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Supreme Court upholds that Circuit Court has Jurisdiction On State Aid Disputes

AUTHOR(S): Kate McKenna
PRACTICE AREA GROUP: EU, Competition and Regulatory
DATE: 16.07.2019

Background

In an important decision delivered on 29 May 2019, the Supreme Court affirmed decisions of the Court of Appeal and the High Court, in the case of Dun Laoghaire Rathdown County Council v West Wood Club Limited [2019] IESC 43, that the Circuit Court has jurisdiction to hear State aid allegations.

In this case, defendant West Wood made State aid allegations in resisting debt enforcement proceedings by the Council plaintiff relating to unpaid commercial rates (council taxes).  In particular, West Wood pleaded that the Council was operating leisure facilities in competition with it, and that the funding received by the Council from such commercial rates amounted to unlawful State aid.  In response, the Circuit Court held that it did not have jurisdiction to hear State aid allegations.

Issues

On appeal in the High Court, it was found that the Circuit Court does have jurisdiction, however the following three questions of law were referred to the Court of Appeal and in turn to the Supreme Court:

(i) Does the Circuit Court have jurisdiction in the instant proceedings to determine a State aid argument pursuant to Articles 107 - 109 of the Treaty on the Functioning of the European Union?


(ii) Is the issue raised by West Wood a challenge to the validity of the rate itself and thus a matter to be dealt with by way of judicial review only?


(iii) If West Wood should be successful on the issue, does the Circuit Court have unlimited jurisdiction to award to the defendant damages?

Findings of the Supreme Court

Justice McKechnie delivered the majority judgment for the Supreme Court and answered the above questions as follows:

(i) With regard to the first question, it was held that the Circuit Court does have jurisdiction to entertain a claim that State aid may constitute a defence in the context of proceedings issued for the recovery of commercial rates.


(ii) The second question was found to be inapplicable, on the basis that the State aid point raised by West Wood is not a challenge to the validity of commercial rates per se but rather is a challenge to the alleged purpose of the Council in using commercial rates income to fund its competing business.


(iii) Regarding the third question, it was held there is a cap on the damages available.  Specifically, this cap is the general monetary jurisdiction of the Circuit Court, which amounts to €75,000.

Based on the above, Justice McKechnie returned the case for hearing by the Circuit Court.

Conclusion

The Supreme Court has strongly affirmed the Circuit Court’s jurisdiction to hear EU law allegations: “there is no doubt that the Circuit Court, as an organ of the State, is to be obliged to give effect to European law”.  It will be interesting to see whether EU competition and State aid arguments will be made more frequently before the Circuit Court in future.  In particular, depending on how the on-going Trucks Cartel litigation progresses at High Court level, it remains to be seen whether individual cartel follow-on damages claims might be brought at Circuit Court level.

This article was co-authored by EU Competition partner Kate McKenna and EU Competition trainee Sadhbh Browne

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