Wednesday 31 May 2023

Advocate General’s Opinion in Grupa Azoty again lays bare a serious gap in EU judicial protection, yet does nothing to plug the hole


Professor Geert van Calster, University of Leuven

Photo credit: Wojciech Antosz, via Wikimedia Commons


Executive summary: Early March Pikamäe AG opined in Joined Cases C 73/22P and C 77/22 P Grupa Azoty S.A. et al v European Commission, an Appeal procedure regarding the admissibility of an application for partial annulment of the Commission September 2020 ‘Guidelines on certain State aid measures in the context of the system for greenhouse gas emission allowance trading post-2021’. Pikamäe AG considers that the Applicants do not have standing to challenge the Guidelines at EU level. I challenge that position, in the light of the right to judicial review before the European Courts and of the Courts' case law on the matter. I conclude that the Opinion mistakenly identifies national judicial review of entirely speculative national measures as a guarantee to access to justice, and that in doing so it compounds the challenging limitation of access to the courts in a wider context (including the environmental context), too.


Introduction to the case at issue

In early March Pikamäe AG opined in Joined Cases C‑73/22P and C‑77/22P Grupa Azoty S.A. et al v European Commission. At first glimpse the case undoubtedly looks pretty dull to most observers, seeing as it engages an application for partial annulment of the Communication from the Commission of 25 September 2020 entitled ‘Guidelines on certain State aid measures in the context of the system for greenhouse gas emission allowance trading post-2021’. Hardly rock and roll. Such aid is generally granted to address potential ‘carbon leakage’, i.e. relocation of industry away from the EU and its stricter climate rules. The applicants manufacture fertilisers, nitrogen compounds, and man-made fibres, a sector not listed in Annex I to the guidelines at issue. This means they are no longer (for the sector was included in the previously applicable Annex II of the 2012 Guidelines) considered to be at risk from carbon leakage.

The General Court having declared the applications inadmissible due to lack of standing, the case has now come before the Court of Justice upon appeal.

A core element in the General Court’s reasoning was [40-42] that the undertakings’ right to challenge the removal from the Annex and their consequential loss of potential State Aid, continued to be guaranteed seeing as Member States may still grant them such aid outside of the Guidelines’ framework, subject to notification to the European Commission. The likely refusal by the Commission to declare the aid compatible with the Internal Market, may then, the General Court suggested, be challenged before the European Courts.

It is this speculative reasoning which raises general concerns with respect to access to justice before the European Courts.


General framework for access to judicial review before the European Courts

Access to judicial review proceedings at the Court of Justice of the European Union (CJEU) is a long contested issue. Article 263 TFEU grants EU Institutions ‘privileged access’ to the European Courts. These are included in paragraphs 2 and 3 of the Article and they are the Member States, the Council, the Commission, the European Parliament, the Court of Auditors, the European Central Bank and the Committee of the Regions. The latter 3 Institutions may only bring an action "for the purpose of protecting their prerogatives".

The fourth paragraph of Article 263 TFEU deals with the so-called "non-privileged" applicants. In the General Court’s Order in the case under discussion, standing requirements for the non-privileged applicants are summarised as follows [26]:

“The admissibility of an action brought by natural or legal persons against an act which is not addressed to them, in accordance with the fourth paragraph of Article 263 TFEU, is subject to the condition that they be accorded standing to bring proceedings, which arises in two situations. First, such proceedings may be instituted if the act is of direct and individual concern to those persons. Secondly, such persons may bring proceedings against a regulatory act not entailing implementing measures if that act is of direct concern to them..” (references to case-law omitted).


Direct concern. The condition of "direct concern", while a hurdle, is not their main stumble block for standing. Indeed for a person to be directly concerned by a Union act, the measure must directly affect the legal situation of the individual and leave no discretion to the addressees of that measure who are entrusted with the task of implementing it, such implementation being pure, automatic and resulting from Union rules without the application of other intermediate rules. This is recurrent case law, going back in particular to the 1978 Simmenthal judgment.

Individual concern.  The condition of "individual concern", turned out to be much more of roadblock. The approach of the Court is known as the "Plaumann" test, after a 1963 case involving a German importer of clementines. The CJEU held in Plaumann that

"(p)ersons other than those to whom a decision is addressed, may only claim to be individually concerned if that decision affects them by reason of certain attributes which are peculiar to them, or by reason of circumstances in which they are differentiated from all other persons and by virtue of these factors distinguishes them individually just as in the case of the person addressed."

This test is difficult enough on paper itself. However in practice it has become even more stringent in that for economic operators, the Court typically holds that these are affected by reason of a commercial activity which may at any time be practised by any person and is not therefore such as to distinguish the applicant in relation to the contested measure as in the case of the addressee. The Plaumann test essentially amounts to a "closed shop" test: to be individually concerned by a decision addressed to another person (including Regulations and Directives addressed to Member States), an applicant needs to show that it is part of a "closed circle of persons who were known at the time of its adoption"  (a much repeated formula, e.g. in Federcoopesca).


The second alternative for standing in the case of non-privileged applicants (actions viz regulatory acts not entailing implementing measures if that act is of direct concern to them) obviously drops the strict ‘individual concern’ requirement and was introduced with the Treaty of Lisbon. In PGNiG Supply, the General Court held [54] that the condition

“is to be interpreted in the light of that provision’s objective, which, as is clear from its origin, consists in preventing an individual whose legal situation is nevertheless directly altered by an act from being denied effective judicial protection with regard to that act. In the light of that objective, it appears that the third limb of the fourth paragraph of Article 263 TFEU is designed to apply only when the disputed act, in itself, in other words irrespective of any implementing measures, alters the legal situation of the applicant.”

The core to this argument of the General Court’s order, is quite clearly and as it emphasises itself, the rule of law’s core contention of ensuring effective judicial protection.

It is on this point that I should like to take issue with Pikamäe’s Opinion in Grupa Azoty.


The challenge with the AG Opinion

—The AG’s suggestion (32) that the Court for the first time needs to hold on the potential to challenge Commission State Aid guidelines is, with respect, neither here nor there. The standing requirements for judicial review necessarily focus on the content of the measure, regardless of their nomenclature. The Guidelines at issue are developed in such detail and, importantly, with the specific instruction not to grant aid to non-Annex sectors, that one fails to see where the Member States’ discretion may at all lie. The AG’s reference (35) ff to the legal nature of guidelines, circumscribed only by general principles of EU law such as proportionality, are sophistic at best, and his continued use of the word ‘soft-law’ for Guidelines of this kind obfuscates their true impact.

—The AG’s justification of the General Court’s abstract reasoning as fitting perfectly within the Court’s existing case-law, may be arguable at a theoretical level in the light of the CJEU authorities. Yet it fails to consider the practical impact of the Guidelines. At this point, it is useful to remind ourselves of the consequences of the standing rules in the perhaps more rock and roll area of environmental law.

The impact of the restrictive approach to standing in the area of environmental law, paved the way for Advocate General Jacob’s Opinion in Union de Pequenos Agricultores (UPA) – not followed by the Court, and to what was then the Court of First Instance’s judgment in Jégo-Quéré. The Court of Justice however rejected the AG’s and CFI’s attempts to broaden access in Greenpeace.

Regardless of whether the CJEU was correct in Greenpeace (I would submit it was not), at least its optimistic presumption in that case that access to effective judicial protection is guaranteed via the preliminary reference procedure, somewhat cynically bears out in practice. The route via national courts presupposes that the Union measure at issue requires acts of implementation by the national authorities. This often then obliges the individual concerned to engineer a violation of the rules laid down by the measures, and subsequently use invalidity as a defence in any criminal or civil action directed against it. As Advocate General Jacobs argued, it would seem unacceptable that individuals be required to break the law, in order to gain access to justice. Yet, at least this engineered route is often available.

In the scenario at issue in Grupa Azoty, that prospect is fanciful. One cannot engineer a breach of State Aid rules in the entirely speculative case that a Member State does, despite the clear instructions in the guidelines, grant aid outside of it.

—Importantly, the AG in his final considerations puts the access to justice cart before the horse, where he argues

“whilst I am aware of the prevailing opinion regarding the need to expand the routes by which individuals access justice at EU level, I question whether it would be desirable, in general, for the Court to find that a soft law instrument like the guidelines at issue is a challengeable measure, and that any competitor that is able to show that it satisfies the requirement of direct concern, as identified in the judgment in Montessori, is thus entitled to bring a legal challenge where that measure constitutes a ‘regulatory act’ within the meaning of the last paragraph of Article 263(4) TFEU. I would note in this regard that, because they can be adopted quickly and adapted to contingent economic situations, these soft law instruments have been used, for example, to frame the Member States’ response to the recent crises caused by the collapse of the banking system, the COVID-19 pandemic and the outbreak of the war in Ukraine. In such situations, could the Commission be expected to adopt measures to make the exercise of its discretion more foreseeable and transparent knowing that the lawfulness of certain provisions can be directly challenged before the General Court? Could an increase in the number of those actions, which would then seem easily foreseeable, not paralyse the Commission’s clarificatory action? Is the revision of the problematic provisions of those measures by the Commission itself not sufficient for the economic operators concerned?”


With respect, first of all the practical implications of granting in the case at issue a circumscribed group of applicants standing, are exceedingly minimal. Under the current Guidelines only a very small group of operators have lost potential State Aid to which they had access under the previous ones. More fundamentally, practical management of access to courts necessarily must follow that very access being guaranteed — not the other way around: access must not be circumscribed by its practical management.


In conclusion, the Opinion mistakenly identifies national judicial review of entirely speculative national measures as a guarantee to access to justice. In doing so it compounds the challenging limitation of access to the courts in a wider context (including the environmental context), too.  

No comments:

Post a Comment