CJEC, November 24, 1987, No 223-85

THE COURT OF JUSTICE OF THE EUROPEAN COMMUNITIES,

1. By application lodged at the Court registry on 22 July 1985, Rijn-Schelde-Verolme Machinefabrieken en Scheepswerven NV (hereinafter referred to as "RSV "), whose registered office is in Rotterdam (the Netherlands), brought an action under the second paragraph of Article 173 of the EEC Treaty primarily for the annulment of Commission Decision 85-351-EEC of 19 December 1984 (Official Journal 1985, L 188, p. 44) by which the Commission found that aid in the sum of hfl 294 million granted to the applicant in 1982 by the Netherlands Government was incompatible with the common market under Article 92 of the EEC Treaty and ordered that it be withdrawn. In the alternative, the application seeks the annulment of Articles 2 and 3 of the Decision which order that the aid be withdrawn and that the Commission be informed of the measures adopted.

2. It is common ground that since 1977 the applicant was, with the Commission's approval, in receipt of state aid under a restructuring programme designed to terminate some of its shipbuilding, ship-repair and heavy engineering activities. In 1979 the Netherlands minister for economic affairs had, by letter of 1 June 1979, informed the second chamber of the states-general of his Decision to relieve, as from 1 January 1979, the RSV group from the financial consequences of the maintenance by various subsidiaries of the group, including VDSM, of activities in the large shipbuilding and heavy offshore engineering and repair sectors. That Decision followed RSV's Decision to refrain from pursuing those activities.

3. The aforesaid letter from the minister for economic affairs contains the following passage: "the aid offer described in this letter will be set out in detail in a letter to RSV. In that connection, I shall carefully reflect as to the appropriate formulation of the aid offer and of the conditions. Those conditions may also cover matters other than those mentioned in this letter if that appears desirable to me in order to attain the aim pursued by the aid. Subsequently, the aid offer will have to be approved by the European Commission. As long as such approval is not forthcoming, the offer is in no way binding. Other conditions considered appropriate in the light of the views stated by the European Commission may be laid down." on 4 July 1979 a copy of that letter was sent to the Commission which did not respond to it.

4. The Netherlands Government had decided on 1 June 1979 to take over the activities of RSV in the abovementioned sectors by creating a new company with the status of a public undertaking, namely the "Rotterdam Offshore en Scheepsbouwcombinatie BV" (hereinafter referred to as "ROS "). In view of the losses incurred, the Netherlands Government decided in April 1980 not to have ROS incorporated and to terminate its large shipbuilding and offshore activities. RSV, which had acted on behalf of ROS after the Decision to set up the latter company, was made responsible for supervising the completion of work in progress, lay-offs and the closures. It was provided that those operations would be underwritten by the state.

5. By letters dated 17 March and 23 April 1980 the Minister for Economic Affairs proposed to RSV the grant of supplementary aid which it accepted. That aid was not notified to the Commission which, however, by letter dated 26 March 1981, approved a project for the grant of aid to RSV from which it emerges that, apart from other sums, hfl 310 million were to be made available to RSV for the dismantling of large shipbuilding at VDSM, one of the undertakings in the group.

6. By reason of the increase in the losses connected with large shipbuilding and heavy offshore engineering further aid was granted to RSV in 1982, the amount being fixed at hfl 294 million (47.5 million were paid on 20 December 1981, 238.5 million on 29 April 1982; the remaining 8 million were not paid). That is the aid, paid before notification thereof to the Commission, which is the subject of the contested Decision.

7. In support of its application for annulment, the applicant puts forward, essentially, the following eight submissions:

(I) infringement of Article 93 (3) of the Treaty, inasmuch as the 1982 aid did not have to be notified to the Commission and the latter could not therefore call for the withdrawal of the aid for want of notification;

(II) infringement of Article 93 (2) of the Treaty, inasmuch as the Commission, in taking 26 months to give its Decision, failed by a large margin to comply with the rules of good administration;

(III) infringement of Article 93 (2) of the Treaty, inasmuch as the Commission failed to comply with the period of two months to initiate the procedure laid down in that provision;

(IV) infringement of Article 190 of the Treaty, inasmuch as the Commission gave reasons for its Decision that were inadequate or, at least, incomprehensible or contradictory, or both;

(V) infringement of Article 92 (1) of the Treaty, inasmuch as the agreement concluded in 1982 does not constitute state aid within the meaning of that provision;

(VI) infringement of Article 92 (1) of the Treaty, inasmuch as the measure granting aid in 1982 does not affect trade or distort competition;

(VII) infringement of Article 92 (3) of the Treaty, inasmuch as the aid in question, contrary to what is stated in the Decision, was linked to a restructuring programme to promote the common interest within the meaning of that Article;

(VIII) infringement of the general principles of law, inasmuch as the requirement of reimbursement contained in the Decision infringes the principles of legal certainty and legitimate expectation.

8. Reference is made to the report for the hearing for a fuller account of the facts of the case and the arguments of the parties, which are mentioned or discussed hereinafter only in so far as is necessary for the reasoning of the Court.

Admissibility

9. According to the Commission, it is not certain that the applicant has a legitimate interest in bringing these proceedings. It was agreed between RSV and the Netherlands Government that the aid would become repayable forthwith and in its entirety in the event of insolvency or suspension of payments. On 9 February 1983 RSV was granted a suspension of payments. It follows that, even if the Commission's Decision were annulled, RSV would be obliged to reimburse the aid in question to the Netherlands Government.

10. That argument cannot be upheld. As the applicant stated in the course of the proceedings, a case is at present pending before the Raad Van State (State Council) of the Netherlands as the result of an action brought by RSV against the Decision of the Netherlands state demanding the reimbursement of certain sums granted to RSV, including a sum of hfl 294 million which is the subject of the contested Decision of the Commission. If RSV were to succeed in its action on the basis of submissions of domestic law in that case, the Commission's Decision would constitute for the Government the sole justification for its request for reimbursement.

11. The applicant therefore has a legitimate interest in bringing these proceedings.

Substance

12. It is appropriate to examine in the first place the second submission whereby the applicant claims that, by waiting 26 months before making the contested Decision, the Commission disregarded the requirements of legal certainty and failed to comply with the rules of good administration. That delay caused RSV, its shareholders and creditors to believe that the sums allocated by way of the aid in question lawfully belonged to that company.

13. According to the Commission, the delay in adopting the Decision was due to its understanding attitude towards the difficulties of RSV. The latter's situation was so complex and the implications of its collapse so serious that it was impossible to take a Decision sooner. It was not until 24 October 1984 that the Commission received from the Netherlands Government concrete information on the cessation of RSV's offshore engineering activities, information which enabled it to form an opinion on the question as a whole.

14. The Commission has given no valid justification for the long time it took to give its Decision. All it has done is to refer to the complexity of the situation of the RSV group and the delay on the part of the Netherlands Government in providing it with the necessary information. It is apparent, however, from the documents before the Court that the aid in question concerned only the supplementary costs of one operation, the cessation of the RSV group's offshore engineering activities, which had already been the subject of aid authorized by the Commission.

15. The situation was therefore known to the Commission and the reasons which caused the costs covered by the aid authorized on 26 March 1981 to be exceeded did not call for deep research. It was mismanagement and unfavourable market conditions which had brought about the cancellation of a contract for the construction of a special kind of dredging platform.

16. It is further apparent from the documents before the Court that the aid in question concerned a sector which since 1977 had been in receipt of aid granted by the Netherlands Government and that that aid was intended to meet additional costs of an operation which had also been in receipt of an authorized aid. The applicant had therefore reasonable grounds for believing that the Commission's doubts no longer existed and that the aid would encounter no objection.

17. It follows that the Commission' s delay in giving the contested Decision could in the case in point establish a legitimate expectation on the applicant' s part so as to prevent the Commission from requiring the Netherlands authorities to order the refund of the aid. Articles 2 and 3 of the Decision of 19 December 1984, from which such a requirement is to be inferred, are therefore unlawful and must be declared void.

18. The unlawfulness of Articles 2 and 3 necessarily affects in the present case, by reason of all the features peculiar to it, the lawfulness of the Decision as a whole.

19. On those grounds the contested Decision must be declared void without there being any need to consider the applicant's other submissions.

Costs

20. Under Article 69 (2) of the rules of procedure the unsuccessful party is to be ordered to pay the costs. As the Commission has been unsuccessful in its submissions it must be ordered to bear

The costs

THE COURT

Hereby:

(1) declares void Commission Decision 85-351 of 19 December 1984 concerning aid granted by the Netherlands Government to an engineering undertaking;

(2) orders the Commission to bear the costs.