Professor Geert van Calster, University of Leuven
Photo credit: Wojciech Antosz, via Wikimedia Commons
Executive summary: In early March, Advocate General Pikamäe issued an opinion in the case of Grupa Azoty S.A. et al v European Commission (Joined Cases C 73/22P and C 77/22 P). This case is an appeal concerning the ability to partially overturn the European Commission’s 2020 “Guidelines on certain State aid measures in the context of the system for greenhouse gas emission allowance trading post-2021.” Advocate General Pikamäe believes the plaintiffs lack the legal standing to contest these guidelines at the EU level. This paper challenges that stance, considering the right to judicial review within the European Courts and relevant case law. The argument presented is that the Opinion incorrectly assumes that hypothetical national judicial review of equally speculative national measures equates to adequate access to justice. This viewpoint further complicates the already restricted access to courts within a broader context, including environmental matters.
Introduction to the case at issue
Advocate General Pikamäe presented his opinion on Joined Cases C‑73/22P and C‑77/22P Grupa Azoty S.A. et al v European Commission in early March. This case, which revolves around a request to nullify parts of the Communication from the Commission of 25 September 2020 (titled ‘Guidelines on certain State aid measures in the context of the system for greenhouse gas emission allowance trading post-2021’), might initially appear unexciting to many. The aid in question aims to tackle “carbon leakage,” the potential relocation of industries outside the EU to avoid stricter environmental regulations. The companies involved, which produce fertilizers, nitrogen compounds, and synthetic fibers, are not listed in Annex I of these guidelines. Consequently, they are no longer considered vulnerable to carbon leakage, unlike under the previous 2012 Guidelines where the sector was part of Annex II.
Following the General Court’s decision to dismiss the applications due to a lack of standing, the case is now before the Court of Justice on appeal.
The General Court’s reasoning, specifically in paragraphs 40-42, centers on the assertion that the companies’ right to challenge their removal from the Annex (and the resulting loss of potential state aid) remains protected. This is because Member States retain the ability to provide aid outside the Guidelines framework, provided they notify the European Commission. The General Court posited that a likely refusal by the Commission to deem such aid compatible with the Internal Market could then be challenged before the European Courts.
This line of speculative reasoning raises fundamental concerns regarding access to justice within the European Courts system.
General framework for access to judicial review before the European Courts
Access to judicial review within the Court of Justice of the European Union (CJEU) has been a long-standing point of contention. Article 263 TFEU grants “privileged access” to EU institutions, which include Member States, the Council, the Commission, the European Parliament, the Court of Auditors, the European Central Bank, and the Committee of the Regions (as outlined in paragraphs 2 and 3 of the Article). The latter three institutions, however, may only initiate proceedings “for the purpose of protecting their prerogatives.”
Article 263 TFEU’s fourth paragraph focuses on “non-privileged” applicants. The General Court’s Order in the case at hand summarizes the standing requirements for these non-privileged applicants as follows (paragraph 26):
“The admissibility of an action brought by natural or legal persons against an act which is not addressed to them, in accordance with the fourth paragraph of Article 263 TFEU, is subject to the condition that they be accorded standing to bring proceedings, which arises in two situations. First, such proceedings may be instituted if the act is of direct and individual concern to those persons. Secondly, such persons may bring proceedings against a regulatory act not entailing implementing measures if that act is of direct concern to them..” (references to case-law omitted).
Direct concern. While a hurdle, the “direct concern” requirement is not the primary obstacle for establishing standing. For an individual to be directly affected by a Union act, the measure must have a direct impact on their legal standing. This impact must leave no room for discretion to those tasked with implementing it, making the implementation automatic and stemming directly from Union rules without the need for intermediary rules. This principle, established in settled case law, traces back to the 1978 Simmenthal judgment.
Individual concern. The “individual concern” requirement presents a more significant roadblock. The Court’s approach, referred to as the “Plaumann” test, originates from a 1963 case concerning a German importer of clementines. In Plaumann, the CJEU concluded that:
“(p)ersons other than those to whom a decision is addressed, may only claim to be individually concerned if that decision affects them by reason of certain attributes which are peculiar to them, or by reason of circumstances in which they are differentiated from all other persons and by virtue of these factors distinguishes them individually just as in the case of the person addressed.”
Difficult to meet on paper, this test becomes even more stringent in practice. The Court often finds that economic operators, for instance, are affected by virtue of engaging in commercial activities accessible to anyone at any time. This, the Court argues, does not differentiate the applicant from others impacted by the measure in the same way the addressed party is differentiated. Essentially, the Plaumann test functions as a “closed shop” test: to demonstrate individual concern in a decision addressed to another entity (including Regulations and Directives directed at Member States), an applicant must prove they are part of a “closed circle of persons who were known at the time of its adoption” (a frequently cited phrase, as in Federcoopesca).
The second avenue for non-privileged applicants to establish standing (challenging regulatory acts without implementing measures if directly affected) removes the strict “individual concern” requirement and was introduced by the Treaty of Lisbon. In PGNiG Supply, the General Court stated (paragraph 54):
“ [This condition] is to be interpreted in the light of that provision’s objective, which, as is clear from its origin, consists in preventing an individual whose legal situation is nevertheless directly altered by an act from being denied effective judicial protection with regard to that act. In the light of that objective, it appears that the third limb of the fourth paragraph of Article 263 TFEU is designed to apply only when the disputed act, in itself, in other words irrespective of any implementing measures, alters the legal situation of the applicant.”
At the heart of the General Court’s order lies the rule of law’s fundamental principle: ensuring effective judicial protection. This is the very point on which this paper disagrees with Advocate General Pikamäe’s Opinion in Grupa Azoty.
The challenge with the AG Opinion
— The Advocate General suggests (paragraph 32) that this case requires the Court to rule for the first time on the ability to challenge Commission State Aid guidelines. With all due respect, this argument is beside the point. The criteria for establishing standing in judicial review inherently hinge on the substance of the measure being challenged, irrespective of its label. The guidelines in question are remarkably detailed and explicitly instruct against granting aid to sectors outside the Annex. It’s unclear where Member States could even exercise discretion. The Advocate General’s reference (paragraph 35 onwards) to the legal character of guidelines (bound only by general EU law principles like proportionality) appears disingenuous at best. Furthermore, the persistent use of “soft-law” to describe these Guidelines obscures their real impact.
— The Advocate General’s defense of the General Court’s abstract reasoning as entirely consistent with existing CJEU case law might hold water theoretically. However, this stance disregards the practical ramifications of these Guidelines. At this juncture, it is worth recalling the consequences of restrictive standing rules in a potentially more captivating area: environmental law.
The restrictive approach to standing in environmental law cases paved the way for Advocate General Jacob’s Opinion in Union de Pequenos Agricultores (UPA), which the Court did not follow. It also influenced the then-Court of First Instance’s judgment in Jégo-Quéré. However, in Greenpeace, the Court of Justice dismissed the AG and CFI’s attempts to relax these stringent requirements.
Regardless of whether the CJEU’s decision in Greenpeace was correct (this paper argues it was not), the CJEU’s optimistic, and somewhat cynical, assumption that the preliminary ruling procedure guarantees effective judicial protection is revealed in practice. Seeking redress through national courts requires the Union measure to necessitate implementation acts by national authorities. This scenario often compels affected individuals to deliberately violate the rules established by the measure, only to subsequently use invalidity as a defense when facing legal action. As Advocate General Jacobs argued, it is unacceptable to expect individuals to break the law to access justice. And yet, this contrived route remains often the only one available.
In the Grupa Azoty case, this scenario is implausible. One cannot engineer a breach of State Aid rules based on the entirely hypothetical possibility of a Member State choosing to grant aid outside the framework, even when explicitly advised against it by the guidelines.
— Importantly, the Advocate General, in his concluding remarks, seems to put the cart before the horse, stating:
“whilst I am aware of the prevailing opinion regarding the need to expand the routes by which individuals access justice at EU level, I question whether it would be desirable, in general, for the Court to find that a soft law instrument like the guidelines at issue is a challengeable measure, and that any competitor that is able to show that it satisfies the requirement of direct concern, as identified in the judgment in Montessori, is thus entitled to bring a legal challenge where that measure constitutes a ‘regulatory act’ within the meaning of the last paragraph of Article 263(4) TFEU. I would note in this regard that, because they can be adopted quickly and adapted to contingent economic situations, these soft law instruments have been used, for example, to frame the Member States’ response to the recent crises caused by the collapse of the banking system, the COVID-19 pandemic and the outbreak of the war in Ukraine. In such situations, could the Commission be expected to adopt measures to make the exercise of its discretion more foreseeable and transparent knowing that the lawfulness of certain provisions can be directly challenged before the General Court? Could an increase in the number of those actions, which would then seem easily foreseeable, not paralyse the Commission’s clarificatory action? Is the revision of the problematic provisions of those measures by the Commission itself not sufficient for the economic operators concerned?”
With all due respect, the practical implications of granting this specific group of applicants standing in this instance would be negligible. Under the current Guidelines, only a handful of operators have lost access to potential State Aid that was available under the previous version. More fundamentally, the practical administration of court access must always follow the guarantee of that access – not the other way around. Access to justice should not be limited by concerns about its practical administration.
In conclusion, the Opinion erroneously presents national judicial review of hypothetical national measures as a sufficient guarantee of access to justice. In doing so, it exacerbates the already significant limitations on access to courts within a broader context, which includes environmental law.