Belgium v Ryanair Ltd

• Jurisdiction: Ireland
• Judge: O'Neill J.
• Judgment Date: 30 June 2006
• Neutral Citation: [2006] IEHC 213
• Date: 30 June 2006
• Court: High Court
• Docket Number: [2005 No. 998 S]

KINGDOM OF BELGIUM v RYANAIR LTD

BETWEEN

KINGDOM OF BELGIUM

PLAINTIFF

AND

RYANAIR LIMITED

DEFENDANT

[2006] IEHC 213

[No. 998 S/2005]

THE HIGH COURT

PRACTICE AND PROCEDURE

Stay

European Union - Recovery of monies - National courts - Annulment of Commission decision - Specific claim - Whether proceedings in Ireland should be stayed pending decision of Court of First Instance of the European Communities - Joined Cases C-143/88 and C-92/89 Zuckerfabrik Suderdithmarschen AG v Hauptzollamt Itzehoe [1991] ECR I-415 and Case C-344/98 Masterfoods Ltd v HB Ice Cream Ltd [2000] ECR I-11369 applied - Merck & Co Inc v GD Searle & Co [2002] 3 IR 614 followed - Council Regulation (EEC) No 659/1999, article 14 - Treaty of Rome 1957, article 87(1) (2005/998S - O'Neill J - 30/6/2006) [2006] IEHC 213 Belgium v Ryanair Ltd

The defendants sought an order staying these proceedings pending the determination of case TT196/04 Ryanair v The Commission which was before the Court of First Instance of the European Communities ("CFI").

Held by O'Neill J. in refusing the application for a stay of the proceedings that the defendants had failed to demonstrate irreparable harm and were not entitled to a stay of the proceedings. There did not appear to be any risk of the proceedings leading to a judgment which could conflict with the judgment of the CFI.

Reporter: R.W.

EEC DEC 2004/393/EC

TREATY ON EUROPEAN UNION ART 87(1)

TREATY ON EUROPEAN UNION ART 234

FOTO-FROST v HAUPTZOLLAMT LUBECK-OST 1987 ECR 4199

MERCK & CO INC & ANOR v GD SEARLE & CO & MONSANTO CO 2002 3 IR 614 2001 2 ILRM 363

FRIENDS OF THE IRISH ENVIRONMENT v MIN ENVIRONMENT UNREP MURPHY 15.4.2005 2005/26/5400

DEPT OF TRADE v BRITISH AEROSPACE 1991 CMLR 165

MASTERFOODS LTD v HB ICE-CREAM LTD 2000 ECR 1=11 369

ZUCKERFABRIK SUDERDITHMARSCHEN AG v HAUPTZOLLAMT ITZEHOE 1991 ECR I-415 1993 3 CMLR 1

TREATY ON EUROPEAN UNION ART 226

EEC REG 659/1999 ART 14

TREATY ON EUROPEAN UNION ART 242

COMMISSION v BAF 1994 ECR 1/2555

COMMISSION v FRANCE C-232/05

KOBLER v AUSTRIA C-224/01 ECJ

TREATY ON EUROPEAN UNION ART 87

TREATY ON EUROPEAN UNION ART 249

TREATY ON EUROPEAN UNION ART 10

1 JUDGMENT of O'Neill J. delivered the 30th June, 2006 .

2 The defendants by their Notice of Motion on 28th day of October, 2005, seek an order staying these proceedings pending the determination of case TT196/04 Ryanair Ltd. v. the Commission of the European Communities, which is currently before the Court of First Instance of the European Communities (hereinafter referred to as the "CFI").

3 The background to this matter is as follows.

4 By its decision published on 12th February, 2004, the Commission of the European Communities (hereinafter referred to as the "Commission"), decided that certain arrangements or transactions which had been concluded between the Walloon region and the defendants and implemented by the plaintiff were determined to be illegal state aids and incompatible with Article 87(1) of the Treaty.

5 The conclusion of the Commission was expressed at paragraph 6 of the decision in the following terms:-

"6. CONCLUSIONS."

6 The Commission notes that Belgium has unlawfully provided aid for the benefit of the airline Ryanair in violation of Article 88(3) of the Treaty. However, for the contribution that this aid can make to the launching of new air transport services and the sustainable development to a regional airport, a portion of this aid may be declared compatible with the common market, subject to the conditions set out in ss. 338 to 334.

7 HAS ADOPTED THIS DECISION:

8 Article 1

9 The aid measures implemented by Belgium in the contract of the 6th November, 2001, concluded between the Walloon Region and Ryanair in the form of a reduction in airport landing charges that goes beyond the official tariff set in Article 3 of the Walloon Government decree of 16th July 1998 laying down charges to be levied for the use of airports in the Walloon Region, and the general discounts provided for in Article 7(1) and (2) of the said Decree, are incompatible with the common market within the meaning of Article 87(1) of the Treaty.

10 Article 2

11 The aid measures implemented by Belgium through the contract of 2nd November, 2001 concluded between Brussels South Charleroi Airport (BSCA) and Ryanair, in the form of discounts on ground handling services in comparison with the official airport tariff, are incompatible with the common market within the meaning of Article 87 (1) of the Treaty.

12 Belgium shall determine the total aid recoverable by calculating the difference between the operating costs borne by BCSA and linked to the ground handling services provided to Ryanair and the price invoiced to the airline. So long as the two-million passenger threshold provided for in Directive 96/67/EC remains unattained, Belgium may deduct from this total any profits realised by BCSA or other strictly commercial activities.

13 Article 3

14 Belgium shall ensure that the compensation guarantees granted in the contract of 6th November, 2001 by the Walloon Region in the event of losses suffered by Ryanair through the exercise by the Walloon of its regulator powers are void. The Walloon Region shall have with Ryanair, as with other airline companies all the necessary freedom and fixing airport charges, airport opening hours, or other provisions of regulatory nature.

15 Article 4

16 The other types of aid granted by BSCA, including marketing contributions, one-shot incentives and provision of office space, are declared compatible with the common market as start-up aid for new routes, subject to the following conditions:

17 (1) The contributions must relate to the opening of a new route and be limited in time. In view of the intra-European destinations covered, the time period must not exceed five years following the opening of a route. The contributions may not be paid for a route opened as a replacement for another route closed by Ryanair in the preceding five years. In future, aid may not be granted for a route that Ryanair has provided in replacement for another route that served previously from another airport located in the same economic or population catchment area.

18 (2) The marketing contributions, currently set at EUR 4 per passenger, must be justified in a development plan compiled by Ryanair and validated by BSCA for each route concerned. The plan shall specify the costs incurred and eligible, which must relate directly to the promotion of the route with the aim of making it viable without aid after an initial period of five years. At the end of the five year period BSCA shall a posteriori validate the start-up costs incurred by each airline, and BSCA shall where necessary enlist an independent auditor in the task.

19 (3) With regard to the portion of contributions already paid by BSCA, a similar exercise must be carried out to validate this aid on the same principles.

20 (4) The one shot contributions paid in a lump sum when Ryanair set up at Charleroi, or whenever a route was opened, must be recovered, except for any portion that Belgium can justify being directly linked to the costs that were incurred by Ryanair at the Charleroi airport hub and are proportional and incentive in nature.

21 (5) The sum total of aid for which a new route benefits must never exceed 50% of start-up marketing and one shot costs aggregated for the two destinations in question, including Charleroi. In the same way, the contributions granted for the destination must not exceed 50% of the actual costs for that destination. Specific attention shall be paid in these evaluations to routes that link Charleroi to a major airport, such as those included in Categories A and B as defined in the Committee of the Regions outlook opinion of 2nd July 2003 on the capacity of regional airports and identified in the present decision, and/or to co-ordinated or fully coordinated airports within the meaning of Regulation EEC No. 95/93.

22 (6) The contributions paid by BSCA that at the end of the five year start-up period exceed the criteria laid down must be repaid by Ryanair.

23 (7) The contributions paid where applicable for the Dublin-Charleroi route under the November 2001 contracts examined herein shall be recovered.

24 (8) Belgium shall set up a non-discriminatory aid scheme intended to ensure equality of treatment for airlines wishing to develop new air services departing from Charleroi airport in accordance with the objective criteria laid down in the present Decision.

25 Article 5

26 (1) Belgium shall take all the necessary measures to recover from the beneficiary the aid mentioned in Articles 2 and 2 and unlawfully made available to it. The aid mentioned in Article 1 may however remain partly unrecovered, for the portion that does not exceed the ceiling, in compliance with the conditions laid down in Article 4. The recovery shall be effected immediately in accordance with the procedures of national law, insofar as they allow immediate and effective enforcement of the present decision. The aid to be recovered shall include interest running from the date at which it was made available to the beneficiary to the date of recovery. The interest shall be calculated on the basis of the reference rate used for calculating the subsidy equivalent for regional aid. It shall be calculated on a compound basis.

27 (2) If the conditions laid down in Article 4 are not complied with a portion of the aid, whether that portion corresponds to a category of aid or an aided route, or if the terms for balancing the agreements concluded between Ryanair and BSCA are substantially altered, Belgium shall be required to recover all the corresponding aid referred to in the said article

28 Article 6 ...