C-5/89

Mr President, one-year time-limit for the revocation of Members of the Court, administrative measures, provided for in Paragraph 48(4) of the Verwaltungsver­ fahrensgesetz (Law on Administrative Procedure) of the Land of Baden- 1. It would be vain to seek any new feature Württemberg, has expired. differentiating this action brought against the Federal Republic of Germany by the Commission under the second subparagraph of Article 93(2) of the EEC Treaty from the 4. I will say at the outset that, whilst the previous case of Commission v Germany reasoning in the abovementioned judgment (hereinafter referred to as 'the Alean case'), of 2 February 1989 should lead the Court in which the Court gave its judgment on 2 without difficulty to find that Germany has February 1989. 1 failed to fulfil its obligations, I feel that it is also desirable that the Court should, when considering the submissions of the German Government, seize the opportunity 2 2. By a decision of 17 November 1987, presented by this case to clarify the rules the Commission found that aid of DM governing recovery of State aids and 2 million granted in 1985 by the Land of provide judicial endorsement of the efforts Baden-Württemberg to the undertaking of the Community authorities to ensure that BUG-Alutechnik GmbH was illegal on the the relevant provisions of the Treaty are grounds that it had not been notified and effective. was incompatible with the common market. The German Government did not contest that decision but, once it had been adopted, criticized it in a note sent to the 5. With regard to the failure to fulfil obli­ Commission claiming, inter alia, that the gations itself, the Federal Republic of value of the aid was in fact negative because Germany had already, in the Alean case, put it was granted in replacement of a guarantee forward the protection of legitimate expec­ of DM 7 million. Moreover, the German tations as a defence against the action Government claimed, recovery of the aid brought by the Commission as a result of a was barred by the principle of the protection failure to implement a decision concerning of legitimate expectations. aid which had not been notified and which was incompatible with the common market.

obligations is that implementation was abso­ German Government makes no claim that it lutely impossible, it found that the has taken any steps whatever to recover the defendant Government had aid from BUG-Alutechnik or proposed to the Commission any means of implementing the decision in such a way as to overcome 'merely informed the Commission of the the legal hurdles allegedly standing in the political and legal difficulties involved in way of implementation. In my view, implementing the decision, without taking therefore, this is a clear case of a failure to any step whatsoever to recover the aid from fulfil obligations. the undertaking in question and without proposing to the Commission any arrangements for implementing the decision which would have enabled those difficulties 10. However, as I have stated, I do feel that to be overcome'. 4 the Court should adopt a clear stance on the submissions based on legitimate expec­ tations and national procedural rules. 7. The Court had earlier pointed out that, if a Member State encounters unforeseen and unforeseeable difficulties in implementing a decision, it may submit them to the 11. The German Government, relying on Commission, together with proposals for an obiter dictum in the judgment in the suitable amendments to the decision, and Alcan case, 6claims that the Court meant that in such cases the duty of cooperation that it was for the national authorities to underlying, in particular, Article 5 of the determine the weight to be given to 'the Treaty requires the Member States and the interests of the Community' when a Community institutions to work together in recipient undertaking invokes the principle good faith with a view to overcoming diffi­ of the protection of legitimate expec­ culties whilst fully observing the Treaty tations. 7 It also stresses 8 that the Court provisions, and in particular the provisions expressly referred in that paragraph to the on aid. judgment in Deutsche Milchkontor v Germany. 9It will be remembered that that judgment recognizes that, subject to certain 8. The Court concluded: conditions, national legislation providing for the protection of legitimate expectations in a field such as the recovery of unduly-paid 'In those circumstances, without its being Community aid is compatible with the necessary to consider the German Treaty. Government's arguments concerning the applicability of national procedural rules to the recovery of the aids, it must be declared that the German Government has no basis for claiming that it was absolutely 12. One of the Commission's arguments, impossible to implement the Commission's which might be termed a 'preliminary' decision.' 5 argument, must, in my view, first be 10 rejected. The Commission points out that

the Deutsche Milchkontor judgment did not concludes that the decision adopted by the concern the law governing State aid and Commission pursuant to Article 93(2) of the that the relevant provision of Community EEC Treaty cannot be binding. law in that case 11expressly referred back to national law with regard to the recovery of unduly paid Community aid. I cannot concur with that view. It would not appear 15. That point of view cannot be accepted. that the difference in the nature of the aid, In its judgment in the Deutsche Milchkontor whether Community or national, should case, the Court made the point that lead to the application of separate sets of rules to the recovery of unduly paid amounts; indeed, the Court's case-law on the subject draws no such distinction. 12 'the principles of the protection of legitimate Moreover, it seems that, by referring expectations and assurance of legal certainty expressly to the Deutsche Milchkontor are part of the legal order of the judgment, the Court's judgment in the Community' Alean case, cited above, meant that the principle of the protection of legitimate expectations, which forms part of the legal and concluded: order of the Community, must be taken into consideration in the context of actions for the recovery of State aids. 'The fact that national legislation provides for the same principles to be observed in a 13. Therefore, although it is undeniable in matter such as the recovery of unduly-paid my view that it must be possible to take Community aids cannot, therefore, be legitimate expectations into consideration, considered contrary to that same legal 4 the crux of the problem seems to me to be order'. 1 twofold: the identity of the authority which is to weigh up those expectations against the interests of the Community, and the circum­ stances in which a recipient undertaking 16. Legitimate expectations recognized may successfully rely on such a principle. under national law may thus be relied upon only in so far as their protection is in agreement with a principle which is part of the legal order of the 14. On the first point, the German Community — provided, according to the Government maintains that, since a same judgment, that the interests of the provision of national law is involved, only Community 15 and the need to preserve the the national authorities are competent to scope and effectiveness of Community law 16 3 interpret and apply that provision. 1 It are taken into consideration.

tional circumstances, which is apparently under a duty to verify whether prior notifi­ not the case here, if the Commission's cation of that aid had been given to the decision has not been contested only the Commission. That opinion is in line with the undertaking which received the incom­ Commission's efforts to ensure that patible aid may rely, where appropriate, on Community law is observed in the field of the principle of the protection of legitimate State aid, as may be seen from its 1983 20 expectations as a defence against recovery Communication which, inter alia, informs proceedings brought by the State concerned. 'potential recipients of State aid of the risk It is then for the national court hearing the attaching to any aid granted them illegally, case to assess the relevancy of such a in that any recipient of an aid granted defence in the light of the rules which illegally, i. e. without the Commission emerge from the judgment in Deutsche having reached a final decision, may have to Milchkontor and, if necessary, refer a refund the aid'. That risk attaching to any preliminary question to this Court. In aid granted without notification has, principle, however, it cannot be acceptable moreover, been recognized by the Court in 21 for the Member State to which the two recent judgments of 14 February and 22 Commission's decision is addressed to be 21 March 1990, in which the Court held able, on its own initiative and after having that refrained from contesting the decision, to refuse to implement it by relying on provisions of its own national law. That would seriously jeopardize the binding effect of decisions adopted by the Commission on the basis of Article 93(2) 'when it finds that an aid has been granted and thereby considerably detract from the or modified without notification, the effectiveness of the rules governing aid. 17 Commission has the power, once it has given the Member State concerned the opportunity to submit its observations, to adopt an interim decision requiring that 18. My interpretation seems, moreover, to State to suspend immediately the payment be supported by the Court's established of the aid pending the result of the inquiry 18 case-law in the field of aid, which holds, concerning it'. 23

23. Moreover, since the Court's recent 29 ruling in the Boussac case, an undertaking in receipt of unnotified aid, although it may 21. In that regard, I should like to recall the be required by the State concerned to figures given by the Commission at the refund the aid, can be certain that the Hearing showing the increase in the total Commission will carry out a thorough amount of aids not notified by Member examination as to whether it is compatible States which the Commission required them with the common market within the to withdraw: ECU 5 million in 1985, meaning of Article 92(2) of the Treaty. ECU 11 million in 1986 and ECU 747 million in 1987.» That expo­ nential growth curve demonstrates the importance of the legal issue in the present 24. I do not, therefore, consider it excessive case. The time has thus come for the Court to assume, in the absence of evidence to the to spell out, so to speak, the 'rules of the contrary, that an undertaking which has not game' with regard to State aid. I verified whether aid was notified is not unreservedly support, of course, the entitled to rely on legitimate expectations. principle of the protection of legitimate expectations, but the need to reconcile that principle with the Community rules on the supervision of State aid should be formally 25. Traders in receipt of State aids are reaffirmed, together with precise details of professionals who have a duty to take the way in which they are to be care — a duty to which Paragraph 48 of the 30 implemented. German Law in question explicitly refers. The obligation under which they are placed to verify that prior notification of the aid granted to them has been given to the Commission does not appear to me to be 22. It must be borne in mind, first, that an either excessive or particularly difficult to undertaking in receipt of aid is already fulfil. entitled, as a person to whom the decision is of direct and individual concern, to bring proceedings seeking a declaration that the 26. However, both the principle of the Commission's decision requiring recovery of protection of legitimate expectations itself 26 the aid is void. The Court, if the matter and the jurisdiction of the national courts to were brought before it, would inevitably determine such matters must be preserved, consider the decision in the light of the need and allowance must therefore be made for to respect fundamental rights in so far as cases in which the fundamental rights of an 27 they have consistently been held to form undertaking, although it has not verified part of the legal order of the Community whether the aid had been notified, are such and in particular the duty to protect that it should none the less be accorded the benefit of the protection of legitimate 25 — These arc the figures given by Sir Leon Brittan in his answer to Written Question No 181/88 (OJ 1989 C 151, 28 — Judgment in Case 310/85 [1987] ECR 901, paragraphs 20 P 9). to 25. 26 — Second paragraph of Article 173 of the EEC Treaty. 29 — Case C-301/87 France Commission, cited above 27 — See, for example, the judgment in Case 149/77 Defrenne v Sabena [WZ] ECV. 1365. 30 — See p. 5 of the Defence.

28. In its Defence, the German Government first stated that the one-year period had in any event already expired when the 30. However, according to its Defence, the Commission adopted its decision in this case German Government is relying on the because it had started to run when the expiry of a period starting to run on the competent authority of the Land of Baden- date on which the national authorities Württemberg granted the aid in question, became aware of the grounds for the with­ 33 that is to say in 1985. Then, in the drawal of the measure. To accept that a Rejoinder, more complex theoretical State may rely on such a time-limit with considerations were laid before the Court: it regard to the recovery of aid would was said that the period in question started obviously ruin any prospect of making such

31 — See, for example, in the Deufil judgment, cited above, the 34 — Rejoinder, p. 8. discussion as to the nature of the aids for the purposes of 35 — See, for example, the judgments in Case 199/82 Amminis- Article 92(1). trazione delle finanze dello Stato v San Giorgio [1983] ECR 32 — Paragraph 48(4) of the Verwaltungsverfahrensgesetz, 3595 and in Case 309/85 Barra v Belgium [1988] ECR 355. quoted by the German Government in its Defence, p. 6. 36 — Case C-142/87, cited above. 33 — Defence, p. 9. 37 — Paragraph 61, emphasis added.

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COMMISSION v GERMANY

concerned. It requires that State to effect the recovery of the aid — by using the procedures of national law, it is true, but without being able to rely on those procedures in order to place itself in a 32. Obviously, if the German authorities position in which recovery is in any event negligently fail to comply with that time- impossible. limit, the national court must consider whether it should not refuse to apply the time-limit in accordance with the Court's established case-law, recently reaffirmed in its judgment of 21 March 1990, if its application would mean that the recovery required by Community law is rendered

38 — Case 52/84, cued above, paragraph 11. 39 — Paragraph 61

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OPINION OF MR DARMON — CASE C-5/89

34. I therefore propose that the Court should declare that, by failing to comply with Commission Decision 88/174/EEC of 17 November 1987 concerning aid which the Land of Baden-Württemberg has provided to BUG-Alutechnik GmbH, an undertaking producing semi-finished and finished aluminium products, the Federal Republic of Germany has failed to fulfil its obligations under the first subparagraph of Article 93(2) and the fourth paragraph of Article 189 of the EEC Treaty. I therefore propose that the Federal Republic of Germany should be ordered to pay the costs.

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