C-94/87

COMMISSION v GERMANY

OPINION OF MR ADVOCATE GENERAL DARMON delivered on 29 November 1988 *

Mr President, decision and in that case, the defendant Members of the Court, government is out of time and may no longer call the validity of the decision into question during this action. 1 The Court has consistently held that the regularity or the merits of such a decision may not be chal­ 1. The essential question raised in this case lenged during legal proceedings instituted is to what extent the obligation to recover under Article 93 (2). However, even in an aid which had been granted by the those circumstances, the Court has allowed national authorities to an undertaking in a government defending an action for breach of the Treaty may be frustrated by failure to fulfil obligations to plead as its the application of a rule of domestic law. In only defence 'that it was absolutely the context of the procedural autonomy impossible for it to implement the decision which the Member States enjoy in the properly'. 2The Court recently stated in its implementation of their Community obli­ judgment of 7 June 1988 Commission v gations, the Government of the Federal Hellenic Republic, that any financial diffi­ Republic of Germany is relying on the culties which might be encountered by the principle of the protection of legitimate recipients of the aid do not constitute such expectations, as it is understood in German an impossibility. 3 However, it should be domestic law, to justify the failure to noted that in that case the Commission implement the Commission's decision which required only the cessation of the aid and ordered it to recover the aid granted to an not its recovery. 4 undertaking producing primary aluminium.

grounds of its legitimate expectation that Community law and to the implementation the aid had been properly granted, or an by the national authorities of obligations action seeking redress for any damage imposed by Community law. But this suffered because of the conduct of the auth­ procedural autonomy is not absolute. It is orities in improperly granting aid which had limited by certain essential mandatory rules exposed it to the risk of an order for its of the Community legal system. repayment. It would then be for the national court to decide, in the light of the principles of Community law and the Court's case-law and, if necessary, a preliminary ruling by the Court, to assess whether the application 7. These mandatory rules, which are of such a principle of domestic law was capable of modifying or even excluding the compatible with the requirements of application of rules of domestic law, include Community law in the circumstances of the the requirement that the exercise of a right case. or the implementation of an obligation flowing from Community law, in this case the obligation to recover sums improperly paid, should not be made virtually impossible. 4. It would be somewhat remarkable to free a government from its obligation to implement a decision which is 'binding in its entirety upon those to whom it is addressed' 5on the grounds of the need to 8. The principle of domestic law concerning protect the legitimate expectations of the the protection of legitimate expectations person who must comply with the ensuing relied on by the defendant government also national decision. forms part of the Community legal order, but its meaning is not necessarily identical. In this case the reference to national procedural law is the reason for Germany's reliance on the principle of protection of legitimate expectations. It must therefore be 5. If the German argument were to be examined to what extent this principle, as regarded as 'a valid excuse', the only formulated in German law, may frustrate question to be dealt with would be whether the obligation to recover the aid in question. the German Government's obligation to recover the aid in question may run counter to the protection due to any legitimate expectation of the recipient undertaking. 9. Two judgments of the Court appear to me particularly relevant in this respect. In the first place, the Court stated in the Ferwerda judgment that 6. With the appropriate prudence and taking the necessary caution in its formu­ lation, the Court recognizes that, as Community law stands and in the absence of Community rules on the matter, national 'in proceedings concerning the recovery by law is applicable to legal actions involving the authorities of the Member States of sums paid in error as export refunds to 5 — Article189 of the EEC Treaty. traders',

Community law does not preclude 'This applies particularly to grounds for excluding recovery where these are related to the administration's own conduct and it 'the application ... of a principle of legal can therefore prevent them from certainty based on national law whereby occurring'. 9 financial benefits granted in error by the public authorities may not be recovered if the error committed was not due to incorrect information supplied by the 10. However, it should be noted that the 10 beneficiary or if such error, despite the fact San Giorgio judgment, albeit delivered in that the information supplied was incorrect a different context and with regard to a though provided in good faith, could easily particular rule of evidence of national law, have been avoided'. 6 adds a major rider which, to my mind, is of general application. The mandatory rule that national law may not make virtually impossible the exercise of a right flowing Secondly, in the Deutsche Milchkontor 7 from a Community rule takes precedence judgment, on which the German over the requirement that there should be Government places particular reliance, the no discrimination between action based on Court reiterated that the failure to observe Community provisions and actions based exclusively on provisions of domestic law. 'the principles of the protection of legitimate expectation and assurance of legal certainty are part of the legal order of the Community', 11. As far as the Ferwerda and Milchkontor judgments are concerned, it should be noted at the outset that those two cases concerned and stated that Community funds paid in error and not, as in this case, a national aid subject to the obligation of prior notification. It should 'the fact that national legislation provides also be noted that those two judgments for the same principles to be observed in a were handed down in the context of matter such as the recovery of unduly paid reference for a preliminary ruling Community aids cannot, therefore, be concerning applications to recover the considered contrary to that same legal amounts unduly paid. Those circumstances order'. 8 may have a bearing on the approach which it is appropriate to adopt. It should also be noted that in the Milchkontor case the German Government had argued that The Court concluded that, in principle, if domestic law was not applicable in a case the same rules are applied in the recovery of involving repayment of Community funds unduly paid Community or national aids, where there was an unlimited duty to they cannot be considered to be contrary to, repay." Finally, it should be pointed out or to undermine, Community law, adding that the Court declared in the Ferwerda that: judgment that 6 — Judgment of 5 March 1980 in Case 265/78 (1980) ECR 617. paragraph 21 of the decision 9 — Paragraph 31 of the decision. 7 — Judgment of 21 September 1983 in Joined Cases 205 to 10 — Judgment of 9 November 1983 in Case 199/82 [1983] 215/82 [1983] ECR 2633 ECR 3595 8 — Paragraph 30 of the decision 11 — At p 2656

'no consideration whatever which under one Did the Court not declare, when for the of the legal systems of the Member States is first time, in the context of an action based or may be based on a principle of legal on Article 93 (2), the Commission requested certainty can in all cases constitute a interim measures under Article 186 of the defence against a claim for the recovery of Treaty, that Community financial benefits wrongly granted. It must in each case be considered whether such application does not jeopardize the very basis of the rule 'disregard of the provisions of the final providing for such recovery and whether it sentence of Article 93, which is the means does not result in practice in frustrating of safeguarding the machinery for review 1 such recovery'. 2 laid down by that article, interferes with the proper operation of that machinery to such an extent as to be capable by itself of giving 13 rise to the application of Article 186'? 12. That is, it seems to me, a statement of fundamental importance. Certainly one can consider the individual case of Alean, the 15. Furthermore, in a series of judgments recipient of the disputed aid, to determine given on 11 December 1973 the Court whether, for reasons particular to it, it recognised that the obligation of prior noti­ should have made certain that the 1 fication had direct effect. 4Finally, it should Community procedure concerning State aids be recalled that in the judgment in the case had been followed before using the aid in of Commission v Federal Republic of question. It is significant to note, as the Germany concerning aid for the redevel­ Commission stated without being contra­ 15 opment of mining regions the Court dicted, that Alean is well aware of the stated that Community provisions regarding aids since it has, on a number of occasions, lodged complaints concerning aids granted to its competitors. 'the Commission is competent, when it has found that aid is incompatible with the common market, to decide that the State 16 concerned must abolish or alter it' 13. However, I suggest that the Court should not examine the individual situation of the recipient of the State aid granted in breach of the rules of the Treaty but rather and that should adopt an overall approach.

requirements of the Treaty are observed to in its recent reports on competition policy. determine the extent to which the obligation In its Fifteenth Report the Commission of the Member State concerned may be stated that 'it has instructed its services specified in the reasoned opinions or automatically to open the Article 93(2) decisions delivered under Articles 169 and procedure in cases where the Member State 93 (2) respectively and in applications does not reply to a request for notification 7 addressed to the Court'. 1 within a limited time' and that 'it is examining whether non-notified aids which have been paid out, or aids paid before the Commission has taken its final decision on them and which are therefore illegal on procedural grounds irrespective of whether 16. In a further development of its or not on examination they are found to be case-law, the Court declared in the Deufil 18 compatible with the common market, judgment, with respect to this 'specifi­ should automatically be subject to a demand cation' : 21 for reimbursement'. In its Sixteenth Report the Commission explains that it has 'continued its policy of systematically ordering the recovery of aid granted illegally by Member States and found to be 'According to Article 93 (2), the incompatible with the common market and Commission is to decide that the State reaffirmed its intention of gradually concerned is to abolish or alter the aid if it applying the same principle also to aid that finds that it is not compatible with the is illegal only for procedural reasons, i. e. common market. Where, contrary to the disregard by Member States of the obli­ provisions of Article 93 (3), the proposed gation to give prior notification of aid 22 aid has already been granted, that decision proposals'. This policy has been regularly may take the form of an order to the followed, as the Seventeenth Report of the 9 national authorities to recover the aid'. 1 Commission on Competition Policy demon­ 23 strates.

19. I would therefore propose that the Court should

(1) declare that, by not implementing the Commission decision of 14 December 1985 (86/60/EEC) on the aid which the Land of Rheinland-Pfalz has provided to an undertaking producing primary aluminium, the Federal Republic of Germany has failed to fulfil its obligations under the EEC Treaty;

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