C-276/99

(b) take measures, or authorise the other 1 — Original language: French. Member States to take measures, by

I - 8057

OPINION OF MR MISCHO — CASE C-276/99

way of derogation from the provisions berg, the Commission described the share- of Article 4, in order to correct the holder loans as unlawful aid and ordered effects of the infringement of the obli- the Federal Republic of Germany to apply gation. for their recovery. Those decisions were the subject of actions brought by the Federal Republic of Germany and the company concerned by applications lodged at the Court of Justice and the Court of First Proceedings may be instituted before the Instance respectively. The Court of Justice Court against decisions taken under sub- stayed proceedings pending judgment of paragraphs (a) and (b) within two months the Court of First Instance. of their notification; the Court shall have unlimited jurisdiction in such cases.

4. Since the actions do not have suspensory If these measures prove ineffective, the effect, the Federal Republic of Germany Commission shall bring the matter before applied to the Court of Justice for an order the Council.' suspending operation of the decision of 18 October 1995 in respect of the loan of DEM 49.895 million on the ground that implementation of the request for recovery would result in the immediate liquidation of NMH. That application was dismissed by order of the President of the Court of I I — Facts 3 May 1996. 4

6. On 14 July 1998 the Federal Republic of 10. In a letter dated 1 February 1999 the Germany notified the Commission of the Commission notified the German Govern- stay of proceedings and, on 23 November ment, in accordance with Article 88 of the 1998, forwarded to it a copy of the order of Treaty, of its view as to the alleged 5 March 1998. On the same date it notified infringement of the Treaty, and called on the Commission that on 6 November 1998 it to submit its comments within one NMH had lodged a petition for the initia- month. The German Government replied tion of composition proceedings. by letter of 3 March 1999 rejecting the complaints raised. On 21 April 1999 the Commission adopted the contested deci- sion, the operative part of which reads as follows:

7. The Commission states that, on 16 December 1998, it initiated a procedure against the Federal Republic of Germany under Article 88 of the Treaty, since it considered that that Member State had infringed Article 86 of the ECSC Treaty by 'Article 1 failing to enforce the decisions requiring recovery of the sums paid.

Germany has failed to fulfil its obligations under Decisions 96/178/ECSC and 96/484/ ECSC and Article 86 of the ECSC Treaty 8. On 31 December 1998 proceedings were by failing to lodge a claim with the court initiated for the winding up of NMH and for the recovery in full of the payments of liquidation of its assets. On 18 January 1999 the Land of Bavaria applied to register all of the loans granted in the list 5 — J o i n e d Cases T-129/95, T-2/96 and T-97/96 [1999] ECR II-17. of creditors' claims. 6 — Case C-111/99 P [2001] ECR I-727.

This Decision is addressed to the Federal Republic of Germany'.

Plea alleging misapplication of Article 88 of the Treaty 11. On 23 July 1999 the Federal Republic of Germany brought an action for annul- ment of the contested decision. The Com- mission contends that the Court should 15. According to the German Government, dismiss that action. which refers to Advocate General Roemer's

I - 8060

GERMANY v COMMISSION

17. The Commission disputes that the sole purpose of Article 88 can be to compel a Member State to put an end to current and persistent failures to fulfil obligations. 20. The Commission concludes from this that 'since, under Article 226 EC, an infringement of the Treaty by a Member 7— Case 20/59 Italy v High Authority [1960] ECR 325. State may be declared even if the situation

I-8061

OPINION OF MR MISCHO — CASE C-276/99

which constituted the infringement of that 25. That press release does not appear Treaty has been remedied during the pro- among the documents before the Court, ceedings before the Court of Justice, there but its existence is not denied by the is no reason why the Commission — Federal Republic of Germany. which in this respect finds itself in a position comparable to that of the Court — should not have that possibility where, during the procedure pending before it, the obligation has already been 26. If the Commission's submission con- performed, or where — as in the present cerning the applicability, in the procedure case — fulfilment of the obligation is no under Article 88, of the Court's case-law longer objectively possible'. concerning infringements charged in a procedure under Article 226 EC and reme- died only during the proceedings before the Court is correct, it is therefore necessary to determine whether, by the publication of a press release, a 'procedure' was in fact 21. I will begin by considering this last initiated by the Commission against the argument of the Commission. Federal Republic of Germany.

22. In the passage I have just cited, the 27. It must be observed that nowhere in Commission is stating, essentially, that it Article 88 is reference made to the 'initia- must still be able to make a finding of tion of a procedure for failure to comply failure to fulfil obligations when that fail- with obligations' or an 'infringement pro- ure has been remedied only during the cedure'. 'procedure before it' or where the fulfil- ment of obligations has become objectively impossible only by that stage.

30. Moreover, the effect of the Commis- will be sufficient therefore for the Court to sion's reasoning would be to render the find that when the Land of Bavaria applied stages of its letter of formal notice mean- to register the full amount owing to it ingless. If, in the comments it submits in under the loans granted in the list of response to that letter, the Member State creditors' claims, namely on 18 January says that it has taken the necessary steps to 1999, no procedure was pending before the remedy the breach, or that it is going to do Commission because the letter of formal so without delay, the Commission will no notice was not sent until 1 February 1999. longer be entitled to adopt in the days that follow a reasoned decision recording the breach. It would, at least, have to allow the State a reasonable time, variable according to the circumstances, to provide proof that it has carried out its intention. 8 33. In the alternative I would add, however that in my opinion what matters is not the existence of a 'pending procedure', but the existence, or otherwise, of an infringement at the time when the reasoned decision is adopted. 31. Accordingly, if a press release, pub- lished before the letter of formal notice was sent, could be held to constitute the initia- tion of a procedure enabling the Commis- sion to record the failure to fulfil obliga- tions even where, in reply to that letter, the 34. The parallel that the Commission seeks Member State shows that it has complied to establish between its position under with its obligations or that it is going to do Article 88 of the Treaty, and that of the so, the letter of notice would be deprived of Court when seised of infringement pro- all its utility. It must therefore be concluded ceedings under Article 226 EC does not that a procedure is 'pending before the seem to me to be sustainable. Commission' only once that letter has been sent.

38. Furthermore, it is not unreasonable to maintain that the Court has, since 1960, upheld that interpretation. In its judgment in Italy v High Authority, cited above, one finds the following passage: '[T]he reasons 40. The fact that the Court has thus held required by the first paragraph of Arti- that the purpose of the procedure under cle 88 must justify the recording of the Article 88 is to overcome inertia or resis- failure and the time-limit referred to therein tance on the part of the Member States defines the period in which a pre-existing proves that that procedure is intended to obligation must be fulfilled ...'. 9 compel Member States to adopt measures, and not to declare that the Member States have not fulfilled their obligations at some point in the past.

39. The Court went on to state a little later: 10 'Article 88 opens means of imple- mentation 11 and is the ultima ratio12 enabling the Community interests 41. Finally, that interpretation is supported by the subsequent provisions of Article 88 of the Treaty. After setting out the coercive 9 * — Translator's note: The Advocate General is speaking of the measures that the High Authority may French text. adopt (with the assent of the Council), — Page 339, under (a), fifth paragraph. 10 — Page 339, under (b), first paragraph. 11 — Emphasis added. 12 — Emphasis in the text. 13 — Emphasis added.

I - 8064

GERMANY v COMMISSION

Article 88 concludes with the following 45. It is apparent from that paragraph that sentence: the Commission may adopt the measures there provided for (with the assent of the Council acting by a two-thirds majority) '[I]f the State has not fulfilled its obligation by the time-limit set by the Commission, or if it brings an action which is dismissed'. I consider that the fact that, where there is an 'If these measures prove ineffective, the action against its decision, the Commission High Authority shall bring the matter may adopt measures against the Member before the Council.' State only after the dismissal of that action, does not exempt the Commission from the requirement, under the first paragraph of Article 88 of the Treaty, to 'set the State a time-limit for the fulfilment of its obliga- tion'.

assertion can displace the clear sentence in decision, the Commission charges the Fed- the first paragraph of Article 88 of the eral Republic of Germany with two omis- Treaty, according to which the Commission sions: failure to extend the claim lodged is to set a time-limit. Furthermore that with the competent national court to cover assertion seems to me to be doubtful. It the full amount of the aid (Article 1 of the may be inferred from the last paragraph of contested decision), and failure to lodge an Article 88, to which I have already refer- appeal against the decision of the Land- red, that the sanctions are intended only to gericht Amberg staying the proceedings encourage the Member State to correct its before that court (Article 2 of the contested behaviour. Accordingly, contrary to what decision). the Commission contends, the sanctions do seem to me to be linked to the duration of the failure to fulfil obligations.

I - 8066

GERMANY v COMMISSION

53. Since the Federal Republic of Germany 56. In my view, such an act cannot be held was no longer in a position, when the to be a failure to fulfil the obligation to reasoned decision was adopted, to take, recover the aid. Confirmation of this can be with practical effect, the steps the Commis- found in the decision in Belgium v Com- sion considered to be necessary in order for mission in which the Court 17 noted that it not to be in breach of its obligations 'the Commission stated at the hearing that under the ECSC Treaty, 16 as the Commis- the Belgian Government had fulfilled its sion indeed acknowledges itself, that Mem- obligations ... in regard to the recovery of ber State cannot be regarded as having the aid since, ... the Belgian Government failed to fulfil its obligations on that date. sought to have its debt registered as one of Tubemeuse's unsecured liabilities …'.

54. On the other hand, having regard to the spirit of the reasoned decision of 21 April 57. Consequently, it may well be — and I 1999, from which it can undeniably be will analyse this point later in the alter- deduced that, in the Commission's view, the native — that at an earlier point in time Federal Republic of Germany had not the Federal Republic of Germany had not taken the necessary steps to recover the taken the necessary steps to recover the aid. aid, was there a failure to fulfil obligations I am, however, of the view that, at the time at the time of the adoption of the reasoned when the reasoned decision was adopted, decision? no such failure existed.

The substance of the failure found by the no risk of a time-bar, an application is Commission made, as here, in the interests of reducing costs, in relation to part of the debt only. It says that the limited number of procedural options open to the debtor in respect of the balance of the claim following judgment 59. The Federal Republic of Germany also for part of it generally results in the challenges the substance of the failure recovery of the said balance without any found by the Commission in the contested difficulty. In most cases payment of the decision. In light of the conclusion I have balance is made voluntarily. just reached, I will examine this plea in the alternative as it may only be considered if the Court is of the view that the Commis- sion was entitled to record a past failure, or that the failure in question still existed at the time when the reasoned decision was adopted. 62. The German Government states that it is not common practice for there simulta- neously to be a notarially authenticated acknowledgment of the debt and a declara- tion of acceptance. Furthermore, this Article 1 of the contested decision would eliminate the costs advantage, given that notarial costs depend on the financial value of the transaction.

70. The Land of Bavaria only lodged a claim against NMH for 20% of the amounts in question.

66. The Commission stresses that it never expressly approved the procedural step taken by the Federal Republic of Germany or encouraged it to take such a step. It concludes from this that the argument 71. Like the Commission, I consider that concerning protection of legitimate expec- there is insufficient evidence to show that it tations is completely misconceived. was guaranteed that a judgment for the amount claimed would have automatically resulted in the recovery of the aid in full.

67. What is to be made of these arguments?

72. The German Government confines itself to claiming that the board of NMH would put their own liability in issue if they refused to pay back the rest of the aid, that 68. As the Court held in Alcan Deutsch- a second, hypothetical, action would not go land, 18 'where State aid is found to be to the merits of the claim but only to the amount thereof, and that it was possible at any stage to extend the claim without risk 18 — Case- C-24/95 [1997] KCR I-1591, paragraph 34. of a time-bar.

I - 8069

OPINION OF MR MISCHO — CASE C-276/99

78. It follows from the Commission's 74. It follows that, as that latter amount explanations — and the German Govern- has not been the subject of any proceedings ment has failed to prove the contrary — which could result in a legal obligation on that the Commission was aware that the the part of the recipient to pay back the aid, procedural step had been taken only fol- the Federal Republic of Germany has not lowing receipt, on 27 November 1997, of taken the necessary steps to recover the aid NMH's pleading in the proceedings before in full. the Landgericht Amberg. That pleading informed it of NMH's refusal to enter into a notarially authenticated agreement in respect of the balance of the aid to be recovered, even though the German Gov- ernment had announced the negotiation of such an agreement in its letter of 6 Decem- 75. The German Government further sub- ber 1996. It therefore appears from that mits that the procedural costs would have pleading that 80% of the value of the aid been too high if the action had sought was not covered by any recovery proceed- recovery of the aid in full. On this point, it ings. is sufficient to observe that the costs of proceedings cannot exempt a Member State from its obligation to take the necessary steps to recover aid paid in breach of the Treaty. 79. Furthermore, that pleading included an application for a stay of the proceedings before the Landgericht Amberg. In that context, the Commission cannot be criti- cised for having wished, as it explains itself, to await the outcome of that application 76. As for the arguments on legitimate before taking a position on the proceedings expectations, it must be observed, first, as a whole. that the Commission denies having indi- cated its agreement to the procedure fol- lowed by the Land of Bavaria, and sec- ondly, that there is no proof of such an agreement in any of the documents before 80. Moreover, the German Government the Court. did not inform the Commission of the I - 8070

86. It contends that, 'given the monopoly of decision of the Community Courts in 82. Lastly, the German Government's argu- matters of Community law, the Landger- ment that it is not common practice for icht Amberg had neither the capacity nor there simultaneously to be a notarially the right to assess the terms of its decision authenticated acknowledgment of the debt on the merits' and that it was compelled, as and a declaration of acceptance is not such a matter of German law, to stay proceed- as to undermine the validity of Article 1 of ings. The German Government took the the contested decision. It is sufficient to view that the recovery of the aid depended observe that it was the German Govern- on whether the Commission decisions ment itself that had mentioned in its letter ordering recovery were valid or not. That of 6 December 1996 this alternative to question was specifically the subject of the judicial proceedings covering the full action before the Court of First Instance. amount of the aid.

87. The German Government contends that the order of the President of the Court 83. It follows from all the foregoing that of Justice of 3 May 1996 refusing suspen- the German Government's complaints sion of the operation of the Commission directed against Article 1 of the contested decisions is irrelevant. That order con- decision are unfounded. cerned the suspension of the operation of

I - 8071

OPINION OF MR MISCHO — CASE C-276/99

the measures, and not the stay of the 91. It considers that, in those circum- national proceedings, at issue in this case. stances, the Land of Bavaria was required to lodge an appeal against the order of the Landgericht Amberg.

94. It is true that, under certain conditions, a national court may grant measures ren- dering a Community act temporarily inap- plicable. 20 The parties agree however that 90. Furthermore, the Commission fails to these conditions did not apply in this case, see how, given that the President of the Court of Justice had dismissed the applica- tion for suspension of the Commission's 19—Joined Cases 46/87 and 227/88 [1989] ECR 2859, decisions, the Landgericht Amberg could, paragraph 64. See also Case C-137/92 P Commission v BASF and Others [1994] ECR I-25J5, paragraph 48, and in ordering a stay of the proceedings before Case C-344/98 Masterfoods and HB [2000] ECR I-11369, paragraph S3, it, order specifically that which the Court 20 — Case C-465/93 Atlanta Frtichthandelsgesellschaft and of Justice had just refused. Others (I) [1995] ECR I-3761.

I - 8072

GERMANY v COMMISSION

in particular, as the Commission points out 98. Nor is it possible to accept the German in the contested decision, because the Government's argument that the Landger- President of the Court of Justice has already icht Amberg's order of stay did not make dismissed an application for suspension of repayment practically impossible or exces- the operation of the decisions in question. sively difficult.

95. It follows from the foregoing that since, 99. It appears from the German Govern- as the German Government has explained, ment's explanations that this argument is the national court considered that its deci- derived from the case-law of the Court of sion 'depended essentially on the question Justice, according to which, 'in principle, whether the Commission decisions order- the recovery of aid must take place in ing repayment of the loans were applicable accordance with the relevant procedural or void', that court misinterpreted Com- provisions of national law, subject however munity law. Those decisions were applic- to the proviso that those provisions are to able and there was therefore no reason to be applied in such a way that the recovery wait before enforcing them. required by Community law is not rendered practically impossible'. 21

since no such reference to the Court has 103. Therefore, if the Commission's rea- been made by the Landgericht Amberg. soned decision had come before the com- pany's insolvency, or if there had been no insolvency, I would have concluded that that decision was valid and rejected the Federal Republic of Germany's complaints. 102. It follows from the foregoing that the Federal Republic of Germany, by failing to lodge an appeal against the decision of the Landgericht Amberg of 5 March 1998 staying the proceedings before that court, failed to take the necessary steps to ensure 104. However, since, in the circumstances the proper enforcement of the Commis- of this case, there was no longer a failure to sion's decisions. The Federal Republic of fulfil obligations within the meaning of Germany's complaints directed against Article 88 when that decision was adopted, Article 2 of the contested decision are I consider that the Commission has mis- therefore also unfounded. applied that provision.

IV — Conclusion

I propose that the Court should:

— annul the Commission Decision of 21 April 1999 in a proceeding under Article 88 of the ECSC Treaty (now Article 88 CS) concerning State aid granted by the Federal Republic of Germany to Neue Maxhütte Stahlwerke GmbH;

— order the Commission to pay the costs in full.

I - 8074