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Infringement Cases, Article 228 EC, Financial Penalties, Lump Sum Payments: Case C-109/08 and Case C-568/07

By Bartolus

A really bad day for Greece ! Not one but two judgments of the Court of Justice imposing the payment of a lump sum financial penalty for failure to comply with a Court judgment contrary to Article 228 EC.

The two cases don't really break new ground. They follow on from Case C-70/06 Commission v. Portugal we noted up here and Case C-121/07 Commission v. France

In its judgment in Case C-109/08 Commission v. Greece, the Commission proposed that the Court impose on Greece a lump sum payment of ? 9 636 for each day of delay in complying with the judgment in Case C?65/05 Commission v Greece, from the day of delivery of that judgment until the day on which it has been fully complied with or until judgment is delivered in this case, whichever is the sooner. That daily amount is arrived at by applying the principles set out in the Commission Communication of 13 December 2005 (SEC (2005) 1658) and multiplying a basic amount of ? 200 by the coefficient for seriousness of the infringement, set in this case at 11 on a scale of 1 to 20, and by the coefficient reflecting Greece?s capacity to pay, set at 4.38. The total lump sum payment requested amounted to ? 3 420 780, which is arrived at by multiplying the daily amount of ? 9 636 by 355 (the number of days between October 26th 2006, the date on which the judgment in Case C?65/05 Commission v Greece was delivered, and October 17th 2007, the date on which the Commission decided to bring the action in this case.

In fact, the Court of Justice held that a lump sum of ? 3 million was appropriate.

It held that if it decides to impose a periodic penalty payment or lump sum payment, it must do so, in exercising its discretion, in a manner that is appropriate to the circumstances and proportionate both to the breach that has been established and to the capacity of the member State concerned to pay. For a lump sum payment, the relevant factors to be taken into account include, in particular, factors such as how long the breach of obligations has persisted since the judgment which initially established it was delivered and the public and private interests involved (see Case C?121/07 Commission v France, paragraph 64).

In this particular case, the Court found that the breach of obligations had persisted for a long period since the judgment which initially established it, of the public and private interests at issue, of the lack of a decision to suspend application of the legislation in question in order to prevent criminal prosecutions, and of the lack of any tangible move to undertake compliance with that judgment. Consequently, payment of a lump sum must be imposed and ?3 million was an appropriate amount. The Court also imposed a periodic pernalty payment of ?31 536 per day until Greece complied with the judgment in Case C65/05.

In the second judgment, in Case C-568/07 Commission the Court did not impose a periodic penalty payment on Greece because it had complied with it obligations before judgment. But it did impose a lump sum penalty of ?1 million for non-compliance in the past. It used similar principles to those described in the first case but took account of the fact that Greece had taken steps to comply quite quickly and achieved full compliance during the course of the proceedings in this case.

Full post as published by EU Law Blog on June 08, 2009 (boomark / email).