(Failure of a Member State to fulfil obligations – State aid – Second subparagraph of Article 88(2) EC – Aid incompatible with the common market – Obligation to recover – Absolute impossibility of implementation)

Summary of the Judgment

(Art. 88(2) EC)

(Arts 10 EC and 88(2) EC)

3. Actions for failure to fulfil obligations – Failure to comply with a Commission decision finding State aid incompatible with the common market – Obligation to recover the aid granted – Reference period – Period fixed by the decision failure to implement which is denied or, subsequently, by the Commission

(Art. 88(2), second subpara., EC)

(see para. 16)

(see para. 17)

3. Because the second subparagraph of Article 88(2) EC does not provide for a pre-litigation phase, in contrast to Article 226 EC, and therefore the Commission does not issue a reasoned opinion allowing Member States a certain period within which to comply with its decision, when the second subparagraph of Article 88(2) EC is applied the reference period can only be that provided for in the decision failure to implement which is denied or, where appropriate, that subsequently fixed by the Commission.

(see para. 24)

1 April 2004(1)

(Failure of a Member State to fulfil obligations – State aid – Second paragraph of Article 88(2) EC – Aids incompatible with the common market – Obligation to recover – Absolute impossibility of implementation)

In Case C-99/02,

Commission of the European Communities, represented by V. Di Bucci, acting as Agent, with an address for service in Luxembourg,

applicant,

Italian Republic, represented by I. Braguglia, acting as Agent, assisted by O. Fiumara, vice avvocato generale dello Stato, with an address for service in Luxembourg,

defendant,

APPLICATION for a declaration that, by not adopting within the time-limit prescribed all measures necessary for the recovery from the recipients of the aid which was found, according to Commission Decision 2000/128/EC of 11 May 1999 concerning aid granted by Italy to promote employment (OJ 2000 L 42, p. 1), notified on 4 June 1999, to be unlawful and incompatible with the common market, and in any event by not notifying the Commission of such measures, the Italian Republic had failed to fulfil its obligations under Articles 3 and 4 of that decision and under the EC Treaty,

THE COURT (Fifth Chamber),

composed of: P. Jann, acting for the President of the Fifth Chamber, C.W.A. Timmermans, A. Rosas, A. La Pergola and S. von Bahr (Rapporteur), Judges,

Advocate General: D. Ruiz-Jarabo Colomer, Registrar: M. Múgica Arzamendi, Principal Administrator,

after hearing oral argument from the parties at the hearing on 18 September 2003, at which the Commission was represented by E. Montaguti, acting as Agent, and the Italian Republic by O. Fiumara, vice avvocato generale dello Stato, and A. Morrone,

having decided, after hearing the Advocate General, to proceed to judgment without an Opinion,

gives the following

1 This request for a preliminary ruling concerns the interpretation of Directive 2011/92/EU of the European Parliament and of the Council of 13 December 2011 on the assessment of the effects of certain public and private projects on the environment (OJ 2012 L 26, p. 1), as amended by Directive 2014/52/EU of the European Parliament and of the Council of 16 April 2014 (OJ 2014 L 124, p. 1) (‘Directive 2011/92’).

2 The request has been made in proceedings between, on the one hand, Waltham Abbey Residents Association and, on the other hand, An Bord Pleanála (Planning Board, Ireland; ‘the Board’), Ireland and the Attorney General (Ireland), concerning authorisation granted by the Board for a strategic residential housing development.

Legal context

European Union law

Directive 2011/92

Recitals 7 to 9 of Directive 2011/92 state:

‘(7) Development consent for public and private projects which are likely to have significant effects on the environment should be granted only after an assessment of the likely significant environmental effects of those projects has been carried out. …

(8) Projects belonging to certain types have significant effects on the environment and those projects should, as a rule, be subject to a systematic assessment.

ECLI:EU:C:2025:140

(9) Projects of other types may not have significant effects on the environment in every case and those projects should be assessed where the Member States consider that they are likely to have significant effects on the environment.’

Article 2(1) of that directive provides:

‘Member States shall adopt all measures necessary to ensure that, before development consent is given, projects likely to have significant effects on the environment by virtue, inter alia, of their nature, size or location are made subject to a requirement for development consent and an assessment with regard to their effects on the environment. Those projects are defined in Article 4.’

Under Article 3(1) of that directive:

‘The environmental impact assessment shall identify, describe and assess in an appropriate manner, in the light of each individual case, the direct and indirect significant effects of a project on the following factors:

…

(b) biodiversity, with particular attention to species and habitats protected under [Council Directive 92/43/EEC of 21 May 1992 on the conservation of natural habitats and of wild fauna and flora (OJ 1992 L 206, p. 7), as amended by Council Directive 2013/17/EU of 13 May 2013 (OJ 2013 L 158, p. 193) (“Directive 92/43”)] and Directive 2009/147/EC [of the European Parliament and of the Council of 30 November 2009 on the conservation of wild birds (OJ 2010 L 20, p. 7)];

…’

Article 4 of Directive 2011/92 provides:

‘1. Subject to Article 2(4), projects listed in Annex I shall be made subject to an assessment in accordance with Articles 5 to 10.

(a) a case-by-case examination;

or

(b) thresholds or criteria set by the Member State.

Member States may decide to apply both procedures referred to in points (a) and (b).

Where a case-by-case examination is carried out or thresholds or criteria are set for the purpose of paragraph 2, the relevant selection criteria set out in Annex III shall be taken into account. Member States may set thresholds or criteria to determine when projects need not undergo either the determination under paragraphs 4 and 5 or an environmental impact assessment, and/or thresholds or criteria to determine when projects shall in any case be made subject to an environmental impact assessment without undergoing a determination set out under paragraphs 4 and 5.

Where Member States decide to require a determination for projects listed in Annex II, the developer shall provide information on the characteristics of the project and its likely significant effects on the environment. The detailed list of information to be provided is specified in Annex IIA. The developer shall take into account, where relevant, the available results of other relevant assessments of the effects on the environment carried out pursuant to Union legislation other than this Directive. The developer may also provide a description of any features of the project and/or measures envisaged to avoid or prevent what might otherwise have been significant adverse effects on the environment.

The competent authority shall make its determination, on the basis of the information provided by the developer in accordance with paragraph 4 taking into account, where relevant, the results of preliminary verifications or assessments of the effects on the environment carried out pursuant to Union legislation other than this Directive. The determination shall made available to the public and:

(a) where it is decided that an environmental impact assessment is required, state the main reasons for requiring such assessment with reference to the relevant criteria listed in Annex III; or

(b) where it is decided that an environmental impact assessment is not required, state the main reasons for not requiring such assessment with reference to the relevant criteria listed in Annex III, and, where proposed by the developer, state any features of the project and/or measures envisaged to avoid or prevent what might otherwise have been significant adverse effects on the environment.

Member States shall ensure that the competent authority makes its determination as soon as possible and within a period of time not exceeding 90 days from the date on which the developer has submitted all the information required pursuant to paragraph 4. In exceptional cases, for instance relating to the nature, complexity, location or size of the project, the competent authority may extend that deadline to make its determination; in that event, the competent authority shall inform the developer in writing of the reasons justifying the extension and of the date when its determination is expected.’

Annex II.A of that directive contains the list of ‘information to be provided by the developer on the projects listed in Annex II’. That list reads as follows:

‘1. A description of the project, including in particular:

(a) a description of the physical characteristics of the whole project and, where relevant, of demolition works;

(b) a description of the location of the project, with particular regard to the environmental sensitivity of geographical areas likely to be affected.

3. A description of any likely significant effects, to the extent of the information available on such effects, of the project on the environment resulting from:

(a) the expected residues and emissions and the production of waste, where relevant;

(b) the use of natural resources, in particular soil, land, water and biodiversity.

Annex III to that directive sets out the ‘criteria to determine whether the projects listed in Annex II should be subject to an environmental impact assessment’.

Directive 2014/52

Recitals 11 and 29 of Directive 2014/52 state:

‘(11) The measures taken to avoid, prevent, reduce and, if possible, offset significant adverse effects on the environment, in particular on species and habitats protected under [Directive 92/43] and Directive 2009/147 …, should contribute to avoiding any deterioration in the quality of the environment and any net loss of biodiversity, in accordance with the [European] Union’s commitments in the context of the [United Nations Convention on Biological Diversity, signed in Rio de Janeiro on 5 June 1992,] and the objectives and actions of the Union Biodiversity Strategy up to 2020 laid down in the [Communication from the Commission to the European Parliament, the Council, the Economic and Social Committee and the Committee of the Regions] of 3 May 2011 entitled ‘Our life insurance, our natural capital: an EU biodiversity strategy to 2020’ [(COM(2011) 244 final)]

…

(29) When determining whether significant effects on the environment are likely to be caused by a project, the competent authorities should identify the most relevant criteria to be considered and should take into account information that could be available following other assessments required by Union legislation in order to apply the screening procedure effectively and transparently. In this regard, it is appropriate to specify the content of the screening determination, in particular where no environmental impact assessment is required. Moreover, taking into account unsolicited comments that might have been received from other sources, such as members of the public or public authorities, even though no formal consultation is required at the screening stage, constitutes good administrative practice.’

Directive 92/43

Article 6(3) of Directive 92/43 provides:

‘Any plan or project not directly connected with or necessary to the management of the site but likely to have a significant effect thereon, either individually or in combination with other plans or projects, shall be subject to appropriate assessment of its implications for the site in view of the site’s conservation objectives. In the light of the conclusions of the assessment of the implications for the site and subject to the provisions of paragraph 4, the competent national authorities shall agree to the plan or project only after having ascertained that it will not adversely affect the integrity of the site concerned and, if appropriate, after having obtained the opinion of the general public.’

Article 12(1) of that directive provides:

‘Member States shall take the requisite measures to establish a system of strict protection for the animal species listed in Annex IV(a) in their natural range, prohibiting:

(a) all forms of deliberate capture or killing of specimens of these species in the wild;

(b) deliberate disturbance of these species, particularly during the period of breeding, rearing, hibernation and migration;

(c) deliberate destruction or taking of eggs from the wild;

(d) deterioration or destruction of breeding sites or resting places.’

Point (a) of Annex IV to that directive mentions ‘all species’ of bats belonging to the suborder of ‘microchiroptera’.

Irish law

13In particular, in a memorandum of 11 December 2000, the Ministry of Labour and Social Security proposed to the Commission a definition of what was to be recovered; the Commission was moreover informed both during the hearing of 4 April 2001 in the Italy v Commission case, cited above, and in a memorandum of 19 April 2001 that, in February 2001, a meeting had been held between the various departments of the competent ministries, during which guidelines for action were drawn up on the basis of which aid deemed to be unlawful was to be recovered, as a means of complementing the technical operational procedure for recovery.

14The Italian Republic maintains that it definitely intends to perform its obligations, having regard to the statements made by the Court. However, in the interest of more expeditious recovery and to avoid the risk that recipients of the unlawful aid might bring proceedings of unforeseeable dimensions at national or even Community level, it is appropriate for the Italian and Community authorities to establish together, out of court and at the very least in broad terms, the criteria allowing, first, for the specific exclusion from the recovery of aid granted to undertakings which, because of their size, location and type of business, are not bound by the obligation to repay the aid and, second, for the exemption of those undertakings which can be reasonably considered to be able to plead a legitimate expectation. The exclusion of certain categories of undertakings, mostly small enterprises, could make it easier to concentrate recovery efforts on undertakings which cannot rely on valid grounds of exclusion from recovery.

Findings of the Court

15It is settled case-law that recovery of unlawful aid is the logical consequence of the finding that it is unlawful and that that consequence cannot depend on the form in which the aid was granted (see, in particular, Case C-183/91 Commission v Greece [1993] ECR I-3131, paragraph 16; Case C-404/97 Commission v Portugal [2000] ECR I-4897, paragraph 38; and Case C-404/00 Commission v Spain [2003] ECR I-6695, paragraph 44).

16In accordance with a consistent line of decisions, where a Commission decision requiring the cessation of State aid incompatible with the common market has not been the subject of a direct action or where such an action has been dismissed, the only defence available to a Member State in opposing an infringement action by the Commission under Article 88(2) EC is to plead that it was absolutely impossible for it to implement the decision properly (Case C-348/93 Commission v Italy [1995] ECR I-673, paragraph 16; Case C-261/99 Commission v France [2001] ECR I-2537, paragraph 23; Case C-499/99 Commission v Spain [2002] ECR I-6031, paragraph 21; and Case C-404/00 Commission v Spain, cited above, paragraph 45).

17The fact that a Member State can only plead in its defence against such an action that implementation was absolutely impossible does not prevent a State which, in giving effect to a Commission decision on State aid, encounters unforeseen and unforeseeable difficulties or becomes aware of consequences overlooked by the Commission, from submitting those problems to the Commission for consideration, together with proposals for suitable amendments to the decision in question. In such cases, the Commission and the Member State must, by virtue of the rule imposing on the Member States and the Community institutions a duty of genuine cooperation which underlies, in particular, Article 10 EC, work together in good faith with a view to overcoming the difficulties whilst fully observing the Treaty provisions and, in particular, the provisions on aid (see Commission v Italy, cited above, paragraph 17; Commission v France, cited above, paragraph 24; Case C-378/98 Commission v Belgium [2001] ECR I-5107, paragraph 31; Case C‑499/99 Commission v Spain, cited above, paragraph 24; and Case C-404/00 Commission v Spain, cited above, paragraph 46).

18However, the condition that it be absolutely impossible to implement a decision is not fulfilled where the defendant government merely informs the Commission of the legal, political or practical difficulties involved in implementing the decision, without taking any real step to recover the aid from the undertakings concerned, and without proposing to the Commission any alternative arrangements for implementing the decision which could have enabled the difficulties to be overcome (see Case 94/87 Commission v Germany [1989] ECR 175, paragraph 10; Case C-280/95 Commission v Italy [1998] ECR I-259, paragraph 14; Case C‑499/99 Commission v Spain, cited above, paragraph 25; and Case C-404/00 Commission v Spain, cited above, paragraph 47).

19In the present case, it should first be borne in mind that, in paragraph 102 of Italy v Commission, cited above, regarding the principle of legitimate expectation, the Court pointed out that, by a notice published in the Official Journal of the European Communities (OJ 1983 C 318, p. 3), the Commission had informed potential recipients of State aid of the risk attaching to any aid granted to them illegally, in that they might have to refund the aid (see Case C-5/89 Commission v Germany [1990] ECR I-3437, paragraph 15).

20It is true that a recipient of illegally granted aid is not precluded from relying on exceptional circumstances on the basis of which it had legitimately assumed the aid to be lawful and thus declining to refund the aid. If such a case is brought before a national court, it is for that court to assess the material circumstances, if necessary after obtaining a preliminary ruling on interpretation from the Court of Justice (see Case C-5/89 Commission v Germany, cited above, paragraph 16, and Italy v Commission, cited above, paragraph 103).

21However, a Member State whose authorities have granted aid contrary to the procedural rules laid down in Article 88 EC may not plead the legitimate expectations of recipients in order to justify a failure to comply with the obligation to take the steps necessary to implement a Commission decision instructing it to recover the aid. If it could do so, Articles 87 EC and 88 EC would be deprived of all practical force, since national authorities would thus be able to rely on their own unlawful conduct in order to render decisions taken by the Commission under those provisions of the Treaty ineffectual (see Case C-5/89 Commission v Germany, cited above, paragraph 17, and Italy v Commission, cited above, paragraph 104).

22In paragraph 105 of its judgment in Italy v Commission, cited above, the Court also recalled that, as to the argument that repayment would be complicated and hard to verify and the argument concerning the wide reach of the aid scheme across the fabric of national production industry, it is sufficient to point out, in accordance with the case-law of the Court, that apprehension of even insuperable internal difficulties cannot justify a failure by a Member State to fulfil its obligations under Community law (see, in particular, Commission v Portugal, cited above, paragraph 52).

23Neither the fact that the Member State in question finds it necessary to examine the individual situation of each undertaking concerned for the purposes of recovering unlawful State aid, as recognised by the Court in paragraph 91 of Italy v Commission, cited above, nor the argument that the Commission initiated the action within an unusually short time after notification of the decision, can justify the failure to implement that decision (see Case C-404/00 Commission v Spain, cited above, paragraph 56).

24Because the second paragraph of Article 88(2) EC does not provide for a pre-litigation phase, in contrast to Article 226 EC, and therefore the Commission does not issue a reasoned opinion allowing Member States a certain period within which to comply with its decision, when the former provision is applied the reference period can only be that provided for in the decision failure to implement which is denied or, where appropriate, that subsequently fixed by the Commission (Commission v Belgium, cited above, paragraph 26). In the present case, Article 4 of Decision 2000/128 shows that the Commission had fixed a time-limit of two months from the date of notification of that decision.

25It is common ground that, at the expiry of the time-limit, the measures necessary to recover the aid in question had not been taken by the Italian Government. In addition, it is apparent from paragraph 105 of the judgment in Italy v Commission, cited above, that more than two and a half years after that time-limit, the Court found that the Italian Government had made no attempt to recover the aid in question.

26Lastly, it is apparent from the explanations provided by the Italian Government at the hearing in the present case to the effect that, at that date, 18 September 2003, the recovery procedure was still in the preparatory stages, including the drawing-up of guidelines for carrying out recovery of the aid in question and identification of the undertakings concerned. The Italian Government had thus not undertaken any actual steps with the firms concerned to recover the aid.

27Accordingly, it is clear that, in the circumstances of the present case, the Italian Republic has not established that it was impossible to implement Decision 2000/128.

28Since none of the measures necessary to recover the aid referred to in Decision 2000/128 from the recipient undertakings have been taken by the Italian Government, it cannot validly rely on an alleged lack of cooperation on the part of the Commission in its defence.

29Accordingly, the Court finds that, by not adopting within the time-limit prescribed all measures necessary for the recovery from the recipients of the aid which was found, according to Decision 2000/128, to be unlawful and incompatible with the common market, the Italian Republic has failed to fulfil its obligations under Articles 3 and 4 of that decision.

Costs

30Under Article 69(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. Since the Commission has applied for costs and the Italian Republic has been unsuccessful, the latter must be ordered to pay the costs.

On those grounds,

hereby

Declares that, by not adopting within the time-limit prescribed all measures necessary for the recovery from the recipients of the aid which was found, according to Commission Decision 2000/128/EC of 11 May 1999 concerning aid granted by Italy to promote employment, to be unlawful and incompatible with the common market, the Italian Republic has failed to fulfil its obligations under Articles 3 and 4 of that decision;

Orders the Italian Republic to pay the costs.

Jann

Timmermans

Rosas

La Pergola

von Bahr

Delivered in open court in Luxembourg on 1 April 2004.

Registrar

President

1 – Language of the case: Italian.

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