Even a request of information to the State not notified to the beneficiary restarts the 10y deadline for recovery

Decision on incompatibility and recovery of aid – Limitation period – Interruption – Need to inform the beneficiary of the aid of an interrupting action

Judgment of the 6th of October 2005, Case C-276/03, EU Commission vs French Republic

26 It should be noted that Article 15 of Regulation No 659/1999 lays down a limitation period of 10 years which begins on the day on which the unlawful aid is awarded to the beneficiary. Under the second sentence of Article 15, p.2, the limitation period is interrupted by "any action taken by the Commission or by a Member State, acting at
the request of the Commission, with regard to the unlawful aid".

27 While that provision indeed contains a reference to both
"action(s) taken by the Commission" and "request(s) of the
Commission", that cannot mean, however, that a request for information addressed by that institution to the Member State concerned constitutes "action taken by the Commission" only provided it has been notified to the beneficiary of the aid. As the Advocate General stated in points 87 to 90 of his Opinion, one explanation for the dual reference might be an oversight on the part of the legislature, which appears to have copied, without paying attention to the procedural differences, the wording used in Article 2 of Regulation (EEC) No 2988/74 of the Council of 26 November 1974 concerning limitation periods in proceedings and the enforcement of sanctions under the rules of the European Economic Community relating to transport and competition (OJ 1974 L 319, p. 1). Alternatively, there may be situations in which a "request of the Commission" does not automatically and simultaneously constitute "action taken by the Commission". Finally, as the Advocate General observes in point 91 of his Opinion, Regulation No 659/1999 allows for the possibility that there are several (successive) interrupting actions since it provides in Article 15 that each interruption is to start time running afresh.

28 Accordingly, the wording of Article 15 of Regulation No
659/1999 does not give any guidance as to whether there is any requirement to notify the action to the beneficiary of the aid if the limitation period is to be interrupted.

29 It must none the less be determined whether such a requirement does not follow from the objective pursued by Article 15 of the regulation.

30 In that respect, according to recital 14 in the preamble to
Regulation No 659/1999, for reasons of legal certainty the limitation period is designed to prevent the recovery of unlawful aid, which can no longer be ordered. The limitation period is therefore intended, in particular, to protect some of the interested parties, including the Member State concerned and the beneficiary of the aid.

31 Those interested parties therefore in fact have a practical
interest in being informed of action taken by the Commission which is capable of interrrupting the limitation period.

32 That practical interest cannot, however, have the effect of making the application of the second sentence of Article 15(2) of Regulation No 659/1999 subject to the requirement that that action be notified to the beneficiary of the aid.

33 The procedure provided for in Article 93(2) of the Treaty
takes place primarily between the Commission and the Member State concerned. It is initiated against that State and not against the beneficiaries (see, to that effect, Joined Cases C‑74/00 P and C-75/00 P FalckandAcciaierie di Bolzano v Commission [2002] ECR I-7869, paragraphs 81 and 83).

34 It is true that case-law has granted the beneficiary of aid
certain procedural rights. However, those rights are designed to
enable the beneficiary to provide information to the Commission and to put forward its arguments, but do not confer on it the status of a party to the procedure.

35 Therefore, even if the status of party could justify a
notification requirement, it suffices to state that the beneficiary of aid does not have that status.

36 Having regard to the foregoing, the Court of First Instance did not interpret Article 15 of Regulation No 659/1999 incorrectly in holding that the limitation period could be interrupted by an action which has not been notified to the beneficiary of the aid, in this case the request for information of 17 January 1997.

37 It is true that both the fact that the beneficiary could not
have a legitimate expectation that the aid was properly granted and the fact that, 10 years after the aid in question was granted, Regulation No 659/1999 was not yet in force are not necessary steps in the reasoning by which that interpretation is reached. However, those findings do not undermine the validity of the interpretation.

38 Consequently, the plea must be rejected as unfounded. The appeal must therefore be dismissed.

[06 october 2005]

Subjects (TAGS): recovery of illegal aid -