(CN) – Portugal will not have to pay a $5.2 million fine demanded by the European Commission as a penalty for its untimely repeal of a certain law, the EU General Court ruled.
Europe’s highest authority ruled in 2004 that Portugal had to repeal a national law incompatible with EU policies. The law in question required litigants to prove fraud if they wanted to recoup damages over public contract disputes.
When Portugal had failed to take action by 2008, the Court of Justice again ordered Portugal to comply and said it would charge the country about $27,000 a day from the date of its judgment, Jan. 10, 2008, until the law was repealed.
Portugal finally repealed the legislation by adopting a new system of compensation for damage caused by the state, which went into effect on Jan. 30 – just weeks after the court’s judgment.
But the commission was not happy with the amended law either and said Portugal owed $5.2 million in fines for the six months between the court’s deadline and the time Portugal implemented an amendment, in July 2008.
Portugal challenged this, and the General Court – one step below the Court of Justice – invalidated the commission’s decision.
In a decision that reaffirms the power of the judicial branch to resolve conflicts between the EU’s legislative branch and member states, the General Court said the Court of Justice retains sole jurisdiction over deciding whether member states have complied with EU law.
The European Commission, which is responsible for recovering penalties, should have considered Portugal’s Jan. 30 implementation in its decision, the General Court ruled.
If the commission disagreed with the Jan. 30 law, it should have brought a new proceeding against Portugal, the decision states.
Portugal may still appeal this decision to the Court of Justice.
The Luxembourg-based Court of Justice circuit has accelerated its gain of power since formation of the European Union.