Judgment of the Court of 2 February 1989. - Commission of the European Communities v Federal Republic of Germany. - State aid - Undertaking producing primary aluminium - Recovery. - Case 94/87.



European Court reports 1989 Page 00175



Summary

Parties

Grounds

Decision on costs

Operative part



Keywords

++++

1 . Application for a declaration that a Member State has failed to fulfil its obligations - Non-compliance with a Commission decision on State aid - Decision not challenged by way of an application for its annulment - Submissions in defence - Absolute impossibility of implementation - Admissibility

( EEC Treaty, first and second subparagraphs of Art . 93(2 ) )

2 . Aid granted by States - Commission decision finding an aid to be incompatible with the common market - Difficulties of implementation - Obligation on the part of the Commission and the Member State to cooperate in seeking a solution consistent with the Treaty

( EEC Treaty, Art . 5 and first subparagraph of Art . 93(2 ) )

3 . Aid granted by States - Recovery of illegal aid - Application of national law - Conditions and limits - Interests of the Community to be taken into consideration

( EEC Treaty, first subparagraph of Art . 93(2 ) )

Summary

1 . Where proceedings are brought against a Member State for failure to fulfil its obligations by not implementing a decision which was addressed to it under the first subparagraph of Article 93(2 ) requiring it to recover illegal aid and which it did not seek to have annulled, the only defence left to the Member State in those proceedings is to plead that it was absolutely impossible for it to implement the decision properly .

2 . If, in giving effect to a decision finding an aid to be incompatible with the common market and ordering its recovery, a Member State encounters unforeseen and unforeseeable difficulties or perceives consequences overlooked by the Commission, it may submit these problems for consideration by the Commission, together with proposals for suitable amendments to the decision in question . In such a case the Commission and the Member State must in accordance with the principle underlying Article 5 of the Treaty, which imposes a duty of genuine cooperation on the Member States and Community institutions, work together in good faith with a view to overcoming the difficulties whilst fully observing the Treaty provisions, and in particular the provisions on aid .

3 . In so far as the procedure laid down by national law is applicable to the recovery of an illegal aid, the relevant provisions of national law must be applied in such a way that the recovery required by Community law is not rendered practically impossible . Where a provision requires the various interests involved to be weighed up before a defective administrative measure is withdrawn, the interests of the Community must be taken fully into consideration .

Parties

In Case 94/87

Commission of the European Communities, represented by Bernhard Jansen, a member of its Legal Department, acting as Agent, with an address for service at the office of Georgios Kremlis, a member of the Commission' s Legal Department, Wagner Centre, Luxembourg,

applicant,

v

Federal Republic of Germany, represented by Martin Seidel, Ministerialrat in the Federal Ministry of the Economy, and by Professor Albert Bleckmann, Professor of Public Law and Public International Law at the University of Muenster, with an address for service in Luxembourg at the Embassy of the Federal Republic of Germany, 20-22 avenue E . Reuter,

defendant,

APPLICATION for a declaration that, by not implementing Commission Decision 86/60/EEC of 14 December 1985 on the aid which the Land of Rheinland-Pfalz provided to an undertaking producing primary aluminium, situated in Ludwigshafen ( Official Journal 1986, L 72, p . 30 ), the Federal Republic of Germany has failed to fulfil its obligations under the EEC Treaty,

THE COURT

composed of O . Due, President, R . Joliet and T . F . O' Higgins ( Presidents of Chambers ), Sir Gordon Slynn, G . F . Mancini, F . A . Schockweiler, J . C . Moitinho de Almeida, G . C . Rodríguez Iglesias and M . Zuleeg, Judges,

Advocate General : M . Darmon

Registrar : D . Louterman, Administrator

having regard to the Report for the Hearing and further to the hearing on 25 October 1988

after hearing the Opinion of the Advocate General delivered at the sitting on 29 November 1988,

gives the following

Judgment

Grounds

1 By application received at the Court Registry on 1 April 1987, the Commission of the European Communities brought an action under the second subparagraph of Article 93(2 ) of the EEC Treaty for a declaration that, by not implementing Commission Decision 86/60 of 14 December 1985 on the aid which the Land of Rheinland-Pfalz provided to an undertaking producing primary aluminium, situated in Ludwigshafen ( Official Journal 1986, L 72, p . 30 ), the Federal Republic of Germany had failed to fulfil its obligations under the EEC Treaty .

2 Article 1 of that decision provides :

"The aid of DM 8 million in the form of the grants that the Land of Rheinland-Pfalz provided to a primary aluminium undertaking in Ludwigshafen in 1983 and 1984 is illegal, having been granted in violation of the provisions of Article 93(3 ) of the EEC Treaty . Moreover, it is incompatible with the common market within the meaning of Article 92 of the Treaty . The said aid shall therefore be recovered from the recipient ."

3 Reference is made to the Report for the Hearing for details of the background to the case, the procedure and the submissions and arguments of the parties, which are mentioned or discussed hereinafter only in so far as is necessary for the reasoning of the Court .

4 The parties agree that neither the Government of the Federal Republic of Germany nor the undertaking which received the aid brought an action under Article 173 of the Treaty for a declaration that the decision in question was void .

5 The parties also agree that no measure has been adopted by the Federal Republic of Germany with a view to recovering the aid .

6 The German Government contends, however, that the aid cannot be recovered without a breach of the principle of the protection of legitimate expectations, which is embodied in particular in Paragraph 48 of the Verwaltungsverfahrensgesetz ( Law on Administrative Procedure ) of the Land of Rheinland-Pfalz, which is applicable to the present case . It contends that the definitive and mandatory character of the Commission' s decision does not extend to the obligation to recover the amount of the aid in question . Article 1 of the decision should be interpreted merely as a reference to the principle that unlawful aid must be recovered, subject to the principles of domestic law, that being the law applicable to the recovery of the aid . The German Government asserts that, if the decision had to be interpreted as requiring recovery of the aid, it would be legally impossible, in view of the aforementioned principle of the protection of legitimate expectations, to discharge that obligation .

7 The interpretation of Article 1 of the decision advocated by the defendant government must be rejected outright . The obligation to recover the aid is laid down unconditionally in wholly unambiguous terms not only in the provisions cited above but also in the preamble to the decision .

8 Consequently, the obligation to recover the aid imposed by the decision is definitive . The Court has consistently held, in particular in its judgment of 15 January 1986 in Case 52/84 Commission v Belgium (( 1986 )) ECR 89, that in such circumstances the only defence left to a Member State in opposing an application for a declaration that it has failed to fulfil its Treaty obligations is to plead that it was absolutely impossible for it to implement the decision properly .

9 It must be borne in mind that in the judgment in Case 52/84, cited above, the Court emphasized that the fact that the only defence which a Member State to which a decision has been addressed can raise in legal proceedings such as these is that implementation of the decision is absolutely impossible does not prevent that State - if, in giving effect to the decision, it encounters unforeseen and unforeseeable difficulties or perceives consequences overlooked by the Commission - from submitting those problems for consideration by the Commission, together with proposals for suitable amendments to the decision in question . In such a case the Commission and the Member State concerned must respect the principle underlying Article 5 of the Treaty, which imposes a duty of genuine cooperation on the Member States and the Community institutions, and must work together in good faith with a view to overcoming difficulties whilst fully observing the Treaty provisions, and in particular the provisions on aid .

10 In the present case, the German Government 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 .

11 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 .

12 It must be added that, in so far as the procedure laid down by national law is applicable to the recovery of an illegal aid, the relevant provisions of national law must be applied in such a way that the recovery required by Community law is not rendered practically impossible and the interests of the Community are taken fully into consideration in the application of a provision which, like that relied upon by the German Government, requires the various interests involved to be weighed up before a defective administrative measure is withdrawn ( see in that connection the judgment in Joined Cases 205 to 215/82 Deutsche Milchkontor v Germany (( 1983 )) ECR 2633 ).

13 It follows from the foregoing that the Court must hold, in the terms set out in the Commission' s conclusions, that the Federal Republic of Germany has failed to fulfil its Treaty obligations .

Decision on costs

Costs

14 Under Article 69(2 ) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs . Since the defendant has failed in its submissions, it must be ordered to pay the costs .

Operative part

On those grounds,

THE COURT

hereby :

( 1 ) Declares that, by not implementing Commission Decision 80/60/EEC of 14 December 1985 on the aid which the Land of Rheinland-Pfalz provided to an undertaking producing primary aluminium, situated in Ludwigshafen ( Official Journal 1986, L 72, p . 30 ), the Federal Republic of Germany has failed to fulfil its obligations under the EEC Treaty;

( 2 ) Orders the Federal Republic of Germany to pay the costs .