Private enforcement against state aid awards in Greece

Private enforcement in national courts

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

The main principles are governed by EU state aid law directly. Against this EU state aid law background, any competent court will have to hear private complaints against the award of state aid (unlawful aid, ie, not notified to the European Commission or implemented before the latter’s approval and unlawful and incompatible aid following a negative decision by the European Commission).

There is no specific national rule describing in detail who has legal standing to bring an action against the award of state aid. The direct effect of article 107(1) TFEU (on the existence of aid) and of article 108(3) TFEU (on the notification and standstill obligations) allows affected parties such as competitors of the beneficiary to bring an action before the competent court. Under general administrative law, the most important element to be demonstrated is the causal link between the administrative act and the alleged damage.

The general powers of the national courts in state aid matters have already been described in question 13 but are repeated and further developed here for ease of reference.

Administrative courts

In most cases, the Greek administrative courts are competent to hear state aid matters. According to article 1(4)(f) of Law No. 1406/1983, the administrative courts have jurisdiction regarding disputes that derive from the issuance of administrative acts relating to the award of European or national aid, subsidies and similar benefits, as well as the administrative acts that impose a relevant measure or sanction. State aid cases are introduced before the Greek administrative courts of first instance.

However, where the aid is linked to a tax measure of an amount exceeding €150,000 or a contract awarded after a public procurement procedure, the case is introduced to the administrative court of appeals, as court of first instance.

Finally, in case the measure is part of an investment scheme, the Supreme Administrative Court is competent pursuant to article 110 paragraph 14 of Law No. 4055/2012.

Decisions of the administrative courts of first instance can be appealed before the administrative courts of appeal where the total amount of the dispute exceeds €5,000, within 60 days of the date on which the decision of the court is served to the parties. An appeal does not have suspensory effect, but such suspension can be requested in case of risk of irreparable damage.

Decisions of administrative courts of appeal can be appealed solely on points of law before the Council of State, Greece’s supreme administrative court.

Civil courts

If aid is granted via a contract between the beneficiary and an administrative body under the provisions of private law, then the civil courts are competent to examine the case. Judgments of civil courts can be appealed within 30 days if the party lives in Greece and 60 days if the party lives abroad or does not have a known residence. An appeal in principle suspends execution of the first-instance judgment, unless the judge has decided it is provisionally enforceable.

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

As described above, there are several available grounds for bringing a private enforcement action, including article 108(3) TFEU directly, tort and contractual provisions.

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

Before administrative courts, it is the state that will defend the aid measure being challenged. Before civil courts, it could be either the state or the beneficiary, depending on how the applicant has formulated his or her application.

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?

Greek national courts have been petitioned to enforce compliance with state aid rules or the standstill obligation under article 108(3) TFEU, although such actions are still not very frequent. An action by a competitor does not automatically have suspensory effect, but the competitor can request the suspension or even the provisional recovery of the aid granted in violation of the standstill obligation.

Pursuant to article 202 of the Greek Code of Administrative Procedure, the applicant can request the suspension of the execution of the administrative act granting the aid. The suspensory effect of the decision expires with the issuance of the final judgment of the administrative court on the legality of the administrative act in question. Suspension can be granted if the measure would lead to irreparable damage for the applicant or if the main action for the annulment of the administrative measure is very likely to be accepted. The applicant bears the burden of proof. In any case, the suspension request is denied if the action for annulment is obviously unfounded or inadmissible (even if the damage is considered to be irreparable). The suspension request is also denied if the negative effects of such a suspension on the public or third-party interest is bigger than the benefit for the applicant.

Concerning specifically the recovery of aid found incompatible by a European Commission decision, a specific process is provided for in article 202, paragraph 4 of the Greek Code of Administrative Procedure. According to this procedure, in case the beneficiary wants to request the suspension of the act implementing such recovery, the following cumulative conditions must be satisfied (in line with the EU courts’ case law - see joined Cases C-143/88 and C-92/89 Zuckerfabrik Süderdithmarschen a.o. and Case C-465/93 Atlanta a.o.):

• apart from the action before the national court, they must have filed an action for annulment before the General Court. Where such an action has not been filed, the national court must send a relevant preliminary question to the CJEU;
• there is serious doubt as to the validity of the European Commission’s decision or the national act implementing it; and
• the plaintiff demonstrates that the immediate execution of the act will cause the plaintiff irreparable damage.

Unfortunately, there seems to still be some confusion or reluctance to apply the direct effect of article 108(3). For instance, in its Decision A3016/2014, in which the applicants had raised the violation of article 108(3) TFEU, the Council of State rejected the argument on the basis that it was not competent to rule on the compatibility of the alleged aid. But this is a separate question, which indeed falls under the exclusive competence of the European Commission, independent from the obligation to notify state aid measures and only implement them after their approval from the European Commission.

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?

Greek courts can directly apply article 29 of Regulation 2015/1589 providing for the amicus curiae conditions in state aid matters. There is no need for a specific national rule of procedure. Pursuant to this provision, Greek courts can ask the Commission:

• to transmit to them relevant information in its possession (whether a procedure is ongoing, whether a decision has been taken, data, statistics, etc); and
• for an opinion concerning the application of EU state aid rules (on all economic, factual or legal matters arising in the context of the national proceedings).

Although national courts can stay proceedings while waiting for the Commission’s opinion, they remain under the obligation to protect individual rights under article 108(3) TFEU, which can include interim measures.

The Athens Court of First Instance requested the Commission’s opinion in the Hellenic Shipyards case (SA15526, Commission decision of 2 July 2008, confirmed by the General Court in Cases T-384/98, T-391/08 and by the CJEU in Case C-246/12 P), which the Commission provided on 29 July 2009.

The amicus curiae provisions also allow the Commission, where the coherent application of state aid rules so requires, acting on its own initiative, to submit written observations to Greek courts. The Commission may, with the permission of the court, also make oral observations and, to prepare its observations, it may request the court to transmit documents at its disposal.

The Commission submitted such observations to the Athens Administrative First Instance Court again concerning the Hellenic Shipyards case, but this time in the context of a request to suspend the acts implementing the Commission’s decision ordering the recovery of the aid found incompatible.

The above possibilities are of course without prejudice to the possibility or obligation for the national court to ask the CJEU for a preliminary ruling regarding the interpretation or the validity of EU law in accordance with article 267 TFEU.

Greek courts have used the procedure under article 267 TFEU, although not very frequently: see for example Cases C-690/13 Trapeza Eurobank Ergasias AE v Agrotiki Trapeza tis Ellados AE (ATE) and Pavlos Sidiropoulos; C-134/91 Kerafina-Keramische v Greece; and C-106/87 Asteris and Others v Greece and EEC.

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

It is the claimant that bears the burden of proof under article 145 of the Greek Code of Administrative Procedure. Likewise, according to article 338 of the Civil Procedure Code, each party must prove the facts necessary to support its claim. The claimant must therefore establish the existence of the contested aid and produce evidence thereof.

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?

A competitor should bring state aid proceedings before a national court when the Commission is already investigating the case, if it believes that it meets the requirements to request interim relief. While the Commission itself is competent to order the suspension of the provisional recovery of state aid granted in violation of the standstill obligation, national courts may be more willing to hear the competitor’s case. That said, granting interim relief is subject to very strict legal requirements before national courts as well (see above and joined Cases C-143/88 and C-92/89 Zuckerfabrik Süderdithmarschen a.o. and Case C-465/93 Atlanta a.o.).

In addition to the above added value, national courts are obliged to take into account the preliminary assessment of the European Commission in its decision to open a formal investigation, pursuant to the CJEU’s judgment in Case C-284/12 Deutsche Lufthansa. In this judgment the CJEU found that:

a national court hearing an application for the cessation of the implementation of that measure and the recovery of payments already made is required to adopt all the necessary measures with a view to drawing the appropriate conclusions from an infringement of the obligation to suspend the implementation of that measure. To that end, the national court may decide to suspend the implementation of the measure in question and order the recovery of payments already made. It may also decide to order provisional measures in order to safeguard both the interests of the parties concerned and the effectiveness of the European Commission’s decision to initiate the formal examination procedure. Where the national court entertains doubts as to whether the measure at issue constitutes State aid within the meaning of Article 107(1) TFEU or as to the validity or interpretation of the decision to initiate the formal examination procedure, it may seek clarification from the European Commission and, in accordance with the second and third paragraphs of Article 267 TFEU, it may or must refer a question to the Court of Justice of the European Union for a preliminary ruling.

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

As national courts are competent to assess whether a measure constitutes state aid under EU law, economic evidence can play an important role, in particular when ruling on whether the state acted as a private operator pursuant to the market economy investor principle.

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

The time frame for court proceedings is generally long in Greece, although requests for interim measures are faster.

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

See question 23.

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

National courts can only rule on the existence of aid, and on whether it is unlawful (ie, whether it has been notified to and approved by the European Commission). The assessment of the compatibility of an aid measure is an exclusive competence of the European Commission.

The legal consequences of the presence of unlawful aid will depend on what the applicant has requested. The EU courts’ case law imposes that the measures of the national courts must make it possible to restore the competitive situation existing prior to payment of the aid. As explained above, the consequences could include suspension of the grant of the aid, provisional recovery of aid already granted or damages.

Pursuant to the judgment in Case C-275/10 Residex, while EU law does not impose specific consequences that the national courts must draw with regard to an infringement of article 108(3) TFEU, the measures of the national courts must make it possible to restore the competitive situation existing prior to payment of the aid. Therefore, it is for the national courts to determine whether cancellation of a guarantee may, given the specific circumstances of the dispute, be a more effective means of achieving that restoration than other means.

National courts can therefore cancel a state guarantee if they consider it constitutes unlawful aid. It is for the national court to decide whether there is any less onerous procedural measure to restore the competitive situation, such as increasing either the premium paid for the guarantee or the interest rate for the corresponding loan.

The legal council of the Greek state, within its competence to advise administrative authorities following the submission of a relevant question, in its Opinion 42/2014, clarified that in case the granting of a guarantee by state bodies for securing a loan violates article 108(3) TFEU, taking into account the direct effect of Treaty articles, this results in the automatic declaration of the loan contract as null and void, under the national rule of articles 174 and 180 of the Greek Civil Code. These articles provide that an agreement that violates the law is invalid and is considered as non-existent. Therefore, the declaration of the loan contract as null and void is automatic and there is no need for a national court to recognise and declare its invalidity.

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?

Damages claims by competitors, third parties or beneficiaries against the granting authority before the national courts

Damages can be sought from the Greek state for non-compliance with EU law in the following two ways.

First, under national liability law, the Greek state and its organs can also be held liable for fault or negligence under articles 104 to 106 of the Introductory Law to the Greek Civil Code. Before administrative courts, the general procedural rules are described in articles 71 to 78 of the Code of Administrative Procedure.

It is necessary to prove a fault, the resulting damage and a causal link. These provisions can therefore be used to engage the state’s responsibility (including the legislature and even the judiciary in certain circumstances) for adopting an act that breaches EU law.

Second, damages can also be sought from the Greek state under EU law liability principles directly, in line with the principles set out in CJEU cases (Joined Cases C-6/90 and C-9/90 Francovich and Bonifaci and Joined Cases C-46/93 and C-48/93 Brasserie du Pêcheur-Factortame III). Under this case law, the liability of the state will be engaged where: (i) the rule of law infringed is intended to confer rights on individuals; (ii) the breach is sufficiently serious; and (iii) there is a direct causal link between the breach of the obligation resting on the state and the damage sustained by the injured parties. As regards the second condition, where the state has a large margin of discretion in implementing a policy, the CJEU has considered that the state’s liability can only be engaged where the state has manifestly and gravely disregarded the limits on its discretion. However, in the field of state aid, no margin of discretion is left to the member states on the application of article 108(3) TFEU. By definition, therefore, a violation of article 108(3) TFEU should always be regarded as a serious breach, likely to engage the state’s liability within the meaning of the case law mentioned above.

Damages claims by the beneficiary (against the granting authority) before the national courts are based on the same principles. However, the damage for the beneficiary cannot be the aid’s recovery. This is not a damage, only the logical consequence of the restoration of undistorted competition following the granting of unlawful aid. The damage must be inherently different in nature and in scope: the beneficiary should show specific damage (eg, that it would have invested its money differently in the absence of the annulled aid measure).

Damages claims by competitors or third parties against the beneficiary before the national courts

Under EU case law, the beneficiary, by claiming any benefit from the violation of article 108(3) TFEU, commits an act of unfair competition under national legislation (Case C-39/94 SFEI and others v La Poste and others). The competitor of such a beneficiary has the right to stop this act of unfair competition by having recourse to an efficient litigation procedure that leads to a definitive decision. In Greece, there is no specific national law providing explicitly for damages actions by a third party against the beneficiary of a state aid measure. Any person that considers it has suffered damages by any action of the aid beneficiary, which can be directly linked to the aid received, can claim compensation before the civil courts, under the general reparative provisions of article 914 of the Civil Code, or under the unjustified enrichment provisions, in particular article 904 of the Civil Code.

In both types of claims described above, damages are calculated according to methodologies similar to antitrust cases (loss of revenue, reduction of turnover, etc) but, as explained above, they cannot include the aid and interest to be recovered.