CJEU, 1st chamber, April 14, 2011, No C-331/09

THE COURT OF JUSTICE OF THE EUROPEAN UNION (First Chamber)

Judgment

1 By its application, the Commission of the European Communities seeks a declaration from the Court that, by failing to comply with its obligations under Commission Decision 2008-344-EC of 23 October 2007 on State Aid C 23-06 (ex NN 35-06) which Poland has implemented for steel producer Technologie Buczek Group (OJ 2008 L 116, p. 26), the Republic of Poland has failed to comply with the provisions of the fourth paragraph of Article 249 EC and Articles 3, 4 and 5 of that decision.

Legal context

2 Recital 13 in the preamble to Council Regulation (EC) No 659-1999 of 22 March 1999 laying down detailed rules for the application of Article [88] of the EC Treaty (OJ 1999 L 83, p. 1) is worded as follows:

'Whereas in cases of unlawful aid which is not compatible with the common market, effective competition should be restored; whereas for this purpose it is necessary that the aid, including interest, be recovered without delay; whereas it is appropriate that recovery be effected in accordance with the procedures of national law; whereas the application of those procedures should not, by preventing the immediate and effective execution of the Commission decision, impede the restoration of effective competition; whereas to achieve this result, Member States should take all necessary measures ensuring the effectiveness of the Commission decision'.

3 Article 14(3) of Regulation No 659-1999 states:

'Without prejudice to any order of the Court of Justice of the European Communities pursuant to Article [242] of the Treaty, recovery shall be effected without delay and in accordance with the procedures under the national law of the Member State concerned, provided that they allow the immediate and effective execution of the Commission's decision. To this effect and in the event of a procedure before national courts, the Member States concerned shall take all necessary steps which are available in their respective legal systems, including provisional measures, without prejudice to Community law.'

4 Under Article 23(1) of that regulation:

'Where the Member State concerned does not comply with conditional or negative decisions, in particular in cases referred to in Article 14, the Commission may refer the matter to the Court of Justice of the European Communities direct in accordance with Article [88(2)] of the Treaty.'

Background to the dispute

5 By Article 1 of Decision 2008-344, notified to the Republic of Poland on 24 October 2007, the Commission declared that the measures taken by the Republic of Poland in favour of the Technologie Buczek Group ('TBG') constitute State aid incompatible with the common market ('the aid at issue').

6 At the material time, TBG operated in the steel production sector as a manufacturer of tubes and was composed of Technologie Buczek SA ('TB'), which owned several subsidiaries, two of which, according to the Commission, were also beneficiaries of the aid in question, namely Buczek Automotive sp. z.o.o. ('BA') and Huta Buczek sp. z.o.o ('HB').

7 The aid at issue received by TBG consisted in the non-enforcement of public debt held by several public creditors, in particular the social security authority, Sosnowiec municipality, where TBG's head office was situated, and the State Fund for the Rehabilitation of Disabled Persons.

8 The first five articles of the operative part of Decision 2008-344 are worded as follows:

'Article 1

The State Aid of PLN 20 761 643 unlawfully awarded by Poland to [TBG] is in breach of Article 88(3) of the Treaty and is incompatible with the common market.

Article 2

The State Aid of PLN 1 369 186 awarded by Poland to [TBG] between 1997 and 2003 has not been used in accordance with the conditions stipulated in Protocol No 8 to the Accession Treaty and is therefore incompatible with the common market.

Article 3

1. Poland shall recover the aid referred to in Article 1 unlawfully made available to [TBG] in particular from the subsidiaries [HB] and [BA], in proportion to the benefit actually obtained by them. Accordingly, Poland shall recover PLN 13 578 115 from [HB] and PLN 7 183 528 from [BA].

2. Poland shall recover the misused aid referred to in Article 2 awarded to [TB] from [TBG].

3. The amounts to be recovered shall bear interest from the date on which they were made available to the recipient until their actual recovery.

4. Interest shall be calculated on a compound basis in accordance with Chapter V of Commission Regulation (EC) No 794-2004 of 21 April 2004 implementing Council Regulation (EC) No 659-1999 laying down detailed rules for the application of Article [88] of the EC Treaty ...

Article 4

1. Recovery of the aid referred to in Articles 1 and 2 shall be immediate and effective.

2. Poland shall ensure that this Decision is implemented within four months of the date of notification thereof.

Article 5

1. Within two months of notification of this Decision, Poland shall submit the following information to the Commission:

(a) the total amount (principal and interest) to be recovered from the recipients;

(b) a detailed description of the measures already taken and planned with a view to complying with this Decision;

(c) documents demonstrating that the recipients have been ordered to repay the aid.

2. Poland shall keep the Commission informed of the progress of the national measures taken to implement this Decision until recovery of the aid referred to in Articles 1 and 2 has been completed in full. It shall immediately submit, at the request of the Commission, information on the measures already taken and planned with a view to complying with this Decision. It shall also provide detailed information concerning the amounts of aid and interest already recovered from the recipient.'

9 On the date on which Decision 2008-344 was adopted, TB was the subject of insolvency proceedings, the declaration of insolvency being delivered on 16 August 2006. However, BA was declared insolvent on 25 June 2008, and HB on 29 April 2009, that is after the expiry of the period prescribed in Article 4 of that decision.

10 On 8 January 2008, TB, BA and HB brought actions before the Court of First Instance of the European Communities (now 'the General Court') seeking the annulment of Decision 2008-344 (registered respectively under numbers T-465-07, T-1-08, and T-440-07). In parallel with their actions, HB and BA applied to the President of the Court for a suspension of operation of that decision. On 13 February 2008, the President of the Court ordered the suspension of operation of the decision pending a final decision on the interim measures. By two orders of 14 March 2008 in Case T-1-08 R Buczek Automotive v Commission and Case T-440-07 R Huta Buczek v Commission, the President of the Court rejected the applications for interim measures brought by BA and HB respectively.

11 On 18 March 2008, the Republic of Poland intervened in support of the forms of order sought by HB and BA and asked the Court to annul Decision 2008-344.

12 As regards the enforcement measures taken by the Polish authorities following that decision, the Republic of Poland, by letter of 25 January 2008, indicated to the Commission several bodies which were responsible for recovery of the aid at issue from the beneficiaries, without however stating the amounts of aid which could be recovered from HB and BA. Relying on difficulties arising from the fact that that aid had been made available to the beneficiaries before the accession of that Member State to the European Union, the Republic of Poland relied, in particular, on the need for an additional period for the recovery of the aid at issue, on the ground that it was necessary to search for and, possibly, to reproduce the relevant documents. Furthermore, in the same letter, the Polish authorities asked whether, in accordance with Decision 2008-344, it was possible to recover the major part of the aid from TB in the insolvency proceedings and to claim from HB and BA only the repayment of the remaining sum.

13 In its response to that letter of 13 February 2008, the Commission objected to that means of recovery of the aid at issue on the ground that it did not accord with the content of Decision 2008-344.

14 By letter of 22 February 2008, the Polish authorities again raised serious legal and practical difficulties in recovering the aid at issue and requested an extension until 30 June 2008 of the period prescribed for the implementation of that decision.

15 In that connection, in a letter of 7 March 2008, they relied on technical difficulties related to the search for the original documents which were the basis on which the aid at issue was granted. From a legal point of view, they claimed that there was a risk of 'double repayment' of the aid by TB and its subsidiaries. According to the Republic of Poland, such a risk arises from the absence of a legal basis enabling administrative bodies to abandon the debts owed to them by TB which the liquidator is required to repay, including amounts which should be recovered from TB's subsidiaries, which were in fact the beneficiaries of the aid at issue. Moreover, if those debts were repaid, there would no longer be any legal basis in Polish insolvency law enabling TB to recover from its subsidiaries the sums paid by it.

16 In its response of 4 April 2008, the Commission, while regretting that no solution to the problem of 'double repayment' had been proposed by the Polish authorities, suggested a provisional application of Decision 2008-344, by which a blocked bank account would be opened into which the actual beneficiaries of the aid at issue would pay the amounts specified in that decision, plus the applicable interest, but made that possibility subject to the condition that the Polish authorities guaranteed that the liquidator of TB would bring a recovery action against HB.

17 By letter of 13 June 2008, the Polish authorities informed the Commission that, during April 2008, the liquidator responsible for the winding up of TB had distributed certain assets, the total sum recovered at that date from TB being approximately PLN 13 million, and repeated that the obligation to repay the aid which TB had received was based on Polish insolvency law. They also informed the Commission of the additional amounts that certain public creditors were to recover from HB and BA.

18 In its letter of 18 July 2008, the Commission requested a detailed report on the state of the actual recovery of the aid at issue, putting a series of specific questions about the amounts claimed by the various creditors. As regards the matter of 'double repayment', the Commission insisted that, whatever the solution envisaged by the Polish authorities, it was not to infringe the obligations clearly set out in Decision 2008-344, and warned the Republic of Poland that if it did not implement that decision the Commission could initiate a procedure under Article 88(2) EC.

19 By letter of 5 September 2008, the Polish authorities informed the Commission of the fact that TB's winding up had been suspended after an action had been brought challenging the distribution plan. With respect to TB's subsidiaries, one body has brought an action against them, but as that application for an enforcement order did not fulfil the formal requirements no decision could be made in that regard. In that letter, the Republic of Poland also requested a meeting between its representatives and those of the Commission.

20 It its reply of 29 October 2008, the Commission again reminded that Member State of the possibility of initiating a procedure under Article 88(2) EC. The Commission put further questions, but made the possibility of such a meeting subject to the prior submission by the Republic of Poland of a proposed solution to the problem of 'double repayment'.

21 In their letter of 22 December 2008, the Polish authorities informed the Commission that the amount of aid to be recovered from TB was higher than the amount communicated to it during the drafting of Decision 2008-344, and that they were going to recover the higher amount. Furthermore, they informed the Commission that a Polish court had given a judgment concerning BA's insolvency. The Polish authorities announced, first, the organisation of a meeting with the various bodies granting aid, in order to discuss the issue of 'double repayment' and, second, the communication of further information in that regard. They attached a copy of the statements of claims from all the creditors in respect of TB's assets and they announced the communication of a proposal in January 2009.

22 In their letter of 30 January 2009, the Polish authorities proposed the repayment of TB's debts with respect to the public bodies existing on 31 December 2004, including interest accruing up to 15 August 2006, that is the day before TB was declared insolvent, out of its insolvency assets, in accordance with the national provisions on the delay of payment of debts contracted with public bodies. On the other hand, neither HB nor BA are liable for the abovementioned debts, but they will repay the economic advantage obtained from the non-recovery of the debts, in other words 'equivalent aid', corresponding to the difference between the interest actually paid by those companies and the interest they should have been charged under market conditions, taking account in particular of their difficult position. Apart from the so-called 'equivalent aid', HB and BA will pay interest on that equivalent, calculated, in BA's case, for the period from 1 January 2005 until 24 June 2008, which is the day preceding the declaration of its insolvency, and, in HB's case, until the date of payment.

23 According to the Polish authorities, that proposal thus provided for the recovery of a sum of PLN 22 130 829, including late payment interest, of which PLN 13 491 124.77 had already been repaid, so that PLN 7 789 272.01 remained outstanding, which, taking account of the amounts owed by HB and BA, exceeded the amounts to be recovered set out in Decision 2008-344.

24 The Commission challenged that calculation and stated that, in its view, the total amount to be recovered from TB was PLN 14 570 608.06. As regards the two other companies, PLN 180 678.22 was to be recovered from HB and BA: PLN 118 162.55 from HB and PLN 62 514.67 from BA, to all of which interest would have to be added.

25 Consequently, by letter of 27 February 2009, the Commission's staff again reminded the Republic of Poland that those measures were contrary to the provisions of Decision 2008-344 in so far as the main burden of repayment of the aid at issue continued to be placed on TB and not, as the decision stated, on HB and BA. In the same letter, the Commission also underlined that it had already rejected the possibility of partial recovery from TB of the aid which was to be recovered from HB and BA, so that measures would be taken in order to initiate a procedure under Article 88(2) EC.

26 On 26 October 2009, the Polish authorities sent the Commission a letter in which they informed it that winding up proceedings had been opened against HB and the statements of claims made by all the creditors in accordance with Decision 2008-344, to enable them to be paid off in the insolvency proceedings against HB and BA.

27 Following that exchange of letters and various other reminders, the Commission, taking the view that the Republic of Poland had still not properly implemented Decision 2008-344, decided to bring the present action.

The action

Arguments of the parties

28 The Commission bases its action on the failure to immediately and effectively implement Decision 2008-344, in accordance with Articles 3 and 4 thereof, which provide for a period of four months from the date of its notification to recover the aid at issue. It claims, in that regard, that, more than 21 months after the date of reception of that decision by the Republic of Poland, no aid had been repaid by HB and BA and, in any event, the Commission has not been informed, in accordance with Article 5 of that decision, of the steps taken by that Member State. As a subsidiary point, the Commission relies on the fact that TB has repaid only part of the total amount to be recovered from TBG. Finally, it submits that the Republic of Poland has not pleaded exceptional circumstances which would have prevented it from properly implementing that decision.

29 As regards the failure to implement Decision 2008-344 immediately and effectively, the Commission states that, more than 21 months after the date of reception of Decision 2008-344 by the Republic of Poland, the aid granted to BA and HB had not yet been recovered, so that the latter continue to benefit from the advantage conferred by that aid. For the Commission to consider that the advantage conferred on BA has been eliminated, it would be necessary, according to settled case-law and paragraph 64 of the Notice from the Commission of 15 November 2007, entitled 'Towards an effective implementation of Commission decisions ordering Member States to recover unlawful and incompatible State aid' (OJ 2007 C 272, p. 4) ('the 2007 Notice'), for the State aid to be repaid by BA to be registered in its insolvency proceedings, which, according to the information available to the Commission, is not the case.

30 Furthermore, according to the Commission, it seems that certain amounts remain undetermined, even though the sums to be recovered from all the beneficiaries are clearly indicated in Decision 2008-344, and that their amount was fixed on the basis of information transmitted by the Polish authorities themselves. Since the Commission has received information relating to an attempt by the creditors to directly recover the aid from HB and BA in only one case, the obligation to recover the amounts fixed in that decision from HB and BA has not been complied with. Furthermore, the Commission's staff have received contradictory information as to the amount of the debts likely to be registered in TB's insolvency proceedings.

31 Finally, the Commission recalls that since bringing an action for annulment under the second paragraph of Article 230 EC does not have suspensive effect on the obligation to implement Decision 2008-344 and, therefore, on the obligation to obtain the repayment of the aid held to be unlawful and incompatible, that decision must be implemented notwithstanding the existence of that action in the absence of a decision of the General Court, under Article 242 EC, ordering the suspension of operation of the decision which required the recovery of the aid at issue.

32 As far as concerns the effective implementation of Decision 2008-344, the Commission, relying in particular on Case 106-77 Simmenthal [1978] ECR 629, paragraphs 17, 18 and 21 to 24, and Case C-119-05Lucchini [2007] ECR I-6199, paragraphs 60 to 62, submits that it is the provisions of Polish insolvency law which have caused the substantial delay in the recovery of the aid at issue and have therefore prevented the immediate implementation of that decision. Although it is true that the Polish authorities raised the issue of 'double repayment' in their correspondence with the Commission at an early stage in the proceedings they have not, however, proposed any solution to the problem which has enabled the effective implementation of that decision. The effect of the proposals made by the Polish authorities is to place the burden of reimbursement primarily on TB and not on HB and BA, which is contrary to the provisions of Decision 2008-344 relating to the body which must bear the economic weight of the recovery of the aid at issue, and does not restore competitive conditions.

33 The Commission also submits that the Polish authorities have not provisionally implemented the decision by giving the beneficiaries of the aid the possibility to pay the corresponding amounts into a blocked bank account as it had suggested. Consequently, even if the Republic of Poland has encountered difficulties in the implementation of Decision 2008-344, the fact remains that it has not discharged its obligation to suggest reasonable alternatives, it has not followed the suggestion to provisionally implement that decision, and it has not acknowledged the fact that the Commission has clearly rejected the possibility of recovering from TB the amounts of aid at issue which are to be repaid by its subsidiaries.

34 Concerning the complaint alleging the absence of exceptional circumstances which would have prevented the Republic of Poland from properly implementing Decision 2008-344, the Commission recalls that, in order to justify the non-implementation of a decision ordering the repayment of aid, the Member State concerned may only put forward arguments showing the absolute impossibility of implementing that decision. Where a Member State encounters unforeseen and unforeseeable difficulties in implementing a decision or becomes aware of consequences overlooked by the Commission, it is required, in accordance with paragraph 28 of the 2007 Notice, to submit those problems for consideration to the Commission, together with proposals for suitable amendments. In such a case, the Commission and the Member State must, pursuant to the principle of loyal cooperation inspired by in particular Article 10 EC, work together in good faith to overcome the difficulties whilst fully observing the EC Treaty provisions and, in particular, those relating to aid.

35 The Commission, referring, first, to the settled case-law of the Court and, second, to paragraph 29 of the 2007 Notice, submits that, although it is true that the Polish authorities have encountered technical and legal difficulties, they have not pleaded 'absolute impossibility' of implementing Decision 2008-344. The criterion of absolute impossibility is not fulfilled where the Member State concerned relies on legal, political or practical reasons preventing it from implementing the relevant decision without also having attempted to recover the aid or submitting to the Commission reasonable alternatives for implementing that decision and which would overcome those difficulties. In the present case, the Polish authorities have not proposed any satisfactory solution in order to resolve the problem of 'double repayment'.

36 The Republic of Poland contends, first of all, that at the time its defence was drafted, all the debtors with respect to the aid at issue, that is TB, HB and BA, were subject to insolvency proceedings and that since all the creditors having claims relating to the State aid defined in Decision 2008-344 had declared their debts in order to be paid off in the various proceedings. That Member State submits that it communicated to the Commission all the information necessary related to those insolvency proceedings, so that it could reasonably be argued that that decision had already been fully implemented in accordance with its contents.

37 The Republic of Poland submits that that conclusion is not affected by the fact that the entire sum indicated in Decision 2008-344 has not been recovered, since all the claims have been declared in respect of the assets of all the debtors mentioned by the Commission and which are subject to insolvency proceedings, the pursuit of repayment of the aid at issue must be undertaken in accordance with national law in the ongoing insolvency proceedings. That argument is based on the wording of Article 14(3) of Regulation No 659-1999, according to which the recovery is to be effected in accordance with the procedures under the national law.

38 The Polish authorities also observe that, even if the payments already made up to the present were not regarded as a repayment of the aid at issue, that should not affect the finding that Decision 2008-344 has been implemented on account of the claims of the creditors in the various ongoing insolvency proceedings, a finding which is supported by paragraph 64 of the 2007 Notice.

39 The Republic of Poland also challenges the Commission's position concerning 'double repayment', maintaining that it has presented the problems connected with the implementation of Decision 2008-344 not as making recovery of the aid at issue impossible, but as meaning that it would be repaid twice, which might result in insolvency proceedings being opened against undertakings which have paid the market price for the assets acquired, and which have not therefore obtained any advantage from the aid made available to TB. That issue corresponds to the subject-matter of the proceedings before the General Court, in which the Republic of Poland set out in detail the reason why, in its view, the Commission has committed an error in extending the responsibility for the recovery of the aid to third parties, that is to HB and BA.

40 According to the Republic of Poland, the proposal sent to the Commission on 25 January 2008 intended to avoid a situation in which, first, the liquidator of TB's assets, having sufficient resources to pay off all of the debts declared, could not refuse the payment of debts which had been declared to him in the insolvency proceedings with respect to that company, even though that payment would have no effect on the obligation to recover the same amounts from HB and BA. That Member State relies, in that regard, on the order in Huta Buczek v Commission, which confirms above all the possibility, with regard to European Union law, to implement Decision 2008-344 in accordance with that proposal from the Polish authorities.

41 Furthermore, the Republic of Poland takes the view that the Commission's complaint relating to the failure to implement Decision 2008-344 within the period provided for in Article 4(2) thereof is unfounded, since it has not fixed the time-limit for the implementation of that decision. It cannot be held that the expiry of the period of four months, calculated from the adoption of that decision, constitutes a time-limit for its implementation. That period, mentioned in paragraph 42 of the 2007 Notice, does indeed state the need to implement such a Commission decision as soon as possible, but it cannot be binding. Given the particular circumstances of the present case, the Commission should have fixed another period which could be regarded as binding, which it failed to do.

42 In answer to those arguments, the Commission, in its reply, maintains all the arguments set out in its application. In addition, it claims that any document submitted to the Court or to the Commission after the application was lodged on 17 August 2009 must, in any event, be regarded as irrelevant for the assessment of the Republic of Poland's failure to full its obligations.

43 Furthermore, the Commission challenges the Republic of Poland's argument that it did not fix a time-limit for the implementation of Decision 2008-344. Basing its argument on paragraph 53 of the judgment in Joined Cases C-485-03 to C-490-03 Commission v Spain [2006] ECR I-11887, it submits that the time-limits result clearly from that decision, that they were appropriate for the purpose of the assessment of the failure to fulfil obligations.

44 The Commission also takes the view that the Republic of Poland refers to information and events after the application was lodged which, moreover, shows only the declaration of claims in respect of the assets and not their recovery.

45 Finally, the Commission submits that, according to established practice based on paragraphs 66 and 67 of the 2007 Notice, where aid is recovered from an insolvent beneficiary, the national authorities responsible for the execution of the recovery decision must appeal any decision by the insolvency administrator or the insolvency court to allow a continuation of the insolvent beneficiary's activity beyond the time-limits set in the decision ordering that recovery. The national courts, when faced with such a situation, should take into account the need to ensure that the immediate and effective execution of the decision concerned. Consequently, the Commission takes the view that the latter must not allow the continuation of the insolvent beneficiary's activity in the absence of full recovery of the aid at issue. In addition, where a continuation plan is proposed to the creditors' committee, the national authorities could only support that plan if it were conceived in such a manner that the aid was repaid in full within the period prescribed by the decision which ordered the recovery.

46 The Republic of Poland, in its rejoinder, maintains its arguments that the Commission's application should be rejected in full.

47 Furthermore, that Member State reiterates that it provided the Commission with all the necessary information, even if it did so by means of its defence. Since, in its reply, the Commission did not claim that certain information, including HB's declaration of insolvency, raised new circumstances or facts which were not previously known, its assertion that the information communicated is irrelevant for the purposes of the present case, on the ground that that communication was made after the date on which the application was lodged, is unfounded, because that information was known to the Commission at that date.

48 Furthermore, the Republic of Poland claims that the date 17 August 2009, indicated by the Commission as being the date on which the period for implementing Decision 2008-344 expired, takes absolutely no account of the particular circumstances linked to its implementation, as such a date must be regarded as the date on which the Commission completed the drafting of its application.

Findings of the Court

The infringement of Articles 3 and 4 of Decision 2008-344

49 The Republic of Poland takes the view that the Commission did not prescribe a period for the implementation of Decision 2008-344. Since the period of four months, calculated from the date of its notification, cannot be binding, the expiry of such a period cannot be regarded as constituting a time-limit for the implementation of that decision.

50 In that connection, it must be recalled that the relevant date for the assessment of a failure to fulfil obligations brought pursuant to the second paragraph of Article 88(2) EC can be, contrary to the Republic of Poland's assertions and because that provision does not provide for a pre-litigation phase in contrast to Article 226 EC and therefore the Commission does not issue a reasoned opinion allowing Member States a certain period within which to comply with its decision, when the former provision is applied the reference period, only that provided for in the decision failure to implement which is denied or, where appropriate, that subsequently fixed by the Commission (Case C-378-98 Commission v Belgium [2001] ECR I-5107, paragraph 26; Case C-499-99 Commission v Spain [2002] ECR I-6031, paragraph 28; Case C-207-05Commission v Italy [2006] ECR I-70, paragraph 31; and Case C-232-05 Commission v France [2006] ECR I-10071, paragraph 32).

51 In the present case, Article 4(2) of Decision 2008-344 imposes a period of four months from the date of notification thereof in order to enable the Republic of Poland to take the measures necessary to recover the aid at issue. Therefore, that period, in the absence of a new period fixed by the Commission, must be regarded as relevant for the assessment of the failure to fulfil obligations complained of.

52 However, the President of the Court, by orders of 13 February 2008, suspended the execution of Decision 2008-344 at the request of BA and HB until the adoption of orders putting an end to the interim proceedings. By the two orders Buczek Automotive v Commission and Huta Buczek v Commission, the President of the Court dismissed the requests for interim relief brought by BA and HB which enables the period prescribed in Article 4(2) of Decision 2008-344 to be extended as far as concerns BA and HB.

53 That being said, it must be stated that, on the expiry of that period, the actions brought by the Polish authorities had not led to a recovery of the aid at issue from the beneficiaries of that aid.

54 In that connection, it must be recalled, as the Commission argued, that recovery of unlawful aid is the logical consequence of the finding that it is unlawful and that consequence cannot depend on the form in which the aid was granted (see, in particular, Case C-183-91 Commission v Greece [1993] ECR I-3131, paragraph 16; Commission v Portugal [2000] ECR I-4897, paragraph 38; and Case C-507-08 Commission vSlovakia [2010] ECR I-0000, paragraph 42).

55 Consequently, the Member State to which a decision requiring recovery of illegal aid is addressed is obliged under Article 249 EC to take all measures necessary to ensure implementation of that decision (see Case C-209-00 Commission v Germany [2002] ECR I-11695, paragraph 31; Case C-404-00 Commission v Spain [2003] ECR I-6695, paragraph 21; and Case C-232-05 Commission v France, paragraph 42). This must result in the actual recovery of the sums owed (see, to that effect, Case C-415-03 Commission v Greece [2005] ECR I-3875, paragraph 44, and Commission v France, paragraph 42).

56 Furthermore, it is settled case-law that the obligation on a Member State to abolish aid found by the Commission to be incompatible with the common market is to restore the previous situation on the European Union market (Case C-350-93 Commission v Italy [1995] ECR I-699, paragraph 21, and Case C-75-97 Belgium v Commission [1999] ECR I-3671, paragraph 64). As long as the aid is not recovered, the beneficiary of the aid is able to keep funds deriving from the aid declared incompatible and to benefit from the resulting unfair competitive advantage (Commission v France, paragraph 47).

57 Thus a Member State which, pursuant to a decision of the Commission, is obliged to recover unlawful aid is free to choose the means of fulfilling that obligation, provided that the measures chosen do not adversely affect the scope and effectiveness of Union law (Case C-209-00 Commission v Germany, paragraph 34; Case C-210-09 Scott and Kimberly Clark [2010] ECR I-0000, paragraph 21; and Commission vSlovakia, paragraph 51).

58 The Court has also held that a Member State can fulfil such an obligation to recover only if the measures adopted by it are appropriate for the purpose of establishing the normal conditions of competition which were distorted by the grant of the unlawful aid the recovery of which has been ordered by a Commission decision (see, Case C-209-00 Commission v Germany, paragraph 35, and Scott and Kimberly Clark, paragraph 22).

59 Furthermore, in accordance with Article 14(3) of Regulation No 659-99, recovery of unlawful aid imposed by a Commission decision is to be effected without delay and in accordance with the procedures under the national law of the Member State concerned, provided that they allow the immediate and effective execution of the Commission decision.

60 However, it must be recalled that, as follows from the case-law on bankrupt undertakings that have received aid, the restoration of the previous situation and the elimination of the distortion of competition resulting from the unlawfully paid aid may, in principle, be achieved by registration of the liability relating to the repayment of the aid in question in the schedule of liabilities (Case 52-84 Commission v Belgium[1986] ECR 89, paragraph 14; Case C-142-87 Belgium v Commission ('Tubemeuse') [1990] ECR I-959, paragraphs 60 to 62; and Case C-277-00 Commission v Germany [2004] ECR I-3925, paragraph 85).

61 It is in the light of those principles that the Republic of Poland's arguments must be assessed.

62 In the first place, that Member State claims that all the debtors which received the aid at issue were the subject of insolvency proceedings and that all the creditors having debts relating to that aid registered their debts in order to be paid off in the various proceedings. The Commission was informed by the Polish authorities of the declaration of insolvency concerning those debtors and the relevant statements of claims, so that Decision 2008-344 was fully implemented in accordance with its content.

63 In that connection, it must be stated that, as far as concerns the insolvency proceedings, on the date of expiry of the period prescribed in Article 4(2) of Decision 2008-344 and taking account of its extension by the suspension of operation of that decision granted by the President of the General Court, only TB was the subject of insolvency proceedings as the declaration of insolvency being made on 16 August 2006. The declarations of insolvency regarding BA and HB, were made on 25 June 2008 and 29 April 2009 respectively, that is after the expiry of that period.

64 It follows that, on the date on which the period expired, the Republic of Poland had not provided the documents enabling the Commission to conclude that TBG was insolvent and had definitively and completely ceased its activity, so that the mere registration of the debts relating to the repayment of the aid in the schedule of liabilities of those companies in the group could suffice in order to comply with Decision 2008-344.

65 Therefore, as regards BA and HB, the case-law on bankrupt undertakings which have received aid is not applicable so that the registration of those debts after the expiry of the period mentioned above does not constitute proper implementation by the Republic of Poland of its obligations under Articles 4 and 5 of Decision 2008-344.

66 As far as concerns TB, it must be held that by letter of 13 June 2008, the Republic of Poland informed the Commission that in April 2008 PLN 13 million had been recovered from TB, such a recovery having been made pursuant to Decision 2008-344.

67 In that regard, even assuming that sum could be regarded as recovery of the aid at issue pursuant to Decision 2008-344, the fact remains that it does not correspond to the amounts to be recovered as set down in that decision.

68 In the second place, as far as concerns the facts relied on by the Republic of Poland in order to justify the failure to implement Decision 2008-344 and, therefore, the failure to recover the unlawful aid granted to TBG, that Member State claims that the delay in its recovery is for the most part due to the joint application of the provisions of Polish procedural law on insolvency and those of that decision, which would have led a risk of double repayment of the debts. Furthermore, it raises other legal, political and practical difficulties caused by the implementation of that decision.

69 In that connection, it must be recalled that according to settled case-law, the only defence available to a Member State in opposing an application by the Commission under Article 88(2) EC for a declaration that it has failed to fulfil its obligations is to plead that it was absolutely impossible for it properly to implement the decision (see Case C-214-07 Commission v France [2008] ECR I-8357, paragraph 44, and Commission vSlovakia, paragraph 43).

70 It follows from the same case-law, that the condition that it be absolutely impossible to implement a decision is not fulfilled where the defendant Member State merely informs the Commission of the legal, political or practical difficulties involved in implementing the decision, without taking any real steps to recover the aid from the undertakings concerned, and without proposing to the Commission any alternative arrangements for implementing the decision which could have enabled those difficulties to be overcome (see, inter alia, Joined Cases 485-03 to C-490-03 Commission v Spain, paragraph 74, and Case C-214-07Commission v France, paragraph 46).

71 In the present dispute, it must be stated that the Republic of Poland, although it has pleaded 'serious difficulties', 'problems' and 'major obstacles' encountered in implementing Decision 2008-344, itself explained, in its written submissions, that it does not regard the existing problems as making impossible recovery of the aid at issue.

72 It must also be pointed out that apprehension of internal difficulties in the course of implementing a decision on State aid cannot justify a failure by a Member State to comply with its obligations under Community law (see, to that effect, in particular, Case C-52-95 Commission v France [1995] ECR I-4443, paragraph 38; Case C-265-95 Commission v France [1997] ECR I-6959, paragraph 55; Case C-280-95 Commission v Italy, paragraph 16; and Case C-441-06 Commission v France [2007] ECR I-8887, paragraph 43).

73 It follows from the foregoing that it must be held that, on the expiry of the period prescribed in Article 4(2) of Decision 2008-344 and, as regards BA and HB, taking account of its extension on account of the suspension of operation of that decision by the President of the General Court in the interim proceedings, the actions undertaken by the Polish authorities did not lead to an effective recovery of the aid at issue and, consequently, the normal conditions of competition have not been restored.

The infringement of Article 5 of Decision 2008-344

74 The Court does not need to examine the head of claim based on Article 5 of Decision 2008-344 and seeking a declaration that the Republic of Poland has failed to inform the Commission of the measures taken and to be taken in order to implement the decision, since the Member State did not in fact implement the decision within the prescribed period (see, inter alia, Case C-177-06 Commission v Spain [2007] ECR I-7689, paragraph 54 and Case C-214-07 Commission v France, paragraph 67).

75 Therefore, it must be held, that, by failing to take, within the period prescribed, all the measures necessary to ensure the implementation of Decision 2008-344, the Republic of Poland has failed to fulfil its obligations under the fourth paragraph of Article 249 EC and Articles 3 and 4 of that decision.

Costs

76 Under Article 69(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party's pleadings. Since the Commission has applied for costs to be awarded against the Republic of Poland and the latter has been unsuccessful, the Republic of Poland must be ordered to pay the costs.

On those grounds, the Court (First Chamber) hereby:

1. Declares that, by failing to take, within the period prescribed, all the measures necessary to implement Commission Decision 2008-344-EC of 23 October 2007 on State Aid C 23-06 (ex NN 35-06) which Poland has implemented for steel producer Technologie Buczek Group, the Republic of Poland has failed to comply with the provisions of the fourth subparagraph of Article 249 EC and Articles 3 and 4 of that decision;

2. Orders the Republic of Poland to pay the costs.