Daewoo Electronics Manufacturing España SA (Demesa) and Territorio Histórico de Álava – Diputacíon Foral de Álava

(Appeal – State aid – Tax measures – Legitimate expectations – New pleas in law)

Summary of the Judgment

(EC Treaty, Art. 93(3) (now Art. 88(3) EC))

(Statute of the Court of Justice, Art. 58)

1.In view of the mandatory nature of the review of State aid by the Commission under Article 93 of the Treaty (now Article 88 EC), undertakings to which aid has been granted may not, in principle, entertain a legitimate expectation that the aid is lawful unless it has been granted in compliance with the procedure laid down in that article and a diligent businessman should normally be able to determine whether that procedure has been followed. In particular, where aid is paid without prior notification to the Commission, so that it is unlawful under Article 93(3) of the Treaty, the recipient of the aid cannot have at that time a legitimate expectation that its grant is lawful.

(see paras 44-45)

2.To allow a party to put forward for the first time before the Court of Justice a plea in law which it has not raised before the Court of First Instance would be to allow it to bring before the Court, whose jurisdiction in appeals is limited, a case of wider ambit than that which came before the Court of First Instance. In an appeal the Court’s jurisdiction is thus confined to review of the findings of law on the pleas argued before the Court of First Instance.

(see para. 59)

(Appeal – State aid – Tax measures – Legitimate expectations – New pleas in law)

JUDGMENT OF THE COURT (Second Chamber) 11 November 2004(1)

In Joined Cases C-183/02 P and C-187/02 P,

Daewoo Electronics Manufacturing España SA (Demesa), established in Vitoria (Spain), represented by A. Creus Carreras and B. Uriarte Valiente, abogados,

appellant in Case C-183/02 P,

Territorio Histórico de Álava – Diputación Foral de Álava, represented by A. Creus Carreras, B. Uriarte Valiente and Bravo-Ferrer Delgado, abogados,

appellant in Case C-187/02 P,

supported by Comunidad Autónoma del País Vasco, represented by E. Garayar Gutiérrez, abogado,

intervener in the appeal,

TWO APPEALS under Article 49 of the EC Statute of the Court of Justice lodged on 15 and 16 May 2002,

the other parties to the proceedings being:

Commission of the European Communities, represented by F. Santaolalla Gadea and J.L. Buendía Sierra, acting as Agents, with an address for service in Luxembourg,

defendant at first instance,

Asociación Nacional de Fabricantes de Electrodomésticos de Línea Blanca (ANFEL), established in Madrid (Spain), and Conseil européen de la construction d'appareils domestiques (CECED), established in Brussels (Belgium),

interveners at first instance,

THE COURT (Second Chamber),

composed of: C.W.A. Timmermans, President of the Chamber, C. Gulmann (Rapporteur) and N. Colneric, Judges,

Advocate General: J. Kokott, Registrar: M. Múgica Arzamendi, Principal Administrator,

after hearing the Opinion of the Advocate General at the sitting on 6 May 2004,

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.

(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;

(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.

(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

declared the applications of the Comunidad Autónoma del País Vasco and of Gasteizko Industria Lurra SA inadmissible in so far as they sought annulment in the same terms;

–ordered the parties to bear their own costs.

The appeals

21By order of 23 October 2002, the Court granted the Comunidad Autónoma del País Vasco leave to intervene in support of the form of order sought by the Territorio Histórico de Álava.

22By order of the President of the Court of 6 March 2003, an application by the Gobierno Foral de Navarra (Government of Navarro) for leave to intervene in support of the form of order sought by Demesa was dismissed.

Demesa claims that the Court should:

–set aside the judgment under appeal;

–give judgment itself in the matter and annul Articles 1(d) and 2 of the contested decision;

–in the alternative, refer the case back to the Court of First Instance;

–order the Commission to pay the costs of the proceedings at first instance and those of the proceedings on appeal.

The Territorio Histórico de Álava claims that the Court should:

–set aside the judgment under appeal;

–give judgment itself in the matter and annul the contested decision in so far as it concerns the tax credit of 45%;

–in the alternative, refer the case back to the Court of First Instance;

–order the Commission to pay the costs of the proceedings at first instance and those of the proceedings on appeal.

The Comunidad Autónoma del País Vasco claims that the Court should:

–set aside the judgment under appeal in part, in so far as it finds that the tax credit of 45% constitutes State aid;

–order the Commission to pay the costs of the proceedings.

Having withdrawn during the oral procedure an objection of inadmissibility in respect of the appeal brought by the Territorio Histórico de Álava, the Commission definitively contends, in both Case C-183/02 P and Case C-187/02 P, that the Court should:

–dismiss the appeal;

–order the appellant to pay the costs.

The grounds for setting aside the judgment under appeal

In its application, Demesa put forward five grounds for setting aside the judgment under appeal, alleging:

–incorrect categorisation of the impugned fiscal measure as State aid incompatible with the common market;

–failure to state the grounds of the judgment under appeal on that point;

–an error of law on the part of the Court of First Instance in so far as it held that the impugned measure was not existing aid;

–failure to state the grounds of the judgment under appeal on that point;

–an error of law on the part of the Court of First Instance in so far as it held that the principle of protection of legitimate expectations was not applicable.

By a pleading lodged on 20 February 2004, Demesa informed the Court that it was maintaining only the ground of appeal based on the principle of protection of legitimate expectations and that it was withdrawing its other grounds of appeal.

In its application, the Territorio Histórico de Álava put forward six grounds for setting aside the judgment under appeal, alleging:

–incorrect categorisation of the impugned tax measure as State aid incompatible with the common market;

–failure to state the grounds of the judgment under appeal on that point;

–an error of law on the part of the Court of First Instance in so far as it held that the impugned measure was not existing aid;

–failure to state the grounds of the judgment under appeal on that point;

–an error of law on the part of the Court of First Instance in so far as it did not find that the Commission had misused its powers;

–failure to state the grounds of the judgment under appeal on that point.

In a pleading lodged on 20 February 2004, the Territorio Histórico de Álava informed the Court that it was:

–maintaining in part the first and second grounds of appeal alleging, respectively, incorrect categorisation of the impugned tax measure as State aid incompatible with the common market and failure to state the grounds of the judgment under appeal on that point;

–maintaining the fifth and sixth grounds of appeal alleging, respectively, misuse of powers and failure to state the grounds of the judgment under appeal on that point;

–withdrawing its other grounds of appeal.

The appeals

After hearing the parties and the Advocate General on this point, the Court considers that it is appropriate, on account of the connection between them, to join the present cases for the purposes of the judgment, in accordance with Article 43 of the Rules of Procedure of the Court of Justice.

The ground of appeal which Demesa bases on the principle of protection of legitimate expectations

Arguments of the parties

Before the Court of First Instance, Demesa invoked the principle of protection of legitimate expectations. It referred to Commission Decision 93/337/EEC of 10 May 1993 concerning a scheme of tax concessions for investment in the Basque country (OJ 1993 L 134, p. 25). It claimed that that decision had categorised as State aid incompatible with the common market, on the ground that they were contrary to Article 52 of the EC Treaty (now, after amendment, Article 43 EC), certain tax credits for investments made. Demesa maintained that the provisions necessary for adjusting the regional legislation to Decision 93/337 had been laid down and that the Commission had expressed its approval of the solution adopted. Accordingly, both the Spanish authorities and the Commission itself considered that the problem was solved. For that reason, the Commission never initiated a procedure in respect of State aid or raised any objection against similar tax measures adopted subsequently. It therefore led Demesa, and any trader subject to the regional legislation concerned, to entertain legitimate expectations that the tax measures adopted by the Diputación Foral de Álava were authorised by the Commission provided that they did not involve any infringement of Article 52 of the Treaty.

Demesa complains that the Court of First Instance, at paragraph 234 et seq. of the judgment under appeal, rejected its plea on the ground that the impugned tax measure had not been the subject of prior notification, contrary to the requirements of Article 93(3) of the EC Treaty (now Article 88(3) EC).

In its submission, in the context of the policy followed by the Commission at the time of its application for the tax credit of 45%, it was excessive to require a trader to ascertain whether the tax measure applicable to it satisfied the conditions of Article 92 of the EC Treaty (now, after amendment, Article 87 EC) and should, in consequence, be notified to the Commission.

Demesa was therefore correct to invoke the principle of protection of legitimate expectations.

The appellant maintains that the declaration of incompatibility in Decision 93/337 was based on a finding of an infringement of Article 52 of the Treaty and not also, as the Court of First Instance held at paragraph 237 of the judgment under appeal, on the finding of an infringement of the Community rules on State aid.

In any event, in Demesa’s submission, the measures called in question in Decision 93/337 were characterised as State aid on the basis of three criteria of selectivity (regional, sectoral and material selectivity) which, it contends, could not be upheld in relation to the impugned tax measure. Accordingly, that decision cannot be relied on to support the argument that Demesa should have considered that the tax credit of 45% constituted State aid and should, in consequence, have been notified to the Commission.

The Commission claims that when the tax credit was granted to Demesa, certain elements clearly showed that it entailed State aid.

39In particular, Decision 93/337 considered that comparable measures constituted aid incompatible with the common market. That declaration of incompatibility was not linked solely to breach of the principle of freedom of establishment but, as the Court of First Instance observed at paragraph 237 of the judgment under appeal, also to breach of the various rules relating to aid.

40It is clear, moreover, that Decision 93/337 could only be based on a prior finding that the measures in question were in the nature of State aid.

41However, Demesa did not ascertain whether the aid it received had been authorised by the Commission.

42In any event, in the absence of prior notification of the impugned tax measure, the appellant could not plead that the Commission had failed to act.

43Accordingly, the Court of First Instance was correct to find that there had been no legitimate expectation.

44It should be borne in mind, first, that in view of the mandatory nature of the review of State aid by the Commission under Article 93 of the Treaty, undertakings to which aid has been granted may not, in principle, entertain a legitimate expectation that the aid is lawful unless it has been granted in compliance with the procedure laid down in that article and, second, that a diligent businessman should normally be able to determine whether that procedure has been followed (Case C-5/89 Commission v Germany [1990] ECR I-3437, paragraph 14; Case C-169/95 Spain v Commission [1997] ECR I-135, paragraph 51; and Case C-24/95 Alcan Deutschland [1997] ECR I-1591, paragraph 25).

45In particular, where aid is paid without prior notification to the Commission, so that it is unlawful under Article 93(3) of the Treaty, the recipient of the aid cannot have at that time a legitimate expectation that its grant is lawful (see Alcan Deutschland, cited above, paragraphs 30 and 31).

46In the present case, the Court of First Instance stated at paragraph 235 of the judgment under appeal that it was not disputed that the tax credit of 45% had been introduced without prior notification, in infringement of Article 93(3) of the Treaty.

47At paragraph 236 of the judgment under appeal, the Court of First Instance correctly held, referring inter alia to Commission v Germany, cited above, that the argument based on the principle of the protection of legitimate interests could not be upheld.

48At the following paragraph of that judgment, the Court of First Instance correctly stated that the applicant’s argument was based on a misreading of Decision 93/337. In that decision, as the Court of First Instance emphasised, the Commission had characterised the aid in question as incompatible with the common market not only because it was contrary to Article 52 of the Treaty but also, at Part V of that decision, in which the Commission examines the possibility of applying one of the derogations provided for in Article 92 of the Treaty, because it did not comply with the various rules relating to aid.

More specifically, in Decision 93/337 the Commission:

– had stated that the aid in question included a tax credit of 20% in respect of investments (Part I);

– had considered that, for the purpose of applying the derogation provided for in Article 92(3)(c) of the Treaty, the conditions laid down in the Community guidelines of 19 August 1992 on State aid for small and medium-sized enterprises (OJ 1992 C 213, p. 2), which, after defining in point 2.2 the components of the category of small and medium-sized enterprises, stated, at point 4.1, fifth paragraph, that the Commission had decided to allow investment aid only up to the levels of 15% of the investment for small enterprises and 7.5% of the investment for other enterprises in the same category, were not satisfied (Part V);

– had ordered the Spanish authorities to ensure that the aid was granted, inter alia, in accordance with the conditions laid down in the Community guidelines on State aid for small and medium-sized enterprises (Article 1(4)).

50It is thus apparent that Demesa could not infer from Decision 93/337 that a tax credit of 45% granted to an undertaking of a size allowing it to make a minimum investment of ESP 2 500 million required by the Sixth Additional Provision of Norma Foral 22/1994 could not be categorised as aid for the purposes of Article 92 of the Treaty.

51In the light of the terms of Decision 93/337, the appellant cannot therefore claim the possibility, which cannot be excluded (see Commission v Germany, cited above, paragraph 16), for the recipient of unlawful aid to rely on exceptional circumstances on the basis of which it legitimately assumed the aid to be lawful.

52As regards the Commission’s alleged failure to act, the Commission rightly claims that any apparent failure to act is irrelevant when an aid scheme has not been notified to it.

53It follows that the ground of appeal which Demesa bases on the principle of protection of legitimate expectations must be rejected.

The grounds of appeal whereby the Territorio Histórico de Álava alleges, first, incorrect categorisation of the impugned tax measure as State aid incompatible with the common market and, second, failure to state the grounds of the judgment under appeal on that point

54Before the Court of First Instance, the Territorio Histórico de Álava maintained that the Commission had infringed Article 92 of the Treaty by considering the tax credit of 45% to be State aid incompatible with the common market, on the ground that Norma Foral 22/1994 constituted a specific measure favouring ‘certain undertakings or the production of certain goods’. It claimed that, in any event, any selective nature which that measure might have was justified by the nature and scheme of the tax system.

55The Territorio Histórico de Álava complains that the Court of First Instance, at paragraphs 148 to 170 of the judgment under appeal, rejected that argument and thus erred in law in applying Article 92 of the Treaty.

56In the pleading which it lodged on 20 February 2004, it states that it maintains its ground of annulment, but at an earlier stage than that of the categorisation of the impugned tax measure as State aid. It claims that during the proceedings at first instance it maintained that the tax credit of 45% was outside the scope of Article 92 of the Treaty, in so far as, as a tax measure, it was justified as a means of attaining an economic-policy objective. The Court of First Instance considered that that did not preclude its categorisation as State aid incompatible with the Treaty. That conclusion is incorrect, because it was formulated at an inappropriate point in the interpretation process. In reality, the Court of First Instance should, before addressing any question of categorisation as State aid, have considered that a tax measure adopted before the conclusions of the Ecofin Council meeting on 1 December 1997 concerning taxation policy (OJ 1998 C 2, p. 1) and the Commission notice of 10 December 1998 on the application of the State aid rules to measures relating to direct business taxation (OJ 1998 C 384, p. 3) was excluded from the review of State aid. Where such a measure formed part of the industrial policy implemented by the Member State concerned, it was excluded from the outset from the scope of Article 92 of the Treaty.

57In the same pleadings, the Territorio Histórico de Álava further states that it also maintains its ground of appeal alleging failure to state the grounds of the judgment under appeal as regards the point of law raised.

58The Commission contends that, in its present form, the ground of appeal alleging incorrect categorisation of the impugned tax measure as State aid incompatible with the common market, notwithstanding the amended form in which it is presented, still requires an examination by the Court of the question of the nature as aid of that measure. The analysis carried out pursuant to Article 92 of the Treaty contains no stage preceding that of discussion of whether the measure in question must be categorised as State aid; the fiscal nature of a measure is of no relevance to the determination of whether or not it constitutes aid. Nor could the conclusions of the Ecofin Council meeting on 1 December 1997 concerning taxation policy and the code of conduct annexed thereto alter the allocation of powers established in the Treaty. In those circumstances, by disputing the competence of the Commission, the Territorio Histórico de Álava is persisting in challenging the categorisation as State aid of the impugned tax measure.

59It must be borne in mind that to allow a party to put forward for the first time before the Court of Justice a plea in law which it has not raised before the Court of First Instance would be to allow it to bring before the Court, whose jurisdiction in appeals is limited, a case of wider ambit than that which came before the Court of First Instance. In an appeal the Court’s jurisdiction is thus confined to review of the findings of law on the pleas argued before the Court of First Instance (see, in particular, Case C-136/92 P Commission v Brazzelli Lualdi and Others [1994] ECR I-1981, paragraph 59; Case C-7/95 P Deere v Commission [1998] ECR I‑3111, paragraph 62; and Case C-217/01 P Hendrickx v Cedefop [2003] ECR I‑3701, paragraph 37).

In the present case, the Territorio Histórico de Álava did not contend at first instance that:

– the impugned tax measure is excluded as such from the scope of the law on State aid;

– Article 92 of the Treaty has applied to the provisions of tax law only since the conclusions of the Ecofin Council meeting on 1 December 1997 concerning tax policy and the Commission notice of 10 December 1998 on the application of the State aid rules to measures relating to direct business taxation.

61In reality, it referred to the economic-policy objectives of the impugned tax measure in the course of argument as to whether that measure was justified by the nature and scheme of the tax system, that is to say, at the stage of the argument concerning the categorisation of the measure as State aid incompatible with the common market for the purposes of Article 92 of the Treaty.

62The Court of First Instance examined the corresponding arguments at paragraphs 167 and 168 of the judgment under appeal.

63The argument submitted to the Court in the present appeal, namely that, in substance, the impugned tax measure was excluded from the outset, at a stage preceding the legal reasoning, from the scope of Article 92 of the Treaty and, subsequently, from actual review by the Commission, therefore constitutes a plea raised for the first time in the appeal.

64This new plea must be declared inadmissible, as must the ground of appeal alleging failure to state the grounds in the judgment under appeal on the point of law raised, as the latter cannot be dissociated from the former.

The grounds of appeal whereby the Territorio Histórico de Álava alleges, first, an error of law on the part of the Court of First Instance in so far as it did not find that there had been a misuse of power and, second, failure to state the grounds of the judgment under appeal on that point

65Before the Court of First Instance, the Territorio Histórico de Álava maintained that the Commission had infringed Article 92 of the Treaty by considering the tax credit of 45% to be State aid incompatible with the common market, on the ground that Norma Foral 22/1994 constituted a specific measure favouring ‘certain undertakings or the production of certain goods’. It claimed that, in any event, any selective nature which that measure might have was justified by the nature and scheme of the tax system.

The Territorio Histórico de Álava states that it claimed before the Court of First Instance that the Commission had used the State aid procedure, an area in which it has exclusive competence and wide powers, in order to implement tax harmonisation. Such harmonisation belongs in reality to the procedure provided for in Articles 101 of the EC Treaty (now, after amendment, Article 96 EC) and 102 of the EC Treaty (now Article 97 EC), which confers competence on the Council of the European Union.

The Territorio Histórico de Álava criticises the Court of First Instance for having confined itself:

–to referring, at paragraph 84 of the judgment in Joined Cases T-92/00 and T‑103/00 Diputación Foral de Álava and Others v Commission [2002] ECR II-1385), relating to aid granted to another undertaking, to the case-law according to which a decision may amount to a misuse of powers only if it appears, on the basis of objective, relevant and consistent evidence, to have been taken with the sole, or at least the decisive, aim of achieving purposes other than those stated;

–to declaring that the existence of a de facto harmonisation brought about by the contested decision had not been demonstrated.

The Commission contends that the ground of appeal is manifestly inadmissible, as it was not raised before the Court of First Instance.

It states that in the judgment under appeal the Court of First Instance did not adjudicate on the question of a possible misuse of power. The Court of First Instance examined that question in a different judgment, namely the judgment in Joined Cases T-92/00 and T-103/00 Diputación Foral de Álava and Others v Commission, which was delivered on the same day as the judgment under appeal.

Findings of the Court

The Territorio Histórico de Álava did not raise a plea alleging misuse of powers before the Court of First Instance in the proceedings at first instance which gave rise to the present appeal.

For the reasons stated at paragraph 59 of this judgment, this ground of appeal must be declared inadmissible, as a new plea, as must the ground of appeal alleging failure to state the grounds of the judgment under appeal on that point, as the latter cannot be dissociated from the former.

It follows from all of the foregoing that the appeals must be dismissed.

Costs

Under the first paragraph of Article 122 of the Rules of Procedure of the Court of Justice, where the appeal is unfounded, the Court is to make a decision as to costs.

Under Article 69(2) of the Rules of Procedure of the Court of Justice, applicable to the procedure on appeal by virtue of Article 118 of those Rules, 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 appellants have been unsuccessful, they must be ordered, in addition to bearing their own costs, to pay those incurred by the Commission, in accordance with the form of order sought to that effect by the Commission.

Under the third subparagraph of Article 69(4) of the Rules of Procedure of the Court of Justice, also applicable to the procedure on appeal by virtue of Article 118, the Comunidad Autónoma del País Vasco, which has intervened in support of the form of order sought by the Territorio Histórico de Álava in Case C-187/02 P, must be ordered to bear its own costs.

On those grounds, the Court (Second Chamber) hereby:

1.Joins Cases C-183/02 P and C-187/02 P for the purposes of the judgment;

2.Dismisses the appeals;

3.Orders the appellants, in addition to bearing their own costs, to pay those incurred by the Commission of the European Communities;

4.Orders the Comunidad Autónoma del País Vasco to bear its own costs.

Signatures.

Language of the case: Spanish.