CELEX: 62008CC0507
Language: en
Date: 2010-09-09 00:00:00
Title: Opinion of Mr Advocate General Cruz Villalón delivered on 9 September 2010. # European Commission v Slovak Republic. # Failure of a Member State to fulfil obligations - State aid - Partial write-off of a company’s tax liability as part of an arrangement with creditors - Commission decision declaring that aid incompatible with the common market and ordering its recovery - Failure to execute. # Case C-507/08.

OPINION OF ADVOCATE GENERAL
      CRUZ VILLALÓN
      delivered on 9 September 2010 1(1)
      
      Case C‑507/08
      European Commission
      v
      Slovak Republic
      (Action for failure to fulfil obligations brought by the Commission against the Slovak Republic)
      (State aid – Cancellation of a tax debt by the tax office in a procedure for an arrangement with creditors – Commission Decision declaring aid incompatible with the common market and ordering its recovery – Failure to execute – Force of res judicata – Grounds for review of final judgments)1.        By an action for failure to fulfil obligations brought under Article 108(2) TFEU, the Commission complains that the Slovak
         Republic has not recovered State aid which the Commission had found to be incompatible with the common market and which took
         the form of the writing off, in favour of the company Frucona Košice a.s. (‘Frucona’), of a tax debt in the context of an
         arrangement with creditors approved by a judicial decision with the force of res judicata. Thus, the Court is faced once again with the difficulty of the extent of the obligation incumbent on Member States with
         regard to the recovery of aid declared unlawful by the Commission.  More specifically, in the instant case the question arises
         whether it is possible to justify the failure to fulfil that obligation on the basis of the existence of national judicial
         decisions with the force of res judicata, which would make recovery of the aid impossible under domestic law.
      
      I –  Facts
      2.        By Decision of 7 June 2006 on State aid C 25/05 (ex NN 21/05) implemented by the Slovak Republic for Frucona, (2) the Commission found that the measures adopted by the Slovak Republic in favour of Frucona constituted State aid incompatible
         with the common market.
      
      3.        It is apparent from that decision that Frucona, an undertaking operating in the sector of the production of spirits, liqueurs,
         non-alcoholic beverages, canned fruit and vegetables, and vinegar, received State aid consisting of the cancellation by the
         Košice local tax office (‘tax office’) of a tax debt amounting to SKK 416 515 990 (EUR 11 million), in the context of an ‘arrangement’
         concluded by that undertaking with its creditors in accordance with the procedure laid down in Law 328/91 on bankruptcy and
         arrangements with creditors, which, like the bankruptcy procedure, is aimed at settling the financial situation of indebted
         companies. The aim of that procedure, initiated by the indebted company, is to reach an arrangement with the creditors whereby
         the company repays part of its debt in return for the cancellation of the remainder of the debt. The arrangement must in any
         event, be approved by the court supervising the procedure.
      
      4.        On 8 March 2004, Frucona lodged with the Krajský súd de Košice, the competent regional court, a proposed arrangement relating
         to several debts, including a tax debt in respect of duty on alcohol. The arrangement procedure was authorised by that court,
         with the approval of the tax office, on 14 July 2004. The authorisation of the regional court was subsequently confirmed by
         the Najvyšší súd of the Republic (3) by decision of 25 October 2004.
      
      5.        Under the agreement, Frucona was required to repay 35% of the debt within one month, while the creditors would waive the remaining
         65%. Frucona’s tax debt came to SKK 640 793 831 (EUR 16.86 million) in total. Pursuant to the arrangement, the tax office
         was entitled to recover the sum of SKK 224 277 841 (EUR 5.86 million), with the result that the tax written off amounted to
         SKK 416 515 990 (EUR 11 million). It should be noted that, once it had paid the amounts agreed, Frucona continued its business
         activities.
      
      6.        After examining the tax write-off concerned, the Commission concluded that (a) the tax office was in a more favourable legal
         and financial position than the private creditors and (b) the Slovak Republic had unlawfully granted the tax cancellation
         in favour of Frucona. Specifically, in its decision of 7 June 2006, the Commission stated:
      
      ‘Article 1
      The state aid which the Slovak Republic has implemented for FRUCONA Košice, a.s., amounting to SKK 416 515 990, is incompatible
         with the common market.
      
      Article 2
      1. The Slovak Republic shall take all necessary measures to recover from the beneficiary the unlawfully granted aid referred
         to in Article 1.
      
      2. Recovery shall be effected without delay and in accordance with the procedures of national law provided that they allow
         the immediate and effective execution of this decision.
      
      3. The sum to be recovered shall bear interest throughout the period running from the date on which it was put at the disposal
         of FRUCONA Košice, a.s. until its actual recovery.
      
      4. The interest shall be calculated in accordance with the provisions laid down in Chapter V of Commission Regulation (EC)
         No 794/2004 of 21 April 2004 implementing Council Regulation (EC) No 659/1999 ... The interest rate shall be applied on a
         compound basis throughout the entire period referred to in paragraph 3.
      
      Article 3
      The Slovak Republic shall inform the Commission, within two months of notification of this Decision, of the measures taken
         to comply with it. It shall provide this information using the questionnaire attached in Annex I to this Decision.’
      
      7.        On 12 January 2007, Frucona brought an action before the Court of First Instance seeking annulment of the Commission’s decision,
         but did not apply for interim measures. The Slovak Republic, for its part, has not brought any action. Judgment in those proceedings,
         in which the hearing was held in December 2009, is currently pending.
      
      8.        With regard to the enforcement measures adopted by the Slovak Republic, on 4 July 2006 the tax office requested Frucona to
         repay the unlawful aid plus interest within eight days. When Frucona failed to comply with that request, the tax office brought
         an action before the Košice II District Court on 21 July 2006.
      
      9.        By decision of 11 June 2007, the Košice II District Court dismissed the action brought by the tax office on the grounds that
         Frucona was not obliged to repay the aid. The court held that: (a) Frucona’s debt to the tax authorities had been extinguished
         ex lege when the sum owed was paid in accordance with the conditions set out in the arrangement with the creditors; (b) even though
         the Commission had required the Slovak Republic to take all measures necessary to recover the aid, that did not confer on
         the tax authorities the right to demand repayment of the aid from its recipient; and (c) it cannot be accepted that the recipient
         of the aid is directly required by law to repay it, for Article 26(1) of Law 231/1999 Rec. on State aid contains a presumption
         that the recipient is aware that it has been granted aid, and, the tax authorities having acted within the boundaries of the
         law, the recipient could not have known that it had been granted unlawful aid.
      
      10.      The decision of the District Court was confirmed by judgment of the Košice Regional Court on 21 April 2008, in which, in addition
         to agreeing with the reasoning of the lower court, the Regional Court observed that: (a) it was not possible to review the
         decision concerning the arrangement with the creditors because it had the force of res judicata; (b) the Commission had failed to respect the provisions of domestic law which resolve the conflict between arrangement proceedings
         and enforcement proceedings; and (c) the principle of the independence of the judiciary underpins, inter alia, the principle
         that the assessment of the facts cannot be reviewed, in accordance with which the national courts – on the basis of expert
         evidence which, it may be presumed, the Commission did not have at its disposal – concluded that the amount of the credit
         from the tax authorities set out in the arrangement between creditors was proportionate.
      
      11.      By letter of 2 July 2008, the tax authorities asked the State Legal Adviser to the Slovak Republic to lodge an extraordinary
         appeal. The Commission states in its application that it has no more detailed information on the matter.
      
      12.      Throughout the proceedings, the Commission has repeatedly insisted on the immediate and effective execution of its decision,
         complaining that, instead of executing it straightaway under national law, the Slovak authorities had decided that it was
         necessary to bring the matter before a judicial body.
      
      13.      In response to the foregoing, the Slovak authorities have essentially put forward two main arguments: (A) The court proceedings
         were indispensable for the purposes of recovering the aid, for Slovak tax law does not provide a legal basis for recovering
         a debt owed to the tax authorities which has been written off under an arrangement with creditors, wherefore it was essential
         to obtain an instrument permitting enforcement. Under Slovak law, an administrative decision of the tax office is not capable
         of ‘setting aside’ the decision of the court responsible for supervising Frucona’s arrangement with its creditors. (B) The
         Commission’s decision was not directly binding on Frucona but rather, being addressed to the Slovak Republic, it required
         the latter to take all the measures necessary to recover the aid unlawfully granted. Therefore, as a ‘foreign’ administrative
         decision, the Commission’s decision did not create an obligation for Frucona to repay the aid, for which reason it was not
         possible to execute the Commission’s decision at national level.
      
      14.      Following various exchanges and reminders after the expiry of the two‑month period laid down by the decision for the communication
         of the measures taken and to be taken for its execution, the Commission, considering that the Slovak Republic had not carried
         out the immediate and effective execution of the decision, decided to bring the present action.
      
      II –  Arguments
      15.      The Commission begins by recalling the case-law in accordance with which the withdrawal of unlawful aid through the recovery
         of the amount of that aid is the logical consequence of the finding that it is unlawful (Belgium v Commission, (4) paragraph 66, and Italy v Commission, (5) paragraph 41). The Commission also relies on the case‑law to the effect that the obligation on Member States with regard
         to the cancellation of aid which the Commission considers incompatible with the common market is intended to achieve the restoration
         of the previous situation, for, so long as the recipient of the aid does not repay it, he benefits from an unfair advantage
         (Commission v France, (6) paragraph 47).
      
      16.      Relying on Article 288 TFEU, the Commission notes the binding nature of the decision and the consequences deriving from it
         for the State to which it is addressed (Commission v Spain, (7) paragraph 21), and emphasises that, more than 29 months since the Slovak authorities received the decision, the aid granted
         to Frucona has still not been recovered, with the result that Frucona retains an advantage which the decision was specifically
         intended to remove.
      
      17.      Consequently, the Commission submits that the Slovak Republic has failed to fulfil the obligations incumbent on it under the
         decision and under Article 14(3) of Regulation (EC) No 659/1999, and that it is not sufficient, as the national authorities
         contend, that they have adopted all the measures appropriate to ensure the execution of the decision, for what is required
         is that the methods used should result in its immediate and effective execution. In any event, the application of procedures
         under national law for the execution of a decision is subject to the condition that those procedures should enable its immediate
         and effective execution (Commission v France, paragraph 49, and Commission v Greece, (8) paragraphs 35 and 44).
      
      18.      The Commission observes that, there being no decision of the General Court ordering suspension of operation of the contested
         decision in accordance with Article 278 TFEU (which has not happened because neither Frucona nor the Slovak authorities have
         applied for such a measure), the action for annulment pending before that court does not affect the enforceability of the
         unimplemented decision. The Commission submits that, in the present case, the grounds set out by the national courts constitute
         a barrier to the effective and immediate execution of the decision, and the Commission criticises in particular the argument
         to the effect that Frucona could not have known that the writing off of part of its tax debt amounted to State aid, for, irrespective
         of the fact that a plea of ignorance is irrelevant in the context of State aid (Germany v Commission, (9) paragraph 14), the version of Law 231/1999 in force at the time of the facts, which the Slovak authorities rely on, treats
         the grant of tax relief in the same way as an indirect form of State aid.
      
      19.      Nor does the Commission accept the argument that the tax debt was extinguished ex lege, for by denying the existence of the debt those authorities have also denied the direct effect of the decision, thereby failing
         to have regard to settled case-law (CarmineCapolongo v Azienda Agricole Maya (10) and Steinike & Weinling v Federal Republic of Germany). (11)
      
      20.      The Commission also states that it is immaterial that the national courts, in the exercise of their independence, have assessed
         certain expert evidence in terms which have allowed them, as the only courts with competence to assess the facts, to conclude
         that the amount of the tax debt governed by the arrangement with creditors was proportionate. The Commission submits, on the
         contrary, that after State aid has been found to be unlawful, the role of the national authorities is restricted to implementing
         the decision which sets out that finding, without having any discretion at all (Alcan Deutschland, (12) paragraph 34).
      
      21.      Further, the Commission does not agree that the force of res judicata acquired by the judicial decisions given in the instant case is a reason worthy of consideration capable of justifying the
         infringement complained of; in that connection, the Commission cites the case-law laid down in Lucchini, (13) at paragraph 63, observing that the Slovak judicial authorities have not even commented on that case-law.
      
      22.      Finally, the Commission submits that the principle of equivalence has not been observed in this case, given that its decision
         did not enjoy the enforceability which, it may be presumed, is characteristic of acts of the Slovak tax authorities. The effect
         of the procedure for obtaining authority to execute through the courts was, therefore, that the decision could not be executed
         on the same terms as national decisions.
      
      23.      In its defence, the Slovak Republic contends that, contrary to the Commission’s assertion, it does not follow from a literal
         interpretation of Article 2(1) and (2) of the Commission’s decision, specifically from the use of the term ‘vymáhanie’ (‘récuperation’
         in the French version) instead of ‘vymoženie’ (‘recouvrement’ in the French version), that the Slovak Republic was required
         actually to recover the aid within the time-limit set; instead, it was merely required to take all the measures necessary
         to recover it, which it in fact did by applying the appropriate fiscal and judicial procedures, including a request for an
         extraordinary appeal sent by the tax office to the State Legal Adviser on 2 July 2008, which appears to suggest that the latter
         was working on that appeal on the date on which the defence of the Slovak Republic was lodged with the Court of Justice (8
         January 2009).
      
      24.      The Slovak Republic maintains that there are factors in this case which make it very different from the usual cases on State
         aid. First, the aid was granted on the basis of a decision of a judicial, rather than an administrative, authority, which
         has acquired the force of res judicata; that precludes the application of the case-law laid down in Lucchini, a judgment which, in any event, was delivered after the Slovak Republic initiated the relevant steps to recover the aid.
         Second, in view of the fact that, according to the decision, the administrative body which granted the aid has responsibility
         for recovering it, it is not possible to claim (and European Union law does not do so) that that body should annul a final
         judicial decision. It would not even be appropriate to do so where a judgment of the Court of Justice must be applied with
         retroactive effect (except in cases in which the exceptional conditions are satisfied for disregarding a principle as important
         to legal certainty as the inalterability of a final judgment; Kühne and Heitz, (14) paragraph 28, and Kapferer, (15) paragraphs 20 and 21), meaning that the Commission seeks for its decision effects which, on principle, even judgments of
         the Court do not have.
      
      25.      In the Slovak Republic’s opinion, it was not, therefore, possible to use a procedure other than that followed, in other words,
         the initiation of court proceedings against Frucona. That method of recovering aid does not constitute a breach of the principle
         of equivalence: according to the Slovak Republic, that argument is not only based on general and imprecise assertions, but
         must also be rejected because recovery of aid has to be compatible with the principle of the procedural autonomy of Member
         States. Finally, the decision is not capable of constituting an instrument permitting enforcement because (a) it is addressed
         to a Member State rather than an individual; (b) it is not binding on the recipient of the aid but rather on the State which
         granted it; and (c) it lacks the precision necessary to be an instrument permitting enforcement. Furthermore, the Slovak authorities
         observe that the principle of equivalence is concerned with the protection of the rights of individuals rather than the obligations
         of the Member States vis-à-vis the Commission.
      
      26.      In its reply, the Commission rejects the argument put forward by the Slovak authorities concerning the literal interpretation
         of the decision, arguing that there could be no doubt that it was their duty actually to secure recovery of the aid within
         the period indicated, unless there were exceptional circumstances which rendered that impossible and which, in any event,
         the Slovak Government has not pleaded.
      
      27.      The Commission accepts that, in the absence of Community provisions on the procedure for the recovery of aid, it is for the
         Member States to determine the method for recovering it, provided that the aid is actually recovered and, naturally, for ensuring
         that the national provisions are applied in such a way that the recovery required by Community law is not rendered practically
         impossible. Furthermore, the Commission asserts that it had no intention of dictating to the Slovak authorities the manner
         in which the aid should be recovered; in particular, it did not claim that the tax office should set aside a court decision
         and instead it merely suggested, as one of the procedures possible, that the competent authority should withdraw the grant
         of aid.
      
      28.      The Commission relies on the principle of the primacy of European Union law and the case-law laid down in Lucchini (which, being confined to interpreting the law in force, and notwithstanding the assertions of the Slovak authorities, is
         perfectly applicable to the instant case) in support of its submission that that principle requires any measure which prevents
         the effective and immediate execution of the decision to be disapplied. For those purposes, it is not appropriate to make
         an exception when such a measure is a judicial decision which has become final; in any event, the importance of res judicata must be qualified by reference to the context in which a decision is given, particularly by reference to the degree to which
         the parties may exert influence on the subject-matter of the proceedings.  In the instant case, that influence was minimal,
         given that the case involved Community competences which the national courts had no option but to observe and give effect
         to. Finally, the Commission submits that all the foregoing is without prejudice to the fact that Slovak law provides for situations
         in which res judicata may be reversed (Article 228 of the Code of Civil Procedure).
      
      29.      Lastly, the Commission disputes that the principle of equivalence has been respected in the instant case, rejecting the Slovak
         Republic’s assertion that the principle is concerned with the protection of the rights of individuals, for, specifically in
         a case of State aid, the Court ruled otherwise in Deutsche Milchkontor (16) and Alcan Deutschland, at paragraph 24. In addition, the Commission submits its invocation of Slovak tax law is enough to prove that the decision
         in issue was afforded less favourable treatment.
      
      30.      In the rejoinder, the Slovak authorities repeat their assertion that they did everything possible to recover the aid, in accordance
         with the wording of the authentic version of the decision. The Slovak authorities insist again that it is impossible to disregard
         the existence of a final judicial decision. Lastly, they maintain that they have never sought to rely on that fact to claim
         that it was impossible to recover the aid or to avoid their obligation to recover it, but only to provide evidence of the
         difficulties inherent in the process of recovering the aid within a period of two months.
      
      III –  Legal framework
      31.      Recital 13 in the preamble to Council Regulation (EC) No 659/1999 of 22 March 1999 laying down detailed rules for the application
         of Article 93 of the EC Treaty states: (17)
      
      ‘Whereas in cases of unlawful aid which is not compatible with the common market, effective competition should be restored;
         whereas for this purpose it is necessary that the aid, including interest, be recovered without delay; whereas it is appropriate
         that recovery be effected in accordance with the procedures of national law; whereas the application of those procedures should
         not, by preventing the immediate and effective execution of the Commission decision, impede the restoration of effective competition;
         whereas to achieve this result, Member States should take all necessary measures ensuring the effectiveness of the Commission
         decision.’
      
      32.      Article 14(3) of Regulation No 659/1999:
      
      ‘Without prejudice to any order of the Court of Justice of the European Communities pursuant to Article 185 of the Treaty,
         recovery shall be effected without delay and in accordance with the procedures under the national law of the Member State
         concerned, provided that they allow the immediate and effective execution of the Commission’s decision. To this effect and
         in the event of a procedure before national courts, the Member States concerned shall take all necessary steps which are available
         in their respective legal systems, including provisional measures, without prejudice to Community law’.
      
      33.      Article 23 of Regulation No 659/1999:
      
      ‘1. Where the Member State concerned does not comply with conditional or negative decisions, in particular in cases referred
         to in Article 14, the Commission may refer the matter to the Court of Justice of the European Communities direct in accordance
         with Article 93(2) of the Treaty.
      
      2. If the Commission considers that the Member State concerned has not complied with a judgment of the Court of Justice of
         the European Communities, the Commission may pursue the matter in accordance with Article 171 of the Treaty’.
      
      IV –  Assessment
      34.      The fact that the decision, failure to comply with which is complained of in these proceedings, is the subject of an action
         in which judgment is pending before the General Court (Case T-11/07), which has not adopted any interim measures, does not
         preclude the Court of Justice from giving a ruling on that infringement without being required to wait for the judgment of
         the General Court (Case C‑232/05 Commission v France, paragraph 60).
      
      35.      The only matter to be examined in these proceedings is the conduct of the Slovak authorities in relation to the decision of
         7 June 2006 on State aid C 25/05, given that the Commission complains that the Slovak Republic has failed to fulfil its obligation
         to implement that decision in the terms laid down in Article 288 TFEU and Article 14(3) of Council Regulation (EC) No 659/1999
         of 22 March 1999. Therefore, according to settled case-law, there must be no consideration at all of the question of the validity
         of that decision, (18) that validity being, in my view, an essential precondition of the duty to execute the decision, which is the true and only
         subject-matter of these proceedings.
      
      36.      The first point to be dealt with is the identification of the unfulfilled obligation. The Slovak Republic maintains that,
         in the light of the wording of the decision, it was not specifically required to recover the aid in any event, but rather
         only to attempt to recover it. Even if it were to be accepted that the Slovak version of the decision is capable of giving
         rise to that interpretation, (19) the fact is that, in the light of the legislation applicable and the settled case-law on the matter, the Slovak authorities
         could not be unaware of was really asked of them. Consequently, the question to be examined now is not whether or not the
         obligation to do what was necessary in order to recover the aid was fulfilled, but rather whether the aid has actually been
         recovered, because that was the content of the obligation imposed.  The question whether, if the unlawful aid is not eventually
         recovered, the fact that the State concerned has taken all the measures necessary to recover it, may exempt it from liability,
         if it is established that it was absolutely impossible to execute the decision, is a different issue (see, inter alia, Commission v Spain, paragraphs 45 to 47); however, it is clear that the primary obligation has always been actually to recover the aid and not
         merely to adopt measures to achieve that aim. In short, it is a typical obligation to achieve a particular result, namely,
         the restoration of the balance of the market conditions which were upset by the unlawful aid granted to one of the market
         players (Commission v France, paragraph 47). In any event, as will be seen below, the aim sought is not something which is required at any price, particularly
         through the sacrifice of principles which are inherent in a State governed by the rule of law and which, as such, have been
         adopted as fundamental principles by the European Union.
      
      37.      Above all, it is clear that the obligation which matters has not been fulfilled, for the aid has not, in fact, been recovered.
         At this point, it is necessary to examine whether or not that infringement may be justified, but it is not appropriate to
         take into consideration the Slovak Republic’s observation relating to the shortness of the period allowed for recovering the
         aid. That objection, like all the others concerning the subject-matter of the decision, ought to have been raised, if appropriate,
         against the decision itself in specific proceedings contesting the decision rather than during the process of implementation.
         Moreover, the Slovak authorities have contradicted themselves to a certain extent by maintaining, on the one hand, that the
         circumstances of the case made recovery of the aid impossible and, on the other, that in fact there were simply serious difficulties
         (which would justify the need for a longer period). Be that as it may, the decisive fact is, as the Commission states, that
         the present action was brought 29 months after the Slovak authorities received the decision and following numerous requests
         from the Commission.
      
      38.      It is settled case-law that, where there are no Community provisions on the procedure for recovery of aid wrongly paid by
         the national authorities concerned, the relevant procedural provisions of national law must, in principle, apply (principle
         of procedural autonomy; see, in that connection, Commission v Spain, paragraph 22), and those provisions must in all cases be interpreted by the national authorities, including the judicial
         authorities, in the terms most favourable to the implementation of European Union law (Lucchini, paragraph 60). That rule is laid down in Article 14(3) of Regulation No 659/1999, which refers to ‘the procedures under
         the national law of the Member State concerned’, subject always to the condition that such procedures ‘allow the immediate
         and effective execution of the Commission’s decision’. However, it must immediately be pointed out that, in accordance with
         Article 14(1), recovery of the aid may not be required ‘if this would be contrary to a general principle of Community law’.
      
      39.      As we have seen, the outcome of the national procedure followed by the Slovak authorities is that, to date, the unlawful aid
         has not been recovered.  Admittedly, the Slovak Republic does not discount the possibility of eventually recovering the aid,
         having asserted at the hearing that it might be possible to bring an action for review under Article 228(1) of the Code of
         Civil Procedure, which I will deal with below and which could result in the overturning of the final judicial decision which
         so far has precluded the recovery of the aid concerned. However, even in that case, the Slovak Republic would still have committed
         an infringement which is open to censure, for the obligation for which it is answerable in these proceedings is to comply
         within a certain period with the provisions of the decision of 7 June 2006.
      
      40.      To my mind, the substantive issue which this case really raises is not so much whether or not the national proceedings brought
         by the Slovak Republic were suitable for the purposes of recovering the aid wrongfully granted as whether, once again, the
         existence in this case of a national judicial decision with the force of res judicata is, purely and simply, a sufficient ground for an exemption from the obligation to bring any proceedings at all. That is
         because, in principle, the force of res judicata means, specifically, that any attempt to review the subject-matter of a final decision is unviable or, at the very least,
         extraordinarily difficult, and, also in principle, incompatible with the binding nature of the time-limits usually granted
         to Member States for the actual recovery of aid declared unlawful.
      
      41.      That means that the fact that there exists a final judicial decision in this case entails calling into question the presumption
         which is generally the starting point in proceedings for failure to fulfil obligations: that national measures and provisions
         which preclude compliance with the obligation to be fulfilled may be disapplied simply by following the proper procedure.
         The Slovak Republic having invoked the existence of a final judgment which, without absolutely excluding the possibility of
         recovering the aid wrongfully granted, makes it extraordinarily difficult to achieve that aim, and the Commission having countered
         in that regard that the authority of res judicata may not be used as an effective defence against the obligation to comply fully and within the time-limit with the provisions
         of its decision, it is clear that the substantive legal issue concerns, once again, the question of the importance of the
         force of res judicata in delimiting the liability of Member States with regard to their obligations to the European Union. In the final analysis,
         therefore, that question essentially boils down to defining the rules on the relationship between national law and Community
         law.
      
      42.      The possibilities in this case are, therefore, as follows. If, on the one hand, the principle of res judicata is disregarded as a determining factor in the quality of final judicial decisions which justifies their being afforded specific
         treatment different from that afforded to other national measures and provisions, it would have to be concluded that the present
         case must be disposed of by applying the well-known case-law on infringements by the administrative and legislative authorities
         of Member States. If, on the other hand, the force of res judicata is found to be a factor worthy of special consideration for the purposes of establishing State liability, it will then be
         necessary to determine to what extent. It may be that it goes so far as to completely justify the infringement or, less radically,
         as to support the proposition that, while the obligation remains incumbent on it, the State concerned may attempt to use procedures
         to overturn the force of res judicata which, owing to their complexity, necessitate longer periods than usual.
      
      43.      Thus, the instant case affords an opportunity to provide some clarification, from a specific perspective, of the definition
         of the rules on the relationship between European Union law and the legal systems of the Member States. While the principle
         of primacy has sufficiently solid foundations, both in itself and in the reasoning behind its effects, (20) rather less progress has been made with regard to the scope of that principle when the authority involved in a possible conflict
         between national and Community law is the judiciary of a Member State.
      
      44.      Naturally, the judiciary is an integral part of a Member State for the purposes of that State’s liability to its citizens
         for infringement of the individual rights granted by European Union law (see, inter alia, Köbler), (21) and to the Union itself under Article 258 TFEU (Commission v Italy, (22) paragraph 29), so that, in line with the reasoning behind those structural principles, a judicial decision, even if it is
         a final judgment (as the judgment in Commission v Spain (23) confirms), may never take precedence over a Community measure, provision or act, and nor, where appropriate, may a law or
         a constitutional provision.
      
      45.      The simplicity of that statement is, however, misleading, for various reasons. The first is that the judiciary of a Member
         State is also, functionally speaking, a judiciary of the European Union; therefore, the relationship which those principles
         support does not operate in respect of separate, distinct legislative and authority systems but rather in conjunction with
         an authority in whose acts the provisions of those concurrent systems become those of a single system. Secondly and more importantly,
         because of their institutional and functional independence, courts are free from any possible intervention by, or influence
         exerted by, governments, in other words, by those who represent the State in its relations with the European Union and who
         have a direct commitment to it with regard to the adoption of the appropriate national measures to ensure proper fulfilment
         of their Community obligations. That commitment, which may also indirectly involve the legislature, inasmuch as the democratic
         parliamentary systems of the Member States always ensure that the government’s wishes are the same as those of the majority
         of the legislature, is, on principle, completely separate from the wishes of the judges and courts. The final reason is that
         the principle of certainty and the requirement that the law should be clearly defined, which the principle of res judicata supports, far from being alien to European Union law, are two of its fundamental and irrevocable principles.
      
      46.      Although the Lucchini judgment, to which we will return shortly, might have led to a different interpretation, the fact is that the Court has consistently
         regarded due respect for the force of res judicata as a principle characteristic of a State governed by the rule of law, which, for that reason, has been adopted by the European
         Union as a community of States founded on the principles essential to the rule of law. A good example is the recent judgment
         in Fallimento Olimpiclub, (24) at paragraph 22 (which cites Köbler, paragraph 38, and Kapferer, paragraph 20), in which the Court draws attention to ‘the importance, both for the Community legal order and for the national
         legal systems, of the principle of res judicata’ and states that, ‘[i]n order to ensure stability of the law and legal relations, as well as the sound administration of
         justice, it is important that judicial decisions which have become definitive after all rights of appeal have been exhausted
         or after expiry of the time-limits provided for in that regard can no longer be called into question’.
      
      47.      In that connection, the Court has gone so far as to accept that Member States are not, in principle, required to disregard
         final judicial decisions, even where doing so would make it possible to rectify an infringement of European Union law (see
         Eco Swiss (25) and Kapferer). In order to rectify an infringement, therefore, Member States must use any domestic procedures for reviewing final judgments
         which are laid down in their national law (Kühne & Heitz). Lastly, where that is not possible, the Court has opted to treat a final judicial decision as a precondition for an unlawful
         act capable of giving rise to State liability (see, inter alia, Köbler), rather than breach the principle of res judicata. However, even that is not without reservation, for the Court has stated that, ‘having regard to the specific nature of the
         judicial function and to the legitimate requirements of legal certainty, State liability in such a case is not unlimited’
         and ‘can be incurred only in the exceptional case where the national court adjudicating at last instance has manifestly infringed
         the applicable law’ (Traghetti del Mediterraneo, (26) paragraph 32). In short, the Court opted for conditional compensation in preference to the restoration at any price of the
         situation before the infringement of Community law by simply setting aside the final decision.
      
      48.      The foregoing is a consequence of treating legal certainty as one of the general principles recognised by European Union law
         (for example, Kempter, (27) paragraph 37) and, as such, included in the limits laid down in Article 14(1) of Regulation No 659/1999 to the requirement
         of recovery of State aid on the part of the Commission.  As I have already observed, it does not concern case-law whose statements
         of principle were the subject of review in Lucchini. As Advocate General Geelhoed observed in his Opinion in Lucchini (point 16), in the light of all its legal and factual circumstances, it was a ‘highly exceptional case’. (28) That was, of course, because, unlike what happened in previous cases heard by the Court, the final judicial decision in issue
         was delivered after the Community act which it infringed. The case did not, therefore, concern a Community act or measure
         the execution of which was impeded in domestic law as a result of a pre-existing, final national decision but rather, completely
         on the contrary, a decision of the Commission which, adopted in a matter within the exclusive competence of the European Union,
         then encountered the problem of a final judgment delivered afterwards by a court lacking jurisdiction. In those circumstances,
         the conflict which arose was not between the certainty and clear definition of the principle of res judicata, on the one hand, and the primacy and effectiveness of Community law on the other. It was, rather, the conflict of certainty
         and clear definition concerning the terms of the relationship between European Union law and the law of the Member States,
         on the one hand, with an unlawful attempt to consolidate in domestic law a national decision with no jurisdictional basis
         at all, on the other. That is why the Court concentrated its analysis on the division of powers between the European Union
         and the Member States, and dispensed, to a large extent, with an examination of the case from the perspective of res judicata.
      
      49.      Nevertheless, in order to insist on the latter point of view, it is necessary to agree that, essentially, and taking a rigorous
         approach, the final judgment at the heart of Lucchini was part of a procedure which went beyond the formal boundaries of strictly national proceedings. Indeed, it may be asserted
         that since that procedure concerned a matter in respect of which competence is reserved exclusively to the European Union,
         any decisions of the judiciary affecting the implementation of the Commission’s decision were part of a procedure which was,
         functionally speaking, a Community procedure. As a result, it may be asserted that the national court, which adopted those
         decisions, would be authorised to do so only as a court of the Union and, accordingly, in strict compliance with Community
         law. That is why, lastly, such decisions could never lawfully give rise to a judgment such as that which, in that case, so
         clearly conflicted with the Commission’s decision. In the context of those proceedings, procedurally national but functionally
         and substantively Community proceedings, it was, therefore, possible for a judgment to be given which, from the point of view
         of national law, was without doubt final but which, in the context of the, substantively speaking, Community proceedings,
         was deprived of all legal effect. In that case and in a case like it, therefore, the Court always has the last (definitive
         and final) word (see, once again, Case C-154/08 Commission v Spain).
      
      50.      Clearly, the Member State to which a decision is addressed requiring it to recover aid unlawfully granted is obliged, under
         Article 288 TFEU, to take all measures necessary to execute that decision in order to recover the aid wrongfully paid without
         delay (see, inter alia, Commission v France, paragraphs 42 to 43). However, other than in exceptional cases such as that described above, that duty cannot go so far
         as to entail sacrificing the principle of legal certainty and the requirement that the law should be clearly defined, which
         the principle of res judicata supports, except through procedures laid down with the usual formalities and conditions of procedural law, which comply,
         therefore, with the requirement that the law should be clearly defined, with the principle of legal certainty and with the
         precautionary principle, all of which underpin the inviolability of final judicial decisions. In other words, the European
         Union has never been able to claim that the recovery of unlawful aid may be achieved through the infringement by the Member
         State concerned of its procedural provisions, since doing so would require it to breach a principle that is fundamental to
         a State governed by the rule of law. The European Union has never disregarded certain values and principles which are part
         of constitutional traditions shared by the Member States and which the Union has, therefore, adopted. As we will see below,
         it is a different matter that the Union may require the Member States to ensure that, in certain situations, their procedural
         laws enable the review of a decision contrary to Community law, even when that decision has become final. In other words,
         their procedural laws must provide for such a decision to be set aside in law, never for infringement ad casum.
      
      51.      Turning back to the instant case, it is appropriate to require from Member States the result of the recovery of aid, albeit without sacrificing the fundamental guarantees of the procedure to be used to achieve that aim. In principle, the procedural autonomy of Member States must not be sacrificed either, provided,
         in all cases, that the provisions of national law are applied in such a way that they do not render practically impossible
         the recovery of aid (Alcan Deutschland, paragraph 24) and Community acts and measures are afforded treatment equivalent to that laid down for national acts and
         measures (Fallimento Olimpiclub, paragraph 24).
      
      52.      In that connection, it is my view that the Member States’ duty to achieve the result of recovering aid unlawfully granted
         necessarily and implicitly entails, as a last resort, a duty to organise their procedural provisions in such a way as to make
         that result possible in general terms and without the need to call into question the principles which characterise a State
         governed by the rule of law. Stated in more direct terms, in cases like that before the Court, Member States must have included
         in their legislation, among the provisions usually laid down in their respective legal systems for the revocation of the authority
         of res judicata, a provision concerning the unlawfulness under Community law of judicial acts or decisions which have become final.
      
      53.      To begin with, such is the marked tendency in a number of States which, prompted by their concern to meet their commitments
         under international law, have taken measures, dictated by circumstance, in order to implement and give effect at national
         level to international judicial decisions, despite the existence of judgments of national courts with the authority of res judicata.  Let us take as an example the judgment of the Italian Court of Cassation of 3 October 2006 (Somogyi), which ordered the reopening of a prosecution concluded by a final judgement, in order to give due effect to a ruling of
         the European Court of Human Rights. Another example, which also concerned the Rome Convention, is the approach taken by the
         Spanish Constitutional Court in its judgment of 16 December 1991 (Bultó), in which it authorised, exceptionally, the use of a recurso de amparo (action for protection of fundamental rights) as
         a method of enforcing at national level certain judgments of the Strasbourg court until such time as the legislature should
         undertake the procedural reform necessary to ensure that, in certain situations, such enforcement could be achieved before
         the ordinary courts.
      
      54.      However, in particular, and strictly in keeping with the reasoning that I have been proposing, certain legal systems, such
         as, in particular, the Slovak, have resorted to the legislative reform of their judicial procedures. Thus, the recent reform
         of 15 October 2008 inserted a paragraph e) into Article 228(1) of the Code of Civil Procedure of the Slovak Republic, pursuant
         to which a final judicial decision may be reviewed on the ground that ‘it is incompatible with a decision of the Court of
         Justice of the European Union or of another body of the European Union’.  A similar provision in relation to decisions of
         the European Court of Human Rights was adopted by a reform of 1 September 2005. That is a perfectly correct solution in that
         it complies with the international commitments of States and with the procedural guarantees of legality inherent in a State
         governed by the rule of law.
      
      55.      From that perspective, it is possible to assert that the Slovak Republic has made a notable effort to fulfil its obligations
         as a Member State by creating a structural relationship between its legal system and the requirements of European Union law
         in the matter of State aid. As far as the future is concerned, there is now an appropriate, satisfactory procedure in place
         for the execution of the Commission’s decisions in that field, which eliminates the difficulty hitherto presented by the existence
         of judicial decisions with the authority of res judicata.
      
      56.      The conclusion must be different if, as is appropriate at this juncture, the circumstances of the instant case are taken into
         account and the conduct of the Slovak authorities aimed at the execution of the decision of 7 June 2006 is examined. I repeat
         that the incontrovertible fact, which the Slovak Republic does not dispute, is that, to date, it has not been possible to
         recover the aid unlawfully granted to Frucona. The length of time which has transpired unavoidably supports the conclusion
         that the infringement complained of in these proceedings is an indisputable fact.  As regards that fact, it has not in any
         case been argued by way of justification that it is impossible to recover the aid due to the existence of a final judicial
         decision, for, the Slovak authorities, as we have seen, have invoked only the difficulties inherent in recovery of the aid
         without at any point asserting that recovery is impossible.
      
      57.      Even accepting that the rules on arrangements with creditors mean that, under Slovak law, as a result of the judicial confirmation
         of the agreement, the tax debt which had been written off, and which, as such, was regarded as unlawful aid by the Commission,
         no longer existed, the fact is that, having regard to the position adopted by the representatives of the Slovak authorities
         in their pleadings and at the hearing, a number of procedural remedies were available which, if diligently applied, would
         very possibly have resulted in the recovery of the unlawful aid within a reasonable period.
      
      58.      Thus, even though the judicial decisions concerned have the force of res judicata, it is conceivable that they would have ceased to present a barrier to the recovery of the aid if the claim for recovery
         had pleaded as the specific causa petendi, differing from the previous, the fact of the Commission decision requiring recovery of the aid, because Article 26 of Law
         231/1999 on State aid provides that, ‘based on a Commission decision relating to unlawful aid, the donor must request repayment
         from the beneficiary’. Nor is it inconceivable that, even before the reform in 2008 of the Code of Civil Procedure, referred
         to above, the instant case was already caught by the ground for review laid down in Article 228(1)(a) of the Code, which lays
         down as a ground for reopening court proceedings the existence of ‘facts, decisions and evidence’ which could not be used
         in the initial proceedings and which might have been decisive with regard to their outcome. Finally, it is certainly not inconceivable
         that the reform of 2008, which inserted a specific ground for review relating to European Union decisions, might have been
         of use for the purposes of recovering the aid as soon as it came into force. In fact, moreover, the State Legal Adviser to
         the Republic appears to have considered that approach in response to the request received from the tax authority for the purposes
         of seeking a review of the final judgment.
      
      V –  Summary
      59.      It is apparent from all of the foregoing that, although the Slovak Republic has undertaken a number of legislative reforms
         which, viewed in the round, will in future enable proper implementation of the Commission’s decisions in cases like this,
         in the circumstances of the instant case and for the reasons set out above, the Slovak Republic has failed to fulfil its obligation
         to give effect to the Commission Decision of 7 June 2006.
      
      VI –  Conclusion
      60.      In the light of the considerations set out above, I propose that the Court should: 
      
      (1)      Declare that, by failing to execute the Commission Decision of 7 June 2006 on State aid C 25/05 (ex NN 21/05) implemented
         by the Slovak Republic for FRUCONA Košice, a.s., the Slovak Republic has failed to fulfil its obligations under Article 288(4)
         TFEU and Article 2 of that decision.
      
      (2)      Order the Slovak Republic to pay the costs.
      1	Original language: Spanish.
      
      2 –	Notified under number C (2006) 2082, and published in OJ 2007 L 112, p. 14.
      
      3 –	Supreme Court of the Slovak Republic in civil matters.
      
      4 –	Case C-142/87 [1990] ECR I-959.
      
      5 –	Case C-305/89 [1991] ECR I-1603.
      
      6 –	Case C-232/05 [2006] ECR I-10071.
      
      7 –	Case C-404/00 [2003] ECR I-6695.
      
      8 –	Case C-415/03 [2005] ECR I-3875.
      
      9 –	Case C-5/89 [1990] ECR I-3437.
      
      10 –	Case 77/72 [1973] ECR 611.
      
      11 –	Case 78/76 [1977] ECR 595.
      
      12 –	Case C-24/95 [1997] ECR I-01595.
      
      13 –	Case C-119/05 [2007] ECR I-6199.
      
      14 –	Case C-453/00 [2004] ECR I-837.
      
      15 –	Case C-234/04 [2006] ECR I-2585.
      
      16 –	Case 205/82 [1983] ECR 2633.
      
      17 –	OJ 1999 L 83, p. 1.
      
      18 –	The Court has repeatedly stated that the Member State concerned may not rely on the unlawfulness of a decision as a defence
         against an action for failure to fulfil obligations based on the failure to execute that decision (see, inter alia, Case C‑196/07
         Commission v Spain [2008] ECR I-0041, paragraph 34), unless the defects concerned are so serious that the decision could be deemed a non-existent
         measure (Case 226/87 Commission v Greece [1988] ECR I‑3611, paragraph 16).
      
      19 –	Although, as the Commission has asserted in its reply (paragraph 10), there is no doubt if the versions of the decision
         in the other languages are taken into account. Thus, for example, in English: ‘to recover the aid’; in French: ‘récupérer
         l´aide’; in German: ‘Beihilfe zurückzufordern’; it is in that multi-lingual context that the provisions of the decision must
         be construed (see, inter alia, Case C-219/95 P Ferriere Nord v Commission [1997] ECR I-4411, paragraph 15).
      
      20 –	In a long process beginning with such exemplary rulings as the one in Case 6/64 Costa v Enel [1964] ECR 1141 and Case 106/77 Simmenthal [1978] ECR 629. Since then, in the event of a conflict, it has been held that European Union law takes precedence over the
         law of the Member States, which may not even invoke their highest-ranking provisions.
      
      21 –	Case C-224/01 [2003] ECR I-10239.
      
      22 –	Case C-129/00 [2003] ECR I-14637.
      
      23 –	Case C-154/08 [2009] ECR I-0000.
      
      24 –	Case C-2/08 [2009] ECR I-0000.
      
      25 –	Case C-126/97 [1999] ECR I-3055.
      
      26 –	Case C-173/03 [2006] ECR I-5177.
      
      27 –	Case C-2/06 [2008] ECR I-411.
      
      28 –	Many academic writers took the same view; for example, Germelmann, C.F., EWS, 9/2007, p. 392; Kremer, C., EuZW, 23/2007, p. 726. Further, the dominant view is that, rather than breaking with its previous case-law in that judgment, the
         Court elaborated on the reasoning behind its traditional statement of the law; for example, Peroni, G., Diritto del commercio internazionale, 22.1, 2008, p. 221; Biondi, A., Common Market Law Review, 2008, p. 1459; Fontana, E., Diritto del commercio internazionale, 22.1, 2008, p. 193.