Provisional text
Joined Cases T‑50/06 RENV II and T‑69/06 RENV II
Ireland
and
Aughinish Alumina Ltd
v
European Commission
(State aid — Directive 92/81/EEC — Excise duties on mineral oils — Mineral oils used as fuel for alumina production — Exemption from excise — Existing or new aid — Article 1(b)(i), (iii) and (iv) of Regulation (EC) No 659/1999 — Legal certainty — Legitimate expectations — Reasonable time — Principle of sound administration — Misuse of powers — Obligation to state reasons — Concept of State aid — Advantage — Effect on trade between Member States — Distortion of competition)
Summary — Judgment of the General Court (First Chamber, Extended Composition), 22 April 2016
1. EU law — Principles — Protection of legitimate expectations — Legal certainty — Included — Principle of estoppel — Not included
2. EU law — Principles — Legal certainty — Scope — Institutions unable to alter measures which they have adopted — Compliance with rules on competence and procedure —Obligation to avoid inconsistencies which might arise in the implementation of the various provisions of EU law — Scope and consequences in State aid matters
(Art. 88 EC)
3. State aid — Respective powers of the Council and the Commission — Council decision authorising a Member State, in accordance with Directive 92/81, to introduce an exemption from excise duty — Not relevant to the allocation, by the treaty, of the said powers
(Arts 87 EC, 88 EC and 93 EC; Council Directive 92/81, Art. 8(4) and (5); Council Decision 2001/224, fifth recital and Art. 1(2))
4. State aid — Concept — Assessment having regard to the objective situation, independently of the conduct of the institutions — Council decision authorising a Member State, in accordance with Directive 92/81, to introduce an exemption from excise duty — Assessment of the Commission concerning the absence, in that context, of distortion of competition and hindrance to the proper functioning of the internal market — Not relevant to the Commission’s power of assessment in State aid matters — No infringement of the principles of legal certainty or effectiveness, or of Article 8(5) of Directive 92/81
(Arts 87(1) EC and 88(2) EC; Council Directive 92/81, Art. 8(4) and (5))
5. State aid — Examination by the Commission — Adoption of an injunction suspending payment of an alleged aid — No obligation on the Commission to adopt such a decision
(Art. 88 EC; Council Directive No 659/1999, Art. 11(1))
6. Actions for annulment — Grounds — Lack of or inadequate statement of reasons — Separate ground from the one concerning substantive legality
(Arts 230 EC and 253 EC)
7. Acts of the institutions — Statement of reasons — Obligation — Scope — Commission decision on State aid — Characterising of the adverse effect on competition and of the affecting of trade between Member States
(Arts 87(1) EC and 253 EC)
8. State aid — Effect on trade between Member States — Adverse effect on competition — Criteria for assessment — Operating aid — Small size and limited extent of aid not a priori excluding the possibility of trade being affected
(Art. 87(1) EC)
9. State aid — Concept — Tax exemption granted by public authorities to certain undertakings — Inclusion — Existing aid — Condition — Actual payment of the aid granted
(Arts 87 EC and 88 EC; Council Regulation No 659/1999, Art. 1(b)(i))
10. State aid — Existing aid and new aid — Procedure for reviewing aid — Distinct procedures — Effects of a decision of incompatibility
(Art. 88 EC)
11. State aid — Examination by the Commission — Assessment at the date the Commission’s decision was taken — Change of legal regime before the decision taken — Consequences —Application of the substantive rules in force at the time the Commission’s decision was taken — Temporal application of procedural rules — Codification of case-law rules — Assessment
(Art. 88 EC; Council Regulation No 659/1999, Arts 1(b), 4(6), and 15)
12. State aid — Existing aid and new aid — Conversion of notified aid into existing aid — Conditions — Power of the Member State concerned to implement the aid only after expiry of the period for opening the formal investigation procedure
(Art. 88 EC)
13. State aid — Existing aid and new aid — No investigation into a new aid for a relatively long period — Transformation into an existing aid — Not permissible
(Art. 88 EC; Council Regulation No 659/1999, Art. 15)
14. State aid — Existing aid and new aid — Conversion of new aid into existing aid — Ten-year time-limit for recovery of unlawful aid — Temporal application
(Art. 88 EC; Council Regulation No 659/1999, Arts 11(2), and 15)
15. State aid — Recovery of unlawful aid — Ten year limitation period laid down in Article 15 of Regulation No 659/1999 — Point from which the limitation period starts to run — Date on which aid granted to the beneficiary
(Art. 88(2) EC; Council Regulation No 659/1999, Art. 15)
16. State aid — Recovery of unlawful aid — Aid granted in breach of the procedural rules under Article 88 EC — Legitimate expectations entertained by recipients — Conditions and limits — End of the legitimate expectation as from publication of the decision to open the formal investigation procedure even in exceptional circumstances
(Arts 87 EC and 88 EC; Council Regulation No 659/1999, Art. 14(1); Council Directive 92/81)
17. State aid — Commission decision to open a formal investigation procedure into a State measure — Obligation to give a decision within a reasonable time — Infringement — No obstacle to recovery of the aid — Limits — Infringement of the rights of the defence
(Art. 88 EC; Council Regulation No 659/1999, Arts 7(6), and 13(2))
18. State aid — Administrative procedure — Obligation of the Commission to give notice to the interested parties to submit their comments — Exclusion of those parties from rights of defence
(Art. 88(2) EC)
19. Judicial proceedings — Costs — Successful party ordered to bear part of its own costs
(Art. 225 EC; Rules of Procedure of the General Court (1991), Art. 135)
1. The estoppel principle is a common law principle that does not exist in EU law as such; that does not mean, however, that certain principles, such as the principles of legal certainty and of protection of legitimate expectations, and certain rules, such as the nemo potest venire contra factum proprium rule enshrined in EU law may not be regarded as connected or related to that principle. Accordingly, a complaint must be rejected as unfounded in law in so far as it is based on an infringement of the estoppel principle, although that is without prejudice to the possibility of examining the arguments raised by the party concerned where they may be deemed to support a plea deriving, in essence, from the principles of legal certainty or of protection of legitimate expectations.
(see para. 56)
2. The principle of legal certainty is a general principle of EU law, which aims to ensure that situations and legal relationships governed by EU law remain foreseeable. To that end, it is essential that the institutions observe the principle that they may not alter measures which they have adopted and which affect the legal and factual situation of persons, meaning that they may amend such acts only in accordance with the rules on competence and procedure.
Observance of the principle of legal certainty also requires that the institutions avoid, as a matter of principle, inconsistencies that might arise in the implementation of the various provisions of EU law, particularly when those provisions pursue the same objective, such as undistorted competition in the common market. In that regard, in State aid matters, the principle of legal certainty requires that, where the Commission has created, in disregard of its duty of care, an equivocal situation, owing to the introduction of elements of uncertainty and a lack of clarity in the applicable legislation, combined with a prolonged lack of response on its part despite its awareness of the aid concerned, the Commission is under a duty to clarify such a situation before it can take any action to order the recovery of the aid already paid.
(see paras 59, 218)
3. The procedure laid down in Article 8(4) of Directive 92/81 on the harmonisation of the structures of excise duties on mineral oils, which granted to the Council, acting unanimously on a proposal from the Commission, the power to authorise any Member State to introduce exemptions or reductions in respect of excise duties other than those laid down by that directive for specific policy considerations, has a purpose and scope which differ from those of the rules established in Article 88 EC.
Consequently, a Council decision authorising a Member State, in accordance with Article 8(4) of Directive 92/81, to introduce an excise duties exemption cannot have the effect of preventing the Commission from exercising the powers conferred on it by the Treaty and, consequently, setting in motion the procedure laid down in Article 88 EC in order to review whether that exemption constitutes State aid and on the conclusion of that procedure, if appropriate, to adopt a decision finding the existence of such aid.
Moreover, the fact that Council authorisation decisions grant full exemptions from excise duties while setting detailed conditions of a geographical and temporal nature and that those conditions are strictly complied with by the Member States has no effect on the division of powers between the Council and the Commission and therefore cannot deprive the Commission of the right to exercise its powers.
It follows that by implementing, without first engaging the procedure laid down in Article 8(5) of Directive 92/81, the procedure laid down in Article 88 EC in order to examine whether an exemption from excise duties constitutes State aid and by adopting, on the conclusion of that procedure, a decision finding the existence of such aid even though Article 1(2) of Decision 2001/224 concerning reduced rates of excise duty and exemptions from such duty on certain mineral oils when used for specific purposes expressly authorised the Member State concerned to continue applying that exemption, the Commission does not infringe the principles of legal certainty and effectiveness of the acts of the institutions, or even Article 8(5) of Directive 92/81. Authorising decisions of the Council, adopted on the proposal of the Commission, can produce effects only within the area covered by the rules on harmonisation of legislation relating to excise duties and do not predetermine the effects of any decision which could be adopted by the Commission in the exercise of its powers in the area of State aid.
(see paras 62-64, 66, 69, 73, 91)
4. The concept of State aid corresponds to an objective situation and cannot depend on the conduct or statements of the institutions. Accordingly, that the fact that the Commission took the view, at the time when the Council adopted decisions under Article 8(4) of Directive 92/81 on the approximation of the rates of excise duties on mineral oils, that exemptions from excise duty on mineral oils used as fuel for the alumina production did not give rise to a distortion of competition and did not impede the proper functioning of the common market cannot not preclude those exemptions from being classified as State aid, within the meaning of Article 87(1) EC, if the conditions governing the existence of State aid are met. It follows, a fortiori, that the Commission is not bound, for the purpose of the classification of the exemptions from excise duty as State aid, by the Council’s assessments, in its decisions in the field of harmonisation of legislation relating to excise duties, according to which those exemptions did not give rise to a distortion of competition and did not impede the proper functioning of the common market.
It follows that, by implementing the procedure under Article 88 EC, for the purposes of examining whether the exemption in question constitutes State aid, and by taking, at the conclusion of that procedure, a decision finding aid incompatible with the common market and ordering its recovery, the Commission does no more than exercise the powers conferred on it by the EC treaty in State aid matters and that, in doing so, it does not infringe the principle of legal certainty, the principle lex specialis derogat legi generali, the presumptions of legality and effectiveness of the acts of the institutions, or Article 8(5) of Directive 92/81.
(see paras 69-71, 74, 88)
5. Article 11(1) of Regulation No 659/1999 concerning the application of Article 88 EC does not require the Commission, if certain conditions are fulfilled, to adopt an injunction suspending the payment of unlawful aid, but provides only that it may adopt such an injunction, where it deems it necessary.
(see paras 79, 259)
6. See the text of the decision.
(see para. 97)
7. See the text of the decision.
(see paras 99, 100)
8. See the text of the decision.
(see paras 112-115, 120, 122, 124, 127)
9. See the text of the decision.
(see paras 117, 201)
10. See the text of the decision.
(see para. 139)
11. Although safeguarding the principles of legal certainty and of protection of legitimate expectations imposes limits on the immediate application of substantive rules, those limits cannot apply in the situation of unlawful aid or notified aid before it has been authorised by the Commission. In the system and logic underlying the control of State aid, the situation is not defined immediately and definitively by the notification or grant of aid, but remains ongoing pending the decision of the EU institutions. In that context, it is for the Commission to apply the substantive rules in force at the time when it gives its decision on the aid or aid scheme at issue or on the compatibility of the aid or scheme with the common market, the only rules on the basis of which the lawfulness of the decision it takes in that regard falls to be assessed.
However, procedural rules cannot govern procedural acts adopted before those rules’ entry into force. Procedural rules are generally held to apply to all proceedings pending at the time when they enter into force. The situation is, however, different as regards rules aimed at codifying certain procedural rules which, in accordance with the case-law of the Court of Justice, were already applicable when those procedural acts entered into force.
That is, in particular, the case with the rule laid down in Article 4(6) of Regulation No 659/1999, laying down detailed rules for the application of Article 88 EC, which concerns the consequences of inaction by the Commission in relation to the preliminary investigation of a notification of State aid. That rule is aimed in particular at codifying certain procedural rules which, in accordance with the case-law arising from the judgment of the Court of Justice in Case 120/73 Lorenz, were already applicable at the time when those procedural rules entered into force.
(see paras 140, 141, 169, 190, 228)
12. See the text of the decision.
(see paras 154, 156, 160, 229)
13. See the text of the decision.
(see para. 160)
14. Article 15 of Regulation No 659/1999 laying down detailed rules for the application of Article 88 EC, which provides that new aid is converted into existing aid after the expiry of the 10-year limitation period for recovering unlawful aid, is a procedural rule intended to apply at the time of that provision’s entry into force. However, in so far as that article contains no transitional provision regarding its application in time, it must be held to apply to all formal investigation procedures in course at the time of that entry into force or initiated from that date. It follows that, even if the aid was granted before the entry into force of Article 15 of Regulation No 659/1999, that article nevertheless has the effect of starting the limitation period of 10 years laid down therein, where the decision to recover that aid is taken, as in the present case, after the entry into force of that article.
(see para. 173)
15. See the text of the decision.
(see para. 181)
16. A Member State whose authorities have granted aid contrary to the procedural rules laid down in Article 88 EC may rely on the legitimate expectations of the recipient undertaking to challenge before the EU judicature the validity of a Commission decision instructing it to recover the aid, but not to justify a failure to comply with the obligation to take the steps necessary to implement it. However, in view of the fundamental role played by the notification obligation to render effective the review of State aid by the Commission, which is mandatory, the recipients of aid may not, in principle, entertain a legitimate expectation that the aid is lawful unless it has been granted in compliance with the procedure provided for in Article 88 EC and a diligent business operator must normally be in a position to confirm that that procedure has been followed.
In those circumstances, a delay by the Commission in deciding that aid is unlawful and that it must be abolished and recovered by a Member State may, in certain circumstances, establish a legitimate expectation on the recipients’ part so as to prevent the Commission from requiring that Member State to order the refund of that aid. However, in view of the requirements resulting from the principles of protection of legitimate expectations and of legal certainty, such an equivocal situation created by the wording of Council decisions, adopted on a proposal from the Commission, to authorise a Member State to introduce exemptions from or reductions in excise duty pursuant to Directive 92/81 on the harmonisation of the structures of excise duties on mineral oils, precludes recovery of the aid granted on the basis of the exemption at issue only until the date of publication in the Official Journal of the European Union of the decision to initiate the formal investigation procedure. By contrast, as of that publication, the aid beneficiary must know that, if the latter constitutes State aid, it has to be authorised by the Commission, in accordance with Article 88 EC. It follows that the publication of the decision to initiate the formal investigation procedure puts an end to the legitimate expectations that the aid beneficiary might previously have that such an exemption was lawful. That publication eliminates any uncertainty, linked to the wording of the Council’s authorisation decisions, as to the fact that the measures in question, if they constitute State aid, have to be approved by the Commission in accordance with Article 88 EC.
Concerning, finally, exceptional circumstances on the basis of which the recipient of unlawful aid could legitimately assume such aid to be lawful, any apparent failure to act on the part of the Commission is irrelevant when an aid scheme had not been notified to it. Such a solution also applies where an aid scheme has been implemented without the prior notice of implementation required by the judgment in Case 120/73 Lorenz being given and thus without the procedure laid down by Article 88 EC being followed in full.
(see paras 214, 216, 223-225, 230, 252)
17. The mere fact that Regulation No 659/1999 laying down detailed rules for the application of Article 88 EC, apart from a limitation period of ten years (from the grant of the aid) at the end of which recovery of the aid may no longer be ordered, does not prescribe any time-limit, even indicative, for the examination by the Commission of unlawful aid, Article 13(2) of that regulation providing that the Commission is not to be bound by the time-limit set out in Article 7(6) of the same regulation, does not prevent the EU judicature from verifying whether that institution failed to take a reasonable amount of time or acted too slowly.
Pursuant to Article 7(6) of Regulation No 659/1999, the reference period for completing a formal investigation procedure in the context of notified State aid is 18 months. That period, even though not applicable to unlawful aid, in accordance with Article 13(2) of Regulation No 659/1999, provides a useful point of reference for assessing the reasonableness of the duration of a formal investigation period relating to a measure that has been unlawfully implemented.
In that regard, a period of just over 49 months between the adoption of the decision to initiate the formal investigation procedure and the adoption of a decision finding State aid and ordering its recovery, which is slightly more than double that provided for in Article 7(6) of Regulation No 659/1999 for completing a formal investigation procedure in the context of notified State aid, appears unreasonable. Such a delay is particularly unjustified in the case of files presenting no obvious difficulty and on which the Commission could have formed an opinion well before the opening of the formal investigation procedure.
However, failure to act within a reasonable time justifies annulment of the decision adopted at the end of that period only in so far as it also constitutes an infringement of the defence rights of the undertakings concerned.
(see paras 217, 234, 237-239, 242, 248, 259, 268-270)
18. See the text of the decision.
(see para. 271)
19. See the text of the decision.
(see paras 276, 277)