Avis juridique important

Judgment of the Court of 20 September 1990. - Commission of the European Communities v Federal Republic of Germany. - State aids - Undertaking producing semi-finished and finished aluminium products - Recovery. - Case C-5/89. European Court reports 1990 Page I-03437 Swedish special edition Page 00499 Finnish special edition Page 00521

Summary Parties Grounds Decision on costs Operative part

++++

Aid granted by States - Recovery of illegal aid - Application of national law - Aid granted contrary to the procedural rules in Article 93 of the Treaty - Possible legitimate expectations of recipients - Protection - Conditions and limits - Interests of the Community to be taken into consideration

( EEC Treaty, first subparagraph of Art . 93(2 ) )

Community law does not preclude national legislation from protecting legitimate expectations and legal certainty in connection with the recovery of national aid granted contrary to Community law .

However, in view of the mandatory nature of the supervision of State aid by the Commission under Article 93 of the Treaty, undertakings to which an aid has been granted may not, in principle, entertain a legitimate expectation that the aid is lawful unless it has been granted in compliance with the procedure laid down in that article .

It is true that a recipient of illegally granted aid is not precluded from relying on exceptional circumstances on the basis of which it had legitimately assumed the aid to be lawful and thus declining to refund that aid . If such a case is brought before a national court, it is for that court to assess the material circumstances and, if necessary, seek a preliminary ruling on interpretation from the Court of Justice .

However, a Member State whose authorities have granted aid contrary to the procedural rules laid down in Article 93 of the Treaty may not rely on the legitimate expectations of recipients in order to justify a failure to comply with the obligation to take the steps necessary to implement a Commission decision instructing it to recover the aid .

Nor may such a Member State rely, as making it absolutely impossible to implement such a decision, on the obligations to which the competent administrative authority is subject under the particular rules governing the protection of legitimate expectations contained in a national provision which lays down a time-limit within which an administrative act granting a benefit may be revoked . Such a provision must 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 .

In Case C-5/89,

Commission of the European Communities, represented by Bernhard Jansen, a member of its Legal Department, acting as Agent, with an address for service in Luxembourg at the office of Georgios Kremlis, a member of the Commission' s Legal Department, Wagner Centre, Kirchberg,

applicant,

v

Federal Republic of Germany, represented by Martin Seidel, Ministerialrat, and Albert Bleckmann, acting as Agents, with an address for service in Luxembourg at the Embassy of the Federal Republic of Germany, 20-22 avenue Emile-Reuter,

defendant,

APPLICATION for a declaration that, by not implementing Commission Decision 88/174/EEC of 17 November 1987 concerning aid which the Land of Baden-Wuerttemberg provided to BUG-Alutechnik GmbH, an undertaking producing semi-finished and finished aluminium products ( Official Journal 1988 L 79, p . 29 ), the Federal Republic of Germany has failed to fulfil its obligations under the EEC Treaty,

THE COURT

composed of : F . A . Schockweiler, President of Chamber acting for the President of the Court, M . Zuleeg ( President of Chamber ) and G . F . Mancini, T . F . O' Higgins, J . C . Moitinho de Almeida, G . C . Rodríguez Iglesias and F . Grévisse, Judges,

Advocate General : M . Darmon

Registrar : D . Louterman, Principal Administrator,

having regard to the Report for the Hearing and further to the hearing on 21 March 1990,

after hearing the Opinion of the Advocate General delivered at the sitting on 8 May 1990,

gives the following

Judgment

2 The aid in question had not been notified to the Commission . On 21 May 1985, on the basis of articles in the press, the Commission sent a letter to the Federal Government enquiring whether it was true that the Land of Baden-Wuerttemberg had granted BUG-Alutechnik GmbH subsidies and credit guarantees with a view to its acquisition by Kaiser Aluminium Europe Inc . By verbal note dated 24 June 1985, the Federal Government confirmed that the aid had been granted to that undertaking and, by two further verbal notes dated 8 August and 2 October 1985 in response to further enquiry by the Commission, gave additional details of the transaction .

3 By a letter of 22 December 1987, after the completion of the procedure laid down in Article 93(2 ) of the EEC Treaty, the Commission notified Decision 88/174/EEC, cited above, to the Federal Republic of Germany . Article 1 of that decision provides that the aid in question "is illegal as it was provided in violation of the provisions of Article 93(3 ) of the EEC Treaty" and that, moreover, "it is incompatible with the common market ".

5 The German Government did not contest that decision . By verbal note dated 19 April 1988, the German Government sent the Commission a communication dated 13 April 1988, in which it set out a number of criticisms concerning certain of the findings and appraisals on which the decision was based . The Commission did not consider those arguments relevant and, by letter of 11 July 1988, called upon the Federal Republic of Germany to implement the decision .

6 By verbal note dated 9 December 1988, the German Government sent the Commission a communication dated 2 December in which it proposed to await the judgment in the Alcan case ( Case 94/87 Commission v Germany [1989] ECR 175 ) in which the legal issues were similar . By letter of 23 December 1988, the Commission informed the German Government that it did not consider it appropriate to wait any longer, and brought the present proceedings .

8 It is common ground that no steps have been taken by the Federal Republic of Germany to recover the aid as required by Decision 88/174/EEC .

9 The German Government claims, however, that it is absolutely impossible to implement the decision by reason of the principle of the protection of legitimate expectations, which is embodied in particular in Paragraph 48 of the Verwaltungsverfahrensgesetz ( Law on Administrative Procedure ) of the Land of Baden-Wuerttemberg, which is applicable to the present case .

10 In particular, it claims that, in accordance with that paragraph and the principles of German constitutional law, a public authority may not revoke an unlawful administrative measure granting a benefit without first weighing up the various interests involved . In the circumstances of the present case, therefore, the national authority is obliged to give the protection of the legitimate expectations of the undertaking which received the aid greater weight than the public interest of the Community in having the aid recovered .

11 Lastly, the German Government argues that recovery of the aid is also prevented by the prohibition in Paragraph 48 of the Verwaltungsverfahrensgesetz of the revocation of an administrative measure granting a benefit more than one year after the administrative authority became aware of the circumstances constituting grounds for revocation .

20 It follows from the foregoing that the Court must hold, in accordance with the Commission' s application, that the Federal Republic of Germany has failed to fulfil its Treaty obligations .

Costs

21 Under Article 69(2 ) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs . Since the Federal Republic of Germany has failed in its submissions, it must be ordered to pay the costs .

On those grounds,

THE COURT

hereby :

( 1 ) Declares that, by not implementing Commission Decision 88/174/EEC of 17 November 1987 concerning aid which the Land of Baden-Wuerttemberg of the Federal Republic of Germany has provided to BUG-Alutechnik GmbH, an undertaking producing semi-finished and finished aluminium products, the Federal Republic of Germany has failed to fulfil its obligations under the EEC Treaty;

( 2 ) Orders the Federal Republic of Germany to pay the costs .