Considerations for state aid recipients in Ireland

Considerations for aid recipients

Is there a legal right for businesses to obtain state aid or is the granting of aid completely within the authorities’ discretion?

There is no automatic legal right under Irish law to receive state aid. The granting of lawful aid is within the authorities’ discretion unless the putative recipient can point to a legal right (eg, founded on a contract or statute) to receive the state aid and then it must be lawful state aid.

If the aid to be provided is unlawful aid (ie, prohibited aid), then it is submitted that it would be unlawful for an arm of the state (eg, a government minister) to provide the aid and an Irish court should refuse to permit the granting of the aid (eg, by way of an injunction) because the Irish court would be acting in breach of its obligations under EU law. There is also case law that shows that the state has been unwilling to provide assistance that it has learned is illegal state aid (eg, Star Marina Limited v Minister for Agriculture Food and the Marine [2014] IEHC 112).

What are the main criteria the national authorities will consider before making an award?

Irish law does not set out the criteria that any national authority needs to consider before making an award of state aid. The Irish authorities must be very mindful of, among other factors, the need to comply with EU law and will not provide any assistance that would amount to unlawful state aid.

What are the main strategic considerations and best practices for successful applications for aid?

Anyone seeking state aid from Ireland should demonstrate how the proposed aid would assist in the fulfilment of an objective of national or regional policy. An examination of cases where state aid has been provided indicates that aid is provided where there is a specific need to meet a government policy aim (eg, to foster an industry such as tonnage tax in the shipping sector, to address regional development problems or to address a crisis such as special measures relating to dioxin contamination in Ireland). It will also be important to demonstrate that the aid would be lawful and, ideally, would be exempted aid not requiring authorisation by the European Commission. It is also worth bearing in mind the need to comply with the Regulation of Lobbying Act 2015 in terms of any lobbying of Designated Public Officials where the party lobbying is seeking state funds.

How may unsuccessful applicants challenge national authorities’ refusal to grant aid?

Anyone that has been refused state aid can potentially sue the relevant entity that has refused the aid provided there are legal grounds to justify an action. Such a suit will normally be instituted in the High Court (which is a trial court). Such a claim could be on the basis of, for example, a breach of administrative law (eg, improper exercise of discretion). However, it is unclear as to the chances of success of such a claim and the courts will ordinarily be deferential to the executive arm of the state and regard this as a matter falling within the doctrine of the separation of powers (ie, judicial power does not interfere with the exercise of executive or legislative power unless the latter is being exercised in a manner that is unlawful).

To what extent is the aid recipient involved in the EU investigation and notification process?

In Ireland, the aid recipient’s level of involvement varies from case to case. Ideally, recipients will seek to be involved at all stages of the investigation or notification but cannot insist on participation participation in matters which are between the European Commission and Ireland. Even in cases where a recipient is involved deeply in a case, there will be situations where Irish government officials will want to have private discussions with the European Commission. In practice, experience shows that a collaborative and interactive approach works best where the public officials can draw on the experience and expertise of the potential beneficiary beneficiary (eg, by virtue of its knowledge of the sector) in engaging with the European Commission, while the aid recipient can contribute knowledge of the sector and ‘coalface’ information, which the European Commission normally finds very helpful in its deliberations.