Re State Equity Holding: Commission of the European Communities v. Belgium

[1986] ECR 99, [1987] 1 CMLR 710 (1986)

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Re State Equity Holding: Commission of the European Communities v. Belgium

European Communities Court of Justice
[1986] ECR 99, [1987] 1 CMLR 710 (1986)

Facts

In February 1983, the Commission of the European Communities (commission) (plaintiff) issued a decision finding that Belgium (defendant) violated Article 93(2) of the treaty (EEC Treaty) that created the European Economic Community (EEC) by providing 475 million Belgian francs in aid to a manufacturing firm. The commission ordered Belgium to effect a “withdrawal of the aid” and to notify the commission within two months of its compliance measures. Belgium did not seek to void the commission’s decision. In June, Belgium wrote to the commission to (1) contest the stated reasons for the decision, (2) emphasize the social consequences of closing the manufacturer, (3) observe that Belgian law prohibited the refund of share capital except by withdrawing profits, and (4) request an explanation of what “withdrawal of the aid” meant. In July, the commission responded that Belgium was required to fulfill EEC law and asked Belgium to promptly state what compliance measures it was taking. In September, Belgium wrote to the commission to again criticize the decision and request an explanation. In January 1984, the manufacturer’s shareholders resolved to wind up the company. In February, the commission brought an action in the European Communities Court of Justice seeking a declaration that Belgium failed to fulfill its obligation under the EEC Treaty by failing to comply with the commission’s decision. Belgium responded that it did not breach the EEC Treaty because the commission refused to explain what Belgium had to do to comply with the decision. Belgium further argued that it could not withdraw the aid to the manufacturer due to the lack of profits, as required by Belgian law. Rather, Belgium could withdraw the money only by winding up the manufacturer, which the commission’s decision did not mandate. Additionally, Belgium noted that the manufacturer’s shareholders already had decided to wind up the company. The commission countered that it was not impossible for Belgium to comply with the decision and that Belgium improperly sought to challenge the decision’s validity.

Rule of Law

Issue

Holding and Reasoning ()

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