Citation: 2010 Eur. St. Aid L.Q. 23 2010

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E~tL 1210Private State Aid Enforcement 1123

Private State Aid EnforcementBarbara Brandtner, Thierry Beranger and Christof LessenicO'

1. Introduction

The notion of piivate enforcement is alieady wellestablished in the field of antitrust] where nation-al courts may be called upon to apply Aiticles 101

or 102 TFEU in litigation between piivate parties.'Piivate enfoicement" in the area of State aidsshould in pirinciple cov er the same ground, namelygenuine enforcement action by private companiesagainst illegal State aid granted to a competitor. Inpractice, however, national court proceedingsrelated to State aid matters go far beyond this strictdefinition, and cover a w~ide variety of proceduralsettings.

The Commission published a first notice onthis subject already in 1995 2 as a first attempt totackle State aid enforcement via cooperation

DG Competition, European Commission. The content of thisarticile does not necessari ly reftiet the official position 01 theEuropean Commission. Respansibility for the information andviewxs expressed lies enti reIv wxith the auLthiors.

1 Commission Notice on the co-operation between the Commris-sion and the courts 01 the EL' Memrber States in the appicationof Articles 81 and 82 [C nlow Article 10] and 10Q2 THE]JOJED C 0, 74.2004,pp. 54-64.

2 Notice on cooperation between national couits and the Cornmission in the State Aid field, 0JC312, 23.11.1995 p.8.

3 See eg. 1. laegei 'The CELF-luidgment. A PrecarioLus Conceptionof the Standstill Obligation' European Stile AidI Lawv Quarterly2008, pp. 279-289; P.C Adiiaanse, 'Appropriate Measuires toRemedy the Consequences of Unlawful Miate Aid' Review ofEuropean Administrative La 20x 09, pp. 7386; P. N itz (ed.),The Ltfectite Apphication of EU Stile AidI Procedures. The Role ofNational Lav ai nd Practice, K Liwer Law I ntei national 2007;A. Sinnaeve, 'What to Expect from National Courts in the Fightagainst LUnlawftul State Aid?' European State id Lawx QUartery,200-, pp. 1-2; J. Flynn, 'The Role of National Courts' in:A. Biondi, P. Eeckhouit & J. Flynn, The Lai4 ot StateAid, O\foidUniversity Pres 2004 pp. 323-337 This issue WaS in particularaddiessed at the Conference oin State Aid Private Entoncevent inBrussels on 19 October 2009.

4 2009 Study on the enforceent 01 State aid law at national leveISee: http://ceuiropa eLu/comipetition/court /tate-,aid-info html.

-5 Commission Notice on the enforcement oftState aid law bynational courts (hie atet the Entorcerrent Notice" or the"Notice") OJ C 85, 09.04.209, pp. 1-22.

betwveen the Commission and the national judi-ciary. This lacked practical guidance, howvever,and has thus not been widely used, M~oieovei, theLU courts have since bettei defined the iole ofnational courts in State aid matters, and there hiavebeen significant legisiatix e developments, Mostimpoitantly, inteiest in national State aid litigationhas dlemonstiably growvn over timie 3 : accoiding, toa recently updated study4 , more and more casesare brought before national courts, and they coveran increasing variety of issues. Only damagesactions by competitors are still unusual andgenerally unsuccessful. There are also sometimesinconsistent interpretations of the State aid rulesby national courts, including within the sameMember State.

It is against this background that the Commis-sion issued its new~ Enforcement Notice0 in April2009. Its purpose is twofold: to better explain therole of national courts in the State aid field asdefined by the EU courts, and to offer nationalcourts and individual claimants practical and userfriendly support in individual cases. The notice isbased on a comprehensive review of the Commis-s10Ions 1995 notice and reflects recent legislativedev elopments and case-law. The consultation niech-anisms for national courts hav e been refined, andthe Commission has announced additional advoca-cy and public awareness efforts to ensure wide-spread use of tihe Notice.

The aim of this article is to piesent and anaiysethe key aspects of piivate enfoicement in theState aid field, with a particular focus on thejurisprudence of the EU courts and proceedingsobserved in national courts. To this effect, w~e w~illfirst recall the basic principles underlying thedivision ot responsibilities between the Cornmission and national courts in State aids matters,then shed light on the twxo main responsibilitiesfacing national courts -protecting competitorsagainst unlawful aid and ensuring effective re-covery of illegal and incompatible aid. We w~ill thenpresent the new support mechanisms availableunder the Notice, before drawving first tentative con-clusions.

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HI. Division of Responsibilitiesbetween the Commissionand National Courts

State aid ieview undei Articles 107 and 1o8 TFEUis characteiised by the fact that both theCommission and national courts play essentialroles in ensuiing compliance with the State aidrules. The Couit of justice (the 'ECJ ') has on sevei-al occasions confiimed that the roles of theCommission and of national courts are clearly dis-tinguished and complement each othe. 6

The most important iole of the Commission inthis respect is to check the compatibility of aid

measures notified to it by reference to Articles 107(2) and (3) Ti-EU. Even where an aid measure hasnot been notified, the Commission is neverthelessobliged to check compatibility. It may only orderthe recovery of an aid where it considers this aid tobe incompatible.

Contrary to the Commission, national courts arenot competent to conduct a compatibility analysison the basis of Articles 107 (2) and (3) Ti-EU.According to the ECJ, their main role is to protectthe individual rights affected by the violation of thestandstill obligation under Article io8 (3) Ti-EU. Inorder to fulfil this role, they are competent to hearclaims by competitors of the beneficiary and otheithird parties who stiffei the competitiv e conse-qluences of unlawful State aid, iriespective ofwhether the aid in question is compatible or not. 9

The national courts' competences (and obligations)thus arise simply as a result of procedural unlaw-fulness (i.e. the fact that an aid measuie has notbeen notified).

Although the iole of national courts as regaidsunlawful State aid undei Article 1o8 (3) TFEU isparticulaily impoitant, they also have importantcompetences in relation to other aspects of Stateaid control. Tihe most important example arenational legal proceedings in recovery cases w~here,contrary to legal proceedings on the basis of Article1o8 (3) TFEU, claims are usually brought by thebeneficiary himself seeking to question the validityand enforceability of a national recovery act (seepart IV below).

Both the Commission's role and that of nationalcourts comprise the need to determine whether acertain measure qualifies as State aid pursuant toArticle 107 Ti-EU. In this respect, the Commissionand the national courts are equally competent. The

national court can thus make an independentassessment of the aid criteria under Article 107 (i)

TFEU, and its use of the support mechanisms setout in section 3 of the Enforcement Notice is entire-ly voluntary (see part V below). The judicial inde-pendence of national courts is therefoie in no wayaffected by the Enforcement Notice. 10

That being said, the ECJ has explicitly recognisedthat a Commnission decision binds all authoritiesand bodies of the relevant Membei State. This alsoincludes the national judiciary." The bindingnature of Commission decisions on national courtsiparticularly relevant in recov~ery cases. This is the

ieason why, once the Commission has oideied a

Member State to recover unlawf Iul aid, the nationalcourt is no longer free to question the aid nature ofthe measure or its compatibility. Such considera-tions can only be taken into account to the extentthis is explicitly foreseen in the Commission deci-sion.

Ill. The Role of National Courts inRelation to unlawful State Aid

As indicated above, the protection of individualrights ar ising out of violations of the standstill obli-gation (Article 1o8 (3) TFEU) is one of the nationalcourts'key responsibilities. The ECJ has iepeatedlyheld that competent national courts, when con-fironted with violations of the standstill obligation,must draw all legal consequences fiom this factunder national law. 1

2 This includes, amongst oth-

6 S'ee e g. Case C-368/04, Trirsilpine Olleiturg ir Osterreich,[2061 ECRI19957 paras. 37 to39.

7See Case C-301/87, France v Commrision (Boussac ', [19901[CR 1-307 paas 21 to 22, and Articles 13 and 14 Of CouncilRegulation EFQ No 659/1999 of 22 Matchi 1999 laying downdetailed rules for the application of Article 93 of the [C Treaty[now~ Article 1 08 TFUE, QJ L83 2703 1999 pp. -9 (hereinafterthe "ProcedUral Regulation")

8 Case 199/06, CELE v SIDE, L008] ECR 1-469, paia. 38

9' Case C-39/94, SFI v La P~oste, L 1996 EC 1-3547 paras. 39 to42; Case '119/05, 4jnistero lell Industria d el Cornrnercio edeli Artigi n ato v Lucchrni L2007 ECR 1-6199, paa-1

10 Please see para. 99 thereof.

I I Case 249/85, Alinko Margarinetabrik M4aria con dei LindeGmnbH & Co. KG v Bun Ies inst aIt f~ir I rnIwirtschiftliche,Marktordnung, LI 987] ECR 2345, para. 17

12 Case C-3-54/90, ENCE v Fnce, [1991] [CR 1 -- 0-5, para. 12;Case C-39/94, SFEI v La Poste, L 996] ECR 1-3547, para. 40;Case C-368/04, Thrs Ipire Olleiturg ir Osterreich, L20061ECR 1-9957 para. 47.

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ers, ordering the recovery of the unlawxful State aid,granting interim relief and granting damages toaffected parties.

In its jurisprudence on Article io8 (3) TEEU, theECJ sometimes iefers to the fact that the nationalcourt needs to ensuire the protection of indrxvidualrights "undei national lawv '13. Whilst this foirmula-tion undoubtedly leaves a certain margin of discre-tion to national rules as to the modalities of thelegal protection to he gianted, national rules cannotsimply prevsent the pirotection of indrxvidual rightsundei Aiticle inS (3) TFLU. This piotection must heeffective and may not be less fax oniable than whatis foireseen foi similai national claims. 14 This isalso why the ECJ explicitly requires the nationalcourt to take full account of the effectiveness anddirect effect of the standstill obligation and the EUinterest. I5

In spite of these principles, there have beenexamples where national courts have denied com-petitors adequate legal protection. A number ofGerman courts have, for example, recently con-cluded that German civil law did not contain asufficient legal basis to allowx State aid claims bycompetitors. 6 The judgments concerned alsorejected the existence of a legal claim directly on

13

14

Case C- 199/06, CELE vSlot, [2008] [CR 1-469, para. 41.

Case C- 368/04, Transaline Olleitor6 in Osterreich, [2006][CR 1-9957 para. 45'.

15- Ibid. para. 52.

16c Landgetichi P-"',darn 23. '1.2(006, 510 17/5 Landgerich' BadKreuzoath 1 6.0-52007 2 0 441/06; Higher Regional CoontSchleswxig-Holstin 2090 2008, 6 U 54,06; GbeilandesgerichiKoblenz 2-5.92.2099 4 UJ s59/07

17 See for a critical analysis of ihese judgments also A. 1Martin-[Hlers 'Pivsale Rechisdui bsetzring im [C Beihilfeni chiKonkurrentenklagen or denischen Zivilgeriebten' [ocopiischeZeischrrif [or lWrrtscfarecfrt 2006, pp. 745-71.

18 Case C-3s490O FNC[ v Frainto [1991 ][CR I1--505 para. 11.

19 Case C-1 994, SF6x v LaRoste, FI 996[ [CR I-3547 patas. 40and 66.

20 Case C-301/87 [Frce v Comssion ( Boossacit 1990]LCR It307 pias. 1 I t

22oad Articles I3 aned '14 of theP~rcer~ral Regulation.

21 Case C-39/94, SEIls [a Poste, LI 996[ [CR I-3547 paias. 40 and68, Case C- 199/06, C[LF v SIDE, L2008] [CR I-469, nras 3d to39

22 Case C-39/94, EIl v [i Poste, 1996] [CR I-3547 para. 70 Seealso Opinion ci Advocate Coneral lacobs in Case C-39/94 oi '14Deembnler 199-3

23 Case 1/09 following a reference for a preliminary ruling irom theConseil d [tat (France) lodged on 2 lannair 2009.

24 See naras 32 Ic 33 thereofi

the basis of Article int8 (3) 0 FEU, arguing that thisprovision was not designed to protect the rights ofindrxvidual competitoirs. This national case law,xvhich is cuirently under appeal before the highestGeiman civil court, is in stark contiast with thejurisprudence of the ECJ: not only has the LCJiepeatedly confirmed the mandatoiy nature ofArticle in8 (3) and its direct effect, bnt also the factthat this piovision is aimed at protecting indrxvidualiights." Even if it was true that German nationallaw does not pirovside a legal basis for a claim (whichis by no means cleai), it should thus alxvays bepossible to base a claim directly on Article inS (3)TEEU. 1 '

1. Recovery of unlawful Aid

The national court's obligations under Article inS

(3) primarily include the obligation to order therecovery of the unlawful State aid from the bene-ficiary.9

The legal consequences of a recovery order by anational court are similar to those of a Commissiondecision under Article 14 of the Procedural Regula-tion. Howxever, the requirements under which anational court can (and must) oidei such a recoveryaie much stiicter. This is because, as already indi-cated above, the Commission can only order iecov-ery aftei has ing checked -and denied -compati-bility2 0 xvhereas national couits can (and must)order irecovsery simply because the measure had notbeen notified.'

Theie aie txvo main exceptions to the LU laxvprinciple that national courts must oidei the iecov-ery of unlawful State aid:

The first one is based on the SFEI jurisprudenceof the ECJ and applies to cases xvheire "excep-tional circumstances" stand in the xwsay of re-covery. 22 Whilst the ECJ has to date not givenclear guidance on xwshat counts as an exceptionalcircumstance, this issue is currently pendingbefore the ECJ via a request for a preliminaryruling in the CELL case 2?3 The approach advo-cated in the Commission's Enforcement Notice 2'

consists in the concept of exceptional circum-stances being mirrored on the requirements ofArticle 14 of the Procedural Regulation. Conse-quently, only a general principle of Communitylaw or objective impossibility wxould be suffi-cient to pireclude recovsery.

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- he second exception stems from the ECJ's CELF

jurisprudence and applies where, by the time thenational judge decides, the Commission hasalready confhrmed the compatibility of the aidmeasure concerned This is based on the con-sideiation that the standstill obligation is onlydesigned to prevsent the implementation of (atleast potentially) incompatible measures. Oncethe Commission has confirmed compatibility,this purpose falls away.i6 Neveitheless, althoughthe ECJ has explicitly denied the existence of arecovery obligation foi the national court underEU law, such an obligation can still arise undernational law.i2

T he CELF jurisprudence cannot be understood assimply aiilowing the national judge to put proceed-ings on hold pending the outcome of a Commissioninvestigation. Where the national court intends toawait the outcome of a parallel Commission inves-tigation, it needs to safeguard the rights~ of com-petitors in the interim. Therefore, the Commissionsuggests that the national court order the paymentof the aid (plus interest) on a blocked account.Depending on the outcome of the Commissioninvestigation, this amount can then either be reim-buirsed oi withheld by the giranting authoirities. 2 8

The ECJ has clarified in CELE that the economicadv antage of unlawful State aid foi its beneficiaryexceeds the nominal aid amount.20

9 This is because,had the aid been duly notified, it would have beenpaid out much later (i.e. aftei the conclusion of theCommission's invsestigation). The EC) theretorerequires the national court to oidei the recovery ofthe time advsantage (in the form of 'illegality inter-est"'). The payment of this interest wvill often hase tobe oideied in addition to the nominal aid amount.But where the Commission has already adopted acompatibility decision by the time the nationalcourt decides, illegality interest wsill have to berecovered on a stand-alone basis

2. Damages Claims

Legal protection for third parties under Ar-tidle io8 (3) T1FEU is not limited to ordering therecovery of unlawxful aid. T1he ECJ has also re-peatedly held that the national courts' obligationsunder Article io8 (3) Ti-EU may include awardingdamages. 30 This applies where a third party (such

as a competitor) has suffered loss as a result of theunlawful aid.

The main difficulty in this respect is not so muchthe existence of a sufficient legal basis foi adamages claiim. This legal basis can often be foundin national law, foi example in national tort law oiin national state liability iules.

W~heie such a specific basis does not exist undernational law, the national court can always awarddamages directly on the basis of EU law. This isbecause a breach of the standstill obligation underArticle 1o8 (3) TFEU forms a sufficiently seriousbreach of a superior norm of EU law, designed toprotect indrvidual rights (Article io8 (3) Ti-EU). Theliability of the State for the payment of damagescan therefore also be based on the ECJ's Francovichand Brasserie du Pecheur jurisprudence. 32

Despite the fact that it is usually possible for theclaimant to identify a solid legal basis for his claim,the research commissioned on this topic by theCommission has not yet identified successful dam-ages claims in the State aid field. The reasons forthe apparently extreme difficulty to bring success-ful claims are to be found on the practical side.Most importantly, competitors are often unable todemonstrate that the unlawful State aid has gener-ated a financial loss.3

3

2-, Case C- 199/06 CELE SIDEt [2008] [CR I-469, paa 45 46and .

26Confirmed in Case C-384/07, esrr b pbihd~ti

tme 0i, para. 28.

27 Case C- 199/06 CELE SIDEt [2008] [CR I-469 para -3.

28 See para. 62 oi ihe Lntforcerent Notice.

29 Case C- 199/06, CELE v SIDE, [20081 [CR I-469, para. 51

30 Case C-39/94, SEl v La Poste, 1996] FCR I-3547 para 7_5;Case C-368/04, Trasalpine Olleitosw in Oaterrech, FL006]LCR I-99-5, para. -6; Case C- 199/06 CELF v SIDE, L2000][CR I-469, para. 3

1 lbe sations Studies, on t1e [nfoicernent o1 Stale Aid Lasw aiNational Level carried out in 1999, 2006 and 2009 show difter-eni examples. [or instance, in Austrian lass section I o1 the

Austrian Act against Unfair Comnpetiiion applies. In [innish lawthe Aci on Damnages is mentioned in the studies, swhereas inDuich lasw actions for damages for breach of the Siate aid rulesshould be birouight Li nder the samse ruIns and pri nci pIns as actionsfor damnages based on iort See:htntp:/e.eriiopa en. 'ompetition /ourtisate-aid-infohtml

32 joined cases C-6/90 and C-9/90, Emncovich eta!. Italy 1~9911[CR 1-537 j oined cases C-46/93 and C-48/93, Braien duPecheur S.A vCermny, [1996] [CR1 1029.

33See thb vaiiouis Studies on lbthe oicernent o1 Slain Aid Laws atNational Level carried out in 1999, 2006 and 2009. See:http:/ e.eriiopa en. 'ompetition /ourtisate-aid-infohtml.

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Demonstrating loss is of course slightly easierwhere the claimant can at least point to a certainbusiness opportunity, which he missed as a iesultof the aid (i.e. a pivate or public sectoi contractawarded to the beneficiaiy). In this case he can esti-mate the foregone profit and present this estima-tion to the court. But where the deteiioiation of thebeneficiaiy's economic situation is more abstiact

(e.g. because the aid has iesulted in a loss of marketshate), the claimant will haxe to engage in complexarguments concerning the (hypothetical) devselop-ment of its own business in the absence of theunlawful aid. This is why the Enforcement Noticeoffeis suppoit to national couits as regards dam-ages calculations. 34

3. Interim Relief

T he adoption of interim measures equally formspart of the national courts' role under Article in8 (3)I7FEU."

The need for such interim measures has alreadybeen discussed under part 111.1 above as regardscases in wxhich the national court decides to sus-pend its ox'sn proceedings (e g. because it wants toawait the outcome of a paiallel Commission inves-tigation). In such cases, the requirement of effectrxvelegal piotection iequires the court to safeguaid therights of affected competitors in the interim.

34 See para. 52 thernot.

35Case C-39/94, SF81 s La Poste, 1996] [CR 1-3547 paid. 2

36 See for example Case C-366/04, Trrsa/prine Olleitung in Osterce-icli FL206] [CR 1-9957, para. 44.

37 For tis section, see also the Notice iromn ihe CommissionToswaids an nofecive implementation cf Comm ission decisionsordering Member States io recover unlawtul and incompaiibleStatenaidOIC 27, 15ll.2007,'pp. 4-17

38 Article 143) "Recoxeix' shall be efttcted wnitlhoct delay and inaccordance with ihe procedures ceder ihe national law ot theMemnber State cone reed, provided that they allosw thre immediateand effective exzecution ot the Commissions decision. To thisitfei and in the event ci a proceduri betore national cocrts, tleMember States concerned shall talke all ncessary steps which are

available in tlseii iespective legal systems :,including pirovisionalineasures withoct prejudice to Community las."

39 See, toi instance The Regional Cocit Ksce, Krajslcs sod Kosice,21.94.2998, 2Cob/ 5aa/2997 FRCCONA Kosice, as This cas isthre subject of an action against Slovakia coder Art. 08(62): CaseC507/98, Commission v Slovak Reaubhic (pending). Actionbrought on 21 Nonvember 2008.

49 See eg. Case C-499/99, conmmission v Spain [299)] [CR 1-6031.

But a request for interim measures can also bebrought on a stand-alone basis. This is often thecase where a thurd patty seeks to pievent the pay-ment of the aid befotre it cxven occur s. The ECJ hasclarified in this tespect that, faced with a plannedunlawful aid, the national court must take the nec-essaty measures to prevsent it. 3 6

IV. The Role of National Courtsin Recovery Cases

National courts ate most fiequently called upon torule in recovery cases when a beneficiary tries tochallenge the validity of a national recovery order.3

However, court action may also be introduced by aMember State seeking to enforce a Commissionrecovery decision or a competitor seeking redressagainst the national authorities' failure to do so.This part w'sill address the issues most frequentlyarising in a national context, by first setting out theapplicable basic principles under EU lawx, thenanalysing howx these matters have been handled bynational courts in practice.

1. Implementation of RecoveryDecisions

According to Atticle 14 (3) of the ProceduralRegulation38 , Membet States ate responsible fotthe implementation of Commission recovsery deci-sions. In this tespect, the Member State is free tochoose the most appiroptrlate legal instrument in itslegal orde, provided this ensures immediate andeffectivse recovsery. Usually, recovsery is thus cartiedont by the adminiisti ationi/inistitution-ibody whichgianted the aid in the first place, and implementedvia administrative procedures (issuing a recoveryorder). A Member State may also consider thatthere is no administrative procedure available in itslegal system, and launch legal action before anational court instead .3 Howxever, in this situation,it has to be recalled that a Member State fails to ful-f il its recovery obligation if the steps taken by itsorgans do not lead to immediate and effectiverecovery.4

9

It is indeed the duty of the Member State toensure that recovery is effective and immediate:only in rare cases have the EU courts ackno'sledgedabsolute impossibility to recovet. This is not the

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case where the Member State merely informs theCommission of the legal, political or practical diffi-culties involved in implementing the decision,without taking any real step to irecov~ei the aid, andwithout proposing any alteirnativ e arrangements tothe Commission" Furthermore, a decision isbinding on all organs of the State (part 2). Nationalpirovisions which would prev~ent effective and/oiimmediate recoveiy therefore hav e to be leftaside. 4

Wheire a M~ember State fails to ensure effectiv eand immediate recovery (be it because of a nationalcourt) this can be pursued in fiont of the ECJ,and ev entually fined undei Article 260 (2) TEUhT1his recently happened in Commission vGreece. 43

In this case, the Court imposed a penalty ofEUR i6 000 for each day of delay and a lump sumof FUR 2 million upon Greece. A similar Courtaction has just been launched by the Commissionagainst Italy

44

2. Actions Questioning the Validityof a National Recovery Order

As indicated above, the most frequent actionsoriginate fiom aid beneficiaries seeking annulmentof recovery ordeis. National court actions cannotchallenge the validity of the underlying Coinmission decision where the claimant could hav echallenged this decision diirectly before EU couits. 4

This is because EU courts already provide legalpiotection to beneficiaries, who can (i) appealagainst the recov ery decision (Article 263 TFEU)and (ii) apply for inteiim relief (Article 278 TFEU).Howevei, the claimant's legal standing beforethe Geneial Court may sometimes be questionable.In such cases, the national courts aie competentand must thus provide the necessary legal protec-tion.

EU jurisprudence on these matters is clear: Inthe "Deggendlori" case4 6, the beneficiary had notchallenged the Commission decision in tront ot theEU courts, but tried to suspend its implementationon the ground that the decision was unlawful. TheCourt held that the time-limit laid dowxn in theTireaty for bringing an annulment action is manda-tory, in order to safeguard legal certainty: once thistime-limit has elapsed, the decision becomes defin-itive. National courts may not question definitiveCommis~sion decisions, since any other couirse of

action w~ould fail to respect their definitive natureand the supremacy of EU lawx

In a similar vemn, the Court ruled in "Lucchini ,47

that no State aid may be gianted in violation of anegative Commission decision, ev en if the iight toreceyive it has been irecognized by a national judg-ment having the foice of ies judicata. H-eie again,the main ieason for the Couit's stance is thesupremacy of EU law.

The applicable limitation period has given rise todiv ergent national interpretations. A court inRome 48 rejected an action foi annulment based onthe claim that the national limitation period

(5 years) had expired. The court rightly recognisedthe direct applicability of the Commission's re-covery decision and its prevalence over conflictingnational rules, and held that the statute of limita-tion contained in the Procedural Regulation

(1o years) is also applicable to national recoveryproceedings. Confronted w~ith a similar situation,however, the Hamburg Financial Court 4 9 ruled thatthe one year limitation period laid down in Germantax lawx superseded the EU's lo year rule.

In both situations, the main question w~asw~hether a national limitation period could serve asa basis for not (fully) implementing a recovery deci-sion. Giv en the settled juiispiudence of the ECJ, thenational provisions should have been left unap-plied, as the Rome court did.

4] Se e g. Case C4]5/2003, Commission v Greece ( O1vr"Pic')[2005 ECRI 1-375 para. 43.

42 Case C-232/0-5. Commission v Frnce ( Scott') [2006] [CR I-1071, patas. 49 to 3

43 Case C-369/07, Commrission v Greece, not published yet in theOf, pa ras. II] tol15D0

44 Case C302/09, Commrission v ItaI, (pending). Action brought on30 July 2009. See also P/09/ 1028 of 25th June 2009.

45 Case C-232/0, Commris~sion v France (Scott, [20061 ECR I-1007 . ars 49 to -23

46 Case C- 188/92, TWD Textilwerke Deggerdori GmnbH v Germa~nv[19941 ECR 1-33

47 Case C- 119/0-5. Alnistero IleII'industria del Comrnercio edeli Artigin to v LUCChini SpA paras. 59 to 63.

48 Court of Firs tInstance of Rome, Labour Division, Tribunale diRomra, sezione lavoro 21.12.2007 EIicsson TelecomnunicazioniSp.A. v I\PS SCCI S p.A.

49 Hamburg Financial Court, Finanzgericht FHmburg 4. Senat,05.09.2)008, 4 V~ 180/08, RUckfonderulng velgutetelMineralokteuer 2.

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3. Interim Relief

Aid beneficiaries also fiequently undertake na-tiollal couit actions to seek ilnteiim ielief againstrecovery ordeis. Gianting interinm relief in suchciicunmstances is subject to the vecry strict legalrequiiemelnts defined ill tile 'Zuckerfabiik' ,5 aild'Atlanta"5 jurisprudence. A nationlal couit mayonly suspend recovery oideis under tile followingstiict conlditions: (i) the couit ilas seiious doubts asregards the v alidity of the Conmmission decision; iftihis is not already pending before the ECJ, it mlustitself refei tile question to the ECJ, (ii) there nmustbe inrgency ill tile sense that ilnteirim iecief is nleces-

sary to avoid serious and irreparable damage to theparty seeking relief; and (iii) due account needs tobe taken of the EU interest in effective and imme-diate recovery. In its assessment of these condi-tions, the national court must respect any EU courtruling on the lawxfulness of the Commission deci-sion or on an application for interim relief at EUlevel.

This principle was well tackled for instance bythe High Court of Ireland. '' Although the Courtconsidered that the first criteria of the "Zucker-fabrik" test might be met, it found that the defen-dant had put forward no evidence to satisfy tile sec-ond criteiia, i.e. to establisil serious aild ir repar ablehlarm. Tile Couit tileiefoie ileld that the defendantwas not entitled to a stay of tile proceedings.

As inldicated above (part lVi.) nlationlal courtsnmay ill any ev ent not suspend tile implem~entationof tile nlational iecoveiy orders for ieasonls relatedto tile validity of tile underlying Comnmission deci-

o0 lamned cases C143/88 and C-9). 89, Zuckert abnkSuderclihfmarsc Per A.G. ao. [19911 ECR 1-41s, paras 23 andfallow ing.

I1 Case C-465/93 Atlanta Fruchthandelsgecellschafl rnbH iao,[1995s ECRI14175

52High Court af Ireland -High Court, 30.06.2006, 2005 998S,Kingdom of Belgium v Rvanair Limited.

(nrCommission Deciin of 'I I May 1999 concerning aid granted bv

Italy to promote employment, GJ L 42 13 502.2000 p. 1.

-4 Case C-99/02, Commission lv f~,120041 [CR 1-33-3.

55Comm ission Decision 2000/394,EC ai 25 Novembei '1999 on aidto firms in Venice and Chioggia by way of relict from social seCLIit' aontributians Lindel Lawxs Nas 30/ 997 and 206/1995, CJL

1350 23.06.2000, pp. -0-63.

56 Case C-302/09, Commission v Italy (pending).

57Chapter V of Regulation (IC) Na 794/2004, 01 L 140,30.04.2004 pp. 1-134 as Iast amended by Regulation (E& No2 71/ 008, 01L 82, 2 Q.3.2 008, p. I.

sion wxhere a challenge at EU level wxould have beenpossible. Although unambiguous, this logical con-sequence of the supremacy of EU law does not yetseem fully recognized by national courts in someMembei States.

A paiticulaily noteworthy case in this respectconcerns the Italian employment measures. 3 Inthis case, seveiral yeairs after the negative Commis-sion decisiou aud a judgment of the ECJ uudeiArticle roB (2) TFEU54 , the recov ery has still notbeeu completed. One of the ieasons foi this situa-tion is a seies of suspension decisions by nationalcourts. Italy then introduced a law in oider to iem-edy the situation, but only a limited numbei of sus-pensions were actually revoked, wxith some casesapparently decided in favour of the beneficiaries. Inlight of this unsatisfactory situation, the Commis-sion has recently launched Article 260 (2) Ti-EUaction against Italy.

The same problem may arise when parallelannulment proceedings are pending before the EUcourts, despite settled jurisprudence holding thatannulment action does not have suspensive effect.For example, followxing the Commission decisionconcerning the Venezia/Chioggia case , some ofthe recovery orders issued by the Italian authoritieswere challenged befoie national couits, who oftensuspended their implementation. The Italianauthoirities challenged tihe suspension oirdeirs wherepossible, but the Coite de Cassazione confirmedtheii lawfulness undei national law. H-ere again, theabox e-mentioned law failed to piroduce its desiredeffects, since a number of local judges held that, foiieasons of geneial Italian procedural law, the sus-pensions remained in place in spite of the newiules. The case is the subject of an action undeiArticle 1o8 (2) TFEU against Italy.56

It should be iccalled in this context that the aidamount to recover bears compound interests fromthe moment the aid was first granted until its actualrepayment3 , to compensate for the financialadvantage arising from the availability of the aid.In some long standing recovery cases, recoveryinterest meanwhile amounts to more than twice theoriginal aid amount. It is thus not in the bestinterest of the beneficiary (nor in the interest ofnational courts possibly seeking to protect thebeneficiary's interests) to delay recovery indefini-tely through legal proceedings. Tihis is also thereason w'~hy the Commission may accept the provi-sional implementation of a iecoveiy decision by

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putting the full amount of recoverable aid (plusinterests) on a blocked account when a case is sub-ject to litigation before national oi EU couits (inwhich case iecov eiy interests stop accr uing).

4. Insolvency Proceedings

The ECJ has consistently held that the fact that abeneficiary is insolvent or subject to bankruptcyproceedings has no effect on its obligation to repayincompatible aid.8 National insolv ency rules applyin this context, piovided they take account of theEU interest and respect EU law.

A recent judgment of the German Federal Courtof Justice (Bundesgerichtshof)59 highlighted theimportance of the effectiveness of recovery. In thiscase, the liquidator of the beneficiary sought resti-tution of the sums already recovered by the grantor,in the context of insolvency proceedings. T1he Courtheld that, even though German bankruptcy lawprovides that the creditors of shareholder loans(situation of the aid grantor) shall qualify as sub-ordinate creditors, such provisions may not applyin cases where the public authority seeks to recoverunlawful aid followxing a Commission recoverydecision. In such cases, the public authoiity mustthus be qualified as first class cieditor, regardless ofwhether the unlawful aid was gianted v ia share-holdei loans oi otherwise, and regardless of anycontractual subor dination clause.

5. Action by Competitors

Action before national courts is not limited tobeneficiaries or public authorities. Competitors ofthe beneficiary may also seek enforcement of re-covery decisions. T1his is because recovery aims atrestoring the competitive situation which existedbefore the aid was granted. As long as the aid is notfully recovered, and recovery interests not paid,competition is still distorted. Competitors may thusrely on (definitive) Commission recovery decisions,since these (should) have direct effect in nationalproceedings. Recent case practice suggests, howxev-er, that this may depend on national legal provi-sions concerning legal standing -and that nationalcourts are not alwxays willing to give full effect toEU lawx (see the German cases referred to underpait III above).

T~his is also w hy the Notice considers that failure byMember State authorities to comply with a Commis-sion recovery decision can give rise to damageclaims under the "Erancovich" and "Brasserie duPecheui' jurispiudence60 . The treatment of suchclaims should miiioi the principles concerning vio-lations of the standstill obligation, and theii successdepend on whether the claimant can demonstratethat he suffered conciete loss directly as a result ofthe delayed recoveiy. Unfoitunately, as indicatedabove (part 111.2.), no0 such action has been successful yet, and such cases are veiy rare.

V. Cooperation between theCommission and National Courts

By virtue of EU lawx, the Commission and theMember States, including their national courts, areunder a reciprocal duty of loyal/sincere coopera-tion. 61 In light of this fact, the Commlnission isunder an obligation to assist national courtswxhen they apply Community law in State aid cases,just as national courts may be obliged to assistthe Commission in the fulfilment of its, tasks. 62

Since the very purpose of the Notice is to encouragepriv ate State aids enfoircement, an entire section 63

has been dedicated to offering practical suppoitto national judges. 64 Two specific suppoit

58 See e.g. Case C-52/84, Commission v BelgiUM, FI 986] ECR 89.

-9 Federal Court of justice (FCJ) Bundesgerichtshof, dBGH), IX.ZRivlseildI, 05 U.0.07 IX ZR 22 /05

60 joined cases C-6/90 and C-9/90, Frncovich etil! Italy, 1~9911ECR 1-37 paias. 31 to 3;and joined case C-46/93 andC-48/93, Brisserie Ilu Pecheur . Gerrnr 1Ll9961 ECR 1-1 02%pal. 31.

61 Formei Article 10 EC replaced in substance by Article 4(3) TEL'(now referred to as the 'principle of sincere cooperation')Regardless of its name, the Lindel ling principle probably quali-

fisa general principle of EU law.

62 See Case C-39/94, SFE v La Poste, [1996] ECR 1-347, para. 50,Order of 13 JuJI 1990 in Cs C-2/88 mm. Zwrtreld ardOthers, 1LI990] ECR 1-365, paras. 16-22 Case C-24,,89,Delimitis vHenninger Br4u, [19911 [CR 1-93-5, para. -53 andCase C-94/00, Roquette Freies, [2002] ECR 1-9011, para. 11.

63

64

Part 3 of the Notice.

Comnpared to the 1 99-5 Cooperation Notice (OJ C 312 of23.11.1995), the Entocernent Notice thu ci~ontai ns muc Lioire

detailed rules on the possible scope and content of requests fori nformation 01 opinons, theieby largely buiild ing on the positive

experience acquired in the Comnmission' cooperation wvith andsupport to national courts in antitrust and merger cases (se theConmission Notice on the cooperation between the Comnmissionand the courts of ELU M rnbei States in the application of Aticle81 and 82 EC, OJ C 101 of27.4.2004, p. -4)

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mechanisms are available in this respect: requestsfor information and requests for Commissionopinions.

1, .Information Requests

The Commission's duty to assist national courtsincludes an obligation to tiransmit irelevant in-

formation ini its possession.65 The Commission

will thus in principle respond to infoimation re-quests wvithin one month from theii receipt (bestendeavours).

Infoimation requests may ini particular concern

procedural matters, such as vwhether a certain aidmeasure has been notified, a Commission proce-dure is pending, a formal investigation has been iitiated or a final decision adopted (or if not, whenthis could be envisaged). National courts may alsoask the Commission to transmit certain documents,such as copies of Commission decisions (if not yetpublished), data, statistics, market studies or eco-nomic analyses.

The Commission's duty to transmit informationis not unlimited, howiever. On the one hand, theCommission needs to respect its duty of profes-sional seciecy as laid down in Article 33 TFEU. Ifcertain documents contain confidential informa-

6-5 See the preceding footnote; see also Case T 353/94, PostbankvConmmision, F9961 ECR 11-921, paia. 93

66 See paras 8-5 to 87 of the Notice.

67 See Order of 13 July 1990 in Case C-2/88 Imm. Zwartfeld and

Others, J1990] ECR 1-3365, paia. 11; Case 1-35394, Posthanl.vCommission, 1996] [CR 11-92] para. 93; Cas cC-27-/00, Firstiand Frinex, [20021 ECR I_ 0943, para. 49.

68 Preliminary ruling requests are mandatory for national courts oflast i salt, Lunless the issuie at stake is already coveied by settled[CJ case-law and the national Court thus has no reason to doubt.

69 See paras. 90 and 91 of the Natice, see also paias I8 (lockexemption Regulations or existing/pre iOUSIV approved aidschemes), 36 (aid quiantification), 41 to 42 (quantification ofrecovery interest) and 48 to -2 (damages claims of the Notice.

70 Since the Commission is solely competent to asses the compati-bility af an aid measure, compatibility que stians should in princi-ple not arise at national court level. However, a national courtmay ask the Commission for infoimation an wxhether it is assess-ing the compatibility of a given mva Lire, whether/when it intendsto do so and wUiethei wh ii a decision may be expected (seeabove part -1and para 92 of the Notice).

3

Incluiding a mailing addiess, telephone and fax contact, and dedi-cated e-mail: ec- amicus-stite- aid ,)ec europa eLI (ee para. 97 ofthe Notice)

See http :/ec euiropa eu/comipetition ,court 'oerview-en htmil

See para. 93 of the Notice.

tion or business secrets, the Commission will there-fore first ask the national court to certify that it canguarantee the protection of this infoimation, andiefuse tiansmission, should the national couit notbe able to give this guaiantee.6 6 On the othei hand,the Commission may hav e to iefuse tiansmission ifthis would inteirfere with its functioning and inde-pendence oi jeopaidize the accomplishment of itstasks (protection of tihe Commission's inteinal deci-sion-making process, including the Commission's'thinking space').

2. Commission Opinions

In light of the particularly complex tasks whichnational courts may face in the practical applicationof EU State aid rules, national courts may alsorequest the Commission's opinion on issues arisingin national State aid proceedings, as a complementto their right (or duty) to ask the ECJ for a prelimi-nary ruling under Article 267 T1FEU.68

Such requests may cover all economic, factual orlegal matters arising in national court proceedings,in particular as regards the State aid nature of anational support measure, the exact calculation andquantification of any aid involved, its confoimitywith an existing block exemption Regulation or aprev iously approv ed aid scheme, the determinationof iecoveiy interest, where applicable, the piesenceor absence of exceptional ciicumstances whichmight prev ent the national couit from orderingiecoveiy, the legal prerequisites foi damages claimsunder Community law oi matters of damage calcu-lation.t9 In fact, the only'excluded sectoi' conceinsquestions of compatibility. - The Commission wviiiendeax oui to emit its opinion within foui monthsfiom the date of the iequest.

To ease national court's access to the Commis-Sion, a single contact point has been created,'1 anda specific wiebsite set up by DG Competition to pro-vide practical information to national courts andclaimants.7 Nevertheless, and in order to preservethe independence of the judiciary, national courtsare not legally bound by Commission opinions.7

The Commission will also not hear the partiesbefore providing its opinion, nor consider the mer-its of the case. While it may be easier (and faster) toobtain, a Commission opinion cannot thereforeclaim the same authority as judgments of the EUCourts.

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VI. Concluding Remarks

Compared to the situation in antitrust, piivate en-forcemnent in the State aid field remnains a dev elopingarea. But the awareness of private State aid enforce-Hient is increas~ing and the numnbei of State aid casespending befoie national courts has risen significant-ly over the last couple of years. Many national courtstake a very active role in this field and fulfil the ioleassigned to them by the ECJ effectively

H-owev ei, it is also clear that not all obstacleswhich stand in the way of moire effectiv e State aidcontrol at national lev el have been iremov~ed.

Potential claimants still face a numbei of problems,including the followxing:

-Some claimants are still finding it difficult toconvince national courts of the mandatorynature of the standstill obligation and the factthat it entitles competitors and other third par-ties to bring claims directly in the national judi-ciary. For the time being, this issue seems to belimited to Germany. It remains to be hoped thatthe Bundesgerichtshof, wxho wxill have to decideon this matter soon, will resolve this issue.

-It is still extrem~ely difficult for third parties tosubstantiate damages claims before nationalcourts. In this respect, more specific guidancemay be needed on how to estimate -in a suffi-ciently precise marineri the economic lossencountered by a competitor or a third party.-A regards irecov~ery, some national courts are

overly generous in suspending iecoveiy ordersissued by the Member State authorities. Thesesuspensions are often not in line with the caselaw of the ECJ and can significantly delay theimplementation of a iecoveiy decision. A seriesof legal actions undei Aiticle io8 (2) TFEU arecuiiently pending befoie the ECJ which shouldprovide further clarity in this area.

The Commission has already indicated that, follow-ing the adoption of the new Enforcement Notice, itwxill now step up its efforts to increase awxarenessamongst national judges and the legal community.We hope that this w~ill help to solve the remainingdifficulties and therefore lay a firm basis for aneffective and successful system of private State aidenforcement at national level.

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