Commission of the European Communities v Italian Republic. (Action against Member States for failure to fulfil obligations) [1995] EUECJ C-349/93 (23 February 1995)

Judgment 1 By application lodged at the Court Registry on 7 July 1993, the Commission of the European Communities brought an action under the second subparagraph of Article 93(2) of the of the EEC Treaty for a declaration that, by failing to order the recovery of the aid unduly paid in 1987 to the Aluminia company and the Comsal company, belonging to the EFIM Group, the Italian Republic had failed to fulfil its obligations under the EEC Treaty, and in particular under Commission Decision 90/224/EEC of 24 May 1989 on aid granted by the Italian Government to Aluminia and Comsal, two State-owned undertakings in the aluminium industry (OJ 1990 L 118, p. 42, hereinafter "the decision"). 2 In the decision, the Commission found that the aid granted by the Italian Government to the Aluminia company and to the Comsal company was incompatible with the common market, within the meaning of Article 92(1) of the Treaty, having been granted in breach of Article 93(3) of the Treaty. It decided that the Italian Government was required to abolish the aid and to recover it from the recipient undertakings (Article 1). The Italian Government was directed to inform the Commission within two months following notification of the decision of the measures taken to comply with it (Article 2). 3 By judgment of 3 October 1991 (Case C-261/899 Italy v Commission [1991] I-4437) the Court dismissed the application for the annulment of that decision. 4 After unsuccessfully asking the Italian Government for information regarding the measures it intended taking following the Court' s judgment in order to comply with the decision, the Commission sent it a letter on 26 June 1992 formally calling on it to comply with the decision before the end of July 1992. 5 By letter of 14 October 1992 the Italian authorities asked for the time-limit to be extended, invoking the need to deal with the question of recovery of the aid in the wider context of the programme for the privatization of public undertakings which the Italian Government proposed implementing. 6 By letter of 10 March 1993, the Commission fixed the final date for compliance with the decision as 31 March 1993. 7 In the absence of any reaction to that letter, the Commission brought an action before the Court under the second subparagraph of Article 93(2) of the Treaty. 8 In its application, the Commission submits that the Italian Republic' s non-compliance with the decision, which had not been remedied by the date on which the application was lodged, that is to say five-and-a-half years after the unlawful aid was disbursed, constitutes an infringement of Article 93(2) of the Treaty. 9 Without contesting its obligation to comply with the decision, the Italian Republic refers to objective difficulties hampering implementation arising from the procedure for the winding up of EFIM and the implementation of the project for the restructuring of the aluminium industry. The decision was to be implemented in the context of genuine cooperation with the Commission, the project for the restructuring of the industry having been notified to it for the purpose of appraisal of its compatibility with Article 92 of the Treaty. 10 In assessing the merits of the Commission' s application, it should be noted that the decision set out in unequivocal terms the Italian Government' s obligation to order recovery of the aid. 11 The Court has consistently held that a Member State may not plead provisions, practices or circumstances existing in its internal legal system in order to justify a failure to comply with its obligations under Community law (Case C-5/89 Commission v Germany [1990] ECR I-3437 , paragraph 18). 12 The only defence available to a Member State in opposing an application by the Commission under Article 93(2) of the Treaty for a declaration that it has failed to fulfil its Treaty obligations is to plead that it was absolutely impossible for it to implement the decision properly (see Case 52/84 Commission v Belgium [1986] ECR 89, paragraph 14, Case 94/87 Commission v Germany [1989] ECR 175, paragraph 8, and Case C-183/91 Commission v Greece [1993] ECR I-3131 , paragraph 10). 13 However, a Member 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, must submit 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 5 of the Treaty, 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 Case 52/84 Commission v Belgium, paragraph 16, Case 94/87 Commission v Germany, paragraph 9, and Case C-183/91 Commission v Greece, paragraph 19). 14 Until 14 October 1992, that is to say more than one year after the Court' s judgment dismissing the application for annulment, the Italian Republic did not react to the Commission' s repeated requests that it give effect to the decision. 15 In the present case, the defendant government merely informed the Commission of the legal and practical difficulties involved in giving effect to the decision, without taking any steps whatsoever vis-à-vis the undertakings in question to recover the aid and without proposing to the Commission alternative ways of implementing the decision which would have enabled it to overcome the difficulties mentioned. The Italian Government merely referred, in very general terms, to difficulties connected with the winding up of EFIM and claimed that the non-recovery of the aid in question was accounted for by the procedure for considering new aid envisaged as part of the restructuring programme. 16 Accordingly, it must be held that there are no grounds for the Italian Republic to claim that implementation of the Commission decision was absolutely impossible. Nor has the defendant shown that there were unforeseen and unforeseeable difficulties or that it cooperated with the Commission in order to overcome any difficulties of that kind. 17 It follows that a declaration of infringement should be made in the terms sought by the Commission. Costs 18 Under Article 69(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs. Since the defendant has been unsuccessful, it must be ordered to pay the costs. On those grounds, THE COURT (Sixth Chamber) hereby: 1. Declares that, by failing to order recovery of the aid unduly paid in 1987 to the Aluminia company and to the Comsal company, belonging to the EFIM Group, the Italian Republic has failed to fulfil its obligations under the EEC Treaty, and in particular under Commission Decision 90/224/EEC of 24 May 1989 on aid granted by the Italian Government to Aluminia and Comsal, two State-owned undertakings in the aluminium industry. 2. Orders the Italian Republic to pay the costs. © European Communities, 2001 All rights reserved BAILII: Copyright Policy | Disclaimers | Privacy Policy | Feedback | Donate to BAILII