Case C-485/03: Action brought on 19 November 2003 by Commission of the European Communities against Kingdom of Spain
Date: 2004-01-24
Institutions: Court of Justice
Subjects: European Commission, Spain, State aid, action for failure to fulfil an obligation, aid to undertakings, small and medium-sized enterprises, suspension of aid, tax relief

24.1.2004

EN

Official Journal of the European Union

C 21/17

Action brought on 17 November 2003 by the Com-
mission of the European Communities against the Federal
Republic of Germany

Reference for a preliminary ruling by the House of Lords
by order of that court dated 10 November 2003, in the
case of Celtec Ltd against Astley and others

(Case C-477/03)

(2004/C 21/31)

(Case C-478/03)

(2004/C 21/32)

An action against the Federal Republic of Germany was
brought before the Court of Justice of the European Communi-
the
ties on 17 November 2003 by the Commission of
European Communities, represented by Claudia Schmidt and
Wouter Wils, with an address for service in Luxembourg.

The applicant claims that the Court should:

1. Declare that by failing to adopt the laws, regulations
and administrative provisions necessary to comply with
Directive 2001/12/EC of the European Parliament and of
the Council of 26 February 2001 amending Council
Directive 91/440/EEC on the development of the Com-
munity’s railways (1), or by failing to inform the Com-
mission thereof, the Federal Republic of Germany has
failed to fulfil its obligations under that directive.

2. Declare that by failing to adopt the laws, regulations
and administrative provisions necessary to comply with
Directive 2001/13/EC of the European Parliament and of
the Council of 26 February 2001 amending Council
Directive 95/18/EC on the licensing of railway undertak-
ings (2), or by failing to inform the Commission thereof,
the Federal Republic of Germany has failed to fulfil its
obligations under that directive.

3. Declare that by failing to adopt the laws, regulations
and administrative provisions necessary to comply with
Directive 2001/14/EC of the European Parliament and of
the Council of 26 February 2001 on the allocation of
railway infrastructure capacity and the levying of charges
for the use of railway infrastructure and safety certifi-
cation (3), or by failing to inform the Commission thereof,
the Federal Republic of Germany has failed to fulfil its
obligations under that directive.

4. Order the Federal Republic of Germany to pay the costs.

Reference has been made to the Court of Justice of the
European Communities by an order of the House of Lords
dated 10 November 2003, which was received at the Court
Registry on 17 November 2003, for a preliminary ruling in
the case of Celtec Ltd and Astley and others on the following
questions:

1. Are the words ‘the transferor’s rights and obligations
arising from a contract of employment or from an
employment relationship existing on the date of a
transfer’ in Article 3(1) of Council Directive 77/187/EEC
of 14 February 1977 on the approximation ofthe laws
of the Member States relating to the safeguarding of
employees’ rights in the event of transfers of undertakings,
businesses or parts of businesses (1) to be interpreted as
meaning that there is a particular point in time at which
the transfer of the undertaking or part thereof is deemed
to have been completed and the transfer of rights and
obligations pursuant to Article 3(1) is effected?

2.

3.

If the answer to question 1 is ‘yes’, how is that particular
point in time to be identified?

If the answer to question 1 is ‘no’, how are the words ‘on
the date of a transfer’ in Article 3(1) to be interpreted?

(1) OJ L 61, 5.3.1977, p. 26.

Action brought on 19 November 2003 by Commission of
the European Communities against Kingdom of Spain

Pleas in law and main arguments

The time-limit for transposition of the directive expired on
15 March 2003.

(Case C-485/03)

(2004/C 21/33)

(1) OJ 2001 L 75, p. 1.
(2) OJ 2001 L 75, p. 26.
(3) OJ 2001 L 75, p. 29.

An action against the Kingdom of Spain was brought before
the Court of Justice of the European Communities on 19 No-
vember 2003 by Commission of the European Communities,
represented by José Luis Buendía Sierra of its Legal Service,
acting as Agent, with an address for service in Luxembourg.

C 21/18

EN

Official Journal of the European Union

24.1.2004

The applicant claims that the Court should:

— declare that, by failing to adopt within the prescribed
the measures necessary to comply with
period all
Articles 2 and 3 of the Commission Decision of 11/07/
2001 relating to a State aid scheme applied by Spain to
a number of undertakings in Álava (notified under
No C(2001)1759) in the form of a tax credit of 45 % of
the investments made, or, in any event, by failing to
notify the Commission of such provisions in accordance
with Article 4, the Kingdom of Spain has failed to fulfil
its obligations under that decision;

— Order the kingdom of Spain to pay the costs.

Pleas in law and main arguments

1.

2.

Failure to fulfil the obligation to cancel the aid payments
outstanding: the measures adopted by the Spanish auth-
orities do not appear to ensure that the companies
enjoying the tax benefits in question prior to the Com-
mission decision of 11 July 2001 do not continue to
enjoy them throughout the period initially envisaged.
Consequently,
the abovementioned measures do not
represent fulfilment of the obligation to abolish any
future payment, as provided for in Article 3(1) of the
Commission decision as regards aid payments outstand-
ing. For the same reason, those measures do not represent
full compliance with the obligation to adopt the measures
necessary to ensure that the aid scheme does not continue
to operate in the future, as provided in Article 2 of the
Commission decision.

the only thing that

Failure to fulfil the obligation to recover the aid already
granted: despite the fact that the decision of 11 July 2001
required immediate recovery, without delay, of the aid
granted,
the competent Spanish
authorities had done by October 2001 was, in their own
words,
‘to commence contacts with the contributors
affected’ and in order to ‘gather information’. By express-
ing itself
the Member State openly
recognised that it had not to date taken any measure to
secure effective recovery of the aid. The Spanish auth-
orities have not even disclosed to the Commission the
identity of the beneficiaries of the aid, despite numerous
requests made to them.

in those terms,

3.

There is no absolute impossibility of giving effect to the
decision: according to settles case-law, the only defence
on which a Member State may rely in the context of
infringement proceedings brought by the Commission
the Treaty is the absolute
under Article 88 (2) of

impossibility of correctly implementing the decision.
Although the addressee of the decision, the Kingdom of
Spain, did not bring any action against it, this was done
both by the authority granting the aid, the Diputación
Foral de Álava, and the Basque trade association, Confe-
bask. The applicants in those proceedings did not at any
time claim that implementation of the decision was
absolutely impossible, merely that it was a complex
matter because of various administrative difficulties of an
internal nature.

Irrelevance of internal administrative difficulties: since
Spanish law does not expressly provide for a mechanism
for recovery of the unlawful and incompatible aid, it was
decided to resort to proceedings for review, on the
initiative of the authorities themselves, of the tax measures
governing the grant of aid, as laid down in the General
Tax Code of each of the Historic Territories. However,
the national authorities deliberately chose a procedure
which makes recovery extraordinarily difficult, namely
proceedings for a declaration that certain measures
susceptible of annulment have an adverse effect, which
renders necessary the satisfaction of a series of cumulative
conditions, which it is extremely difficult to fulfil, above
all from a temporal point of view. Domestic law provides
for a number of procedures which, at first sight, are less
problematical, such as review of provisions and measures
which are ipso jure void, a procedure which appears to
be perfectly applicable to the aids granted in breach of
the procedure laid down in Article 88 of the EEC Treaty.
Recourse to that procedure would probably be less
problematical, in so far as it allows a declaration of nullity
by the Administration itself, without the need to fulfil
the requirements laid down for the abovementioned
declaration of adverse effects. The national authorities do
not appear in this case to have chosen either the least
problematical procedure or the most relevant procedure
among those available to them within the domestic legal
system.

The principle of genuine cooperation between the Com-
mission and the Member State: the Commission has
provided all clarifications requested of
it, displaying
availability and flexibility in order to facilitate the task of
recovery to be undertaken by the national authorities.
Commission officials have shown themselves to be willing
to examine the possibility of applying the de minimis
rule, the regulation on aid for SMEs or the guidelines on
regional aid in relation to each individual case of recovery,
provided that they are given a report setting out details
of the progress achieved with recovery of the aids and the
possible grounds on which each of the beneficiaries
might qualify.

4.

5.