Germany’s Federal Court of Justice has ruled that the discount in fees Ryanair received from Lübeck Blankensee airport did not amount to state aid.

Unlike the European Court of Justice, the German court held that the European Commission’s opening decisions do not have a binding effect on national courts.

In the judgment, dated 9 February, the Federal Court of Justice said national courts are not obliged to order recovery of money paid in cases where the EU competition enforcer has opened a formal state aid investigation into the measure at issue.

Air Berlin had brought the case in 2004, seeking an order on the city of Lübeck to provide information about the details of the arrangements and eventually recover the alleged aid from Ryanair. Lübeck’s contract allegedly offered Ryanair airport fees much more favourable than those indicated by the published airport charge regulation.

When the court of first instance decided in 2006 to allow some of Air Berlin’s claims, Ryanair appealed, and in May 2008 the Higher Regional Court ruled there was no claim for Air Berlin.

Air Berlin then appealed this decision to the Federal Supreme Court, which decided in February 2011 to overturn the appeal court judgment of 2008 and send the matter back for a rehearing. The Higher Regional Court submitted questions about the binding effects of commission investigations to the European Court of Justice.

The European Commission had opened its own investigation into the case in 2007 and the ECJ made a preliminary ruling in 2013 that opening decisions by the European Commission to start an investigation place obligations on national courts, potentially including ordering the recovery of aid already paid.

Georg Berrisch, a partner at Baker Botts, who acted for Ryanair, said the European Court of Justice’s decision was unclear, but many believed it said that opening investigations by the commission are binding on national courts.

He said: “It said once the commission has opened formal investigations, national courts have to draw all consequences from a possible violation of article 108(3) and, as the case may be, must order the suspension of the measures and the recovery of payments.”

The Higher Regional Court in Germany decided in 2015 that Air Berlin had a claim due to the ECJ’s ruling that commission investigations are binding on national courts. Ryanair then appealed.

In its decision on 9 February, Germany’s Federal Court of Justice made clear that decisions by the European Commission to open an investigation do not immediately bind national courts. For example, if a court has doubts about whether the conduct truly constituted state aid, it can seek clarification and even a preliminary ruling from the European Court of Justice. The court had not published the full judgment at the time of writing, but issued a press release summarising its ruling.

Britta Grauke, a partner at Weil Gotshal & Manges who acted for Ryanair, said the Federal Court of Justice clarified that “the national courts must still review the interests of all parties involved, and, in particular, pay due regard to the principle of proportionality.”

A spokesperson for Ryanair said the company welcomed the Federal Court of Justice’s ruling and the European Commission’s confirmation that the agreement complied with the market economy operator principle and the EU state aid rules.

Air Berlin said that “only after publication of the decisions can it be verified whether, and which, effects the commission’s decision will have on the national court proceedings.”

Counsel to Ryanair

Weil Gotshal & Manges

Partner Britta Grauken in Frankfurt is assisted by Michaela Schmitt

Baker Botts

Partner Georg Berrisch in Brussels

Jordan and Hall

Partner Reiner Hall in Karlsruhe