Cases T‑200/22 and T‑314/22
Republic of Poland
v
European Commission
Judgment of the General Court (Second Chamber, Extended Composition) of 29 May 2024
(Environment – Lignite mining activities at an open-cast mine – Turów lignite mine (Poland) – Law governing the institutions – Failure to comply with an order of the Court of Justice imposing interim measures – Periodic penalty payment – Recovery of debts by offsetting – Article 101(1) and Article 102 of Regulation (EU, Euratom) 2018/1046 – Removal of the case in the main proceedings from the register – No retroactive effect on the interim measures ordered – Obligation to state reasons)
Application for interim relief – Interim measures – Imposition of a periodic penalty payment if the relevant party fails to comply with the interim measure ordered – Settlement agreement between the parties and removal of the case in the main proceedings from the register – Effect of that removal on the amount payable in respect of the periodic penalty payment
(Art. 2 TEU; Art. 279 TFEU; Rules of Procedure of the Court of Justice, Arts 160(1) and (2) and 162(3))
(see paragraphs 31-42, 47-49)
Résumé
The General Court, ruling in extended composition, has dismissed two actions for annulment brought by the Republic of Poland against multiple decisions of the European Commission by which the Commission recovered amounts payable in respect of a daily penalty imposed by the Court of Justice. In that case, in proceedings between the Czech Republic and Poland, the Court of Justice had adopted interim measures in order to ensure that its final decision was fully effective. Poland failed to comply with those interim measures and was therefore ordered to pay a daily penalty until it had complied with them. The case in the main proceedings was removed from the register after the parties had concluded a settlement agreement. In its judgment, the General Court clarifies the effects of that removal from the register on Poland’s obligation to pay the amount payable in respect of the penalty.
On 26 February 2021, the Czech Republic brought an action against Poland for failure to fulfil its obligations on account of the extension and continuation of lignite mining activities at the open-cast mine in Turów (Poland), close to the Czech and German borders. At the same time, the Czech Republic brought an application for interim measures seeking the immediate cessation of those mining activities, which the Court of Justice granted on 21 May 2021. (1)
Taking the view that Poland had failed to comply with that order, the Czech Republic brought, on 7 June 2021, a fresh application for interim measures seeking the imposition on Poland of a daily penalty payment. On 20 September 2021, (2) Poland was ordered to pay to the Commission, from that date, a penalty of EUR 500 000 per day until it complies with the order imposing interim measures.
The Commission issued Poland with formal notice to pay the amounts payable in respect of the periodic penalty and informed it that, if payment of those amounts was not made, it would recover them by means of offsetting pursuant to the Financial Regulation. (3)
Since Poland failed to make those payments, the Commission adopted the five contested decisions, (4) by which it offset its debt against various amounts owed to Poland by the European Union, for an amount of almost EUR 68 500 000 over the period from 20 September 2021 to 3 February 2022.
The Czech Republic and Poland concluded a settlement agreement on 3 February 2022 and requested that the case be removed from the register.
The case in the main proceedings having been removed from the register, (5) Poland lodged an application for cancellation of the order of 20 September 2021 imposing on it a periodic penalty payment. It also requested the Commission to discontinue the procedure for enforcement of the periodic penalty payments and to withdraw the contested decisions already adopted as at that date. The Commission stated that it would continue to recover by way of offsetting the amounts payable up to the date on which the settlement agreement was concluded as long as the order of 20 September 2021 had not been ‘set aside’. By order of 19 May 2022, (6) the application for cancellation of the order of 20 September 2021 was dismissed.
By two separate actions, Poland claimed that the General Court should annul the contested decisions adopted by the Commission in view of the settlement agreement which led to the removal of the case in the main proceedings from the register of the Court of Justice.
Findings of the General Court
By its first plea, Poland submits, in essence, that the settlement agreement and the removal of Case C‑121/21 from the register led to the retroactive cessation of the effects of the interim measures ordered in that case, with the result that the debt recovered is non-existent and its recovery is contrary to Articles 101 and 102 of the Financial Regulation.
In that regard, the General Court points out that, in view of the ancillary nature of the proceedings for interim measures in relation to the main proceedings, the order of 21 May 2021 ordering the cessation of lignite mining activities at the Turów mine and the order of 20 September 2021 imposing a periodic penalty payment lapsed with effect from the date on which the case in the main proceedings was removed from the register, namely 4 February 2022.
As regards the consequences of removing the case in the main proceedings from the register with regard to the existence of Poland’s debt, the General Court states that, first, the order removing the case from the register makes no mention of the interim measures prescribed by the order of 21 May 2021 or of the daily penalty payment. Secondly, Poland’s application for cancellation of the order of 20 September 2021 imposing that periodic penalty payment was dismissed. Thirdly, the order dismissing that application expressly states that the daily penalty payment lapsed with effect from 4 February 2022. Consequently, the daily penalty was actually payable from the date of service of the order of 20 September 2021 until the date on which the case in the main proceedings was removed from the register, namely 4 February 2022.
The General Court states that to reach a different conclusion would be to deviate from the purpose of the periodic penalty payment, which is to guarantee the effective application of EU law, such application being an essential component of the rule of law, a value enshrined in Article 2 TEU.
That conclusion cannot be called into question by Poland’s argument that continuing to enforce the interim measures despite the removal of the case in the main proceedings from the register goes beyond the sole objective pursued by those measures, namely, primarily to guarantee the effectiveness of the judgment on the substance. Periodic penalty payments imposed by the Courts of the European Union are intended not only to guarantee the effectiveness of the judgment on the substance, but also to ensure compliance with interim measures and to deter, in this instance, Poland from delaying compliance with those measures. Poland’s line of argument would be tantamount to depriving the periodic penalty payment mechanism of all substance as it would allow a party deliberately to fail to fulfil the obligation to comply with the interim measures ordered until the close of the main proceedings, thereby undermining the effectiveness of EU law.
Similarly, Poland’s argument that enforcing periodic penalty payments makes the conclusion of a settlement agreement less attractive cannot be upheld in view of the purpose of periodic penalty payments and the fact that the removal of the case in the main proceedings from the register had beneficial consequences for Poland in that the daily penalty ceased to be payable as from 4 February 2022 and not from the date of delivery of a judgment of the Court of Justice.
The General Court finds, lastly, that Article 101 of the Financial Regulation, contrary to Poland’s submission, does not lay down any obligation on the part of the Commission to cancel an established amount receivable. Furthermore, the conditions laid down for recovery by offsetting were satisfied since the Commission did verify that Poland’s debt existed and determined the amount of that debt.
Consequently, the General Court dismissed the first plea in law. The second plea in law, alleging failure to comply with the obligation to state reasons, was also dismissed as unfounded and the General Court therefore dismissed the actions in their entirety.