C-122/73

with proper diligence if it omitted which is granted without being to define its attitude within a notified; in the event of notification, reasonable period, guided by Articles it operates during the preliminary 173 and 175, which provide for a period, and where the Commission period of two months. sets in motion the contentious procedure, up to the final decision. As 3. When this period has expired, the regards the whole of this period it Member State concerned may confers rights on individuals which the national courts are bound to implement the plan, but the requirements of legal certainty safeguard. involve that prior notice should be 7. While the direct effect of the last given to the Commission. The aid sentence of Article 93 requires thereupon comes under the system of national courts to apply this provision existing aid. without any possibility of its being excluded by rules of national law of 4. The objective pursued by Article 93 any kind whatsoever, it is for the (3), which is to prevent the internal legal system of every Member implementation of aid contrary to the State to determine the legal procedure Treaty, implies that this prohibition is leading to this result.

In Case 122/73

Reference to the Court under Article 177 of the EEC Treaty by the Verwal­ tungsgericht (Administrative Court) of Frankfurt-on-Main for a preliminary ruling in the action pending before that court between

NORDSEE, DEUTSCHE HOCHSEEFISCHEREI GMBH, 2850 Bremerhaven, Kluss­ mannstraße 3, and

FEDERAL REPUBLIC OF GERMANY, represented by the Bundesamt fur gewerb­ liche Wirtschaft (Federal office for trade), 6 Frankfurt-on-Main, Bocken- heimer Landstraße 38,

composed of: R. Lecourt, President, A. M. Donner, M. Sørensen, Presidents of Chambers, R. Monaco, J. Mertens de Wilmars (Rapporteur), P. Pescatore, H. Kutscher, C. Ó Dálaigh, A. J. Mackenzie Stuart, Judges,

Advocate-General: G. Reischl Registrar: A. Van Houtte

gives the following

JUDGMENT

Issues of fact and of law

I — Facts and procedure included in the same programme had already been notified previously (20 The facts of the case, the matter referred February 1969), or were so during the and the observations submitted under next few months (9 June and 19 Article 20 of the Statute of the Court of September 1969). In the course of the Justice are described in the report for the parliamentary procedure for adoption of hearing as follows: the draft, additional information — During 1968, a draft law providing for mainly concerned with some amend­ grants to be made available to support ments adopted at the second reading — investment in certain regions was drawn was given to the Commission on 20 June up by the Government of the Federal 1969 in the multilateral consultations Republic of Germany as part of a arranged by the latter. After being general scheme of aid for regional approved by the Bundestag and the economic development. Bundesrat, the draft became the In accordance with Article 93 (3), first Investment Allowance Law of 18 August sentence, of the Treaty, the Commission 1969 (Investitionszulagegesetz, BGBI, was notified of the draft law by note 1211), which came into force on 22 verbale dated 22 April 1969. Other plans August 1969.

The Commission's staff did not complete the EEC Treaty ceases to apply and its report for the Commission on the set the system of aid may be of plans notified between February and introduced? September 1969, until 18 December (c) Does the prohibition contained in 1969. The Commission took the view this provision still apply if the that the proposed aid scheme was not procedure in accordance with the compatible with the common market, second sentence of Article 93 (3) of and accordingly initiated the procedure the EEC Treaty, in spite of the under Article 93 (2) of the Treaty on 13

A enacted contrary to this provision be decision given on 20 October 1971, regarded as invalid or inapplicable which held that the action was until the decision has been reached? inadmissible, was quashed by a judgment of the Verwaltungsgerichtshof (e) Are the words 'Member State' in the of Land Hesse on 24 April 1972 and the third sentence of Article 93 (3) EEC case was remitted to the Frankfurt Treaty to be interpreted as meaning Verwaltungsgericht. that failure to observe this provision Considering that the action raised infringes the direct rights of private parties, or must the national court, questions concerning the interpretation of Community law, the court, by an in the circumstances of question (d), of its own motion take account of order dated 19 March 1973, referred the the invalidity of the law in its following questions for a preliminary

In such a 'without delay initiate the case Member States should make a procedure' in accordance with the formal complaint and commence second sentence of Article 93 (3) of proceedings for failure to act, in the EEC Treaty, after being accordance with Article 175, first and informed by the Member State in second paragraphs. Any other course accordance with the first sentence of would entail an interpretation by Article 93 (3) of the EEC Treaty, Member States of the words 'without does this have the consequence in delay', which might then be given law that the prohibition contained in different meanings by different Member the third sentence of Article 93 (3) of States.

As regards the third and fourth Republic of Germany, represented by Mr questions, the court is of the opinion Seidel, Regierungsdirektor, and from the that if a national legislator has not Government of the United Kingdom, waited for a decision from the represented by Mr G. Slynn, Junior Commission on the provisions planned, Counsel to the Treasury. he takes the risk of having either to The Advocate-General delivered his repeal it or to see it annulled by the opinion at the hearing on 7 November courts, since otherwise the third sentence 1973. of Article 93 (3) would be deprived of any real effect.

Article 93 (2) and therefore relates to By letter of 5 June 1973 the plaintiff aid already in existence. Since a decision in the main action notified the Court resulting from such a procedure can only that it had commenced appeal have effect as to the future, the request proceedings in the Hesse Verwaltungsge for a preliminary ruling is unnecessary. richtshof against the order of the In support of his argument the plaintiff Verwaltungsgericht of Frankfurt-on- in the main action cites the decisions of Main referring the case. the Cologne Verwaltungsgericht and the After hearing the preliminary report of Minister Oberverwaltungsgericht, which the Judge-Rapporteur and the opinion of held, in similar cases, that no reference the Advocate-General, the Court decided for a preliminary ruling was necessary. to dispense with a preliminary inquiry. Written observations were submitted by B — Observations of the Commission the plaintiff in the main action, by the The Commission observes that in Commission, and by the Governments of relation to State aid the Treaty draws a

JUDGMENT OF 11. 12. 1973 — CASE 122/73

Such a duty could be effect until the Commission has given its supported by the sanction of proceedings opinion. This second obligation raises for failure to fulfil an obligation. the following questions: when does it However, this kind of notification would arise, how long does it subsist and what not have to be couched in the form of a are the consequences, for the validity or formal decision within the meaning of applicability of a national aid scheme, of Article 189; moreover, it could not have

The obligation to inform the Commission, so third sentence of Article 93 (3) applies that the Member State concerned is only to the procedure mentioned in already bound by the restrictive Article 93 (2). obligation during the period allowed for Thus, the prohibition against putting the the Commission's scrutiny. The final aid scheme into effect, which applies as sentence of Article 93 (3) merely serves soon as notification has been given, to extend that obligation. ceases either when the Commission As regards the duration of the communicates its opinion that the restriction, the Commission states that in scheme is compatible with the common practice it observes the theory market, or when a reasonable period for maintained by the majority of writers, consideration has elapsed.

NORDSEE v GERMANY

Outside that Article 93 (3). initial period no restriction would be in But this direct effect cannot be limited force, therefore the procedure would be exclusively to cases where the one taken against an existing aid, which Commission has initiated a procedure could only have effect ex nunc. within the meaning of the second As to the fifth question, the Commission sentence of Article 93 (3). Direct effect considers that both the normal should also attach to the restrictive restriction during the examination obligation during the time for period and the extended restriction consideration, running from notification provided for in the third sentence of of the aid scheme. Failure to observe this Article 93 (3) are of direct effect.

in the affirmative. If the Commission has without delay initiated the procedure fails, within a reasonable time, to initiate referred to in Article 93 (2). the procedure under Article 93 (3), It is evident from the general scheme of second sentence, then the prohibition Article 93 that Member States are free to against implementation lapses. exercise their own judgment in The Commission observes that in the implementing and applying their existing present dispute it considers the purposes systems of aid, subject to the of the law of 18 August 1969, taken as a requirement of compatibility with the whole, to be acceptable. It wishes merely common market expressed in Article 92 to amend it in certain respects and to and that of scrutiny by the Commission restrict its scope. That is why the expressed in Article 93, particularly in Commission informed the Federal paragraph 2. Government that it regarded the German As regards the control exercisable over regional economic subsidies as aid new plans for granting aid under Article already in existence, so that the 93 (3), the United Kingdom Government procedure initiated on 13 January 1970 observes, firstly, that there is no definite did not prevent that law from being put requirement that the Commission must into effect pending a final decision. give its approval or authorization The reply to the third question depends expressly. The absence of authorization

does not prevent a system of aid from no general prohibition against granting being introduced or altered. On the aid makes it clear that failure on the part other hand, there is no obligation on the of the Commission to take action within part of the Commission to make a reasonable period of time or before the comments at the stage referred to in the date on which the plans are due for first sentence of Article 93 (3). The implementation constitutes tacit approv Commission can only initiate the al or waiver of the requirement of procedure under Article 93 (3), second awaiting a final decision, as is evident sentence, if it is of the opinion that the from the opinion of Mr Advocate- plans are incompatible with the common General Lagrange on Article 102 in

Treaty. For a Member State, while contained in Article 93 (3) ineffective. awaiting such a decision, to find itself Any action taken subsequently by the bound to refrain from implementing its Commission must be taken under Article proposals, would amount to an 93 (2). undesirable and unnecessary infringe The third question should be answered ment of the Member State's liberty, in the negative since any procedure making it wait upon the Commission's initiated by the Commission outside the

Government plans, subject always to the permanent restriction contained in Article 93 (1) On an overall analysis of the Treaty and (2). provisions applicable in respect of aid, Even if it is conceded, contrary to the the German Government observes that opinion of the United Kingdom the prohibition in Article 92 (1) does Government, that the Commission is not apply to all grants of aid but only to bound, under the terms of Article 93 (3), those which affect trade between in every instance to make a final Member States and distort competition. decision, the fact that Article 93 contains That is why the prohibition is addressed

solely to Member States and has no This interpretation, confirmed by the direct effect. The importance attached to practice followed by the Commission, safeguarding the interests of Member accords with the draft regulation States is also evident from the power submitted to the Council by the conferred on the Council by Article Commission in 1966, on the application 93 (2), third indent, to grant exemptions of some of the provisions in Article 93. in exceptional circumstances. Indeed Article 1 allows Member States to implement the plans notified as soon The German Government submits that as the Commission shows, expressly or the answer to the first question should by lapse of a certain period, that it has be in the negative. According to Article no objection to make. 93 (3), the control exercised over aid schemes makes use of a twofold The requirements of legal certainty procedure. The compulsory notification mentioned by the court of reference in by a Member State of its proposals to support of the requirement of a final grant aid is to enable the Commission to decision, would be as well assured, as give its opinion, either that there is no regards matters affecting only Member objection to the introduction of the States and institutions, by certifying as proposed scheme, or that since some to compatibility or by notification that a objections do appear a formal scrutiny formal inquiry had been initiated. has been commenced. The latter As to the consequences of the indicates that the notification procedure Commission's failure to act after the has given way to the investigation necessary period for reaching an opinion procedure. During the notification on the aid proposals notified has elapsed procedure no step may be taken towards (question two), the opinion of the implementing the proposals for aid, since German Government is that the the first sentence of Article 93 (3) states restriction based on the first sentence of that notification must allow the Article 93 (3) subsists only for a certain Commission time to make its comments. period which varies according to the It would in any event be contrary to particular case and that when that logic and the system of preventive period has elapsed the aid plan, if control for a Member State to be able to properly notified, may be implemented. adopt during the initial period measures This was the result envisaged by the which might later be prohibited under Commission in its draft regulation on the investigation procedure. the application of some of the provisions Neither the wording nor the purpose of in Article 93. Moreover, the same view Article 93 (3) requires the Commission was maintained by Mr Advocate-General to give a final decision at the end of the Mayras in Case No 70/72 (Commission notification procedure. Since prohibition v Federal Republic of Germany). The in Article 92 does not have direct effect, period within which the Commission it would be sufficient for the must make known any objections must Commission to make known by be gauged, in each case, in the light of informal means that it has no objection the urgency of the aid proposed and the to the proposed aid. Even where the needs of the Commission regarding Commission terminates the notification information.

the event of the procedure having been may adopt measures which guarantee initiated after the consideration period the precedence of Community law, but prior to the implementing of the without necessarily having to declare the proposals. But that is not the case before national law void. the Court. Furthermore, the national law adopted To the third question, the German in breach of the prohibition expressed in Government would reply that a the last sentence of Article 93 (3) is not procedure initiated against a system of deprived of effect permanently, but only aid introduced after expiry of the subject to the final decision of the consideration period could only be based Commission on its compatibility with on Article 93 (2) and thus be effective the common market. only as to the future. In reply to the fifth question, the As to the fourth question, the German German Government is wholly in accord Government considers that infringement of the prohibition contained in Article with the Judgment of the Court of Justice given on 15 July 1964 (Case 6/64 93 (3), last sentence, cannot have the Costa v Enel, Rec. 1964, p. 1162), which consequence of invalidating the national states that the third sentence of Article law in question but can make it 93 (3) confers direct rights on private inapplicable while no final decision has parties. The inapplicability of the law in been given by the Commission. It is question, given the precedence of evident from the reasoning of the Court Community law, must be automatically in Case 34/67 Judgment of 4 April 1968, considered. Luck, Rec. 1968, p. 370) that where Community regulations having direct The report for the hearing reproduced effect are concerned, the national courts above was followed by oral proceedings.

Paragraph 3 institutes prior control of plans to grant new or alter existing aid and provides that 'the Commission shall be informed, in sufficient time to enable it to submit its comments, of any plans to grant or alter aid. If it considers that any such plan is not compatible with the common market having regard to Article 92, it shall without delay initiate the procedure provided for in paragraph 2. The Member State concerned shall not put its proposed measures into effect until this procedure has resulted in a final decision'.

3 In stating that the Commission shall be informed of plans to grant new or alter existing aid 'in sufficient time to enable it to submit its comments', the draftsmen of the Treaty have sought to provide this institution with sufficient time for consideration and investigation to form a prima facie opinion on the partial or complete conformity with the Treaty of the plans which have been notified to it.

It is only after being put in a position to form this opinion that the Commission is bound, if it considers the plan incompatible with the common market, to initiate without delay contentious procedure, provided for in Article 93 (2), by giving notice to the Member State to submit its comments.

4 According to the last sentence of Article 93 the Member State shall not put its proposed measures into effect until this procedure has resulted in a final decision.

The objective pursued by Article 93 (3), which is to prevent the implementation of aid contrary to the Treaty, implies that this prohibition is effective during the whole of the preliminary period.

5 On the other hand, although it is in the interests of good administration for the Commission, when, at the end of the preliminary examination, it considers that the aid conforms with the Treaty, to inform the State concerned, it is not however bound to take a decision thereon, within the meaning of Article 189 of the Treaty, since Article 93 requires such a step only at the end of the contentious procedure.

It is not possible to conclude that the measure of aid is compatible with the Treaty from the fact that the Commission did not consider itself obliged to initiate the contentious investigation procedure within the reasonable period referred to above.

Article 93 (1) requires the Commission, in cooperation with Member States, to keep under constant review all existing systems of aid.

Aid implemented, during the Commission's silence, after a period necessary for its preliminary examination, is thus subject, as an existing aid, to the provisions of Article 93 (1) and (2).

6 In the first place, therefore, it is proper to reply to the questions put that Article 93 (3) of the Treaty must be interpreted as meaning that if the Commission, during the preliminary period, arrives at the conclusion that there is no need to initiate the contentious procedure, it is not bound to issue a decision within the meaning of Article 189.

This same provision implies, moreover, that, if the Commission, after having been informed by a Member State of a plan to grant or alter aid,

Thus the direct effect of the prohibition extends to all aid which has been implemented without being notified and, in the event of notification, operates during the preliminary period, and where the Commission sets in motion the contentious procedure, up to the final decision.

9 As regards the second part of the question, while the direct effect of the prohibition in question requires national courts to apply it without any possibility of its being excluded by rules of national law of any kind whatsoever, it is for the internal legal system of every Member State to determine the legal procedure leading to this result.

Costs

10 The costs of the Governments of the Federal Republic of Germany and of the United Kingdom, as well as those of the Commission of the European Communities, which have submitted observations to the Court are not

JUDGMENT OF 11. 12. 1973 — CASE 122/73

recoverable, and as these proceedings are, in so far as the parties to the main action are concerned, a step in the action pending before a national court, the decision on costs is a matter for that court.

3. The direct effect of the prohibition on the Member State concerned from putting its proposed measures into effect extends to all aid

NORDSEE v GERMANY

which is granted without being notified and, in the event of notification, is granted during the preliminary period, and up to the final decision where the Commission sets in motion the contentious

procedure. As regards the whole of this period it confers rights on the individual which the national courts are bound to safeguard.

4. While the direct effect of the last sentence of Article 93 compels national courts to apply this provision without it being possible to object on the grounds of rules of national law, whatever they may be, it is for the internal legal system of every Member State to determine the legal procedure leading to this result.

Lecourt Donner Sørensen Monaco Mertens de Wilmars