Case C-275/10

Residex Capital IV CV

v

Gemeente Rotterdam

(Reference for a preliminary ruling from the Hoge Raad der Nederlanden)

‛Article 88(3) EC — State aid — Aid granted in the form of a guarantee to a lender for the purpose of enabling the latter to grant a loan to a borrower — Infringement of procedural rules — Obligation to recover — Nullity — Powers of the national court’

Opinion of Advocate General Kokott delivered on 26 May 2011   I - 13047

Judgment of the Court (First Chamber), 8 December 2011   I - 13067

Summary of the Judgment

1. State aid — Respective powers of the Commission and the national courts — Role of national courts

   (Art. 88(3) EC)

2. State aid — Recovery of unlawful aid — Restoration of the previous situation — Obligations of national courts

   (Art. 88(3) EC)

3. State aid — Recovery of unlawful aid — Restoration of the previous situation — Obligations and powers of national courts

   (Art. 88(3) EC)

1.  Implementation of the system for supervision of State aid, resulting from Article 88 EC and the case-law of the Court on the subject, is a matter, on the one hand, for the Commission and, on the other, for the national courts. In that regard, the national courts and the Commission play distinct but complementary parts. Whereas assessment of the compatibility of aid measures with the common market falls within the exclusive competence of the Commission, subject to review by the Union judicature, it is for the national courts to ensure that the rights of individuals are safeguarded when the obligation to give prior notification of State aid to the Commission pursuant to Article 88(3) EC has been infringed.

   An aid measure put into effect in breach of the obligations arising from Article 88(3) EC is unlawful. It is for the national courts to draw from this all the necessary conclusions, in accordance with their national law, with regard to both the validity of the acts giving effect to the aid and the recovery of financial support granted in breach of that provision.

   (see paras 25-29)

2.  The logical consequence of a finding that aid is unlawful is to remove it by means of recovery in order to restore the situation previously obtaining. By repaying the aid, the beneficiary forfeits the advantage which it had over its competitors on the market, and the situation prior to payment of the aid is restored. In order for this to repayment to be made, it is essential that the national courts identify the beneficiary or, as the case may be, the beneficiaries of the aid.

   In the case where aid is granted in the form of a guarantee, the beneficiaries of that aid may be either the borrower or the lender or, in certain cases, both of them together. When a loan granted by a credit institution to a borrower is guaranteed by the public authorities of a Member State, that borrower normally obtains a financial advantage and thus benefits from aid within the meaning of Article 87(1) EC, inasmuch as the financial cost it bears is less than that which it would have borne if it had had to obtain that same financing and that same guarantee at market prices.

   However, a lender may also be liable to procure an economic advantage from the guarantee in question, in particular when it cannot be excluded at the outset that the guarantee was granted for the needs of an existing claim of the lender, in the context of a restructuring of the borrower’s debt. If that were so, the lender would have obtained its own economic advantage by means of that guarantee since the security of its claim increased as a result of being guaranteed by the public authority, with no amendment, moreover, to the conditions of the guaranteed loan. It is for the national court to identify the beneficiary or, as the case may be, the beneficiaries of that guarantee and to effect recovery of the total amount of the aid in question.

   (see paras 33-34, 37, 39-40, 42-43)

3.  In the area of State aid, with regard to the recovery of unlawful aid granted in the form of a guarantee by a public authority in order to cover a loan granted by a finance company to an undertaking which would not have been able to secure such financing under normal market conditions, Union law does not impose any specific conclusion that the national courts must necessarily draw with regard to the validity of the acts relating to implementation of the aid.

   However, given that the objective of the measures that the national courts are bound to take in the event of infringement of Article 88(3) EC is, essentially, to restore the competitive situation existing before the payment of the aid in question, those courts must ensure that the measures which they take with regard to the validity of the abovementioned acts make it possible for such an objective to be achieved. Accordingly, it is for the national courts to determine whether, in a particular case, cancellation of the guarantee may, given the circumstances specific to the dispute before it, be a more effective means of achieving that restoration than other measures. There may be situations in which the cancellation of a contract, in so far as this is liable to lead to the mutual restitution of the services performed by the parties or the disappearance of an advantage for the future, may be better able to achieve the objective of restoring the competitive situation which existed before the aid was granted.

   Consequently, the last sentence of Article 88(3) EC must be interpreted as meaning that the national courts have jurisdiction to cancel a guarantee in a hypothetical case in which unlawful aid was implemented by means of a guarantee provided by a public authority in order to cover a loan granted by a finance company to an undertaking which would not have been able to secure such financing under normal market conditions. When exercising that jurisdiction, those courts are required to ensure that the aid is recovered and, to that end, they can cancel the guarantee, in particular when, failing any fless onerous procedural measures, that cancellation is such as to lead to or facilitate the restoration of the competitive situation which existed before that guarantee was provided.

   (see paras 44-49, operative part)