In its Judgment of 11 November 2015 in Klausner Holz Niedersachsen, C-505/14, EU:C:2015:742, the Court of Justice of the European Union (CJEU) has reiterated that the requirement of effectiveness (effet utile) of EU law is incompatible with national principles and rules of finality of judicial decisions (res iudicata) that would prevent a court from drawing all the consequences of a
breach of the EU State aid rules in Art 107(1) and 108(3) TFEU because of a (related, previous) national judicial decision which has become
definitive.
The case does not set any new principle of EU law. The CJEU has repeatedly stressed that the effectiveness of EU law trumps res iudicata considerations under the domestic rules of the Member States--which has led some of them to develop a progressive approach to determining the finality of judicial decisions when not doing so would result in an infringement of EU law [regarding Italy, see Impresa Pizzarotti, C-213/13, EU:C:2014:2067 and comments here].
However, in my view, the case is interesting because the CJEU expands its case law as far as the application of the principle of consistent or harmonious interpretation is concerned, by indicating that domestic courts must try to reinterpret the principle of res iudicata itself in accordance with EU law so as not to impar its effectiveness and, only where that consistent interpretation is not possible, then proceed to a strict analysis of the principle of res iudicata under the principle of effectiveness of EU law.
In Klausner Holz Niedersachsen, the CJEU starts its reasoning by reiterating its settled case law on the duty of consistent interpretation and its limits.
30 While accepting that the principle of res judicata, as construed in national law, has certain objective, subjective and temporal limitations and certain exceptions, the referring court notes that that law precludes not only re-examination, in a second action, of the pleas already expressly settled definitively, but also the raising of questions which could have been raised in an earlier action and which were not so raised.
31 In that regard, it is appropriate to recall that it is for the national courts to interpret, as far as it is possible, the provisions of national law in such a way that they can be applied in a manner which contributes to the implementation of EU law (judgment in Lucchini, C-119/05, EU:C:2007:434, paragraph 60).
32 It is true that this principle of interpreting national law in conformity with EU law has certain limitations. Thus the obligation on a national court to refer to the content of EU law when interpreting and applying the relevant rules of domestic law is limited by general principles of law and it cannot serve as the basis for an interpretation of national law contra legem (see to that effect, judgments in Impact, C-268/06, EU:C:2008:223, paragraph 100, and Association de médiation sociale, C-176/12, EU:C:2014:2, paragraph 39).
...
34 In that regard, it must be borne in mind that the principle that national law must be interpreted in conformity with EU law also requires national courts to do whatever lies within their jurisdiction, taking the whole body of domestic law into consideration and applying the interpretative methods recognised by it, with a view to ensuring that EU law is fully effective and to achieving an outcome consistent with the objective pursued by it (see, to that effect, judgment in Dominguez, C-282/10, EU:C:2012:33, paragraph 27 and the case-law cited).
35 Thus, it is for the referring court to ascertain, on that basis, whether it can find such an interpretation ... (C-505/14, paras 30-35, emphasis added).
The CJEU then proceeds to extend the analysis where an EU law compliant interpretation of the principle of res iudicata is not possible. Unsurprisingly, it resorts to the principle of effectiveness of EU law, and reasons as follows:
38 If such a measure or interpretation should, however, prove not to be possible, attention should be drawn to the importance, both in the legal order of the European Union and in national legal systems, of the principle of res judicata. In order to ensure stability of the law and legal relations, as well as the sound administration of justice, it is important that judicial decisions which have become definitive after all rights of appeal have been exhausted or after expiry of the time-limits provided for in that regard can no longer be called into question (see judgments in Fallimento Olimpiclub, C-2/08, EU:C:2009:506, paragraph 22, and Târșia, C-69/14, EU:C:2015:662, paragraph 28).39 Therefore, EU law does not always require a national court to disapply domestic rules of procedure conferring finality on a judgment, even if to do so would make it possible to remedy a breach of EU law by the decision at issue (see judgments in Kapferer, C-234/04, EU:C:2006:178, paragraph 22, Fallimento Olimpiclub, C-2/08, C:2009:506, paragraph 23, Commission v Slovak Republic, C-507/08, EU:C:2010:802, paragraph 60, Impresa Pizzarotti, C-213/13, EU:C:2014:2067, paragraph 59, and Târșia, C-69/14, EU:C:2015:662, paragraph 29).40 In the absence of EU legislation in this area, the rules implementing the principle of res judicata are a matter for the national legal order, in accordance with the principle of the procedural autonomy of the Member States. However, such procedural rules must not be less favourable than those governing similar domestic situations (principle of equivalence) and must not be framed in such a way as to make it in practice impossible or excessively difficult to exercise the rights conferred by EU law (principle of effectiveness) (see judgments in Fallimento Olimpiclub, C-2/08, EU:C:2009:506, paragraph 24, and Impresa Pizzarotti, C-213/13, EU:C:2014:2067, paragraph 54 and the case-law cited).41 As regards application of the principle of effectiveness, the Court has held that every case in which the question arises as to whether a national procedural provision makes the application of EU law impossible or excessively difficult must be analysed by reference to the role of that provision in the procedure, its conduct and its special features, viewed as a whole, before the various national bodies. In that context, it is necessary to take into consideration, where relevant, the principles which lie at the basis of the national legal system, such as the protection of the rights of the defence, the principle of legal certainty and the proper conduct of the proceedings (see, to that effect, judgments in Fallimento Olimpiclub, C-2/08, EU:C:2009:506, paragraph 27, and Târșia, C-69/14, EU:C:2015:662, paragraphs 36 and 37 and the case-law cited).42 In that regard, it must be noted that an interpretation of national law ... can have the consequence, in particular, that effects are attributed to the decision of a national court ... which frustrate the application of EU law, in that they make it impossible for the national courts to satisfy their obligation to ensure compliance with the third sentence of Article 108(3) TFEU.43 It follows therefrom that both the State authorities and the recipients of State aid would be able to circumvent the prohibition laid down in the third sentence of Article 108(3) TFEU by obtaining, without relying on EU law on State aid, a declaratory judgment whose effect would enable them, definitively, to continue to implement the aid in question over a number of years. Thus, in a case such as that at issue in the main proceedings, a breach of EU law would recur ... without it being possible to remedy it.44 Furthermore, such an interpretation of national law is likely to deprive of any useful effect the exclusive power of the Commission ... to assess, subject to review by the EU Courts, the compatibility of aid measures with the internal market. If the Commission, to which the Federal Republic of Germany has in the meantime notified the aid measure constituted by the contracts at issue, should conclude that it is incompatible with the internal market and order its recovery, execution of its decision must fail if a decision of the national court could be raised against it declaring the contracts forming that aid to be 'in force' (C-505/14, paras 38-44, emphasis added).
The CJEU concludes that a significant obstacle to the effective
application of EU law and, in particular, a principle as fundamental as
that of the control of State aid cannot be justified either by the
principle of res judicata or by the principle of legal certainty (C-505/14, para 45). The final result leaves the open question of whether the initial analysis under the duty of consistent interpretation was at all necessary.
In my view, the CJEU tried to show deference towards the general principles of law of the national domestic orders of the Member States, while at the same time reaffirming the supremacy of the general principles of EU law. And in doing so, indicated to the Member States' courts that they should try to mediate any possible conflict by recourse to the duty of consistent interpretation, so as to 'domesticate' the requirement of effet utile of EU law. It will be interesting to see to what extent that leads to a reinterpretation of the German principle of res iudicata, which may well become 'progressive' all'Italiana. Who said that debates on general EU law were a thing of the past?
