Case C-596/13 P Commission v Moravia Gas Storage: Procedural changes, succession of directives and application in time

The Court of Justice’s recent judgment of 26 March 2015 in Case C-596/13 P Commission v Moravia Gas Storage EU:C:2015:203 sets out  – not for the first time – the principle according to which procedural rules in a new directive apply immediately to pending procedures.

Here’s what happened. 

In April 2009, the applicant, Globula a.s., which changed its name to Moravia Gas Storage applied to  the Czech Ministry of Industry and Trade (‘the Ministry’) for authorisation to build an underground gas storage facility (‘UGS facility’) at Dambořice (Czech Republic). In that application, it also applied for a temporary exemption from the obligation to provide negotiated third party access for the entire new capacity of the UGS facility.

The Ministry authorised – in October 2010 – the construction of the UGS facility and temporarily exempted the applicant from the obligation to provide negotiated third party access. The Ministry then wrote to the Commission in February 2011 notifying it of the decision granting the authorisation pursuant to Directive 2003/55/EC (the Second Gas Directive).

But – and this is when things got complicated – Directive 2003/55/EC was repealed and replaced by Directive 2009/73/EC (the Third Gas Directive) with effect from 3 March 2011, shortly after the Ministry notified the Commission.

Which procedure applied ? That of Directive 2003/55/EC or that of Directive 2009/73/EC ?

The question was important as Directive 2009/73/EC introduced a number of the key changes to the procedure at the Commission level:

  • First, the Commission is no longer required to ask initially the Member State concerned to withdraw or amend its decision, but can now adopt a binding decision directly.
  • Second, the Commission’s binding decision is no longer subject to the ‘comitology’ procedure.
  • Third, the periods within which the Commission may act have been changed. Whereas, under the Second Gas Directive, the initial two-month period could be extended by a month where the Commission sought further information, that initial period may be extended, under the Third Gas Directive, by an additional period of two months from the receipt of the additional information.

The Commission considered that the procedure under the Third Gas Directive applied and adopted a Decision by which it ordered the Czech Republic to withdraw its decision of October 2010. Thus, the Commission did not first address an initial decision asking the Czech Republic to withdraw or amend its decision.

The Applicant, Globula (later Moravia Gas Storage) challenged the Commission’s decision successfully in the General Court in Globula v Commission Case T-465/11, EU:T:2013:406. In its judgment, the General Court annulled the Commission’s decision finding that the Commission was wrong to apply the procedural provisions of the Third Gas Directive and should have applied those in the Second Gas Directive.

The Commission then appealed that judgment in Case C-596/13 P. And won. The Court of Justice quashed the judgment of the General Court and referred the case back to it.

The Court recalled that a new rule of law applies from the entry into force of the act introducing it, and, while it does not apply to legal situations that have arisen and become definitive under the old law, it does apply to their future effects, and to new legal situations. It is otherwise, subject to the principle of the non-retroactivity of legal acts, only if the new rule is accompanied by special provisions which specifically lay down its conditions of temporal application (judgment in Gemeinde Altrip and Others, C‑72/12, EU:C:2013:712, paragraph 22 and the case-law cited).

As for procedural rules, the Court recalls that  according to settled case-law, they are generally taken to apply from the date on which they enter into force (judgment in Commission v Spain, C‑610/10, EU:C:2012:781, paragraph 45 and the case-law cited), as opposed to substantive rules, which are usually interpreted as applying to situations existing before their entry into force only in so far as it clearly follows from their terms, their objectives or their general scheme that such an effect must be given to them (see judgments in Meridionale Industria Salumi and Others, 212/80 to 217/80, EU:C:1981:270, paragraph 9; Molenbergnatie, C‑201/04, EU:C:2006:136, paragraph 31; and Commission v Freistaat Sachsen, C‑334/07 P, EU:C:2008:709, paragraph 44).

The Court has also held that the provision which forms the legal basis of an act and empowers an EU institution to adopt the act must be in force on the date on which the act is adopted (see judgment in ThyssenKrupp v Commission, C‑352/09 P, EU:C:2011:191, paragraph 88).

In the present case, the General Court held that the procedural and substantive changes introduced by Article 36 of Directive 2009/73 formed an indivisible whole, so that, in accordance with the judgment in Meridionale Industria Salumi and Others (212/80 to 217/80, EU:C:1981:270), the entirety of those provisions did not apply with retroactive effect: consequently the rules of Directive 2003/55 applied with respect both to the substance and to the procedure.

The Court went on to distinguish the rule set out in Meridionale Industria Salumi and Others (212/80 to 217/80, EU:C:1981:270) by stating that it was an exceptional case. It held in that rather peculiar case that EU legislation which was intended to establish a body of rules covering the post-clearance recovery of customs duties contained both procedural and substantive rules forming an indivisible whole, the individual provisions of which could not be considered in isolation with regard to their temporal effect. The reason for such an exception was the replacement of the existing national rules by new EU rules, with the aim of achieving a consistent and uniform application of EU legislation thus established in the field of customs (see judgment in Molenbergnatie, C‑201/04, EU:C:2006:136, paragraph 32).

The Court made clear that the situation at issue in Meridionale Industria Salumi and Others (212/80 to 217/80, EU:C:1981:270) is not comparable to that at issue in the present case. Directive 2009/73 repeals and replaces previous EU legislation applicable in the same field, namely Directive 2003/55. Directive 2009/73 does not create a new set of rules but is a direct continuation of Directive 2003/55, and leaves unchanged the content of the substantive provisions of that directive, in particular the substantive provisions on the material conditions for the grant of an exemption in Article 22(1) and (2) of Directive 2003/55 and Article 36(1) and (2) of Directive 2009/73.

The fact that the procedural rules of Directive 2003/55 were amended by Directive 2009/73 is not in itself, contrary to the General Court’s conclusion in paragraph 36 of the judgment under appeal, capable of showing that the procedural and substantive provisions laid down in Article 36 of Directive 2009/73 are ‘indivisible’ within the meaning of the judgment in Meridionale Industria Salumi and Others (212/80 to 217/80, EU:C:1981:270). On the contrary, the fact that in those directives the same substantive provisions are accompanied by different procedural provisions tends to show that, in the circumstances of the present case, those substantive provisions can be separated from those procedural provisions.

It follows that, in the absence of special provisions specifically determining the conditions of its temporal application, Directive 2009/73 was to apply to procedures that were ongoing on the date of its entry into force, 3 March 2011. The General Court therefore erred in law in considering that the Commission had been wrong to apply that directive when adopting the contested decision.

MGS and the Czech Republic claimed that the application of Directive 2009/73 would breach the principle of the protection of legitimate expectations. The Court dismissed that argument by stating that according to settled case-law that principle cannot be extended to the point of generally preventing a new rule from applying to the future effects of situations which arose under the earlier rule (judgments in Tomadini, 84/78, EU:C:1979:129, paragraph 21; Commission v Freistaat Sachsen, C‑334/07 P, EU:C:2008:709, paragraph 43; and Stadt Papenburg, C‑226/08, EU:C:2010:10, paragraph 46).

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