Study on private enforcement of state aid rules by national courts in the EEA EFTA States July 2019 EFTA Surveillance Authority Study on private enforcement of state aid rules by national courts in the EEA EFTA States The information and views set out in this study are those of the author(s) and do not necessarily reflect the official opinion of the EFTA Surveillance Authority (“ESA”). ESA does not guarantee the accuracy of the data included in this study. Neither ESA nor any person acting on ESA’s behalf may be held responsible for the use which may be made of the information contained therein. Table of contents Table of EU and EEA relevant abbreviations 3 Abstract 4 1 Introduction and context 5 1.1 Background – EEA rules on state aid and the role of national courts 5 1.2 The scope, structure and objective of the present study 6 2 Main findings on the EEA EFTA States level 7 3 Enforcement of the standstill obligation 10 3.1 The EEA EFTA States’ legal framework for private enforcement 10 3.2 Private enforcement of the standstill obligation in the EEA EFTA States 12 4 Recovery of unlawful state aid 13 4.1 The EEA EFTA States’ legal framework for recovery of unlawful state aid 13 4.2 Recovery of unlawful state aid in the EEA EFTA States 14 5 Obstacles to private enforcement of state aid rules 16 5.1 Legal framework 16 5.2 The application of the notion of state aid 17 5.3 Small number of private enforcement cases 17 6 Cooperation with ESA and the enforcement guidelines 18 7 Best practices 19 8 Conclusions and recommendations 20 CHAPTER 1: ICELAND 1 Executive summary 22 2 Methodology 22 3 The legal system of Iceland and availability of judicial relief 23 3.1 Introduction 23 3.2 Legal framework relating to state aid law 23 3.3 Consequences of unlawful state aid 24 3.4 Competent courts and powers held by Icelandic courts relating to state aid law 25 4 Procedures concerning the recovery of unlawful state aid 28 4.1 National procedures for the recovery of unlawful state aid where ESA has taken a negative decision 28 4.2 National procedures for the recovery of unlawful state aid where ESA has not taken a negative decision, e.g. where state aid is implemented in breach of the standstill obligation 28 4.3 Possible actions for contesting the validity of the recovery decisions, or in case no recovery is ordered 29 5 Summary of conclusions drawn from the cases below and the interviews 30 5.1 Introduction and overview of findings 30 5.2 Enforcement of standstill obligation and of recovery of unlawful state aid 31 5.3 The use of the ESA’s guidelines on enforcement of state aid law by national courts 32 5.4 Obstacles/difficulties regarding private enforcement of state aid law 32 5.5 Cooperation with ESA 33 5.6 Best practice 33 5.7 Conclusions and recommendations 33 CHAPTER 2: LIECHTENSTEIN 1 Executive summary 34 2 Methodology 35 3 Liechtenstein’s legal system and availability of judicial relief 36 3.1 Direct applicability of the EEA Agreement 36 3.2 Competent courts and powers held by Liechtenstein’s courts relating to state aid law 38 4 Procedures concerning recovery of unlawful state aid 43 4.1 General 43 4.2 Recovery under administrative law 44 4.3 Recovery under civil law 45 4.4 Possible actions for contesting validity of a recovery order or if no recovery is ordered 45 4.5 Enforcement of the recovery order 45 5 Conclusions drawn from cases practice and the interviews 46 1 5.1 Introduction and overview of findings 46 5.2 Enforcement of the standstill obligation and of recovery of unlawful state aid 47 5.3 Use of ESA’s guidelines on enforcement of state aid law by national courts 47 5.4 Obstacles and difficulties regarding private enforcement of state aid law 47 5.5 Cooperation with ESA 48 5.6 Best practice 48 5.7 Conclusions and recommendations 48 CHAPTER 3: NORWAY 1 Executive summary 51 2 Methodology 52 2.1 Introduction 52 2.2 Legal research 52 2.3 Questionnaire 52 3 Norway’s legal system and availability of judicial relief 53 3.1 Introduction 53 3.2 Legal framework relating to state aid law 53 3.3 Consequences of unlawful state aid 54 3.4 Competent courts and powers held by Norwegian courts relating to state aid law 54 4 Procedures concerning the recovery of unlawful state aid 56 4.1 National procedures for the recovery of unlawful state aid where ESA has taken a negative decision 56 4.2 National procedures for the recovery of unlawful state aid where ESA has not taken a negative decision, e.g. where state aid is implemented in breach of the standstill obligation 60 4.3 Possible actions for contesting the validity of the recovery decisions, or in case no recovery is ordered 60 5 Main findings of the study 62 5.1 Introduction and overview of findings 62 5.2 Difficulties with the interpretation and application of the notion of state aid 65 5.3 Cooperation with ESA 66 5.4 Enforcement of the standstill obligation 66 5.5 Enforcement of recovery 68 5.6 Best practices 70 5.7 Conclusions and recommendations 71 ANNEXES 73 Iceland Annexes Liechtenstein Annexes Norway Annexes 2 Table of EU and EEA relevant abbreviations CJEU Court of Justice of the European Union EC European community EEA European Economic Area EEA Agreement Agreement on the European Economic Area, OJ L 1, 3.1.1994, pp. 3-522 EEC European Economic Community EEC Treaty Treaty establishing the European Economic Community ESA EFTA Surveillance Authority EU European Union GBER The Commission Regulation (EU) No 651/2014 of 17 June 2014 declaring certain categories of aid compatible with the internal market in application of Articles 107 and 108 of the Treaty, OJ L 187, 26.6.2014, p. 1–78, EEA Supplement No 71, 27.11.2014, p. 61 OJ Official Journal of the European Union Protocol 3 SCA Protocol 3 to the Surveillance and Court Agreement, as amended by the Agreements amending Protocol 3 to the Agreement between the EFTA States on the Establishment of a Surveillance Authority and a Court of Justice (SCA), signed in Brussels on 21.3.1994, 6.3.1998 and 10.12.2001 SCA Agreement between the EFTA States on the establishment of a Surveillance Authority and a Court of Justice, OJ L 344, 31.12.1994, pp. 1-8 TFEU Treaty on the Functioning of the European Union, OJ C 202, 7.6.2016, p. 1–388 3 Abstract The present Study aims to give an overview of private enforcement of state aid rules by national courts in the EEA EFTA States since the entry into force of the EEA Agreement 25 years ago. The findings of the Study are based on relevant cases identified in the three EEA EFTA States, as well as information from state aid practitioners and judges in the EEA EFTA States. The Study revealed that there have been rather few private enforcement cases in each of the EEA EFTA States since the entry into force of the EEA Agreement. The Study identified 45 judgments of varying relevance from the EEA EFTA States. Of these, six concern the private enforcement of the standstill obligation and two concern the recovery of unlawful state aid based on a negative decision with recovery from ESA. The Study identified one ruling in which the plaintiff succeeded in its claim that the standstill obligation had been breached. The Study did not identify any case where the national court had initiated the cooperation procedure pursuant to ESA’s Enforcement Guidelines. The Study also revealed that the national legal frameworks implementing the standstill and recovery obligations under the Surveillance and Court Agreement are rather unclear. The degree of ambiguity varies between the EEA EFTA States. Moreover, it found that the knowledge about state aid rules amongst practitioners and judges seems to be rather low. These factors, including the lack of case law, could be mutually reinforcing elements explaining the lack of private enforcement. In order to facilitate private enforcement in the EEA EFTA States going forward, the Study considers that an amendment of the national legal frameworks for state aid in all three EEA EFTA States would be useful. ESA could also consider contributing to increased knowledge about state aid law in the EEA EFTA States, for example by offering training to national judges. 4 EEA EFTA wide conclusions 1 Introduction and context 1.1 Background – EEA rules on state aid and the role of national courts The EEA Agreement entered into force 25 years ago. For the EEA EFTA States,1 this implied inter alia that they since have had to adhere to the state aid rules in the EEA Agreement.2 The state aid rules in the EEA Agreement mirror those of the EU Treaties in substance. However, in terms of state aid procedure, it is the EFTA Surveillance Authority (‘ESA’) that has the exclusive right to declare state aid compatible with Article 61(2) or (3) of the EEA Agreement, not the European Commission (the ‘Commission’). While only ESA can approve state aid, national courts also have an important role to play as regards the enforcement of state aid rules. According to established jurisprudence of the European Courts, national courts’ responsibilities pertain mainly to two types of situations: (i) the private enforcement of the standstill obligation, and (ii) recovery of unlawful aid.