International Law

State Aids, National Courts and Commission Procedures: Case C-1/90

By Bartolus

The Court of Justice has handed down a quick judgment in Case C-1/90 CELF that clears up the situation of national courts seised of an action for the recovery of unlawful state aid pending a decision of the Commission on its compatibility.

The main issue was whether a national court, seised by a competitor of an action for the recovery from a beneficiary of unlawful state aid, may stay those recovery proceedings until the Commission has taken a decision declaring the aid to be compatible with the common market.

The Court of Justice held that the national court may not stay the recovery proceedings in such circumstances but must rule on the matter without waiting for a Commission decision.

The background to the case is rather tortuous and need not really concern us. In short, the French state provided aid to CELF, a cooperative, to promote the export of French language books. A competitor to CELF, which did not benefit from any state support, complained to the Commission that the aid granted was incompatible with the EU and brought an action before the French courts seeking recovery of the aid granted to CELF. The Commission had adopted three successive decisions declaring the aid to CELF to be compatible with the common market but the Court of First Instance (now, General Court) annulled each and every one of those decisions. So the question came up as to what the national court should do with the recovery action pending the adoption of the Commission's fourth decision: To stay or not to stay ?

Definitely, do not stay, is the Court of Justice's answer.

The Court recalled that Article 108 §3 TFEU (ex Article 88(3) EC) entrusts the national courts with the task of preserving, until the final decision of the Commission, the rights of individuals faced with a possible breach by State authorities of the prohibition laid down by that provision (Case C-199/06 CELF I [2008] ECR I-469, paragraph 38). The Court has already in essence ruled, in Case C?39/94 SFEI and Others [1996] ECR I?3547, paragraphs 44 and 50 to 53, that:
? the initiation by the Commission of an examination procedure cannot release national courts from their duty to safeguard the rights of individuals in the event of a breach of the requirement to give prior notification;
? where it is likely that some time will elapse before it gives its final judgment, for example, where it seeks clarification from the Commission for the purposes of interpreting the concept of State aid which it may have cause to grant or where it refers a question to the Court for a preliminary ruling, the national court must decide whether it is necessary to order interim measures in order to safeguard the interests of the parties.

The Court also noted that a stay of the national proceedings would amount to maintaining the benefit of aid during the period in which implementation is prohibited which would be inconsistent with the very purpose of Article 108 §3 TFEU and would render that provision ineffective.

The Court adds for good measure that the annulment by the EU courts of a previous positive Commission decision cannot justify any different conclusion prompted by the consideration that, in that case, the aid might subsequently be once again declared compatible by the Commission. The purpose of Article 108 §3 TFEU is clearly prompted by the consideration that, until a new decision has been adopted by the Commission, it cannot be presumed that that decision will be positive in its content.

Full post as published by EU Law Blog on March 15, 2010 (boomark / email).