Insight: “Grand Chamber judgment in Czech Republic v Commission: judicial protection in the area of EU’s own resources to be channelled through actions for unjust enrichment” by Dolores Utrilla
The Grand Chamber of the Court of Justice has just rendered its judgment in Czech Republic v Commission (C-575/18 P), dismissing the appeal against the order of the General Court of 28 June 2018 in T-147/15. Thereby the Court of Justice confirms that the Commissionn’s letters under the EU’s system of traditional own resources (TOR) are not able to produce legal effects and therefore can not be subject to actions for annulment under Article 263 TFEU.
The case concerns certain imports in the Czech Republic of pocket flint lighters from Laos in the period from 2004 to 2007. Following an investigation by the European Anti-Fraud Office, the director of the Directorate ‘Own resources and financial programming’ of the Directorate-General for Budget of the Commission issued a letter informing the Czech authorities that the conditions for exemption from the obligation to make own resources available, provided for in Article 17(2) of Regulation 1150/2000, were not met, and called on them to make available the corresponding sum to the EU. On 17 March 2015, the Czech Republic paid the disputed amount into the Commission’s account, but expressed its reservations as to the view taken by the Directorate-General in its letter.
As the Commission decided not to initiate infringement proceedings because the TOR amount that was owed had been paid, the Czech Republic brought an action for annulment against the letter (T-147/15). By its order of 28 June 2018, the General Court dismissed the action as inadmissible, considering that the letter constituted a mere written statement of opinion supplemented by an invitation to make available the disputed TOR amounts.
By its appeal before the Court of Justice, the Czech Republic claimed that the General Court’s Order in T-147/15 is contrary to the Czech Republic’s right to effective judicial protection under Article 47 of the Charter, read in conjunction with Article 263 TFEU. According to the Czech Republic, the General Court erred in law when it considered that the Czech Republic’s right to judicial protection was safeguarded because there was a possibility that the Commission would make an application under Article 258 TFEU.
In its judgment today, the Grand Chamber of the Court of Justice dismissed the appeal considering that the right to effective judicial protection under Article 47 of the Charter is not intended to alter the system of judicial review provided for by the Treaties, and in particular the rules on the admissibility of actions brought directly before the Court of Justice of the EU (CJEU). Consequently, the interpretation of the concept of ‘challengeable act’ in the light of Article 47 cannot result in that condition being disregarded without exceeding the powers conferred by the TFEU on the CJEU.
Furthermore, the Court of Justice noted that the Czech Republic’s argument that its action for annulment should be allowed to succeed is at odds with the characteristics of the EU’s TOR system. Today’s judgment highlights that the obligations to collect, establish and pay TOR are imposed directly on the Member States by virtue of the provisions of Decisions 2000/597 and 2007/436 and Regulation 1150/2000, without the Commission being vested with a decision-making power enabling it to require the Member States to establish and make available to it amounts of the EU’s TOR. The Court of Justice emphasises that it is not its role to alter the choice made in that regard by the EU legislature.
As explained here, in addition to the appeal decided today by the Grand Chamber, two other actions by the Czech Republic are currently pending before the General Court: an action for failure to act against the Commission because it did not commence infringement procedures against the Czech Republic or return the paid amount (T-13/19), and an action for damages against the Commission on the basis of the prohibition of unjust enrichment (T-151/20).
Today’s judgment contains two elements of interest for these two pending cases.
Firstly, the Court of Justice has ruled that, contrary to the position of the Czech Republic, where a Member State makes a provision subject to reservations, the Commission cannot, however, be required to bring an action for failure to fulfil obligations against that Member State. According to the Grand Chamber, such an obligation would be contrary to the scheme of Article 258 TFEU, from which it follows that the Commission is not required to initiate infringement proceedings, but has a discretionary power in that regard.
Secondly, the Court of Justice has stressed that, where a Member State has made available to the Commission an amount of the EU’s own resources with reservations as to the merits of that Institution’s position and the dialogue procedure with the Commission has not made it possible to put an end to the dispute between that Member State and that institution, that Member State is entitled to claim compensation for unjust enrichment of the EU and, where appropriate, to bring an action to that effect before the General Court.
The judgment is available here (in French).
An Op-Ed on this case by Michal Kianička will be published soon on EU Law Live. We will keep you posted!
Dolores Utrilla is Assistant Editor at EU Law Live and Associate Professor at the University of Castilla-La Mancha.