61989CC0005_EN
Opinion of the Advocate-General
Opinion of the Advocate-General
++++
Mr President,
Members of the Court,
1 . It would be vain to seek any new feature differentiating this action brought against the Federal Republic of Germany by the Commission under the second subparagraph of Article 93(2 ) of the EEC Treaty from the previous case of Commission v Germany ( hereinafter referred to as "the Alcan case "), in which the Court gave its judgment on 2 February 1989 . ( 1 )
2 . By a decision of 17 November 1987, ( 2 ) the Commission found that aid of DM 2 000 000 granted in 1985 by the Land of Baden-Wuerttemberg to the undertaking BUG-Alutechnik GmbH was illegal on the grounds that it had not been notified and was incompatible with the common market . The German Government did not contest that decision but, once it had been adopted, criticized it in a note sent to the Commission claiming, inter alia, that the value of the aid was in fact negative because it was granted in replacement of a guarantee of DM 7 000 000 . Moreover, the German Government claimed, recovery of the aid was barred by the principle of the protection of legitimate expectations .
3 . That claim is adduced in the present proceedings, and it is also submitted that the one-year time-limit for the revocation of administrative measures, provided for in Paragraph 48(4 ) of the Verwaltungsverfahrensgesetz ( Law on Administrative Procedure ) of the Land of Baden-Wuerttemberg, has expired .
4 . I will say at the outset that, whilst the reasoning in the abovementioned judgment of 2 February 1989 should lead the Court without difficulty to find that Germany has failed to fulfil its obligations, I feel that it is also desirable that the Court should, when considering the submissions of the German Government, seize the opportunity presented by this case to clarify the rules governing recovery of State aids and provide judicial endorsement of the efforts of the Community authorities to ensure that the relevant provisions of the Treaty are effective .
5 . With regard to the failure to fulfil obligations itself, the Federal Republic of Germany had already, in the Alcan case, put forward the protection of legitimate expectations as a defence against the action brought by the Commission as a result of a failure to implement a decision concerning aid which had not been notified and which was incompatible with the common market .
6 . Although the Court, in accordance with past decisions, ( 3 ) held that the only defence which a State may put forward in such a case against an action for failure to fulfil obligations is that implementation was absolutely impossible, it found that the defendant Government had
"merely informed the Commission of the political and legal difficulties involved in implementing the decision, without taking any step whatsoever to recover the aid from the undertaking in question and without proposing to the Commission any arrangements for implementing the decision which would have enabled those difficulties to be overcome ". ( 4 )
7 . The Court had earlier pointed out that, if a Member State encounters unforeseen and unforeseeable difficulties in implementing a decision, it may submit them to the Commission, together with proposals for suitable amendments to the decision, and that in such cases the duty of cooperation underlying, in particular, Article 5 of the Treaty requires the Member States and the Community institutions to work together in good faith with a view to overcoming difficulties whilst fully observing the Treaty provisions, and in particular the provisions on aid .
8 . The Court concluded :
"In those circumstances, without its being necessary to consider the German Government' s arguments concerning the applicability of national procedural rules to the recovery of the aids, it must be declared that the German Government has no basis for claiming that it was absolutely impossible to implement the Commission' s decision ." ( 5 )
9 . That reasoning would appear to be easily transferable to the present case, where the German Government makes no claim that it has taken any steps whatever to recover the aid from BUG-Alutechnik or proposed to the Commission any means of implementing the decision in such a way as to overcome the legal hurdles allegedly standing in the way of implementation . In my view, therefore, this is a clear case of a failure to fulfil obligations .
10 . However, as I have stated, I do feel that the Court should adopt a clear stance on the submissions based on legitimate expectations and national procedural rules .
11 . The German Government, relying on an obiter dictum in the judgment in the Alcan case, ( 6 ) claims that the Court meant that it was for the national authorities to determine the weight to be given to "the interests of the Community" when a recipient undertaking invokes the principle of the protection of legitimate expectations . ( 7 ) It also stresses ( 8 ) that the Court expressly referred in that paragraph to the judgment in Deutsche Milchkontor v Germany . ( 9 ) It will be remembered that that judgment recognizes that, subject to certain conditions, national legislation providing for the protection of legitimate expectations in a field such as the recovery of unduly-paid Community aid is compatible with the Treaty .
12 . One of the Commission' s arguments, which might be termed a "preliminary" argument, must, in my view, first be rejected . The Commission points out ( 10 ) that the Deutsche Milchkontor judgment did not concern the law governing State aid and that the relevant provision of Community law in that case ( 11 ) expressly referred back to national law with regard to the recovery of unduly paid Community aid . I cannot concur with that view . It would not appear that the difference in the nature of the aid, whether Community or national, should lead to the application of separate sets of rules to the recovery of unduly paid amounts; indeed, the Court' s case-law on the subject draws no such distinction . ( 12 ) Moreover, it seems that, by referring expressly to the Deutsche Milchkontor judgment, the Court' s judgment in the Alcan case, cited above, meant that the principle of the protection of legitimate expectations, which forms part of the legal order of the Community, must be taken into consideration in the context of actions for the recovery of State aids .
13 . Therefore, although it is undeniable in my view that it must be possible to take legitimate expectations into consideration, the crux of the problem seems to me to be twofold : the identity of the authority which is to weigh up those expectations against the interests of the Community, and the circumstances in which a recipient undertaking may successfully rely on such a principle .
14 . On the first point, the German Government maintains that, since a provision of national law is involved, only the national authorities are competent to interpret and apply that provision . ( 13 ) It concludes that the decision adopted by the Commission pursuant to Article 93(2 ) of the EEC Treaty cannot be binding .
15 . That point of view cannot be accepted . In its judgment in the Deutsche Milchkontor case, the Court made the point that
"the principles of the protection of legitimate expectations and assurance of legal certainty are part of the legal order of the Community"
and concluded :
"The fact that national legislation provides for the same principles to be observed in a matter such as the recovery of unduly-paid Community aids cannot, therefore, be considered contrary to that same legal order ". ( 14 )
16 . Legitimate expectations recognized under national law may thus be relied upon only in so far as their protection is in agreement with a principle which is part of the legal order of the Community - provided, according to the same judgment, that the interests of the Community ( 15 ) and the need to preserve the scope and effectiveness of Community law ( 16 ) are taken into consideration .
17 . However, if Article 93(2 ) of the Treaty is not to be made completely nugatory, it seems to me that, unless there are exceptional circumstances, which is apparently not the case here, if the Commission' s decision has not been contested only the undertaking which received the incompatible aid may rely, where appropriate, on the principle of the protection of legitimate expectations as a defence against recovery proceedings brought by the State concerned . It is then for the national court hearing the case to assess the relevancy of such a defence in the light of the rules which emerge from the judgment in Deutsche Milchkontor and, if necessary, refer a preliminary question to this Court . In principle, however, it cannot be acceptable for the Member State to which the Commission' s decision is addressed to be able, on its own initiative and after having refrained from contesting the decision, to refuse to implement it by relying on provisions of its own national law . That would seriously jeopardize the binding effect of decisions adopted by the Commission on the basis of Article 93(2 ) and thereby considerably detract from the effectiveness of the rules governing aid . ( 17 )
18 . My interpretation seems, moreover, to be supported by the Court' s established case-law in the field of aid, ( 18 ) which holds, as I have pointed out, that the only defence which may be raised against an action for failure to comply with obligations is that it was absolutely impossible for the decision to be properly implemented .
19 . The second point calls for more extensive comment . In my Opinion in the Alcan case, ( 19 ) I considered that it could be deduced from the philosophy underlying the Court' s case-law in the field of the protection of legitimate expectations that any undertaking receiving State aid was under a duty to verify whether prior notification of that aid had been given to the Commission . That opinion is in line with the Commission' s efforts to ensure that Community law is observed in the field of State aid, as may be seen from its 1983 Communication ( 20 ) which, inter alia, informs "potential recipients of State aid of the risk attaching to any aid granted them illegally, in that any recipient of an aid granted illegally, i.e . without the Commission having reached a final decision, may have to refund the aid ". That risk attaching to any aid granted without notification has, moreover, been recognized by the Court in two recent judgments of 14 February ( 21 ) and 21 March ( 22 ) 1990, in which the Court held that
"when it finds that an aid has been granted or modified without notification, the Commission has the power, once it has given the Member State concerned the opportunity to submit its observations, to adopt an interim decision requiring that State to suspend immediately the payment of the aid pending the result of the inquiry concerning it ". ( 23 )
20 . It is true that the absence of any system of publicity for the notification of State aid or of any decision adopted by the Commission not to initiate the procedure under Article 93(2 ) of the EEC Treaty is regrettable . ( 24 ) It nevertheless appears to me that undertakings receiving aid must be able to verify whether notification has been carried out by approaching either their national authorities or the Commission .
21 . In that regard, I should like to recall the figures given by the Commission at the Hearing showing the increase in the total amount of aids not notified by Member States which the Commission required them to withdraw : ECU 5 million in 1985, ECU 11 million in 1986 and ECU 747 million in 1987 . ( 25 ) That exponential growth curve demonstrates the importance of the legal issue in the present case . The time has thus come for the Court to spell out, so to speak, the "rules of the game" with regard to State aid . I unreservedly support, of course, the principle of the protection of legitimate expectations, but the need to reconcile that principle with the Community rules on the supervision of State aid should be formally reaffirmed, together with precise details of the way in which they are to be implemented .
22 . It must be borne in mind, first, that an undertaking in receipt of aid is already entitled, as a person to whom the decision is of direct and individual concern, to bring proceedings seeking a declaration that the Commission' s decision requiring recovery of the aid is void . ( 26 ) The Court, if the matter were brought before it, would inevitably consider the decision in the light of the need to respect fundamental rights in so far as they have consistently been held ( 27 ) to form part of the legal order of the Community and in particular the duty to protect legitimate expectations, as the Court did in its judgment in Deufil v Commission . ( 28 )
23 . Moreover, since the Court' s recent ruling in the Boussac case, ( 29 ) an undertaking in receipt of unnotified aid, although it may be required by the State concerned to refund the aid, can be certain that the Commission will carry out a thorough examination as to whether it is compatible with the common market within the meaning of Article 92(2 ) of the Treaty .
24 . I do not, therefore, consider it excessive to assume, in the absence of evidence to the contrary, that an undertaking which has not verified whether aid was notified is not entitled to rely on legitimate expectations .
25 . Traders in receipt of State aids are professionals who have a duty to take care - a duty to which Paragraph 48 of the German Law in question explicitly refers . ( 30 ) The obligation under which they are placed to verify that prior notification of the aid granted to them has been given to the Commission does not appear to me to be either excessive or particularly difficult to fulfil .
26 . However, both the principle of the protection of legitimate expectations itself and the jurisdiction of the national courts to determine such matters must be preserved, and allowance must therefore be made for cases in which the fundamental rights of an undertaking, although it has not verified whether the aid had been notified, are such that it should none the less be accorded the benefit of the protection of legitimate expectations . In such cases, the national court must be able to assess the conduct of the recipient undertaking in concreto, if necessary after having referred a preliminary question to this Court . The doubts with which some undertakings may be assailed, when faced with "atypical" forms of aid, as to whether notification is necessary should not be made light of . ( 31 ) But the concrete nature of the assessment to be carried out by the national court must be contrasted with the abstract concept of legitimate expectations on which Germany relies in support of its refusal to implement the Community decision ordering the recovery of aid in question . The existence of legitimate expectations is not presumed, it must be proved .
27 . I shall also make a number of observations concerning the submissions based on national administrative law, which provides that an administrative measure may not be withdrawn more than one year after the date on which the authorities became aware of the grounds for the withdrawal of the measure . ( 32 )
28 . In its Defence, the German Government first stated that the one-year period had in any event already expired when the Commission adopted its decision in this case because it had started to run when the competent authority of the Land of Baden-Wuerttemberg granted the aid in question, that is to say in 1985 . ( 33 ) Then, in the Rejoinder, more complex theoretical considerations were laid before the Court : it was said that the period in question started to run on the day on which the Commission became aware of the granting of the aid; that institution could nevertheless apply to the Court for an interim measure if it was unable to reach a decision within that period . ( 34 )
29 . Let it be pointed out that, although the Court' s case-law relating to the recovery of sums paid out unduly refers back to national procedural rules, it does so subject to the proviso that those rules may neither discriminate against actions based on Community law as opposed to those based on national law nor make it impossible to exercise a right conferred by Community law . ( 35 ) And the Court, in its judgment of 21 March 1990, ( 36 ) has recently applied that case-law specifically to State aids, declaring that
"as a general rule, the recovery of unlawfully paid aid must take place in accordance with the relevant procedural provisions of national law, subject however to the proviso that those provisions are to be applied in such a way that the recovery required by Community law is not rendered practically impossible ". ( 37 )
30 . However, according to its Defence, the German Government is relying on the expiry of a period starting to run on the date on which the national authorities became aware of the grounds for the withdrawal of the measure . To accept that a State may rely on such a time-limit with regard to the recovery of aid would obviously ruin any prospect of making such recovery effective . It must also be stressed that, in the final analysis, the State on which the duty of notification lay would itself determine the point from which the period started to run . According to the Court' s case-law, ( 38 ) the Commission' s decision imposes an obligation to achieve the required result, the only possible derogation from which could be provided by the absolute impossibility of implementing the decision, disclosed after an active search for a solution in the context of a dialogue between the Commission and the State concerned . It requires that State to effect the recovery of the aid - by using the procedures of national law, it is true, but without being able to rely on those procedures in order to place itself in a position in which recovery is in any event impossible .
31 . In its Rejoinder, the German Government suggests, as I have stated, that the one-year period should be made to run from the date on which the Commission becomes aware of the aid . That, I would observe, is an interpretation, and perhaps a perilous interpretation, of the national provision in question . Paragraph 48 of the Verwaltungsverfahrensgesetz of the Land of Baden-Wuerttemberg refers only to the moment when the circumstances warranting the withdrawal of the irregular measure come to the knowledge of the national authorities, not to that of the Commission . Since, as a result of the Court' s decision in the Boussac case, aid which has not been notified is not illegal on that score alone, it seems to me that it is the adoption by the Commission of a final decision on the incompatibility of the aid with the common market which constitutes the starting point for the time within which the measure granting the aid which has been unlawfully maintained is to be withdrawn . In other words, I consider, although it is not for me to take the place of the national courts which, alone, are competent to interpret it, that the application of national law, and in particular Paragraph 48 of the Verwaltungsverfahrensgesetz, to the recovery of aid, should require the German authorities to withdraw the measure within a period of one year from the notification of the substantive decision taken by the Commission .
32 . Obviously, if the German authorities negligently fail to comply with that time-limit, the national court must consider whether it should not refuse to apply the time-limit in accordance with the Court' s established case-law, recently reaffirmed in its judgment of 21 March 1990, if its application would mean that the recovery required by Community law is rendered practically impossible . ( 39 ) Nor would such a result interfere with the protection of legitimate expectations, since the decisions of the Commission are published in the Official Journal of the European Communities and, therefore, the recipient undertaking would already be aware, long before the expiry of the one-year period, that the aid received has been found to be incompatible with the common market .
33 . But, as I have said, even if I believe that the Court should use the opportunity afforded by the present case to state the value it accords to those submissions, such a statement would be relevant only in the context of a possible future preliminary ruling . In this case, it is sufficient to apply the case-law arising out of the Court' s ruling in the Alcan case .
34 . I therefore propose that the Court should declare that, by failing to comply with Commission Decision 88/174/EEC of 17 November 1987 concerning aid which the Land of Baden-Wuerttemberg has provided to BUG-Alutechnik GmbH, an undertaking producing semi-finished and finished aluminium products, the Federal Republic of Germany has failed to fulfil its obligations under the first subparagraph of Article 93(2 ) and the fourth paragraph of Article 189 of the EEC Treaty . I therefore propose that the Federal Republic of Germany should be ordered to pay the costs .
(*) Original language : French .
( 1 ) Judgment in Case 94/87 Commission v Germany [1989] ECR 175 .
( 2 ) Commission Decision 88/174/EEC concerning aid which the Land of Baden-Wuerttemberg has provided to an undertaking producing semi-finished and finished aluminium products ( OJ 1988 L 79, p . 29 ).
( 3 ) Judgment in Case 52/84 Commission v Belgium [1986] ECR 89 .
( 4 ) Case 94/87, cited above, paragraph 10 .
( 5 ) Ibid ., paragraph 11 .
( 6 ) Paragraph 12 .
( 7 ) Rejoinder, pp . 5 and 6 .
( 8 ) Rejoinder, p . 2 .
( 9 ) Judgment in Joined Cases 205 to 215/82 [1983] ECR 2633, paragraphs 30 to 32 .
( 10 ) Reply, p . 2 .
( 11 ) Article 8(1 ) of Regulation ( EEC ) No 729/70 of the Council of 21 April 1970 on the financing of the common agricultural policy ( OJ, English Special Edition, 1970 ( I ), p . 218 ).
( 12 ) See, for example, Case 77/76 Cucchi v Avez [1977] ECR 987, Case 177/78 Pigs and Bacon Commission v McCarren [1979] ECR 2161, Case 61/79 Amministrazione delle finanze dello Stato v Denkavit italiana [1980] ECR 1205, Case 130/79 Express Dairy Foods v Intervention Board for Agricultural Produce [1980] 1887 and Joined Cases 331, 376 and 378/85 Bianco & Girard v Directeur général des douanes et droits indirects [1988] ECR 1099 .
( 13 ) Rejoinder, p . 5 .
( 14 ) Joined Cases 205 to 215/82, cited above, paragraph 30 .
( 15 ) Joined Cases 205 to 215/82, cited above, paragraph 32 .
( 16 ) Joined Cases 205 to 215/82, cited above, paragraph 22 .
( 17 ) In that connection, see paragraphs 3 and 4 of my Opinion, delivered on 29 November 1988 in Case 94/87 [1989] ECR 175, cited above .
( 18 ) Case 52/84, cited above .
( 19 ) Case 94/87, cited above, points 14 to 18 .
( 20 ) OJ 1983 C 318, p . 3 .
( 21 ) Case C-301/87 France v Commission [1990] ECR I-307 ( hereinafter referred to as "the Boussac case ").
( 22 ) Case C-142/87 Belgium v Commission [1990] ECR I-959 .
( 23 ) Case C-301/87, cited above, paragraph 19; Case C-142/87, cited above, paragraph 15 .
( 24 ) In this connection, see the Opinion of Mr Advocate General Tesauro in Case C-142/87, cited above, point 8 .
( 25 ) These are the figures given by Sir Leon Brittan in his answer to Written Question No 181/88 ( OJ 1989 C 151, p . 9 ).
( 26 ) Second paragraph of Article 173 of the EEC Treaty .
( 27 ) See, for example, the judgment in Case 149/77 Defrenne v Sabena [1978] ECR 1365 .
( 28 ) Judgment in Case 310/85 [1987] ECR 901, paragraphs 20 to 25 .
( 29 ) Case C-301/87 France v Commission, cited above .
( 30 ) See p . 5 of the Defence .
( 31 ) See, for example, in the Deufil judgment, cited above, the discussion as to the nature of the aids for the purposes of Article 92(1 ).
( 32 ) Paragraph 48(4 ) of the Verwaltungsverfahrensgesetz, quoted by the German Government in its Defence, p . 6 .
( 33 ) Defence, p . 9 .
( 34 ) Rejoinder, p . 8 .
( 35 ) See, for example, the judgments in Case 199/82 Amministrazione delle finanze dello Stato v San Giorgio [1983] ECR 3595 and in Case 309/85 Barra v Belgium [1988] ECR 355 .
( 36 ) Case C-142/87, cited above .
( 37 ) Paragraph 61, emphasis added .
( 38 ) Case 52/84, cited above, paragraph 11 .
( 39 ) Paragraph 61 .