INspiRE Jean-Monnet-Centre of Excellence - Case Law: Alcan-Case
In the Alcan proceedings, the Federal Administrative Court attends to the compatibility of national regulations to reclaim an unlawful State aid with Community law. This involved the annulment of the notice of granting the state aid and accordingly the demanded recovery of the granted payments. The final decision of the EC Commission found these payments to violate Article 92 of the EC Treaty (now Article 107 of the TFEU) and therefore they had been granted contrary to Community law. In this particular case the Federal Administrative Court addressed the question, whether the limitation period of Section 48 (4) of the VwVfG (Verwaltungsverfahrensgesetz – Administrative Procedure Act), intending to protect legitimate expectations and ensure legal security, and the regulations for the absence of enrichment rule out a possible recovery of the granted aids, even if they were granted contrary to Community law.
Section 48 (4) of the VwVfG: “The annulment of an unlawful administrative act is possible only within one year after the authority becomes aware of the facts justifying the annulment. […]”
The recovery of aids generally proceeds according to the applicable national law. However, the national law is subject to the caveat that the application of this law is not to render the recovery, that is required under Community law, practically impossible (effet utile). The matter was referred to the European Court of Justice for a preliminary ruling of the question, whether the authority in charge is obliged to withdraw a notice of granting for an aid contrary to Community law (declared by a final decision of the Commission), even if the limitation period under national law has already lapsed. If the period has lapsed, technically under national law, the authority cannot withdrawn the notice anymore.
The European Court of Justice affirmed the national authority’s obligation to withdraw in all constellations submitted to the preliminary ruling. Applying Section 48 (4) of the VwVfG unrestricted to cases determined by European law in the previous judicial practice in Germany is therefore contrary to European law. If a withdrawal after one year is not possible, the principle of effet utile is violated. The Federal Administrative Court took account of the European Court of Justice’s decision and therefore found the European Court of Justice had not exceeded their competence by drawing up limits for the national law concerning limitation periods and protection of legitimate expectations in regards to the recovery of the aids granted contrary to Community law. The limitation period of Section 48 (4) of the VwVfG is therefore without effect for the recovery of aids granted contrary to Community law (development of law in conformance with primary law, effet utile). The Federal Administrative Court also declared the decision of the European Court of Justice does not overrule any indispensable fundamental constitutional rights, especially not the protection of legitimate expectations.
The European Court of Justice conforms with constitutional requirements, as long as they state, a company receiving aids can only trust in the correctness of the aids if these were granted in accordance with the designated procedure.
The German legislator has not yet drawn any consequences from the decision of the European Court of Justice and has not adjusted Section 48 (4) of the VwVfG. (Unlike after the ‘Quelle’-judgment or the ‘Fliesen’-judgment, see also INspiRE)
For particulars of the Alcan-judgment and the development of law in conformance with primary law see Möllers, Juristische Methodenlehre, 2. ed., Munich 2019, Section 12, mn. 27 et seqq. For the German legislator’s obligation to adjust see Möllers, Juristische Methodenlehre, 2. ed., Section 12, mn. 109 et seqq.