Land Rheinland-Pfalz v Alcan Deutschland GmbH.

• Jurisdiction: European Union
• Celex Number: 61995CC0024
• ECLI: ECLI:EU:C:1996:433
• Docket Number: C-24/95
• Date: 12 November 1996
• Court: Court of Justice (European Union)
• Procedure Type: Reference for a preliminary ruling

Important legal notice

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61995C0024

Opinion of Mr Advocate General Jacobs delivered on 12 November 1996. - Land Rheinland-Pfalz v Alcan Deutschland GmbH. - Reference for a preliminary ruling: Bundesverwaltungsgericht - Germany. - State aid - Recovery - Application of national law - Limits. - Case C-24/95.

European Court reports 1997 Page I-01591

Opinion of the Advocate-General

1 The Bundesverwaltungsgericht (Federal Administrative Court) seeks a ruling from the Court on whether Community law requires the setting aside of certain rules of national administrative law which would render unlawful a measure revoking the grant of aid and demanding repayment.

The facts and the national court's questions

2 The relevant facts and issues are set out with commendable clarity in the order for reference. Alcan Deutschland GmbH (`Alcan') is the German subsidiary of a Canadian company. From 1979 it operated an aluminium plant in Ludwigshafen. In 1982, following substantial increases in the price of electricity, the company decided to close the plant, but the closure was subsequently postponed when the Land of Rheinland-Pfalz, with the agreement of the Federal Government, offered Alcan temporary aid of up to DM 8 million. The plant was eventually closed in 1987.

3 After learning of the proposed aid from reports in the press, the Commission, by a telex of 8 March 1983 addressed to the Federal Government, requested prior notification of the aid under Article 93(3) of the Treaty, adding that no aid should be paid until the Commission had given its final decision. The telex was forwarded to the Land by letter of 14 March 1983. By decision of 9 June 1983 the Land nevertheless granted Alcan half of the proposed aid, namely DM 4 million.

4 The Federal Government notified the aid to the Commission by a communication of 25 July 1983. After obtaining further details of the aid from the Federal Government the Commission commenced its preliminary examination on 11 October 1983, setting itself a period of one month. By a telex dated 24 November 1983 the Federal Government informed the Commission that, since the one-month period had now expired, the aid would be paid. By a letter of 25 November 1983 the Commission informed the Federal Government that the aid which had already been paid was unlawful and that the remainder should not be paid before the Commission took a final decision. The Land was informed of this on 28 November 1983. Nevertheless by a decision of 30 November 1983 it granted Alcan the remaining DM 4 million of aid.

5 By a decision of 14 December 1985 (1) addressed to the Federal Republic of Germany the Commission found the aid granted to Alcan to be unlawful, having been paid in violation of Article 93(3) of the Treaty, and to be incompatible with the common market within the meaning of Article 92 of the Treaty; it accordingly ordered its recovery.

6 By letters of 12 February and 21 April 1986 the Federal Government informed the Commission that recovery of the aid was precluded by the principle of the protection of legitimate expectations. By a letter of 27 June 1986 the competent member of the Commission replied that, since the Federal Government had not put forward any proposals for suitable solutions, such as repayment of the aid by instalments or conversion into a loan on market terms, he was unable to propose any amendment to the Commission decision.

7 By an application of 30 March 1987 the Commission brought the matter before the Court which, by a judgment of 2 February 1989 (`Alcan I'), (2) declared that Germany had failed to fulfil its obligations under the Treaty by not complying with the Commission decision.

8 Subsequently, by a decision of 26 September 1989, the Land revoked the decisions granting the aid and demanded repayment of the DM 8 million. Alcan instituted proceedings before the Verwaltungsgericht (Administrative Court), which annulled the Land's decision revoking the aid on the ground that it infringed Paragraph 48(4) of the Verwaltungsverfahrensgesetz (Law on Administrative Procedure) of the Land. (3) That provision imposes a time-limit for the revocation of administrative acts of one year from the moment when the authority became aware of the facts justifying such revocation.

9 Following an unsuccessful appeal to the Oberverwaltungsgericht (Higher Administrative Court) the Land appealed to the referring court, the Bundesverwaltungsgericht. The latter upheld the finding of the lower courts that Paragraph 48(4) was infringed, taking the view that the one-year time-limit began to run at the latest in July 1986, being the date on which the Land was informed of the letter of 27 June 1986 from the competent member of the Commission. It also considers that the revocation decision may be unlawful under German law on two further grounds. First, it seems likely that the exercise by the Land of its discretion to revoke the aid measures under Paragraph 48(1) of the Verwaltungsverfahrensgesetz infringed the principle of good faith because the Land was primarily responsible for the illegality of the aid decisions. In that connection the Bundesverwaltungsgericht notes Alcan's allegation that the Land was fully aware as early as March 1983 of the questionable legality of the aid and did not inform Alcan so as not to dissuade it from continuing to operate the plant; the Land does not deny that it did not inform Alcan of the Commission's telex of 8 March 1983 demanding that no aid should be paid out. Secondly, the Bundesverwaltungsgericht considers that Alcan may be able to rely on Paragraph 818(3) of the Bürgerliches Gesetzbuch (Civil Code) (applicable by virtue of Paragraph 48(2) of the Verwaltungsverfahrensgesetz), which precludes recovery where the gain arising from an unlawful administrative measure has ceased to exist. Alcan alleges that that is so here because it subsequently closed the plant in question after incurring further losses. It seems however that, by virtue of the seventh sentence of Paragraph 48(2) of the Verwaltungsverfahrensgesetz, that defence would not be available if Alcan knew the circumstances which rendered the aid decision unlawful or if its lack of such knowledge was due to gross negligence.

10 The Bundesverwaltungsgericht raises the question whether Community law may nevertheless require recovery of the aid and therefore seeks a ruling from the Court on the following questions:

`1. Is the competent authority obliged, by reason of the requirement to apply national law 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", to revoke, in accordance with a final, binding decision of the EC Commission ordering recovery, the aid decision in question even if the authority has allowed the preclusive time-limit which exists for that purpose under national law in the interest of legal certainty to elapse?

2. If the reply to question 1 is in the affirmative:

Is the competent authority obliged, by reason of the abovementioned requirement, to revoke, in accordance with a final, binding decision of the EC Commission ordering recovery, the aid decision in question even if the competent authority is responsible for the illegality of the aid decision to such a degree that revocation appears to be a breach of good faith towards the recipient?

3. If the reply to questions 1 and 2 are in the affirmative:

Is the competent authority obliged, by reason of the abovementioned requirement, to demand, in accordance with a final, binding decision of the EC Commission ordering recovery, the repayment of the aid which was granted even if such demand is excluded by national law because the gain no longer exists and in the absence of bad faith on the part of the recipient of the aid?'

11 Alcan alone proposes a negative reply to the questions. The Land, the French, German and Austrian Governments and the Commission submit that the Court should give an affirmative reply to all three questions.

Relevant Community provisions and case-law

12 Before turning to those questions it may be helpful to set out some of the basic principles applicable in this area. Under the first sentence of Article 93(3) of the Treaty a Member State is obliged to inform the Commission, in sufficient time to allow it to submit its comments, of any plans to grant...