European Food SA and Others v European Commission.

• Jurisdiction: European Union
• Court: General Court (European Union)
• ECLI: ECLI:EU:T:2024:659
• Docket Number: T-624/15,T-694/15
• Date: 02 October 2024

JUDGMENT OF THE GENERAL COURT (Second Chamber, Extended Composition)

2 October 2024 ( *1 )

(State aid – Articles 107 and 108 TFEU – Bilateral investment treaty – Arbitration clause – Romania – Accession to the European Union – Repeal of a tax incentives scheme prior to accession – Arbitral award granting payment of damages after accession – Decision declaring the aid incompatible with the internal market and ordering its recovery – First paragraph of Article 351 TFEU – Obligation to state reasons – Concept of ‘State aid’ – Advantage – Selective nature – Whether imputable to the State – Whether compatible with the internal market – Aid facilitating the economic development of disadvantaged regions – Recovery – Concept of ‘economic unit’ – Legitimate expectations – Right to be heard)

In Cases T‑624/15 RENV, T‑694/15 RENV and T‑704/15 RENV,

European Food SA, established in Păntășești (Romania),

Starmill SRL, established in Păntăşeşti,

Multipack SRL, established in Păntăşeşti,

Scandic Distilleries SA, established in Păntăşeşti,

represented by N. Forwood, Barrister-at-Law, and by G. Forwood and W. De Catelle, lawyers,

applicants in Case T‑624/15 RENV,

Ioan Micula, residing in Oradea (Romania), represented by N. Forwood, G. Forwood and W. De Catelle,

applicant in Case T‑694/15 RENV,

Viorel Micula, residing in Oradea,

European Drinks SA, established in Ştei (Romania),

Rieni Drinks SA, established in Rieni (Romania),

Transilvania General Import-Export SRL, established in Oradea,

West Leasing SRL, formerly West Leasing International SRL, established in Păntăşeşti,

represented by J. Derenne, D. Vallindas, A. Álvarez Vidal, R. Chiriţă, and O. Chiriţă, lawyers,

applicants in Case T‑704/15 RENV,

v

European Commission, represented by T. Maxian Rusche and P.-J. Loewenthal, acting as Agents,

defendant,

supported by

Federal Republic of Germany, represented by R. Kanitz, J. Möller and N. Scheffel, acting as Agents,

by

Kingdom of Spain, represented by M.J. Ruiz Sánchez, acting as Agent,

by

Republic of Latvia, represented by K. Pommere, acting as Agent,

by

Hungary, represented by M. Fehér and G. Koós, acting as Agents,

and by

Republic of Poland, represented by D. Lutostańska, B. Majczyna and M. Rzotkiewicz, acting as Agents,

interveners,

THE GENERAL COURT (Second Chamber, Extended Composition),

composed of A. Marcoulli, President, V. Tomljenović, N. Półtorak, R. Norkus (Rapporteur) and W. Valasidis, Judges,

Registrar: A. Marghelis, Administrator,

having regard to the written part of the procedure,

having regard to the judgment of 25 January 2022, Commission v European Food and Others (C‑638/19 P, EU:C:2022:50),

further to the hearing on 4 and 5 March 2024,

gives the following

Judgment ( 1 )

1 By their actions based on Article 263 TFEU, the applicants, European Food SA, Starmill SRL, Multipack SRL and Scandic Distilleries SA, in Case T‑624/15, Mr Ioan Micula, in Case T‑694/15, and Mr Viorel Micula, European Drinks SA, Rieni Drinks SA, Transilvania General Import-Export SRL and West Leasing SRL, in Case T‑704/15, seek the annulment of Commission Decision (EU) 2015/1470 of 30 March 2015 on State aid SA.38517 (2014/C) (ex 2014/NN) implemented by Romania – Arbitral award Micula v Romania of 11 December 2013 (OJ 2015 L 232, p. 43; ‘the contested decision’).

I. Background to the dispute

2 The applicants were named in the contested decision as the beneficiaries of the compensation granted by an arbitral award on 11 December 2013 in Case ARB/05/20 Micula and Others v Romania (‘the arbitral award’) made by an arbitral tribunal (‘the arbitral tribunal’) established under the auspices of the International Centre for Settlement of Investment Disputes (ICSID).

3 Mr Ioan Micula and Mr Viorel Micula, Swedish citizens residing in Romania, are the majority shareholders of the European Food and Drinks Group (EFDG), whose activities include the production of food and drink in the region of Ștei-Nucet, Bihor County, in Romania. European Food, Starmill, Multipack, Scandic Distilleries, European Drinks, Rieni Drinks, Transilvania General Import-Export and West Leasing belong to the EFDG.

4 On 2 October 1998, the Romanian authorities adopted Emergency Government Ordinance No 24/1998 granting certain investors in disadvantaged regions who had obtained permanent investor certificates a series of tax incentives, including, inter alia, facilities such as exemption from customs duties and value added tax for machinery, reimbursement of customs duties for raw materials and exemption from the payment of profit tax; those applied for as long as the relevant area was designated as a ‘disadvantaged region’.

5 By decision of 25 March 1999, the Romanian Government designated the mining area of Ștei-Nucet as a ‘disadvantaged region’ for 10 years, with effect from 1 April 1999.

6 On 1 July 2000, Emergency Government Ordinance No 75/2000 amended Emergency Government Ordinance No 24/1998 while maintaining the tax incentives at issue (together, ‘the tax incentives scheme at issue’).

7 On the basis of the permanent investor certificates, obtained on 1 June 2000 by European Food and on 17 May 2002 by Starmill and Multipack, those three companies made investments in the mining area of Ștei-Nucet.

8 In February 2000, the negotiations for the accession of Romania to the European Union started. In those negotiations, the European Union noted, in the common position of 21 November 2001, that in Romania there were a ‘number of existing as well as new incompatible aid schemes which [had] not been brought into line with the acquis’, including the ‘facilities provided under [the tax incentives scheme at issue]’.

9 On 29 May 2002, a bilateral investment treaty was concluded between the Swedish Government and the Romanian Government on the Promotion and Reciprocal Protection of Investments (‘the BIT’). That treaty entered into force on 1 July 2003 and granted investors of both countries (including for investments entered into prior to the entry into force of the BIT) certain protections when the investors of one country invested in the other country.

10 Article 2(3) of the BIT provides, inter alia, that ‘each Contracting Party shall at all times ensure fair and equitable treatment of the investments by investors of the other Contracting Party and shall not impair, by means of arbitrary or discriminatory measures, the administration, management, maintenance, use, enjoyment or disposal thereof by those investors’. Furthermore, Article 7 of the BIT provides that any dispute between investors and the signatory countries is to be settled, inter alia, by an arbitral tribunal under the auspices of ICSID. In that regard, in accordance with Article 54(1) of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States, concluded on 18 March 1965 (‘the ICSID Convention’), each Contracting State is required to enforce the arbitral awards rendered pursuant to that convention, with the award being binding on the parties, who, in accordance with Article 53(1) of that convention, must abide by and comply with its terms.

11 On 26 August 2004, Romania repealed all the measures granted under the tax incentives scheme at issue, with the exception of the exemption from the payment of profit tax, stating that ‘in order to meet the criteria in the Community rules on State aid, and also to complete the negotiations under Chapter No 6 – Competition Policy it [was] necessary to eliminate all forms of State aid in national legislation incompatible with the acquis communautaire in this area’. That repeal came into effect on 22 February 2005.

12 On 28 July 2005, Mr Ioan Micula, Mr Viorel Micula, European Food, Starmill and Multipack (‘the arbitration applicants’) requested the establishment of an arbitral tribunal pursuant to Article 7 of the BIT, in order to obtain compensation for the damage resulting from the repeal of the tax incentives scheme at issue.

13 On 1 January 2007, Romania acceded to the European Union.

14 By decision of 24 September 2008, the arbitral tribunal found that the arbitration applicants’ claims were admissible.

15 In the arbitral award, the arbitral tribunal found that, by repealing the tax incentives scheme at issue prior to 1 April 2009, Romania had violated the legitimate expectations of the arbitration applicants, who thought that those incentives would be available, in substantially the same form, until 31 March 2009 inclusive, had failed to act transparently by failing to inform them in a timely manner and had failed to ensure fair and equitable treatment of those applicants’ investments, within the meaning of Article 2(3) of the BIT. Consequently, it ordered Romania to pay them, by way of damages, the sum of 791882452 Romanian lei (RON) (approximately EUR 178 million), that sum being fixed by taking into account principally the loss allegedly suffered by those applicants in the period from 22 February 2005 until 31 March 2009. ...

19 On 1 October 2014, the Commission informed Romania that it had decided to initiate the formal investigation procedure laid down in Article 108(2) TFEU in respect of the partial execution of the arbitral award by Romania that took place in early 2014 as well as in respect of any further implementation or execution of that award (‘the opening decision’). In that decision, published in the Official Journal of the European Union on 7 November 2014, it invited interested parties to submit their comments. ...

25 On 30 March 2015, the Commission adopted the contested...