Belgium

AuthorTh. Jestaedt; J. Derenne; T. Ottervanger
ProfessionJones Day; Lovells; Allen & Overy
Pages73-113

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2. Outline of the availability of judicial relief under the Belgian legal system
2. 1 Procedures concerning the direct effect of Article 88 (3) EC

The violation of Article 88 (3) EC can be invoked before three different types of court in Belgium:

- the supreme (and unique) administrative court: the Council of State ("Conseil d'Etat"/"Raad van State");

- the judiciary courts (commercial and civil courts: courts of first instance and commercial courts, and their relevant courts of appeal - "tribunal de première instance"/"rechtbank van eerste aanleg", "tribunal de commerce"/"rechtbank van koophandel", "cours d'appel"/"hoven van beroep"

- and the Supreme Court - "Cour de cassation"/"Hof van cassatie");

- the constitutional court, the Court of Arbitration ("Cour d'arbitrage"/"Arbitragehof"), which has the power to review legislative acts on limited points of constitutional law (constitutional disputes and the principle of non-discrimination between Belgian citizens).

2.1. 1 Procedure before the Council of State

Any administrative act of a non-legislative nature can be reviewed before the Council of State (action for annulment

- "recours en annulation" or "recours pour excès de pouvoir"). This type of action largely finds its origins in the judicial mechanism of the French Council of State. The action can be lodged by any party demonstrating an interest (such interest must be personal, present, certain, direct and legitimate). The time limit for submitting the action is two months from the notification, publication or full knowledge of the act.

Up until now, the State aid cases before the Council of State have involved challenges by beneficiaries against a recovery decision (Dufrasne), and against a decision rejecting a tender on State aid grounds (Breda). So far, no actions have been brought by competitors before the Council of State against a decision granting State aid in breach of Article 88 (3) EC.

It may be that the procedure before the Council of State, which is quite lengthy, is not very convenient for a claimant competitor of a beneficiary of unlawfully granted State aid. However, accelerated procedures do exist with respect to (i) actions challenging the decisions of the regulatory bodies in the financial, insurance, social security sectors; (ii) the application of the law on mortgages, and (iii) the expulsion of illegal foreigners. These accelerated procedures do not apply to State aid issues specifically and only the last one seems to be justified by the nature of the matters concerned.

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More interesting is the possibility of requesting, in parallel with the action for annulment, the suspension of the challenged act (act granting State aid, for instance). A decision of the Council of State is then delivered within 45 days. The pleas invoked in a request for suspension must be "serious and likely to justify the annulment" and there must be a risk of a serious and irreparable harm (the latter condition is very difficult to fulfil since pecuniary damage is only deemed to be irreparable if it leads a claimant to bankruptcy).

If it is not possible for the claimant to wait 45 days, it can make use of the extreme urgent procedure ("procédure d'extrême urgence"). The risk of damage from an immediate implementation of the challenged act must be imminent or, at least, likely before the expiry of the 45 days; in addition, the claimant must have done its best to prevent the damage and must have lodged the request as soon as possible before the Council of State. The case may then be fixed immediately (within one or a few hours). A decision can be delivered on the day of the request.

Finally, a request for interim measures can be made before the Council of State (in parallel with a request for suspension, which in turn will require a request for annulment). It should be noted that neither the suspension procedure, nor the extreme urgent procedure nor the interim relief procedure has been used in State aid matters.

Moreover, the interim measures requested cannot have as their object so-called personal rights ("droits subjectifs"). In the event that a person wishes to protect such personal rights, he will need to seek interim measures before a civil court (usually, the President of the Court of First Instance) by requesting an appropriate order to prevent the damage to his personal rights.

The civil courts appear to have obtained jurisdiction on administrative matters by virtue of Article 159 of the Belgian Constitution which provides for the "exception of illegality", i.e. courts are required to apply administrative decisions of a general scope only where they are in accordance with the law. Through the use of Article 159, civil courts have kept their powers to suspend administrative acts (or prohibit the execution of such acts) where such acts have escaped the censure of the Council of State.

2.1. 2 Procedure before the Court of Arbitration (Constitutional Court)

The Court of Arbitration is competent to review the constitutionality of certain legislative acts. It can legally review the compatibility of laws ("lois" from the federal parliament), decrees ("décrets"/"decreten": legislative acts of the Flemish region, of the Walloon region and of the French and German speaking Communities) and ordinances ("ordonnances"/"ordonnanties": legislative acts of the Brussels region) with:

- the rules laying down the division of powers between the State, the communities and the regions laid, down in the Constitution and in special laws;

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- the fundamental rights and liberties guaranteed in Section II of the Constitution (Articles 8 to 32 of the Constitution);

- the principle of legality of taxation as laid down in Article 170 of the Constitution;

- the principle of non-discrimination in fiscal matters as laid down in Article 172 of the Constitution; and

- the protection for non-citizens as expressed in Article 191 of the Constitution.

A violation of EC State aid rules constitutes a violation of such fundamental rights. Thus, in some of the State aid case law examples (the Schaerbeek cases) described below, the Court of Arbitration found that the relevant laws breached Articles 10 and 11 of the Constitution (principle of non-discrimination) in parallel with State aid rules. Prior to the extension of the Court of Arbitration's competences in 2004, only the violation of this principle (and not the other fundamental rights mentioned in section 2 of the Constitution) could be directly invoked before the Court of Arbitration. This explains why the claimants in the Schaerbeek cases invoked the violation of this principle read in conjunction with the State aid rules. These rules remain of course an indirect ground of review after the extension of the Court's competences.

Regulations having the force of law, which are subject to constitutional control, include both substantive and formal rules adopted as lois/wetten, décrets/decreten and ordonnances/ordonnanties mentioned above. All other regulations, such as royal decrees; decisions of governments, communities and regions; ministerial decrees; regulations; and decisions of provinces and municipalities, as well as court judgments, fall outside the jurisdiction of the Court of Arbitration.

A case may be brought before the Court of Arbitration by virtue of a direct action or through a preliminary reference by another court.

(i) Direct Action

A case may be brought before the Court (in the form of an action for annulment) and may be instituted by any authority designated by statute or by any interested party.

The following authorities and persons may bring an action for annulment before the Court of Arbitration:

- the Council of Ministers and the governments of the communities and regions;

- the presidents of all legislative assemblies, at the request of two-thirds of their members;

- natural or legal persons, both in private law and public law, Belgian as well as foreign nationals.

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The latter category of persons must be able to demonstrate an interest. This means that those persons must show in their application to the Court of Arbitration that they are liable to be personally, directly and unfavourably affected by the challenged legislative act.

Actions must be brought within six months of the publication of the challenged act in the Moniteur belge/Belgische Staatsblad.

The action for annulment does not suspend the effect of the challenged act. In order to guard against the possibility that the challenged act may cause irrevocable prejudice during the period between the introduction of the action and the judgment of the Court of Arbitration, and that a subsequent retroactive annulment may no longer have any effect, the Court of Arbitration may, at the claimant's request and in exceptional circumstances, order the suspension of the challenged act pending a judgment on the merits of the case. A decision on the merits of the case needs to be rendered within three months of the order suspending the act, otherwise the effects of the suspension order will cease.

If the action is well-founded, the challenged act will be entirely or partially annulled. Judgments annulling a challenged act have absolute binding force from the moment they are published in the Moniteur belge/Belgische Staatsblad. Such annulment has retroactive effect, which means that the annulled act must be deemed never to have existed. If necessary, the Court of Arbitration may moderate the retroactive effect of the annulment by upholding the effects of the annulled act (the principles are very similar to those applicable at the EC level following a ruling of the ECJ or the CFI on the basis of Article 230 EC).

(ii) Preliminary reference

Any court may refer preliminary issues to the Court of Arbitration.

If a question comes up in a particular court about the compatibility of laws, decrees and ordinances with the rules laying down the division of powers between the State, the communities and the regions or with Articles 8 to 32, 170, 172 or 191 of the Constitution, that court must in principle address a preliminary reference to the Court of Arbitration. "Preliminary" means before the court passes further judgment. When a court refers a question to the Court of Arbitration, the proceedings before the court in question are suspended, pending the answer of the Court of Arbitration. If the Court of Arbitration decides that the act in question conflicts with the rules mentioned above, the referring judge must no longer take this act into consideration during further adjudication of the case. The act in question, however, will be maintained in the legal system.

In cases which raise preliminary points of law, courts delivering judgment in proceedings involving the same parties and concerning the same legal issues (including courts of appeal) must comply with the ruling given by the Court of Arbitration on the preliminary point of law in question. Moreover, where the Court of Arbitration finds a violation, the act will remain part ofPage 77 the system of law, but a new six-month term commences in which an action for annulment of the act in question can be brought.

Judgments of the Court of Arbitration are legally enforceable and are not open to appeal.

2.1. 3 Procedure before civil courts

Actions may be brought before the civil courts (and the commercial courts) regarding litigation between private parties or between the latter and the State when it is not intended to request the annulment of a particular State measure (the sole administrative court in Belgium is the Council of State described above). Civil courts also have jurisdiction to rule on the State's liability.

The commercial courts have jurisdiction over litigation between professionals in the course of their business or over any litigation concerning business acts. Actions for damages brought against a competitor would be brought before commercial courts. Where the claimant is a non-professional, the action can also be brought before the civil courts. Judgments of the commercial courts are appealed to the commercial division of the courts of appeal and are further appealed on points of law only to the Supreme Court.

* Action to obtain an order to reimburse unlawful aid and/or a cease and desist order

Competitors can bring an action before a commercial court and request it to order the beneficiary to reimburse the aid to the relevant administration. Such an action would be based upon the principle of the supremacy of EC law over national law.

The complainant who wishes to obtain such an order must show sufficient interest. The enforcement of the law (in this case, Article 88 (3) EC) is not alone a sufficient interest. Therefore, a competitor would have to show how the grant of the aid directly affected it by putting it at a competitive disadvantage56. However, this rule should not undermine the "objective of ensuring the effectiveness of the prohibition on implementation of aid referred to in the last sentence of Article [88] (3) EC"57.

There is also a specific procedure based on unfair competition law principles: a competitor may sue a beneficiary before the President of the Commercial Court with a view to obtaining a cease and desist order (in an accelerated procedure, similar to the interim relief procedurePage 78 but this is an action on the merits of the case with a definitive decision) for any unfair competitive behaviour. This action is based on liability principles since an unfair trade practice constitutes a fault. The action is provided for by Article 93 of the Law of 14 July 1991 on trade practices and consumer information58 (see Breda case described below). Within a State aid context, the unfair behaviour of the beneficiary that could be complained of from a competition perspective is the fact that the beneficiary would benefit from an unlawful aid whilst it is expected from any diligent economic operator to verify the procedural compliance of such grant. The fact that the beneficiary will act on the market by taking advantage of this unlawfully received/granted aid (for instance, in order to offer a lower price in a tender) may also be relevant. The President of the Commercial Court can only deliver cease and desist orders under this procedure. Any action for damages (see below) relying on such a decision will have to be lodged before the Commercial Court in a separate action.

* Action for liability and damages from the State

Damages can be sought from the Belgian State for not complying with Community law in the following two ways.

First, under national liability law, a person has to make good in full any damage caused by his fault (Article 1382 of the Belgian Civil Code) or by his negligence (Article 1383 of the Belgian Civil Code).

The Belgian State and its organs can also be held liable for fault or negligence under these provisions. Unlike French law, Belgian law therefore allows in principle the granting of damages in cases of State liability according to the same conditions as apply to individuals. It is necessary to prove fault, the resulting damage and a causal link.

These provisions can therefore be used to engage the responsibility of the State (including the legislator or even the judicial power in certain circumstances) for adopting an act which breaches Community law. Damage can include the breach of a legitimate interest.

Secondly, damages can also be sought from the Belgian State under Community law liability principles, in line with the principles set out in ECJ case law59.

Under this case law, the liability of the State will be engaged where: (i) the rule of law infringed is intended to confer rights on individuals; (ii) the breach is sufficiently serious; and (iii) there is a direct causal link between the breach of the obligation resting on the State and the damage sustained by the injured parties. As regards the second condition (sufficiently serious breach), where the State has a large margin of discretion in implementing a policy,Page 79 the ECJ has considered that the State's liability can only be engaged where the State has manifestly and gravely disregarded the limits on its discretion.

This second condition (sufficiently serious breach) can therefore be a much harder condition to satisfy than the test for breach under civil liability, where a simple breach is sufficient evidence of damage. However, this is not the case in the field of State aid as no margin of discretion is left to the Member States on the application of Article 88 (3) EC. By definition therefore, the violation of Article 88 (3) EC should always be regarded as a serious breach, likely to engage the State's liability within the meaning of the case law mentioned above. Concerning State aid rules, the ECJ's case law may therefore seem more favourable to (or least equivalent to, since any breach of the law by the State is regarded as a fault on behalf of the State) claimants than the traditional national liability system based on "fault, damage and causal link" (Article 1382 of the Civil Code).

* Action for suspension of the implementation

As before the Council of State, suspension of the implementation of the decision granting unlawful aid can be requested by competing undertakings before the relevant civil court (in fact, the president of the civil or commercial court, acting "en référé" - interim relief). However, suspension can only be requested when the administrative decision to grant the aid creates personal rights ("droits subjectifs") to the person seeking interim relief (see also section 2.1.1 concerning judicial review of administrative acts by the Council of State). The conditions for this type of interim measures are urgency, prima facie case and serious and immediate harm.

However, it should be noted that a judge may consider, according to the specific legal circumstances, that it is not competent to grant interim relief and ultimately decide that is up to the Council of State to deal with such an action.

* Action for liability and damages from the beneficiary

There has been no example of such a case under Belgian law (however, actions for unfair competition, described above, are based on liability principles).

The question of the liability of the beneficiary of unlawful aid will have to be brought before the civil courts under Article 1382 of the Civil Code described above.

The relevant courts will have to determine whether the beneficiary benefited from the aid in full knowledge of its unlawful character, or whether the beneficiary ought to have been aware of this illegality, as well as the amount of damages to be granted to the competitors. This would appear to be a difficult test to satisfy.

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2. 2 Procedures concerning the enforcement of negative Commission decisions
2.2. 1 Action to recover

In order to recover unlawfully granted aid (whatever its form), the relevant Belgian authority responsible for granting the aid first sends a letter of formal notice to the recipient of the aid, requesting it to refund the aid within a specified period of time.

If the beneficiary of the aid refuses to refund the aid, the relevant Belgian authority can bring a civil action before the Commercial Court seeking a court order for reimbursement. Proceedings before the Commercial Court can last longer than one year. Such action will be subject to the general rules of civil proceedings contained in the Judicial Code.

Both parties to the proceedings can appeal the judgment of the Commercial Court to the Court of Appeal and, on points of law, to the Supreme Court.

2.2. 2 Action contesting the recovery

The beneficiary of the aid can contest the recovery order by bringing an action for annulment before the Council of State (see the Dufrasne case below).

The beneficiary can also contest the recovery order before the Commercial Court in its defence of the recovery action undertaken by the relevant Belgian authority.

2.2. 3 Action in case no recovery is ordered

If, following a Commission decision, the State does not order the recovery of the aid from the beneficiary, competitors may request the State to take action and, in case of a refusal, bring an action for annulment of this refusal before the Council of State (or initiate an action for damages for not having recovered the aid).

2.2. 4 Action contesting the validity of the Commission decision

National courts have no jurisdiction under EC law to declare acts of the Community institutions void. Even though they might consider the Commission's negative decision to be illegal, a national court may not prevent the national recovery procedure. Should they disagree with a Commission decision, the courts should refer a preliminary question as to its validity to the ECJ under Article 234 EC60. Such requests are, however, inadmissible if a challenge to the Commission decision directly before the CFI under Article 230 EC would have been manifestly admissible (the Commercial Court of Ghent anticipated this rule a few days before the CFI in the TWD case61).

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In a recent example (Ter Lembeek, section 3.4.1 below), the national court suspended the proceedings of the Belgian State seeking recovery of aid from a beneficiary until the CFI came to a judgment on the action for annulment against the Commission decision ordering the recovery of the unlawful aid.

2. 3 Procedures concerning the implementation of positive Commission decisions

Even if the Commission has found State aid to be compatible with the Common Market, claimants (beneficiaries of the aid or competitors of the beneficiaries) can challenge the validity of this decision before a national court by asking it to request a preliminary ruling from the ECJ under Article 234 EC ("exception d'illégalité"). Such requests by claimants are, however, inadmissible where the claimant could have challenged the Commission decision directly before the CFI under Article 230 EC and such action would have been manifestly admissible (see section 2.2.4 above).

If the aid is found to have been unlawful, a final decision of the Commission declaring the aid to be compatible with the Common Market does not prevent the claimant from requesting the recovery of the aid from the beneficiary, at least for the period prior to the adoption of such a positive decision.

2. 4 Summary of conclusions of cases described in section 3 below

The cases analysed in section 3 below cover the period from 1992 to 2005. Hereafter follow some of the conclusions that can be drawn from the cases set out in that section.

2.4. 1 Actions brought by competitors against beneficiaries

There has in fact only been one case where a Belgian court has had to rule on an action brought by a competitor against a recipient of State aid (the Breda Fucine case described in section 3.1.2 where the claimant successfully obtained a cease and desist order against an Italian company regarding its participation in a tender process).

As discussed in the conclusion further below, it is not really clear what discourages competitors from bringing proceedings against beneficiaries of State aid. There are no specific procedural or legal obstacles, except the difficulty encountered in some cases to qualify the measure as State aid or the usual length of the procedure before the courts in Belgium (however, the cease and desist order procedure mentioned above may lead to a quite satisfactory result from that point of view).

2.4. 2 Actions for judicial review of an act introducing State aid

The claimants in such actions are not necessarily competitors of the beneficiary. First, in two cases the claimants were municipalities seeking to withdraw the tax exemption granted to a beneficiary of aid. Secondly, in some cases the claimants have been parties unwilling to payPage 82 taxes to a regime which may constitute State aid (see section 2.4.3 below for a more detailed description of this case). Thirdly, in one case the claimant was a professional association representing insurance companies against a measure which would benefit a competitor of the members of that association.

The Belgian courts had to address a wide range of issues in these cases, ranging from whether an aid measure constituted existing aid, to the question of whether a State aid measure found to be compatible with EC law can apply retroactively to a State aid measure which was not notified.

Generally, the civil courts appear to have a better grasp of State aid law than the constitutional court which, on two occasions, erred in its application of Article 88 (3) EC. For example, in one case, the Court of Arbitration considered that it was not competent to act because the failure by the Belgian State to notify a State aid measure to the Commission was a mere procedural fault, not affecting the substance of that State aid measure.

2.4. 3 Cases relating to the 1987 law on animal health requiring parties to make contributions to the system

There have been at least five separate cases concerning the Law of 24 March 1987 on animal health. This law required slaughterhouses to make contributions to a fund aimed at combatting animal diseases.

The Commission had ruled in 1991 that this constituted incompatible aid. However, the Commission did approve the subsequent 1998 law modifying this regime.

In four cases, parties brought proceedings before the civil courts against the Belgian State seeking reimbursement of the contributions they had made to the fund. The parties were successful in three of these cases (and one case is still pending) on the grounds that the fund constituted unlawful State aid. Remarkably, in three out of these four civil proceedings, the relevant court referred a question for a preliminary ruling to the ECJ (only in the Voeders Velghe case did the Supreme Court not make a reference but applied the ECJ's reasoning in the Van Calster judgment62, concerning the same tax, to come to its ruling (see section 3.3.2 below)).

One interesting question that arose in a number of cases was whether the subsequent approval by the Commission of the modified aid regime in 1998 allowed the Belgian State to keep the contributions made to the fund prior to this approval.

The Court of Arbitration, the constitutional court, considered that the 1998 law could have such retroactive effect. This ruling went against the earlier EC case law concerning the impact of non-notification of State aid measures.

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Fortunately, in the Van Calster case, the Court of Appeal of Antwerp referred a question to the ECJ on this point. On the basis of the ECJ's ruling, the Supreme Court in the Voeders Velghe case held that the Court of Arbitration's ruling was wrong (although the Supreme Court cannot overturn this ruling) and that it would be a breach of Article 88 (3) EC to provide the 1998 law with retroactive effect.

2.4. 4 Recovery cases

There have been six cases where the Court has had to deal with recovery actions brought by the State against beneficiaries of State aid as a result of a Commission decision declaring the aid in question to be incompatible and ordering recovery of the aid. These cases are analysed in more detail in Part II of this study.

There have also been some cases where the relevant authorities have, of their own initiative, sought to recover alleged unlawful State aid from parties.

Two cases concerned the question of whether a creditors' arrangement, whereby the creditors of an insolvent company agreed to partially write off social security debts, constituted unlawful State aid. The relevant courts did not consider that such arrangements constituted State aid.

In a third case, a local Brussels taverne in financial difficulties was granted by the VAT administration a favourable VAT repayment scheme. In this case, the court applied the private investor test to conclude that the measure constituted non-notified State aid. In another similar case (preceding the former one), the Commercial Court raised of its own motion the State aid issue and referred a preliminary question to the ECJ which led to the "private creditor test" (DMT case63).

2.4. 5 Actions by beneficiaries

There have only been a few direct actions brought by beneficiaries of State aid.

Two of these cases were actions for annulment brought before the Council of State against administrative measures taken by a relevant national authority or public body which had negatively affected the beneficiary of the State aid64. One case was brought by a beneficiary of State aid before an Employment Tribunal challenging a recovery order of the Social Security service65.

In the first case before the Council of State, a company successfully challenged a decision of the national authority suspending further payment of aid to this company and ordering reimbursement of aid already paid on the grounds that this constituted unlawful aid whichPage 84 had not been notified to the Commission. The Council of State annulled the national authority's decision on the grounds that there was no decision of the Commission prohibiting the aid in question.

In the other case before the Council of State, a company was prevented from submitting a tender offer because it had benefited from unlawful State aid. The company's action for annulment against that decision was dismissed.

2.4. 6 Conclusions

Over the last few years there has been a steady increase of the number of State aid cases handled by the Belgian courts.

There have been remarkably few actions brought by competitors. In particular, no party has ever brought an action for damages in relation to a State aid measure. There is no clear explanation for this as Belgian law does provide adequate opportunities for competitors to bring actions. Possibly, parties are discouraged by the length of judicial proceedings before the Belgian courts, preventing them from seeking a quick remedy.

There are also only a few examples of actions brought by beneficiaries. However, this may be more understandable given that beneficiaries are generally the defendants in recovery proceedings initiated by the State.

On the other hand, national authorities have been more willing to bring State aid actions.

Although there have been no actions for damages, there have been a number of cases brought by parties seeking the reimbursement of certain contributions made to the State to set up a fund which was later considered to be an unlawful aid scheme.

The length of judicial proceedings, especially in the civil courts, is probably the main obstacle to the effective application of EC State aid rules in Belgium. Indeed, a case can last up to ten years when it has to run through all of the various levels of courts (including references for a preliminary ruling to the ECJ).

In most of the cases analysed below, the Belgian courts have willingly and correctly applied the EC State aid rules. Moreover, Belgian courts have in a number of cases not hesitated to refer questions to the ECJ in order to obtain clarification on various points of law, although it is interesting to note that neither the Court of Arbitration (the constitutional court) nor the Council of State has ever made such a reference in relation to a State aid matter.

Only in a minority of cases have the national courts incorrectly applied EC State aid rules. In two cases, a national court refused to consider whether a measure constituted unlawful aid on the grounds that the Commission had not issued a negative decision on that aid measure. In other cases, national courts, although possibly arriving at the right decision, applied ECPage 85 State aid rules where it may not have been necessary to do so. It is not clear whether this will constitute a trend or not. The most worrying aspect is that most errors in the application of EC State aid law have been made by the Court of Arbitration, against whose rulings there is no right of appeal.

The following points can be emphasised from this review of the Belgian courts' application of the EC State aid rules:

(i) on three major points of law, the Court of Arbitration's interpretation of the EC State aid rules contrasts with the interpretation by most civil courts (the Council of State having not had the opportunity to rule on a true State aid case, which is an indicator of the type of claimant in EC State aid matters in Belgium):

- concept of existing aid: the Court of Arbitration arrived at the qualification of existing aid merely by reference to a Commission's decision to close a file in which the Commission had not explicitly taken a position on this qualification; in fact, the Court of Arbitration should have justified this qualification itself without referring it to the Commission in the absence of a formal Commission decision; this contrasts with one civil court which referred this issue to the ECJ in order to take a position duly informed by the latter (Namur-Les Assurances du crédit - Office National du Ducroire);

- scope of Article 88 (3) EC: in one case, the Court of Arbitration seemed to consider that an infringement of Article 88 (3) EC did not affect the substance of a law but only its procedural character; this contrasts with the exemplary and landmark case decided by the Supreme Court in Tubemeuse where it was decided that a violation of Article 88 (3) implies that the measure affected should be regarded as null and void, the EC State aid rules having primacy and constituting public policy rules;

- in another case, the Court of Arbitration ruled against the principles established by the ECJ considering the impact of the non-notification of State aid measures and the fact that a decision of compatibility by the Commission could not regularise the illegality; this contrasts with an ECJ ruling on this point specifically following a preliminary reference by a civil court;

(ii) the length of proceedings before national courts is an issue which leads to a serious level of inefficiency regarding the application of EC State aid rules:

- sometimes, the national courts will reach a suitable decision, but only after years of proceedings (for example in Lornoy, the Supreme court correctly applied the EC law principles 15 years after the violation of Article 88 (3) EC and nine years after an ECJ ruling);

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- sometimes, the courts will decide to stay the proceedings until a judgment of the CFI on the legality of the Commission decision. One may wonder whether the Masterfoods principles set out by the ECJ66 can be applied in the State aid area in view of the specific characteristics of Article 88 (3) EC; indeed, the Masterfoods principles require national courts to avoid giving decisions which may conflict with a decision contemplated by the Commission in the implementation of Articles 81 and 82 EC. In such circumstances, the ECJ considered that the national court should either concur with the Commission's decision or stay proceedings until a challenge to that decision was definitely adjudicated by the European Courts. However, Article 88(3) EC contains a strict obligation on Member States not to grant State aid until a final decision has been taken by the Commission; in recovery proceedings, the national court's task should simply concern the enforcement of this strict obligation, whether or not the aid in question is compatible with EC law. The only situation where a national court could possibly be required to stay proceedings pending the outcome of a decision of the CFI should be where there is serious doubt as to whether the aid measure in question actually constituted State aid (and this assumes that the challenge before the CFI specifically concerns the qualification of State aid; if this is not the case - i.e. only the compatibility assessment is challenged - any stay of proceedings would be totally irrelevant).

- when the negative Commission decision is definitive (i.e. was not challenged), it is all the more surprising to wait for more than 15 years in order to have a recovery order which may be executed (Idealspun and Beaulieu cases); claimants who neglect to challenge the Commission decision in this context should be limited in their legal means to delay in this manner the execution of recovery decisions;

(iii) finally, and to conclude on a positive point, it should be noted that Belgian courts are at the source of numerous landmark cases of the ECJ and have allowed the case law to progress by sometimes delivering innovative and long-awaited rulings, which can only serve as an example to all national courts:

- Tubemeuse, 1992: State aid rules are public policy rules and the measures affected by the violation of Article 88 (3) EC are null and void;

- Breda, 1995: the recipient of unlawful aid commits an act of unfair trade practice;

- Beaulieu, 1994: the validity of a negative Commission decision can no longer be put into question by a beneficiary before the national courts by virtue of a request for a preliminary ruling under Article 234 EC if this beneficiary was manifestly admissible in challenging such a decision before the CFI and has not done so;

- DMT, 1997: private creditor test.

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3. List of cases with summaries

The cases are sub-divided in the following way:

- actions by competitors against beneficiaries;

- actions for judicial review of national legislation;

- cases relating to the 1987 law on animal health requiring parties to make contributions to the system;

- actions for recovery by the State:

- enforcing a negative Commission decision;

- actions against beneficiaries seeking to withdraw allegedly illegal State aid;

- actions by the beneficiary.

3. 1 Actions by competitors against beneficiaries
3.1. 1 President of Commercial Court of Brussels, 15 September 2000 and Court of Appeal of Brussels of 7 December 2001, Hays v La Poste (Assurmail service) and Key Mail, unreported (F)

Facts and legal issues: Hays brought an action for a cease and desist order against the conditions adopted by La Poste for setting up a division (Assurmail) which would compete with Hays' Document Exchange service (DX) in the insurance sector.

Hays claimed that Assurmail benefited from cross-subsidies constituting non-notified State aid in breach of Article 88 (3) EC. Hays also claimed that La Poste's action breached Article 82 EC.

Decision: The President of the Commercial Court decided to refer a question the Commission, but on the day of the re-opening of the oral hearing, its decision was appealed; the Court of Appeal did not come to a ruling on this matter as the Commission issued a decision (on 5 December 2001) declaring that the service was in breach of Article 82 EC. This was sufficient for La Poste to discontinue Assurmail (the Court of Appeal decided on 7 December 2001 to stay the proceedings until the adoption of a Commission decision, which was adopted two days before the delivery of this judgment).

3.1. 2 President of Commercial Court of Brussels, Judgment of 13 February 1995, Breda Fucine Meridionali v Manoir Industries, JTDE, 1995, p 72 (F/H/I)

Facts and legal issues: the Belgian national railways (SNCB-NMBS) launched a tender for the provision of railways materials. Breda, an Italian company, and Manoir Industries, aPage 88 French company, submitted competing offers. It appeared that Breda's offer was 40 % lower than Manoir's offer.

Manoir filed a complaint with the Commission, alleging that Breda benefited from State aid granted by the Italian State. Manoir also lodged an action for a cease and desist order before the President of the Brussels Commercial Court alleging that Breda's offer was abnormally low and unfair due to this State aid, which had not been notified to the Commission. An order was rendered by default in favour of Manoir. Breda filed an opposition with the same judge, requesting a contradictory judgment.

Decision: the President of the Brussels Commercial Court first recalled, rejecting Breda's pleas, that the national court has powers to interpret and apply the concept of aid with a view to determining whether a State measure had to comply with Article 88 (3) EC. The President of the court explicitly referred to Steinike & Weinlig67.

The President of the court further rejected the argument that the definitive and non-provisional character of the powers of the court, in the context of the cease and desist order procedure, would be incompatible with a possible Commission decision on the compatibility of the aid with the Common Market. The Court referred this time to Saumon - FNCE68 in order to confirm that any Commission decision could not have the effect of a posteriori regularising a violation of Article 88 (3) EC. The national court may therefore not be requested to stay the proceedings while waiting for such a Commission decision.

Finally, the President of the court ruled that Breda could not exonerate itself by arguing that the notification obligation bears on the Italian State and not on itself, the State aid being "incompatible with the Common Market, and therefore unacceptable, on this market, [sic] Breda committed an abuse in intervening on it as it did with its offer to the SNCB, with the help of such State aid; this abuse constitutes an act of unfair competition prohibited by Article [88] of the Law on the protection of commerce and consumers since it infringes or may infringe a subjective right of Manoir to an undistorted competition, inherent to its professional interests".

Comments: this is an exemplary decision which refers to all the consequences, vis-à-vis the beneficiary of unlawful aid, of the violation of Article 88 (3) EC. The State claiming any benefit from this violation constitutes an act of unfair competition under national legislation69. The competitor of such a beneficiary has the right to stop this act of unfair competition by having recourse to an efficient litigation procedure which leads to a definitive decision, although the latter is adopted by virtue of an interim relief procedure (specific procedure for a cease and desist order).

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There is, however, one confusing point in the judgment. Rejecting Breda's argument, the President of the court rightly stated that the question of the eventual compatibility of the State aid was not at stake. However, in its concluding decision, the President of the court wrongly qualified the State aid in question as being "incompatible aid with the Common Market". This was perhaps an error of wording, but it should nevertheless not be repeated in order to avoid confusing the important distinction between the legality/lawfulness of the aid, on the one hand, and its compatibility with the Common Market, on the other hand (the only scope of intervention of the judge under Article 88 (3) EC read in conjunction with Article 87 (1) EC).

It should be noted that Breda later on brought an action before the Council of State seeking to annul the decision of the SNCB to avoid the tender to Manoir. This is described in more detail in section 3.5.4 below.

3.1. 3 Court of Appeal of Brussels, 5 February 1993, Namur-Les Assurances du Crédit SA and Compagnie Belge d' Assurance Crédit SA v The Office National du Ducroire and the Belgian State, unreported (F)

Facts and legal issues: under the Belgian Law of 31 August 193970 on the Office national du Ducroire ("OND"), that body, which is a public establishment responsible, in particular, for guaranteeing risks relating to foreign trade transactions, was accorded a number of advantages. These were: a State guarantee, formulated as a general principle, capital endowment of State income-producing bonds, the covering of its annual financial deficit by the State and exemption from the tax on insurance contracts and from corporation tax.

Namur-Les Assurances du Crédit SA and Compagnie Belge d'Assurance Crédit SA, another private undertaking operating on the same market, considered that, in view of the advantages accorded by the State to the OND, the enlargement of its field of activity was of such a nature as to distort competition. They therefore lodged a complaint with the Commission, alleging infringement of Articles 87 and 88 EC. They also made an application to the national court seeking, in particular, on the basis of Article 88 (3) EC, suspension of the OND's activity as a credit insurer for exports to Member States until the adoption by the Commission of a decision on the compatibility of the aid accorded or the delivery of a judgment on the substance of their action against the OND and the Belgian State.

Decision: the Court of Appeal of Brussels referred a request for a preliminary ruling to the ECJ and asked inter alia the following question: "(1) Must Article [88](3) of the Treaty be interpreted as meaning that the granting or alteration of aid includes a decision of a Member State to authorize, after the entry into force of the Treaty, a public establishment, which previously engaged only incidentally in credit insurance for exports to other Member States, to exercise that activity in future without restriction, so that the aid which was granted by that Page 90 State to the establishment under legislation predating the entry into force of the Treaty now applies to the exercise of that activity as thus extended?"

The ECJ responded that "enlargement, in circumstances such as those described in the judgment making the reference, of the field of activity of a public establishment which is in receipt of aid granted by the State under legislation predating the entry into force of the Treaty cannot, where it does not affect the system of aid established by that legislation, be regarded as constituting the granting or alteration of aid which is subject to the obligation of prior notification and the prohibition on putting aid into effect laid down by that provision"71.

Comments: this case helped the ECJ clarify the scope of the notion of existing State aid.

3. 2 Actions seeking judicial review of legislation before the Court of Arbitration
3.2. 1 Court of Arbitration, Case 195/2004, 1 December 2004, Nestlé Waters Benelux and others (action for annulment of provisions of the law on fiscal aspects of environmental taxes and ecobonuses and the programme act of 2003), excerpt published in Belgisch Staatsblad/ Moniteur belge of 10 December 2004, p 81699 (B)

Facts and legal issues: Nestlé Waters and others72 filed actions for annulment of some provisions of the law on fiscal aspects of environmental taxes and eco-bonuses and the Programme Act of 2003. These provisions introduced a new tax regime for drinks' packaging. This regime involved so-called 'eco-bonuses' in the form of a reduction of excise duties and value added taxes on drinks and a levy on packaging, subject to an exemption under certain conditions.

The Programme Act of 2003 abolished the legal provision which exempted from the levy packaging that was made up of a minimum percentage of recyclable raw materials. At the same time the Programme Act gave the government the power to introduce such an exemption and expressly provided that the exemption could only enter into force after authorisation by the Commission. This legal change was triggered by a letter from the Commission to the Belgian Government, expressing doubts as to the possible State aid character of this exemption.

The claimants challenged the new tax regime for drinks' packaging under various headings. The majority of their arguments related to infringements of taxation principles, such as legal certainty, predictability and legality. The latter principle requires that there is a parliamentary act which determines the essential elements of the tax. Other arguments concerned alleged breaches of EC law, in particular Articles 28 and 30 EC, Article 90 EC and certain directives.

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The claimants also challenged the new framework for exemptions of recyclable raw materials from the levy, submitting that it amounted to an illegitimate discrimination between re-usable packaging on the one hand, which is exempted by the Act itself, and recyclable packaging on the other hand, which can only be exempted after the government decides to grant the exemption.

Decision: the Court of Arbitration rejected all of the actions, except for the challenge to the provision which allowed the government, instead of the legislator, to change the tax bands, since this amounted to an infringement of the principle of legality of taxes.

In order to justify the new exemption regime which led to discrimination between re-usable and recyclable packaging, the Court of Arbitration expressly referred to the Commission's letter expressing doubts as to the possible State aid character of this exemption, which prompted the legislator to provide that the new exemption could only enter into force after approval by the Commission.

3.2. 2 Court of Arbitration, Case 32/2004, 10 March 2004, Municipality of Schaarbeek against the Belgian State (preliminary question - tax exemption of the public telecoms operator), excerpt published in Belgisch Staatsblad/ Moniteur belge of 10 May 2004, p 37541 (B)

Facts and legal issues: in a dispute between the Municipality73 of Schaarbeek and the Belgian State before the Court of First Instance of Brussels, the latter court referred a preliminary question to the Court of Arbitration regarding the constitutionality of Article 25 of the Act of 19 July 1930 establishing the Telegraph and Telephone Agency ("R.T.T."). This article exempted Belgacom (successor of the R.T.T.) from all taxes in favour of municipalities, despite the fact that the company was performing both a public service and a commercial activity.

Complaints had been filed with the Commission, alleging that the exemption after the liberalisation of the market constituted illegal and incompatible State aid. The Commission closed its file on this matter once it learned from the Belgian State of its intention to repeal the measures in question, which it did in August 2002.

In this procedure, Schaarbeek alleged that the tax exemption constituted an infringement of Articles 10 and 11 of the Belgian Constitution (non-discrimination), read in conjunction with Articles 86 and 87 EC. In particular, it submitted that the fact that Belgacom had continued to be exempted in the period between the liberalisation of the market and August 2002 was unconstitutional, in that it favoured Belgacom over its competitors.

Decision: according to the Court of Arbitration, it can be inferred from the Commission's decision to close the file that the tax exemption is an existing State aid (the exemption wasPage 92 enacted in 1930), although the Commission did not state whether it concerned existing aid or new aid (at least the judgment did not elaborate on the reasoning of the Commission for closing the file). The Court of Arbitration ruled that the aid can only be considered incompatible after a negative Commission decision. Since the Commission filed the complaint, there had been no such decision. Moreover, the exemption had been abolished by the Belgian State upon request by the Commission. The Court of Arbitration therefore concluded that Articles 87 and 88 EC had not been infringed.

Furthermore, the fact that the exemption was not abolished with retroactive effect was not found to be unconstitutional. Belgacom had to be given the appropriate time to adjust to the requirements of a liberalised market.

Comments: the Court of Arbitration is competent to judge on the compatibility of a parliamentary act with the Belgian Constitution when read in conjunction with the articles in the EC Treaty on State aid. In making this judgment, the Court of Arbitration respected the (alleged) view of the Commission as to whether there was (existing) aid.

One can query the fact that the Court did not simply state that it was not competent to adjudicate on the matter as the aid in question concerned existing aid (an area in which national courts have no competence to adjudicate).

3.2. 3 Court of Arbitration, Case 143/2004, 5 November 2003, Province of Hainaut and municipalities of Schaarbeek and Sint-Joost-Ten-Node (action for annulment of programme act of 2001), excerpt published in Belgisch Staatsblad/ Moniteur belge of 25 November 2003, p 56634 (B)

Facts and legal issues: as indicated in the case74 cited in section 3.2.2., Belgacom was exempted from municipal and provincial taxes by virtue of the Law of 19 July 1930. Complaints were filed with the Commission against this measure on the grounds that it constituted incompatible State aid contrary to Article 87 EC. As a result of these complaints this tax exemption was repealed by Law in 2001 and 2002 with ex nunc effect ("the contested measures"). The Commission closed its file on this matter once it learned from the Belgian State of its intention to repeal the measures in question.

The claimants, the Municipalities of Schaerbeek and St Josse Ten Noode, sought the annulment of the contested measures in so far as they had no retroactive effect. According to the claimants, since the liberalisation of the telecommunications market in Belgium in 1992, the tax exemption in question violated inter alia Articles 87 and 88 EC in so far as the exemption favoured Belgacom over other economic operators. Accordingly, the complainant considered that Belgacom should be required to pay the municipalities all unpaid taxes since 1992.

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Decision: the Court of Arbitration inferred from the Commission's decision to file the complaint against the measures in question that the Commission considered that the tax exemption constituted existing aid, the repeal of which by the Law of 2001 and 2002 was sufficient to meet the requirements of the EC Treaty.

The Court of Arbitration ruled that, as the measure constituted existing aid (it was enacted in 1930), it could only be considered as incompatible with the EC Treaty once the Commission had adopted a decision to that effect.

The Court of Arbitration therefore concluded that there was no violation of Articles 87 and 88 EC.

Comments: See comment in section 3.2.2.

3.2. 4 Court of Arbitration, Case 17/2000, 9 February 2000, Georges Lornoy & Sons and others (action for annulment of provisions of act establishing budgetary fund for the health and quality of animals and animal products), published in Belgisch Staatsblad/ Moniteur belge of 7 March 2000, p 6681 (B)

Facts and legal issues: see section75 3.3.1 below for a description of the case.

3.2. 5 Court of Arbitration, Case 20/97, 15 April 1997, Professional Association of the Belgian and foreign insurance companies operating in Belgium (action for annulment of provisions of the Law of 20 December 1995 containing social provisions), published in Belgisch Staatsblad/Moniteur belge of April 1997, p 9567 (B)

Facts and legal issues: an association of insurance companies76 (the "UPEA") filed an action challenging the constitutionality of a specific regime of deductibility of contributions to retirement funds and the provision of a State guarantee for the solvability margin of one social fund, i.e. the "Caisse de Prévoyance" of doctors, dentists, and pharmacists (the "Doctors' fund").

The State guarantee was only granted to one social fund and not to the traditional insurance companies. The UPEA therefore alleged that a competitive advantage was being granted to the Doctors' fund by way of a State aid measure which had not been notified to the Commission. In the UPEA's view this amounted to an infringement of the Belgian Constitution, read in conjunction with the EC Treaty provisions on State aid.

Decision: the action was dismissed. The Court of Arbitration considered the absence of notification of a potential State aid measure as a matter relating purely to the establishment of the legislative act in question rather than to its substance. Therefore, as the objection didPage 94 not concern the substance of the challenged legislative act but rather the way in which that act was established, the Court of Arbitration considered that it was not competent to rule on the matter.

Comments: the Court erred in law by holding that the absence of notification of a potential State aid measure is a procedural matter, which relates to the establishment of the legislative act introducing the measure and does not affect the substance of the act itself. If a newly introduced State aid measure has not been notified to the Commission, the aid is unlawful on the basis of Article 88 (3) EC, and so should be declared null and void under national law. In light of the supremacy of EC law, the legislative act introducing the aid should then be regarded as unlawful.

3. 3 Cases relating to the 1987 law on animal health requiring parties to make contributions to the system
3.3. 1 Court of Arbitration, Case 17/2000, 9 February 2000, Georges Lornoy & Sons and others (action for annulment of provisions of act establishing budgetary fund for the health and quality of animals and animal products), published in Belgisch Staatsblad/Moniteur belge of 7 March 2000, p 6681(B)

Facts and legal issues: the Law of 24 March 198777 on animal health established a system to finance services combatting animal diseases and improving animal hygiene and the health and quality of animals and animal products. The claimants were required to make contributions to this system. The Belgian State failed to notify this aid scheme to the Commission in breach of Article 88 (3) EC.

On 7 May 1991, the Commission adopted Decision 91/538/EEC on the animal health and production fund in Belgium. The Commission ruled that the aid granted by Belgium in the beef, veal and pork sectors was incompatible with the Common Market within the meaning of Article 87 EC and must be discontinued in so far as the compulsory contribution was also imposed on products imported from other Member States at the stage of slaughter.

On 16 December 1992, the ECJ, following a request for a preliminary ruling by a Belgian court (see case summary in section 3.3.3 below), held that the contributions in question could constitute a charge having equivalent effect to a customs duty contrary to Article 12 EC, as well as State aid contrary to Article 87 EC78.

The 1987 Law was repealed and replaced by the Law of 23 March 1998 on the establishment of a budgetary fund for the health and quality of animals and animal products. The 1998 regime had retroactive effect with regard to the measures introduced by the 1987 law requiring persons to make contributions to the fund. This State aid scheme was properlyPage 95 notified to the Commission and approved in 1996 (Commission Decision of 9 August 1996 relating to aid measure N 366/96).

The claimants brought an action seeking the annulment of the 1998 regime. They claimed inter alia that the 1998 regime breached Articles 10 and 11 of the Belgian Constitution, read in conjunction with Articles 87 and 88 EC, the principle of legal certainty, and the general principle of the non-retroactivity of laws. According to the claimants, the 1998 regime deprived Article 88 (3) EC of its effectiveness in so far as it prevented them from seeking reimbursement of the contributions made under the 1987 regime.

Decision: the Court of Arbitration dismissed the actions of the producers on the grounds set out below.

First, the Court of Arbitration noted that Belgian law allows a measure to have retroactive effect when it is indispensable for achieving an objective of general interest, such as the good functioning of the public service.

The Court of Arbitration then considered that the 1998 law only consolidated the provisions of the 1987 regime. It did not contain any new provision which differed from those contained 1987 regime. The national producers should therefore have expected that Belgium would maintain the measures in question after meeting its obligation to notify these measures.

The Court of Arbitration finally considered that this did not go against Community law. Indeed, as the Commission had, by virtue of its 1996 Decision, approved the 1998 regime without any condition, and, given the importance of the measure in question, the Court considered that the 1998 law was compatible.

Comments: this judgment runs contrary to the principles established in the earlier judgments of the ECJ concerning the impact of non-notification of State aid measures in breach of Article 88 (3) EC79.

The ECJ's later ruling in 2003 in the Van Calster and Cleeren case80 concerned the same measures examined by the Court of Arbitration. The ECJ noted that Article 88 (3) EC precludes the levying of charges which finance specifically an aid scheme that has been approved by the Commission, in so far as those charges are imposed retroactively in respect of a period prior to the date of that decision (the Court of Appeal of Antwerp, which referred this Van Calster case to the ECJ81, has not yet delivered its judgment).

According to the ECJ, the 1996 Commission decision does not approve the retroactive effect of the 1998 regime; even if the Commission did examine the compatibility of the chargesPage 96 imposed with retroactive effect, it does not have competence to decide that an aid scheme put into effect contrary to Article 88 (3) EC is legal.

As illustrated in section 3.3.2 below, unlike the Court of Arbitration, the Supreme Court has now taken into account the ECJ's ruling.

3.3. 2 Supreme Court, Case no C.02.0133.N, 11 March 2005, Voeders Velghe - De Backer v Belgian State (contributions on basis of Law on animal health) (B)

Facts and legal issues: see the ruling of the Court of Arbitration82 in the Lornoy case cited above. This case concerns the same 1987 law referred to in the Lornoy case and its amendment in 1998.

The claimants brought an action seeking recovery of the contributions they made under the 1987 law on the grounds that this constituted unlawful State aid.

The Court of Appeal of Brussels (following the Court of Arbitration ruling in Lornoy summarised above) considered that the 1998 law retroactively brought to an end the unlawfulness of the 1987 law and that there was therefore no need to reimburse the relevant contributions.

The parties lodged an appeal on points of law ("pourvoi en cassation") before the Supreme Court, which upheld the parties' appeal and annulled the judgment of the Court of Appeal.

Decision: the Supreme Court first noted that where a State aid measure is implemented in breach of the obligation to notify, the national judicial bodies are obliged to order the reimbursement of the relevant contributions setting up this measure.

The Supreme Court observed that, whilst the assessment of the compatibility of aid measures with the Common Market falls within the exclusive competence of the Commission, it is for the national courts to ensure that the rights of individuals are safeguarded where the obligation to give prior notification of State aid to the Commission pursuant to Article 88 (3) EC is infringed.

The Supreme Court then referred to the ECJ's judgment in Van Calster and Cleeren (cited in section 3.3.1 above), in which it specifically examined the 1987 Belgian law. The Supreme Court ruled that a Commission decision declaring the draft 1998 law compatible does not retroactively remedy the failure to notify the 1987 law.

On this basis, the Supreme Court considered that the Court of Appeal was therefore wrong to consider that the 1998 law could have retroactive effect and regularise the contributions made under the 1987 law, a measure which was not notified to the Commission in breach of Article 88 (3) EC.

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Comments: this judgment rightly applies the principles of the ECJ's case law, in particular cases C-354/90 Saumon - FNCE, C-39/94 SFEI a.o. v La Poste a.o. and Joined cases C-261/01 and C-262/01 Van Calster. This case illustrates that the Belgian civil courts have not applied the Court of Arbitration's reasoning in the Lornoy case (mentioned in section 3.3.1 above), and are now correctly applying EC case law.

3.3. 3 Supreme Court, Case no C 96.0091.N, 19 January 2001, Belgian State against Georges Lornoy & Sons and others (parafiscal retributions) (B)

Facts and legal issues: in this case, the Belgian State83 was pursued by veal importers before Civil courts seeking the reimbursement of the contributions they had to make to the fund for the health and safety of animals (which was set up by the 1987 law on animal health). This is the same fund referred to in the Cour of Arbitration's ruling in the Lornoy case and the Supreme Court's ruling in the Voeders Velghe judgment. However, this case does not concern the impact of the subsequent amendment of the law in 1998 which was the subject in those other cases.

In 1991, the Court of First Instance of Turnhout made a reference for a preliminary ruling to the ECJ, asking whether this measure constituted incompatible State aid. On the basis of the ECJ's response to its request for a preliminary ruling (see Case C-17/91, Lornoy, cited above) and the Commission's Decision of 7 May 1991 declaring that the State aid was incompatible with the Common Market, the Court of First Instance of Turnhout ordered the Belgian State to reimburse the contributions. This judgment was upheld in 1995 by the Court of Appeal.

On appeal, on points of law, the Belgian State argued that the Supreme Court should set aside the Court of Appeal's judgment on, among others, the following grounds:

- the Court of Appeal should not have considered that the entire aid regime constituted incompatible State aid in so far as the Commission decision of 7 May 1991, declaring this aid incompatible, did not require the parties to change the obligatory contributions established for national products - i.e. in the Belgian State's view only the charges imposed on imported goods should be reimbursed;

- by virtue of a Law of 21 December 1994, the 1987 law had been amended so as to bring the aid regime in line with the Commission's decision; and

- the reimbursement of the contributions could lead to an unjust enrichment of the parties involved.

Decision: the Supreme Court confirmed the Court of Appeal's ruling and rejected arguments submitted by the appellant.

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First, by failing to notify the aid regime (and subsequent modification) to the Commission, the State violated Article 88 (3) EC. The Court of Appeal had to draw all the consequences concerning the validity of the measures in question. By virtue of Article 88 (3) EC, the sanction for not notifying the aid in question was to render it impossible for the Member State in question to apply the 1987 law.

Secondly, the Law of 19 December 1994 amending the 1987 law introduced a new aid regime which should have been notified to the Commission in accordance with its Decision of 7 May 1991. The Supreme Court noted that the Belgian State had failed to do so. The Supreme Court considered that by virtue of Article 88 (3) EC, the Commission should have been informed of each proposed aid measure that the Member State wished to introduce.

Thirdly, the Supreme Court, relying on the ECJ's judgment in the Dilexport case84, considered that the national judge could indeed consider that the reimbursement of the contributions in question might constitute an unjust enrichment. However, national authorities would not require persons seeking reimbursement of such contributions to submit evidence that they had not passed on the debt to third parties.

Comments: the Supreme Court has correctly applied the principles of EC law and fully drew the consequences of the State's failure to notify a State measure in breach of Article 88 (3) EC. The parties needed ten years of legal proceedings in order to obtain a final order for the reimbursement of their contributions. It is interesting that in this case the Supreme Court did not even refer to the earlier Court of Arbitration ruling on the retroactive effect of the 1998 law.

3.3. 4 Court of Appeal of Brussels, Case no 95KR248, 4 December 1997, NV De Moor Gilbert and others against the Belgian State (contribution to fund for the health and production of animals) (B)

Facts and legal issues: this case concerned85 a dispute between undertakings trading in pig meat, on one hand, and the Belgian State, on the other, about the legality of a compulsory contribution levied upon the slaughter or export of beef cattle, calves and pigs, for the benefit of the fund for the health and safety of animals (the "1987 law" referred to above).

In a previous action, the undertakings had sought and received an order under which the State was prohibited from cashing the contributions pending the adoption of a Commission decision. However, the Court of First Instance ordered the slaughterhouses to transfer the amounts claimed to the Deposit and Consignation Fund in order to preserve the rights of the State pending that Commission decision. The Court of First Instance also submitted three preliminary questions to the ECJ86. The questions submitted by the Brussels Court of FirstPage 99 Instance were very similar to the preliminary questions submitted by the Court of First Instance of Turnhout in the Lornoy case referred to above87.

In this case, the slaughterhouses requested the release of the money blocked in the special fund. In the meantime, the Commission had decided on 7 May 1991 that the aid paid with the money collected through the contributions was incompatible with the Common Market. The ECJ for its part had ruled on the preliminary questions and had pointed to the role of the national judge to uphold the rights of those affected by a possible breach by the State of the prohibition on putting aid into effect without awaiting a positive Commission decision.

Decision: the release of the blocked money was granted. On appeal, the Court of Appeal reasoned that the Belgian State had not notified the potential State aid measures and that a State could never implement State aid measures in the absence of a final positive Commission decision. Therefore, the State was not legally entitled to cash the contributions.

Comments: this case highlights the division of powers between the national judge and the Commission in State aid matters, noting the Commission's exclusive competence to assess the compatibility of aid with the Common Market and the national court's duty to draw the consequences of the failure by a State to notify an aid, in breach of Article 88 (3) EC.

3. 4 Recovery actions by the State
  1. Actions for recovery against beneficiaries for unlawful aid following a negative Commission Decision

3.4. 1 The Ter Lembeek Case (2004)

Facts and legal issues: on 24 April 2002, the Commission issued a decision (Decision 2002/825) declaring that the State aid which Belgium implemented for the Beaulieu Group (Ter Lembeek International) in the form of the waiver of a debt of BEF 113,712,000 was incompatible with the Common Market. The Commission ordered Belgium to take all necessary steps to recover from the beneficiary the aid referred to in Article 1 and unlawfully made available to it.

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On 22 July 2002, Ter Lembeek International brought an action before the CFI seeking the annulment of the Commission Decision (Case T-217/02, still pending).

The Walloon Region brought an action before the Commercial Court seeking the recovery of the unlawful aid.

Ter Lembeek requested the Commercial Court to suspend proceedings until after the judgment of the CFI. The Walloon Region claimed on the other hand that the decision of the Commission was binding and that actions before the ECJ have no suspensory effect.

On a subsidiary basis, the Walloon Region requested a bank guarantee. Ter Lembeek disagreed on the grounds that it was a solvent company.

Decision: the Commercial Court noted that this case concerned the division of competences between the Commission and the national judge in State aid matters. The Commercial Court noted that where it is required to make a judgment under Articles 81 and 82 EC in a matter already adjudicated by the Commission, the national judge may not take a decision which goes against the Commission decision.

The Commercial Court considered that the Commission's decision would still be respected if it suspended the proceedings until the judgment of the CFI. Indeed, according to the Commercial Court, the Walloon Region would not suffer any damage as it could claim interest on the sums owed. The Commercial Court therefore suspended proceedings until the CFI's ruling in Case T-217/02.

The Commercial Court ordered Ter Lembeek to set up a bank guarantee for the sum owed which would become payable if the CFI upheld the validity of the Commission decision. No date was provided as regards the date by which this bank guarantee should be set up.

Comments: by staying the proceedings until judgment of the CFI, the Commercial Court has not given full effect to Article 88 (3) EC and the Commission's order to recover the unlawful aid. The Commercial Court's decision is clearly motivated by the fact that it would not wish to arrive at a situation where the CFI would annul the Commission's decision when Ter Lembeek had already repaid the aid.

It should be noted that Ter Lembeek appealed the judgment to make a bank guarantee available to the Court of Appeal.

Facts and legal issues: this case is a follow-up to the Commercial Court's judgment in the case referred to above.

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The Walloon Region pleaded that Ter Lembeek had not executed the Commercial Court's ruling to set up a bank guarantee. Indeed, the Commercial Court's ruling had not provided any time-limit by which the bank guarantee should be set up. The Walloon Region therefore requested the Commercial Court to require Ter Lembeek to execute the court's ruling in the above case by setting up a bank guarantee and order that any failure to do so would be subject to a penalty payment.

Decision: the Court dismissed the Walloon Region's action on the ground that there was no urgency involved in the application for interim measures. Indeed, in the Commercial Court's view, there was no evidence that Ter Lembeek would become insolvent prior to the CFI's judgment on the Commission decision and that the Walloon Region would therefore suffer any irreparable damage.

Comments: the impact of this ruling in combination with the Commercial Court's ruling in the case summarised above is that Ter Lembeek can avoid taking any substantial measures to reimburse the aid, as long as an action for annulment against a Commission declaring the aid incompatible is pending before the CFI.

3.4. 2 Commercial Court of Mons, RG 03630/01, 21 January 2002, SRIW (Walloon Region) v Mrs BLONDIAU (curator of the bankrupt estate of Verlipack), unreported (A)

Facts and legal issues: the Belgian State granted aid to the Verlipack group in form of a capital injection to Verlipack and two loans granted to a private company in order to finance the acquisition of a majority share in Verlipack. In its Decision of 4 October 2000, the Commission declared the aid illegal and incompatible with the Common Market and ordered the Belgian State to recover the aid from Verlipack. The Commission's decision was upheld by the ECJ on 3 July 200388.

Since the normal term open to creditors under Belgian law to lodge claims with the bankrupt's trustee had already passed, the Walloon Region had to seek an order from the Commercial Court allowing it to lodge its claim regarding the loans with the bankrupt estate. The government therefore brought proceedings against three companies which were part of the Verlipack group in two different proceedings.

Decision: the Commercial Court issued two orders admitting the claim by the Walloon Region concerning the loans in the bankrupt estate. Consequently, the Walloon Region was registered as a creditor.

Comments: without expressly saying so, the Commercial Court accepted the Commission's decision in which recovery of the aid was ordered as an autonomous cause of action whichPage 102 justifies admitting the State as a creditor of the bankrupt's estate. The approach of the Supreme Court in Tubemeuse (see below) does not seem to be contested any more.

3.4. 3 The Idealspun case (recovery capital investment) (A)

Facts and legal issues: the Belgian Government subscribed to a capital increase of Idealspun N.V., a subsidiary of Beaulieu, the biggest Belgian textile group. The Commission decided on 27 June 1984 (Decision 84/508) that the participation by the State constituted aid which was incompatible with the Common Market. On 9 April 1987, the ECJ found that Belgium had failed to comply with the Commission decision by not having recovered the aid89. On 19 February 1991, the ECJ found that Belgium had failed to comply with its 1987 judgment90.

After these judgments of the ECJ, the Flemish Government (successor in title of the Belgian Government in the area of economic expansion policy) sued Idealspun and its other shareholders to recover the aid on the basis that the subscription was void.

The obligation to repay the aid was not contested as such by the recipient. The issue at stake was the legal basis of that obligation. The government was of the opinion that the contract under which they had subscribed to the capital increase was contrary to EC law and was therefore void ab initio (see Tubemeuse case of 1992 below). This gave rise to an obligation on Idealspun to repay the amount paid under the void contract. According to the recipient, the contract was not void and if any repayment was due, it was under the contract itself. The recipient also asserted that it could still challenge the negative Commission decision in court since it had not been a party to the procedure before the Commission and the ECJ (violation of Article 6 ECHR).

Decision: the Commercial Court ruled in favour of the government. According to the Commercial Court, the contract was void since the Commission had decided that the aid was unlawful and incompatible with the Common Market, and this decision was not subject to review by the national judges.

Article 6 ECHR had not been infringed since the recipient of the aid could have intervened in the procedure before the Commission and challenged the Commission's decision before the CFI, but neglected to do so. The Commercial Court also did not accept that Idealspun had legitimate expectations regarding its entitlement to retain the aid. The Belgian Government had implemented the aid before the Commission had taken a decision. A diligentPage 103 businessman would have known that the Belgian State had not complied with the standstill obligation under Article 88 (3) EC.

Comments: the Court drew the right legal conclusions from the Commission's decision in which the capital participation was declared to be aid which was incompatible with the Common Market. This should indeed lead to the conclusion that the contract under which the State had subscribed to the capital increase was contrary to EC law and was therefore void ab initio.

The judgment drew all the consequences of the illegality under Article 88 (3) EC and applied the principles set out in the Tubemeuse judgment, which states that a statutory violation of EC law is deprived from any legal consideration.

Facts and legal issues: the recipient of the aid appealed against the judgment of the Kortrijk Commercial Court. The recipient argued that at the time the negative Commission decision was adopted, in light of certain developments in the case law on admissibility of direct actions on the basis of Article 230 (4) EC, it was not clear that it could have challenged the decision. The recipient also urged the Court of Appeal to refer preliminary questions to the ECJ about the validity of the Commission's decision.

Decision: the Court of Appeal confirmed the judgment in all of its aspects. According to the Court of Appeal, it was beyond doubt that the recipient undertaking, as the beneficiary of individual aid, had standing to appeal the negative Commission decision. The undertaking could not rely upon its wrong assessment of its right to appeal.

The Commission decision was final and could not be contested before the national judge. Therefore, the Court of Appeal ruled that the request for a preliminary procedure was pointless. The Court of Appeal concluded that the aid was illegal and the capital injection should be reimbursed (it should be noted that the Commercial Court of Ghent - see Beaulieu case below - reached the same conclusions six years beforehand by even anticipating this principle recognised by the ECJ in 1994 (see TWD in section 2.2 above)).

Comments: six years have passed since the Commercial Court's ruling ordering recovery of the aid and 16 years since the Commission decision ordering reimbursement of the aid.

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3.4. 4 The Beaulieu case (recovery capital investment) (A)

Facts and legal issues: Socobesom granted aid amounting to BEF 725 million to NV Fabelta, an insolvent synthetic fibre producer. The aid would take the form of a majority holding by Socobesom in a newly formed enterprise (NV Beaulieu Kunststoffen), in which a large private textile group, mainly engaged in carpet production, would take a minority holding of BEF 200 million and would use part of the aid to manage a rescue operation by undertaking certain investments in order to maintain the nylon production of the insolvent firm. This aid was notified to the Commission.

In its Decision 84/111 of 30 November 1983, the Commission decided that the aid was unlawful (implementation before its decision) and incompatible and ordered the Belgian Government to recover the aid. On 24 February 1989, the ECJ ruled that the Belgian Government had failed to implement the decision91.

Sobescom and the Belgian Government started proceedings to recover the aid. Due to the refusal of Beaulieu to return the aid, Sobescom and the Belgian Government filed an action for recovery before the Commercial Court. The defendants argued that the Commission decision was unlawful.

Decision: the Commercial Court upheld the arguments of the claimants on the same grounds as those set out in the Idealspun case described earlier. Indeed, the Commercial Court considered that only the ECJ could annul the Commission decision, and that the defendants had had the opportunity to challenge the decision before the CFI under Article 230 EC, but had failed to do so within the required time limits. The Commercial Court therefore considered it inappropriate to make a reference for a preliminary ruling before the ECJ relating to the validity of the Commission decision.

The Commercial Court further noted that the defendants could not rely upon the principle of legitimate expectations. Indeed, the claimants, before receiving State aid should, each as a "careful undertaking", have examined whether the State aid measure had been notified and approved by the Commission. Furthermore, the Commercial Court noted that, as the defendants were undoubtedly familiar with transactions containing elements of State aid and were surrounded by efficient advisors on Community law, the relevant provisions of EC law should have been sufficiently known to them.

The Commercial Court ordered the defendants to reimburse the aid, including interest to be counted from 19 December 1988 (the date on which the Commission had sent a reasonedPage 105 opinion to Belgium claiming that it had failed to comply with its obligations under the EC Treaty).

Comments: as mentioned above, it is remarkable that the Commercial Court reached this reasoning a few days before a landmark case of the ECJ on the question of inadmissibility of a preliminary reference under Article 234 EC when the Commission's negative decision had not been challenged92.

Facts and legal issues: this is NV Beaulieu's appeal against the judgment of the Commercial Tribunal of Ghent mentioned above. The arguments raised on appeal are very similar to those raised in the main proceedings.

NV Socobesom cross-appealed claiming that interest should be paid on the aid granted from 28 July 1983 to date.

Decision: the Court of Appeal dismissed the appeal on the same grounds as the Commercial Court.

The Court however did consider that interest should be paid on the sum owed from 1 January 1985 rather than from 19 December 1988.

This is NV Beaulieu's appeal against the judgment of the Court of Appeal. The Supreme Court dismissed the appeal.

3.4. 5 Supreme Court, Case No 9152, 18 June 1992, Belgian State v NV Tubemeuse (recovery capital investment) (A)

Facts and legal issues: the Belgian State93 granted aid to the company Tubemeuse through the form of a subscription for shares in the capital of the company. In its decision of 4 February 1987, the Commission declared the aid incompatible and ordered the Belgian State to recover the aid (which had not been notified).

Tubemeuse was subject to insolvency proceedings. The Belgian State requested that it should be registered as a creditor in order to recover the unlawful aid. The judge at firstPage 106 instance and the Court of Appeal rejected this request on the grounds that the Commission decision did not transform the Belgian State's participation in the capital of Tubemeuse into a simple debt for the receiver.

The case was appealed to the Supreme Court.

Decision: the Supreme Court stated that the EC State aid rules were public policy rules and therefore any act granting State aid contrary to these provisions would be illegal.

Accordingly, the capital injection introduced by the Belgian State in SA Tubemeuse was deprived of any legal cause and should be declared null and void. The absolute nullity of the capital injection would allow the Belgian State to recover the aid.

The Supreme Court considered that the Court of Appeal's refusal to register the Belgian State as a creditor did not recognise the effect of the absolute nullity of the capital injection and violated EC law. In this respect, the Court of Appeal's judgment was overturned.

Comments: this exemplary decision of the Supreme Court illustrates how efficient the application of EC law can be if all of the consequences of violating Article 88 (3) EC and a Commission decision are recognised by the judge.

The Supreme Court went on to set aside the application of national law in order to ensure the full effectiveness of EC law.

  1. Actions for recovery against beneficiaries for alleged illegal aid where there has been no negative Commission decision

3.4. 6 Supreme Court, Case No C.03.0409.N, 18 February 2005, Rijksdienst voor Sociale zekerheid v Champagne Holding and others (acquittal of social security debt) (A)

Facts and legal issues: the Rijksdienst voor Sociale zekerheid/Office National94 Sécurité Sociale (the "Social Security Service") challenged the restructuring and payment plan for Champagne Holding. The plan had been approved by a majority of creditors and the Commercial Court, and provided for a write-off of all debts up to 40% of the amount due.

The Social Security Service alleged inter alia that the partial write-off of social security debts constituted illegal State aid and, since the rules on State aid were matter of public policy, the Commercial Court had wrongly approved the restructuring and payment plan.

Decision: the Supreme Court rejected this and all other arguments. According to the Supreme Court, as long as the partial write-off of social security debts is of the same nature as the write-off of debts to private creditors granted under the same restructuring andPage 107 payment plan, the write-off does not constitute illegal State aid. The loss of social security contributions for the State in such a situation does not prove the existence of a burden on the State nor of a benefit for the recipient. To support this argument the Supreme Court cited cases C-480/98, Spain v Commission [2000] ECR I-8717 and C-200/97, Ecotrade [1998] ECR I-7907.

Comments: the Supreme Court took a very narrow approach to the concept of burden on the State and benefit to the recipient of the aid. A write-off of social security debts clearly places a burden on the State treasury to the benefit of the creditor. The comparison with the write-off of debts to private creditors does not appear to be relevant in that respect.

3.4. 7 Commercial Court of Liège, 16 April 2002, Office Nationale de Sécurité Sociale v L and Schroeder and Props (bankruptcy - social security debt), published in jurisprudence, de Liège, Mons et Bruxelles 2002/31 p 1373 (A)

Facts and legal issues: Mr L was in deep financial trouble. By virtue of the Law of 17 July 1997 on Arrangements with Creditors, a plan was approved by the majority of Mr L's creditors (in terms of numbers and money owed) in order to settle Mr L's debt. The ONSS, the social security service, which was one of Mr L's creditors, was against this arrangement as it would reduce Mr L's social security contributions.

The ONSS brought an action before the Commercial Court claiming inter alia that the reduction of social security contributions was contrary to Article 87 EC and contrary to the ECJ's ruling of 17 June 1999 concerning Belgium's Maribel aid scheme95.

Decision: the Commercial Court considered that the Maribel case law was not pertinent as it concerned a situation where the collecting entity granted the aid in question to one specific undertaking in a discretionary manner. In the case at hand, the 1997 law would apply to all undertakings in difficulty, and any positive measure would need to satisfy the objective conditions set out in the 1997 law.

The Commercial Court, applying a private creditor test, further noted that Mr L's private creditors voted massively in favour of the measures demanded by Mr L, thus illustrating that the private creditors were happy with that kind of measure.

3.4. 8 Commercial Court Brussels, 7 July 1997, Déménagements-Manutention Transports (DMT) - summarised in ECJ ruling of 29 June 1999 (A)

Facts and legal issues: the Commercial Court96 was examining the question of whether it should, of its own motion, declare DMT insolvent. Indeed, under the national applicable rules, insolvency may be pronounced by judgment of the Commercial Court upon application by thePage 108 insolvent trader, or on the application of one or several creditors, or of its own motion. An investigation into the possible insolvency of an undertaking is initially carried out by the investigating judge who, once he has sufficient information to suggest that the undertaking may be insolvent, refers the matter to the Commercial Court. That is what happened in this case. DMT's balance sheet showed that DMT could not, with its current assets, meet current liabilities. Notably, DMT owed social security contributions to the Office National de Sécurité Sociale (National Social Security Office) ("the ONSS"). It is accepted that the ONSS may, at its discretion, grant periods of grace to employers and vary such periods.

Decision: the Commercial Court pointed out that the ONSS appeared to have shown "exceptional patience" towards DMT in exercising that power. It therefore took the view that, by those payment facilities, the ONSS had contributed to sustaining, artificially, the business of an insolvent undertaking which was unable to obtain funding under normal market conditions. Accordingly, the Court decided to stay the proceedings and refer the following questions to the ECJ for a preliminary ruling: "1. Is Article [88] of the Treaty to be interpreted as meaning that measures in the form of payment facilities granted by a public body such as the ONSS enabling a commercial company to retain over a period of at least eight years a proportion of the sums collected from staff and to use those sums in support of its commercial activities, when that undertaking is unable to obtain funding under normal market conditions or to increase its capital, are to be considered State aid within the meaning of that article? 2. If the first question is answered in the affirmative, is Article [87] of the Treaty to be interpreted as meaning that such aid is compatible with the common market?"

The ECJ ruled that the Commercial Court had, of course, no jurisdiction to refer the second question, the Commission being exclusively competent to examine the compatibility of State aid with the Common Market. On the first question, the ECJ developed the so-called "private creditor test" and ruled that "Payment facilities in respect of social security contributionsgranted in a discretionary manner to an undertaking by the body responsible for collecting such contributions constitute State aid for the purposes of Article [87](1) of the EC Treaty if, having regard to the size of the economic advantage so conferred, the undertaking would manifestly have been unable to obtain comparable facilities from a private creditor in the same situation vis-à-vis that undertaking as the collecting body" (operative part of the ruling).

Comments: this case resulted from specific powers granted to the Commercial Court in the control of insolvent companies; however, it illustrates how Article 88 (3) EC can be given full effectiveness if national courts raise, within the limits of their powers, of their own motion, the violation of public policy rules such as Article 88 (3) EC. The Commercial Court did not rule any further on the matter. The sums in question were recovered.

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3.4. 9 Commercial Court Brussels, 8 February 1999, Public Prosecutor v SA Taverne Falstaff (payment scheme VAT), extract published in DAOR, 1999/99 p 49 (A)

Facts and legal issues: the public prosecutor demanded the bankruptcy of SA Taverne Falstaff. In its defence, the Taverne invoked the payment scheme granted to it by the VAT administration. This scheme allowed the Taverne to repay its debt in monthly installments over a period of seven to eight years, applying an interest rate much below the market rate. Therefore, the Taverne argued that it was not in a situation where it had lost the confidence of its creditors, which is a precondition to being declared bankrupt.

Decision: The Taverne was declared bankrupt by the Commercial Court. It held that the payment scheme constituted illegal State aid which had not been notified to the Commission, since the debt at stake concerned money received by the tax payer and distorted competition, particularly in light of the interest rate below market conditions. Therefore, the credit granted to the Taverne was void.

In support of its decision, the Commercial Court invoked the opinion of Advocate Jacobs in DMT, which set out the private investor test for the first time (see case mentioned above).

Comments: it may be doubted whether in this case the aid granted actually (or even potentially) affected trade between Member States.

3. 5 Actions by the beneficiary
3.5. 1 Council of State, case no 110.759, 30 September 2002, VZW V.K.W Limburg and VZW Kamer van Handel en Nijverheid van Limburg v Flemish Regions (F)

Facts and legal issues: on 26 October 2000, the Flemish Government97 notified to the Commission certain amendments to "directives" on soft aid for consultancy, training and studies (Flanders) which implemented inter alia the Law of 30 December 1970 concerning economic expansion and the Law of 4 August 1978 concerning economic reorientation. This aid scheme was approved by the Commission in a letter dated 12 January 2001 (aid No 712/2000) and on 14 December 2001, the Directives entered into force.

The claimants, the association of Christian employers of the Limburg Region and the Chamber of commerce of Limburg, filed actions for annulment and suspension of the measure in question.

The parties argued that their members would be negatively affected by the amendments introduced to the aid scheme.

Decision: the Council of State examined only whether it should suspend the measure in question or not. The Council of State pointed out that it can only suspend a measure if thePage 110 claimants concerned can show that there are serious grounds for annulling the measure and that the claimants themselves will suffer irreparable damage due to the implementation of the measure.

The Council of State considered that, where the members of associations are individually affected by a measure, those members must themselves bring an action for the suspension of the measure in question. An association cannot bring an action for suspension of a measure on behalf of third parties.

The Council of State therefore dismissed the action for suspension.

Comments: this case is interesting in so far as it shows that associations are not able to seek before the Council of State the suspension of State aid on behalf of the beneficiaries (who are members of the association in question) of the measure.

It should be noted that the action for annulment was later on withdrawn by the parties.

3.5. 2 Employment Court of Tongeren (tribunal du travail), Case No 2775/2000, 7 June 2002, Ford v Rijksdienst Sociale Zekerheid (Maribel aid scheme), unreported (A)

Facts and legal issues: in common with many other companies, Ford received aid from the Belgian State in the form of reductions of social security contributions (the so-called Maribelbis and Maribel-ter scheme). This scheme was declared unlawful and incompatible by the Commission, which ordered the Belgian State to recover the aid (Decision 97/239 of 4 December 1996). The ECJ rejected the Belgian State's action seeking the annulment of the Commission decision (Case C-75/97 cited above). Shortly afterwards, the Belgian State and the Commission concluded a Protocol Agreement which laid down the arrangements for repayment of the illegally granted aid.

Ford repaid the amount which was due on the basis of the National Act implementing the Protocol Agreement. However, it then attempted to reclaim part of this sum, asserting that the claim of the Belgian State to this part was time-barred.

In support of this claim, Ford argued that the applicable limitation period was five years, i.e. the limitation period applicable to claims by the Social Security Service against employers regarding social security contributions. According to Ford, the starting point of this limitation period was the date on which the aid was granted since the Commission decision declaring the aid incompatible with the Common Market had retroactive effect.

Decision: the Employment Court rejected Ford's claim. According to the Employment Court, the applicable limitation period was eight years and not five years, as claimed by Ford. The obligation to reimburse reductions of social security contributions is a specific obligation stemming from the EC State aid regime, and is not the same as the general obligation to payPage 111 social security contributions. Moreover, the act implementing the Protocol Agreement expressly laid down a limitation period of eight years.

The Employment Court considered that as to the starting point of the limitation period, the issue was when the claim of the State became due. The Employment Court considered, citing the FNEC case98, that when aid is granted in breach of Article 88 (3) EC is subject to a negative Commission decision, the transaction under which the aid granted is void ab initio. According to the Employment Court, this does not mean that the right to recover the aid existed from the moment the aid was granted. Citing the Ladbroke case99, the Employment Court stated that it is for the Member State to determine the legal basis for recovery of the aid. Therefore, the right to recover was due only once the act implementing the Protocol Agreement had been adopted, shortly after the judgment of the ECJ which finally confirmed the obligation for the Belgian State to recover the aid.

The Employment Court upheld the retroactive effect of the act establishing a prolonged limitation period of eight years. To hold otherwise would render it impossible for the Belgian State to recover the aid. According to the Employment Court, the principle that acts should not have retroactive effect should not be followed by the legislator when exceptional circumstances exist. In this case, the Employment Court recognised that the obligations of Belgium under the law of the EC constituted exceptional circumstances in light of the supremacy of EC law. Lastly, the Employment Court confirmed the principle established by the ECJ, according to which the breach of the obligation to notify aid prevents the recipient undertakings from relying on the principle of protection of legitimate expectations, as held by the ECJ100.

Comments: the Employment Court stretched the case law of the ECJ on the implementation of the obligation of the Member States under EC law to recover illegal aid. The ECJ has always recognised that the recovery of aid must take place in accordance with the relevant procedural provisions of national law, subject, however, to the condition that those provisions are to be applied in such a way that the recovery required by Community law is not rendered practically impossible (see also Article 14 (3) of Regulation No 659/1999). Moreover, the illegal and void character of the aid resulted directly from Article 88 (3) EC and not from the Commission's negative decision. Therefore, the supremacy of EC law (and Regulation No 659/1999) should have been used in order to justify that the limitation period of five years could not be applied, since this would have rendered the recovery practically impossible.

In this case, the Employment Court did not find that the application of national procedural law (i.e. the five year limitation period) would render the recovery impossible. The Employment Court therefore did not justify its statement that the non-applicability of the normal limitation period was justified by the application of EC law.

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3.5. 3 Council of State, case no 94.080, 16 March 2001, SA Dufrasne Métaux v the Walloon Region (action for annulment of decision to withdrawing decision granting investment aid) (A)

Facts and legal issues: in 1995, investment101 aid was granted by the Walloon region to the company Dufrasne Métaux SA in order to purchase a specific piece of machinery.

In June 1996, the Walloon region discovered that the aid did not fall within the scope of the Community Framework of Aid to Steel Industry. On this basis it decided to withdraw the aid granted to Dufrasne, request it to refund the aid already paid out, and not provide it with final instalments of the aid.

Dufrasne brought an action seeking the annulment of this decision.

The Region considered that the action was deprived of any purpose since, if annulled, the new act could only be identical. Indeed, the sum granted to Dufrasne would constitute an unlawful aid contrary to Article 88 (3) EC. By virtue of the Alcan case law102, this would require the Walloon Region to seek reimbursement of that aid.

Decision: the Council of State did not accept the argument of the Walloon Region. According to the Council of State, it was not clear whether the measure in question would be prohibited by Commission decision 3855/91/ECSC, establishing Community rules for aid to the steel industry.

Moreover, the Alcan case is not relevant since the present case does not concern an obligation to withdraw an aid declared incompatible by a definitive Commission decision. Indeed, in the present case there exists no Commission decision declaring the aid incompatible.

The Council of State further considered that there was no reason not to apply the case law stating that an act 'creating rights', even if irregular, cannot be withdrawn after the expiry of the time period for challenging it (60 days). On this basis, the contested decision was annulled.

Comments: the judgment contains no reference to Article 88 (3) EC, the violation of which would seem to justify a solution similar to Alcan (obligation to withdraw an illegal act even if not allowed under national law). Indeed, given that the measure in question did not fall within the scope of the Community Framework of Aid to Steel Industry (Walloon Region), any implementation of the aid measure in question would breach the notification requirement to the Commission under Article 88 EC.

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3.5. 4 Council of State, case no 55.426, 27 September 1995, Breda Fucine Meridionali v SNCB (action for suspension of decision SNCB rejecting offer by Breda Fucine Meriodionali and allotting assignment to competitor) (H)

Facts and legal issues: the claimant sought the suspension103 of the implementation of the decision taken by the SNCB to reject the claimant's tender and award the contract to other bidding companies.

The claimant was accused of having submitted an abnormally low bid, supported by illegal State aid granted by the Italian State. Upon the request of another bidding company, the President of the Commercial Court of Brussels ordered the claimant to withdraw its bid. The claimant challenged this judgment. Shortly afterwards, the Commission decided that the SNCB should not award the contract to the claimant since its bid was partially financed by State aid which had not been approved by the Commission. On hearing the challenge, the President of the Brussels Commercial Court confirmed its earlier judgment (procedure on opposition).

Following this judgment, the claimant notified the SNCB in writing that it had withdrawn its bid, but expressly stated that it was appealing the judgment of the President of the Brussels Commercial Court.

In the meantime, the SNCB had awarded the contract to other bidding companies.

Decision: the action for suspension was rejected because of a lack of interest on the part of the claimant in filing the action. The Council held that the claimant had withdrawn its own bid pending the judgment on appeal. Therefore, the claimant filed this action for suspension for the sole purpose of delaying the new decision to award the contract until the judgment on appeal was rendered. Since the suspension procedure cannot be used to block an executory administrative decision, the Council rejected the action. 113

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[56] However, it should be noted that when the claimant contests the payment of an illegal tax, for instance, by relying upon Article 88 (3) EC, it does not have to show that this tax puts it at a competitive disadvantage (as compared to the beneficiaries of the aid financed by the tax, for instance) but only that it is affected by the tax being illegal (see the Streekgewest case: "An individual may have an interest in relying before the national court on the direct effect of the prohibition on implementation referred to in the last sentence of Article [88](3) of the Treaty not only in order to erase the negative effects of the distortion of competition created by the grant of unlawful aid, but also in order to obtain a refund of a tax levied in breach of that provision. In the latter case, the question whether an individual has been affected by the distortion of competition arising from the aid measure is irrelevant to the assessment of his interest in bringing proceedings. The only fact to be taken into consideration is that the individual is subject to a tax which is an integral part of a measure implemented in breach of the prohibition referred to in that provision", Case C-174/02, Streekgewest Westelijk Noord-Brabant v Staatssecretaris van Financiën, not yet reported, para. 19).

[57] See para. 20 of Streekgewest case cited above.

[58] Article 93 of the Act grants the right to order the cessation of an action contrary to fair trade practices by which a seller damages or could damage the professional interests of one or more other sellers. According to this provision, a seller can require the cessation of any action it deems contrary to fair trade practices, even if it has not been penalised or prohibited by a legal text.

[59] See notably Joined cases C-6/90 and C-9/90, Francovich and Bonifaci [1991] ECR I-5357; Joined cases C-46/93 and C-48/93, Brasserie du Pêcheur-Factoratame III [1996] ECR I-1090.

[60] Case 314/85, Foto-Frost v Hauptzollamt Lübeck-Ost [1987] ECR 4199.

[61] See Commercial Court of Ghent, 25 February 1994 (see section 3.4.4 below) and Case C-188/92, TWD Textilwerke Deggendorf GmbH v Bundesrepublik Deutschland, [1994] ECR I-833.

[62] Joined Cases C-261/01 and C-262/01 [2003] ECR I-12249.

[63] Case C-256/97, DMT [1999] ECR I-3913.

[64] See Council of State decisions in the Breda Dufrasne and Fucine cases described in sections 3.5.3 and 3.54 below.

[65] See Employment Court of Tongeren (Tribunal du travail), Case No. 2775/2000, 7 June 2002, Ford against Rijksdienst Sociale Zekerheid, unreported. Described at section 3.5.2 below.

[66] Case C-344/98, Masterfoods Ltd v HB Ice Cream Ltd [2000] ECR I - 11369.

[67] Case 78/76, Steinike & Weinlig [1977] ECR 595.

[68] Case C-354/90, Fédération nationale du commerce extérieur des produits alimentaires and Syndicat national des négociants et transformateurs de Saumon [1991] ECR I-5505.

[69] See Case C-39/94, SFEI a.o. v La Poste a.o. [1996] ECR I-3547.

[70] Summarised in Case C-44/93, Namur-Les Assurances du Crédit SA v Office National du Ducroire and the Belgian State [1994] ECR I-3829.

[71] Case C-44/93, cited above.

[72] Full text available on the website of the Court of Arbitration at http://www.arbitrage.be/.

[73] Full text available on the website of the Court of Arbitration at http://www.arbitrage.be/.

[74] Full text available on the website of the Court of Arbitration at http://www.arbitrage.be/.

[75] Full text also available on the website of the Court of Arbitration at http://www.arbitrage.be/.

[76] Full text also available on the website of the Court of Arbitration at http://www.arbitrage.be/.

[77] Full text also available on the website of the Court of Arbitration at http://www.arbitrage.be/.

[78] Case C-17/91, Georges Lornoy en Zonen NV and others v Belgian State [1992] ECR I-6525.

[79] See, in particular, Case C-354/90, Saumon - FNCE [1991] ECR I-5505 and Case C-39/94, SFEI a.o. v La Poste a.o. [1996] ECR I-3547.

[80] Joined cases C-261 and C-262/01 [2003] ECR I-12249.

[81] Court of Appeal of Antwerp, 28 June 2001, Belgium v NV Openbaar Slachthuis.

[82] Full text available on the website of the Supreme Court at http://www.juridat.be/juris/jucf.htm, 8 April 2005.

[83] Full text available on the website of the Supreme Court at http://www.juridat.be/juris/jucf.htm, 18 October 2001; Arr. Cass.2001, afl. 1,141.

[84] Case C-343/96 [1999] ECR I-579.

[85] Full text available at http://www.juridat.be/cgi_juris/jurn.pl.

[86] Joined Cases C-144/91 and C-145/91, Gilbert Demoor en Zonen NV and others v Belgian State [1992] ECR I-6613.

[87] There were other cases on the same issue before lower courts - see, notably, Court of First Instance of Leper, 11 February 1994, Ministry of Agriculture v Gérard Claeys (which led to a preliminary ruling of the ECJ (Case C-114/91 [1992] ECR I-6559) in which the ECJ ruled that "[a] parafiscal charge of the kind at issue in the main proceedings may, depending on how the revenue from it is used, constitute State aid incompatible with the common market if the conditions for the application of Article [87] of the Treaty are met, that being a matter for the Commission to determine in accordance with the procedure laid down for that purpose in Article [88] of the Treaty. In that respect, regard must also be had to the jurisdiction of the national courts where, in introducing the charge, the Member State concerned failed to comply with its obligations under Article [88](3) of the Treaty, and where a Commission decision under Article 93(2) of the Treaty has found the levying of the charge as a method of financing State aid to be incompatible with the common market".

[88] Case C-457/00, Belgium v Commission [2003] ECR I-6931.

[89] Case 5/86, Commission v Belgium [1987] ECR I-1773.

[90] Case C-375/89, Commission v Belgium [1991] ECR I-383.

[91] Case C-74/89, Commission v Belgium [1990] ECR I-491.

[92] Case C-188/92, TWD Textilwerke Deggendorf GmbH v Bundesrepublik Deutschland [1994] ECR I-833.

[93] Full text available on the website of the Supreme Court at http://www.juridat.be/juris/jucf.htm, 18 October 2001; Arr. Cass. 1991-92, 985.

[94] Full text available on the website of the Supreme Court at http://www.juridat.be/juris/jucf.htm.

[95] See Case C-75/97, Belgium v Commission [1999] ECR I-3671.

[96] Case C-256/97, DMT [1999] ECR I-3913t

[97] Published on the website of the Council of State at http://raadvst-consetat.fgov.be/.

[98] Case C-354/90, Fédération nationale du commerce extérieur [1991] ECR I-5505.

[99] Case T-67/94, Ladbroke/Commission [1998] ECR II-1.

[100] Case C-24/95, Land Rheinland Pfalz v Alcan Deutschland GmbH [1997] ECR I-1591.

[101] Published on the website of the Council of State at http://raadvst-consetat.fgov.be/.

[102] Case C-24/95, Land Rheinland Pfalz v Alcan Deutschland GmbH [1997] ECR I-1591.

[103] Published on the website of the Council of State at http://raadvst-consetat.fgov.be/.

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