Introduction
National courts have competence to determine the existence of State aid and whether State aid regulations are interpreted correctly by national authorities. In addition, national courts may decide whether approved aid schemes are implemented according to the terms authorised by the Commission. But national courts have no competence to determine the compatibility of State aid itself with the internal market. That’s is the exclusive right of the Commission.
On 1 August 2025, in an unusual case, the Court of Justice of the EU [CJEU], in response to request for a preliminary ruling, concluded that if the requesting national court would decide whether aid had been granted correctly in the context of an approved scheme it would also be assessing the compatibility of State aid with the internal market [case C-514/23, Tiberis].[1] Therefore, it would encroach on the exclusive competence of the Commission. The reason that the encroachment would occur was that the national court would have to consider modalities of the aid that were “indissolubly” or “inextricably” linked to the aid measure itself. That would constitute assessment of the compatibility of the aid – something not possible for a national court. Therefore, the CJEU rejected the request for a preliminary ruling on the ground that it was inadmissible.
Background
An Italian court requested the CJEU to provide guidance on the interpretation of Article 3 of Directive 2009/28 on the promotion of the use of energy from renewable sources and of Article 4 of Directive 2018/2001 on the promotion of the use of energy from renewable sources.
The proceedings before the Italian court arose from a dispute between Tiberis and the Italian Ministry of Economic Development and Ministry of Environment and Energy Security concerning an order requesting Tiberis to repay part of the aid that it had received for the production of electricity from renewable sources.
The aid in question was granted in the context of a scheme that had been approved in 2016 by the Commission in decision SA.43756. The scheme aimed at promoting electricity production from renewable energy sources. The Commission found the scheme to be compatible with the 2014-2020 guidelines on State aid for environmental protection and energy [EEAG].
Tiberis operated a hydroelectric power plant on the River Tiber. In September 2017, Tiberis was granted State aid by “GSE” – the aid granting authority. From 2017 until 2021, Tiberis received a total of EUR 4 million in aid. However, in April 2022 and May 2022, GSE requested Tiberis to repay part of the aid totalling EUR 1.2 million. Tiberis challenged the compatibility of the implementing Italian law with EU law.
The competence of national courts
Instead of answering the questions of the referring court, the CJEU examined the admissibility of the request. This is because, according to Italy, if the request were admissible it “(32) would lead to a substantial alteration of the aid authorised by Decision SA.43756, which would amount to that court [i.e. the referring Italian court] granting new aid that was neither notified to the Commission nor authorised by it. This is precluded by Article 108(3) TFEU.”
The CJEU noted that the “(37) scheme for the promotion of electricity produced from renewable sources […] constitutes a State aid scheme, within the meaning of Article 107 TFEU, Article 2(k) of Directive 2009/28 and point 5 of the second paragraph of Article 2 of Directive 2018/2001, which was notified to the Commission by the competent Italian authorities and which is the subject of Decision SA.43756. By that decision, the Commission decided not to raise objections to that scheme, having found that that it was compatible with the internal market under Article 107(3)(c) TFEU.”
“(38) In the present case, it is therefore necessary to determine whether an action brought before a national court by an economic operator in order to challenge a modality of implementation of a State aid scheme intended to promote the production of electricity from renewable sources, of which it is a beneficiary and which is the subject of a Commission decision finding it compatible with the internal market, may be assessed by that court in the light of the provisions of Article 3 of Directive 2009/28 or Article 4 of Directive 2018/2001, on which that operator relies and which are the subject of the question referred.”
Then the CJEU recalled that “(39) within the system established by the FEU Treaty for monitoring State aid, the national courts and the Commission fulfil complementary but separate roles”.
“(40) In particular, national courts 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. For this purpose, proceedings may be commenced before national courts requiring those courts to interpret and apply the concept of ‘State aid’, contained in Article 107(1) TFEU, in order to determine whether a State measure introduced without observance of the preliminary examination procedure provided for in Article 108(3) TFEU ought or ought not to have been subject to this procedure. By contrast, national courts do not have jurisdiction to give a ruling on whether aid measures or a State aid regime are compatible with the internal market. Indeed, in accordance with settled case-law, that assessment falls within the exclusive competence of the Commission, subject to review by the EU judicature”.
The obligations of the Commission
Next, the CJEU recalled the well-established principle that “(41) the procedure under Article 108 TFEU must never produce a result which is contrary to the specific provisions of the FEU Treaty. Accordingly, State aid which, as such or by reason of some modalities thereof, contravenes provisions or general principles of EU law cannot be declared compatible with the internal market. Where the modalities of an aid measure or an aid scheme are so indissolubly linked to the object of the aid or the scheme, or to their functioning, that it is impossible to assess them separately, their effect on the compatibility or incompatibility of the aid or scheme viewed as a whole must necessarily be assessed by means of the procedure prescribed in Article 108 TFEU”.
Consequently, “(42) the assessment of such modalities therefore falls outside the jurisdiction of the national courts”.
“(43) National courts must take all the necessary measures, whether general or specific, to ensure the fulfilment of the obligations under EU law and refrain from taking those which may jeopardise the attainment of the objectives of the Treaty, as follows from Article 4(3) TEU. Therefore, national courts must, in particular, refrain from taking decisions which run counter to a Commission decision on the compatibility of State aid with the internal market, the assessment of which comes within the exclusive competence of that institution, subject to review by the EU judicature”.
The incentive mechanism was inextricably linked to the functioning of the aid scheme
Under the approved aid scheme, the amount of aid depended on the actual price of electricity. If it lied below a reference price [which was calculated in such a way as to enable the electricity generators to cover their costs plus reasonable profit], the generators received aid. If it lied above the reference price, the generators had to pay back the difference. That is why this arrangement is termed in the judgment as a “negative incentive mechanism”.
“(44) In the present case, […] the negative incentive mechanism […] constitutes a modality of operation of the aid scheme referred to in Decision SA.43756, a matter which moreover, was confirmed during the hearing. In that regard, it is apparent, in particular, from […] Decision SA.43756 that it is the negative incentive mechanism contested in the case in the main proceedings that ultimately determines the amount of aid granted individually to economic operators benefiting from the aid scheme […] Thus, it was that mechanism which enabled the Commission to conclude that, precisely for projects entered in a register, that aid scheme satisfied the condition of proportionality.”
“(45) Therefore, […], that modality, which is inextricably linked to the functioning of the aid scheme concerned, cannot be assessed in isolation from that scheme.”
“(46) In addition, […] the Commission could not declare the State aid scheme which is the subject of Decision SA.43756 to be compatible with the internal market, pursuant to Article 107(3)(b) TFEU, without first ensuring that that aid scheme does not infringe other relevant provisions or general principles of EU law”.
“(47) It follows, in the first place, that to allow a national court, in the context of the implementation of that aid scheme, to review the lawfulness, in the light of Article 3 of Directive 2009/28, of that negative incentive mechanism would amount, in essence, to giving that court the power to substitute its own assessment for that of the Commission in Decision SA.43756 and to allowing it, contrary to the case-law […], to encroach on that institution’s exclusive competences relating to the assessment of the compatibility of State aid with the internal market, and to breach its duty to cooperate in good faith with the EU institutions”.
Existing aid
Then the CJEU noted another reason why the national court could not examine the incentive mechanism.
“(52) Since the aid scheme established by the decree of 23 June 2016 was authorised by the Commission under that decision, it comes within the concept of ‘existing aid’ within the meaning of Article 1(b)(ii) of Regulation 2015/1589.”
“(53) Article 108(1) TFEU gives the Commission the power, in cooperation with the Member States, to keep existing aid under constant review. That review may prompt the Commission to propose to the Member State concerned the appropriate measures required by the progressive development or by the functioning of the internal market and, if necessary, to decide to abolish or alter aid which it considers to be incompatible with the internal market”.
“(54) In addition, in the context of the constant review of existing aid schemes, the legal situation does not change until such time as the Member State concerned accepts proposals for appropriate measures or the Commission adopts a final decision”.
“(55) The assessment of the compatibility of an existing aid scheme with the internal market thus continues to come within the exclusive competence of the Commission, subject to review by the EU judicature”.
“(56) Moreover, in the circumstances of this case, the Commission, by the Communication entitled ‘Guidelines on State aid for climate, environmental protection and energy 2022’ (OJ 2022 C 80, p.1), which replaced the 2014-2020 Guidelines on 18 February 2022, proposed to Member States, by way of ‘appropriate measures’ within the meaning of Article 108(1) TFEU, to amend, where necessary, their existing environmental protection and energy aid schemes in order to bring them into line with the new guidelines no later than 31 December 2023.”
“(57) That period had not yet expired on 4 April 2022 or 2 May 2022, the dates on which the invoices giving rise to the dispute in the main proceedings, […], were issued.”
New aid
Consequently, the CJEU held that “(58) any amendment to the negative incentive mechanism at issue in the main proceedings would, as a result of any increase in the aid intensity which might result from it, be liable to affect the assessment of the compatibility of the aid scheme at issue with the internal market. That mechanism is inextricably linked to the functioning of that scheme and, in the absence of that mechanism, it is possible that the Commission would have considered that that aid scheme was not proportionate and that, consequently, it would not have declared it compatible with the internal market. Such an alteration would therefore constitute, under Article 4(1) of Regulation No 794/2004, an ‘alteration to existing aid’ and, therefore, ‘new aid’, within the meaning of Article 1(c) of Regulation 2015/1589, subject to the notification obligation laid down in Article 108(3) TFEU, the compatibility of which with the internal market falls, […], within the exclusive competence of the Commission, subject to review by the EU judicature.”
“(59) The finding made in the preceding paragraph of the present judgment also applies in the event that an amendment to that mechanism is not made erga omnes, as Tiberis is requesting in this case, but solely for the benefit of a particular beneficiary, such as Tiberis. The authorisation to implement a State aid scheme granted by the Commission in a decision not to raise objections is valid only in so far as all the factors taken into consideration by the Commission in that decision for the purposes of assessing the compatibility of that scheme with the internal market are respected […] Thus, an aid scheme implemented at an individual level which does not correspond to the aid scheme notified to and authorised by the Commission could also be considered to be ‘new aid’ within the meaning of Article 1(c) of Regulation 2015/1589”.
“(60) The Court has already held that the establishment as such of State aid cannot result from a judicial decision but entails a decision as to the appropriate course of action which falls outside the scope of a court’s powers and obligations”.
“(61) Where the national court is seised of a request seeking the payment of aid which is unlawful, since it was not notified to the Commission, the task of reviewing State aid which EU law confers on those courts must, in principle, lead the national court to reject that request, while acknowledging that, nevertheless, a decision of the national court ordering the defendant to pay the aid in question subject to the condition that that aid must first be notified to the Commission by the national authorities concerned and that the Commission gives its consent, or is deemed to have given it, is also likely to prevent new aid from being paid in breach of Article 108(3) TFEU and Article 2(1) and Article 3 of Regulation 2015/1589.”
“(62) However, that case-law cannot be applied to the context of the case in the main proceedings […] In the case in the main proceedings, the national court’s jurisdiction to hear and determine the action in the main proceedings is not such as to prevent new aid from being paid in breach of Article 108(3) TFEU and Article 2(1) and Article 3 of Regulation 2015/1589. […] any amendment to the negative incentive mechanism is subject to the notification obligation laid down in Article 108(3) TFEU and the assessment of the compatibility of that amendment with the internal market comes within the exclusive competence of the Commission, subject to review by the EU judicature.”
“(63) It follows from all of the foregoing that EU law precludes the referring court from assessing whether the negative incentive mechanism at issue in the main proceedings complies with the provisions of Article 3 of Directive 2009/28 or Article 4 of Directive 2018/2001, since that mechanism is inextricably linked to the functioning of the State aid scheme which the Commission declared compatible with the internal market by Decision SA.43756.”
Conclusions
The CJEU concluded that the interpretation of Article 3 of Directive 2009/28 and Article 4 of Directive 2018/2001 was not relevant to the resolution of the dispute between Tiberis and the aid granting authority and, therefore, it held that the request for a preliminary ruling was inadmissible.
The relevant lesson of this judgment is that national courts, when reviewing the correctness of implementation of approved aid schemes, may not assess any aspect of aid that is indissolubly or inextricably linked to the aid measure because that would be tantamount to determining the compatibility of the measure with the internal market and would encroach on the exclusive competence of the Commission.
[1] The full text of the judgment can be accessed at:
