Opinion of Advocate General Ćapeta delivered on 11 July 2024.

• Jurisdiction: European Union
• Celex Number: 62023CC0369
• ECLI: ECLI:EU:C:2024:612
• Date: 11 July 2024
• Court: Court of Justice (European Union)

Provisional text

OPINION OF ADVOCATE GENERAL

ĆAPETA

delivered on 11 July 2024 (1)

Case C‑369/23

Vivacom Bulgaria EAD

v

Varhoven administrativen sad,

Natsionalna agentsia za prihodite

(Request for a preliminary ruling from the Varhoven administrativen sad (Supreme Administrative Court, Bulgaria))

(Reference for a preliminary ruling – Liability of a Member State for damage caused to individuals as a result of breaches of EU law attributable to a national court adjudicating at last instance – National rules providing for the jurisdiction of a court of last instance to hear actions based on breaches of EU law attributable to that court – Article 19(1), second subparagraph, TEU – Article 47 of the Charter of Fundamental Rights of the European Union – Effective judicial protection – Independent and impartial court – Objective test of impartiality)

I. Introduction

1. Impartiality is a defining feature of a court. As far back as 399 B.C., Socrates said: ‘Four things belong to a judge: to hear courteously, to answer wisely, to consider soberly and to decide impartially.’ (2)

2. Is a court that is invited to decide on its own breach of EU law impartial?

3. That question arises in the present case in relation to an action for damages brought by a company based on the wrong interpretation of EU law by a national court of last instance.

II. The facts in the main proceedings, the question referred for a preliminary ruling and the procedure before the Court

4. Vivacom Bulgaria EAD (‘Vivacom’) is a Bulgarian company which provides telecommunications services.

5. In 2007 and 2008, it issued invoices to two Romanian companies on the basis of contracts for the sale of prepaid cards and vouchers for telecommunications services, showing the value added tax (‘VAT’) at 0%.

6. In the course of a tax audit, the Natsionalna agentsia za prihodite (National Revenue Agency, Bulgaria; ‘the NAP’) considered that it could not be proven that those cards and vouchers were received by persons representing those Romanian companies. Thus, the NAP regarded the transactions as a supply of services whose place of supply was in Bulgaria, where Vivacom carried out its activity, in accordance with the national legislation transposing the VAT Directive. (3)

7. Consequently, on 20 June 2012, the NAP issued a tax assessment notice to Vivacom, establishing additional VAT liabilities totalling 760 183.15 Bulgarian leva (BGN) (approximately EUR 388 485).

8. Vivacom paid the amount due and initiated administrative review proceedings against the notice, which were unsuccessful.

9. Vivacom then brought an action against the notice before the Administrativen sad Sofia-grad (Administrative Court, Sofia City, Bulgaria; ‘the ASSG’), which was dismissed in part. According to that court, Vivacom was liable to pay the VAT because the transactions involved were characterised as a supply of goods but, as the cards and vouchers had not left Vivacom’s warehouse, the place of supply was on Bulgarian territory.

10. Vivacom brought an appeal against that judgment before the Varhoven administrativen sad (Supreme Administrative Court, Bulgaria; ‘the VAS’). By judgment of 16 December 2014, that court upheld the judgment at first instance. In particular, the VAS agreed with the ASSG’s findings that the transactions were a supply of goods, and found that the relevant national rules had been correctly applied. The VAS being the court of last instance, its judgment was final.

11. Thereafter, on 12 December 2019, Vivacom brought an action for damages based on State liability as developed in EU law against the NAP and the VAS before the ASSG. Vivacom claimed that the NAP and the VAS had misapplied the relevant provisions of the VAT Directive, as interpreted by the Court of Justice in its case-law.

12. By judgment of 18 April 2022, the ASSG dismissed Vivacom’s action. In particular, that court held that there was no sufficiently serious breach of EU law on the part of the NAP or the VAS.

13. In that respect, the ASSG found that the NAP had correctly applied the relevant law. That court also considered that, although the VAS had wrongly classified the transactions as supplies of goods instead of services, the correct legal treatment of those supplies would not have led to a different result, since the conditions for exemption from VAT liability were not satisfied, and that the VAS had correctly concluded that there was no basis for applying the Court of Justice’s case-law relied on by Vivacom.

14. Vivacom lodged an appeal against that judgment before the VAS, the referring court in the present case. Vivacom argues, inter alia, that the simultaneous role of the VAS as the court of last instance and a party to the dispute does not meet the requirements of a fair hearing by an independent and impartial court under EU law, even if the chamber is different from the one that made the final decision in the tax dispute.

15. The referring court considers that the question of its jurisdiction should be referred to the Court of Justice before examining the merits of the case.

16. The referring court explains that, under the provisions of Bulgarian law, (4) actions for damages based on breaches of EU law attributable to the VAS fall within the jurisdiction of the administrative courts. As a general rule, administrative proceedings are heard by courts at two instances. The VAS is the court of last instance, which is why such actions for damages must be examined by the VAS at last instance.

17. That court therefore wonders whether national rules which allow the same court to be both judge and defendant in the same case meet the requirements of the second subparagraph of Article 19(1) TEU for effective legal protection in the fields covered by EU law and of the second paragraph of Article 47 of the Charter of Fundamental Rights of the European Union (‘the Charter’) for an independent and impartial court.

18. The referring court points out that Vivacom does not provide any specific evidence of circumstances that raise questions as to the subjective impartiality of the judges in the VAS chamber, but takes the view that the VAS is biased given its capacity as defendant, and that the mere fact that the action against the VAS is being heard at last instance before the same court, albeit before a completely different chamber, is sufficient to give rise to serious doubts as to the independence and impartiality of each chamber of that court. The same court also notes that the case-law of the European Court of Human Rights (‘ECtHR’) on Article 6(1) of the European Convention on Human Rights (‘ECHR’) does not provide a definitive answer to the question whether a particular court may consider a claim in which it is a defendant. (5)

19. Under those circumstances, the Varhoven administrativen sad (Supreme Administrative Court) decided to stay the proceedings and to refer the following question to the Court of Justice for a preliminary ruling:

‘Do the second subparagraph of Article 19(1) TEU and Article 47 of the Charter of Fundamental Rights of the European Union preclude national legislation such as Article 2c(1)(1) of the ZODOV, read in conjunction with Article 203(3) and Article 128(1)(6) of the APK, under which an action for compensation for damage caused by an infringement of EU law by the VAS, in which the VAS is the defendant, must be examined by that court at last instance?’

20. Written observations were submitted to the Court by Vivacom Bulgaria, the VAS, the Bulgarian Government and the European Commission. No hearing was held.

III. Analysis

A. The question raised by this case

21. In the landmark judgment in Köbler, (6) the Court held that the principle of liability on the part of a Member State for damage caused to individuals as a result of breaches of EU law is also applicable where the breach arises from a decision of a court adjudicating at last instance (‘Köbler liability’). (7)

22. In that judgment, in response to arguments by certain Member States that the application of the principle of State liability to decisions of national courts adjudicating at last instance was precluded by difficulties in designating the competent court, (8) the Court explained that the ‘application of that principle cannot be compromised by the absence of a competent court.’ (9)

23. The Court left it for the Member States, in line with the principle of procedural autonomy, to provide for the procedural rules by which individuals may bring Köbler liability claims before the courts, recalling that those rules must satisfy the requirement of effective judicial protection. (10)

24. The present case calls into question such rules established by a Member State to accommodate Köbler liability for their compatibility with the requirement of effective judicial protection.

25. That requirement, which is a general principle of EU law, (11) is today embedded in both the second subparagraph of Article 19(1) TEU and Article 47 of the Charter, of which the referring court requested an interpretation.

26. The principle of effective judicial protection has the same content throughout its application in EU law. (12) It requires, among other things, that the court hearing the claim alleging a breach of an EU-based right, as in the present case, be independent and impartial. (13)

27. Under the case-law, the Court has recognised that there are two aspects of judicial independence: external and internal. The external aspect demands that the court exercise its functions wholly autonomously, without being subject to any hierarchical constraint or subordinated to any other body and without taking orders or instructions from any source whatsoever, thus being protected against external interventions or pressure liable to impair the independent judgment of its members and to influence their decisions. The internal aspect, which is also referred to as judicial impartiality, seeks to ensure...