ORDER OF THE PRESIDENT OF THE COURT OF FIRST INSTANCE
23 December 2008 (*)
(Application for interim measures – State aid – Commission decision declaring aid awarded by the Republic of Hungary to certain electricity producers through power purchase agreements to be incompatible with the common market – Application for suspension of operation – Lack of urgency – Weighing up of interests)
In Case T‑468/08 R,
AES-Tisza Erőmű kft (AES-Tisza kft), established in Tiszaújváros (Hungary), represented by T. Ottervanger and E. Henny, lawyers,
applicant,
v
Commission of the European Communities, represented by L. Flynn, N. Khan and K. Talabér-Ritz, acting as Agents,
defendant,
APPLICATION for suspension of the operation of Article 1 of Commission Decision C (2008) 2223 final of 4 June 2008 on the State aid awarded by the Republic of Hungary through power purchase agreements,
THE PRESIDENT OF THE COURT OF FIRST INSTANCE OF THE EUROPEAN COMMUNITIES
makes the following
Order
Factual background
1 In the mid-1990s, the Republic of Hungary’s main objective in the energy sector was to modernise the infrastructure related to power generation in order to ensure security of supply. In order to achieve that objective, which required substantial capital investments, the State introduced a system of long-term power purchase agreements (‘PPAs’) designed to encourage electricity generators to invest in Hungary. Within the framework of those PPAs, which were concluded between 1995 and 2001, the State-owned undertaking Magyar Villamos Művek (MVM) Rt gave a commitment, as a ‘single buyer’, to purchase a specific quantity of electricity at a fixed price. Those long-term PPAs thus made it possible to guarantee for producers a return on their investments.
2 The Hungarian electricity market has been governed by three consecutive regimes. The first laid down the obligation for MVM to ensure security of supply at the lowest possible cost (1992-2002). The second, which came into force in 2003, introduced a dual model by dividing the market into two sectors: a liberalised sector representing about 30% of production and a public-utility sector, serviced by MVM, representing about 70% of production. Under that regime, energy generators were legally obliged to offer the required capacity to MVM at prices regulated for the public-utility sector. After the implementation of the third regime in 2004, energy producers are still obliged to supply MVM, but price regulation has been abolished, and electricity prices have from then on been determined on the basis of the price formula specified in each PPA.
3 The applicant, AES-Tisza Erőmű kft, is a wholly-owned Hungarian subsidiary of the AES Group, the parent company of which, AES Corporation, is based in the United States. It has generated electricity in Hungary in its Tisza II plant since 1996, when it bought the former State-owned undertaking Tisza as part of the Hungarian Government’s privatisation programme. In that context, the applicant also acquired the long-term PPA previously concluded between Tisza and MVM. The Tisza II plant, which was built between 1972 and 1978, is fuelled primarily by natural gas, with fuel oil as back-up. It is the primary provider of balancing and peak power for the Hungarian system. The AES Group operates two other plants in Hungary, at Borsod and at Tiszapalkonya, which are active in the liberalised sector of the market and thus do not benefit from a long-term PPA.
4 In November 2005, the Commission opened the formal investigation procedure under Article 88(2) EC in respect of the abovementioned long-term PPAs. The Commission had doubts as to the compatibility of those PPAs with the Community scheme for State aid, given that the PPAs shielded the producers concerned from all commercial risks and placed them in a better position than other producers on the market.
5 On 4 June 2008, the Commission adopted Decision C (2008) 2223 final on the State aid granted by the Republic of Hungary through PPAs (‘the contested decision’), the operative part of which reads as follows:
‘Article 1
1. The purchase obligations as defined in the [PPAs] between [MVM] and [the applicant and six other electricity generators] contain State aids within the meaning of Article 87(1) [EC] to the electricity generators.
2. The State aids referred to in Article 1(1) are incompatible with the common market.
3. [The Republic of] Hungary shall refrain from granting the State aids referred to in paragraph 1 within six months following the date of notification of the present Decision.
Article 2
1. [The Republic of] Hungary shall recover the aid referred to in Article 1 from the beneficiaries.
…
Article 3
1. Within two months following notification of this Decision, [the Republic of] Hungary shall submit to the Commission information concerning the measures already taken and planned to comply with this Decision and notably the steps taken to perform an appropriate simulation of the wholesale market in order to establish the amounts to be recovered, the detailed methodology intended to be applied and a detailed description of the set of data that it intends to use for that purpose.
…
Article 4
1. The exact amount of aid to be recovered should be calculated by [the Republic of] Hungary on the basis of an appropriate simulation of the wholesale electricity market as it would have stood if none of the [PPAs] referred to in Article 1(1) had been in force since 1 May 2004.
2. Within six months following notification of this Decision, [the Republic of] Hungary shall calculate the amounts to be recovered on the basis of the method referred to in paragraph 1 and submit to the Commission all relevant information with regard to that simulation, notably its results, a detailed description of the applied methodology and of the set of data used to carry out the simulation.
Article 5
[The Republic of] Hungary shall ensure that the recovery of the aid referred to in Article 1 is implemented within ten months following the date of notification of this Decision.
Article 6
This Decision is addressed to the Republic of Hungary.’
Procedure and forms of order sought by the parties
6 By application lodged at the Registry of the Court of First Instance on 21 October 2008, the applicant brought an action for the annulment of the contested decision.
7 By a separate document lodged at the Registry of the Court of First Instance on the same day, the applicant brought the present application for interim measures, in which it claims, essentially, that the President of the Court of First Instance should:
– suspend operation of Article 1 of the contested decision, pursuant to Article 105(2) of the Rules of Procedure of the Court of First Instance, until the final order in these interlocutory proceedings and, in any event, until the Court of First Instance has given a ruling in the main action;
– order the Commission to pay the costs.
8 In its written observations on the application for interim measures, lodged at the Registry of the Court of First Instance on 14 November 2008, the Commission claims that the President of the Court of First Instance should:
– dismiss the application for interim relief;
– order the applicant to pay the costs.
9 After the Commission had lodged its observations, the applicant was granted leave to submit a reply, which it did by document of 12 December 2008. In that document, the applicant stated, in particular, that its application for suspension of operation concerned Article 1 of the contested decision only in so far as the applicant was itself affected by that provision. The Commission responded to that reply by a document of 18 December 2008.
Law
10 Pursuant to Articles 242 EC and 243 EC in conjunction with Article 225(1) EC, the judge hearing an application for interim measures may, if he considers that circumstances so require, order that application of an act against which an action has been brought before the Court of First Instance be suspended or prescribe any necessary interim measures.
11 Article 104(2) of the Rules of Procedure provides that an application for interim measures must state the subject-matter of the proceedings, the circumstances giving rise to urgency and the pleas of fact and law establishing a prima facie case for the interim measures applied for. Accordingly, suspension of operation and other interim measures may be ordered by the judge hearing the application for interim measures if it is established that such an order is justified, prima facie, in fact and in law and that it is urgent in so far as it must, in order to avoid serious and irreparable harm to the applicant’s interests, be made and produce its effects before a decision is reached in the main action. Those conditions are cumulative, with the result that an application for interim measures must be dismissed if any one of them is absent (order of the President of the Court of Justice in Case C‑268/96 P(R) SCK and FNK v Commission [1996] ECR I‑4971, paragraph 30). Where appropriate, the judge hearing such an application must also weigh up the interests involved (see order of the President of the Court of Justice in Case C‑445/00 R Austria v Council [2001] ECR I‑1461, paragraph 73 and the case-law cited).
12 Furthermore, in the context of that overall examination, the judge hearing the application enjoys a broad discretion and is free to determine, having regard to the specific circumstances of the case, the manner and order in which those various conditions are to be examined, there being no rule of Community law imposing a pre-established scheme of analysis within which the need to order interim measures must be analysed and assessed (orders of the President of the Court of Justice in Case C‑149/95 P(R) Commission v Atlantic Container Lineand Others [1995] ECR I‑2165, paragraph 23, and of 3 April 2007 in Case C‑459/06 P(R) Vischim v Commission, not published in the ECR, paragraph 25).
13 Finally, it must be noted that Article 242 EC lays down the principle that actions are not to have suspensory effect (order of the President of the Court of Justice in Case C‑377/98 R Netherlands v Parliament and Council [2000] ECR I‑6229, paragraph 44, and order of the President of the Court of First Instance in Case T‑191/98 R II Cho Yang Shipping v Commission [2000] ECR II‑2551, paragraph 42). It is thus only in exceptional circumstances that the judge hearing an application for interim measures may order that operation of an act against which an action has been brought before the Court of First Instance be suspended or prescribe interim measures.
14 Having regard to the documents in the file, the President considers that all information required for a decision on the present application for interim measures is available to him, without it being necessary first to hear the parties’ oral explanations.
15 In the circumstances of the present case, it is appropriate, first, to examine whether the condition relating to urgency is met.
Arguments of the parties
16 Confirming that the present application for interim measures does not concern Articles 3 and 4 of the contested decision, the applicant submits that immediate implementation of Article 1(1) to (3) of the contested decision would cause it serious and irreparable damage, inasmuch as, by Article 1, the Commission requires the Republic of Hungary to adopt legislative and regulatory measures ordering the termination of the purchase obligations laid down in the PPAs. In the meantime, a Law adopted by the Hungarian Parliament on 15 November 2008 for the purpose of implementing the contested decision provides for the cancellation of the PPA concluded between MVM and the applicant as of 31 December 2008. Such cancellation of its PPA would, the applicant argues, seriously undermine its current and future position on the Hungarian electricity market and would cause it to incur considerable losses which are impossible to quantify.
17 The contested decision, the applicant continues, creates considerable legal uncertainty for its current and future contractual relations with MVM which will prevent them from negotiating a new commercially viable PPA. Moreover, the applicant will be unable to recover – by whichever means – the investments which it made in good faith and agreed on normal commercial terms with MVM.
18 In this respect, first, the applicant explains that the immediate implementation of Article 1 of the contested decision would deprive it of the right to negotiate ‘fair and balanced’ amendments to the PPA currently linking it to MVM. If it wishes to survive on the Hungarian market, the applicant will be forced to accept substantial, unilaterally imposed amendments to the existing PPA, or to conclude a new agreement with MVM on the latter’s terms alone, which would cause it serious and irreparable damage.
19 Second, the applicant recalls that it made considerable investments for the purpose of modernising installations at the Tisza II plant. Those investments, at a cost of EUR 98 million, over and above the sum of USD 133 million paid for the purchase of Tisza II, were financed by bank loans. The modernised plant was brought into full service in the course of 2005, with the result that it was possible only from that time on to reflect the investment costs in the capacity fee payable by MVM to the applicant under their PPA. A termination of that PPA in December 2008 would therefore deprive the applicant of its contractual right to earn a return on this considerable investment over the remaining duration of the PPA (eight years). The applicant could then at most expect to be able to sell its electricity as base-load power at less than variable costs, which would not allow it to cover its fixed costs. It would not be possible to repair that damage if the Court of First Instance were to grant the application for annulment in the context of the main proceedings, since Article 1 of the contested decision will deprive the applicant of the very contractual parameters it had negotiated with MVM for apportioning the investment, the operational costs and the benefits in a fair and balanced way.
20 If the applicant were not able to sell sufficient quantities of power at price levels which permit repayment of the loans taken out to finance the abovementioned investments, its creditors would very likely consider it to be in default, with the result that the entire loan would have to be repaid immediately. Given current conditions in the financial sector, the applicant would find it impossible to raise a loan in order to deal with a request for early repayment; in any event, even if it could raise a loan, the cost would inevitably have a detrimental effect on the Tisza II plant. The inevitable result would be insolvency and seizure of the applicant’s assets in Hungary.
21 Third, the applicant alleges that the Commission has made it impossible for it to conclude valid bilateral contracts. If the applicant were to renegotiate the existing PPA or replace it with a new agreement, it would be confronted with considerable legal uncertainty as to the parameters of the agreement which it could validly conclude with MVM. That legal uncertainty would be directly attributable to the mistake consistently made by the Commission in classifying the PPA ‘as an advantage to the applicant’. The Commission’s failure to define with any precision the scope of that advantage has created an ‘impossible commercial situation’ for the applicant. According to the Commission, the State-aid element in a PPA-type contract lies in the combined effect of several interrelated elements: the price, the duration of validity of the contract, and the impact of certain contractual terms relating to a minimum purchase quantity. However, the Commission does not indicate whether the so-called ‘advantage’ inherent in the PPA could be linked to an advantageous price for the applicant.
22 It is thus impossible for the applicant to establish whether a measure adjusting any single one of those components would suffice to remove the State-aid elements from a future PPA. Nor does the Commission provide any indication as to what duration of the PPA it would consider acceptable. That situation is further exacerbated by the fact that the contested decision does not define the exact value of the ‘purchase obligations’.
23 By acknowledging that the ‘overall value of all the conditions of MVM’s long-term purchase obligations … for the period between 1 May 2004 and the termination of the PPAs cannot be calculated with exactitude’ (point 443 of the contested decision), the Commission shows that it is itself entirely uncertain as to what ‘value’, if any, is the correct one for the purpose of applying the contested decision.
24 In other parts of the contested decision, the Commission appears to base the so-called ‘advantage’ on the risk that MVM might be contractually obliged to purchase more electricity than it needs. That, it is argued, is also a fundamental misconception of the function of the applicant’s PPA, which is to provide a specific service to MVM, namely flexibility. The applicant’s plant plays a crucial role in balancing the Hungarian system and must, for that reason, always be available. An availability or capacity fee is a normal method to compensate for the provision of that type of service. Thus, bilateral agreements between electricity companies and their customers comprising such fees are a standard feature of mature liberalised electricity markets, in the European Union and elsewhere.
25 The Commission’s approach appears to imply that the only type of contractual arrangement acceptable for the Hungarian market in future would be a short-term contract for the delivery of power, and that any type of price formula that also includes a capacity fee element would be unacceptable, even if this were absolutely vital in order to ensure the flexibility that the Tisza II plant provides for the Hungarian system.
26 As regards the balance of interests, the applicant submits that the serious and irreparable damage that it would suffer if Article 1 of the contested decision were not suspended greatly outweighs the Commission’s interest in restoring effective competition, the possible interests of third parties and the public interest. In that context, having reiterated the ways in which the purported damage would mainly be caused, the applicant submits that the suspension of operation which it seeks would not affect the legitimate exercise by the Commission of its powers to require recovery of all unlawful State aid should the unlawfulness be confirmed in the context of the main proceedings.
27 According to the Commission, all of the damage alleged by the applicant is financial in nature. However, the applicant has not provided any information as to its own financial situation or to that of the AES Group to which it belongs. According to the Commission, that omission alone is sufficient to justify dismissal of the application for interim measures. Moreover, the website of the AES Group shows that the group operates globally and that the revenue it recorded in 2007 was so high that the damage alleged by the applicant cannot be regarded as serious. Finally, the negative predictions as to the contractual situation in which the applicant would be placed if the PPA which it concluded with MVM were to be cancelled are not supported by any evidence.
Findings of the President
28 The urgent nature of an application for interim relief, as set out in Article 104(2) of the Rules of Procedure, must be assessed in relation to the need for an interim decision in order to prevent serious and irreparable damage being caused to the party seeking the interim measure. In order to fulfil the requirements of that provision, it is not enough simply to claim that implementation of the measure in respect of which suspension is sought is imminent; rather, the onus is on the party seeking the interim measure to prove that it cannot await the outcome of the main proceedings without suffering damage of that nature. To be able to determine whether the damage which the applicant fears is serious and irreparable and therefore provides grounds for, exceptionally, suspension of the operation of the contested decision, the judge hearing the application must have specific evidence allowing him to determine the precise consequences which the absence of the measures applied for would in all probability entail (order of the President of the Court of Justice in Case 378/87 R Top Hit Holzvertrieb v Commission [1987] ECR 161, paragraph 18; orders of the President of the Court of First Instance in Case T‑196/01 R Aristoteleio Panepistimio Thessalonikis v Commission [2001] ECR II‑3107, paragraph 32, and in Case T‑163/00 R Carotti v Court of Auditors [2000] ECR-SC I‑A‑133 and II‑607, paragraph 8; order of the President of the Second Chamber of the Court of First Instance in Case T‑143/99 R Hortiplant v Commission [1999] ECR II‑2451, paragraph 18).
29 In addition, the purported damage must be certain, or, at least, shown to be sufficiently likely to occur, which means that the party seeking the interim measure must still provide evidence of the facts on the basis of which that damage is anticipated. Damage that is entirely hypothetical, in so far as it is based on the occurrence of future and uncertain events, cannot justify the granting of interim measures (see, to that effect, order of the President of the Court of Justice in Case C‑335/99 P(R) HFB and Others v Commission [1999] ECR I‑8705, paragraph 67; orders of the President of the Court of First Instance in Case T‑241/00 R Le Canne v Commission [2001] ECR II‑37, paragraph 37, and in Joined Cases T‑195/01 R and T‑207/01 R Government of Gibraltar v Commission [2001] ECR II‑3915, paragraph 101).
30 It must be added that an application for interim measures must in itself be sufficiently clear and precise to allow the defendant to submit its observations and the judge hearing the application to rule on that application, where necessary, without other supporting information, which means that the essential elements of fact and law on which that application is based must be set out in a coherent and comprehensible fashion in the application for interim measures itself (see, to that effect, orders of the President of the Court of First Instance in Case T‑236/00 R Stauner and Others v Parliament and Commission [2001] ECR II‑15, paragraph 34, in Case T‑306/01 R Aden and Others v Council and Commission [2002] ECR II‑2387, paragraph 52, and in Case T‑85/05 R Dimos Ano Liosion and Others v Commission [2005] ECR II‑1721, paragraph 37). Such an application must, in its own right, allow the defendant to understand the applicant’s claims and the judge to rule on its substance.
31 It follows that an application for interim measures cannot, with a view to making up for any deficiencies, reasonably be supplemented by a subsequent document submitted by the applicant, where relevant, in response to observations submitted by the opposing party. Opening up such a possibility for ‘making up’ would be incompatible, not only with the speed required in applications for interim relief, but also, and especially, with the spirit of Article 109 of the Rules of Procedure, pursuant to which, if an application for interim relief is dismissed, the applicant can make a further application only ‘on the basis of new facts’.
32 In the present case, it is therefore appropriate to reject from the outset all the information – with the exception of acknowledged facts – that the applicant put forward for the first time in its document of 12 December 2008 for the purpose of establishing urgency, in so far as it could already have submitted that information in the application for interim measures.
33 Having established the foregoing, it is necessary to examine, first, the applicant’s argument that cancellation in December 2008 of the PPA which it concluded with MVM would cause it serious and irreparable damage by reason of the fact that it would no longer be in a position to repay the loan which it took out in order to finance the purchase of the Tisza II plant (USD 133 million) and the modernisation of that plant (EUR 98 million), which would inevitably lead to its insolvency and the seizure of its assets in Hungary.
34 In this respect, it must be noted that the applicant hereby puts a figure to financial damage which, if it were to occur, would, it argues, lead to its disappearance from the energy market in Hungary.
35 It is firmly established in the case-law that damage of a purely pecuniary nature cannot, save in exceptional circumstances, be regarded as irreparable, or even as reparable only with difficulty, if it can ultimately be the subject of financial compensation (order of the President of the Court of Justice in Case C‑471/00 P(R) Commission v Cambridge Healthcare Supplies [2001] ECR I‑2865, paragraph 113; order of the President of the Court of First Instance in Case T‑339/00 R Bactria v Commission [2001] ECR II‑1721, paragraph 94).
36 If there is a risk of purely pecuniary damage, an interim measure sought will be justified only if it appears that, without that measure, the applicant would be in a position that could imperil its existence before final judgment in the main action (order of the President of the Court of First Instance in Case T‑181/02 R Neue Erba Lautex v Commission [2002] ECR II‑5081, paragraph 84).
37 However, it has been held that the fact that an undertaking may become insolvent does not necessarily mean that the condition as to urgency is fulfilled. The assessment of the material circumstances of an undertaking must take into consideration, inter alia, the characteristics of the group to which it is linked by way of its shareholders (order of the President of the Court of First Instance of 2 May 2007 in Case T‑297/05 R IPK International – World Tourism Marketing Consultants v Commission, not published in the ECR, paragraph 59; also see, to that effect, order of the President of the Court of Justice in Case C‑12/95 P Transacciones Marítimas and Others v Commission [1995] ECR I‑467, paragraph 12), which may lead the judge hearing the application for interim measures to hold that the condition concerning urgency is not fulfilled, in spite of the foreseeable insolvency of the undertaking (see order of the President of the Court of Justice in Case C‑232/02 P(R) Commission v Technische Glaswerke Ilmenau [2002] ECR I‑8977, paragraph 56 and the case-law cited).
38 In this context, it is necessary to assess whether the purported damage can be regarded as serious in view of, inter alia, the size and turnover of the undertaking applying for interim measures and the characteristics of the group to which it belongs (see orders of the President of the Court of Justice in Joined Cases C‑51/90 R and C‑59/90 R Comos-Tank and Others v Commission [1990] ECR I‑2167, paragraph 26, and in Case C‑43/98 P(R) Camar v Commissionand Council [1998] ECR I‑1815, paragraph 36 and the case-law cited; see also orders in Transacciones Marítimas and Others v Commission, cited in paragraph 37 above, paragraph 12, and IPK International – World Tourism Marketing Consultants v Commission, cited in paragraph 37 above, paragraph 59).
39 That approach is based on the idea that the objective interests of the undertaking concerned are not independent from those of the persons who direct it. The serious nature of the purported damage must therefore also be assessed in respect of the financial situation of the persons controlling the undertaking. That coincidence of interests is justification in particular for not assessing the interest of the undertaking concerned in surviving independently of the interest which those who direct it attach to its permanence (order in HFB and Others v Commission, cited in paragraph 29 above, paragraph 62; orders of the President of the Court of First Instance in Le Canne v Commission, cited in paragraph 29 above, paragraph 40, and in Case T‑192/01 R Lior v Commission [2001] ECR II‑3657, paragraph 55).
40 In the light of that case-law, it is necessary to establish whether the purported financial damage can be regarded as serious in view of, inter alia, the size and turnover of the undertaking applying for interim measures and of the group to which it belongs.
41 In this respect, the applicant has merely stated, in the present application for interim measures, that it is a subsidiary of the AES Group, referring, for further information, to the ‘10-K’ form, which can be found on the group’s website (www.aes.com). By contrast, the applicant has provided no information that would make it possible to assess the financial characteristics of the group to which it belongs, nor, for that matter, any reliable information – such as a statement by a director duly authorised by AES Corporation – capable of demonstrating that the applicant’s parent company has no interest in providing it with financial support. In addition, the applicant has not claimed, and even less shown, that its parent company or other companies in the AES Group have been prevented from supporting it financially (see, to that effect, order of the President of the Court of Justice in Case C‑364/99 P(R) DSR-Senator Lines v Commission [1999] ECR I‑8733, paragraph 52), at least until the main proceedings have come to an end, in order to prevent the applicant’s creditors from treating it as being in default and rendering all the applicant’s bank loans immediately repayable. Finally, the applicant failed at the same time to produce the terms in the financing agreements that ostensibly stipulate that its bank loans are repayable immediately and to state to what extent the loans used had already been repaid.
42 As the applicant has failed entirely to substantiate its assertions as to the gravity of the financial damage arising from the enforcement of the contested decision, the condition of urgency has not been satisfied. In this respect, it must be noted that it is not for the judge hearing the application for interim measures to compensate, of his own motion, for such a lack of evidence (order of the President of the Court of First Instance in Case T-111/01 R Saxonia Edelmetalle v Commission [2001] ECR II‑2335, paragraph 28).
43 For those reasons, the financial damage that the applicant has alleged cannot justify the granting of suspension of operation as applied for.
44 Moreover, publicly available information (see the group’s website and, in particular, the ‘10-K’ form), as referred to by the applicant, indicates that the AES Group operates worldwide, that it has 124 electricity plants in 29 countries, that the group’s annual revenue amounted to USD 13.6 billion in 2007 – an increase of 17.4% in comparison with 2006 – and that the group’s total assets were valued at USD 34.4 billion in 2007. In the light of those figures, on the one hand, the financial damage alleged by the applicant, which is a wholly-owned subsidiary of the parent company of the AES Group, can hardly be regarded as serious. On the other hand, there is nothing to suggest that that group, which operates worldwide, would not be prepared, where necessary, to grant financial support – for which it could turn to financial markets outside Hungary – in order to safeguard the applicant’s survival on the Hungarian market, even if only by standing surety vis-à-vis the banks demanding early repayment of the abovementioned loans. This assessment is not invalidated by claims to the contrary in the document of 12 December 2008, which are not supported by any evidence provided by the AES Group or, in particular, AES Corporation.
45 Moreover, even a unilateral refusal on the part of the AES Group to provide assistance cannot as a rule be enough to preclude the group’s financial situation from being taken into account. The extent of the purported damage cannot depend on the unilateral intention of the parent company or the other subsidiaries of the group to which the undertaking which seeks suspension of operation belongs, where – as in the case of the applicant, which is a wholly-owned subsidiary of AES Corporation – the interests of those undertakings belonging to the same group are objectively merged (see, to that effect and by analogy, orders of the President of the Court of Justice in DSR-Senator Lines v Commission, cited in paragraph 41 above, paragraphs 50 and 54, and in Case C‑7/01 P(R) FEG v Commission [2001] ECR I‑2559, paragraph 46).
46 In any event, the purported damage cannot be regarded as irreparable, or even reparable only with difficulty, if it may be the subject of subsequent compensation by the Commission in the event of annulment of the contested decision. In particular, the applicant has failed to show that it would be unable to obtain such compensation by means of an action for compensation under Article 288 EC (see, to that effect, order of the President of the Court of First Instance in Case T‑303/04 R European Dynamics v Commission [2004] ECR II-3889, paragraph 72 and the case-law cited).
47 In this regard, the uncertainty linked to the reparation of pecuniary loss in the context of a possible action for damages cannot, in itself, be regarded as being a factor of such kind as to establish that such loss is irreparable. At the stage of the application for interim measures, the prospect of subsequently obtaining compensation in respect of pecuniary loss in an action for damages brought following annulment of the contested measure is necessarily uncertain. It is not the purpose of an application for interim measures to take the place of such an action for damages in order to remove that uncertainty (see order of the President of the Court of Justice in Case C‑404/01 P(R) Commission v Euroalliages and Others [2001] ECR I‑10367, paragraphs 71 to 73).
48 Further, the applicant claims that it has to fear for its present and future position on the Hungarian electricity market, in so far as the cancellation of its PPA required by Article 1 of the contested decision would place it in a very weak position, when it comes to renegotiating the contract, vis-à-vis the other party to the contract, MVM, as the latter would be able to force the applicant to accept the most unfavourable contractual terms. In addition, the legal uncertainty caused by the Commission’s obvious inability to identify the State-aid elements in the applicant’s current PPA prevents the applicant from concluding a new agreement that will be legally and economically valid.
49 It must be held that the applicant hereby confines itself to describing only the most unfavourable potential outcome of an immediate implementation of Article 1 of the contested decision; in other words, it puts forward mere hypotheses, without, however, establishing whether it is certain, or at least likely, that the purported serious and irreparable damage will actually occur. However, several factors appear, rather, to militate against these doom-laden predictions.
50 The applicant itself stressed the crucial importance of the Tisza II plant for the power supply system in Hungary. In that context, it submitted that the Tisza II plant was ‘a primary provider of balancing and peak power for the Hungarian system’ and plays a ‘crucial role in balancing [that] system’, that MVM had ‘an interest in having a secure source of balancing and peak power from a modern, clean gas-fired plant’, while recalling the ‘flexibility which the Tisza II plant provides for the Hungarian system’ (paragraphs 7, 83, 95 and 97 of the application for interim measures).
51 Consequently, it does not appear likely that the future conditions for the sale of electricity generated by the Tisza II plant will be as disastrous as the applicant claims, even if – in the event that no new PPA is concluded – the plant were to move from the public-utility sector to the liberalised sector of the Hungarian electricity market. This appears even less likely since the applicant did not claim that there was overcapacity in the production of electricity in the liberalised sector of the market. Moreover, the fact cannot be overlooked that the applicant’s competitors on the Hungarian market are likewise affected by Article 1 of the contested decision and that at least some of them, the PPAs of which have not expired, are likely, in precisely the same way as the applicant, to lose the benefit of their current PPAs. It cannot therefore be claimed that the contested decision places the applicant alone in a competitive situation that is less favourable than that of other electricity producers on the market at issue. The President can therefore only accept that the applicant should be able to continue to sell adequate amounts of electricity generated by the Tisza II plant.
52 In this context, it must be added that point 29 of the contested decision indicates that other electricity producers, which, like the applicant, benefited from purchase obligations laid down in their PPAs have, in the meantime, terminated those PPAs. In its application for interim measures, the applicant did not comment on that point; in particular, it did not claim that the end of those purchase obligations had the effect of reducing the activities of the operators at issue. Moreover, the AES Group itself operates two Hungarian plants (at Borsod and at Tiszapalkonya) outside PPAs, and the applicant has not claimed that the fact that those plants belong to the liberalised sector of the market has rendered the operating conditions economically and financially unacceptable to the AES Group.
53 It is, admittedly, true that the future conditions under which electricity generated at the Tisza II plant will be sold will probably be less favourable than those under the current PPA, a fact which is likely to reduce the applicant’s revenue and draw out repayment of the loans which it incurred for the purpose of financing that plant. However, in the light of the fact that the applicant belongs to the AES Group (see paragraph 44 above), that potential deterioration in its economic situation can scarcely be regarded as serious. In any event, the applicant has not established that such damage is likely.
54 Moreover, as the situation stands at present, it is entirely conceivable that the financial damage that the applicant might suffer in the form of a deterioration in its economic situation could be the subject of partial or full compensation at a later stage, with the result that it cannot be regarded as irreparable.
55 On the one hand, the Hungarian Law of 15 November 2008 makes provision not only for the cancellation of the PPAs still in force as of 31 December 2008 (Articles 1 and 3), but also for the repayment of unauthorised State aid, within the period laid down by the Commission, while at the same time authorising the generating plants to deduct stranded costs from the amount of aid they have to repay (Articles 5 and 11). The applicant has not shown that the compensation mechanism provided for was entirely irrelevant for the costs which it incurred for the purpose of purchasing and modernising the Tisza II plant. By contrast, the Commission has expressly stated that it might approve such a compensation mechanism for stranded costs in the case where all the criteria set out in its Notice on Stranded Costs Methodology are met, and that it was very likely that the applicant would be among the beneficiaries of that scheme.
56 On the other hand, in contrast to what the applicant claims, it is conceivable that it might be possible to calculate and quantify the damage resulting from the cancellation of the PPA concluded between the applicant and MVM as required by the contested decision, in the event that the contested decision were to be annulled. The applicant has, in particular, not given any reasons why it would be impossible for it, in the context of a possible action for compensation under Article 288 EC (see paragraphs 46 and 47 above), to compare the revenue that it would have generated under the PPA, if that had not been cancelled, with the revenue that it will generate under one or more electricity supply contracts concluded after 31 December 2008 for the purpose of replacing that PPA, and to receive the difference from the Commission by way of compensation.
57 Finally, in so far as the applicant submits that implementation of Article 1 of the contested decision would prevent it from concluding valid agreements with MVM because of the purported legal uncertainty in respect of the State-aid elements, suffice it to note that the lack of precision which the applicant criticises relates only to the recovery of the State aid that has been declared incompatible with the common market and, more particularly, the parameters which the Hungarian authorities must simulate in order to establish the amounts to be recovered pursuant to Articles 2 to 4 of the contested decision. As regards Article 1 of the contested decision, which is the only article contested by the present application for interim measures, the Commission in that article essentially does no more than order the termination of long-term PPAs and does not dictate which type of contractual relationship is to be established on the market at issue following that termination.
58 As the Commission correctly stated it does not seek, in the contested decision, to restrict the possibility for electricity generators to conclude commercial agreements with MVM or any other Hungarian purchaser. Moreover, the Commission expressly invited the applicant, if it had doubts concerning potential State aid in a new PPA negotiated with MVM, to request the inclusion of a clause making performance of the contract subject to its notification to the Commission and to the latter’s approval.
59 It follows from all of the foregoing that the applicant has not succeeded in establishing that it would suffer serious and irreparable damage if the suspension of operation that it has applied for were not granted.
60 The dismissal of the application for interim measures by reason of that lack of urgency is, moreover, supported by the weighing up of the different interests present.
61 In this respect, it must be noted that the first subparagraph of Article 88(2) EC provides that, if the Commission finds that State aid is not compatible with the common market, it is to decide that the State concerned must abolish or alter such aid within a period of time to be determined by the Commission. It follows that the general interest in the name of which the Commission fulfils the tasks entrusted to it, by Article 88(2) EC and Article 7 of Council Regulation (EC) No 659/1999 of 22 March 1999 laying down detailed rules for the application of Article [88] EC (OJ 1999 L 83, p. 1), in order to ensure that the functioning of the common market is not distorted by State aid harmful to competition, is particularly important. The purpose of the obligation of the Member State concerned to abolish aid which is incompatible with the common market is to re-establish the previously existing situation (see, to that effect, order of the President of the Court of First Instance in Case T‑198/01 R Technische Glaswerke Ilmenau v Commission [2002] ECR II‑2153, paragraph 113 and the case-law cited).
62 Consequently, it has been held that, in connection with an application to suspend operation of the obligation imposed by the Commission to repay aid unlawfully granted which it has declared to be incompatible with the common market, the Community interest must normally, if not always, take precedence over the interest of the aid recipient in avoiding enforcement of the obligation to repay it before judgment is given in the main proceedings (order in Technische Glaswerke Ilmenau v Commission, cited in paragraph 61 above, paragraph 114). This must apply equally where an application for interim measures concerns, as in the present case, only the obligation to terminate such aid, and not the obligation to repay aid which the Commission has also imposed.
63 It is only in exceptional circumstances, and only if the condition relating to urgency is met, that the recipient of such aid can be granted interim measures (see, to that effect, order in Technische Glaswerke Ilmenau v Commission, cited in paragraph 61 above, paragraphs 115 and 116).
64 In the present case, however, the applicant does not satisfy the condition as to urgency and has not established that it would face exceptional circumstances that could justify tipping the balance of interests at issue in favour of granting interim measures, given that the mere fact that the purported State aid was disbursed to the applicant through prices paid within the framework of a long-term electricity supply agreement which it had concluded with a State-owned undertaking cannot be regarded as exceptional.
65 Consequently, the application for interim measures must be dismissed, without there being any need to examine whether the condition that there be a prima facie case has been satisfied.
On those grounds,
THE PRESIDENT OF THE COURT OF FIRST INSTANCE
hereby orders:
1. The application for interim relief is dismissed.
2. The costs are reserved.
Luxembourg, 23 December 2008.