As of: July 2010

Are environmental associations "undertakings"?

Pursuant to Article 3 (4) of the Aarhus Convention EU member states and the European Union have the obligation to support associations and organisations promoting environmental protection. Moreover, Article 9 (2) of the Convention stipulates that these organisations, acting as "agents on behalf of nature", are entitled to take collective legal action before a court of law. This provision was also transposed into community law.

Aid granted by states within the meaning of Article 107 TFEU¹ (previously Article 87 of the EC Treaty) is any aid granted by a member state to an undertaking without any contractual return, thus favouring it. In general it is prohibited to grant state aid. Exemptions are approved by the EU Commission in the framework of its state aid control, if the aid granted serves common European interests and only marginally distorts competition within the European Union.

The decision taken by the EU Commission on state aid mentioned below, which states that environmental and nature conservation associations are "undertakings", now jeopardises the current practice of support for associations.

If these organisations were to be considered “undertakings” in the meaning of EC state aid law, any such support given to associations would have to be deemed state aid. As a consequence any state support would have to be notified in a complex and potentially lengthy procedure and await its approval. Moreover, in case of a third party complaint it may become necessary to recall funds granted without EU Commission approval.

The case under discussion concerns the transfer of land owned by the Federal Republic of Germany to nature conservation associations under the proviso that they manage these areas durably and in line with nature conservation principles.

The EU Commission has passed contradictory decisions on state aid in this context.

Against the backdrop of complaints from the timber industry, a first measure of this kind received approval as state aid in Germany, classifying nature conservation associations as undertakings (see State aid decision N277/03, PDF document, 180 KByte, text in German), whereas in a comparable case from the Netherlands nature conservation associations were not considered undertakings (see State aid decision NN41/05 (PDF document, 147 KByte, barrier-free, text in German)).

To achieve legal certainty for future land transfers to nature conservation associations the Federal Government took a precautionary approach and notified these measures aiming at a decision by the EU Commission stating that these measures do not represent state aid, since nature conservation associations are not to be considered undertakings. However, the EU Commission classified these measures as state aid, reasoning that nature conservation associations have to be considered undertakings (see State aid decision NN8/09 (PDF document, 1.705 KByte)).

Therefore the Federal Republic of Germany has lodged proceedings with the Court of First Instance of the European Communities. The proceedings aim at a Court decision declaring the Commission decision null and void, to the extent to which the measures notified are categorised as state aid within the meaning of Article 107 (1) TFEU ((Particulars of claim of 31/08/2009 (PDF document, 269 KByte, barrier-free)). The Proceedings have been registered under the reference T-347/09.

The Court action was published on 7 November 2009 in the Official Journal of the EU (PDF-Dokument, 709 KByte, text in English). The statement of defence by the EU Commission, the German reply to the defence and the rejoinder by the Commission were presented in November 2009 and February and April 2010 respectively. The parties involved discussed the case in great detail and acknowledged its legal implications without, however, any convergence in their respective viewpoints. Meanwhile France, the Netherlands and Finland have joined the proceedings in support of Germany. In March and April 2010 they submitted legal documents to the court which back the German position convincingly.

1) Treaty on the Functioning of the European Union, entered into force on 1 December 2009.

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