CELEX: 62009CJ0001
State aid
Article 88(3) EC
Unlawful aid declared compatible with the common market
Annulment of the Commission decision
National courts
Application for recovery of unlawfully implemented aid
Proceedings stayed pending the adoption of a new Commission decision
Exceptional circumstances liable to limit the obligation to repay

This reference for a preliminary ruling concerns the interpretation of Article 88(3) EC.
The reference has been made in the course of proceedings between the Centre d’exportation du livre français (French Book Export
Centre; ‘CELF’) and the Ministre de la Culture et de la Communication (Minister for Culture and Communication), on the one
hand, and the Société internationale de diffusion et d’édition (International Distribution and Publishing Company; ‘SIDE’),
on the other, concerning aid paid to CELF by the French State.

The dispute in the main proceedings and the questions referred for a preliminary ruling

Factual background to the dispute and the proceedings before the Court of First Instance of the European Communities
Until 2009, CELF, a cooperative society in public limited company form, carried on the activity of export agent.
Its object was to process directly orders for abroad and the French overseas territories and departments for books, brochures
and any communication media and, more generally, to perform any operations aimed, in particular, at increasing the promotion
of French culture throughout the world, using the above media.
From 1980 to 2002, CELF received operating subsidies from the French State to offset the extra costs of handling small orders
placed by booksellers established abroad.
Following a complaint made in 1992 by SIDE, a competitor of CELF, the Commission of the European Communities, by Decision
NN 127/92 of 18 May 1993, notice of which was published in the
Official Journal of the European Communities
of 25 June 1993 (OJ 1993 C 174, p. 6), accepted that the aid at issue was compatible with the common market. It accordingly
held that there was no need to raise any objection.
By judgment of 18 September 1995 in Case T-49/93
SIDE
v
Commission
[1995] ECR II‑2501, the Court of First Instance annulled that decision in so far as it concerned the subsidy granted exclusively
to CELF to offset the extra cost involved in handling small orders for French-language books placed by booksellers established
abroad. It held that the Commission ought to have initiated the
inter partes
procedure provided for by Article 93(2) of the EC Treaty (subsequently Article 88(2) EC).
By Decision 1999/133/EC of 10 June 1998 concerning State aid in favour of Coopérative d’exportation du livre français (CELF)
(OJ 1999 L 44, p. 37), the Commission declared the aid to be unlawful, but again accepted that it was compatible with the
common market.
By judgment of 28 February 2002 in Case T-155/98
SIDE
v
Commission
[2002] ECR II‑1179, the Court of First Instance annulled that decision in so far as it declared the aid in question to be
compatible with the common market, on the ground that the Commission had committed a manifest error of assessment with regard
to the definition of the relevant market.
By Decision 2005/262/EC of 20 April 2004 on the aid implemented by France in favour of the Coopérative d’exportation du livre
français (CELF) (OJ 2005 L 85, p. 27), the Commission accepted for the third time that the aid was compatible with the common
market.
By judgment of 15 April 2008 in Case T-348/04
SIDE
v
Commission
[2008] ECR II‑625, the Court of First Instance annulled that positive decision on the grounds that the Commission had, first,
erred in law by applying Article 87(3)(d) EC to the period before 1 November 1993 instead of applying the substantive rules
in force during the period in question and, secondly, committed a manifest error of assessment in its examination of the compatibility
of the disputed aid.
On 8 April 2009, the Commission adopted a decision extending the formal examination procedure begun in 1996, in such a way
as to state its reservations concerning the compatibility of the aid at issue in view of the judgment of the Court of First
Instance of 15 April 2008 in
SIDE
v
Commission
, and to allow the French Republic, the recipient of the aid and the other interested parties to state their views again before
a final decision was taken.
By decision of 25 April 2009, the tribunal de commerce de Paris (Paris Commercial Court), taking into consideration the financial
situation of CELF, opened an insolvency safeguard procedure vis-à-vis that undertaking with a six-month observation period.
By decision of 9 September 2009, finding that there had been no resolution and that liabilities existed which precluded the
possibility of any plan for continued operation, that court made an order placing CELF in liquidation and appointed a liquidator.
According to the information provided to the Court during the oral procedure, CELF ceased its activities following that decision.

The proceedings before the Conseil d’État and the questions referred
Appeals were brought before the Conseil d’État (French Council of State) by CELF and the Minister for Culture and Communication
against a judgment of the Cour administrative d’appel de Paris (Administrative Court of Appeal, Paris) of 5 October 2004 which
ordered the French State, at the request of SIDE, to recover, within three months of the date of notification of the judgment,
the aid paid to CELF for handling small orders for books placed by foreign booksellers and, in default, to pay a penalty of
EUR 1 000 for each day of delay.
In those appeals, the appellants argued, among other things, that the Cour administrative d’appel de Paris should have ruled
that, in the present case, the fact that the Commission had recognised the aid as being compatible with the common market
precluded the obligation to repay the aid which follows, as a rule, from the unlawfulness consisting of implementation, by
the Member State, of measures of State aid contrary to Article 88(3) EC.
By judgment of 29 March 2006, the Conseil d’État decided to stay proceedings and to refer the following questions to the Court
for a preliminary ruling:
‘1.      Is it permissible under Article 88 [EC] for a State which has granted to an undertaking aid which is unlawful, and which the
courts of that State have found to be unlawful on the ground that it had not previously been notified to the … Commission
as required under Article 88(3) EC, not to recover that aid from the economic operator which received it on the ground that,
after receiving a complaint from a third party, the Commission declared that aid to be compatible with the rules of the common
market, thus effectively exercising its exclusive right to determine such compatibility?
2.      If that obligation to repay the aid is confirmed, must the periods during which the aid in question was declared by the …
Commission to be compatible with the rules of the common market, before those decisions were annulled by the Court of First
Instance …, be taken into account for the purpose of calculating the sums to be repaid?’
In reply to those questions, the Court, by judgment of 12 February 2008 in Case C‑199/06
CELF and Ministre de la Culture et de la Communication
[2008] ECR I‑469 (‘the
CELF I
judgment’), held that:
‘1.      The last sentence of Article 88(3) EC is to be interpreted as meaning that the national court is not bound to order the recovery
of aid implemented contrary to that provision, where the Commission has adopted a final decision declaring that aid to be
compatible with the common market, within the meaning of Article 87 EC. Applying Community law, the national court must order
the aid recipient to pay interest in respect of the period of unlawfulness. Within the framework of its domestic law, it may,
if appropriate, also order the recovery of the unlawful aid, without prejudice to the Member State’s right to re-implement
it, subsequently. It may also be required to uphold claims for compensation for damage caused by reason of the unlawful nature
of the aid.
2.      In a procedural situation such as that in the main proceedings, the obligation, arising from the last sentence of Article
88(3) EC, to remedy the consequences of the aid’s unlawfulness extends also, for the purposes of calculating the sums to be
paid by the recipient, and save for exceptional circumstances, to the period between a decision of the Commission … declaring
the aid to be compatible with the common market and the annulment of that decision by the Community court.’
On the basis of those answers, the Conseil d’État, by judgment of 19 December 2008, ordered the Minister for Culture and Communication
to recover from CELF interest on the unlawful aid in respect of the following periods:
–        between 1980, the year in which that aid began to be paid, and the date of the decision making the reference;
–        between the date of the decision making the reference and the date on which either that aid was definitively found to be compatible
with the common market or on which its definitive recovery was effected.
Concerning the question of the recovery of the principal amount of the aid paid, the Conseil d’État took the view that the
outcome of the case depended on an interpretation of European Community law by reason of the new annulment, subsequent to
the
CELF I
judgment, delivered by the Court of First Instance on 15 April 2008 in
SIDE
v
Commission
.
The Conseil d’État accordingly decided to stay proceedings and to refer the following questions to the Court for a preliminary
ruling:
‘(1)      May the national court stay proceedings concerning the obligation to recover State aid until the Commission … has ruled, by
way of a final decision, on the compatibility of the aid with the rules of the common market, where a first decision of the
Commission declaring that aid to be compatible has been annulled by the Community judicature?
(2)      Where the Commission has on three occasions declared the aid to be compatible with the common market, before those decisions
were annulled by the Court of First Instance …, is such a situation capable of being an exceptional circumstance which may
lead the national court to limit the obligation to recover the aid?’

The questions referred

The first question
By its first question, the Conseil d’État asks whether a national court, before which proceedings have been brought, on the
basis of Article 88(3) EC, for repayment of unlawful State aid, may stay the adoption of its decision on that application
until the Commission has ruled on the compatibility of the aid with the common market after the annulment of a prior positive
decision.
In paragraphs 61 and 63 of the
CELF I
judgment, the Court noted that:
–        under the first paragraph of Article 231 EC, when an action for annulment is well founded, the Community judicature must declare
the contested act void, with the result that the decision of annulment leads to the disappearance retroactively of the contested
act with regard to all persons;
–        at the time of the Community judicature’s annulment of a positive decision, the aid in question is deemed not to have been
declared compatible by the annulled decision.
It follows that a situation such as that in the dispute in the main proceedings is similar to a situation in which proceedings
are brought before the national court on the basis of Article 88(3) EC, even though no decision has yet been adopted by the
Commission on the compatibility of aid under assessment.
However, it should be noted that Article 88(3) EC entrusts the national courts with the task of preserving, until the final
decision of the Commission, the rights of individuals faced with a possible breach by State authorities of the prohibition
laid down by that provision (
CELF I
judgment, paragraph 38).
In that regard, the Court has already in essence ruled, in Case C‑39/94
SFEI and Others
[1996] ECR I‑3547, paragraphs 44 and 50 to 53, that:
–        the initiation by the Commission of an examination procedure cannot release national courts from their duty to safeguard the
rights of individuals in the event of a breach of the requirement to give prior notification;
–        where it is likely that some time will elapse before it gives its final judgment, for example, where it seeks clarification
from the Commission for the purposes of interpreting the concept of State aid which it may have cause to grant or where it
refers a question to the Court for a preliminary ruling, the national court must decide whether it is necessary to order interim
measures in order to safeguard the interests of the parties.
The Court has thus stressed the national court’s obligation not to defer its examination of the applications for safeguard
measures.
The last sentence of Article 88(3) EC is based on the preservative purpose of ensuring that incompatible aid will never be
implemented. The intention of the prohibition thus effected is therefore that compatible aid alone may be implemented. In
order to achieve that purpose, the implementation of planned aid is to be deferred until the doubt as to its compatibility
is resolved by the Commission’s final decision (
CELF I
judgment, paragraphs 47 and 48).
The objective of the national courts’ tasks is therefore to pronounce measures appropriate to remedy the unlawfulness of the
implementation of the aid, in order that the aid does not remain at the free disposal of the recipient during the period remaining
until the Commission makes its decision.
A decision to stay proceedings would,
de facto
, have the same effect as a decision to refuse the application for safeguard measures. It would have the effect that no decision
on the merits of that application would be taken before the Commission’s decision. It would amount to maintaining the benefit
of aid during the period in which implementation is prohibited, which would be inconsistent with the very purpose of Article
88(3) EC and would render that provision ineffective.
Therefore, the national court cannot stay the proceedings without rendering Article 88(3) EC ineffective, contrary to the
principle of effectiveness of the applicable national procedures.
The annulment by the Community judicature of a first positive Commission decision cannot justify any different conclusion
prompted by the consideration that, in that case, the aid might subsequently be once again declared compatible by the Commission.
The purpose of Article 88(3) EC is clearly prompted by the consideration that, until a new decision has been adopted by the
Commission, it cannot be presumed that that decision will be positive in its content.
The obligation to give a ruling without delay on the application for safeguard measures does not require the court before
which that application is brought actually to adopt such measures.
There is an obligation to adopt safeguard measures only if the conditions justifying such measures are satisfied, namely,
that there is no doubt regarding the classification as State aid, that the aid is about to be, or has been, implemented, and
that no exceptional circumstances have been found which would make recovery inappropriate. If those conditions are not satisfied,
the national court must dismiss the application.
When ruling on the application, the national court may order either the repayment of the aid with interest or, for example,
as the Commission suggested in paragraph 62 of its Notice 2009/C 85/01 on the enforcement of State-aid law by national courts
(OJ 2009 C 85, p. 1), the placement of the funds on a blocked account so that they do not remain at the disposal of the recipient,
without prejudice to the payment of interest for the period between the expected implementation of the aid and its placement
on that blocked account.
By contrast, the ‘standstill’ obligation set out in Article 88(3) EC would not be fulfilled, at that stage, by simply ordering
interest to be paid on amounts which remain in the accounts of the undertaking. It is in no way established that an undertaking
which has unlawfully received State aid could, were it not for that aid, have obtained an equivalent amount by way of loan
from a financial institution under normal market conditions and thus have that amount at its disposal prior to the Commission
decision.
Ultimately, the first obligation of the national court is to make a ruling, whether positive or negative.
The answer to the first question is therefore that a national court before which an application has been brought, on the basis
of Article 88(3) EC, for repayment of unlawful State aid may not stay the adoption of its decision on that application until
the Commission has ruled on the compatibility of the aid with the common market following the annulment of a previous positive
decision.

The second question
By its second question, the Conseil d’État asks, in essence, whether the adoption by the Commission of three successive decisions
declaring aid to be compatible with the common market, which were subsequently annulled by the Community judicature, is, in
itself, capable of constituting an exceptional circumstance such as to justify a limitation of the recipient’s obligation
to repay that aid, in the case where that aid was implemented contrary to Article 88(3) EC.
It should be noted that, in the
CELF I
judgment, the Court reserved the possibility of taking exceptional circumstances into account when assessing the scope of
the obligation to remedy the unlawfulness of aid, including in the case where that obligation is limited to the payment of
interest.
In paragraph 65 of that judgment, the Court acknowledged that a recipient of unlawfully implemented aid is not precluded from
relying on exceptional circumstances on the basis of which it had legitimately assumed the aid to be lawful and thus from
declining to repay that aid.
It ruled to that effect in respect of a situation at issue in the main proceedings in which three positive Commission decisions
had already been adopted, two of which had been annulled.
However, the Court immediately noted, in essence, that a positive decision of the Commission cannot give rise to a legitimate
expectation on the part of the aid recipient, first, where that decision has been challenged in due time before the Community
judicature, which annulled it, or, secondly, so long as the period for bringing an action has not expired or, where an action
has been brought, so long as the Community judicature has not delivered a definitive ruling (
CELF I
judgment, paragraphs 66 to 68).
Finally, the Court pointed out that the answer to the question referred was given in the light of a procedural situation such
as that in the main proceedings (
CELF I
judgment, paragraph 69).
The manner in which that reasoning was set out was thus such as to suggest that three positive decisions followed by actions
for annulment brought within the respective prescribed periods, the first two of which had been upheld and the third was still
pending, did not amount to an exceptional circumstance.
The wording of the second question submitted in the present case indicates that the Conseil d’État takes the view, on the
contrary, that a succession of three positive decisions might amount to an exceptional circumstance.
However, on the date on which the
CELF I
judgment was delivered, the three positive Commission decisions had already been adopted.
Only one new event took place before the second order for reference, namely, the annulment of the third positive decision
by the judgment of the Court of First Instance of 15 April 2008 in
SIDE
v
Commission
.
Such an event is not, in itself, liable to give rise to a legitimate expectation and to constitute an exceptional circumstance.
The unusual succession of three annulments reflects,
a priori
, the difficulty of the case and, far from giving rise to a legitimate expectation, would rather appear likely to increase
the recipient’s doubts as to the compatibility of the disputed aid.
It may, admittedly, be acknowledged that a succession of three actions leading to three annulments amounts to a very unusual
situation. Such circumstances, however, arise as part of the normal operation of the judicial system, which grants individuals
who believe that they have suffered as a result of the unlawfulness of aid the possibility of bringing proceedings for the
annulment of successive decisions which they consider to be the cause of that situation.
In a situation such as that in the main proceedings, the existence of an exceptional circumstance also cannot be upheld in
the light of the principle of legal certainty, since the Court has already held, essentially, that, so long as the Commission
has not taken a decision approving aid, and so long as the period for bringing an action against such a decision has not expired,
the recipient cannot be certain as to the lawfulness of the aid, with the result that neither the principle of the protection
of legitimate expectations nor that of legal certainty can be relied upon (see Case C‑91/01
Italy
v
Commission
[2004] ECR I‑4355, paragraphs 66 and 67).
In a situation such as that in the main proceedings, the existence of an exceptional circumstance cannot, finally, be upheld
in the light of the principle of proportionality. Abolishing unlawful aid by means of recovery is the logical consequence
of a finding that it is unlawful. Accordingly, the recovery of such aid, for the purpose of restoring the previously existing
situation, cannot in principle be regarded as disproportionate to the objectives of the provisions of the EC Treaty relating
to State aid (see, inter alia, Case C‑298/00 P
Italy
v
Commission
[2004] ECR I‑4087, paragraph 75 and the case-law cited).
The reply to the second question is therefore that the adoption by the Commission of three successive decisions declaring
aid to be compatible with the common market, which were subsequently annulled by the Community judicature, is not, in itself,
capable of constituting an exceptional circumstance such as to justify a limitation of the recipient’s obligation to repay
that aid, in the case where that aid was implemented contrary to Article 88(3) EC.

Costs
Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court,
the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs
of those parties, are not recoverable.
On those grounds, the Court (Fourth Chamber) hereby rules:
1.
A national court before which an application has been brought, on the basis of Article 88(3) EC, for repayment of unlawful
State aid may not stay the adoption of its decision on that application until the Commission of the European Communities has
ruled on the compatibility of the aid with the common market following the annulment of a previous positive decision.
2.
The adoption by the Commission of the European Communities of three successive decisions declaring aid to be compatible with
the common market, which were subsequently annulled by the Community judicature, is not, in itself, capable of constituting
an exceptional circumstance such as to justify a limitation of the recipient’s obligation to repay that aid, in the case where
that aid was implemented contrary to Article 88(3) EC.
[Signatures]
*
Language of the case: French.