Judgment of the Court of 7 June 1988. - Commission of the European Communities v Hellenic Republic. - State aid - Failure to implement a Commission decision. - Case 63/87.



European Court reports 1988 Page 02875



Summary

Parties

Grounds

Decision on costs

Operative part



Keywords

++++

1 . Measures adopted by the institutions - Presumption of validity

( EEC Treaty, Art . 189 )

2 . State aid - Commission decision declaring aid incompatible with the common market - Non-implementation - Justification - Implementation absolutely impossible because of financial difficulties with which recipients would be confronted - Unacceptable

( EEC Treaty, Art . 93 ( 2 ) )

Summary

1 . It follows from the legislative and judicial system established by the Treaty that, although respect for the principle of the rule of law within the Community context entails the right to challenge the validity of Community measures by legal action, that principle also imposes upon all persons subject to Community law the obligation to acknowledge that such measures are fully effective as long as they have not been declared to be invalid .

2 . The financial difficulties with which undertakings receiving unlawful aid could be confronted as a result of its withdrawal do not make it absolutely impossible for the Member State concerned to implement the Commission decision finding that the aid was incompatible with the common market and must be abolished .

Parties

In Case 63/87

Commission of the European Communities, represented by Théofanis Christoforou and Georgios Kremlis, members of its Legal Department, and Thomas Cusack, Legal Adviser to the Commission, with an address for service in Luxembourg at the office of Georgios Kremlis, Jean Monnet Building, Kirchberg,

applicant,

v

Hellenic Republic, represented by Stelios Perrakis, lawyer, lecturer at the Faculty of Law of the University of Thrace, Vassilis Zorbas, lawyer, Legal Adviser to the Ministry for Economic Affairs, and Mr Laios, Legal Adviser to the Ministry of Agriculture, with an address for service in Luxembourg at the Greek Embassy, 117 Val-Sainte-Croix, L-1371,

defendant,

APPLICATION for a declaration that, by not complying within the prescribed period with Commission Decision 86/187/EEC of 13 November 1985 on aids granted by Greece in the form of interest rebates in respect of exports of all products with the exception of petroleum products ( Official Journal 1986, L 136, p . 61 ), the Hellenic Republic has failed to fulfil its obligations under the EEC Treaty,

THE COURT

composed of : Lord Mackenzie Stuart, President, G . Bosco and O . Due ( Presidents of Chambers ), T . Koopmans, C . Kakouris, T . F . O' Higgins and F . Schockweiler, Judges,

Advocate General : Sir Gordon Slynn

Registrar : D . Louterman, Administrator

having regard to the Report for the Hearing and further to the hearing on 3 December 1987,

after hearing the Opinion of the Advocate General delivered at the sitting on 1 March 1988,

gives the following

Judgment

Grounds

1 By application lodged at the Court Registry on 27 February 1987, the Commission of the European Communities brought an action before the Court under the second subparagraph of Article 93 ( 2 ) of the EEC Treaty for a declaration that, by not complying within the prescribed period with Commission Decision 86/187/EEC of 13 November 1985 on aids granted by Greece in the form of interest rebates in respect of exports of all products with the exception of petroleum products ( Official Journal 1986, L 136, p . 61 ), the Hellenic Republic has failed to fulfil its obligations under the Treaty .

2 Decision 86/187/EEC found in substance that the aid, in the form of an interest rebate of 6 or 3% granted on export credits by the Greek authorities subject to certain conditions, was incompatible with the common market within the meaning of Article 92 of the Treaty and had to be abolished . Article 2 of the decision provides : "Greece shall inform the Commission, within one month of receiving notification of this decision, of the measures which it has taken in order to comply therewith ". The decision was notified to the Hellenic Republic with a covering letter on 23 December 1985 .

3 On 26 February 1986, the Hellenic Republic brought an action under the first paragraph of Article 173 of the Treaty for a declaration that the decision was void ( Case 57/86 ) and, on 13 March 1986, it submitted an application for suspension of the operation of the decision under Article 185 of the Treaty . That application was dismissed by order of the President of the Court of 30 April 1986 ( ECR 1497 ). The Court has dismissed the principal application in those proceedings by judgment delivered on the same date as this judgment .

4 By telex of 23 May 1986, the Commission asked the Greek authorities to inform it within two weeks of the measures actually adopted for the purpose of complying with the decision . The Hellenic Republic did not reply officially to that telex nor did it communicate the measures adopted in order to comply with the decision .

5 The Commission' s departments were informed, without however having received any official notice thereof, that the Bank of Greece had, by decision of 5 June 1986, reduced the rebate to 5% with effect from 9 June 1986 and, by decision of 29 January 1987, reduced the rebate from 5 to 3% for the period from 1 April to 31 December 1987 and abolished it entirely with effect from 1 January 1988 .

6 Reference is made to the Report for the Hearing for a fuller account of the facts, 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 .

7 The Commission considers that Greece has failed to fulfil its obligations by not complying with the decision within the time-limit of one month from the notification of the decision prescribed therein . The defendant was required to adopt the necessary measures by 23 January 1986 at the latest and to inform the Commission thereof immediately . The defendant is not entitled to refuse to comply with the decision within the prescribed time-limit on the ground that it has brought an action for the annulment of the decision .

8 Greece claims that it was absolutely impossible for it to comply with the decision within the prescribed time-limit . The immediate abolition of the system of rebates at issue would have had exceptionally serious consequences for Greek exporters and, consequently, for the country' s economic and monetary policy . Interest rebates, which were an integral part of a new general system of credit set up in April 1983, could not have been withdrawn without a comprehensive reform of that system . Such a reform would have required some time, in order to allow the necessary appraisals to be carried out . Finally, during negotiations for the approval of measures for stabilizing the Greek economy under Article 108 of the EEC Treaty, the Commission was very understanding in regard to Greece' s economic difficulties .

9 The Commission stated at the hearing that where it is duly established that it was impossible to adopt the necessary measures within the prescribed time-limit, such measures must be adopted or implemented within a reasonable time .

10 As the Court has held ( judgment of 13 February 1979 in Case 101/78 Granaria v Hoofdproduktschap voor Akkerbouwprodukten (( 1979 )) ECR 623 ), it follows from the legislative and judicial system established by the Treaty that, although respect for the principle of the rule of law within the Community context entails the right to challenge the validity of Community measures by legal action, that principle also imposes upon all persons subject to Community law the obligation to acknowledge that such measures are fully effective as long as they have not been declared to be invalid .

11 It should also be pointed out, on the other hand, that pursuant to Article 185 of the EEC Treaty, actions brought before the Court of Justice do not have suspensory effect . Moreover, the application by Greece for suspension of the operation of the contested decision was dismissed .

12 In those circumstances, Greece, as the addressee of the decision, had to regard it as binding in its entirety irrespective of the fact that it had brought an action for a declaration that that decision was void .

13 It is common ground that the defendant completely abolished the contested interest rebate system only with effect from 1 January 1988 . On the other hand, the Commission contended, without being contradicted, that it was never officially informed of the measures adopted by the defendant . The Court must therefore find that Greece did not comply with the decision .

14 The defendant has not supported its submission that it was absolutely impossible to implement the decision with specific arguments of such a nature as to show that the contested interest rebate system could not have been abolished within the time-limit fixed by the decision or, at the very least, within a reasonable time . In that regard, it is sufficient to note that the financial difficulties with which exporters could be confronted as a result of the withdrawal of the unlawful aid do not make it absolutely impossible to implement the decision . Consequently, the defendant' s submission must be rejected as unfounded .

15 Its second submission must also be rejected . Even though the Commission showed great understanding for the economic difficulties referred to by the Greek authorities and even though the interest rebate scheme at issue was raised during negotiations between the parties, it has not been shown that the Commission' s attitude could have been understood as affecting the defendant' s obligation to comply with Decision 86/187/EEC .

16 It follows from the foregoing that by not complying with Commission Decision 86/187/EEC of 13 November 1985 on aids granted by Greece in the form of interest rebates in respect of exports of all products with the exception of petroleum products, the Hellenic Republic has failed to fulfil its obligations under the Treaty .

Decision on costs

Costs

17 Under Article 69 ( 2 ) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been asked for in the successful party' s pleading . Since the Hellenic Republic 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 complying within the prescribed period with Commission Decision 86/187/EEC of 13 November 1985 on aids granted by Greece in the form of interest rebates in respect of exports of all products with the exception of petroleum products, the Hellenic Republic has failed to fulfil its obligations under the Treaty;

( 2 ) Orders the Hellenic Republic to pay the costs .