Karella v Minister of Industry

• Date: 30 May 1989
• Court: Council of State (Greece)

Greece, Council of State (Fourth Chamber).

(Mouzourakis, Vice President; Vrontakis, Rapporteur)

Karella

and

Minister of Industry

Treaties Effect in municipal law EEC Treaty, 1957 Articles 189 and 191 Legislation enacted by the EEC institutions Status under municipal law Directives Implementation under municipal law Direct effect Conditions Whether directives capable of creating rights for individuals under municipal law

Treaties Effect in municipal law Treaty concerning the Accession of Greece to the European Communities, 1979 Application of Community law with immediate effect from date of accession Directives Obligation for Greece to enact provisions of municipal law to secure compliance with existing Community directives from date of accession

Relationship of international law and municipal law Treaties Incorporation of provisions into municipal legal order Greek Constitution, Article 28

International organizations EEC Institutions Court of Justice Preliminary rulings under Article 177 of EEC Treaty Powers Interpretation of treaty provisions Binding nature of interpretation by Court of Justice for municipal courts

Economics, trade and finance State aid Industry Aid compatible with Common Market Public restructuring of Greek companies in severe financial difficulties Compatibility with rules of EEC Council Directive 77/91 concerning protection of shareholders The law of Greece

Summary: The facts:1Law No 1386/1983 was part of a relief programme adopted by the Greek Government in 1985 in order to cope with the severe financial and social problems posed by the situation of a large number of companies facing huge debts and bankruptcy. It set out a policy of State intervention through subsidies to support ailing companies and, as such, contravened the provisions of the Second EEC Council Directive No 77/91 concerning the protection of existing shareholders in cases of the public restructuring of companies. Nevertheless the Commission of the European Communities, acting pursuant to the procedure established by Article 93 of the EEC Treaty, decided to allow the application of the law, considering that it was a legitimate response to a situation threatening a serious disturbance in the economy of a Member State (Article 92(3)(b)).

During 1983, by a decision of the Secretary of State for the Economy, the provisions of the law in question were applied to the company Klostiria Velka AE which was experiencing serious financial difficulties. Pursuant to Article 8 of that law, temporary management of the company was transferred to the OAE, a public body for the restructuring of undertakings. The OAE decided to increase the company's share capital, a decision which was approved by the Secretary of State for Industry, who also made provision for an unfettered right of redemption for existing shareholders, which they had to exercise within one month. Marina Karella and Nikolaos Karellas, two shareholders in Klostiria Velka, brought an action before the Council of State for the annulment of that decision on the ground that the law in question infringed the second directive.

Held (with one dissenting vote):Law No 1386/1983 did not appear to infringe the provisions of EEC Council Directive 77/91 since it constituted an emergency measure which fell outside the scope of the directive. Nevertheless, since this decision was open to question, a reference would be made to the Court of Justice of the European Communities under Article 177 of the EEC Treaty...