(Failure of a Member State to fulfil obligations - Judgment by default - Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community - Transition period - Jurisdiction of the Court - Judgment of the Supreme Court of the United Kingdom - Enforcement of an arbitral award -- Article 4(3) TEU - Duty of sincere cooperation - Stay of proceedings - First paragraph of Article 351 TFEU - Agreements between Member States and third countries concluded before the date of their accession to the European Union - Multilateral treaties - Article 267 TFEU - Failure to refer a question for a preliminary ruling - National court adjudicating at last instance - Article 108(3) TFEU - State aid - Standstill obligation)
II. Background to the case and the pre-litigation procedure
15. The relevant factual background to the dispute, as appearing in the case file, can be summarised as follows.
A. The arbitral award, the Commission’s decisions and the proceedings before the Court of Justice of the European Union
16. On 26 August 2004, Romania repealed, with effect from 22 February 2005, a regional State aid scheme in the form of various tax incentives that had been established in 1998. On 28 July 2005, Swedish investors Ioan and Viorel Micula and three companies they controlled which were established in Romania (‘the investors’) - which had benefited from the scheme before its repeal - requested the establishment of an arbitral tribunal pursuant to Article 7 of the BIT, in order to obtain compensation for the damage resulting from the revocation of the tax incentives scheme at issue.
17. In its arbitral award of 11 December 2013 (‘the award’), the arbitral tribunal found that, by repealing the tax incentives scheme at issue prior to 1 April 2009, Romania had violated the legitimate expectations of the investors, had failed to act transparently by failing to inform them in a timely manner and had failed to ensure fair and equitable treatment of their investments, within the meaning of Article 2(3) of the BIT. Consequently, the arbitral tribunal ordered Romania to pay the investors, by way of damages, the sum of Romanian lei (RON) 791 882 452 (approximately EUR 160 million at the current exchange rate).
18. On 26 May 2014, the Commission adopted Decision C(2014) 3192 final, obliging Romania immediately to suspend any action that might lead to the implementation or execution of the award, on the ground that such action appeared to constitute unlawful State aid, until the Commission had taken a final decision on the compatibility of the suspected aid with the internal market (‘the suspension injunction’).
19. On 1 October 2014, the Commission informed Romania that it had decided to initiate the formal investigation procedure laid down in Article 108(2) TFEU in respect of the suspected aid (‘the opening decision’).
20. Subsequently, on 30 March 2015, the Commission adopted Decision (EU) 2015/1470 on State aid SA.38517 (2014/C) (ex 2014/NN) implemented by Romania - Arbitral award Micula v Romania of 11 December 2013 (‘the 2015 final decision’). That decision provided, in essence, that (i) the payment of the compensation granted by the award to the investors constituted ‘State aid’ within the meaning of Article 107(1) TFEU which was incompatible with the internal market, and (ii) Romania was required not to pay out any incompatible aid, and must recover such aid which had already been paid out to the investors.
21. The investors challenged the validity of the 2015 final decision before the General Court, which, by the judgment of 18 June 2019 in European Food and Others v Commission, annulled that decision. (8) In essence, the General Court upheld the investors’ pleas alleging (i) the Commission’s lack of competence and the inapplicability of EU law to a situation predating Romania’s accession, and (ii) an error in classifying the award as an ‘advantage’ and ‘aid’ within the meaning of Article 107 TFEU.
22. On 27 August 2019, the Commission lodged an appeal against the judgment of the General Court before the Court of Justice. By its judgment of 25 January 2022, the Court of Justice set aside the judgment of the General Court. (9) In essence, the Court of Justice found, first, that the alleged aid was granted after Romania’s accession to the European Union and, consequently, the General Court had erred in law in holding that the Commission lacked competence ratione temporis to adopt the 2015 final decision. In addition, the Court of Justice found that the General Court had also erred in law when it held that the judgment in Achmea (10) was irrelevant in the case at hand. It followed - according to the Court of Justice - that Romania’s consent to the arbitration system laid down in the BIT became inapplicable following the accession of that Member State to the European Union. Since the General Court had not, in its judgment, examined all the pleas relied on by the investors, the Court of Justice referred the case back to the General Court for a fresh judgment. To date, that case is pending before the General Court.
23. Finally, by its order of 21 September 2022 in Romatsa and Others, the Court of Justice - answering a request for a preliminary ruling referred by a Belgian court in a dispute which involved the investors - ruled that Article 267 TFEU and Article 344 TFEU must be interpreted as meaning that a court of a Member State seised of the enforcement of the award is ‘obliged to set aside that award and, consequently, cannot in any event proceed with its enforcement in order to enable its beneficiaries to obtain payment of the damages which it awarded to them’. (11)