Case T-33/09

Portuguese Republic

European Commission

(Non-compliance with a judgment of the Court of Justice establishing a failure to fulfil obligations – Penalty payment – Claim for payment – Repeal of the legislation at issue)

Summary of the Judgment

1. Procedure – Division of jurisdiction between the Court of Justice and the General Court – Action for annulment brought by a Member State against a decision of the Commission fixing the amount of the penalty payment due pursuant to a judgment of the Court of Justice

(Arts 225(1), first para., EC, 228(2) EC and 230 EC)

2. Actions for failure to fulfil obligations – Judgment of the Court of Justice finding a breach of the obligation to comply with a judgment and imposing a penalty – Competence of the Commission to calculate the penalty payment determined by the Court of Justice – Limits

(Arts 226 EC to 228 EC)

1. The EC Treaty does not make any specific provision regarding the settlement of disputes that would arise between a Member State and the Commission when recovering amounts that are due to the budget of the European Union pursuant to a judgment given by the Court of Justice under Article 228(2) EC, ordering a Member State to pay a penalty to the Commission.

It follows that the remedies established by the EC Treaty apply and that the decision, by which the Commission determines the amount due from the Member State in terms of the penalty payment which it has been ordered to make, can be the subject of an action for annulment pursuant to Article 230 EC. Therefore, the General Court has jurisdiction to hear and determine such an action, in accordance with the provisions of the first subparagraph of Article 225(1) EC.

However, in exercising such jurisdiction, the General Court cannot impinge on the exclusive jurisdiction reserved to the Court of Justice under Articles 226 EC and 228 EC. The General Court may not rule, therefore, in the context of an action for annulment based on Article 230 EC and brought against a decision of the Commission relating to the enforcement of such a Court of Justice judgment, on a question relating to the infringement by the Member State of its obligations under the EC Treaty that has not been previously decided by the Court of Justice.

(see paras 62-67)

2. In the context of enforcing a judgment of the Court of Justice imposing a penalty payment on a Member State, the Commission must be able to assess the measures adopted by the Member State to comply with the judgment of the Court of Justice in order, inter alia, to prevent the Member State which has failed to fulfil its obligations from simply taking measures that, in reality, have the same content as those that were the subject of the judgment of the Court of Justice. However, the exercise of that power of appraisal can prejudice neither the rights – and in particular the procedural rights – of the Member States, as they result from the procedure set out in Article 226 EC, nor the exclusive jurisdiction of the Court of Justice to rule on the compliance of national legislation with Community law. The rights and duties of Member States may be determined and their conduct appraised only by a judgment of the Court of Justice under Articles 226 EC to 228 EC. Consequently, the Commission is not entitled to decide, in such a context, that the measures taken by a Member State to comply with a judgment do not comply with Community law, to draw conclusions from this for the calculation of the penalty payment determined by the Court of Justice. If it considers that the new system of rules introduced by a Member State does not yet constitute a correct transposition of a directive, the Commission must initiate the procedure provided for in Article 226 EC.

(see paras 81-82, 88-89)

JUDGMENT OF THE GENERAL COURT (Third Chamber)

29 March 2011 (*)

(Non-compliance with a judgment of the Court of Justice establishing a failure to fulfil obligations – Penalty payment – Claim for payment – Repeal of the legislation at issue)

In Case T‑33/09,

Portuguese Republic, represented by L. Inez Fernandes and J.A. de Oliveira, acting as Agents,

applicant,

European Commission, represented by M. Konstantinidis, P. Guerra e Andrade and P. Costa de Oliveira, acting as Agents,

defendant,

APPLICATION for annulment of Commission Decision C(2008) 7419 final of 25 November 2008, requiring payment of the penalty payments due pursuant to the judgment of the Court of Justice in Case C-70/06 Commission v Portugal [2008] ECR I‑1,

THE GENERAL COURT (Third Chamber),

composed of J. Azizi, President, E. Cremona and S. Frimodt Nielsen (Rapporteur), Judges,

Registrar: K. Andová, Administrator,

having regard to the written procedure and further to the hearing on 26 October 2010,

gives the following

Judgment

Legal context

1 Under Article 225(1), first subparagraph, EC:

‘The Court of First Instance shall have jurisdiction to hear and determine at first instance actions or proceedings referred to in Articles 230, 232, 235, 236 and 238, with the exception of those assigned to a judicial panel and those reserved in the Statute for the Court of Justice. The Statute may provide for the Court of First Instance to have jurisdiction for other classes of action or proceeding.’

2 Article 226 EC provides:

‘If the Commission considers that a Member State has failed to fulfil an obligation under this Treaty, it shall deliver a reasoned opinion on the matter after giving the State concerned the opportunity to submit its observations.

If the State concerned does not comply with the opinion within the period laid down by the Commission, the latter may bring the matter before the Court of Justice.’

3 Article 228 EC provides:

‘1. If the Court of Justice finds that a Member State has failed to fulfil an obligation under this Treaty, the State shall be required to take the necessary measures to comply with the judgment of the Court of Justice.

2. If the Commission considers that the Member State concerned has not taken such measures it shall, after giving that State the opportunity to submit its observations, issue a reasoned opinion specifying the points on which the Member State concerned has not complied with the judgment of the Court of Justice.

If the Member State concerned fails to take the necessary measures to comply with the Court's judgment within the time-limit laid down by the Commission, the latter may bring the case before the Court of Justice. In so doing it shall specify the amount of the lump sum or penalty payment to be paid by the Member State concerned which it considers appropriate in the circumstances.

If the Court of Justice finds that the Member State concerned has not complied with its judgment it may impose a lump sum or penalty payment on it.

...’

4 Under Article 274, first paragraph, EC:

‘The Commission shall implement the budget, in accordance with the provisions of the regulations made pursuant to Article 279 …’

Background to the dispute

5 By judgment of 14 October 2004 in Case C-275/03 Commission v Portugal, not published in the ECR (‘the 2004 judgment’), the Court of Justice declared that:

‘By failing to repeal Decree-Law No 48 051 of 21 November 1967, making the award of damages to persons harmed by a breach of Community law relating to public contracts, or the national laws implementing it, conditional on proof of fault or fraud, the Portuguese Republic has failed to fulfil its obligations under Article 1(1) and Article 2(1)(c) of Council Directive 89/665/EEC of 21 December 1989 on the coordination of the laws, regulations and administrative provisions relating to the application of review procedures to the award of public supply and public works contracts [OJ 1989 L 395, p. 33].’

6 Taking the view that the Portuguese Republic had not complied with that judgment, the Commission of the European Communities decided to bring a new action for failure to fulfil obligations under Article 228(2) EC for failure to comply with the obligations imposed by the judgment of the Court of Justice.

7 Law 67/2007 of 31 December 2007 adopting the system for the non-contractual civil liability of the State and other public bodies (Lei No. 67/2007 que aprova o regime da responsabilidade civil extracontratual do estado e demais entidades públicas, Diário da República, First Series, No 251 of 31 December 2007) lays down the system for the non-contractual civil liability of the State and other public bodies in the event of damage caused by legislative, judicial or administrative activity, for all matters not provided for in a special law. It also governs, without prejudice to any provisions of a special law, the civil liability of office holders, civil servants and officials in the event of damage caused by their actions or omissions in the performance of administrative or judicial duties that results from such performance, as well as the civil liability of other workers in the service of the bodies covered by that law. Article 5 of Law 67/2007 repeals Decree-Law No 48 051. Law 67/2007 came into force on 30 January 2008.

8 In Case C-70/06 Commission v Portugal [2008] ECR I‑1 (‘the 2008 judgment’), the Court of Justice held:

‘16. In point 1 of the operative part of the [2004 judgment], the Court held that, by failing to repeal Decree-Law No 48 051, the Portuguese Republic had failed to fulfil its obligations under Article 1(1) and Article 2(1)(c) of Directive 89/665.

17. In the context of the present proceedings for failure to comply with obligations, in order to check whether the Portuguese Republic has adopted the measures necessary to comply with the judgment at issue, it needs to be determined whether Decree-Law No 48 051 has been repealed.

18. In that regard, according to settled case‑law, the reference date for assessing whether there has been a failure to fulfil obligations under Article 228 EC is the date of expiry of the period prescribed in the reasoned opinion issued under that provision (see Case C‑304/02 Commission v France [2005] ECR I‑6263, paragraph 30; Case C‑119/04 Commission v Italy [2006] ECR I‑6885, paragraph 27; and Case C‑503/04 Commission v Germany [2007] ECR I‑6153, paragraph 19).

19. In the present case, it is common ground that, on the date of expiry of the period laid down in the reasoned opinion addressed to it on 13 July 2005, the Portuguese Republic had not yet repealed Decree-Law No 48 051.

20. In the light of the above, it must be found that, by failing to adopt the measures necessary to ensure compliance with the [2004 judgment], the Portuguese Republic has failed to fulfil its obligations under Article 228(1) EC.

…

23. [T]he argument of the Portuguese Republic, that State liability for damage caused by acts committed by its officials and agents is already laid down in other provisions of national law, cannot be accepted. As the Court held in paragraph 33 of its [2004 judgment], that fact has no bearing on the failure to fulfil obligations constituted by maintaining Decree-Law No 48 051 in force in the national legal system. The existence of such provisions cannot, therefore, ensure compliance with that judgment.

24. Consequently, it must be found that, by failing to repeal Decree-Law No 48 051 making the award of damages to persons harmed by a breach of Community law relating to public contracts, or the national laws implementing it, conditional on proof of fault or fraud, the Portuguese Republic has failed to adopt the measures necessary to comply with the [2004 judgment] and has thereby failed to fulfil its obligations under Article 228(1) EC.

…

30. Having recognised that the Portuguese Republic has not complied with [the 2004 judgment], the Court may, pursuant to the third subparagraph of Article 228(2) EC, impose a lump sum or penalty payment on it.

31. In that regard, it should be pointed out that it is for the Court to assess in each case, in the light of the circumstances of the case, the financial penalties to be imposed (Case C‑304/02 Commission v France, paragraph 86, and Case C‑177/04 Commission v France [2006] ECR I‑2461, paragraph 58).

32. In the present case … the Commission suggests that the Court should impose a penalty payment on the Portuguese Republic.

…

36. It must be found, in the present case, that, during the hearing at the Court on 5 July 2007, the agent of the Portuguese Republic confirmed that Decree‑Law No 48 051 was still in force on that date.

…

54. In the light of all of the foregoing, it is necessary to order the Portuguese Republic to pay to the Commission, into the account “European Community own resources”, a penalty payment of EUR 19 392 for every day of delay in implementing the measures necessary to comply with the [2004 judgment], from the day of delivery of judgment in the present case until the day on which the [2004 judgment] is complied with.

…

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

1. Declares that, by failing to repeal Decree-Law No 48 051 of 21 November 1967, making the award of damages to persons injured by a breach of Community law relating to public contracts, or the national laws implementing it, conditional on proof of fault or fraud, the Portuguese Republic has failed to adopt the measures necessary to comply with the [2004 judgment] and has thereby failed to fulfil its obligations under Article 228(1) EC;

2. Orders the Portuguese Republic to pay to the Commission of the European Communities, into the account “European Community own resources”, a penalty payment of EUR 19 392 for every day of delay in implementing the measures necessary to comply with the [2004 judgment] from the day on which the Court of Justice delivers judgment in the present case until the day on which the [2004 judgment] is complied with.’

9 On 28 January 2008 a meeting was held between representatives of the Portuguese Republic and representatives of the Commission, during which the scope of Law 67/2007 was discussed. The representatives of the Portuguese authorities argued that, with the approval and publication of Law 67/2007 repealing Decree-Law No 48 051, the Portuguese Republic had taken all the measures necessary to comply with the 2004 judgment. The representatives of the Portuguese Republic also stated that it intended to challenge before the Court of Justice any decision of the Commission relating to the recovery of the amounts due in terms of the penalty payment set by the Court. They also claimed that the Portuguese Republic should at most pay the amounts which might be due only for the period between the date of delivery of the judgment, that is 10 January 2008, and the date when Law 67/2007 entered into force, that is 30 January 2008.

10 The Commission, for its part, contended that, in essence, Law 67/2007 did not constitute an adequate and complete measure to comply with the 2004 judgment.

11 Two other meetings then took place between the parties, at the initiative of the Portuguese Republic, in order to find an amicable settlement to its dispute with the Commission.

12 By letter of 25 April 2008, the Portuguese authorities sent to the Commission draft Law No 210/2008 amending Law 67/2007.

13 In the explanatory memorandum to the draft law, the Portuguese Government justifies the amendment of Law 67/2007 by the need to bring the new system of non-contractual liability of public bodies into line with the Commission’s interpretation of the 2008 judgment and with the system provided for in Council Directive 89/665/EEC of 21 December 1989 on the coordination of the laws, regulations and administrative provisions relating to the application of review procedures to the award of public supply and public works contracts (OJ 1989 L 395, p. 33) and Council Directive 92/13/EEC of 25 February 1992 coordinating the laws, regulations and administrative provisions relating to the application of Community rules on the procurement procedures of entities operating in the water, energy, transport and telecommunications sectors (OJ 1992 L 76, p. 14).

14 On 15 July 2008, the Director-General of the Internal Market and Services Directorate-General (DG) sent a letter to the Portuguese authorities in which, firstly, he stated that he shared the view that those authorities had not yet taken all the measures necessary to comply with the 2004 judgment and, secondly, he sought payment of the amount of EUR 2 753 664, corresponding to the penalty payments due for the period from 10 January to 31 May 2008, in compliance with the 2008 judgment.

15 By letter of 23 July 2008, the Portuguese authorities sent to the Commission a copy of Law 31/2008, of 17 July 2008, amending for the first time Law 67/2007 (Lei No 31/2008 que procede à primeira alteração à Lei No 67/2007, Diário da República, First Series, No 137, of 17 July 2008). That law came into force on 18 July 2008.

16 By letter of 4 August 2008, the Portuguese authorities responded to the letter from the Commission requesting payment. They repeated their position according to which, with the publication and entry into force of Law 67/2007, they had adopted all the measures necessary to comply with the 2004 judgment. They stated that they had, however, agreed to amend Law 67/2007 and to adopt Law 31/2008 in order to avoid prolonging the dispute and to overcome their differences with the Commission concerning the interpretation of Law 67/2007. The Portuguese authorities also stated that Article 2 of Law 31/2008 provided for its retroactive application as from 30 January 2008. Consequently, they argued, Portuguese law has complied with the 2004 judgment since 30 January 2008. Accordingly, the Portuguese authorities sought, in essence, reassessment of the amount of the penalty payment, taking 30 January 2008 as the reference date.

17 By letter of 22 August 2008, the Portuguese authorities informed the Commission that they were going to transfer to the ‘Commission's own resources account No 636003’ the sum of EUR 2 753 664, while pointing out that that transfer was made conditionally and did not represent acceptance by the Portuguese Republic of the daily penalty payment or waiver of its right to challenge the fact that the amount is due by recourse to the appropriate legal proceedings.

18 By application lodged at the Registry of the General Court on 15 September 2008 under reference T‑378/08, the Portuguese Republic brought an action seeking annulment of the letter of 15 July 2008.

19 By document lodged at the Registry of the General Court on 3 December 2008, the Commission raised a plea of inadmissibility under Article 114 of the Rules of Procedure of the General Court. In essence, it contended that the letter of 15 July 2008 did not constitute an actionable measure in so far as it was not a final decision of the Commission.

20 By letter lodged at the Registry of the General Court on 19 January 2009, the Portuguese Republic informed the General Court that it was discontinuing its action, in accordance with Article 99 of the Rules of Procedure.

21 Case T‑378/08 was removed from the Register of the General Court by order of the President of the Third Chamber of the General Court of 5 March 2009.

22 By Decision C (2008) 7419 final of 25 November 2008 (‘the contested decision’), notified to the Portuguese Republic by letter of 26 November 2008 from the General Secretariat, the Commission stated, in essence, that in its view Law 67/2007 did not constitute adequate compliance with the 2004 judgment; that, by contrast, by Law No 31/2008 the Portuguese authorities had complied with that judgment and that, as that law had come into force on 18 July 2008, the date on which the infringement had ceased was determined as being 18 July 2008. The Commission therefore confirmed the request for payment of the penalty payment made in the letter from DG Internal Market and Services of 15 July 2008. The Commission furthermore claimed an additional amount of EUR 911 424, corresponding to the period from 1 June to 17 July 2008.

Forms of order sought by the parties

23 The Portuguese Republic claims that the Court should:

– principally, annul the contested decision;

– in the alternative, annul the contested decision in so far as its effects extend beyond 29 January 2008;

– order the Commission to pay all the costs or, if the amount of the penalty payment is reduced by the Court, order each party to bear its own costs.

24 The Commission contends that the Court should:

– dismiss the application of the Portuguese Republic;

– order the Portuguese Republic to pay all the costs.

Law

Arguments of the parties

25 The Portuguese Republic claims, in essence, that the Court of Justice clearly held that the infringement resulted from the failure to repeal Decree-Law No 48 051 and that, therefore, it was incumbent upon it to repeal that decree-law in order to comply with the 2004 judgment.

26 The Portuguese Republic, it submits, complied with the 2004 judgment by adopting Law 67/2007, repealing Decree-Law No 48 051 and introducing a new system for the non-contractual civil liability of the State.

27 Moreover, the Portuguese Republic considers that the Commission’s interpretation of that law is incorrect.

28 In that regard, it claims, in essence, that in paragraph 31 of its 2004 judgment, the Court of Justice considered that, by making the civil liability of the State conditional on proof of fault or fraud, under the conditions set out in Decree-Law No 48 051, the Portuguese Republic had failed to fulfil its obligations under Community law. By contrast, a system of liability based on a presumption of fault – as laid down in Law 67/2007 and, in particular, Articles 7 and 10(2) and (3) thereof –complies with the Community directives. There is nothing in the 2004 judgment to suggest that State liability in the context of the contracts covered by Council Directive 71/305/EEC of 26 July 1971 concerning the co-ordination of procedures for the award of public works contracts (OJ 1971 L 185, p. 5) and Council Directive 77/62/EEC of 21 December 1976 coordinating procedures for the award of public supply contracts (OJ 1977 L 13, p. 1) is purely objective in nature, that is, without fault.

29 The Portuguese Republic considers that, to comply with the 2004 judgment, it could thus freely establish the conditions for implementing the mechanism referred to in Article 2(1)(c) of Directive 89/665, on condition that such a mechanism exempts the injured party from the requirement of proving a fault committed by the contracting authority.

30 According to the Portuguese Republic, the existence of a fault and the requirement to adduce evidence of that fault should not be confused.

31 The Portuguese Republic considers that the fact that the new system provides for a rebuttable presumption does not undermine its compliance with Directive 89/665, in so far as it will be sufficient for the person concerned to claim and to prove the unlawfulness of the conduct, without the need to prove the existence of the fault, whereas it will be incumbent on the State, where relevant, to prove the contrary.

32 The Portuguese Republic considers, moreover, that the reference to minor fault set out in Article 10(2) of Law 67/2007 is irrelevant, since the injured person is, in any event, exempted from having to prove fault and the reference has the sole purpose and effect of preventing the official or agent responsible for the unlawful and harmful act from being held jointly liable. In other words, there will not be any right of recovery against the agent in the event of minor fault, but solely in the event of serious fault or fraud. That distinction, which only concerns the relationship between the administration and its agents, is however irrelevant in relation to the injured person.

33 Furthermore, according to the Portuguese Republic, the provisions of Article 7(3) and (4) of Law 67/2007 relating to administrative fault are intended, in essence, to protect the individual in situations where he is unable to identify specifically the agent or official responsible for the unlawful, harmful act. In those cases, the act is presumed to be unlawful. The individual is thereby also exempted from having to prove the unlawful nature of the act, which constitutes a form of strict liability.

34 In addition, the Portuguese Republic claims, in essence, that in so far as it did not confine itself to repealing Decree-Law No 48 051, but laid down a new system of non-contractual civil liability of the State, there is no continuity between the previous system and the system established by Law 67/2007 and, therefore, no continuity of the infringement of Community law.

35 The Portuguese Republic argues, moreover, that the amendment to Law 67/2007 introduced by Law 31/2008 was intended solely to overcome a disagreement with the Commission regarding interpretation and to prevent this from continuing.

36 According to the Portuguese Republic, as the Court of Justice did not rule on the compliance of Law 67/2007 with Community law, it was for the Commission to bring a new action for failure to fulfil obligations in order to submit to the Court of Justice the question of whether the new system of rules established by that law complied with European Union law.

37 In the alternative, the Portuguese Republic claims that the retroactive nature of Law 31/2008 – assuming that law, and not Law 67/2007, brings Portuguese law into line with Community law – means that the date to be taken into consideration for the end of the infringement is 30 January 2008 and not the date of publication of the law, incorrectly used by the Commission.

38 Accordingly, the Portuguese Republic seeks annulment of the contested decision on the ground that the Commission erred in law.

39 With regard to the principal complaint put forward by the Portuguese Republic, the Commission contends firstly, in essence, that the subject-matter of the proceedings is determined by the Commission in the formal notice that it sends to the Member State concerned.

40 According to the Commission, the subject-matter of the proceedings, in the action for failure to fulfil obligations brought against the Portuguese Republic, was not a positive action of that State, but an omission by it. That omission resulted from the fact that Directive 89/665 was supposed to achieve a result – the compensation of persons harmed by any infringement of the Community law governing public procurement or the national rules implementing that law – and that the repeal of Decree-Law No 48 051 was not, according to the Commission, sufficient to achieve that objective.

41 Consequently, the Commission considers that it was not a question of repealing merely Decree-Law No 48 051, but indeed the whole system of rules that gave rise to the infringement of the Community directive. It considers that the Court of Justice was clear in that regard in its 2004 and 2008 judgments, on the basis that Decree-Law No 48 051, which made the award of damages to persons harmed conditional on proof of fault, in accordance with the conditions set out in that legislation, put the Portuguese Republic in a situation of infringement of Community law. It contends, furthermore, that in the 2008 judgment the Court of Justice declared that, as it had not repealed the system giving rise to the infringement, the Portuguese Republic had not complied with the 2004 judgment.

42 The Commission considers that it is clear that the 2004 judgment does not mean that, by merely repealing Decree-Law No 48 051, the Portuguese Republic had brought its law into line with its obligations under Article 1(1) and Article 2(1)(c) of Directive 89/665.

43 The Commission then contends that, according to its interpretation of Portuguese law, Law 67/2007 did not bring that law into line with Community law, even though it acknowledges in its written pleadings that the system of rules introduced was different from the system previously in force. According to the Commission, the Portuguese Republic complied with the 2004 judgment only when it adopted Law 31/2008.

44 In that regard, the Commission submits, in essence, that Directive 89/665 provides for the compensation of persons harmed by unlawful decisions of contracting authorities or by an infringement of the law. It is not an issue of strict liability, therefore, but of administrative non-contractual civil liability. In this connection, the Commission considers that, in the 2004 judgment, the Court of Justice did not deal with that issue and that no conclusion can be drawn from that judgment in this regard.

45 According to the Commission, the Court of Justice held, by contrast, that the Portuguese Republic’s system of judicial protection was inadequate because it required proof of the existence of a fault committed by agents of the administrative body.

46 The Commission contends, moreover, that Law 67/2007 did not correctly transpose Directive 89/665 into Portuguese law.

47 The Commission states that three situations must be distinguished in that regard.

48 Firstly, if the act was committed by an official or agent who acted fraudulently or committed a serious fault, the unlawful act is directly attributable to that official or agent and the State is indirectly jointly liable if, in addition to those two initial conditions, the agent or official thus identified acted in the performance of his duties. If that condition is not met, the State is not liable.

49 The Commission considers, moreover, that, if the official is guilty of fraud or a serious fault, the injured person must prove the fraud or serious fault, in accordance with Article 10(2) of Law 67/2007, because the general criteria relating to the burden of proof are again applicable in that case.

50 Secondly, if the unlawful act was carried out by an official who committed a minor fault, the unlawful act is directly attributable to that official or that agent and the State is indirectly liable, as it has not committed any act for which it can be censured. It is only vicariously liable. Here again, according to the Commission, the liability is conditional on the agent or official having acted in the performance of his administrative duties and as a consequence of such performance. If the State demonstrates that the agent did not commit a fault, it is not liable.

51 With regard to minor fault, the Commission contends, in essence, that the presumption of fault can easily be rebutted by any means, including testimony, provided that the fault is assessed by reference to the diligence of an average official, who is not expected to resolve the imperfections of the administrative system.

52 Thirdly, if the action or omission is functional in nature and the damage is not due to a specified official or agent, or where it is impossible to attribute the action or omission to any person, the damage is attributed to an abnormal functioning of the service if, considering the circumstances and average standards, it would be reasonable to require different conduct from the service. If those conditions are not fulfilled, the State is not liable.

53 The Commission considers, in essence, that the concept of abnormal functioning of the service is, at least in part, a substitute for fault, in that it implies verification of the diligence required directly from the public service in which the act occasioning loss occurred.

54 Thus, in any event, according to the Commission, the compensation of the injured person is made conditional, by the law, on the existence of a fault of the official when carrying out the unlawful act, or on the abnormal functioning of the service.

55 Thus, the Commission considers that the civil liability of the State is not direct under Law 67/2007, before its amendment by Law 31/2008, but that it depends on the existence of a fault on the part of the officials or agents of the administrative body. In its 2004 judgment, the Court of Justice declared that that system did not comply with the provisions of Directive 89/665. Indeed, the fault of the agent or official and the abnormal functioning of the service are both concepts that are alien to Directive 89/665.

56 Finally, the Commission considers, in essence, that the infringement is continuous and that it only ended with Law 31/2008, with the succession of Decree-Law No 48 051 and Law 67/2007 being irrelevant in that regard. Furthermore, it considers that the retroactivity of Law No 31/2008 is also irrelevant, since it was the adoption of that law on 17 July 2008 that ended the infringement and that date only is to be taken into consideration.

Findings of the Court

Preliminary considerations

57 It should be noted that, under the terms of Article 226 EC, where the Commission considers that a Member State has failed to fulfil obligations under the EC Treaty, it is to deliver a reasoned opinion after giving the State concerned the opportunity to submit its observations. If the State concerned does not comply with the opinion within the period laid down by the Commission, the latter may bring the matter before the Court of Justice.

58 It is settled case-law that the Commission is not empowered to determine conclusively, by opinions formulated pursuant to Article 226 EC or by other statements of its attitude under that procedure, the rights and duties of a Member State, or to give it guarantees concerning the compatibility of a given line of conduct with the Treaty and that, according to Articles 226 EC to 228 EC, the rights and duties of Member States may be determined and their conduct appraised only by a judgment of the Court of Justice (Joined Cases 142/80 and 143/80 Essevi and Salengo [1981] ECR 1413, paragraph 16, and Case C‑393/98 Gomes Valente [2001] ECR I-1327, paragraph 18).

59 Furthermore, under Article 228(2) EC, the Court of Justice may, when an action is brought before it by the Commission after the latter has issued a reasoned opinion that the Member State concerned has not complied with, impose a lump sum or penalty payment on it if it finds that the Member State has not complied with its judgment.

60 The procedure laid down in Article 228(2) EC must be regarded as a special judicial procedure for the enforcement of judgments, in other words as a method of enforcement (Case C-304/02 Commission v France [2005] ECR I‑6263, paragraph 92).

61 It should be noted, however, that the EC Treaty does not lay down the detailed rules for the enforcement of the judgment that the Court delivers at the conclusion of that new procedure, in particular where a penalty payment is decided on.

62 Nevertheless, where a judgment of the Court of Justice, delivered pursuant to Article 228(2) EC, orders a Member State to pay a penalty payment to the Commission, into the account ‘European Community own resources’, and since, under Article 274 EC, the Commission implements the budget, the latter is responsible for recovering the amounts that would be due to the budget of the European Union pursuant to the judgment, in accordance with the provisions of the regulations made under Article 279 EC.

63 The EC Treaty does not make any specific provision, however, regarding the settlement of disputes that would arise between a Member State and the Commission on that occasion.

64 It follows that the remedies established by the EC Treaty apply and that the decision, by which the Commission determines the amount due from the Member State in terms of the penalty payment which it has been ordered to make, can be the subject of an action for annulment pursuant to Article 230 EC.

65 Therefore, the General Court has jurisdiction to hear and determine such an action, in accordance with the provisions of the first subparagraph of Article 225(1) EC.

66 However, in exercising such jurisdiction, the General Court cannot impinge on the exclusive jurisdiction reserved to the Court of Justice under Articles 226 EC and 228 EC.

67 The General Court may not rule, therefore, in the context of an action for annulment based on Article 230 EC and brought against a decision of the Commission relating to the enforcement of a Court of Justice judgment delivered on the basis of Article 228(2) EC, on a question relating to the infringement by the Member State of its obligations under the EC Treaty that has not been previously decided by the Court of Justice.

The present case

68 It is appropriate to recall the terms of the 2008 judgment:

18. In that regard, according to settled case law, the reference date for assessing whether there has been a failure to fulfil obligations under Article 228 EC is the date of expiry of the period prescribed in the reasoned opinion issued under that provision (see Case C-304/02 Commission v France [2005] ECR I‑6263, paragraph 30; Case C‑119/04 Commission v Italy [2006] ECR I-6885, paragraph 27; and Case C‑503/04 Commission v Germany [2007] ECR I-6153, paragraph 19).

…

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

69 It follows expressly from the operative part of the 2008 judgment, read in the light of the grounds adopted by the Court of Justice at paragraphs 16 to 19, that it was sufficient for the Portuguese Republic to repeal Decree-Law No 48 051 in order to comply with the 2004 judgment and that the penalty payment would be due until that repeal.

70 It is common ground that Decree-Law No 48 051 was repealed by Article 5 of Law 67/2007, which was adopted on 31 December 2007, was published in the Diário da República on that date and came into force on 30 January 2008.

71 However, in the contested decision, the Commission considered, in essence, that Law 67/2007 did not constitute adequate compliance with the 2004 judgment; that, by contrast, by Law 31/2008 the Portuguese authorities had complied with that judgment and that, as that law came into force on 18 July 2008, the date on which the infringement had ended was determined as being 18 July 2008. The Commission therefore refused to accept that the date on which the infringement ended was the date on which Decree-Law No 48 051 had been repealed by Law 67/2007.

72 Hence, the Commission failed to take into account the operative part of the 2008 judgment. The contested decision must therefore be annulled.

73 That finding is not affected by the Commission’s interpretation of the 2004 judgment.

74 It is true that the Commission contends that the Court of Justice, by requiring, in its 2004 and 2008 judgments, the repeal of Decree-Law No 48 051 ‘making the award of damages to persons harmed by a breach of Community law relating to public contracts, or the national laws implementing it, conditional on proof of fault or fraud’, required not only the repeal of that decree-law – which, according to the Commission, would have resulted in a legal vacuum and would not have constituted correct transposition of Directive 89/665 – but that those judgments must be interpreted as meaning that the Court of Justice also found that making the award of damages to persons harmed by a breach of Community law relating to public contracts, or the national laws implementing it, conditional on proof of fault or fraud did not comply with the directive.

75 Consequently, the Commission considers that the infringement persisted as long as Portuguese law continued to make the award of damages to persons harmed by a breach of Community law relating to public contracts, or the national laws implementing it, conditional on proof of fault or fraud.

76 Accordingly, the Commission considers that it had to take into consideration not the date on which the decree-law was repealed, but the date on which the Portuguese legislature abolished the provision making the award of damages to persons harmed by a breach of Community law relating to public contracts, or the national laws implementing it, conditional on proof of fault or fraud.

77 According to the Commission, as the repeal of Decree-Law No 48 051 did not have that effect, the infringement was thus able to continue.

78 This is what it found in the contested decision when it considered, in essence, that Law 67/2007 did not constitute adequate compliance with the 2004 judgment, that, by contrast, by Law 31/2008 the Portuguese authorities had complied with that judgment and that, as that law had come into force on 18 July 2008, the date on which the infringement had ceased was determined as being 18 July 2008.

79 The Commission, therefore, had not only the option but, it is argued, also the obligation to check if the new system of rules established by the adoption of Law 67/2007 constituted an adequate transposition of Directive 89/665.

80 That argument cannot, however, be accepted.

81 Indeed, in the context of enforcing a judgment of the Court of Justice imposing a penalty payment on a Member State, the Commission must be able to assess the measures adopted by the Member State to comply with the judgment of the Court of Justice in order, inter alia, to prevent the Member State which has failed to fulfil its obligations from simply taking measures that, in reality, have the same content as those that were the subject of the judgment of the Court of Justice.

82 However, the exercise of that power of appraisal can prejudice neither the rights – and in particular the procedural rights – of the Member States, as they result from the procedure set out in Article 226 EC, nor the exclusive jurisdiction of the Court of Justice to rule on the compliance of national legislation with Community law.

83 It must be stated that the Court of Justice did not rule on the compliance of Law 67/2007 with Directive 89/665 either in its 2004 judgment or in its 2008 judgment.

84 Furthermore, it is common ground that Law 67/2007 repealed Decree-Law No 48 051 and introduced a new system of liability including substantial modifications to the system that prevailed under Decree-Law No 48 051.

85 The Commission itself acknowledges, in the contested decision, that ‘Law 67/2007 makes it potentially less difficult for tenderers, who have been harmed by an unlawful act of the contracting authority, to obtain damages’ and, in its written pleadings, that the Portuguese legislature did not confine itself to repealing Decree-Law No 48 051, but replaced it with a new system of rules by means of Law 67/2007.

86 Furthermore, it is clear both from the discussions between the parties before the adoption of the contested decision, and from their written pleadings in the context of this case, that they do not agree on whether Law 67/2007 complies with Community law.

87 To decide such an issue would amount to assessing the compatibility of Law No 67/2007 with Community law, which requires a complex legal analysis that goes far beyond a formal review to determine whether or not Decree-Law No 48 051 has been repealed.

88 The rights and duties of Member States may be determined and their conduct appraised only by a judgment of the Court of Justice under Articles 226 EC to 228 EC (see paragraph 58 above).

89 Consequently, the Commission was not entitled to decide, in the context of the enforcement of the 2008 judgment, that Law 67/2007 did not comply with Community law and then draw conclusions from this for the calculation of the penalty payment determined by the Court of Justice. In so far as it considered that the system of rules introduced by the new law did not constitute a correct transposition of Directive 89/665, the Commission should have initiated the procedure provided for in Article 226 EC.

90 For the sake of completeness, the General Court notes that the argument put forward by the Commission, which consists in claiming that greater discretion should be granted to it in relation to the enforcement of a judgment delivered by the Court of Justice under Article 228(2) EC, would have the consequence that, when a Member State has challenged before the General Court an assessment by the Commission that goes beyond the actual terms of the operative part of the judgment of the Court of Justice, the General Court would, inevitably, be required to make a ruling on the compliance of national legislation with Community law. Such an appraisal falls within the exclusive jurisdiction of the Court of Justice and not that of the General Court.

91 It follows from the above that the Commission was not entitled to adopt the contested decision which must, therefore, be annulled.

Costs

92 Under Article 87(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 been unsuccessful, it must be ordered to pay the costs, in accordance with the form of order sought by the Portuguese Republic.

On those grounds,

THE GENERAL COURT (Third Chamber)

hereby:

1. Annuls Commission Decision C(2008) 7419 final of 25 November 2008;

2. Orders the European Commission to pay the costs.

Azizi

Cremona

Frimodt Nielsen

Delivered in open court in Luxembourg on 29 March 2011.

[Signatures]

* Language of the case: Portuguese.