Carbunion v Council (Order) [2014] EUECJ C-99/14

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(Appeals - State aid - Decision 2010/787/EU - Aid to facilitate the closure of uncompetitive coal mines - Conditions for considering that aid compatible with the internal market - Article 181 of the Rules of Procedure of the Court)

APPEAL under Article 56 of the Statute of the Court of Justice of the European Union, brought on 24 February 2014,

Federación Nacional de Empresarios de Minas de Carbón (Carbunión), established in Madrid (Spain), represented by K. Desai, solicitor, and S. Cisnal de Ugarte, abogado,

Council of the European Union, represented by F. Florindo Gijón and P. Mahnič Bruni, acting as Agents,

European Commission, represented by L. Flynn, É. Gippini Fournier and C. Urraca Caviedes, acting as Agents, with an address for service in Luxembourg,

composed of T. von Danwitz (Rapporteur), President of the Chamber, C. Vajda, A. Rosas, E. Juhász and D. Šváby, Judges,

having decided, after hearing the Advocate General, to rule by reasoned order in accordance with Article 181 of the Rules of Procedure of the Court,

1 By its appeal, the Federación Nacional de Empresarios de Minas de Carbón (Carbunión) seeks to have set aside the order of the General Court of the European Union in Carbunión v Council (T-176/11, EU:T:2013:686; ‘the order under appeal’) whereby that court dismissed as inadmissible its action seeking the partial annulment of Council Decision 2010/787/EU of 10 December 2010 on State aid to facilitate the closure of uncompetitive coal mines (OJ 2010 L 336, p. 24; ‘the contested decision’).

2 As Council Regulation (EC) No 1407/2002 of 23 July 2002 on State aid to the coal industry (OJ 2002 L 205, p. 1), which established a State aid regime specific to the coal sector, expired on 31 December 2010, the Council of the European Union adopted, on 10 December 2010, the contested decision.

‘(2) The small contribution of subsidised coal to the overall energy mix no longer justifies the maintenance of such subsidies for securing the supply of energy in the Union.

(3) The Union’s policy of encouraging renewable energy sources and a sustainable and safe low-carbon economy does not justify the indefinite support for uncompetitive coal mines. The categories of aid permitted by Regulation … No 1407/2002 should therefore not be continued indefinitely.

(4) However, in the absence of sector-specific State aid rules, only the general State aid rules apply to coal. In this context, uncompetitive coal mines, currently benefiting from aid under [Regulation No 1407/2002], may no longer be eligible for aid and may be forced to close.

(6) This Decision marks the transition, for the coal sector, from the application of sector-specific rules to the application of general State aid rules which are applicable to all sectors.

(7) In order to minimise the distortion of competition in the internal market resulting from State aid to facilitate the closure of uncompetitive coal mines, such aid should be degressive and strictly limited to coal production units that are irrevocably planned for closure.

(8) In order to mitigate the environmental impact of the production of coal by coal production units to which closure aid is granted, the Member States should establish a plan of appropriate measures, for example in the field of energy efficiency, renewable energy or carbon capture and storage.’

4 Article 2(1) of that decision provides that, in the context of closure of uncompetitive mines, aid to the coal industry may be considered compatible with the proper functioning of the internal market if it complies with the provisions of that decision.

‘1. Aid to an undertaking intended specifically to cover the current production losses of coal production units may be considered compatible with the internal market only if it satisfies the following conditions:

(a) the operation of the coal production units concerned must form part of a closure plan the deadline of which does not extend beyond 31 December 2018;

(b) the coal production units concerned must be closed definitively in accordance with the closure plan;

(f) the overall amount of closure aid granted by a Member State must follow a downward trend: by the end of 2013 the reduction must not be less than 25%, by the end of 2015 not less than 40%, by the end of 2016 not less than 60% and by the end of 2017 not less than 75% of the aid granted in 2011;

(h) the Member States must establish a plan to take measures aimed at mitigating the environmental impact of the production of coal by production units to which aid is granted pursuant to this Article, for example in the field of energy efficiency, renewable energy or carbon capture and storage.

3. If the coal production units to which aid is granted pursuant to paragraph 1 are not closed at the date fixed in the closure plan as authorised by the [European] Commission, the Member State concerned shall recover all aid granted in respect of the whole period covered by the closure plan.’

‘2. Member States which intend to grant closure aid as referred to in Article 3 shall notify a closure plan for the coal production units concerned to the Commission. The plan shall contain at least the following:

(b) the real or estimated production costs for each coal production unit per coal year;

3. Member States shall notify any amendments to the closure plan to the Commission.’

7 By application lodged at the Registry of the General Court on 14 March 2011, Carbunión brought an action seeking the annulment of Article 3(1)(a), (b) and (f), and (3) of the contested decision (‘the contested provisions’).

8 By order of the President of the Eighth Chamber of the General Court of 1 August 2011, the Commission was granted leave to intervene in support of the form of order sought by the Council.

9 By separate document, the Council raised an objection of inadmissibility under Article 114(1) of the Rules of Procedure of the General Court, arguing inter alia that the contested provisions were not severable from the remainder of the decision under appeal. Both Carbunión and the Commission submitted observations on that objection of inadmissibility.

10 By the order under appeal, the General Court upheld the objection of inadmissibility raised by the Council, supported by the Commission, and dismissed Carbunión’s action as inadmissible.

- set aside the order under appeal in its entirety, including the order to pay the costs;

- itself give final judgment in the dispute, in accordance with Article 61 of the Statute of the Court of Justice of the European Union, and to annul the contested provisions in so far as they affect Carbunión; and

12 The Council requests the Court to declare the appeal inadmissible and to order Carbunión to pay the costs.

13 The Commission asks that the Court dismiss the appeal and order Carbunión to pay the costs.

14 Under Article 181 of its Rules of Procedure, where an appeal is, in whole or in part, manifestly inadmissible or manifestly unfounded, the Court may at any time, acting on a proposal from the Judge-Rapporteur and after hearing the Advocate General, decide by reasoned order to dismiss that appeal in whole or in part. That provision should be applied in the present case.

15 The Council contends that the appeal is inadmissible in its entirety on the grounds, first, that it was brought before the Court out of time and, secondly, that Carbunión merely reproduces in its appeal the pleas and arguments already put forward before the General Court.

16 With regard to the first objection of inadmissibility, it should be stated that, under Article 56 of the Statute of the Court, the time-limit for bringing an appeal is two months from the notification of the decision appealed against. Under Article 51 of the Rules of Procedure of the Court, that time-limit is to be extended on account of distance by a single period of 10 days. If the time-limit ends on a Sunday, according to Article 49(2) of those rules, it is extended until the following working day. Moreover, Article 57(7) of those rules provides that the date and time at which a copy of the signed original of a procedural document is received at the Registry by telefax or any other technical means of communication available to the Court will be deemed to be the date and time of lodgment for the purposes of compliance with the procedural time-limits, provided that the signed original of the procedural document is lodged at the Registry no later than 10 days thereafter.

17 As the appellant received notification of the order under appeal on 13 December 2013, the time-limit for bringing an action against that order thus ended two months and 10 days after that date, namely on 23 February 2014. That day being a Sunday, the time-limit was extended until 24 February 2014, the date on which a copy of the signed original of the appeal was received, by telefax, at the Court. That signed original was lodged at the Court Registry on 28 February 2014, thus less than 10 days after the lodgment by telefax. Therefore, the first objection of inadmissibility, based on the appeal having been lodged out of time, must be rejected.

18 In relation to the second objection of inadmissibility, according to which the appeal is merely a repetition of the pleas already put forward before the General Court, it should be recalled that, according to settled case-law of the Court, an appeal which merely repeats or reproduces verbatim the pleas in law and arguments previously submitted to the General Court, does not satisfy the requirements to state reasons under the second subparagraph of Article 256(1) TFEU, the first subparagraph of Article 58 of the Statute of the Court of Justice, and Article 168(1)(d) of the Rules of Procedure of the Court. However, the points of law examined at first instance may be argued again in the course of an appeal, provided that the appellant challenges the interpretation or application of EU law by the General Court. Indeed, if an appellant could not thus base his appeal on pleas in law and arguments already relied on before the General Court, an appeal would be deprived of part of its purpose (see, to that effect, judgment in Inuit Tapiriit Kanatami and Others v Parliament and Council, C-583/11 P, EU:C:2013:625, paragraphs 46 and 47 and the case-law cited).

19 In its appeal, Carbunión does not merely reiterate or reproduce verbatim the pleas and arguments it raised before the General Court but challenges specific paragraphs of the order under appeal that it considers to be vitiated by errors of law. Carbunión maintains in particular that such errors of law were committed by the General Court in the context of the interpretation under which it found the contested provisions to be conditions for the grant of aid intrinsically linked to the substance of the contested decision. It thus challenges an essential part of the reasoning of the order under appeal. Therefore, the second ground of inadmissibility must also be rejected.

21 By its first ground of appeal, Carbunión alleges that the General Court committed an error of law in paragraphs 33, 35 to 37 and 40 of the order under appeal in so far as it found the contested provisions to be intrinsically linked to the substance of the contested decision.

22 Carbunión maintains that that finding is based on an incorrect method of assessment, namely on a limited purposive interpretation under which the contested decision purports to create a specific legal framework for granting of aid for the closure of uncompetitive coal mines. In Carbunión’s view, the General Court should have used a comprehensive purposive interpretation as regards that decision, by taking into account in particular Recitals 3 and 8 in the preamble thereto as well as Article 3(1)(h) of the same decision, so as to find that its purpose was to promote the environment and renewable energy sources.

23 Moreover, the General Court should have used a counterfactual scenario for the assessment of whether the contested provisions were severable; specifically, it should have analysed whether removing the contested provisions would have prevented the contested decision from attaining its specific purpose.

24 Lastly, the General Court committed an error of law by examining whether collectively the contested provisions were severable instead of undertaking an individual examination of each contested provision in respect of its severability from the remainder of the contested decision.

26 According to the settled case-law of the Court, partial annulment of a Union act is possible only if the elements whose annulment is sought may be severed from the remainder of the act (see, inter alia, judgments in Commission v Council, C-29/99, EU:C:2002:734, paragraph 45, and Germany v Commission, C-239/01, EU:C:2003:514, paragraph 33). The Court has repeatedly ruled that that requirement of severability is not satisfied where the partial annulment of an act would have the effect of altering its substance (judgments in Commission v Poland, C-504/09 P, EU:C:2012:178, paragraph 98, and Commission v Parliament and Council, C-427/12, EU:C:2014:170, paragraph 16).

28 In that regard, it should be recalled that the contested decision, as is apparent from its title, purports to establish a specific legal framework for the grant of aid to facilitate the closure of uncompetitive coal mines. It is apparent from Recitals 4 and 6 in the preamble to that decision that the decision marks the transition from the application of rules specific to the coal sector to the application of general rules applicable to all sectors. In particular, it is based on the Council’s view, set out in Recitals 2 and 3 in the preamble to the decision, that the Union’s policy of encouraging renewable energy sources and a sustainable and safe low-carbon economy does not justify the indefinite granting, to those uncompetitive coal mines, of aid permitted by Regulation No 1407/2002.

29 Against that background, Carbunión is wrong to argue that the contested decision purports to promote the protection of the environment and renewable energy sources. That argument in fact stems from a confusion between the purpose of that decision and the considerations justifying its adoption. Those elements are mentioned in Recital 3 in the preamble to the contested decision only to justify its purpose of facilitating the closure of uncompetitive coal mines. Moreover, while Article 3(1)(h) of the contested decision and Recital 8 in the preamble thereto provide for the establishment of a plan to take measures aimed at mitigating the effects of coal production on the environment, those planned measures concern only production units to which closure aid has been granted and which, according to Recital 7 in the preamble to that decision, are irrevocably planned for closure.

30 As regards the review of whether the contested provisions are severable, that review requires consideration of the scope of those provisions, in order to be able to assess whether their annulment would alter the spirit and substance of the contested decision (judgment in Commission v Estonia, C-505/09 P, EU:C:2012:179, paragraph 112 and the case-law cited).

31 In that regard, it should be recalled that the contested provisions specifically limit the grant of coal production aid only to aid for closing uncompetitive coal mines. Under those provisions, the grant of that aid is subject to the condition that the coal production units be definitively closed at the date fixed in the closure plan - 31 December 2018 at the latest - failing which the Member State concerned must recover all aid granted. In those conditions, partial annulment of the contested decision, which would be limited to the contested provisions, would have the effect of removing that temporal requirement, meaning that uncompetitive coal mines would not have to cease operations by 31 December 2018, but could continue to run and to receive State aid indefinitely, contrary to the purpose of the contested decision, set out in paragraph 28 of this judgment.

32 It follows that the General Court committed no error of law in finding, in paragraphs 33, 35 to 37 and 40 of the order under appeal, that the contested provisions were intrinsically linked with the very substance of the contested decision.

33 With regard to the complaint that the General Court, for the assessment of whether the contested provisions were severable, should have used a counterfactual scenario consisting of analysing whether removing the contested provisions would have prevented the contested decision from attaining its specific purpose, it must be considered that, even if it is true that it was required to do so, the General Court did in fact undertake such an analysis. In fact, in paragraph 38 of the order under appeal, it found that the partial annulment sought by Carbunión would result in the contested decision, under which State aid to the coal sector can be authorised only until the definitive closure of the production units receiving the aid, namely by 31 December 2018 at the latest, being replaced by a different decision authorising the grant of such aid without any limitation in time. Therefore, the complaint is based on a manifestly erroneous reading of the order under appeal.

34 The same is true of the complaint that the General Court did not individually analyse the severability of the contested provisions, without it being necessary to assess whether it was required to undertake such an analysis. In paragraphs 45 and 46 of the order under appeal, the General Court did in fact individually analyse Articles 3(1)(a) and (f) of the contested decision in relation to their severability from the remainder of that decision. With regard to Article 3(1)(b) and (3) thereof, Carbunión is similarly not entitled to challenge, before this Court, a lack of individual analysis of those provisions, given that it did not put forward arguments supporting the severability of those provisions before the General Court, as is apparent from paragraph 44 of the order under appeal.

35 Having regard to the foregoing considerations, the first ground relied on by Carbunión in support of its appeal must be rejected as manifestly unfounded.

36 By its third and fourth grounds of appeal, which should be examined together, Carbunión maintains that the General Court committed an error of law in holding that the provisions of Article 3(1)(a) and (f) of the contested decision taken individually were not severable from that decision.

37 In Carbunión’s view, contrary to the finding of the General Court in paragraph 45 of the order under appeal, Article 3(1)(a) of the contested decision defines the temporal scope of the contested decision. Thus, on the basis of its own case-law to the effect that the provisions determining the temporal effects of a Union act may be subject to a partial annulment of that act (judgment in Vischim v Commission, T-380/06, EU:T:2009:392, paragraph 54), the General Court should have found that that provision was severable from the remainder of the contested decision.

38 Carbunión also maintains that, in paragraph 46 of the order under appeal, the General Court incorrectly interpreted Article 3(1)(f) of that decision, in finding that the compatibility with the internal market of the aid provided for by that provision was conditional on the gradual decrease of the aid. In Carbunión’s view, that gradual decrease is merely an arrangement for granting State aid in support of a specific industry that is severable from the remainder of the contested decision, in accordance with the solution adopted by the Court in the judgment in Germany v Commission (EU:C:2003:514, paragraphs 35 to 37).

41 It is clear, from the wording of Article 3(1)(a) of the contested decision, as the Commission has stated in its written observations, that that provision makes the grant of closure aid subject to the establishment of a closure plan the deadline of which does not extend beyond 31 December 2018, but does not determine the temporal scope of the contested decision. Moreover, the temporal scope of that decision is subject to a specific requirement, in Article 9 thereof, to the effect that the decision expires only on 31 December 2027. Therefore, the General Court was right to hold, in paragraph 45 of the order under appeal, that the judgment in Vischim v Commission (EU:T:2009:392) could not be used to support, by analogy, the argument that Article 3(1)(a) of the contested decision was severable from the remainder of that decision.

42 With regard to the gradual decrease of the aid pursuant to Article 3(1)(f) of the contested decision, it is sufficient to state that, according to the introductory wording of that paragraph, read in the light of Recital 7 in the preamble to that decision, that gradual decrease is a condition for the compatibility of closure aid for uncompetitive coal mines with the internal market which is intrinsically linked to the very purpose of the contested decision. It is clear from those considerations that the General Court was right to find, in paragraph 46 of the order under appeal, that Article 3(1)(f) of the contested decision was not severable from the remainder of it, unlike the provision in question in the case that led to the judgment in Germany v Commission (EU:C:2003:514) which related only to the financing rules of the aid scheme at issue in that case.

43 Accordingly, the third and fourth grounds of appeal put forward by Carbunión in support of its appeal must be rejected as manifestly unfounded.

44 By its second and fifth grounds of appeal, which should be examined together, Carbunión maintains that the General Court committed, in paragraph 39 of the order under appeal, an error of law, first, in finding that annulment of the contested provisions would deprive Article 7(2) and (3) of the contested decision of its intended effect and, secondly, in relying on that finding to conclude that the contested provisions could not be severed from the remainder of that decision.

45 The Commission contends that those grounds of appeal are ineffective and that, in any event, they are unfounded.

46 Those grounds of appeal stem from a manifestly erroneous reading of the order under appeal. While the General Court considered, in paragraph 39 of the order under appeal, that the partial annulment sought by Carbunión would deprive Article 7(2) and (3) of the contested decision of its intended effect, it nevertheless follows clearly from the wording used and, in particular, from the fact that that paragraph starts with the word ‘moreover’, that it is a supererogatory argument on which the General Court did not rely to find, in paragraph 40 of the order under appeal, that the contested provisions were not severable from the remainder of the contested decision.

47 In those conditions, the second and fifth grounds of appeal must be rejected as ineffective.

48 It follows from all of the foregoing considerations that the appeal must be dismissed in its entirety.

49 Under Article 138(1) of the Rules of Procedure of the Court of Justice, which applies to appeal proceedings by virtue of Article 184(1) thereof, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. Since the Council and the Commission have applied for costs and Carbunión has been unsuccessful, it must be ordered to pay the costs.

2. Orders La Federación Nacional de Empresarios de Minas de Carbón (Carbunión) to pay the costs.

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You are here: BAILII >> Databases >> Court of Justice of the European Communities (including Court of First Instance Decisions) >> Carbunion v Council (Order) [2014] EUECJ C-99/14_CO (11 December 2014) URL: http://www.bailii.org/eu/cases/EUECJ/2014/C9914_CO.html Cite as: ECLI:EU:C:2014:2446, EU:C:2014:2446, [2014] EUECJ C-99/14_CO

Court of Justice of the European Communities (including Court of First Instance Decisions)