gross domestic product and the number of votes in the Council are not sufficient in themselves to determine a Member State’s ability to pay. Other factors should also be taken into account, such as the public deficit, the national debt or inflation.
Appraisal
31. As I have already had occasion to explain in my Opinion in Case C-70/06 Commission v Portugal, (11) I consider that, in order to apply the enforcement procedure provided by Article 260 TFEU in a consequent manner, that procedure must be understood as a tool for fully realising the objective of proceedings under Article 258 TFEU, which is to bring infringements of European Union law to an end, and at the same time as a means of dissuading Member States from failing to comply with the judgments of the Court establishing a breach of European Union law pursuant to Article 258 TFEU.
32. The nature of the system of financial penalties which under Article 260(2) TFEU serve to achieve these objectives follows from the case-law of the Court. While a penalty payment seems particularly suitable for the purpose of inducing a Member State to put an end as soon as possible to a breach of obligations which, in the absence of such a measure, would tend to persist, the imposition of a lump sum is based more on the assessment of the effects on public and private interests of the failure of the Member State concerned to comply with its obligations, in particular where the breach has persisted for a long period since the judgment initially establishing it was delivered. (12)
33. In the present case, the Commission rightly withdrew its claim seeking a penalty payment, given the function of penalty payments as described above and the compliance with the 2007 judgment by the Hellenic Republic. This is also confirmed by the case-law of the Court, under which the imposition of a penalty payment pursuant to Article 260 TFEU is, in principle, justified only in so far as the failure to comply with an earlier judgment of the Court persists. (13)
34. With regard to the imposition of a lump sum, I would reiterate the view expressed in my Opinion in Case C-121/07 Commission v France, (14) that a lump sum cannot be ordered automatically in all cases where a failure to fulfil obligations pursuant to Article 260(1) TFEU has been found.
35. The Court has followed this approach in finding that that provision confers a wide discretion upon it when deciding whether or not to impose such a penalty (15) on the basis of all the relevant factors pertaining to both the particular nature of the infringement established and the individual conduct of the Member State involved. (16)
36. I consider that, in the present case, three facts argue for the imposition of a lump sum.
37. First, there is the conduct of the Hellenic Republic. As I have pointed out in point 16 of the present Opinion, although the Hellenic Republic has referred to its ‘constant close collaboration’ with the Commission, the belated replies from the Greek authorities both to the letter of formal notice and to the reasoned opinion certainly do not demonstrate this kind of collaboration during the pre-litigation procedure. The change in the Greek authorities’ conduct came about only after the Commission’s decision to bring the present action.
38. Second, there is the duration of the infringement. In my view, the period of 29 months that passed from the date on which the 2007 judgment was delivered to the date of adoption of the law transposing Directive 2004/80 into Greek law may be regarded as a significant length of time, particularly given the circumstances also highlighted by the Commission, namely the clarity of the 2007 judgment and of Directive 2004/80, which consequently present no difficulties of interpretation, and the lack of any particular difficulties associated with the procedure for transposing Directive 2004/80.
39. The arguments put forward by the Hellenic Republic seeking to justify the duration of the infringement on the basis of the problems relating to the need to gather the financial resources necessary for transposing Directive 2004/80 or to the holding of elections cannot be upheld. The Court has clearly stated that a Member State cannot plead provisions, practices or situations prevailing in its domestic legal order to justify failure to observe obligations arising under European Union law. (17)
40. Thirdly, the seriousness of the infringement also argues for the imposition of a lump sum. Account must be taken of the fact that the Hellenic Republic was the last Member State to transpose Directive 2004/80, and did so almost four years after the expiry of the time-limit for transposing it. (18)
41. However, recital 7 in the preamble to Directive 2004/80 states:
‘This Directive sets up a system of cooperation to facilitate access to compensation to victims of crimes in cross-border situations, which should operate on the basis of Member States’ schemes on compensation to victims of violent intentional crime, committed in their respective territories. Therefore, a compensation mechanism should be in place in all Member States.’ (19)
42. It follows that, by its failure to act in connection with Directive 2004/80, the Hellenic Republic has also to some extent compromised the measures adopted by the other Member States and reduced the effectiveness of their compensation mechanisms.
43. Furthermore, as the Commission has rightly pointed out, failure to transpose Directive 2004/80 into Greek law obstructed achievement of the fundamental objective of freedom of movement for persons in a single area of freedom, security and justice. This finding is supported by recital 2 in the preamble to Directive 2004/80, which reads as follows:
‘The Court of Justice held in the Cowan … Case that, when Community law guarantees to a natural person the freedom to go to another Member State, the protection of that person from harm in the Member State in question, on the same basis as that of nationals and persons residing there, is a corollary of that freedom of movement. Measures to facilitate compensation to victims of crimes should form part of the realisation of this objective.’
44. In view of the conduct of the Hellenic Republic and the duration and the seriousness of the infringement, as resulting from the circumstances described above, I consider that the Hellenic Republic should be ordered to pay a lump sum.
45. As for the amount of this lump sum, it should be noted at the outset that the Court is not bound by the proposal from the Commission and that the amount of the lump sum is a matter for its own discretion. (20)
46. It can be seen from the judgments in which the Court has ordered Member States to pay a lump sum (21) that, in contrast to the fixing of a penalty payment, the Court has not adopted the method of calculation proposed by the Commission in its 2005 communication.
47. For this reason, I consider it neither helpful nor necessary to examine whether the calculation of the ‘n’ factor is correct, which the Hellenic Republic disputes, or to seek an answer as to whether this factor, based on gross domestic product and the number of votes in the Council, is sufficient in itself to determine a Member State’s ability to pay. (22)
48. It follows from case-law that, when conducting the assessment required in order to set the amount of a lump sum payment, the Court must ensure that that penalty is appropriate to the circumstances and proportionate both to the breach that has been established and the ability to pay of the Member State concerned. The relevant factors to be taken into account include, in particular, factors such as how long the breach of obligations has persisted since the judgment which initially established it was delivered and the public and private interests involved. (23)
49. In the present case, in addition to the considerations set out in points 37 to 43 of this Opinion, account should be taken of the fact that the Hellenic Republic complied with the 2007 judgment during the present case.
50. Given all the considerations set out above, a sum of EUR 2 million seems appropriate to the circumstances of the case.
Conclusion
51. Having regard to the foregoing considerations, I propose that the Court should:
– declare that, by having failed to take, on expiry of the period set for this purpose by the European Commission in the reasoned opinion, the measures necessary to comply with the judgment of 18 July 2007 in Case C‑26/07 Commission v Greece, the Hellenic Republic has failed to fulfil its obligations under Article 260(1) TFEU;
– order the Hellenic Republic to pay to the European Commission, into the account ‘European Union own resources’, a lump sum of EUR 2 million;
– order the Hellenic Republic to pay the costs.