The General Court of the European Union annuls the European Commission’s Decision on State Aid in the Micula case (Micula v. Romania)

On 18 June 2019, the General Court of the European Union (“GCEU”) handed down its judgment in the case of Micula v. Romania and annulled the 2015 European Commission’s decision that the award rendered by an arbitral tribunal in 2013, obliging Romania to pay €178 million to the investors, constituted illegal State aid under European Union (“EU”) law and forbidding Romania from performing the arbitral award.

The arbitration case had been brought by five investors, including the Micula brothers, against Romania on the basis of Romania’s 2005 repeal of the incentives it had granted in 1998 under the Emergency Governance Ordinance (“EGO”) to certain investors in disfavoured regions.  The repeal was part of Romania’s accession process to the European Union with a view to eliminating all forms of State aid in national legislation incompatible with the acquis communautaire.

In March 2015, the European Commission adopted the contested decision according to which partial payment of the award by Romania constituted illegal State aid.  This decision required Romania to suspend further implementation or execution of the arbitral award.

In a judgment delivered on 18 June 2019, the GCEU held that the State aid measure by Romania was not incompatible with EU law.  As the EGO incentives were repealed prior to Romania’s accession to the EU, the Commission had no competence to assess their unlawfulness in light of EU law, according to the GCEU.  Thus, the State aid rules did not bind Romania prior to its accession to the EU.

The GCEU also held that the Commission had retroactively applied its powers and that it could not classify the measure at issue as State aid within the meaning of Article 107(1) TFEU.

In light of the Sweden-Romania BIT, the GCEU distinguished the Micula case from the Achmea case.  The GCEU held that the Micula arbitral tribunal was not bound to apply EU law to events occurring prior to Romania’s accession to the EU.

On this basis, the GCEU annulled the Commission’s contested decision in its entirety.

The GCEU’s decision is subject to appeal before the Court of Justice of the EU.