Case C-573/12, Ålands Vindkraft

Swedish support scheme promoting green energy production in national territory compatible with EU law

>> The Renewable Energy Directive (Directive 2009/28) allows Member States to support the production of green energy. Member States which grant benefits to producers are not required to support the use of green energy produced in another Member State.

Swedish legislation provides that green electricity production installations located on the national territory may be awarded electricity certificates. Those certificates may then be sold to electricity suppliers or to certain users, who are under an obligation to hold a certain number (quota) of certificates, corresponding to a proportion of the total quantity of electricity supplied or consumed, failing which they must pay a fee.  

Ålands Vindkraft applied  for electricity certificates in respect of its wind farm in the Åland archipelago, in Finland. The application was refused on the grounds that only green electricity production installations located in Sweden may be awarded such electricity certificates. Ålands Vindkraft challenged that administrative decision before the Swedish courts, arguing that the principle of the free movement of goods precluded the Swedish electricity certificates scheme.

Whether support system within meaning Directive 2009/28.

The referring court asks whether point (k) of the second paragraph of Article 2 and Article 3(3) of Directive 2009/28 must be interpreted as allowing a Member State to establish a support scheme which provides for the award of tradable certificates to producers of green electricity solely in respect of green electricity produced in the territory of that State and which places suppliers and certain electricity users under an obligation to deliver annually to the competent authority a certain number of those certificates, corresponding to a proportion of the total volume of electricity that they had  supplied or consumed.

The Court first of ll assessed whether a green electricity support system such as that at issue in the main proceedings constituted a ‘support scheme’ within the meaning of point (k) of the second paragraph of Article 2 and Article 3(3) of Directive 2009/28.

The Court found that  a support scheme for green electricity production using green certificates, such as that at issue in the main proceedings, had the necessary characteristics to be categorised as a ‘support scheme’ within the meaning of point (k) of the second paragraph of Article 2 and Article 3(3) of Directive 2009/28.

The referring court expressed doubts concerning the fact that the support scheme at issue in the main proceedings provided for the award of electricity certificates solely in respect of green electricity produced in the national territory. The Court however held that it was clear that, in adopting Directive 2009/28, the EU legislature left open the possibility of such a territorial limitation.

The Court found that the EU legislature did not intend to require Member States who opted for a support scheme using green certificates to extend that scheme to cover green electricity produced on the territory of another Member State. The Court thus concluded that Directive 2009/28 must be interpreted as allowing a Member State to establish a support scheme, such as that at issue in the main proceedings.

Whether legislation caught by  Article 34 TFEU

The referring court also asked whether Article 34 TFEU must be interpreted as meaning that national legislation such as that at issue in the main proceedings constituted a measure having equivalent effect to a quantitative restriction on imports for the purposes of that provision. If so, the referring court asked whether such legislation might nevertheless be justified in the light of its objective of promoting the production of green electricity.

The Court reiterated that, where a matter had been the subject of exhaustive harmonisation at EU level, any national measure relating thereto must be assessed in the light of the provisions of that harmonising measure and not in the light of primary law (see, inter alia, Radlberger Getränkegesellschaft and S. Spitz, C‑309/02, EU:C:2004:799).

The Court thus found that it was necessary to determine whether the harmonisation brought about by Directive 2009/28 ought to be regarded as being of such a kind as to preclude an examination of whether legislation such as that at issue was compatible with Article 34 TFEU. In that regard, it should be noted at the outset that, far from seeking to bring about exhaustive harmonisation of national support schemes for green energy production, the EU legislature — as is apparent, inter alia, from recital 25 to Directive 2009/28 — based its approach on the finding that Member States apply different support schemes and on the principle that it is important to ensure the proper functioning of those schemes in order to maintain investor confidence and to enable those States to define effective national measures in order to achieve their mandatory national overall targets under the directive. The Court that it could not be considered that, in covering that aspect of the territorial scope of national support schemes, the harmonisation brought about by Directive 2009/28 in the field of support schemes was of such a kind as to preclude an examination of their compatibility with Article 34 TFEU. 

Whether existence of barrier to trade

The Court stressed that the free movement of goods between Member States was a fundamental principle of the Treaty which found its expression in the prohibition set out in Article 34 TFEU (see, inter alia, Commission v Denmark, C‑192/01, EU:C:2003:492).

Reiterating its famous Dasonville case law, the Court held that in prohibiting between Member States measures having equivalent effect to quantitative restrictions on imports, Article 34 covered any national measure capable of hindering, directly or indirectly, actually or potentially, intra-Community trade (see, inter alia, Dassonville, 8/74, EU:C:1974:82, and PreussenElektra, EU:C:2001:160).

As it is, it must be noted in that regard that the legislation at issue is capable, in various ways, of hindering — at least indirectly and potentially — imports of electricity, especially green electricity, from other Member States.

In the first place, it follows from that legislation that suppliers and certain consumers are required to hold on the annual due date a certain number of electricity certificates for the purposes of meeting their quota obligation, which depends on the total volume of electricity that they supply or consume. However, in the absence, inter alia, of an international agreement to that effect, only certificates awarded under the national scheme could be used to meet that obligation. Accordingly, those suppliers and consumers were as a rule required, on the basis of the electricity that they import, to purchase such certificates, failing which they had to pay a specific fee.Such measures were thus capable of impeding electricity imports from other Member States (see, inter alia, by analogy, Ligur Carni and Others, C‑277/91, C‑318/91 and C‑319/91, EU:C:1993:927).

In the second place, the referring court noted both in its order and in its questions that, although green electricity producers might, in the context of the support scheme established by the legislation at issue in the main proceedings, trade their electricity certificates on an open, competitive market that was dedicated to that trade, there was nothing in that legislation to stop the producers from selling those certificates together with the electricity that they produced, as a package.The existence of such a possibility seemed capable in practice of facilitating the opening of negotiations and the establishment of contractual relationships — in some cases, on a long-term basis — concerning the supply of national electricity by those producers to suppliers or electricity users, the latter being able to obtain, in that way, both the electricity and the green certificates that they needed in order to meet their quota obligation. The Court thus found that, to that extent also, the effect of the support scheme at issue in the main proceedings was, at least potentially, to curb electricity imports from other Member States (see, to that effect, Commission v Ireland, 249/81, EU:C:1982:402).

In that context, the Court noted that failure by a Member State to adopt adequate measures to prevent barriers to the free movement of goods that had been created, in particular, through the actions of traders but made possible by specific legislation that that State had introduced, is just as likely to obstruct intra-Community trade as is a positive act (see Commission v France, C‑265/95, EU:C:1997:595, and Schmidberger, C‑112/00, EU:C:2003:333, paragraph 58).

The Court thus concluded that t legislation such as that at issue in the main proceedings was capable of impeding imports of electricity, especially green electricity, from other Member States and that, in consequence, it constituted a measure having equivalent effect to quantitative restrictions on imports, in principle incompatible with the obligations under EU law resulting from Article 34 TFEU, unless that legislation could be objectively justified (see, to that effect, inter alia, Commission v Austria, C‑320/03, EU:C:2005:684).

Whether a possible justification
The Court stressed that national legislation or a national practice that constituted a measure having equivalent effect to quantitative restrictions might be justified on one of the public interest grounds listed in Article 36 TFEU or by overriding requirements. In either case, the national provision must, in accordance with the principle of proportionality, be appropriate for ensuring attainment of the objective pursued and must not go beyond what is necessary in order to attain that objective (see, inter alia, Commission v Austria, C‑524/07, EU:C:2008:717).


1. The objective of promoting the use of renewable energy sources

 According to settled case-law, national measures that are capable of hindering intra-Community trade may inter alia be justified by overriding requirements relating to protection of the environment (see, to that effect, Commission v Austria, EU:C:2008:717, paragraph 57 and the case-law cited).

In the present case,   the Court noted that the use of renewable energy sources for the production of electricity, which legislation such as that at issue in the main proceedings sought to promote, was useful for the protection of the environment inasmuch as it contributed to the reduction in greenhouse gas emissions. The Court stressed that the the increase in the use of renewable energy sources constituted one of the important components of the package of measures needed to reduce greenhouse gas emissions and to comply with the Kyoto Protocol to the United Nations Framework Convention on Climate Change, and with other Community and international greenhouse gas emission reduction commitments beyond the year 2012.

The Court found that the objective of promoting the use of renewable energy sources for the production of electricity, such as the objective pursued by the legislation at issue in the main proceedings, was in principle capable of justifying barriers to the free movement of goods.

2. Proportionality 

The Court held the by its very nature, a scheme such as in the present case required for its proper functioning market mechanisms that were capable of enabling traders — who were subject to the quota obligation and who did not yet possess the certificates required to discharge that obligation — to obtain certificates effectively and under fair terms. The Court stressed that it was therefore important that mechanisms be established which ensured the creation of a genuine market for certificates in which supply could match demand, reaching some kind of balance, so that it was actually possible for the relevant suppliers and users to obtain certificates under fair terms.

According to the findings of the referring court, the green certificates were actually sold, in the Member State concerned, on a market that was open to competition and, accordingly, the price of those certificates was determined by the interplay of supply and demand.

The Court held that provided that there was a market for green certificates which actually met the conditions set out above and on which traders who had imported electricity from other Member States were genuinely able to obtain certificates under fair terms, the fact that the national legislation at issue in the main proceedings did not prohibit producers of green electricity from selling to traders under the quota obligation both the electricity and the certificates did not mean that the legislation went beyond what was necessary to attain the objective of increasing the production of green electricity. The fact that such a possibility remains open appeared to be an additional incentive for producers to increase their production of green electricity.

The Court thus concluded that Article 34 TFEU must be interpreted as not precluding national legislation which provided for the award of tradable certificates to green electricity producers solely in respect of green electricity produced in the territory of the Member State concerned and which places suppliers and certain electricity users under an obligation to surrender annually to the competent authority a certain number of those certificates, corresponding to a proportion of the total volume of electricity that they had  supplied or used, failing which they must pay a specific fee.


Text of Judgment 

Joined Cases C-362, 363 and 407/13

Italian seafarers legislation complying with principles of EU law


>> The Italian Navigation Code of Italy set the maximum duration of fixed-term contracts  of seafarers ar at one year. The code also required the start date and the duration of the contract to be specified, that every contract concluded for a period exceeding one year was converted into a contract of indefinite duration, and that, if several contracts were concluded for a fixed term or for specified voyages, the employment was considered to be continuous where no more than 60 days elapsed between two contracts. 
The EU Framework Agreement (Directive 1999/70) lays down the general principles and minimum requirements relating to fixed-term work.  Last year, the Court held in the Della Rocca case that the Framework Agreement did not apply to temporary workers (see, EU:C:2013:235).
In the present case, the referring court asked whether the Framework Agreement must be interpreted as meaning that it applied to workers, such as the appellants in the main proceedings, who were employed as seafarers under fixed-term employment contracts on ferries making sea crossings between two ports situated in the same Member State. If that was indeed the case, the referring Court asked whether the provisions of the Framework Agreement, in particular Clause 3(1) thereof, must be interpreted as precluding national legislation, such as that at issue in the main proceedings, which provided that fixed-term employment contracts had to indicate their duration, but not their termination date.
The Court of Justice first of all recalled that the Framework Agreement covers generally ‘fixed-term workers who had an employment contract or employment relationship as defined in law, collective agreements or practice in each Member State’ (Article 2 of the Framework Agreement, see also:  Adeneler and Others, C-212/04, EU:C:2006:443; Della Rocca, C-290/12, EU:C:2013:235,; and Márquez Samohano, C-190/13, EU:C:2014:146). The Court held that e Framework Agreement applied to all workers providing remunerated services in the context of a fixed-term employment relationship linking them with their employer  (Del Cerro Alonso, C-307/05, EU:C:2007:509; Gavieiro Gavieiro and Iglesias Torres, C‑444/09 and C‑456/09, EU:C:2010:819; and the order in Montoya Medina, C‑273/10, EU:C:2011:167).
The Court however added that the scope of the Framework Agreement was not unlimited, as   the definition of the contracts and employment relationships to which it applied were not determined by that agreement or by EU law, but by national law and/or practice, so long as those concepts were not defined in a manner that resulted in the arbitrary exclusion of a category of persons from the benefit of the protection provided by the Framework Agreement (see Sibilio, C‑157/11, EU:C:2012:148). The Court reiterated that the agreement did not apply to temporary workers. 
Nevertheless, the Court in the present case held that  seafarers employed under fixed-term employment contracts on ferries making crossings between two ports within the same Member State, fell within the scope of the Framework Agreement. The Court pointed out that Framework Agreement made it possible for Member States, when implementing the agreement, to take account of the needs of specific sectors and/or categories of workers involved, provided that that was justified on objective grounds (Marrosu and Sardino, C-53/04, EU:C:2006:517, and Kücük, C‑586/10, EU:C:2012:39).
The Court reiterated that the  Framework Agreement was not intended to harmonise all national rules relating to fixed-term employment contracts but simply aimed, by determining general principles and minimum requirements, to establish a general framework for ensuring equal treatment for fixed-term workers by protecting them against discrimination and to prevent abuse arising from the use of successive fixed-term work agreements or contracts (see: Impact, C‑268/06, EU:C:2008:223, on which I write this post;  Huet, C‑251/11, EU:C:2012:133,; and the order in Vino, C‑20/10, EU:C:2010:677).
The Court held that Clause 3(1) of the Framework Agreement defined the concept of ‘fixed-term worker’ and, in that context, set out the central characteristic of a fixed-term contract, namely the fact that the end of such a contract was determined ‘by objective conditions such as reaching a specific date, completing a specific task, or the occurrence of a specific event’. However, that clause did not impose any obligation on Member States in respect of the rules of national law applicable to the conclusion of fixed-term employment contracts.
The Court held that the Framework Agreement did not lay down a general obligation on the Member States to provide for the conversion of fixed-term employment contracts into contracts of indefinite duration. Indeed, Clause 5(2) of the Framework Agreement in principle left it to the Member States to determine the conditions under which fixed-term employment contracts or relationships were to be regarded as contracts or relationships of indefinite duration. It followed that the Framework Agreement did not specify the conditions under which contracts of indefinite duration might be used.
The Court concluded that Clause 5 of the Framework Agreement must be interpreted as meaning that it did not preclude, in principle, national legislation, such as that at issue in the main proceedings, which provided for the conversion of fixed-term employment contracts into employment contracts of indefinite duration only in circumstances where the worker concerned had been employed continuously under such contracts by the same employer for a period longer than one year, the employment relationship being considered to be continuous where the fixed-term employment contracts were separated by time lapses of less than or equal to 60 days. It was, however, for the referring court to satisfy itself that the conditions of application and the effective implementation of that legislation resulted in a measure that was adequate to prevent and punish the misuse of successive fixed-term employment contracts or relationships.


Case C-76/13, Commission v. Portugal

Court taking into account financial crisis when setting amount penalty payment Portugal

>> Portugal Telecom (PTC, HQ pictured) is the largest telecommunications operator in Portugal and
also operates in numerous other countries such as  Brazil. In 1995 the Portuguese Government granted it the exclusive right to operate the public telecommunications service. In principle, it was granted that right until that activity was liberalised in accordance with EU law.

The Universal Service Directive (Directive 2002/22) adopted in 2002, provides that every Member State is to designate the undertakings that are to provide the universal service while observing the principles of objectivity, transparency, non-discrimination and proportionality. That directive was to be transposed by the Member States by 24 July 2003. However, after 2003 PTC continued to be the exclusive provider, reason for which the European Commission in  2005 initiated the pre-litigation procedure and in 2009, brought infringement proceedings against Portugal before the Court of Justice. In 2010, the Court held that Portugal had failed to transpose correctly the provisions of the Universal Service Directive and to ensure that those provisions were in practice applied.

In 2013, the Commission decided to  bring new infringement proceedings, since the concession contract concluded with PTC was still in force. In fact, it was not until October 2012 that Portugal had launched the tendering procedure for the selection of the universal service providers. Furthermore, the new legislation to repeal the legislation incompatible with EU law would not enter into force until 1 June 2014. Moreoever, termination of the contract concluded with PTC was not provided for before 2025.

The Commission argued that Portugal should be ordered to make a penalty payment of €43 500 for every day of delay in complying with the judgment of 2010 and to pay a fixed-rate sum of €5 000 for every day from the date of delivery of the judgment of 2010 until the date of Portugal’s compliance with that judgment or the date on which the Court delivers judgment in the new infringement proceedings.

The Court agreed that it was appropriate to order Portugal to pay a lump sum and to make a penalty payment. The Court also found that the duration of the infringement, which was nearly three and a half years, including 28 months’ delay in complying with the 2010 judgment, was excessive.The Court stressed the seriousness of the infringement, emphasising not only that the failure to transpose  a Directive was an obstacle to the proper functioning of the internal market, but also that  the failure to comply with the judgment of 2010 had adverse consequences for both private interests - the competitors of PTC -  and public interests - those of  the end-users.

With regard to the lump sum, the Court observed that the failure to comply with the judgment of 2010 has prejudiced private and public interests. In addition, it emphasised that the concession contract under which PTC was to be the provider of the universal service until 2025 was approved on 17 February 2003, after the directive had entered into force, and that the Member States were required to transpose that directive into national law by 24 July 2003 at the latest. The Court has found that these matters make it necessary to adopt a deterrent measure, such as an order to pay a lump sum.

Nevertheless, the Court also found that - next to the fact that  tendering procedures were launched in October 2012  - Portugal’s ability to pay  had been reduced in the context of the economic crisis.  The Court stressed that  a penalty payment had to be an appropriate financial means of ensuring full compliance with the judgment concerned. However,  it found that the sum proposed by the Commission would not be proportionate.

The Court found that it was proportionate to order Portugal to pay a lump sum of €3 million and also to make a penalty payment of €10 000 for every day of delay in implementing the measures necessary in order to comply with the 2010 judgment.

Text of Judgment

Case C‑156/13, Digibet and Albers v Westdeutsche Lotterie

Schleswig - Holstein could tempo temporarily allow games of chance without infringing EU law.

>> German legislation prohibitted the organisation and facilitation of games of chance on the Internet and the advertising of games of chance on television, the Internet and via telecommunications networks. However, the use of the Internet for those purposes may be authorized in exceptional circumstances for lotteries and sporting bets, the aim of which is to combat the development and spread of illegal gaming. For this reason, Schleswig - Holstein authorized the organisation and facilitation of games on chance on the Internet from 1 January 2012 until 8 February 2013. That authorisation was granted to any person who, in the EU, was able to demonstrate that it complied with certain conditions. Even though this legislative exception had now been repealed, authorisations issued to operators of games of chance on the Internet remained valid for a transitional period of several years.


Digibet is authorised to organise games of chance under a licence issued by the authorities in Gibraltar. Thus, it offers games of chance and sports betting in German via its Internet site ‘digibet.com’. Following an action brought by the Westdeutsche Lotterie (a public lottery company
in North Rhine - Westphalia) a German court ordered Digibet and its managing director Mr Albers to cease to offer the possibility of playing games of chance via the Internet to persons in Germany. Digibet and Mr Albers challenged that judgment before the referring Court, which asked whether  Article 56 TFEU must be interpreted as meaning that it precluded legislation common to the majority of federal entities of a Member State having a federal structure which prohibited, in principle, the organisation and facilitation of games of chance via the internet, where, for a limited period, a single federal entity maintained in force more liberal legislation coexisting with the restrictive legislation of the other federal entities and that that entity issued authorisations to operators in order to supply games on the internet which remained valid for a transitional period after the repeal of that more liberal legislation.

Interestingly, Digibet and  Mr Albers inter alia  relied on the famous Winner Wetten  case (Case C-409/06 Winner Wetten (EU:C:2010:503), according to which rules of national law, even of a constitutional order, cannot be allowed to undermine the unity and effectiveness of EU law.

The Court first of all reiterated that it was not disputed that legislation of a Member State such as that at issue in the main proceedings constituted a restriction on the freedom to provide services guaranteed by Article 56 TFEU (see Joined Cases C316/07, C358/07 to C360/07, C409/07 and C410/07 Stoß and Others EU:C:2010:504).

The Court held that it was necessary, however, to determine whether such a restriction might be allowed as a derogation, on grounds of public policy, public security or public health, as expressly provided for under Articles 51 TFEU and Article 52 TFEU, which were applicable in the area of freedom to provide services by virtue of Article 62 TFEU, or justified, in accordance with the case-law of the Court, by overriding reasons in the public interest. The Court has consistently held that restrictions on betting and gaming might be justified by overriding requirements in the public interest, such as consumer protection and the prevention of both fraud and incitement to squander money on gambling (see Joined Cases C186/11 and C209/11 Stanleybet International and Others EU:C:2013:33, on which I wrote this post).

In that context, the Court has repeatedly stated that the legislation on games of chance is one of the areas in which there are significant moral, religious and cultural differences between the Member States. In the absence of harmonisation in the field at EU level, it is for each Member State to determine in those areas, in accordance with its own scale of values, what is required in order to ensure that the interests in question are protected  the identification of the objectives which are in fact pursued by the national legislation falls, in the context of a case referred to the Court under Article 267 TFEU, within the jurisdiction of the national court (see e.g., Case C-347/09 Dickinger and Ömer EU:C:2011:582, on which I wrote this post).

The referring court asked however about the requirement that restrictions imposed by the Member States must satisfy the conditions of proportionality and non-discrimination which applied to them, as laid down in the case-law of the Court of Justice and, in particular, the condition according to which national legislation is appropriate for ensuring attainment of the objective pursued only if it genuinely reflected a concern to attain it in a consistent and systematic manner. The referring court therefore wishes to know whether the proportionality and consistency of the restrictive legislation at issue in the main proceedings, seen as a whole, is called into question given the existence, for a limited period, of more liberal legislation only in the Land Schleswig-Holstein.

The Court of Justice in that regard stressed the particular nature of the gambling, where, unlike the establishment of free, undistorted competition in a traditional market, the presence of that kind of competition in the very specific market of games of chance was liable to have a detrimental effect owing to the fact that those operators would be led to compete with each other in inventiveness in making what they offered more attractive than their competitors and, in that way, increasing consumers’ expenditure on gaming and the risks of their addiction.

Therefore, national authorities enjoyed a wide measure of discretion which enabled them to determine what was required in order to ensure consumer protection and the preservation of order in society and — provided that the conditions laid down in the Court’s case-law are in fact met — it was for each Member State to assess whether, in the context of the legitimate aims which it pursued, it was necessary to prohibit, wholly or in part, betting and gaming or only to restrict them and, to that end, to lay down more or less strict supervisory rules.

Next, it should be recalled that, when provisions of the Treaties or of regulations conferred powers or impose obligations upon the Member States for the purposes of the implementation of EU law, the question of how the exercise of such powers and the fulfilment of such obligations might be entrusted by Member States to specific national bodies was solely a matter for the constitutional system of each State (Case C-428/07 Horvath, EU:C:2009:458, paragraph 49).  

The Court added that in the present case, the division of competences between the Länder could not be called into question, since it benefitted from the protection conferred by Article 4(2) TEU, according to which the Union must respect national identities, inherent in their fundamental structures, political and constitutional, including regional and local self-government. The Court added that  even assuming that the existence of legislation of one Land, which was more liberal than that in force in the other Länder, might damage the consistency of the legislation at issue as a whole, it must be observed that, in the circumstances of the case in the main proceedings, such damage to consistency was limited ratione temporis and ratione loci to a single Land. Therefore, it could according to the Court not be argued that the derogating legal situation in one Land seriously affected the appropriateness of the restrictions on games of chance applicable in all the other Länder to achieve the legitimate public interest objectives that they pursued.

The Court also took into account that the more liberal legislation on games of chance adopted by the Land Schleswig-Holstein was in force from 1 January 2012 until 8 February 2013. After that date, that Land applied the more restrictive rules already in force in the other Länder.

In those circumstances, the Court found that the restriction on the freedom to provide services constituted by the legislation on games of chance at issue in the main proceedings was capable of satisfying the requirements of proportionality as laid down in the case-law of the Court.



Case C‑184/11, Commission v Spain

Spain ordered to pay a lump sum of €30 million for having failed to adopt all the measures necessary to recover unlawful State aid granted by provinces of Basque Country.

>> In the 1990’s, Álava, Vizcaya and Guipúzcoa (the three provinces of the Basque Country) granted State aid to certain undertakings in the form of a reduction in the tax base and a 45% tax credit for investments. In 2001, the Commission found that aid to be incompatible with the internal market and ordered Spain to take all necessary measures to recover the aid from the recipients. Finding that not all the aid had been recovered, in 2003 the Commission brought actions for failure to fulfil obligations before the Court of Justice. By judgment of 14 December 2006, the Court held that Spain had failed to fulfil its obligation to adopt all the measures necessary to comply with the Commission decisions (C-485/03, Commission v Spain). 

Since it considered that Spain had not fully complied with the 2006 judgment, in 2011 the Commission decided to bring a new action for failure to fulfil obligations. The Commission was of the view that the amounts not yet recovered when the action was brought represented approximately 87% of the total of the unlawful aid to be recovered. Subsequently, the Commission found that Spain had fully complied with the 2006 judgment during the proceedings before the Court, so it withdrew its application for an order for a periodic penalty payment while maintaining its application for an order for payment of a lump sum.

The Court first of all held that in order to determine whether Spain adopted all the necessary measures to comply with the judgment in Commission v Spain EU:C:2006:777, it must be ascertained whether the amounts of the unlawful aid at issue were repaid by the recipient undertakings.The Court reiterated that the reference date for the assessment of whether there had been a failure to fulfil obligations was the date of expiry of the period prescribed in the reasoned opinion issued under Article 228(2) EC (see Case C‑304/02 Commission v France).

Since the FEU Treaty abolished the reasoned opinion stage in infringement proceedings under Article 260(2) TFEU, the reference date for assessing whether there had been an infringement for the purpose of Article 260 TFEU was the date of expiry of the period prescribed in the letter of formal notice issued in accordance with the first subparagraph of Article 260(2) (Case C‑610/10 Commission v Spain and Case C‑576/11 Commission v Luxembourg).The Court however held that where the proceedings for failure to fulfil obligations had been brought on the basis of Article 228(2) EC and a reasoned opinion had been issued before the date of entry into force of the Treaty of Lisbon, namely 1 December 2009, the reference date was the date of expiry of the period prescribed in the reasoned opinion (see Case C‑533/11 Commission v Belgium).

It followed that, given that, in the present case, the Commission issued the reasoned opinion on 26 June 2008, the reference date for the assessment of whether there had been a failure to fulfil obligations was the date of expiry of the period prescribed in that reasoned opinion, namely 27 August 2008.

The Court held that although Spain had put forward various arguments in connection with the amount of the unlawful aid at issue to be recovered or which had actually been recovered, it was clear from the written statements given in response to the questions put by the Court and the details given at the hearing that Spain accepted that, although all those arguments were admissible and well founded, a substantial part of the aid to be recovered in order to comply with the judgment in Commission v Spain had not been recovered at the expiry of the period prescribed by the Commission in the reasoned opinion.

According to the Court, Spain could not therefore reasonably argue that, within that period, it took all the measures necessary in order successfully to recover the unlawful aid at issue. The Court thus found that, by failing to take, by the date on which the period prescribed in the reasoned opinion issued by the Commission on 26 June 2008 expired, all the measures necessary to comply with the judgment in Commission v Spain, Spain had failed to fulfil its obligations under Article 260(1) TFEU.

The Court found that it was for the Court, in each case, in the light of the circumstances of the case before it and the degree of persuasion and deterrence which appeared to it to be required, to determine the financial penalties appropriate, such as an order for payment of a lump sum, in particular for preventing similar infringements of EU law from recurring (see: Case C‑121/07 Commission v France, and Case C‑279/11 Commission v Ireland).

The Court reiterated that an order to pay a lump sum was based essentially on the assessment of the effects on public and private interests of the failure of the Member State concerned to comply with its obligations, in particular where the breach had  persisted for a long period after the judgment initially establishing it was delivered (Case C‑241/11 Commission v Czech Republic).

The Court held that the imposition of a lump sum payment must depend in each individual case on all the relevant factors relating both to the characteristics of the infringement established and to the conduct of the Member State involved in the procedure initiated under Article 260 TFEU. The Court added that that provision conferred a wide discretion on the Court in deciding whether or not to impose such a penalty.

The Court reiterated that the Member State concerned must actually recover the sums owed, belated recovery after the prescribed time-limits have expired not satisfying the requirements of the EC Treaty (see Case C‑496/09 Commission v Italy). The Court held that if a Member State encountered unforeseen or unforeseeable difficulties or perceives consequences overlooked by the Commission, it must submit those problems for consideration by the Commission together with proposals for suitable amendments to the decision in question (Case C‑354/10 Commission v Greece EU and Case C‑411/12 Commission v Italy), which had not occurred in the present case. The Court find that the infringement of which Spain was accused lasted for a considerable period which in any event had no relation to the difficulties in recovering the aid paid under schemes that had been declared unlawful and incompatible with the internal market.

The Court added that in the present case, the unlawful aid in question was particularly harmful to competition because of its large amount and the unusually large number of recipients regardless of the economic sector of the recipients.  The Court held that where a Member State repeatedly engaged in unlawful conduct in such a manner in a specific sector governed by EU rules, this might be an indication that effective prevention of future repetition of similar infringements of EU law might require the adoption of a dissuasive measure, such as a lump sum payment  The Court therefore considered that it was justifiable in the present case to order Spain to pay a lump sum.


Text of Judgment 

Case C‑43/12, Commission v. Parliament and Council

Court annuls directive on exchange of information on eight road safety related traffic offenses

>> In 2008, the European Commission submitted to the Parliament and the Council a proposal for a directive seeking, in essence, to facilitate the exchange of information concerning certain road traffic offences and the cross-border enforcement of the sanctions attached to them. That proposal was based on Article 71(1) EC, now Article 91(1)(c) TFEU, which regulates the powers of the European in relation to transport safety. On 25 October 2011, the Parliament and the Council adopted Directive 2011/822, using however as a legal basis Article 87(2) TFEU, the EU’s competence in the field of police cooperation. Taking the view that the directive had been adopted on the incorrect legal basis, the Commission brought annulment proceedings before the Court of Justice.

In short, Directive 2011/822 sets up a procedure for the exchange of information between Member States in relation to eight road traffic offences (speeding, non-use of a seat-belt, failing to stop at a red traffic light, drink-driving, driving under the influence of drugs, failing to wear a crash helmet, use of a forbidden lane and illegally using a mobile telephone). The Member States may thus access each other's national data concerning vehicle registration in order to determine the person liable for the offence.

The Court first of all reiterated that, the choice of legal basis for a European Union measure must rest on objective factors that were amenable to judicial review; these included the aim and content of that measure (see e.g. Case C‑411/06 Commission v Parliament and Council EU, and Case C‑130/10 Parliament v Council).

The Court added that if examination of the measure concerned revealed that it pursued a twofold purpose or that it had a twofold component and if one of those was identifiable as the main or predominant purpose or component, whereas the other was merely incidental, that measure must be based on a single legal basis, namely that required by the main or predominant purpose or component (see e.g. Case C‑137/12 Commission v Council).

The Court thus found that in order to assess whether the present action was well founded, both the aim and the content of Directive 2011/82 must therefore be examined, in order to determine whether that directive could have been validly adopted — as contended by the Council and the Parliament — on the basis of Article 87(2) TFEU rather than on the basis of Article 91(1)(c) TFEU, which was relied on by the Commission as the appropriate legal basis.

The Court found that the  system of information exchange as laid down in the Directive might  increase deterrence in relation to road traffic offences and induce more cautious behaviour by the driver of a vehicle that was registered in a Member State other than the Member State of the offence, thereby helping to reduce the number of casualties due to road traffic accidents.

The Court thus held that the main aim of Directive 2011/82 was to improve road safety which, as stated in recital 1 in the preamble to that directive, was a prime objective of the European Union’s transport policy.

With regard to the content of Directive 2011/82, the Court found that the system for the exchange of information between the competent authorities of the Member States set up by the directive provided the means of pursuing the objective of improving road safety and enabled the European Union to attain that aim.
The Court thus concluded that since, both in respect of its aims and its content, Directive 2011/82 was  a measure to improve transport safety within the meaning of Article 91(1)(c) TFEU, it should have been adopted on the basis of that provision.  Thus, since the action was well founded, Directive 2011/82 was annulled.

The Court however found that there were important grounds of legal certainty why the Court should maintain the effects of that directive until the entry into force, within a reasonable period of time — which might not exceed twelve months as from the date of delivery of the present judgment — of a new directive based on the correct legal basis -  Article 91(1)(c) of the TFEU.

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Case C-209/13, UK v. Council

Court dismisses action brought by the United Kingdom against the decision authorising eleven Member States to establish enhanced cooperation to  set up a financial transaction tax

>> The United Kingdom asked the Court of Justice to annul Council Decision 2013/52/EU of 22 January 2013, which authorized  eleven Member States to use the enhanced cooperation procedure to set up a financial transaction tax (‚FTT’).


That decision was adopted when it was clear that an FTT could not obtain unanimous support within the Council in the foreseeable future.

While recognising that its action, brought as a precautionary measure, could be considered to be premature, the United Kingdom relied on two pleas in law in support of its action. The first plea concerned a claimed infringement of Article 327 TFEU and of customary international law in so far as the contested decision authorized the adoption of an FTT which produced extraterritorial effects. The second plea, relied on in the alternative, related to a claimed infringement of Article 332 TFEU in that that decision authorized the adoption of an FTT which would impose costs on Member States which were not participating in the enhanced cooperation.


The Court first of all, with regard to the matter of admissibility,  recalled that, under Article 120(c) of the Rules of Procedure and the case-law relating thereto, an application initiating proceedings must state the subject-matter of the dispute and a summary of the pleas in law on which the application was based. That statement must be sufficiently clear and precise to enable the defendant to prepare his defence and the Court to rule on the application. It was therefore necessary for the essential points of law and of fact on which a case was based to be indicated coherently and intelligibly in the application itself and for the heads of claim to be set out unambiguously so that the Court did not rule ultra petita or fail to rule on a claim (Case C‑360/11 Commission v Spain and Case C‑545/10 Commission v Czech Republic). 

The Court held that in this case, the content of the application satisfied those requirements of clarity and precision. It enabled the Council and the Member States intervening in its support to prepare their arguments in relation to the pleas relied on by the United Kingdom and it put the Court in a position to carry out its review of the contested decision.

The Court added that in the context of an action for the annulment of a Council decision which, like the contested decision, had  as its subject-matter the authorisation of enhanced cooperation on the basis of Article 329 TFEU, the Court’s review was related to the issue of whether that decision was valid as such in the light of, inter alia, the provisions, contained in Article 20 TEU and in Articles 326 TFEU to 334 TFEU, which defined the substantive and procedural conditions relating to the granting of such authorisation. The Court held that that review should not be confused with the review which might be undertaken, in the context of a subsequent action for annulment, of a measure adopted for the purposes of the implementation of the authorised enhanced cooperation.

The Court pointed out that the objective of the contested decision was to authorise 11 Member States to establish enhanced cooperation between themselves in the area of the establishment of a common system of FTT with due regard to the relevant provisions of the Treaties. The principles of taxation challenged by the United Kingdom were, according to the Court, not in any way constituent elements of that decision. First, ‘the counterparty principle’ corresponded to an element in the 2011 proposal mentioned in recital 6 of that decision. Second, the ‘issuance principle’ first appeared in the 2013 proposal.


As regards the action’s second plea in law,  the Court held that the contested decision contained no provision related to the issue of expenditure linked to the implementation of the enhanced cooperation authorised by that decision. Further, and irrespective of whether the concept of ‘expenditure resulting from implementation of enhanced cooperation’, within the meaning of Article 332 TFEU, did or did not cover the costs of mutual assistance and administrative cooperation referred to by the United Kingdom in its second plea, was is obvious that the question of the possible effects of the future FTT on the administrative costs of the non-participating Member States could not be examined for as long as the principles of taxation in respect of that tax had not been definitively established as part of the implementation of the enhanced cooperation authorised by the contested decision. The Court added that those effects were dependent on the adoption of ‘the counterparty principle’ and the ‘issuance principle’, which were however, as mentioned, not constituent elements of the contested decision. 


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Joined Cases C‑293/12 and C‑594/12

Court declares Data Retention Directive to be invalid

The main objective of the Data Retention Directive (Directive 2006/24) was to harmonise Member States’ provisions concerning the retention of certain data which were generated or processed by providers of publicly available electronic communications services or of public communications networks. It therefore sought to ensure that the data were available for the purpose of the prevention, investigation, detection and prosecution of serious crime, such as, in particular, organised crime and terrorism. The directive for this reason provided that the providers must retain traffic and location data as well as related data necessary to identify the subscriber or user. By contrast, it did not permit the retention of the content of the communication or of information consulted. 


The Irish High Courtand the Austrian Verfassungsgerichtshof (Constitutional Court)  asked the Court to examine the validity of Directive 2006/24 in the light of Articles 7, 8 and 11 of the Charter of Fundamental Rights. 


The Court  first of all pointed out that it  followed from Article 1 and recitals 4, 5, 7 to 11, 21 and 22 of Directive 2006/24 that the main objective of that directive was to harmonise Member States’ provisions concerning the retention, by providers of publicly available electronic communications services or of public communications networks, of certain data which were generated or processed by them, in order to ensure that the data were available for the purpose of the prevention, investigation, detection and prosecution of serious crime, such as organised crime and terrorism, in compliance with the rights laid down in Articles 7 and 8 of the Charter.

The Court however added that the obligation, under Article 3 of Directive 2006/24, on providers of publicly available electronic communications services or of public communications networks to retain the data listed in Article 5 of the directive for the purpose of making them accessible, if necessary, to the competent national authorities raised questions relating to respect for private life and communications under Article 7 of the Charter, the protection of personal data under Article 8 of the Charter and respect for freedom of expression under Article 11 of the Charter.

The Court found that even though, as is apparent from Article 1(2) and Article 5(2) of Directive 2006/24, the directive did not permit the retention of the content of the communication or of information consulted using an electronic communications network, it was not inconceivable that the retention of the data in question might have an effect on the use, by subscribers or registered users, of the means of communication covered by that directive and, consequently, on their exercise of the freedom of expression guaranteed by Article 11 of the Charter.

The Court held that the retention of data for the purpose of possible access to them by the competent national authorities, as provided for by Directive 2006/24, directly and specifically affected private life and, consequently, the rights guaranteed by Article 7 of the Charter. Furthermore, according to the Court, such a retention of data also fell under Article 8 of the Charter because it constituted the processing of personal data within the meaning of that article and, therefore, necessarily had to satisfy the data protection requirements arising from that article (see: Cases C‑92/09 and C‑93/09 Volker und Markus Schecke and Eifert).

The Court held that by requiring the retention of the data listed in Article 5(1) of Directive 2006/24 and by allowing the competent national authorities to access those data, Directive 2006/24 derogated from the system of protection of the right to privacy established by Directives 95/46 and 2002/58 with regard to the processing of personal data in the electronic communications sector, directives which provided for the confidentiality of communications and of traffic data as well as the obligation to erase or make those data anonymous where they were no longer needed for the purpose of the transmission of a communication, unless they were necessary for billing purposes and only for as long as so necessary.

The Court added in order to establish the existence of an interference with the fundamental right to privacy, it did not matter whether the information on the private lives concerned was sensitive or whether the persons concerned had been inconvenienced in any way (see, to that effect, Cases C‑465/00, C‑138/01 and C‑139/01 Österreichischer Rundfunk and Others). 

The Court thus held that the obligation imposed by Articles 3 and 6 of Directive 2006/24 on providers of publicly available electronic communications services or of public communications networks to retain, for a certain period, data relating to a person’s private life and to his communications, such as those referred to in Article 5 of the directive, constituted in itself an interference with the rights guaranteed by Article 7 of the Charter.

Furthermore, the access of the competent national authorities to the data constituted a further interference with that fundamental right (see, as regards Article 8 of the ECHR, Eur. Court H.R., Leander v. Sweden, 26 March 1987, § 48, Series A no 116; Rotaru v. Romania [GC], no. 28341/95, § 46, ECHR 2000-V; and Weber and Saravia v. Germany (dec.), no. 54934/00, § 79, ECHR 2006-XI). Accordingly, Articles 4 and 8 of Directive 2006/24 laying down rules relating to the access of the competent national authorities to the data also constituted an interference with the rights guaranteed by Article 7 of the Charter.  Likewise, Directive 2006/24 constituted an interference with the fundamental right to the protection of personal data guaranteed by Article 8 of the Charter because it provided for the processing of personal data.

The Court pointed out Article 52(1) of the Charter provides that any limitation on the exercise of the rights and freedoms laid down by the Charter must be provided for by law, respect their essence and, subject to the principle of proportionality, limitations may be made to those rights and freedoms only if they are necessary and genuinely meet objectives of general interest recognised by the Union or the need to protect the rights and freedoms of others.

The Court held that  so far as concerns the essence of the fundamental right to privacy and the other rights laid down in Article 7 of the Charter, it must be held that, even though the retention of data required by Directive 2006/24 constituted a particularly serious interference with those rights, it was not such as to adversely affect the essence of those rights given that, as followed from Article 1(2) of the directive, the directive did not permit the acquisition of knowledge of the content of the electronic communications as such. Nor was that retention of data such as to adversely affect the essence of the fundamental right to the protection of personal data enshrined in Article 8 of the Charter, because Article 7 of Directive 2006/24 provided, in relation to data protection and data security, that, without prejudice to the provisions adopted pursuant to Directives 95/46 and 2002/58, certain principles of data protection and data security must be respected by providers of publicly available electronic communications services or of public communications networks.  

The Court found that the retention of data for the purpose of allowing the competent national authorities to have possible access to those data, as required by Directive 2006/24, genuinely satisfies an objective of general interest. In those circumstances, it was necessary to verify the proportionality of the interference found to exist.

The Court reiterated thatthe principle of proportionality requires that acts of the EU institutions be appropriate for attaining the legitimate objectives pursued by the legislation at issue and do not exceed the limits of what is appropriate and necessary in order to achieve those objectives (see, to that effect, Case C‑343/09 Afton Chemical, Cases C‑581/10 and C‑629/10 Nelson and Others; and Case C‑283/11 Sky Österreich).

The Court stressed that with regard to judicial review of compliance with those conditions, where interferences with fundamental rights were at issue, the extent of the EU legislature’s discretion might prove to be limited, depending on a number of factors, including, in particular, the area concerned, the nature of the right at issue guaranteed by the Charter, the nature and seriousness of the interference and the object pursued by the interference (see, by analogy, as regards Article 8 of the ECHR, Eur. Court H.R., S. and Marper v. the United Kingdom [GC], nos. 30562/04 and 30566/04, § 102, ECHR 2008-V). 

The Court found that in the present case, in view of the important role played by the protection of personal data in the light of the fundamental right to respect for private life and the extent and seriousness of the interference with that right caused by Directive 2006/24, the EU legislature’s discretion was reduced, with the result that review of that discretion should be strict.

The Court held that the EU legislation in question must lay down clear and precise rules governing the scope and application of the measure in question and imposing minimum safeguards so that the persons whose data had been retained had sufficient guarantees to effectively protect their personal data against the risk of abuse and against any unlawful access and use of that data (see, by analogy, as regards Article 8 of the ECHR, Eur. Court H.R., Liberty and Others v. the United Kingdom, 1 July 2008, no. 58243/00, § 62 and 63; Rotaru v. Romania, § 57 to 59, and S. and Marper v. the United Kingdom, § 99).

The Court added that the need for such safeguards is all the greater where, as laid down in Directive 2006/24, personal data were subjected to automatic processing and where there was a significant risk of unlawful access to those data (see, by analogy, as regards Article 8 of the ECHR, S. and Marper v. the United Kingdom, § 103, and M. K. v. France, 18 April 2013, no. 19522/09, § 35).

The Court found that Directive 2006/24 affected, in a comprehensive manner, all persons using electronic communications services, but without the persons whose data were retained being, even indirectly, in a situation which was liable to give rise to criminal prosecutions. It therefore applied even to persons for whom there was no evidence capable of suggesting that their conduct might have a link, even an indirect or remote one, with serious crime. Furthermore, it did not provide for any exception, with the result that it applied even to persons whose communications were subject, according to rules of national law, to the obligation of professional secrecy.

Moreover, whilst seeking to contribute to the fight against serious crime, Directive 2006/24 did not require any relationship between the data whose retention was provided for and a threat to public security and, in particular, it was not restricted to a retention in relation (i) to data pertaining to a particular time period and/or a particular geographical zone and/or to a circle of particular persons likely to be involved, in one way or another, in a serious crime, or (ii) to persons who could, for other reasons, contributed, by the retention of their data, to the prevention, detection or prosecution of serious offences.

The Court held that not only was there a general absence of limits in Directive 2006/24 but Directive 2006/24 also failed to lay down any objective criterion by which to determine the limits of the access of the competent national authorities to the data and their subsequent use for the purposes of prevention, detection or criminal prosecutions concerning offences that, in view of the extent and seriousness of the interference with the fundamental rights enshrined in Articles 7 and 8 of the Charter, might be considered to be sufficiently serious to justify such an interference. On the contrary, Directive 2006/24 simply referred, in Article 1(1), in a general manner to serious crime, as defined by each Member State in its national law.

The Court in short held that Directive 2006/24 did not lay down clear and precise rules governing the extent of the interference with the fundamental rights enshrined in Articles 7 and 8 of the Charter. The Court held that Directive 2006/24 entailed a wide-ranging and particularly serious interference with those fundamental rights in the legal order of the EU, without such an interference being precisely circumscribed by provisions to ensure that it was actually limited to what was strictly necessary.

The Court concluded that that, by adopting Directive 2006/24, the EU legislature had exceeded the limits imposed by compliance with the principle of proportionality in the light of Articles 7, 8 and 52(1) of the Charter. The Court held that in those circumstances, there was no need to examine the validity of Directive 2006/24 in the light of Article 11 of the Charter.

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