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Archive for July 1st, 2011

Death in Venice: The end of a Commission’s locus standi theory in State aid cases?

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[Note by Alfonso: Once again, it´s a pleasure to have our friend, State aid expert, and colleague of mine Napoleón Ruiz  (don´t be fooled by the picture, he´s real) informing us of what´s new in the world of State aids. We leave you with him].

Thanks again to Nico and Alfonso for inviting me to write a post on State aid matters. My previous post was devoted to explaining how “vaporous” some of the legal concepts which make up the notion of State aid are.  

As a sequel of my previous post, I would like to briefly refer to another interesting battlefield within the State aid area: the locus standi of the beneficiaries of aid schemes ( think, for instance, of tax measures) to challenge negative decisions of the Commission. In contrast with antitrust practice where undertakings are always the addressees of the Commission’s  decisions, in State aid cases the addressees of Commission decisions are –in theory- exclusively member States.

State aid cases brought before the European Courts by recipients of the aids usually begin with ferocious debates with the Commission on whether the  appellants fulfill, or not, the famous Plaumann test. Needless to say, the Commission is not precisely enthusiastic when it comes to accepting undertakings appealing its Decisions; that is true to such an extent that one could attribute it the nickname of  “Dr. No” (which is the answer one –almost- always gets when asking whether an aid beneficiary is individually concerned by a negative decision). The Commission’s argument in this regard is simple and sharp: in order for an undertaking to be individually concerned, it needs to prove that it has actually benefited from the aid, and that can only be demonstrated when the applicant has been addressed a recovery order from the Member State before lodging the appeal (and that does not happen so often). Otherwise, that undertaking must refer to the national  judge and pray request: (i) that the Court declares itself competent to rule the case and (ii) that it raises a preliminary reference of validity of the Commission´s  decision (which does not happen frequently either ).

Frankly, one does not need to be a constitutional law expert to find this argument at odds with the most basic conception of the right to access to justice under article 6 of the ECHR.

That was indeed the state of play in State aid cases until just a couple of weeks ago, when the ECJ issued an important ruling which has gone relatively unnoticed. I am referring to the so-called Hotel Cipriani (a very recommendable place to stay in Venice if one can afford it…) case (C-71/09 P). In that case, the ECJ upheld the GC’s ruling, dismissing the Commission’ pleas on admissibility and clarifying the boundaries of the Plaumann test in such cases. In particular, the Court states in paragraphs 55-57 of the Judgment that:

“The Court must dismiss at the outset the argument that the recovery obligation imposed by the contested decision did not sufficiently identify the applicants at the time that that decision was adopted. (…)

As the Advocate General has pointed out (…), the order for recovery already concerns all the beneficiaries of the system in question individually in that they are exposed, as from the time of the adoption of the contested decision, to the risk that the advantages which they have received will be recovered, and thus find their legal position affected. Those beneficiaries thus form part of a restricted circle (…), without it being necessary to examine additional conditions, concerning situations in which the Commission’s decision is not accompanied by a recovery order. Moreover, the eventuality that, subsequently, the advantages declared illegal may not be recovered from their beneficiaries does not exclude the latter from being regarded as individually concerned.

The Court must also dismiss the Commission’s argument that recognition of the admissibility of actions against a decision of the latter ordering the recovery of State aid had the ‘paradoxical and perverse’ effect of requiring the beneficiaries of the State aid to challenge that decision immediately, before even knowing whether it would lead to a recovery order concerning them. (…)”

It seems to me that the wording of the Judgment leaves little room for interpretation: the Court finds that the order for recovery imposed by the Decision is, by itself, sufficient to individually concern a beneficiary without any further requirements (i.e. individual order of recovery addressed to the beneficiary by the Member State). Thus, the ECJ definitely quashes the Commission’ position regarding the locus standi of beneficiaries and, in my view closes the debate.

In conclusion, although I would not insinuate that the Commission was as “fond” of the argument as was the character of Dr. Von Aschenbach of young Tadzio in Thomas Mann’ tale (masterly brought to the screen by Luchino Visconti), it is however true that this Judgment strikes a serious blow to the procedural strategy of the Commission, which from now onwards will have to focus much more on substance and less on admissibility.

Written by Alfonso Lamadrid

1 July 2011 at 4:03 pm