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Legitimate Expectations and the “Right” to State Aid

 |  October 29, 2021

By: Phedon Nicolaides (State Aid Uncovered)

As the process of transition to green economy accelerates, Member States have been reducing the subsidies they promised to grant to the early investors in the production of electricity from renewable sources of energy [RES]. Some of these investors have taken legal action before national courts or resorted to arbitration tribunals in the context of investor-protection treaties to seek compensation.

On 16 September 2021, in case C‑850/19 P, FVE Holýšov and 28 others v European Commission, the Court of Justice upheld a judgment of the General Court that rejected claims that the principle of protection of legitimate expectations had been violated.[1]

FVE Holýšov and the other appellants requested the annulment of the judgment of the General Court in case T-217/17, FVE Holýšov and others v Commission. The General Court had dismissed their appeal against a 2016 Commission decision, SA.40171, concerning support of electricity production from renewable energy sources [RES].

In that decision the Commission concluded that Czech measures for the support of RES electricity or green electricity constituted State aid that was compatible with the internal market. The Czech Republic supported the production of green electricity through a variety of measures. Some of the initial measures that the applicants brought to the attention of the Commission about ten years earlier were considered informally by the Commission [in a letter sent to the applicants] not to constitute State aid because they appeared not to involve state resources [they imposed obligations on distributors to buy more expensive green electricity].

As the Czech measures evolved over time they involved State aid, but the amount of subsidies for green electricity producers was gradually reduced. Because the applicants had several contacts with the Commission, they claimed before the General Court that the information they had received from the Commission was inconsistent and that, for this reason, it infringed the principle of protection of legitimate expectations. The General Court dismissed that claim. The applicants repeated that claim before the Court of Justice…