CJEC, October 12, 1978, No 156-77

THE COURT OF JUSTICE OF THE EUROPEAN COMMUNITIES,

1. By application lodged on 21 December 1977, the Commission requests the Court for a declaration that '' by not complying with the Commission decision of 4 May 1976 on aid from the Belgian Government to the Societe Nationale des Chemins de Fer Belges (SNCB) for through international railway tariffs for coal and steel within the period laid down by the Commission, the Kingdom of Belgium has failed to fulfil an obligation under the treaty ''.

2. In Article 1 of its decision of 4 May 1976 (Official Journal 1976, No L 229, p. 24), the Commission declared that the financial aid granted by the Kingdom of Belgium to the SNCB under Article 3 (2) of Regulation (EEC) No 1107-70 of the Council of 4 June 1970 on the granting of aids for transport by rail, road and inland waterway, as amended by Regulation (EEC) No 1473-75 of 20 May 1975 (Official Journal 1975, No L 152, p. 1) is not compatible with the common market to the extent that is should be granted under Article 4 of the said Regulation.

3. It also decided that the Kingdom of Belgium should take the necessary action, as soon as possible and at the most within three months, either to terminate the aid in question or to modify its legal base in order that that aid might be granted under the provisions of Article 4 of Regulation No 1107-70.

4. As the Kingdom of Belgium did not comply with that decision, the Commission lodged this application before the Court of Justice pursuant to the second subparagraph of Article 93 (2) of the treaty.

Admissibility

5. The Kingdom of Belgium objects that the application is inadmissible on the ground that it has no legal basis in the second subparagraph of Article 93 (2) of the treaty.

6. In support of that objection it maintains that the compensation referred to both in Article 3 (2) and in Article 4 of Regulation No 1107-70, constituting aid within the meaning of Article 77 of the treaty, is, by virtue of that provision, removed from the scope of Article 92 of the treaty, the first Paragraph of which specifies expressly that it applies '' save as otherwise provided in this treaty ''.

7. It claims that as the Commission's intervention in the present case cannot, therefore, be justified within the context of Article 92 of the treaty, Article 93 cannot provide a valid legal basis for the present application.

8. Although in its defence the Belgian Government put forward this objection as '' a mere observation '' made not '' as a defence but solely in order better to determine the problems relating to the substance of the case '', it is however necessary to examine the validity of that objection.

9. By this objection, the Kingdom of Belgium claims in substance that the Commission decision of 4 May 1976 is defective for lack of competence, a defect which, as it is one of those referred to in Article 173 of the treaty, cannot, for the reasons given below, be examined within the context of this procedure.

10. Moreover, the effect of the application of Article 77 of the treaty, which acknowledges that aid to transport is compatible with the treaty only in well-defined cases which do not jeopardize the general interests of the Community, cannot be to exempt aid to transport from the general system of the treaty concerning aid granted by the States and from the controls and procedures laid down therein.

11. To this effect, Article 3 (1) of Regulation No 1107-70, which was not amended by the above-mentioned Regulation No 1473-75, enumerates the cases and conditions in which an aid granted under Article 77 of the treaty may be justified pursuant to that provision and Article 2 thereof specifies that '' Articles 92 to 94 of the treaty shall apply to aids granted for transport by rail, road and inland waterway ''.

12-13. Since the Commission's action in this case was motivated by the finding that the aid in question comes within the prohibition laid down in Article 92 of the treaty the application lodged as a result of that action therefore has its legal basis in the second subparagraph of Article 93 (2) of the treaty. The objection of inadmissibility raised by the Kingdom of Belgium is therefore unfounded.

The substance of the case

14. The Kingdom of Belgium claims essentially that the initiation of a procedure on the basis of Article 93 of the treaty against the aid in question is all the more unjustified in the present case, since the Commission has not established that this aid fulfils the conditions of incompatibility laid down in Article 92 (1).

15. Therefore the Kingdom of Belgium contests the validity of the present application by calling in question the legality of the decision of 4 May 1976 by which the Commission declared that the aid in question was incompatible with the common market.

16. The Commission maintains that since the Belgian Government did not lodge against that decision an application for annulment within the period of two months laid down by the third Paragraph of Article 173 of the treaty it is therefore now barred from contesting the legality of that decision within the context of these proceedings.

17. Article 93 (2) of the treaty, which gives the Commission the necessary power to ensure application of and compliance with the principle laid down in Article 92, provides for a special procedure enabling that institution to give a ruling, apart from the exceptional and specific case referred to in the third subparagraph of Article 93 (2), as to the compatibility with the treaty of both aid granted by the State or through State resources and, pursuant to Article 93 (3), of plans to grant or alter aid and to decide if necessary that it should be abolished or altered.

18. For this purpose, the first Subparagraph of Article 93 (2) provides that if, after giving notice to the parties concerned to submit their comments, the Commission finds that aid is not compatible with the common market having regard to Article 92, or that such aid is being misused, '' it shall decide that the State concerned shall abolish or alter such aid within a period of time to be determined by the Commission ''.

19. Such a decision is, under the fourth Paragraph of Article 189 of the treaty, '' binding in its entirety upon those to whom it is addressed ''.

20. In so far as the Member State to whom it is addressed considers that it is unable to comply with that decision because it is legally unfounded it may contest the legality thereof by having recourse to the legal remedies available to it under Article 173 of the treaty on the conditions laid down by that provision.

21. In view of the fact that the periods within which applications must be lodged are intended to safeguard legal certainty by preventing Community measures which involve legal effects from being called in question indefinitely, it is impossible for a Member State which has allowed the strict time-limit laid down in the third paragraph of Article 173 to expire without contesting by the means available under that Article the legality of the Commission decision addressed to it to be able to call in question that decision by means of Article 184 of the treaty when an application is lodged by the Commission on the basis of the second Subparagraph of Article 93 (2) of the treaty.

22. First, the objection provided for in Article 184 of the treaty is limited under that provision to proceedings '' in which a Regulation of the Council or of the Commission is in issue '' and can in no case be invoked by a Member State to whom an individual decision has been addressed.

23. Secondly, it follows from the wording of the second Subparagraph of Article 93 (2) of the treaty, in particular from the words '' in derogation from the provisions of Articles 169 and 170 '', that the purpose of the application referred to therein may only be a declaration that the Member State concerned has failed to comply with a Commission decision compelling it to abolish or alter an aid within a specific period, whereas in the case of Articles 169 and 170 the application is directed against any failure of a Member State to fulfil one of its obligations under the treaty.

24. In these circumstances, to permit a Member State to whom a decision adopted under the first subparagraph of Article 93 (2) has been addressed to call in issue the validity of that decision when an application referred to in the second subparagraph of Article 93 (2) has been lodged, in spite of the expiry of the period laid down in the third Paragraph of Article 173 of the treaty, would be impossible to reconcile with the principles governing the legal remedies established by the treaty and would jeopardize the stability of that system and the principle of legal certainty upon which it is based.

25. Although it is true that the validity of a Community measure may be called in question by means of the procedure for obtaining a preliminary ruling referred to in Article 177 of the treaty, in spite of the expiry of the period laid down in the third paragraph of Article 173 such a procedure, which is laid down in respect of all measures adopted by the institutions and corresponds solely to the requirements of the national courts, is nevertheless subject to objectives and rules different from those which govern the applications referred to in Article 173 of the treaty, and cannot justify a derogation from the principle of the time-barring of applications as a result of the expiry of the periods within which proceedings must be brought, without thereby depriving Article 173 of its legal significance.

26. In the present case the Kingdom of Belgium does not contest that it has not complied with the Commission decision of 4 May 1976.

27. The Kingdom of Belgium has therefore failed to fulfil its obligation under Article 93 in conjunction with Article 189 of the treaty.

28. The present application is therefore well founded.

Costs

29. Under Article 69 (2) of the rules of procedure the unsuccessful party shall be ordered to pay the costs.

30. The defendant has failed in its submissions.

THE COURT

Hereby :

1. Declares that, by not complying with the Commission decision of 4 May 1976 on aid from the Belgian Government to the Societe Nationale des Chemins de Fer Belges (SNCB) for through international railway tariffs for coal and steel within the period laid down by the Commission, the Kingdom of Belgium has failed to fulfil an obligation under the treaty.

2. Orders the Kingdom of Belgium to pay the cost.