Private enforcement against state aid awards in Romania

Private enforcement in national courts

Which courts will hear private complaints against the award of state aid? Who has standing to bring an action?

As a rule, national courts are to ensure the direct applicability of article 108(3) of the Treaty on the Functioning of the European Union (TFEU) by adopting any measures required.

The court may therefore rule on the suspension of state aid, reimbursement of same and interest, as well as compensation for any affected undertakings, among others.

The Competition Council or the Commission can intervene in the proceedings as amicus curiae.

What are the available grounds for bringing a private enforcement action?

As a rule, a private enforcement action can be brought against the aid provider on the specific ground provided by article 411 of Emergency Ordinance No. 77/2014. Conditions are as described in question 13.

This does not exclude the use of other grounds such as tort against the aid beneficiary or unfair competition to the extent to which the conditions for same are met.

Who defends an action challenging the legality of state aid? How may defendants defeat a challenge?

Should an action be brought with respect to illegal state aid, the affected undertakings should primarily take legal action against the state aid provider in accordance with the special procedure provided by Emergency Ordinance No. 77/2014. Thus, it is up to the state aid provider to defend same. The Competition Council and the Commission may intervene in the proceedings as amicus curiae as per Emergency Ordinance No. 77/2014.

Have the national courts been petitioned to enforce compliance with EU state aid rules or the standstill obligation under article 108(3) TFEU? Does an action by a competitor have suspensory effect? What is the national courts’ track record for enforcement?

In accordance with Emergency Ordinance No. 77/2014, national courts are to ensure the direct applicability of article 108(3) TFEU by adopting any measures required, in particular in relation to prevention of the payment of unlawful aid, recovery of unlawful aid, recovery of interest and payment of damages to the affected competitors.

To date we have not come across any noteworthy court decisions on the matter.

Is there a mechanism under your jurisdiction’s rules of procedure that allows national courts to refer a question on state aid to the Commission and to stay proceedings?

There are no specific national provisions regarding articles 29(1) and (2) of the Procedural Regulation.

The amicus curiae institution itself is not a traditional Romanian civil procedure institution and courts may be reluctant in resorting to or accepting same.

To our knowledge, the Commission has not intervened as an amicus curiae before a Romanian court. The Commission has, however, (unsuccessfully) intervened in an investment arbitration where the matter of state aid and the interplay thereof with investment treaties has been discussed (Micula et al v Romania ICSID No. ARB/05/20).

This is without prejudice to the right of the Romanian courts to ask for a preliminary ruling in accordance with the procedure and conditions detailed in article 267 TFEU. The Romanian courts do use the procedure, there being no perceived reluctance or overuse.

Which party bears the burden of proof? How easy is it to discharge?

Under Romanian law, the claimant usually bears the burden of proof. Thus, the claimant must bring evidence with respect to the illegality of the state aid. As per Emergency Ordinance No. 77/2014, should the measure be deemed as incompatible state aid by the Commission, national courts are bound by such findings.

Otherwise, the claimant would have to bring evidence showing that the aid may be deemed unlawful as per EU enactments and as construed by the European courts. There is no specific alleviation of the standard of proof.

Discovery procedures do not exist in Romanian law.

Should a document be in the possession of a public institution or authority, the court shall take measures, at the request of one of the parties or at its own initiative, to bring the document to court. The public institution or authority may refuse to present the document if it refers to national defence, public safety or diplomatic relations. Nonetheless, excerpts from such document may be made available should the disclosure of the entire document not be possible.

There is also a possibility to ask the opposing party to present a certain document in its possession, under certain conditions (such claims are approved by the court if the document belongs to both parties, if the opposing party has referred to it during the proceedings or if the opposing party is obliged by law to present same).

Should a competitor bring state aid proceedings to a national court when the Commission is already investigating the case? Do the national courts fully comply with the Deutsche Lufthansa case law? What is the added value of such a ‘second track’, namely an additional court procedure next to the complaint at the Commission?

Emergency Ordinance No. 77/2014 does not make a distinction between the obligations of a national court in case of a closed investigation and the obligations of a national court in case of a non-finalised investigation. Hence, a national court is enabled and at the same time under obligation to take all necessary measures regarding the protection of any third parties affected by such potential illegal state aid.

It is, however, plausible that the court may decide to stay the proceedings until the Commission’s decision is made (as the national court could be bound by such a decision as regards the state aid qualification).

To date, we have not come across any relevant court decisions in this respect. However, it is only reasonable to assume that Romanian courts will closely follow the reasoning of the EU courts.

What is the role of economic evidence in the decision-making process?

National courts will rule on whether a certain measure amounts to illegal state aid. In that sense, economic evidence may prove to be a necessary and useful tool, especially when it comes to establishing the existence of an economic advantage or for private investor tests.

Usually, economic evidence may be presented by means of expert testimony or an expert report.

Nonetheless, if a decision of the Commission regarding the same case is in place, the court will be bound by the Commission’s findings regarding the existence of an aid measure. In this case, economic evidence will normally not be required or allowed.

What is the usual time frame for court proceedings at first instance and on appeal?

Despite recent reforms regarding the organisation of courts, the time frame for court proceedings both at first instance and on appeal is usually quite long. However, this time frame depends on the specific court where the claim is lodged. On average, the time frame in administrative litigation is roughly six months at first instance and roughly one year on appeal.

Nevertheless, there are special procedures that are (at least theoretically) faster, when it comes to the award of interim relief measures.

What are the conditions and procedures for grant of interim relief against unlawfully granted aid?

Under the Romanian Civil Procedural Code, it is possible to obtain interim relief in certain conditions that apply to all civil proceedings (including state aid proceedings). Thus, as a general rule, it is possible to obtain interim relief during state aid proceedings brought before Romanian courts. Hence, a court order can be obtained in urgent cases, in order to preserve a right that may otherwise be prejudiced; to prevent imminent damage; as well as to eliminate any hindrance that may appear in the course of execution.

This option is also expressly provided by Emergency Ordinance No. 77/2014, which states that, in case the provider grants state aid by infringing the notification obligation or the standstill provision, the courts can take all necessary measures for the protection of the interested parties, including any interim relief measures.

There is also a possibility to obtain interim relief during the proceedings with respect to potential unfair competition infringements.

What are the legal consequences if a national court establishes the presence of illegal aid? What happens in case of (illegal) state guarantees?

Should a court establish the presence of illegal aid, it is under obligation to take any necessary measures in accordance with the applicable procedural laws, in particular in relation to prevention of the payment of unlawful aid, recovery of unlawful aid, recovery of illegal interest and damages for affected competitors.

There have been no known noteworthy developments in relation to the Residex case law in Romania.

What are the conditions for competitors to obtain damages for award of unlawful state aid or a breach of the standstill obligation in article 108(3) TFEU? Can competitors claim damages from the state or the beneficiary? How do national courts calculate damages?

In theory, aggrieved competitors can file for damages from the state aid provider or the beneficiary or both.

Any such claims shall be based on the general tort law requirements, based on infringement of state aid legislation (and potentially also unfair competition). Under Romanian civil law, a successful claim in tort should fulfil the following conditions: the existence of an infringement, the existence of damages, the guilt of the infringer as well as a causal link between the infringement and the damages.