TAT European Airlines SA v Commission of the European Communities. (State aid) [2000] EUECJ T-49/97 (27 January 2000)

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This electronic version is not authentic and is subject to amendment. 61997B0049 Order of the Court of First Instance (Second Chamber, extended composition)of 27 January 2000. TAT European Airlines SA v Commission of the European Communities. State aid - Air transport - Authorisation of aid payable in three tranches - Action brought against the decision authorising payment of the third tranche - Adoption of a fresh decision authorising the aid in implementation of an annulling judgment - No need to adjudicate - Conditions. Case T-49/97. European Court reports 2000 Page II-00051 1. Actions for annulment - Action contesting a decision implementing an annulled decision authorising State aid - Adoption by the Commission of a fresh decision authorising the aid which replaces, but does not confirm, the contested implementing decision - Interest in continuing an action for the annulment of the implementing decision - No subsisting interest (EC Treaty, Art. 173 (now, after amendment, Art. 230 EC)) 2. Procedure - Amendment of the pleadings in the course of the proceedings - Detailed rules - Mere manifestation of an intention to contest an act - Insufficient to constitute an amendment of the pleadings (Rules of Procedure of the Court of First Instance, Art. 44) 1. Where a Commission decision authorising State aid has been annulled in its entirety by the Community judicature, the effect of that annulment is to remove the legal basis and raison d'être for every implementing decision by which the Commission authorised payment of the various tranches of the aid in question. An act by which the Commission subsequently reaffirms that the aid is compatible with the common market and renews authorisation for payment of the various tranches must be regarded as an autonomous act replacing the earlier authorisation decisions, not as an act which merely confirms them. Adoption of that new act - which is an instrument creating or altering legal rights and therefore amounts to a new act so far as concerns authorisation of payment of the tranches - causes an applicant to lose all legitimate interest in continuing an action directed to obtaining annulment of the earlier decision authorising payment of a tranche of aid. ( see paras 32-36 ) 2. Just as it cannot take the place of an application in conformity with the requirements of Article 44 of the Rules of Procedure of the Court of First Instance, a mere manifestation of an intention of challenging a particular act cannot be treated as an amendment of the pleadings in an action in progress, an option open to applicants in special circumstances and by way of exception. ( see para. 41 ) In Case T-49/97, TAT European Airlines SA, a company incorporated under French law, established at Tours (France), represented by Romano Subiotto, Solicitor, Robbert Sneders, of the Brussels Bar, and Stéphanie Hallouët, of the Paris Bar, with an address for service in Luxembourg at the Chambers of Elvinger, Hoss and Prussen, 15 Côte d'Eich, applicant, v Commission of the European Communities, represented by Nicholas Khan, of its Legal Service, acting as Agent, Ami Barav, of the Paris Bar and of the Bar of England and Wales, with an address for service in Luxembourg at the office of Carlos Gómez de la Cruz, of its Legal Service, Wagner Centre, Kirchberg, defendant, supported by French Republic, represented by Kareen Rispal-Bellanger, Head of Subdirectorate in the Legal Affairs Directorate of the Ministry of Foreign Affairs, and Frédérik Million, Chargé de Mission in the same Directorate, acting as Agents, with an address for service in Luxembourg at the French Embassy, 8B Boulevard Joseph II, and Compagnie Nationale Air France, a company incorporated under French law, established in Paris (France), represented by Olivier d'Ormesson and Anne Wachsmann, of the Paris Bar, with an address for service in Luxembourg at the Chambers of Katia Manhaeve, 58 Rue Charles Martel, interveners, APPLICATION for annulment of the Commission decision of 27 July 1996 authorising payment of the third tranche of restructuring aid to Air France (OJ 1996 C 374, p. 9), THE COURT OF FIRST INSTANCE OF THE EUROPEAN COMMUNITIES (Second Chamber, Extended Composition), composed of: J. Pirrung, President, J. Azizi, A. Potocki, M. Jaeger and A. W. H. Meij, Judges, Registrar: H. Jung, makes the following Order Background to the dispute and procedure 1 By Decision 94/653/EEC of 27 July 1994 concerning the notified capital increase of Air France (OJ 1994 L 254, p. 73, the 1994 decision), the Commission authorised the grant to that undertaking of State aid of 20 billion French francs, payable in three tranches, provided that the French authorities complied with 16 commitments set out in the operative part. That decision also made the payment of the second and third tranches subject to fulfilment of those commitments and to actual implementation of a plan to restructure Air France during the period 1994 to 1996. 2 Two actions were brought against that decision on 21 November and 22 December 1994 by several airline companies, including British Airways and British Midland Airways. 3 By decision of 27 July 1996 (OJ 1996 C 374, p. 9, the contested decision), the Commission authorised payment of the third tranche of aid. 4 By application lodged at the Registry of the Court of First Instance on 4 March 1997 the applicant brought this action for annulment of the contested decision. In substance, it complains that the Commission authorised payment of the third tranche of aid without reopening the administrative procedure and despite the fact that several of the obligations imposed by the 1994 decision had not been fulfilled. The case was registered under No T-49/97. 5 By the judgment given in Joined Cases T-371/91 and T-394/94 British Airways and Others and British Midland Airways v Commission [1998] ECR II-2405, the Court annulled the 1994 decision for lack of reasoning on two points. 6 By orders of the President of the First Chamber (Extended Composition), of 26 October 1998, the French Republic and Compagnie Nationale Air France (Air France)were given leave to intervene in support of the forms of order sought by the Commission. 7 When invited to submit their observations on the consequences of the Court's judgment in British Airways in connection with Case T-49/97, the French Republic and Air France stated that the action had become devoid of purpose and that there was therefore no longer any need to adjudicate. The Commission explained that in order to give effect to that judgment it had found it necessary to adopt a new decision on 22 July 1998 (the new decision or the 1998 decision)concerning the capital increase of Air France. It stated that it remained to be seen whether an action would be brought against that decision once it was published. 8 At the same time, in its written observations of 16 November 1998, the applicant considered that even if annulment of the 1994 decision were to have the effect of depriving the contested decision of its legal basis, the present action had not become devoid of purpose. Inasmuch as the new decision expressly confirmed the authorisation of the payment of the third tranche, it is clear from settled case-law that the applicant was not obliged to bring a fresh action against it. In Case 14/81 Alpha Steel v Commission [1982] ECR 749, paragraph 8, the Court of Justice held that an individual decision replacing, while the action was in progress, a previous decision having the same subject-matter must be regarded as a new factor which allows the applicant to amend its pleadings. The applicant concluded that, far from rendering the present action devoid of purpose, the new decision, once published [ought to] enable [it] ... to expand its original pleadings or to submit additional pleadings having regard to its content and reasoning. 9 The decision of 22 July 1998 concerning the capital increase of Air France was published in the Official Journal of the European Communities on 12 March 1999 (OJ 1999 L 63, p. 66). 10 In that decision the Commission, giving effect to the judgment in British Airways, first of all gave reasons for the two points in respect of which the Court had held that the reasoning was insufficient. It then referred to the recitals of the text of the 1994 Decision ... regarded as forming an integral part of this Decision (recital 35). 11 Furthermore, the Commission noted that the annulment of the 1994 Decision removes the legal basis of the ... decisions ... regarding [authorisation for] the payment of the second and third tranches of aid to Air France and considered that, in those circumstances, it was proper not to object once again to the payment of the relevant tranches. It referred in that connection to the statement of grounds in the letters it sent to the French authorities ... which must also be regarded as forming an integral part of the decision (recital 36). 12 Consequently, the Commission declared, first, that the aid granted to Air France in the form of a FRF 20 billion capital increase to be paid in three tranches was compatible with the common market and, second, that it did not object to the payment of the second and third tranches of that increase in 1995 and 1996 (Articles 1 and 2). 13 By letter of 14 June 1999 the applicant waived its right to lodge a reply, on the ground that the file before the Court [contained] all the necessary information. 14 By document received at the Court Registry on 15 July 1999, the Commission made a preliminary application under Article 114 of the Rules of Procedure of the Court of First Instance for a declaration that there was no need to adjudicate. 15 The French Republic, in its observations lodged on 29 July 1999, and Air France, in its statement in intervention lodged the same day, supported the Commission's application for a declaration that there was no need to adjudicate. 16 The applicant submitted its written observations on the preliminary application on 30 July 1999. Forms of order sought by the parties 17 The Commission claims that the Court should: - declare that there is no need to adjudicate; - order the parties to bear their own costs. 18 The applicant contends that the Court should dismiss the application for a declaration that there is no need to adjudicate. Law Arguments of the parties 19 The Commission considers that in the absence of an action brought against the decision of 22 July 1998 the present action has become devoid of purpose. The new decision constitutes the sole legal basis for the authorisation of payment of the third tranche of the aid, since the contested decision no longer exists in the Community legal order. Withdrawal or repeal of an act by its author is equivalent to annulment of the act by the judicature (order of the Court of First Instance in Case T-145/95 Proderec v Commission [1997] ECR II-823, paragraph 26). 20 The Commission goes on to consider that the circumstances in Alpha Steel were different from those in the present case. Unlike the case giving rise to that judgment, in which the applicant expressly amended its original application by extending it to the new decision adopted during the course of the proceedings, the present action is directed exclusively against a decision which, legally speaking, no longer exists. 21 The applicant maintains that the annulment of the 1994 decision in the judgment in British Airways did not have the effect of depriving the contested decision of all legal basis. It argues that, in accordance with the principle of the hierarchy of rules of law, the legal basis of that decision cannot be a decision of equal force the provisions of which it infringes. Notwithstanding the finding that the French Republic failed to comply with two of the conditions for authorisation of the aid laid down in the 1994 decision, in the contested decision the Commission authorised payment of the third tranche of aid, considering whether it was compatible with Article 92 of the EC Treaty (now, after amendment, Article 87 EC). Accordingly, the legal basis of the contested decision is not the 1994 decision, from which derogation was made, but Article 92 of the Treaty. 22 With regard to Proderec v Commission the applicant points out that that decision concerns an act which had been withdrawn and replaced by the Commission as a result of the finding of a formal defect affecting it. In the present case, however, the Court did not find in its judgment of 25 June 1998 that the contested decision was vitiated by any such defect. In those circumstances, it argues that to accept that the Commission may withdraw a decision which has produced legal effects would be tantamount to permitting it to take advantage of that withdrawal, without any procedural justification, to deprive the applicant of its right of action. Such a result would clearly be contrary to the principle of judicial protection. Moreover, in the decision of 22 July 1998 the Commission did not state that it was withdrawing and replacing the contested decision, merely that it was addressing an alleged lack of a legal basis for that decision. 23 If the Court should consider that the judgment in British Airways deprived the contested decision of any legal basis, the applicant submits in the alternative that it is contrary to the principle of the proper administration of justice to require a fresh action to be brought, when the decision of 22 July 1998 does no more than repeat, by means of a mere reference, the reasoning of the contested decision, without making the slightest alteration to it. In consequence, the pleas in law raised in support of the action remain fully relevant. 24 The applicant draws a comparison with infringement proceedings under Article 169 of the EC Treaty (now Article 226 EC)and notes that, according to the case-law of the Court of Justice (see, in particular, Case C-105/91 Commission v Greece [1992] ECR I-5871 , paragraph 13), the Commission is not obliged to start the pre-litigation procedure afresh where the legislation in issue has been amended after that procedure was initiated but has not, however, removed the infringement. In the present case, the introduction of new proceedings would not make any change at all to the substance of the dispute, inasmuch as one act and one act only is concerned, namely, the authorisation of payment of the third tranche of aid. The proceedings would, by contrast, be drawn out considerably longer. 25 It adds that it has made clear in its pleadings its intention to challenge the act authorising payment of the third tranche of aid, in particular in its observations of 16 November 1998. Furthermore, the sole object of those observations was to set out the reasons for which the present proceedings must follow their course despite the annulment of the 1994 decision. 26 The applicant points out that, since the contested decision was not altered in any way, it had no need to amend the claims and pleas in law set out in its application. In Alpha Steel the Court of Justice accepted that the replacement, while the action was in progress, of an individual decision by another having the same subject-matter constituted a new factor permitting the applicant to make such an amendment. It must therefore be accepted, a fortiori, that the applicant is not required to amend its claims and pleas in law where the reasons stated for the decision concerned are unchanged, as in the present case. The 1994 decision was annulled for insufficient reasoning on two points unconnected with the authorisation of payment of the third tranche of aid, and the new decision of 22 July 1998 merely refers to the contested decision in so far as that authorisation is concerned. It would be unreasonable to consider that only an expressly amended action is admissible if there is nothing to warrant such amendment. 27 In any event, it would seem to be unjustifiable for the Commission to be able to profit by its own failure to comply with its duty to provide reasons for the 1994 decision in order to place its subsequent decisions beyond the reach of judicial review. In the circumstances of this case, if the defendant's arguments were to be accepted, the applicant would find itself in a worse position than it would have if the Commission had not failed in the abovementioned duty. Findings of the Court 28 Under Article 114(1)of the Rules of Procedure, where a party so requests, the Court of First Instance may give a decision on a preliminary plea not going to the substance of the case. In accordance with Article 114(3), unless the Court otherwise decides, the remainder of the proceedings is to be oral. In this instance, the Court considers that it has obtained sufficient information from examination of the documents in the file to give a decision, without opening the oral procedure, on the Commission's preliminary plea that there is no need to adjudicate. 29 No action has been brought to challenge the validity of the new decision of 22 July 1998, published in the Official Journal of the European Communities on 12 March 1999. Consequently, that decision, and in particular Article 2 thereof authorising payment of the third tranche of aid, has become final. 30 Accordingly, it remains to be established whether that new decision replaced, or merely confirmed, the contested decision, since it is only in the latter case that the applicant can provide proof of a legitimate interest in continuing this action. In that situation, annulment of the confirmatory act would follow from annulment of the previous act (Case C-180/96 United Kingdom v Commission [1998] ECR I-2265 , paragraph 28), with the result that the confirmatory act would not be open to challenge by means of an autonomous action for annulment (Case 26/76 Metro v Commission [1977] ECR 1875, paragraph 4). 31 According to settled case-law, it is a prerequisite of classification of an act as purely confirmatory that the act concerned should contain no new factor as compared with a previous decision and that it has not therefore replaced that earlier decision (see, for example, Case T-82/92 Cortes Jimenez and Others v Commission [1994] ECR-SC II-237, paragraph 14, and Case T-68/97 Neumann and Neumann Schölles v Commission [1999] ECR-SC II-1005, paragraph 58). 32 In this case, it should be noted, first, that British Airways retrospectively removed the 1994 Decision from the Community legal order (see Case T-73/95 Oliveira v Commission [1997] ECR II-381, paragraph 25). In that decision, the Commission had authorised the principle of the aid in question and its total amount, some FRF 20 billion, payable in three tranches, and made the payment of the second and third tranches conditional on the French Republic's fulfilment of several commitments. Having regard to the general logic of the 1994 decision, the subsequent decisions relating to payment of the second and third tranches constituted implementing acts. In consequence, the annulment of the basic 1994 decision removed the legal basis for the two implementing decisions. 33 The applicant's arguments concerning the principle of the hierarchy of rules of law are not such as to invalidate that analysis. Admittedly, it is unarguable that the decisions relating to the payment of the second and third tranches of aid possessed autonomous legal force vis-à-vis the 1994 decision, in that they considered both whether the French Republic had fulfilled the commitments imposed by that decision and whether the two payments of aid were compatible with Article 92 of the Treaty. Nevertheless, that autonomy was relative in the case of acts implementing the 1994 decision. Once that decision was declared null and void in its every provision, including those relating to the staggered payment of the aid, every implementing decision relating to the conditions of that payment had necessarily lost its raison d'être. 34 It should next be borne in mind that in its decision of 22 July 1998, adopted in response to British Airways, the Commission both reaffirmed that the aid was compatible with the common market and renewed its authorisation for payment of the second and third tranches of aid. By so doing, the Commission took a new decision encompassing the authorisation of the principle of the aid and that of the payment of the second and third tranches. Thus, it did not merely readopt, with retrospective force, the 1994 decision alone, leaving unchanged the decisions relating to payment of the second and third tranches of aid. The decision of 22 July 1998 includes the statement that it is proper not to object once again to the payment of the ... tranches, which expresses the Commission's intention of adopting a decision to authorise afresh the payment of the two tranches of aid concerned. 35 It follows that the decision of 22 July 1998, even though its reasoning concerning the payment of the third tranche of aid is indistinguishable from that in the contested decision, is an instrument creating or altering legal rights, and therefore amounts to a new act so far as concerns the authorisation of payment of that tranche. In consequence, it is not a purely confirmatory act but is an autonomous decision replacing the contested decision. 36 In those circumstances, the adoption of the new decision has led to the applicant losing all legitimate interest in continuing this action in so far as it is directed to obtaining annulment of the contested decision which no longer forms part of the Community legal order. 37 In so far as the applicant relies on Alpha Steel in support of its claims, it must be stated that in that case a particular procedural situation led the Court of Justice to consider that the replacement, while an action was in progress, of one decision with another having the same subject-matter had to be regarded as a new factor allowing the applicant to amend its pleadings, with the result that it was not obliged to make a fresh application (paragraph 8). The same judgment makes it clear (paragraphs 1, 3, 4 and 6)that the applicant had actually added a supplement to its reply in order to amend its conclusions to request annulment of the newly adopted decision. 38 The present case does not involve the same procedural situation as that which gave rise to Alpha Steel, in which the Commission had on its own initiative replaced a decision in order to take account of criticisms made in the action brought against that decision and relating to inaccurate figures appearing in it. The decision of 22 July 1998, however, was adopted pursuant to Article 176 of the EC Treaty (now Article 233 EC)in response to the Court's annulment of the 1994 decision which formed the legal basis of the contested decision. 39 In this instance, furthermore, the applicant has in any event failed to amend its claims. While it did not know, pending publication of the decision of 22 July 1998 (see paragraph 9 above), whether that decision would simply confirm the authorisation of the payment of the third tranche, the applicant did no more than contemplate amending its claims by stating in its observations of 16 November 1998 that the new decision once published should enable it ... to expand its claims. The applicant's letter of 14 June 1999, of later date than the publication of the new decision, contains nothing to permit the inference that the subject-matter of the present action has been extended to the decision of 22 July 1998. 40 In consequence, the applicant may on no account rely upon the approach adopted in Alpha Steel. 41 As regards the applicant's argument that it was enough for it to have manifested its intention to contest the authorisation of the payment of the third tranche, whatever its legal basis, in order not to be obliged to adapt its claims to the new decision, since the reasoning for the authorisation remained strictly unchanged, the applicant fails to have regard to the fact that the decision of 22 July 1998, adopted in response to the annulment of the 1994 decision, is an instrument creating or altering legal rights, and therefore amounts to a new act. Moreover, just as it cannot serve in stead of an application in conformity with the requirements of Article 44 of the Rules of Procedure, a mere manifestation of an intention of challenging a particular act cannot be treated as being equivalent to amendment of the pleadings in an action in progress, an opportunity open to applicants in special circumstances and by way of exception (see the order in Case T-22/96 Langdon v Commission [1996] ECR II-1009, paragraph 16). 42 With regard to the considerable prolongation of the duration of the proceedings, criticised by the applicant as being the consequence of the Court's refusal to authorise it to continue its original application, it suffices to point out that the applicant has not even attempted, by amending its pleadings, to make use of the solution arrived at in Alpha Steel. Furthermore, given that with regard to the payment of the third tranche the decision of 22 July 1998 contains a statement of reasons identical to that in the contested decision, the introduction of a fresh application would not have entailed either any actual burden of additional work or an unacceptable prolongation of the proceedings. 43 The applicant also alleges that the consequence of declaring that there is no need to adjudicate, in conjunction with the final nature of the new decision, would be a breach of the principle of judicial protection because the Commission might thus place the contested decision beyond the reach of judicial review. In this connection it must be stated that the adoption of the decision of 22 July 1998, in response to the Court's annulment of the 1994 decision, cannot be treated as though it were some unfair procedural tactic adopted by the Commission in order to deprive the applicant of its right of action. In addition, the adoption of a fresh decision and the possibility of the correlated declaration that there is no need to adjudicate in the present proceedings had already been discussed by the parties before the publication of that decision in the Official Journal of the European Communities. As, inter alia, its observations of 16 November 1998 demonstrate, the applicant was therefore aware of the situation and of the need to take such steps as might be appropriate to the new procedural circumstances of the case. 44 Finally, the applicant's argument that the obligation to bring a fresh action against the decision of 22 July 1998 or to amend its original application reflects no more than an excessive regard for formalities cannot be accepted either. It should be borne in mind, first, that since the contested decision no longer forms any part of the Community legal order, the present action cannot succeed and, second, that the decision of 22 July 1998, against which no action was brought during the prescribed period, has become final. In those circumstances, to make it possible to call in issue the validity of that decision, despite the expiration of the period within which the action must be brought, would jeopardise the principle of legal certainty (Case 156/77 Commission v Belgium [1978] ECR 1881, paragraph 24). 45 It follows that there is no need to adjudicate on this action. Costs 46 Under Article 87(6)of the Rules of Procedure, where a case does not proceed to judgment the costs are to be in the Court's discretion. In this instance, it would seem fair to order the Commission to pay its own costs and one third of the costs incurred by the applicant which is, accordingly, to bear two thirds of its own costs. 47 Under Article 87(4)of those Rules, the French Republic, which has intervened in the proceedings, is to bear its own costs. 48 Under the third subparagraph of Article 87(4)of the Rules of Procedure, the Court may order an intervener, other than States which are parties to the Agreement on the European Economic Area and the Supervisory Authority of the European Free Trade Association, to bear its own costs. In the circumstances of this case, Air France, which has intervened in support of the forms of order sought by the defendant, must be ordered to bear its own costs. On those grounds, THE COURT OF FIRST INSTANCE (Second Chamber, Extended Composition) hereby orders: 1. There is no need to adjudicate on this action. 2. The Commission is ordered to bear its own costs and one third of those incurred by the applicant. The latter shall bear two thirds of its own costs. 3. Each intervener is to bear its own costs. © European Communities, 2001 All rights reserved BAILII: Copyright Policy | Disclaimers | Privacy Policy | Feedback | Donate to BAILII URL: https://www.bailii.org/eu/cases/EUECJ/2000/T4997.html