Commission of the European Communities v Kingdom of Spain.

• Jurisdiction: European Union
• Court: Court of Justice (European Union)
• Writing for the Court: Macken
• ECLI: ECLI:EU:C:2003:373
• Docket Number: C-404/00
• Date: 26 June 2003
• Procedure Type: Recurso por incumplimiento – fundado

Case C-404/00


Commission of the European Communities
v
Kingdom of Spain

«(Failure of Member State to fulfil obligations – State aid – Regulation (EC) No 1013/97 – Aid to publicly-owned shipyards – Commission Decision 2000/131/EC ordering repayment – Non-implementation)»

Opinion of Advocate General Geelhoed delivered on 7 March 2002

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Judgment of the Court (Sixth Chamber), 26 June 2003

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Summary of the Judgment

1..

Actions for failure to fulfil obligations – Non-compliance with a Commission decision on State aid – Pleas in defence – Plea alleging that the decision is unlawful – Inadmissible – Limits – Non-existent measure

(Art. 88(2), second subpara., EC, Arts 226 EC, 227 EC, 230 EC and 232 EC)

2..

Actions for failure to fulfil obligations – Non-compliance with a Commission decision on State aid – Pleas in defence – Absolutely impossible to implement

(Art. 88(2) EC)

3..

State aid – Commission decision finding aid incompatible with the common market – Difficulties of implementation – Obligation of the Commission and the Member State to cooperate in seeking a solution compatible with the Treaty

(Arts 10 EC and 88(2) EC)

4..

State aid – Recovery of unlawful aid – Application of national law – Conditions and limitations – Interests of the Community to be taken into account

(Art. 88(2), first subpara., EC)

1.

The system of remedies set up by the Treaty distinguishes between the remedies provided for in Articles 226 EC and 227 EC, which permit a declaration that a Member State has failed to fulfil its obligations, and those contained in Articles 230 EC and 232 EC, which permit judicial review of the lawfulness of measures adopted by the Community institutions, or the failure to adopt such measures. Those remedies have different objectives and are subject to different rules. In the absence of a provision of the Treaty expressly permitting it to do so, a Member State cannot, therefore, properly plead the unlawfulness of a decision addressed to it as a defence in an action for a declaration that it has failed to fulfil its obligations arising out of its failure to implement that decision. The position could be different only if the measure in question contained such particularly serious and manifest defects that it could be deemed non-existent. That finding also applies in an action for failure to fulfil obligations brought under the second subparagraph of Article 88(2) EC. see paras 40-42

2.

The only defence available to a Member State in opposing an infringement action by the Commission under Article 88(2) EC is to plead that it was absolutely impossible for it to implement the decision properly. see para. 45

3.

A Member State which, in giving effect to a Commission decision on State aid, encounters unforeseen and unforeseeable difficulties or becomes aware of consequences overlooked by the Commission must submit those problems to the Commission for consideration, together with proposals for suitable amendments to the decision in question. In such a case, the Commission and the Member State must, by virtue of the rule imposing on the Member States and the Community institutions a duty of genuine cooperation which underlies, in particular, Article 10 EC, work together in good faith with a view to overcoming the difficulties whilst fully observing the Treaty provisions and, in particular, the provisions on aid. see para. 46

4.

Although, in the absence of Community provisions relating to the procedure applicable to the recovery of illegal aid, such recovery must take place, in principle, in accordance with the relevant provisions of national law, those provisions must however be applied in such a way that the recovery required by Community law is not rendered practically impossible and the interests of the Community are taken fully into consideration. see para. 51

JUDGMENT OF THE COURT (Sixth Chamber)
26 June 2003(1)

((Failure of Member State to fulfil obligations – State aid – Regulation (EC) No 1013/97 – Aid to publicly-owned shipyards – Commission Decision 2000/131/EC ordering repayment – Non-implementation))

In Case C-404/00, Commission of the European Communities, represented by K.-D. Borchardt and S. Rating, acting as Agents, with an address for service in Luxembourg,

applicant,

v

Kingdom of Spain, represented by S. Ortiz Vaamonde, acting as Agent, with an address for service in Luxembourg,

defendant,

APPLICATION for a declaration that, by not adopting within the prescribed period the measures necessary to comply with Commission Decision 2001/131/EC of 26 October 1999 on the State aid implemented by Spain in favour of the publicly-owned shipyards (OJ 2000 L 37, p. 22), which declares that that aid was granted illegally and is therefore incompatible with the common market, the Kingdom of Spain has failed to fulfil its obligations under the fourth paragraph of Article 249 EC and under Articles 2 and 3 of that decision,

THE COURT (Sixth Chamber),,

composed of: R. Schintgen, President of the Second Chamber, acting as President of the Sixth Chamber, C. Gulmann, V. Skouris, F. Macken (Rapporteur) and N. Colneric, Judges, Advocate General: L.A. Geelhoed,
Registrar: R. Grass,

having regard to the report of the Judge-Rapporteur,

after hearing the Opinion of the Advocate General at the sitting on 7 March 2002,

gives the following

Judgment

1

By application lodged at the Court Registry on 7 November 2000, the Commission of the European Communities brought an action under the second subparagraph of Article 88(2) EC for a declaration that, by not adopting within the prescribed period the measures necessary to comply with Commission Decision 2000/131/EC of 26 October 1999 on the State aid implemented by Spain in favour of the publicly-owned shipyards (OJ 2000 L 37, p. 22), which declares that that aid was granted illegally and is therefore incompatible with the common market, the Kingdom of Spain has failed to fulfil its obligations under the fourth paragraph of Article 249 EC and Articles 2 and 3 of that decision.

Applicable legislation

2

Council Directive 90/684/EEC of 21 December 1990 on aid to shipbuilding (OJ 1990 L 380, p. 27), the application of which was extended by Council Regulation (EC) No 3094/95 of 22 December 1995 on aid to shipbuilding (OJ 1995 L 332, p. 1), lays down specific rules applicable to aid to that sector, which constitute an exception to the general prohibition set out in Article 87(1) EC.

3

By Council Regulation (EC) No 1013/97 of 2 June 1997 on aid to certain shipyards under restructuring (OJ 1997 L 148, p. 1), the Council approved aid for the restructuring of shipyards in various Member States, including the publicly-owned yards in Spain.

4

Article 1 of Regulation No 1013/97 states:

1.

Notwithstanding the provisions of Regulation (EC) No 3094/95, for the yards under restructuring specified in paragraphs 2, 3 and 4 of this article the Commission may declare additional operating aid compatible with the common market for the specific purposes and up to the amounts specified. ...

4.

Aid for the restructuring of the publicly-owned yards in Spain may be considered compatible with the common market up to an amount of [ESP] 135 028 million in the following forms:

─

interest payments of up to [ESP] 62 028 million in 1988 to 1994 on loans taken on to cover unpaid previously approved aid,

─

tax credits in the period 1995 to 1999 of up to [ESP] 58 000 million,

─

capital injection in 1997 of up to [ESP] 15 000 million.

All other provisions of Directive 90/684/EEC shall apply to these yards.The Spanish Government agrees to carry out, according to a timetable approved by the Commission and in any case before 31 December 1997, a genuine and irreversible reduction of capacity of 30 000 cgrt [compensated gross registered tonnes]. Factual background and Decision 2000/131Factual background

5

The factual background, as outlined in paragraphs 6 to 9 of the grounds of Decision 2000/131, is as follows:

(6)

Under its August 1997 decision in State aid Case C 56/95 [OJ 1997 C 354, p. 2], the Commission [approved] State aids totalling a maximum of ESP 229 008 billion in support of the restructuring of the publicly-owned yards in Spain. The package of approved aids included special tax credits of up to ESP 58 billion in the period 1995 to 1999.

(7)

The reason for the inclusion of these special tax credits was as follows. When the restructuring plan was originally drawn up, the yards were still part of the INI group (Instituto Nacional de Industria) and able to reduce by 28% after-tax losses through INI, in accordance with generally applicable Spanish national legislation, offsetting losses against profits elsewhere in the group. The financial projections under the plan assumed that such tax credits would continue to be available despite the fact that...