C-210/98

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on further limited exceptions to Article 4(c) in order to cover the period remaining until of the Treaty. the expiry of the Treaty. 6

4. The Commission therefore adopted sev- 7. Under Article 1(1) of the fifth Code eral successive general Decisions (so-called '[a]id to the steel industry ... may be Steel Aid Codes) establishing rules author- deemed Community aid and therefore ising the grant of aid to the steel industry in compatible with the orderly functioning of certain cases expressly provided for. the common market only if it satisfies the provisions of Articles 2 to 5'.

5. The rules relevant to the present pro- ceedings are to be found in the fifth Code. 3 8. Article 5 provides with regard to invest- Its legal basis is Article 95 of the Treaty ment aid for undertakings located in the which in all cases not provided for in the territory of the former German Democratic Treaty allows for the taking of decisions Republic: necessary to attain one of the objectives set out in Articles 2, 3 and 4 of the Treaty. As required by Article 95, the Commission adopted the Code after consulting the Consultative Committee and with the unanimous assent of the Council. 'Aid granted to steel undertakings for investment under general regional aid schemes may until 31 December 1994 be deemed compatible with the common mar- ket, provided that the aided undertaking:

6. According to Article 9 of the fifth Code its rules were to enter into force on 1 January 1992 and to apply until 31 December 1996. The fifth Code replaced the fourth Code 4which expired on 31 December 1991. The currently applicable scheme is contained in the sixth Code 5which entered into force on 1 Jan- uary 1997 and will expire on 22 July 2002

the overall production capacity of that given case is incompatible with the provi- territory.' sions of this Decision, it shall inform the Member State concerned of its decision. The Commission shall take such a decision not later than three months after receiving the information needed to assess the pro- posed aid. Article 88 of the Treaty shall 9. Article 6 contains procedural rules: apply in the event of a Member State's failing to comply with that decision. The planned measures falling within paragraph 1 or 2 may be put into effect only with the approval of and subject to any conditions laid down by the Commission. ' 1 . The Commission shall be informed, in sufficient time to enable it to submit its comments, of any plans to grant or alter aid of the types referred to in Articles 2 to 5. ... The notifications of aid plans required by the Article must be lodged with the Com- mission at the latest by 30 June 1994 as regards aid covered by Article 5 and 30 June 1996 as regards all other aid. 5. If the Commission fails to initiate the procedure provided for in paragraph 4 or otherwise to make its position known within two months of receiving notification of a proposal, the planned measures may be put into effect provided that the Member State first informs the Commission of its intention to do so. Where the Commission seeks the views of Member States under the provisions of paragraph 3, the abovemen- tioned time period shall be three months. 3. The Commission shall seek the views of the Member States on plans ... for regional investment aid when the amount of the aided investment ... is in excess of ECU 10 million, and on other major aid proposals notified to it before adopting a position on them. ...

11. Walzwerk Ilsenburg GmbH (herein- after 'Ilsenburg') was formerly a State- owned steel mill established in Saxony- Anhalt in the former German Democratic Republic. 16. The aid was part of two general regional aid schemes approved by the Commission in accordance with the rele- vant provisions of the EC and ECSC Treaties, namely the Rahmenplan der Gemeinschaftsaufgabe Förderung der 12. In 1992 it was acquired by Preussag regionalen Wirtschaftsstruktur (Frame- Stahl AG (hereinafter 'Preussag Stahl') as a work programme for the common task of legally independent subsidiary. improvement of regional economic struc-

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tures) and the Investitionszulagengesetz tion of the planned aid, provided that the (Law on special fiscal concessions as institution was still in a position to adopt a regards investments) respectively. decision before the end of 1994. However, as proposed aid No 777/94 had only been notified on 25 November 1994, that is to say, just 17 working days before the Commission's last meeting in 1994, it considered that, even by expediting the procedure as much as possible, it would be unable to give a decision before the end of the year, since the views of the Member 17. By fax dated 24 November 1994 the States had to be sought because of the level German Government notified the planned of the proposed investments. aid to the Commission; it was registered the following day by the Commission as pro- posed aid No 777/94.

20. By letter dated 13 December 1994 the Federal Government informed the Com- 18. The fax referred expressly to the noti- mission that it would not withdraw the fication, on 10 May 1994, of another notification of proposed aid No 777/94. p r o p o s a l f o r i n v e s t m e n t a i d of DEM 11 800 000 to the Ilsenburg mill for the reconversion of energy sources and the improvement of environmental protection (hereinafter 'proposed aid No 308/94')

My colleague Karel van Miert and I share your view as to the urgency of adopting a 25. By letter of 1 February 1995 to the decision on the aid to undertakings situated Federal Government, the Commission con- in the new German Lander so that their firmed that certain planned regional aids, economic development is not hindered by including proposed aid No 308/94, were excessively long administrative procedures. compatible with Article 5 of the Code.

For that reason I am pleased to be able to inform you that the European Commission 26. On 15 February 1995 the Commission today approved the aid to the Ilsenburg decided to open the examination procedure mill, pursuant to your request. I wish your pursuant to Article 6(4) of the Code with undertaking every success. regard to proposed aid No 777/94. That decision was notified to the German autho- rities by letter dated 10 March 1995, subsequently reproduced in a notice pub- lished in the Official journal of the Eur- opean Communities. 7

Yours sincerely, Signed: Martin Bangemann.' 7 — OJ 1995 C 289, p. 11.

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27. In the letter the Commission pointed that the investment subsidy and the special out that the extremely late notification of fiscal concession constituted State aid the planned aid had made it impossible to incompatible with the common market give a decision on its compatibility before according to Article 1(1) of the Code and 31 December 1994 and that, after that prohibited by Article 4(c) of the Treaty. date, it was no longer competent to adopt Furthermore, it ordered them to be repaid. a decision according to the wording of Article 5 of the Code itself. In addition, the Commission invited other Member States and interested parties to submit their com- ments on proposed aid No 777/94 within one month of the date of publication of the notice.

Procedure before the Court of First adopt a decision before 31 December 1994. Instance and the judgment under appeal The procedural rules of the Code were designed to give the Commission a period of six months in order to decide on the compatibility of the aid. In any event under 33. By application lodged at the Court of Article 6(5) of the Code the Commission First Instance on 15 August 1996, Preussag disposed of a period of three months to Stahl brought an action for the annulment take a preliminary view. There was further- of the contested decision. The Federal more no proof of manifest negligence on Republic of Germany intervened in support the Commission's part. In paragraph 67 the of Preussag. Court of First Instance held that the other aids to which the applicant had referred were either notified earlier than the aid at issue or did not require consultation of the Member States.

34. In the judgment under appeal 9 the Court of First Instance dismissed the appli- cation, rejecting the seven pleas in law advanced by the applicant. The reasons it gave may be summarised as follows.

37. In its first and third pleas the applicant had argued that nothing prevented the Commission from deciding after 35. As regards the Commission's attitude 31 December 1994 that regional invest- between the notification of the aid and ment aids referred to in Article 5 of the 31 December 1994, the applicant had Code were compatible with the common argued in its second and fourth pleas that market provided that the material condi- the aid obviously satisfied the Code's tions for their approval were satisfied. substantive criteria. Therefore, six weeks were sufficient for the Commission to take a positive decision. In its view, it had also been a victim of discrimination in that the Commission had authorised similar aids equally notified too late.

45. In support of its appeal Salzgitter advances six pleas in law. It contends that the Court of First Instance

40. The Court of First Instance held in paragraphs 77 to 86 that owing to the circumstances of the case the letter of 21 December could not lead Preussag to (1) erred in law in deciding that after entertain legitimate expectations. 31 December 1994 the Commission could no longer adopt decisions on the compatibility of the category of aid at issue;

41. The Court of First Instance also dis- missed the applicant's sixth and seventh (2) erred in law in deciding that the pleas alleging respectively an infringement Commission was not required to adopt of Article 6(5) of the Code and breach of a decision on the compatibility of aid the duty to state reasons. No 777/94 before 31 December 1994;

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47. Since the Commission's first objection is made in respect of all six pleas in law, it is appropriate to discuss it at this stage of the analysis. (5) infringed the principle of protection of legitimate expectations in deciding that the letter by Commissioner Bangemann could not have led Preussag to enter- tain legitimate expectations as to the approval of the aid; and 48. The Commission relies on judgments in which the Court has held that an appeal is inadmissible where it '... confines itself to repeating or reproducing word for word the pleas in law and arguments previously submitted to the Court of First Instance, including those based on facts expressly rejected by that Court; in reality, such an (6) infringed the duty to state reasons in appeal amounts to no more than a request deciding that the Commission's reason- for a re-examination of the application ing was sufficient. submitted to the Court of First Instance, a

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matter which falls outside the jurisdiction requirement is that the appeal must clearly of the Court ...'. 10 state which aspects of the contested judg- ment are criticised and the legal arguments which specifically support the appeal.

10 — Case C-87/9S P CNPAAP v Council [1996] I - 2 0 0 3 , paragraph 30 of the order; Case C-338/93 P De Hoe v Commission [1994] ECR I-819, paragraph 19. 52. For the category of aid in question 11 — See Article 51 of the ECSC Statute, Article 112(1)(c) of the Rules of Procedure, Case C-244/92 P Kupka-Floridi v three dates in the fifth Code are of parti- Economic and Social Committee [1993] ECR I-2041, cular relevance. paragraph 9 of the order, and Case C-49/96 P Progoulis v Commission [1996] ECR I-6803, paragraph 24. 12 — See Articles 49(1) and 54(1) of the ECSC Statute. 13 — Case C-386/96 P Dreyfus v Commission [1998] ECR I-2309, paragraph 38 of the judgment; Case C-391/96 P Compagnie Continentale (France) v Commission [1998] ECR I-2377, paragraph 36; Case C-403/96 P Glencore Grain v Commission [1998] ECR I-2405, paragraph 38; Case C-404/96 P Glencore Grain v Commission [1998] 53. The third sentence of Article 6(1) ECR I-2435, paragraph 36. See also my Opinion in Case establishes a notification time-limit. Noti- C-154/99 P Politi v European Training Foundation, deliv- ered on 24 February 2000, paragraphs 29 to 3 1 . fications of aid plans falling under by

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Article 5 'must be lodged with the Com- 58. As to the nature of the notification mission at the latest by 30 June 1994'. time-limit contained in Article 6(1), none of the parties seems to attach great signifi- cance to the fact that Germany notified the planned aid only on 25 November 1994 and thus about five months after the expiry of the time-limit in question. 54. The second subparagraph of Arti- cle 1(3) contains payment time-limits. Aid falling under Article 5 must be paid before 31 December 1994 with the exception of special fiscal concessions (Investitionszula- gen), which may be paid up to 31 Decem- ber 1995.

56. The arguments of the parties before the Court of First Instance and on appeal have essentially focused on the nature of the third date, contained in Article 5, and particularly on the question whether or not the Commission continued after 31 December 1994 to be competent to decide on the compatibility of investment 60. The Commission explicitly adopted the aids for steel undertakings located in the same position in its letter of 1 December territory of the former German Democratic 199414where it stated that the notification Republic. time-limit in Article 6(1) of the fifth Code was not preclusive but merely administra- tive. Its only function was to permit the Commission to deal with notified aid plans in time before the end of the year. There- fore, notification after the expiry of the 57. By contrast, the parties agree that the payment time-limits contained in Arti- cle 1(3) are of a strict nature. 14 — See paragraph 19 above.

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time-limit was not as such an obstacle to 63. The absence of any discussion of the approval as long as the Commission had nature of the notification time-limit is sufficient time to examine and to take a somewhat surprising since the Court of decision on the planned aid before the end Justice held in Germany v Commission 17 of the year. that the corresponding notification time- limits contained in the Second Steel Aid Code 18 were mandatory. It is also apparent from the pleadings before the Court of First Instance that the parties referred to the case-law in question.

61. Before the Court of First Instance the Commission adopted a more guarded posi- tion on the interpretation of Article 6(1) of the Code. The judgment under appeal summarises that position as follows: 64. When organising the oral procedure on the present appeal the Court therefore invited the parties to address the issue of the relevant part of the judgment in Ger- many v Commission.

62. The judgment under appeal does not deal explicitly with the nature of the 66. The Commission, first, repeated its notification time-limit. The reasoning of guarded position on the nature of the the Court of First Instance on the nature of notification time-limit. Then it stated that the Commission's obligations in respect of it was not so much the expiry of the belatedly notified aid presupposes, how- notification time-limit but the expiry of ever, that the Commission had the right to the time-limit for a Commission decision authorise such aid and was not precluded from doing so by Germany's failure to respect the notification time-limit. 16 1 7— Case 214/83 [1985] ECR 3053, paragraphs 45 to 47 of the judgment. 18 — Commission Decision No 2320/81/ECSC of 7 August 1981 establishing Community rules for aids to the steel industry, OJ 1981 I. 228, p. 14. 15 — See paragraph 50 of the judgment under appeal. 19 — See tor a more detailed account paragraph 80 et seq, 16 — See i n particular paragraphs 52 to 60 ot the judgment. below.

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which had made the approval of the aid It is true that the Commission has adopted impossible. Consequently, the nature of the decisions in cases that had been notified notification time-limit was not relevant for after 30 June 1994, but only where it was the outcome of the case. possible to take them before 31 December 1994. ...

67. I do not agree with the Commission. In [In the present case t]he time between my view, the nature of the notification 25 November 1994 (the date of receipt of time-limit is decisive for the correct solu- the notification) and 21 December 1994 tion of the case. I consider that if the (the Commission's last session before notification time-limit in Article 6(1) of the 31 December 1994) ... was not sufficient ... fifth Code was indeed mandatory and to take a final decision.'20 preclusive the contested decision was ille- gal.

76. A further reason to examine the nature 72. In the present case, however, the of the notification time-limit is to establish grounds in question are not independent the correct basis for the decision (in view of of each other. possible further proceedings). If the Com- mission's decision is annulled on the ground that the notification time-limit was mandatory there would be no basis for the Commission to approve the aid. If however the decision were to be annulled on another ground, it might be possible for 73. Instead of relying on belated notifica- the Commission to take a new decision tion, the Commission based the contested approving the aid. decision on two other elements. The Com- mission concludes, first, that owing to lack of time it was not obliged to approve the aid before 31 December 1994. Secondly, after that date the Commission was no longer competent to approve the aid. 21 77. Consequently, before addressing the six pleas of the appellant, I will deal with the preliminary issue of the notification time- limit.

74. Whilst the second element has no direct connection with the notification time-limit, 78. Two questions arise. the first element presupposes that the Commission had the right to approve aid notified after 30 June 1994 and thus that the time-limit was not preclusive. Conse- quently, the decision is based on reasoning ( 1 ) Since none of the parties has sought to address the issue of the nature of the 21 — Sec sections II and III and the conclusion i n section IV of notification time-limit, may the Court the contested decision. in appeal proceedings raise the issue of

82. However, the formula quoted must, 80. Invited to state at the hearing their first, be seen in the light of the special viewpoint on the relevance of Germany v circumstances of the case. Preclusion by the Commission, Salzgitter and the German time-limit would have had 'the effect of Government advanced three arguments depriving a Member State of the payment why, in their view, the time-limit in Arti- of financial aid its application for which cle 6(1) of the fifth Code is not mandatory. ha[d] been approved and on the basis of First, they claim that under the general which it ha[d] already incurred consider- principles of administrative law notifica- able expenditure . . . ' . 23 tion time-limits are mandatory only if this is clearly expressed, which is not the case with regard to Article 6(1) of the fifth 22 — Case 44/81 Germany v Commission [1982] ECR 1855, Code. Secondly, the Court's judgment in paragraph 16 of the judgment. Germany v Commission is not relevant for 23 — Ibidem.

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approval of which is — due to its charac- — seek the views of the Member States ter — entirely exceptional. 27 under Article 6(3) (this involves trans- lations),

88. Three important objectives of the Code — initiate a procedure under Article 6(4) with regard to regional investment aid 28 by giving notice to the interested par- are its early phasing out within three ties concerned to submit their com- years, 29 an efficient control by the Com- ments (publication in the Official Jour- mission, 30 and preliminary consultation of nal and further translations might be other Member States on important invest- necessary), and ment aid projects. 31

— after receiving those comments and assessing the case take, as a collegiate 89. In my view, the attainment of those body, a final decision which, if positive, three objectives could be gravely endan- must allow the Member State con- gered by considering the time-limit for cerned to grant the aid before the notification to be merely a guideline. The payment time-limit expires. six months between the notification time- limit of 30 June 1994 and the payment time-limit of 31 December 1994 is a rela- tively short period for the complex approval procedure laid down in Article 6 of the Code. During those six months and 90. In my view, the three objectives men- depending on the circumstances the Com- tioned above are realistically achievable mission might have to only if the Commission has in all cases at least six months between notification and 31 December 1994.

93. Here a further objective of the time- 95. That leads me to the second group of limit in question comes into play. Proce- arguments on the interpretation of Arti- dural time-limits for notification, approval cle 6(1) of the fifth Code, namely argu- and payment of aids were introduced for ments concerning the relevance of the the first time in the second Code 3 2 with the Court's case-law on the notification time- expressly stated purpose of ensuring that all limit in Article 8(1) of the second Code. aids from which the steel industry may benefit are treated uniformly within a single procedural framework. 33 Uniform treatment is, however, equally endangered if the notification deadline is considered to be merely a guideline. The present case is a perfect illustration of the questions which necessarily arise if one takes a lenient approach as regards notification time-lim- its. What are then the limits of that The relevance of the judgment in Germany leniency, who determines those limits and v Commission according to what criteria? Another con- nected problem is the difficulty of guaran- teeing equal treatment. It is therefore not surprising that legal certainty and equal treatment play a prominent role in the Court's case-law on the nature of certain procedural time-limits. 34 96. In that judgment 36 Germany sought the annulment of several Commission deci- sions authorising aid to steel undertakings 32 — Cited in note 18. granted by other Member States. 33 — See the preamble to the second Code, third recital. 34 — See, tor example. Case 42/85 Cockerill-Sambre v Commis- sion [1985] ECR 3749, paragraph 10 of the judgment; Case C-239/97Ireland v Commission [1998] ECR 1-2655, 35 — Cited in note 17. paragraph 7. 36 — Cited in note 17.

97. Article 8(1) of the then applicable sec- If the Council fails to take a unanimous ond Code 37 stated in terms almost identical decision within two months of the Com- to Article 6(1) of the fifth Code that '[t]he mission's request, assent shall be given by Commission shall be informed, in sufficient qualified majority...' time to enable it to submit its comments, of any plans to grant or alter aids as referred to in Articles 3 to 7. Notification pursuant to this Article must be made to the Commission no later than 30 September 1982. ...' 100. Germany had argued inter alia that Article 8(1) of the second Code had neces- sarily been infringed since the total amount of aid authorised in the contested decisions had been higher than the amount of aid notified to the Commission by 30 Septem- ber 1982. 98. The fifth indent of Article 2(1) of the second Code laid down the two other relevant time-limits. Aid granted to the steel industry could be considered compa- tible with the common market provided that it was approved not later than 1 July 101. The Commission had argued that the 1983 and did not lead to aid payments after notification time-limit laid down in Arti- 31 December 1985. cle 8(1) of the second Code constituted a purely procedural time-limit exclusively intended to promote effective action on the part of the Commission and, in parti- cular, to ensure that the latter had sufficient time to consider whether the aid plans were compatible with the common market. The 99. Article 12(1) of the second Code pro- legal significance of the notification date vided as follows: had to be determined in the light of the object of Article 8(1) and of the signifi- cance of that date in relation to the other dates specified in the Code. The decisive time-limit, in its view, was 1 July 1983, the last date on which under Article 2(1) of the second Code aid could be approved. 'If in the light of the market trend and of the level of prices for iron and steel products, the Commission considers it necessary to amend the time-limits laid down in Articles 2 ... and 8(1), it shall seek the unanimous assent of the Council. 102. Advocate General VerLoren van The- maat stated in his Opinion that 'even if the Commission's argument is accepted, 37 — Cited in note 18. namely that the time-limit for notification

'The Commission's argument on this point cannot be accepted. Article 12 of the Second Aids Code expressly provides that the time-limits laid down in Article 8(1) and Articles 2 ... may not be amended by the Commission unless it proves to be necessary to do so in the light of the market 106. For the purposes of the present appeal trend and the level of prices for iron and Salzgitter and the German Government steel and unless the Council gives its argue that the Court relied in Germany v consent. Commission exclusively on Article 12 in the second Code. Since that rule was not retained in subsequent Codes the judgment cannot be authority for the interpretation of other Codes. Moreover, it was in the light of the Court's judgment that the Community legislature did not keep a rule Consequently the Commission was not such as Article 12 in subsequent Codes in entitled to authorise aid if the plans to order for the Commission to be able to grant or alter aid had not been notified to it treat flexibly notifications submitted after by 30 September 1982.' 39 expiry of the time-limit.

38 — See pp. 3075 and 3076. 40 — Case 304/85 Falck v Commission [ 1987] ECR 871, 39 — See paragraphs 46 and 47 of the judgment. paragraphs 16 and 18 of the judgment.

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108. A more serious underlying question is whether the differences between the second and the fifth Code are such as to preclude analogies. 111. The only major difference between the two Codes is the presence in the second Code of Article 12, which does not have an equivalent in subsequent Codes. As already explained, Salzgitter and the German Gov- 109. In that regard, both Codes are in ernment maintain that it was in the light of many respects similar. They are exceptions the Court's reasoning in Germany v Com- to the general prohibition of aids under the mission that the Community legislature did Treaty, have the same legal basis in Arti- not keep a rule such as Article 12 of the cle 95 of the Treaty, use in their respective second Code in the following Codes. Articles 1 the same method, namely the fiction of a system of Community aid, are structured very similarly and, contrary to the first Code, 41 contain procedural rules with a precise timetable. 112. I find that line of argument unconvin- cing. Article 12 of the second Code allowed the Commission to amend the time-limits in Articles 2 and 8(1) if that proved to be necessary in the light of market develop- 110. The wording and purpose of the time- ments and if the Council gave its assent. limits in Article 8(1) of the second Code

42 — See preamble to the second Code, cited in note 18, fifth 41 — Commission Decision No 257/80/ECSC of 1 February recital, and preamble to the fifth Code, cited in note 2, 1980 establishing Community rules for specific aids to eleventh recital. the steel industry, OJ 1980 L 29, p. 5. 43 — Cited in note 4.

117. Finally, there are two arguments drawn from the differences between the respective timetables of the second and the fifth Codes which support my view. 114. According to my understanding of Germany v Commission the Commission was not empowered to amend the notifica- tion time-limit without the assent (whether unanimous or by a qualified majority) of the Council. In my view, the same must apply a fortiori with regard to the fifth 118. On the one hand, under the second Code where the Commission always needs Code the Member States had roughly one the unanimous assent of the Council for any amendment of the time-limits. 45 — Commission Decision No 3484/85/EEC of 27 November 1985, OJ 1985 L 340, p. 1. 46 — Preamble to the third Code, cited in note 45, under II, and 44 — See preamble to the second Code, cited in note 18, fifth preamble to the fourth Code, cited in note 4, under I, recital. paragraphs 1 and 2.

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year between the entry into force of the The Commission's practice and the princi- Code in August 1981 and the expiry of the ple of legitimate expectations time-limit to notify aid plans in September 1982. Under the Fifth Code Germany had roughly two and a half years between its entry into force in January 1992 and the 121. It is common ground that the Com- expiry of the notification time-limit on mission in its practice adopted a lenient 30 June 1994. Delays in notifying are thus attitude and treated the notification time- even less understandable in the context of limit in Article 6(1) of the fifth Code as the fifth Code. merely indicative. Salzgitter and the Ger- man Government claim that it is bound by that practice which in their view created legitimate expectations.

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nity legal acts that an act of general being expressly invited to comment on the application such as the fifth Code cannot issue. implicitly be altered by subsequent indivi- dual decisions based on that same act of general application. 48 Moreover, to accept the contrary argument would allow the Commission to circumvent the require- ments of Article 95 of the Treaty, namely unanimous assent of the Council, in order 126. However, none of the legal questions to obtain amendments of the fifth Code. raised in the appellant's pleas would have arisen if the Commission had respected the mandatory nature of the notification time- limit. I have also argued above that the contested decision is based on the assump- tion that the notification time-limit was merely administrative. 49 The contested decision was thus taken in breach of 124. I accordingly conclude that the noti- Article 6(1) of the fifth Code. fication time-limit for aid to steel under- takings in the former German Democratic Republic in Article 6(1) of the fifth Code is mandatory and preclusive.

127. In that situation of tension between, on the one hand, the reluctance of the parties (and of the Court of First Instance) to address the issue, and, on the other hand, the Court's role as guardian of the rule of law, the question is whether the Court may or must raise the issue of its own motion. Should the Court raise of its own motion the issue of the mandatory nature of the notification time-limit?

132. Finally, the Court clearly attaches importance to the fact that national appeal courts should be able to raise certain points of Community law of their own motion. 56 130. That is, first, because the Court has It would be inconsistent if the Court were the task under Article 31 of the Treaty of to exclude that possibility altogether with ensuring that in the interpretation and regard to its own appeal procedures. application of Community rules the law is observed. The appeal procedure is an important channel through which the Court exercises that function. In other procedures it is settled case-law that the two Community Courts may or even must raise pleas in law involving matters of 133. The question is thus not so much public policy of their own motion. 52 There whether the Court has the power to raise is no reason why at the appeal stage that pleas in law involving matters of public possibility should be excluded altogether. policy of its own motion but whether in the present case the Commission's disregard of the notification time-limit is a matter of public policy.

the parties and the court under the applic- cle 253 EC) and a manifest error of assess- able rules of procedure, on the branch of ment, as follows: the judiciary which is called upon to apply the concept, and on the level at which the proceedings take place.

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its own motion a manifest and grave 141. First, it must be determined whether substantive illegality, for example an infrin- the rule infringed is designed to serve a gement of a fundamental right or of fundamental objective of the Community Article 85 of the EC Treaty (now Arti- legal order and whether it plays a signifi- cle 81 EC), whilst being able to raise of its cant role in the achievement of that objec- own motion infringements of certain pro- tive. cedural rules.

138. I prefer therefore to follow an 142. Secondly, it must be established whe- approach which the Court has adopted in ther the rule infringed was laid down in the other cases, where the Court has raised a interest of third parties or the public in plea of its own motion without looking general and not merely in the interest of the into its theoretical classification. 60 In the persons directly concerned. words of the Court the question is whether it appears to be 'inappropriate to allow doubts as to the legality of [an act] to persist'. 61

143. Thirdly, the breach of the rule should be manifest, meaning that both the Court and third parties can easily detect the 139. Is the Commission's disregard of the breach and identify it as such. Where a preclusive nature of the notification time- breach of Community law is evident the limit a breach sufficiently important to be authority of the rule of law is most raised by the Court of its own motion? endangered. At the same time the Court What are the criteria for deciding the can be more confident of reaching the right question whether or not it is 'inappropriate' result. for the Court 'to allow doubts as to the legality of an act to persist'? Is the pre- clusive nature of the notification time-limit in the present case a matter of 'public policy'? 144. I consider that in the present case those three conditions are fulfilled.

Democratic Republic. Those objectives are 147. Finally, and this is perhaps the most to contribute to the early phasing out of serious element in the present case, the that aid within three years, to allow an Commission's breach of the law was man- efficient control by the Commission, to ifest. The breach was manifest, first, involve other Member States in the deci- because compliance with a time-limit is a sion-making process through preliminary matter easily ascertainable by any inter- consultation on important investment aid ested party. Steps are taken either before or projects and to guarantee uniform treat- after it occurs. There is no room for ment and legal certainty. 62 Ultimately, the intermediate, 'grey' situations. (Those con- scheme is designed to protect competing siderations may also be relevant where the steel undertakings located in Germany and Court raises of its own motion the time- in other Member States against unfair limits for taking proceedings before the competition arising out of unjustifiable Court itself. 65) Secondly, after the judg- investment subsidies in Eastern Germany ments in Germany v Commission and Falck and thus serves to achieve a fundamental it was evident that the Commission could purpose of the Treaty. 63 I have also no longer validly claim that the notification explained why the notification time-limit time-limits in the following steel aid codes plays such an important role within that were merely indicative. It undermines scheme. 64 respect for the rule of law in the Commu- nity legal order if despite two Court judgments to the contrary an institution continues to consider admissible the authorisation of aid notified after the expiry of the relevant time-limit.

151. The views I have reached so far may be summarised as follows. 149. Even if one adopts a restrictive atti- tude as to the issues which can be raised by the Court of its own motion, the issue of the time-limit is one which in my view may and must be raised. 152. The notification time-limit of 30 June 1994 laid down in Article 6(1) of the fifth Code is preclusive. Since the contested decision is partly based on the assumption that the time-limit is merely administrative, 150. First, the issue is limited to a point of the decision infringes Article 6(1) of the law only. All the relevant facts as regards fifth Code. The preclusive nature of the the belated notification of the aid are time-limit is a matter of public policy. established and known to the Court. Sec- Therefore the Court must raise it of its ondly, to raise that new issue will not lead own motion, even if neither the Court of to a judgment ultra petita 66 or to a First Instance nor the parties have prohibited change of the subject-matter of addressed the issue. the proceedings. 67 The mandatory nature of the time-limit will ultimately justify annulment of the contested Commission decision and thus the grant of the relief sought. To raise the issue is therefore to be distinguished from introducing a new claim 153. As a first consequence the judgment of for relief modifying the boundaries of the the Court of First Instance must be set aside dispute as defined by the forms of order because it failed to raise the mandatory sought. Finally, the prohibition on the nature of the notification time-limit of its own motion.

159. In its contested decision of 29 May 1996 the Commission found that the investment subsidy and the special fiscal In the alternative: The Commission's com- concession constituted state aid incompati- petence rattorte temporis to approve aid ble with the common market and prohib- ited under the Treaty and the Code, and ordered them to be repaid.

156. I will nevertheless consider in the alternative the pleas advanced by the appellant. 6 9 160. The Commission argued, first, that owing to the nature of the products and the location of the undertaking concerned, 69 — Sec paragraph 45 above. Article 4(c) of the Treaty and Article 5 of

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the fifth Code were in principle applicable. date, the State aid notified is incompatible Then the Commission held as follows: with the common market according to Article 1(1) of the [fifth Code] and prohib- ited by Article 4(c) of the ECSC Treaty.

'However, Article 5 of the [fifth Code] shows clearly that the Commission only The aid in question has already been paid. has the authority to declare regional invest- Since it is incompatible with the common ment aid compatible with the common market and prohibited by the ECSC Treaty, market for steel before 31 December 1994; it has to be recovered ...' it follows that it has no such authority after 31 December 1994.

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takings in the five new Länder compatible that any ... plan is not compatible ...' Simi- with the common market for steel. larly, in Article 5 of the Code, the expres- sion 'may... be deemed compatible' suggests rather a time-limit for compatibility of the aid rather than a procedural requirement. In fact it repeats the wording of Arti- cle 1(1): 'Aid ... may be deemed Commu- 163. The issue is therefore whether Arti- nity aid and therefore compatible with the cle 5 must be read as laying down an orderly functioning of the common mar- approval deadline. ket ...' Thus, Article 5 obliges a Member State seeking approval of aid to comply by 31 December 1994 with all the procedural and substantive requirements for the com- patibility of the aid in order for it to be eligible for approval. It does not impose a time-limit on the Commission for approval of the aid. The German text of Article 5 is even clearer in that respect. 71 Wording

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Decision No 1018/85/ECSC of 19 April sively from those articles, the Court of First 1985 amending the second Code 72 which Instance held that: stated that 'Articles 2, 5 and 8 of [the second Code] have laid down deadlines for notifications, approvals and payments of aids'.

'... aid coming within the terms of the Code could be put into effect only with the prior approval of the Commission. To that extent, as is clear from the reference to 167. In the subsequent Codes, however, the Article 5 of the Code in the second para- Community legislature replaced the for- graph of Article 1(3), the deadline of mula of the second Code by 'may until... be 31 December 1994 laid down for the deemed compatible'. Typical examples in payment of regional investment aids was that respect are Article 5 of the fifth Code necessarily the deadline imposed on the and Article 5 of the sixth Code. If the Commission by Article 5 for adopting Community legislature had intended Arti- decisions on the compatibility of that cle 5 of the fifth Code to lay down a time- category of aid.' limit for approval of aid, it would be expected to have maintained the unambig- uous formula used in the second Code.

169. I find that reasoning unconvincing.

Interpretation in the light of the scheme of the Code 170. First of all, it is not clear why the Court of First Instance relies on the refer- ence to Article 5 in the second paragraph of Article 1(3) which provides that '[t]he deadline for payments of aid falling under 168. The Court of First Instance relied Article 5 is 31 December 1994 ...'. In my exclusively, in the decisive paragraph 41 view, Article 1(3) refers to Article 5 merely of the judgment under appeal, on a sys- to define the scope of application of the tematic interpretation of the Code, and in special payment time-limit in issue. I do not particular on the relationship between see how that use of Article 5 for the Articles 5, 1 and 6. After quoting exten- purposes of the application of another Article of the Code should have repercus- sions on the interpretation of Article 5 72 —OJ 1985 L 110, p. 5. itself.

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approval and therefore risks infringement an approval deadline would have unrea- of the second prohibition by paying the aid sonable consequences. The Commission after the expiry of the deadline laid down in would be able to determine its own com- the second paragraph of Article 1(3). petence ratione temporis merely by choos- ing to decide on the aid at issue before or after 31 December 1994. A Member State's right to grant aid would ultimately depend on the administration's decision-making resources or — even worse — its goodwill. 179. The decisive element, namely whether To interpret Article 5 as suggested by the the Commission approves an aid before or Commission and the Court of First Instance after expiry of the payment deadline, would establish a time-limit the expiry of depends entirely on its administrative abil- which would have grave consequences for ity and/or its willingness to adopt such a parties who have no possibility of influen- decision before 31 December 1994. That cing compliance with that deadline. That means in practice that through inaction the may be a further reason why the second Commission can force a Member State to Code was the first and last Code to contain infringe the Code although that State has a true approval deadline. complied with all the requirements of the Code.

186. However it makes no difference to the attainment of that objective if because of Teleologicai arguments administrative difficulties for example the Commission approves the aid on 1 January 1995 instead of 31 December 1994. It is only the time when the investments are made which is material as far as the effects of the aid on competition are concerned 184. According to the preamble to the fifth and not the time at which the Commission Code regional investment aids are excep- decision on the compatibility of the aid is tional in nature and there is 'no justifica- adopted. tion in maintaining them beyond the appropriate period for the modernisation of the steel plants concerned, which is set at three years'. 74 The aim of the Code as regards investment aid is thus that the aided investments in the modernisation of steel plants take place before the end of 1994. That is confirmed by the rules 187. I accordingly conclude that if the applicable to the special fiscal concession Court were not to agree with the solution (Investitionszulage) which is granted under proposed above it would have to uphold German tax law after the investment has the appellant's first plea in law, set aside the taken place. The payment of that type of judgment of the Court of First Instance and aid is allowed up to 31 December 1995 annul the contested decision. The Commis- (Article 1(3)). sion would in that event have to take the necessary steps according to Article 34 of the Treaty, and should be ordered to pay the costs.

185. In order to achieve that aim it is important that Member States respect their obligations under the Code. They should notify the aid sufficiently in advance and in 188. Since I conclude that the appellant's first plea is well founded, it is unnecessary to examine the other pleas, which arise 74 — See preamble to the fifth Code, cited in note 2, 11th recital. only in the further alternative.

— annul Commission Decision No 96/544/ECSC of 29 May 1996;

— order the appellant and the Commission to bear their own costs; and

— order the German Government to bear its own costs.

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