Reports of Cases. JUDGMENT OF THE COURT (First Chamber) 18 February 2016 *

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1 Reports of Cases JUDGMENT OF THE COURT (First Chamber) 18 February 2016 * (Reference for a preliminary ruling Directive 93/13/EEC Unfair terms Order for payment procedure Enforcement proceedings Powers of the national court responsible for enforcement to raise of its own motion the fact that the unfair term is invalid Principle of res judicata Principle of effectiveness Charter of Fundamental Rights of the European Union Judicial protection) In Case C-49/14, REQUEST for a preliminary ruling under Article 267 TFEU from the Juzgado de Primera Instancia No 5 de Cartagena (Court of First Instance, Cartagena, Spain), made by order of 23 January 2014, received at the Court on 3 February 2014, in the proceedings Finanmadrid EFC SA v Jesús Vicente Albán Zambrano, María Josefa García Zapata, Jorge Luis Albán Zambrano, Miriam Elisabeth Caicedo Merino, THE COURT (First Chamber), composed of A. Tizzano, Vice-President of the Court, acting as President of the First Chamber, A. Borg Barthet, E. Levits (Rapporteur), M. Berger and S. Rodin, Judges, Advocate General: M. Szpunar, Secretario judicial: M. Ferreira, Principal Administrator, having regard to the written procedure and further to the hearing on 2 September 2015, after considering the observations submitted on behalf of: the Spanish Government, by A. Rubio González, acting as Agent, the German Government, by T. Henze, J. Kemper, D. Kuon and J. Mentgen, acting as Agents, EN * Language of the case: Spanish. ECLI:EU:C:2016:98 1

2 JUDGMENT OF CASE C-49/14 FINANMADRID EFC 15 Mr J.L. Albán Zambrano, Ms García Zapata and Ms Caicedo Merino were joint guarantors to Finanmadrid in respect of that loan. 16 A commission on opening the file had been set at 2.5% of the capital reimbursement was to be by instalments over 84 months at an interest rate of 7% per annum. For any late payment of the instalments, a late payment interest rate of 1.5% per month was provided for as well as a penalty of EUR 30 in respect of each instalment missed. 17 Since the instalments of the loan taken out by Mr J.V. Albán Zambrano had not been paid since the beginning of 2011, on 8 July 2011 Finanmadrid terminated the contract at issue in the main proceedings early. 18 On 8 November 2011, Finanmadrid applied to the Secretario judicial of the Juzgado de Primera Instancia No 5 de Cartagena (Court of First Instance, Cartagena) to open enforcement proceedings against the defendants in the main proceedings. 19 By decision of 13 February 2012, the Secretario judicial of the Juzgado de Primera Instancia No 5 de Cartagena (Court of First Instance, Cartagena, Spain) declared that application admissible and ordered the defendants to the main proceedings either to pay the sum of EUR , together with interest from 8 July 2011, within 20 days, or, through a lawyer and a procurador, to oppose the enforcement of the debt and to appear before that court in order to explain why they considered they were not liable to pay all or part of the amount claimed. 20 Since within the time limit set, the defendants to the main proceedings failed either to comply with the order for payment or to appear before the court, by decision of 18 June 2012 the Secretario judicial closed the enforcement proceedings pursuant to Article 816 of the LEC. 21 On 8 July 2013, Finanmadrid applied to the Juzgado de Primera Instancia No 5 de Cartagena (Court of First Instance, Cartagena) for execution of that decision. 22 On 13 September 2013, that court requested the parties to the main proceedings to submit their observations concerning, inter alia, the potentially unfair nature of some of the terms of the contract at issue in the main proceedings and whether the legislation governing enforcement proceedings runs counter to the right to effective judicial protection. With regard to the latter aspect, that court noted that it had not been informed of the application for an order for payment made by Finanmadrid, of the examination of that application by the Secretario judicial, or of its outcome. 23 Only the applicant in the main proceedings submitted observations. 24 The referring court states that Spanish procedural law provides for intervention by the court in enforcement proceedings only where it is apparent from the documents annexed to the application that the amount claimed is not correct, in which case the Secretario judicial must inform the court thereof, or where the debtor contests the order for payment proceedings. It adds that, since the decision of the Secretario judicial is an enforceable procedural instrument with the force of res judicata, the court cannot examine of its own motion, in enforcement proceedings, any possible unfair terms in the contract which gave rise to the order for payment proceedings. 25 In that context, having doubts as to the compatibility of the relevant provisions of Spanish law with EU law, that court decided to stay the proceedings and to refer the following questions to the Court for a preliminary ruling: (1) Must Directive [93/13] be interpreted as precluding national legislation such as that currently governing the Spanish order for payment procedure (Articles 815 and 816 [of the] LEC), which does not mandatorily provide either for the examination of unfair terms or the intervention of the ECLI:EU:C:2016:98 5

3 JUDGMENT OF CASE C-49/14 FINANMADRID EFC 38 Since the reform made by Law 13/2009 (BOE No 266, of 4 November 2009, p ), which entered into force on 4 May 2010, it is now for the Secretario judicial, if the debtor fails to comply with the order for payment or fails to appear before the court, to give a reasoned decision which closes the order for payment procedure and has the force of res judicata. 39 That legislative amendment, made with a view to accelerating the process of order for payment proceedings, is not, as such, the subject matter of the doubts expressed by the Juzgado de Primera Instancia No 5 de Cartagena (Court of First Instance, Cartagena) in the present reference for a preliminary ruling. 40 In that regard, it must be noted that, in the absence of harmonisation of the national enforcement mechanisms, the details of their implementation are governed by the internal legal order of the Member States by virtue of the principle of procedural autonomy of those States. Nevertheless, the Court has pointed out that the means of implementation must meet the dual condition that they are no less favourable than those governing similar domestic actions (principle of equivalence) and do not make it in practice impossible or excessively difficult to exercise the rights conferred on consumers by EU law (principle of effectiveness) (judgment in Sánchez Morcillo and Abril García, C-169/14, EU:C:2014:2099, paragraph 31 and the case-law cited). 41 As regards, firstly, the principle of equivalence, it must be observed that the Court does not have before it any evidence that might raise doubts as to the compatibility of the national legislation at issue in the main proceedings with that principle. 42 It is apparent, notably from the provisions of Articles 551, 552 and 816(2) of the LEC, that, in the Spanish procedural system, the court hearing the enforcement of an order for payment may neither assess of its own motion the unfair nature, in the light of Article 6 of Directive 93/13, of a term in a contract concluded between a seller or supplier and a consumer, nor determine of its own motion whether such a term runs counter to the national rules of public policy, which it is, nevertheless, for the national court to ascertain (see, to that effect, judgment in Aziz, C-415/11, EU:C:2013:164, paragraph 52). 43 Secondly, with regard to the principle of effectiveness, it should be noted that the Court has consistently 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 progress and its special features, viewed as a whole, before the various national bodies (judgment in Banco Español de Crédito, C-618/10, EU:C:2012:349, paragraph 49 and the case-law cited). 44 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 (judgments in Asociación de Consumidores Independientes de Castilla y León, C-413/12, EU:C:2013:800, paragraph 34, and Pohotovosť, C-470/12, EU:C:2014:101, paragraph 51 and the case-law cited). 45 In the present case, it must be noted that the progress and particular features of the Spanish order for payment proceedings are such that, in the absence of facts requiring the intervention of the court, referred to in paragraph 24 of the present judgment, those proceedings are closed without it being possible for there to be a check as to whether there are unfair terms in a contract concluded between a supplier or seller and a consumer. If, accordingly, the court hearing the enforcement of the order for payment does not have the power to assess of its own motion whether such terms are present, the consumer could be faced with an enforcement order without having the benefit, at any time during the proceedings, of a guarantee that such an assessment will be made. 8 ECLI:EU:C:2016:98

4 JUDGMENT OF CASE C-49/14 FINANMADRID EFC 46 In that context, it must be stated that such a procedural arrangement is liable to undermine the effectiveness of the protection intended by Directive 93/13. Such effective protection of the rights under that directive can be guaranteed only provided that the national procedural system allows the court, during the order for payment proceedings or the enforcement proceedings concerning an order for payment, to check of its own motion whether terms of the contract concerned are unfair. 47 Such a consideration cannot be called into question where the national procedural law, such as that at issue in the main proceedings, confers on the decision issued by the Secretario judicial the force of res judicata and endows it with effects analogous to those of a decision of the court. 48 It must be noted that, although 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, those rules must still comply with the principles of equivalence and effectiveness (see, to that effect, Asturcom Telecomunicaciones, C-40/08, EU:C:2009:615, paragraph 38 and the case-law cited). 49 As regards the principle of equivalence, as the Advocate General noted in point 70 of his Opinion, there is no evidence in the case in the main proceedings to support a finding that the rules implementing the principle of res judicata under Spanish law in the cases relating to Directive 93/13 are less favourable than those governing situations falling outside the scope of this directive. 50 With regard to the principle of effectiveness, compliance with which by the Member States must be assessed in the light, in particular, of the criteria set out in paragraphs 43 and 44 of this judgment, it must be noted that, in accordance with the wording of Articles 815 and 816 of the LEC, the power of the Secretario judicial to check an application for an order for payment is restricted to checking the compliance with the formalities to which such an application is subject, in particular the accuracy, in the light of the documents annexed to that application, of the amount of the debt claimed. Thus, by virtue of Spanish procedural law, it does not fall within the powers of the Secretario judicial to assess the potentially unfair nature of a term in a contract on which the debt is based. 51 Furthermore, it must be borne in mind that the decision of the Secretario judicial closing the order for payment proceedings becomes res judicata, which makes it impossible to check the unfair terms at the stage of enforcement of an order, simply because the consumers have not lodged an objection to the order within the time limit prescribed for that purpose and the Secretario judicial has not referred the matter to the court. 52 In this regard, however, it must be noted, firstly, that there is a significant risk that the consumers concerned will not lodge the objection required, be it because of the particularly short period provided for that purpose, or because they might be dissuaded from defending themselves in view of the costs which legal proceedings would entail in relation to the amount of the disputed debt, or because they are unaware of or do not appreciate the extent of their rights, or indeed because of the limited content of the application for the order for payment submitted by the sellers or suppliers, and thus the incomplete nature of the information available to them (see, to that effect, judgment in Banco Español de Crédito, C-618/10, EU:C:2012:349, paragraph 54). 53 Secondly, it is apparent from the order for reference that the Secretario judicial is required to refer the matter to the court only when it is clear from the documents annexed to the application that the amount claimed is not accurate. 54 In those circumstances, as noted, in essence, by the Advocate General in point 75 of his Opinion, it must be held that the Spanish rules at issue in the main proceedings, implementing the principle of res judicata in the context of the order for payment procedure, appear to run counter to the principle of effectiveness, in so far as they make it impossible or excessively difficult, in proceedings brought by suppliers or sellers and in which consumers are the defendants, to ensure the protection conferred on the consumers by Directive 93/13. ECLI:EU:C:2016:98 9

5 Reports of Cases JUDGMENT OF THE COURT (First Chamber) 26 January 2017 * (Reference for a preliminary ruling Directive 93/13/EEC Contracts concluded between sellers or suppliers and consumers Unfair terms Mortgage loan agreements Mortgage enforcement proceedings Limitation period Function of the national courts Res judicata) In Case C-421/14, REQUEST for a preliminary ruling under Article 267 TFEU from the Juzgado de Primera Instancia No 2 de Santander (Court of First Instance No 2, Santander, Spain), made by decision of 10 September 2014, received at the Court on 10 September 2014, in the proceedings Banco Primus SA v Jesús Gutiérrez García, THE COURT (First Chamber), composed of A. Tizzano, Vice-President of the Court, acting as President of the First Chamber, M. Berger, A. Borg Barthet, S. Rodin (Rapporteur) and F. Biltgen, Judges, Advocate General: M. Szpunar, Registrar: M. Ferreira, Principal Administrator, having regard to the written procedure and further to the hearing on 24 September 2015, after considering the observations submitted on behalf of: Banco Primus SA, by E. Vázquez Martín, abogado, the Spanish Government, by M.J. García-Valdecasas Dorrego, acting as Agent, the European Commission, by J. Baquero Cruz and M. van Beek, acting as Agents, after hearing the Opinion of the Advocate General at the sitting on 2 February 2016, gives the following EN * Language of the case: Spanish. ECLI:EU:C:2017:60 1

6 JUDGMENT OF CASE C-421/14 BANCO PRIMUS paragraph in order to submit an application on the basis of the existence of any of the grounds for objecting to enforcement provided for under Articles 557 and 695 of [Law 1/2000 of 7 January 2000 on the Civil Procedure Code]. 4. Publication of the present provision shall be considered full and valid notification for the purposes of notifying and calculating the periods provided for in paragraphs 2 and 3 of the present article, without its being necessary in any circumstances expressly to make an order in that respect. 16 Furthermore, Article 136 of the LEC provides: Once the time limit for carrying out a procedural step has elapsed, the step in question shall become time-barred and the opportunity to carry it out shall be lost. The Court Clerk shall leave a record of the elapse of the time limit in an official document and shall order the measures to be adopted or shall serve notice to the court so the corresponding decision can be ordered. 17 Article 207(3) and (4) of the LEC adds: 3. Final decisions become res judicata and the court hearing the case in which they were delivered shall in any event abide by their terms. 4. Once the period for lodging an appeal against a decision has elapsed without any appeal having been brought, the decision shall become final and res judicata and the court hearing the case in which it was delivered shall in any event abide by its terms. The dispute in the main proceedings and the questions referred for a preliminary ruling 18 On 12 June 2008, Banco Primus granted a loan to Mr Gutiérrez García which was secured by a mortgage on his home. The loan was granted for a term of 47 years, and was repayable in 564 monthly instalments. Following the failure of Mr Gutiérrez García to pay seven successive monthly instalments in repayment of the loan, the bank triggered the accelerated repayment procedure on 23 March 2010 in accordance with Clause 6a of the loan agreement. Banco Primus sought payment of the outstanding total principal plus ordinary and default interest and costs. It also proceeded to auction the mortgaged property. Since there were no bidders for the property at the auction which took place on 11 January 2011, on 21 March 2011 and by enforceable decision the referring court awarded the property to Banco Primus at a price which represented 50% of its estimated value. On 6 April 2011, Banco Primus sought to obtain possession of the property, which was deferred as a result of three successive incidents, including the one which led to the adoption of the order of 12 June 2013 which deemed Clause 6 of the loan agreement, relating to default interest, to be unfair. The adoption of the decision of 8 April 2014, following the third objection, terminated the suspension of the eviction. 19 On 11 June 2014, Mr Gutiérrez García lodged, before the referring court, an extraordinary application objecting to the mortgage enforcement proceedings on the ground that Clause 6 of the loan agreement was unfair. 20 Following that opposition, the referring court, after having suspended the eviction proceedings by a decision of 16 June 2014, expressed doubts relating to the unfairness, within the meaning of Directive 93/13, of certain terms of the loan agreement other than the term concerning default interest, namely: Clause 3 relating to ordinary interest, which provides for the calculation thereof on the basis of a formula, by which the outstanding loan principal and interest accrued is divided by the number of days in a financial year, namely 360 days, and ECLI:EU:C:2017:60 5

7 JUDGMENT OF CASE C-421/14 BANCO PRIMUS Clause 6a relating to accelerated repayment, pursuant to which Banco Primus may demand the immediate repayment of the principal, of the interest and other costs, in particular in the event that the borrower fails to pay, on the agreed date, any amount owed by way of principal, interest or amounts advanced by the bank. 21 However, that court found, first of all, that Mr Gutiérrez García s opposition was filed out of time, since it was made after the limitation period laid down by the Fourth Transitional Provision of Law 1/2013 had expired. 22 The referring court found, secondly, that Article 207 of the LEC, which governs the principle of res judicata, precludes it from re-examining the unfair nature of the terms of the loan agreement at issue in the main proceedings, since the lawfulness of that agreement, with regard to Directive 93/13, had already been ascertained in the context of the decision of 12 June 2013, which has become final. 23 Moreover, the referring court noted that, even if Clause 6a of the loan agreement at issue in the main proceedings were be found to be unfair, the case-law of the Tribunal Supremo (Supreme Court, Spain) would prevent it from finding that term to be null and void and from rejecting it, since Banco Primus did not apply that term in the case at hand. Rather, it complied with the requirements of Article 693(2) of the LEC in waiting for Mr Gutiérrez García to default on payment of seven monthly instalments before triggering the accelerated repayment procedure. 24 Accordingly, in order to determine the extent of its powers in the light of Directive 93/13, the referring court, first, harbours doubts as to the compatibility of the Fourth Transitional Provision of Law 1/2013 with that directive and, second, as to whether, in complex mortgage enforcement proceedings, such as those at issue in the main proceedings, it is obliged by that directive, in spite of the requirements of Article 207 of the LEC, to examine of its own motion the terms of a loan agreement which has already been put to such an examination with regard to Directive 93/13 in the context of a decision which has become res judicata. Third, that court also seeks details as to the assessment criteria to be used to determine whether Clauses 3 and 6a of the loan agreement at issue in the main proceedings are unfair and the consequences to be drawn from such a finding. 25 In those circumstances, the Juzgado de Primeria Instancia No 2 de Santander (Court of First Instance No 2, Santander, Spain), decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling: (1) Must the Fourth Transitional Provision of Law No 1/2013 be interpreted so as not to constitute an obstacle to the protection of the consumer? (2) Under Directive 93/13, and in particular Articles 6(1) and 7(1) thereof, and in order to ensure the protection of consumers and users in accordance with the principles of equivalence and effectiveness, is a consumer permitted to raise a complaint regarding the presence of unfair terms outside the period specified under national legislation for raising such a complaint, and is the national court required to examine such terms? (3) Under Directive 93/13, and in particular Articles 6(1) and 7(1) thereof, and in order to ensure the protection of consumers and users in accordance with the principles of equivalence and effectiveness, is a national court required to assess, of its own motion, whether a term is unfair and to determine the appropriate consequences, even where an earlier decision of that court reached the opposite conclusion or declined to make such an assessment and that decision was final under national procedural law? 6 ECLI:EU:C:2017:60

8 JUDGMENT OF CASE C-421/14 BANCO PRIMUS 45 Accordingly, it needs to be determined whether, in such circumstances, the need to replace the formal balance which the agreement establishes between the rights and obligations of the seller or supplier and the consumer with an effective balance which re-establishes equality between them requires the referring court to carry out a new appraisal of that agreement of its own motion, notwithstanding the fact that the domestic rules of procedure apply the principle of res judicata. 46 In that connection, attention should be drawn, at the outset, to the importance, both for the EU legal order and for the national legal systems, of the principle of res judicata. Indeed, the Court has already had occasion to observe that, 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 to exercise those rights can no longer be called into question (see, inter alia, judgment of 6 October 2009, Asturcom Telecomunicaciones, C-40/08, EU:C:2009:615, paragraphs 35 and 36). 47 Moreover, the Court has already recognised that consumer protection is not absolute. In particular, it has considered that EU law does not require a national court to disapply domestic rules of procedure conferring finality on a decision, even if to do so would make it possible to remedy an infringement of a provision, regardless of its nature, contained in Directive 93/13 (see, to that effect, judgments of 6 October 2009, Asturcom Telecomunicaciones, C-40/08, EU:C:2009:615, paragraph 37, and of 21 December 2016, Gutiérrez Naranjo and Others, C-154/15, C-307/15 and C-308/15, EU:C:2016:980, paragraph 68), unless national law does not grant such a court that power in the event of infringement of national rules relating to public policy (see, to that effect, judgment of 6 October 2009, Asturcom Telecomunicaciones, C-40/08, EU:C:2009:615, paragraph 53). 48 Furthermore, the Court has already pointed out that, according to EU law, the principle of effective judicial protection of consumers does not afford a right of access to a second level of jurisdiction but only to a court or tribunal (see, to that effect, judgment of 17 July 2014, Sánchez Morcillo and Abril García, C-169/14, EU:C:2014:2099, paragraph 36 and the case-law cited). 49 It results from the foregoing that Directive 93/13 must be interpreted as not precluding a rule of national law, such as that resulting from Article 207 of the LEC, which prohibits the national courts from examining of their own motion the unfairness of contractual terms which have been entered into with a seller or supplier, where a ruling has already been given on the lawfulness of the terms of the contract, taken as a whole, with regard to Directive 93/13 in a decision which has become res judicata, which is a matter to be ascertained by the referring court. 50 That said, it is apparent from the order for reference that, in the present case, the procedural rule relating to res judicata, laid down in Article 207 of the LEC, prohibits national courts not only from re-examining the lawfulness, with regard to Directive 93/13, of contractual terms in respect of which a definitive decision has already been delivered, but also from assessing the potential unfairness of other terms of the same contract. 51 It follows from the principles resulting from paragraphs 40 to 43 above that the conditions laid down in the national laws to which Article 6(1) of Directive 93/13 refers may not adversely affect the substance of the right that consumers acquire under that provision not to be bound by a term deemed to be unfair (judgment of 21 December 2016, Gutiérrez Naranjo and Others, C-154/15, C-307/15 and C-308/15, EU:C:2016:980, paragraph 71). 52 Thus, in the case where, in a previous examination of a contract in dispute which led to the adoption of a decision which has become res judicata, the national court limited itself to examining of its own motion, with regard to Directive 93/13, one or certain terms of that contract, that directive requires a national court, such as the one in the main proceedings, before which a consumer has properly lodged an objection to enforcement proceedings, to assess, at the request of the parties or of its own motion where it is in possession of the legal and factual elements necessary for that purpose, the potential 10 ECLI:EU:C:2017:60

9 JUDGMENT OF CASE C-421/14 BANCO PRIMUS unfairness of other terms of that contract. In the absence of such a review, consumer protection would be incomplete and insufficient and would not constitute either an adequate or effective means of preventing the continued use of that term, contrary to Article 7(1) of Directive 93/13 (see, to that effect, judgment of 14 March 2013, Aziz, C-415/11, EU:C:2013:164, paragraph 60). 53 In the case at hand, in the absence of precise information in that regard in the file before the Court, it is for the national court to assess whether, in the decision of 12 June 2013 which has become res judicata, the lawfulness, with regard to Directive 93/13, of all the terms of the loan agreement at issue in the main proceedings have been reviewed or just Clause 6 thereof. 54 In the light of all of the foregoing considerations, the answers to questions 1, 2 and 3 are as follows: Articles 6 and 7 of Directive 93/13 must be interpreted as precluding a provision of national law, such as the Fourth Transitional Provision of Law 1/2013, which, as regards mortgage enforcement proceedings which were instituted before the date of entry into force of the law of which that provision forms part and which were not concluded at that date, imposes a time limit of one month on consumers, calculated from the day following the publication of that law, within which to object to enforcement on the basis of the alleged unfairness of contractual terms; Directive 93/13 must be interpreted as not precluding a rule of national law, such as that resulting from Article 207 of the LEC, which prohibits national courts from examining of their own motion the unfairness of contractual terms where a ruling has already been given on the lawfulness of the terms of the contract, taken as a whole, with regard to that directive in a decision which has become res judicata. By contrast, where there are one or more contractual terms the potential unfair nature of which has not been examined during an earlier judicial review of the contract in dispute which has been closed by a decision which has become res judicata, Directive 93/13 must be interpreted as meaning that a national court, before which a consumer has properly lodged an objection, is required to assess the potential unfairness of those terms, whether at the request of the parties or of its own motion where it is in possession of the legal and factual elements necessary for that purpose. Questions 4 and 5 55 By its fourth and fifth questions, which it is appropriate to examine jointly, the referring court seeks, in essence, clarification of the criteria to be taken into account, in accordance with Article 3(1) and Article 4 of Directive 93/13, in order to evaluate the potential unfairness of terms such as those at issue in the main proceedings, relating to the calculation of ordinary interest and accelerated repayment resulting from a failure on the part of the debtor to comply with his obligations during a limited specific period. 56 It should be pointed out, at the outset, that those questions are, in the light of the case-law set out in paragraph 30 above, inadmissible in as much as they seek to determine whether the national court may, in the context of its examination of the potential unfairness of a contractual term and, more specifically Clause 6a of the contract at issue in the main proceedings, take account of circumstances which arose after the conclusion of the contract. The order for reference does not specify in a clear manner the nature of the circumstances which arose after the conclusion of the contract. In those circumstances, the Court is not in possession of the necessary facts to be able to carry out its analysis and is not, therefore, in a position to provide the referring court with a reply which may be of use to it in determining the outcome of the dispute in the main proceedings. ECLI:EU:C:2017:60 11

10 Reports of Cases JUDGMENT OF THE COURT (Second Chamber) 11 November 2015 * (Reference for a preliminary ruling Articles 107 TFEU and 108 TFEU State aid Aid granted in breach of Article 108(3) TFEU Decision of a Member State court establishing the validity of the contract granting that aid Res judicata Interpretation in conformity with EU law Principle of effectiveness) In Case C-505/14, REQUEST for a preliminary ruling under Article 267 TFEU from the Landgericht Münster (Regional Court, Münster (Germany)), made by decision of 17 September 2014, received at the Court on 12 November 2014, in the proceedings Klausner Holz Niedersachsen GmbH v Land Nordrhein-Westfalen, THE COURT (Second Chamber), composed of R. Silva de Lapuerta, President of the First Chamber, acting as President of the Second Chamber, J.L. da Cruz Vilaça, A. Arabadjiev (Rapporteur), C. Lycourgos and J.-C. Bonichot, Judges, Advocate General: P. Mengozzi, Registrar: A. Calot Escobar, having regard to the written procedure, after considering the observations submitted on behalf of: Klausner Holz Niedersachsen GmbH, by D. Reich, Rechtsanwalt, the Land Nordrhein-Westfalen, by G. Schwendinger, Rechtsanwalt, the European Commission, by R. Sauer, T. Maxian Rusche and P.-J. Loewenthal, acting as Agents, having decided, after hearing the Advocate General, to proceed to judgment without an Opinion, gives the following EN * Language of the case: German. ECLI:EU:C:2015:742 1

11 JUDGMENT OF CASE C-505/14 KLAUSNER HOLZ NIEDERSACHSEN Consideration of the question referred for a preliminary ruling 17 By its question, the referring court asks, in essence, whether EU law precludes, in circumstances such as those at issue in the main proceedings, the application of a rule of national law enshrining the principle of res judicata from preventing a national court which has held that contracts forming the subject-matter of the dispute before it constitute State aid, within the meaning of Article 107(1) TFEU, implemented in breach of the third sentence of Article 108(3) TFEU, from drawing all the consequences of that breach because of a national judicial decision which has become definitive, which court, without examining whether those contracts constitute State aid, has held that the contracts remain in force. 18 As a preliminary point, it must be borne in mind that, in accordance with the settled case-law of the Court, Article 108(3) TFEU establishes a prior control of plans to grant new aid (judgment in Deutsche Lufthansa, C-284/12, EU:C:2013:755, paragraph 25 and the case-law cited). 19 The aim of that system of prior control is therefore that only compatible aid may be implemented. In order to achieve that aim, the implementation of planned aid is to be deferred until the doubt as to its compatibility is resolved by the Commission s final decision (judgment in Deutsche Lufthansa, C-284/12, EU:C:2013:755, paragraph 26 and the case-law cited). 20 The implementation of that system of control is a matter for both the Commission and the national courts, their respective roles being complementary but separate (judgment in Deutsche Lufthansa, C-284/12, EU:C:2013:755, paragraph 27 and the case-law cited). 21 Whilst assessment of the compatibility of aid measures with the common market falls within the exclusive competence of the Commission, subject to review by the Courts of the European Union, it is for the national courts to ensure the safeguarding, until the final decision of the Commission, of the rights of individuals faced with a possible breach by State authorities of the prohibition laid down by Article 108(3) TFEU (judgment in Deutsche Lufthansa, C-284/12, EU:C:2013:755, paragraph 28 and the case-law cited). 22 Proceedings concerning State aid may be commenced before national courts requiring those courts to interpret and apply the concept of aid contained in Article 107(1) TFEU, in particular in order to determine whether State aid introduced without observance of the preliminary examination procedure provided for in Article 108(3) TFEU ought to have been subject to this procedure (see, to that effect, judgment in Fédération nationale du commerce extérieur des produits alimentaires and Syndicat national des négociants et transformateurs de saumon, C-354/90, EU:C:1991:440, paragraphs 9 and 10 and the case-law cited). 23 The involvement of national courts is the result of the direct effect which the prohibition on implementation of planned aid laid down in the third sentence of Article 108(3) TFEU has been held to have. In this respect, the Court has stated that the immediate enforceability of the prohibition on implementation referred to in that provision extends to all aid which has been implemented without being notified (judgment in Deutsche Lufthansa, C-284/12, EU:C:2013:755, paragraph 29 and the case-law cited). 24 National courts must offer to individuals the certain prospect that all the appropriate conclusions will be drawn from an infringement of the third sentence of Article 108(3) TFEU, in accordance with their national law, as regards the validity of measures giving effect to the aid, the recovery of financial support granted in disregard of that provision and possible interim measures (judgment in Deutsche Lufthansa, C-284/12, EU:C:2013:755, paragraph 30 and the case-law cited). 4 ECLI:EU:C:2015:742

12 JUDGMENT OF CASE C-505/14 KLAUSNER HOLZ NIEDERSACHSEN 25 The objective of the national courts tasks is therefore to pronounce measures appropriate to remedy the unlawfulness of the implementation of the aid, in order that the aid does not remain at the free disposal of the recipient during the period remaining until the Commission makes its decision (judgment in Deutsche Lufthansa, C-284/12, EU:C:2013:755, paragraph 30 and the case-law cited). 26 To that end, when national courts hold that the measure at issue constitutes State aid within the meaning of Article 107(1) TFEU, implemented in breach of the third sentence of Article 108(3) TFEU, they may decide to suspend the implementation of the measure in question and order the recovery of payments already made or to order provisional measures in order to safeguard both the interests of the parties concerned and the effectiveness of the Commission s subsequent decision (see, by analogy, judgment in Deutsche Lufthansa, C-284/12, EU:C:2013:755, paragraph 43, and order in Flughafen Lübeck, C-27/13, EU:C:2014:240, paragraph 26). 27 In the present case, the referring court, in accordance with the task thus entrusted to it, has held that the contracts at issue constitute State aid, which has been implemented in breach of the third sentence of Article 108(3) TFEU. However, it considers itself prevented from satisfying its obligation to draw all the consequences from that breach because of the declaratory judgment of the Oberlandesgericht Hamm (Higher Regional Court, Hamm) confirming that the contracts at issue remained in force is res judicata. 28 In that regard, it is apparent from the file placed before the Court, firstly, that the dispute which gave rise to that decision of the Oberlandesgericht Hamm (Higher Regional Court, Hamm) did not concern, either principally or incidentally, the State aid characteristics, within the meaning of Article 107(1) TFEU, of the contracts at issue, so that, as the referring court points out, that question was not examined by the Oberlandesgericht Hamm (Higher Regional Court, Hamm) or by the Landgericht Münster (Regional Court, Münster) when it ruled at first instance in the same dispute. 29 Secondly, it is apparent therefrom that the sole aim of the dispute which gave rise to the declaratory judgment of the Oberlandesgericht Hamm (Higher Regional Court, Hamm) was to obtain a ruling that the contracts at issue remained in force, despite the fact that the Land had rescinded them. However, the purpose of the dispute before the referring court is, firstly, to obtain payment of damages in respect of the non-execution of part of those contracts, secondly, to obtain execution of another part thereof and, thirdly, to obtain certain information concerning in particular the prices applied in the sector. 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). ECLI:EU:C:2015:742 5

13 JUDGMENT OF CASE C-505/14 KLAUSNER HOLZ NIEDERSACHSEN 33 In the main proceedings, the referring court believes it is faced with such a limitation, pointing out that national law leaves it no option to refuse execution of the [contracts at issue]. 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, taking into consideration, in particular, firstly, the elements referred to in paragraphs 28 and 29 of the present judgment (see, by analogy, judgment in Dominguez, C-282/10, EU:C:2012:33, paragraph 31) and, secondly, the case-law of the Court referred to in paragraph 26 of the present judgment, from which it is apparent that, in order to draw all the consequences of a breach of the third sentence of Article 108(3) TFEU, the national courts may, as necessary, order provisional measures. In the present case, accordingly, it is for the referring court to examine the possibility of ordering a measure such as the temporary suspension of the contracts at issue until the adoption of the Commission decision closing the procedure, which would enable that court to satisfy its obligations under the third sentence of Article 108(3) TFEU without actually ruling on the validity of the contracts at issue. 36 Furthermore, although the referring court took the view that the exceptions drawn from German civil procedural law to the principle of res judicata did not apply in the case, it must be noted that, under Paragraph 322 of the ZPO, judgments are able to become res judicata only in so far as a ruling has been given on the complaint made in the action or on a counterclaim. Accordingly, it is for the referring court to ascertain whether such a limitation, expressly set out in Paragraph 322(1) of the ZPO, does not authorise it to interpret that provision as meaning that, when a breach of the third sentence of Article 108(3) TFEU is claimed, the force of res judicata extends only to the legal claims on which the court has ruled and therefore does not preclude a court from ruling, in a later dispute, on points of law on which there is no ruling in that definitive decision. 37 In fact, a measure such as that referred to in paragraph 35 of the present judgment or an interpretation such as that referred to in paragraph 36 of this judgment would not have the effect of calling into question the legal finality definitively attaching to the decision of the Oberlandesgericht Hamm (Higher Regional Court, Hamm). 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 6 ECLI:EU:C:2015:742

14 Reports of Cases JUDGMENT OF THE GENERAL COURT (First Chamber) 17 February (Common foreign and security policy Restrictive measures taken against Iran with the aim of preventing nuclear proliferation Freezing of funds Plea of illegality Legal basis Misuse of powers Rights of the defence Legitimate expectations Legal certainty Ne bis in idem Res judicata Proportionality Manifest error of assessment Fundamental rights) In Joined Cases T-14/14 and T-87/14, Islamic Republic of Iran Shipping Lines, established in Tehran (Iran), and the other applicants whose names are listed in the Annex, represented by F. Randolph QC, P. Pantelis, Solicitor, M. Lester, Barrister, and M. Taher, Solicitor, v Council of the European Union, represented by M. Bishop and V. Piessevaux, acting as Agents, supported by European Commission, represented by D. Gauci and T. Scharf, acting as Agents, applicants, defendant, intervener in Case T-87/14 APPLICATION, in Case T-14/14, pursuant to Article 263 TFEU, for annulment of Council Decision 2013/497/CFSP of 10 October 2013 amending Decision 2010/413/CFSP concerning restrictive measures against Iran (OJ 2013 L 272, p. 46), and of Council Regulation (EU) No 971/2013 of 10 October 2013 amending Regulation (EU) No 267/2012 concerning restrictive measures against Iran (OJ 2013 L 272, p. 1), in so far as those acts concern the applicants; and, in Case T-87/14, (i) pursuant to Article 277 TFEU, for a declaration that Decision 2013/497 and Regulation No 971/2013 are inapplicable, and (ii) pursuant to Article 263 TFEU, for annulment of Council Decision 2013/685/CFSP of 26 November 2013 amending Decision 2010/413/CFSP concerning restrictive measures against Iran (OJ 2013 L 316, p. 46), and of Council Implementing Regulation (EU) No 1203/2013 of 26 November 2013 implementing Regulation (EU) No 267/2012 concerning restrictive measures against Iran (OJ 2013 L 316, p. 1), in so far as those acts concern the applicants, THE GENERAL COURT (First Chamber), composed of H. Kanninen, President, I. Pelikánová (Rapporteur) and E. Buttigieg, Judges, EN 1 Language of the case: English. ECLI:EU:T:2017:102 1

15 JUDGMENT OF JOINED CASES T-14/14 AND T-87/14 ISLAMIC REPUBLIC OF IRAN SHIPPING LINES AND OTHERS v COUNCIL 181 It follows from the foregoing that the Council did not infringe the applicants rights of defence and that the third plea in law must be rejected. Fourth plea in law, alleging breach of the principles of protection of legitimate expectations, legal certainty, res judicata, ne bis in idem and non-discrimination 182 The applicants submit that, following the judgment of 16 September 2013, IRISL (T-489/10, EU:T:2013:453), they were entitled to expect that their names would not again be included on the lists at issue unless the Council put forward new allegations or evidence. By re-listing them, the Council breached the principles of protection of legitimate expectations, legal certainty, res judicata, ne bis in idem and non-discrimination. Breach of the principle of res judicata 183 It should be noted that, according to settled case-law, annulment judgments given by the Courts of the European Union have the force of res judicata with absolute effect as soon as they become final. This applies not only to the operative part of the judgment annulling a decision, but also to the grounds which are its essential basis and are inseparable from it (see judgment of 5 September 2014, Éditions Odile Jacob v Commission, T-471/11, EU:T:2014:739, paragraph 56 and the case-law cited). The judgment annulling the act therefore means that the author of the act annulled must adopt a new act having regard not only to the operative part of the judgment but also to the grounds which led to the judgment and constitute its essential basis, thereby ensuring that the new act is not affected by the same irregularities as those identified in the judgment annulling the original act (see, to that effect, judgment of 6 March 2003, Interporc v Commission, C-41/00 P, EU:C:2003:125, paragraphs 29 and 30). 184 However, the principle of res judicata in respect of a judgment extends only to the matters of fact and law actually or necessarily settled (judgment of 19 February 1991, Italy v Commission, C-281/89, EU:C:1991:59, paragraph 14). Thus, Article 266 TFEU requires the institution which adopted the act annulled only to take the necessary measures to comply with the judgment annulling its act. The author of the act may, however, rely in its new decision on grounds other than those on which it based its first decision (see, to that effect, judgment of 6 March 2003, Interporc v Commission, C-41/00 P, EU:C:2003:125, paragraphs 28 to 32). 185 It must be noted that the judgment of 16 September 2013, IRISL (T-489/10, EU:T:2013:453) did not call into question the accuracy of the actions of which IRISL was accused, namely the three incidents involving IRISL linked to the shipment of military material in violation of paragraph 5 of Security Council Resolutions 1747 (2007), or the evidence relating to those actions. The General Court found only that those actions (i) were not sufficient to justify the entry of IRISL s name on the lists at issue on the basis of the criterion relating to persons who have assisted someone in violating the provisions of the relevant Security Council resolution, and (ii) did not constitute support for nuclear proliferation for the purposes of the criterion relating to persons providing support for Iran s nuclear activities. 186 The criterion on the basis of which IRISL s name was re-listed by Decision 2013/685 and Implementing Regulation No 1203/2013 must be distinguished from those applied by the Council in the acts annulled by the judgment of 16 September 2013, IRISL (T-489/10, EU:T:2013:453). Contrary to what is maintained by the applicants, in relying on a new, legally adopted, criterion justifying the imposition of restrictive measures against them, the Council did not therefore circumvent that judgment. ECLI:EU:T:2017:102 23