Finland
| Author | Th. Jestaedt; J. Derenne; T. Ottervanger |
| Profession | Jones Day; Lovells; Allen & Overy |
| Pages | 129-132 |
Page 129
Based on the direct effect of Article 88 (3) EC, Finnish courts have a general obligation to safeguard third parties' rights in the event of aid being granted in breach of EC law.
In the case that the aid has, for example, been left unnotified or granted and/or paid out in the absence of a Commission decision, Finnish courts may be requested to intervene in the matter, as administrative decisions that result in the granting of aid that does not comply with EC law may be found to be unlawful and, consequently, unenforceable.
Although national courts are not vested with an authority to rule on the compatibility of aid with EC law, they may be required to examine whether the aid subject to appeal should have been notified to the Commission.
Depending on the public body which made the decision on the aid, such a decision may generally be challenged pursuant to the Administrative Judicial Procedure Act (Hallintolainkäyttölaki, statute number 586/1996, as amended) or the Act on Municipalities (Kuntalaki, statute number 365/1995, as amended).
Under the Administrative Judicial Procedure Act, parties having standing to appeal include the addressees of the decision on the aid and those whose right, obligation or benefit has been directly affected by the decision on the aid, as evidenced by the appealing party in question.
In the administrative courts' jurisprudence, a third party's right to appeal has been interpreted rather narrowly. Whilst, due to scarce decision-making practice, no general guidance in relation to State aid in this respect is yet available, the existing decision-making practice on the concept of "directly affected" suggests that the right to appeal might be difficult to prove in an individual case. However, it has not yet been tested as to how, for example, the principle of effectiveness, as construed in the jurisprudence of the European Courts, would affect the interpretation of the above requirement under certain circumstances, if the right to appeal were not de facto provided for by the applicable Finnish legislation.
Under the Act on Municipalities, in addition to addressees and those whose right, obligation or benefit has been directly affected by the decision, certain third parties, such as residents of a municipality, have a general standing to appeal against decisions of the municipality or its organs, as stipulated in more detail therein.
The appellate court in relation to an aid decision in each matter depends on the authority who has decided on the aid in question, generally being either the Supreme AdministrativePage 130 Court ("Korkein Hallinto-oikeus") or the competent Administrative Court ("Hallinto-oikeus"), whose decisions may be appealed before the Supreme Administrative Court.
Under both the Administrative Judicial Procedure Act and the Act on Municipalities, the implementation of the aid decision subject to appeal may be expressly prohibited by the appellate court pending decision on the substance of the case, if the appeal has not already suspended implementation. Such a prohibition may be made by the court of its own initiative or upon a request by the appealing party and will be considered separately, based on a case-by-case analysis.
a) Action against authority granting unlawful aid
A third party who is able to show that it has incurred damage due to an unlawful aid decision may be entitled to damages under the Act on Damages (Vahingonkorvauslaki, statute number 412/1974, as amended) from the authority who granted the unlawful aid. If unclear, the competent court may also be required to decide on whether the aid subject to an appeal should have been notified to the Commission.
Under the Act on Damages, an authority is liable to compensate damage incurred by a third party, should such damage have been caused by the authority through fault or neglect in the course of its public duties. This liability has, however, been limited in so far as it will be triggered only in the event that the authority has not complied with the reasonable requirements placed on it considering the quality and purpose of the authority's duty in question.
Under the Act on Damages, in addition to the above requirement, a party seeking damages would need to be able to prove that there is a causal link between the incurred damage and the authority's decision by virtue of which the unlawful aid has been granted.
Notably, it has never been tested in Finnish courts how the criteria for a Member State's liability to compensate damage, as developed by the European Courts would, in a particular case, affect the application of the above-described criteria under the Act on Damages.
An action for damages may be initiated, in the first instance, in a competent District Court, whose decision may be appealed before a competent Court of Appeal and, possibly, to the Supreme Court.
b) Action against a competitor
As the decision to pay unlawful aid has been made by an authority, it appears unlikely that a claimant could successfully seek compensation for damage from the recipient of the unlawful aid. Therefore, such compensation should, in the first place, be requested from the authority in question.
Page 131
Under the Act on Application of Certain European Community Law Provisions Relating to State Aid (Laki eräiden valtion tukea koskevien Euroopan yhteisöjen säännösten soveltamisesta, statute number 300/2001), aid pursuant to Article 87 EC may be recovered from its recipient either wholly or in part in accordance with the Commission's decision to that effect. The said Act does not include more detailed provisions dealing with the actual recovery of unlawful aid.
There is no specific legislation relating to the enforcement of positive Commission decisions, but it appears that the claimant could initiate proceedings in an administrative court, as set out in section 2.1.1 above.
However, due to the existing limitations in competence of national courts to adjudicate on the compatibility of aid with EC law, it would be necessary to refer the matter to the ECJ.
For the purposes of this study, we have researched publicly available databases by using relevant key words in Finnish. However, it should be noted that there are no available databases regarding decisions by first instance civil or administrative courts, and that databases regarding decisions by higher civil and administrative courts are not comprehensive. Also, we have enquired of the Finnish Ministry of Trade and Industry, as to whether, to its knowledge, there have been or are pending any cases regarding State aid.
In addition to the cases below , publicly available databases contain a few case, where either a party has unsuccessfully argued that a measure undertaken by a municipality or the State of Finland constitutes unlawful State aid, or where the court in question has ruled that it has no jurisdiction in the matter.104
Facts and legal issues: A local energy company disputed the national allocation plan for emission trading, as regards emission allocation granted to the claimant, and demanded an adjustment thereof.
Page 132
Decision: The Supreme Administrative Court ruled that the allocation had been conducted in accordance with the existing EC and national legislation, including provisions on State aid, and dismissed the claim.
Facts and legal issues: A local energy company disputed the national allocation plan for emission trading, as regards emission allocation granted to the claimant. The claimant argued that the allocation was not reasonable and, among other things, that the allocation de facto amounted to unlawful State aid to the claimant's competitor.
Decision: Among other things, the Supreme Administrative Court found that the Commission had reviewed the emission allocation plan concerned in the light of Articles 87 and 88 EC and had submitted that a possible State aid would likely be compatible with the Common Market, if it were assessed pursuant to Article 88 (3) EC.
Consequently, the Supreme Administrative Court ruled that the allocation had been conducted in accordance with the existing EC and national legislation, dismissed the claim, and held that the claimant's request for preliminary ruling did not meet the criteria pursuant to Article 234 EC.
In this case, the Helsinki Court of Appeal upheld the earlier decision by the District Court of Helsinki that the alleged aid did not constitute State aid. According to the Helsinki Court of Appeal, it had not been shown by the appealing party that the aid, granted to a local golf club, would affect trade between Member States.
Therefore, the Court of Appeal did not consider the case further, but ruled that the granted aid did not meet the criteria set forth for State aid pursuant to EC law.
Whilst a conclusive assessment of the existing system is difficult due to the limited number of cases, it appears at the outset that the existing legal framework of remedies available pursuant to national legislation would, as such, be adequate. However, practical difficulties in establishing a right to appeal may result in a third party enforcing its rights primarily through the Commission rather than at a domestic level.
-------------------------
[104] KHO 2004:101 The Supreme Administrative Court, 29 November 2004, DNo. 2642/1/03, where it was found that municipality's pre-emption right of real property is not a measure conferring State aid. Dno. 7/03/JH Market Court, 10 June 2003, Scandinavian Airlines System, Denmark-Norway-Sweden v The State of Finland / Ministry of Finance, where the Market Court ruled that it is not the competent court to examine possible State aid issues because the civil courts are competent for competition law issues.
