On 23 July 2021, the European Commission adopted a new notice (“Notice”) on the enforcement of EU State aid rules by national courts. The Notice, which has a better structure, updates and further clarifies the rules applicable at national level contained in the 2009 Notice, which were no longer in line with EU Court of Justice case law and the regulatory framework for State aid because of ongoing developments in this field.
The text of the Notice is available on the European Commission's website.
After a brief introductory reminder of the notion of State aid, the system of State aid control established by the Treaty and the obligations incumbent on both the national authorities and the Commission, the Notice devotes the first chapter to the main general principles when implementing State aid rules. In addition to the principles of equivalence and effectiveness already referred to in the 2009 Notice, it addresses the principles of loyal cooperation and res judicata.
It should be noted that the principle of res judicata at national level has relative force in the field of State aid since, under the principle of the primacy of Union law, the European Commission has exclusive competence under the Treaty to assess State aid compatibility with the internal market.
The role of the Commission and national courts in the enforcement of State aid rules is then addressed respectively in chapters 3 and 4 of the Notice.
As to the role played by the Commission in this matter, the Notice explains in greater detail the Commission’s exclusive competence to assess the compatibility of an aid measure with the internal market, the procedural context in which this competence is exercised, the consequences that these procedures may have at national level and the Commission’s powers in this area (such as deciding to recover unlawful and incompatible aid, or issuing a suspension or recovery order).
As regards the role played by national courts, the Commission recalls their essential role, namely to ensure that the rights of individuals are safeguarded in the event that State authorities fail to comply with the standstill obligation (States may not put into effect aid measures until the Commission has formally ruled on their compatibility).
The Notice includes further clarifications on the competences of national courts, in particular on the following points:
As to assessing whether the standstill obligation has been breached, the Commission makes it clear that national courts must be able to establish whether the measure falls under one of the exceptions to the notification obligation. Indeed, if the measure fulfils the criteria set out in an exemption regulation, or if it constitutes existing aid, Member States are not obliged to notify it in advance to the Commission. The Commission clarifies the scope of these two exceptions.
In terms of suspension or termination of the implementation of the measure, the Notice specifies that Union law does not impose any specific consequences with regard to the validity of the act granting the illegal aid. National courts may therefore declare the contract by which the aid was granted null and void, annul the decision of the State authorities granting the aid or suspend its execution.
As regards the recovery of unlawful aid in the absence of a Commission decision, the Notice provides useful and necessary clarification on calculating interest for the period of illegality. Article 9 of Regulation (EC) No 794/2004 (on the method for setting the interest rate) does not apply in the absence of such a recovery decision. Therefore, the calculation of interest for the period of illegality is carried out according to the applicable rules of national law, subject to two conditions: rules of national law must respect the principles of equivalence and effectiveness, and the interest due for the period of illegality must be calculated at a rate equivalent to that which would have been applied if the beneficiary had had to borrow the required aid funds on the market within that period.
With regard to the prescription period applied to national courts’ powers to order recovery, the Notice makes it clear that the 10-year period provided for in the Procedural Regulation applies only to the Commission. Thus, national limitation periods may be longer, which may result in the national court having to order the recovery of aid granted in breach of the standstill obligation, even after the expiry of the Commission’s limitation period. It should be noted, however, that in Member States where limitation periods are shorter than 10 years, the courts are bound by these periods unless there is a Commission recovery decision.
As to interim measures, it should be noted that national courts are obliged to adopt interim measures if the following conditions are met: a) the existence of State aid is beyond doubt; b) the aid is about to be, or has been, put into effect; and c) no exceptional circumstances making recovery inappropriate have been found.
Finally, as regards actions for damages, the Notice reiterates the lessons learned from the Asteris case law, namely that State aid is of a fundamentally different legal nature from the damages that national authorities would be ordered to pay to individuals as compensation for the harm they have suffered. Thus, in deciding on compensation to third parties for costs incurred as a direct result of unlawful aid, national courts must be careful not to adopt a decision that would have the effect of granting aid or extending the circle of beneficiaries. Damages actions may not have the effect of circumventing the State aid rules.
It should also be noted that a beneficiary of unlawful State aid cannot validly invoke legitimate expectations in an attempt to obtain damages. The beneficiary must be able to ascertain that the procedure for granting aid has been respected.
Chapter 5 of the Notice innovates in some aspects.
In addition to the option for the Commission to assist national courts, as already mentioned in the 2009 Notice, by providing information and opinions on the application of State aid rules, the Notice also gives the Commission the option to intervene on its own initiative as amicus curiae by submitting observations in proceedings before national courts, without a specific prior request from the courts concerned.
The decision to intervene as amicus curiae is an exclusive prerogative of the Commission and is at its own discretion. However, if it decides to intervene, it must inform the Permanent Representation of the Member State concerned and respect national procedures and practices.
The Commission will assess the necessity or appropriateness of its intervention in the light of, inter alia, the implications of the case beyond the individual case; the impact that its observations might have on the effectiveness of implementing State aid rules by national courts; the nature of the case (in particular whether it raises a new substantive issue in the field); or whether the case may be the subject of further appeal. However, such observations are not binding on the national court deciding the case.
This option to intervene as amicus curiae was provided for with a view to ensuring consistent application of the relevant Treaty rules, as well as to further encourage knowledge sharing and closer cooperation with the Commission. In this respect, it should be recalled that there is a single contact point through which national courts or parties can address their requests.
It should be noted that the Notice also contains a specific section concerning national courts assisting the European Commission. National courts are invited (because of the duty of loyal cooperation) to send the Commission a copy of any written judgment given in a national procedure in which the Commission has intervened, whether by means of a transmission of information, an opinion or observations as amicus curiae.
The Commission also encourages Member States to establish coordination points for national judges dealing with State aid issues, in order to promote the sharing of best practices and a more effective and consistent enforcement of State aid rules.
In Chapter 6, the Commission addresses in a more structured and detailed way the consequences of failure to implement State aid rules and decisions. Here, the Commission stresses the importance of Member States notifying any measures to prolong or amend an act granting State aid, for example by way of interpretation. This may occur when a national court issues a judgment affecting the implementation of a State aid act. The Commission recalls that if compliance with the standstill obligation is not ensured and new aid is not notified, the Commission may have to open an investigation procedure into the unlawful aid on its own initiative or as a result of a complaint.
Finally, the Commission recalls that Member States are not immune from infringement proceedings under Article 258 of the Treaty if they fail to fulfil an obligation under the Treaties. This could happen in the field of State aid if the national courts do not draw the appropriate conclusions from the infringement of Article 108(3) of the Treaty and do not, for example, prevent the implementation of an illegal measure or order its recovery.
The Notice follows on from and takes account of all the observations and comments received following a public consultation, which rightly stressed the importance of greater cooperation between national courts and the Commission.
In this respect, Annabelle Lepièce was one of the experts called upon to draft the Belgian chapter of the study commissioned by the European Commission on the enforcement of State aid rules and decisions by national courts, published in 2019.
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