Sky Blue Sports & Leisure Ltd & Anor, R (on the application of) v Arena Coventry Ltd & Anor [2016] EWCA Civ 453 (13 May 2016)

Sky Blue Sports & Leisure Ltd & Anor, R (on the application of) v Arena Coventry Ltd & Anor [2016] EWCA Civ 453 (13 May 2016)

The Council's loan to ACL did not constitute unlawful state aid under Article 107 TFEU because, given the wide margin of judgment afforded to public authorities and the Council's position as freeholder and shareholder, a rational private investor could have made the loan under similar circumstances. The loan was at a commercial rate, fully secured, and based on prudent business planning. The Appellants failed to demonstrate that the transaction fell outside the bounds of reasonable decision-making or that no plausible explanation existed other than state aid.

Citation
[2016] EWCA Civ 453
Parties
Appellant/claimant: Sky Blue Sports & Leisure Limited; Appellant/claimant: Arvo Master Fund Limited; Respondent/defendant: Coventry City Council; Interested Party: Arena Coventry Limited; Interested Party: Trustees of the Alan Edward Higgs Charity
Jurisdiction
England and Wales
Judgment Date
13 May 2016
Procedural Posture
Judicial Review / Appeal From Administrative Court
Outcome
Appeal dismissed
Legal Topics
State Aid Under Article 107 TFEU, Market Economy Operator Test, Recovery of Unlawful State Aid, Local Authority Powers, Commercial Investment by Public Bodies
European Union Law Administrative Law State Aid State Aid Under Article 107 TFEU Market Economy Operator Test Recovery of Unlawful State Aid Local Authority Powers Commercial Investment by Public Bodies

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Parties

Sky Blue Sports & Leisure Limited

Appellant/claimant

Arvo Master Fund Limited

Appellant/claimant

Coventry City Council

Respondent/defendant

Arena Coventry Limited

Interested Party

Trustees of the Alan Edward Higgs Charity

Interested Party

Procedural Posture

Judicial Review / Appeal From Administrative Court

Legal Issues

  1. 1 Whether Coventry City Council's £14.4 million loan to Arena Coventry Limited constituted unlawful state aid under Article 107 TFEU
  2. 2 Whether the Council acted as a market economy operator
  3. 3 Whether the loan distorted or threatened to distort competition and affected trade between Member States

Ratio Decidendi

The Council's loan to ACL did not constitute unlawful state aid under Article 107 TFEU because, given the wide margin of judgment afforded to public authorities and the Council's position as freeholder and shareholder, a rational private investor could have made the loan under similar circumstances. The loan was at a commercial rate, fully secured, and based on prudent business planning. The Appellants failed to demonstrate that the transaction fell outside the bounds of reasonable decision-making or that no plausible explanation existed other than state aid.

Court Disposition

Appeal dismissed

Orders

  • No quashing of the Council's loan decision
  • No order for recovery of alleged unlawful state aid