Supreme Court dismissed claim that NAMA failed to exercise EU Treaty powers regarding impaired borrower loans.

THE SUPREME COURT

2010 No. 396

Murray C.J.

Denham J.

Hardiman J.

Fennelly J.

Macken J.

Finnegan J.

McKechnie J.

BETWEEN:

DELLWAY INVESTMENTS LIMITED, METROSPA LIMITED,

BERKLEY PROPERTIES LIMITED, MAGINOTGRANGE LIMITED,

MAY PROPERTY HOLDINGS LIMITED, SCI 20 PLACE VENDOME,

DIRECTDIVIDE TRADING LIMITED, SUBMITQUEST LIMITED,

BELFAST OFFICE PROPERTIES LIMITED,

THE FORGE LIMITED PARTNERSHIP,

FINBROOK INVESTMENTS LIMITED,

CONNIS PROPERTY SERVICES LIMITED,

FORMCREST CONSTRUCTION LIMITED,

CHESTERFIELD (THE PAVEMENTS) SUBSIDIARY LIMITED,

ABBEY DEVELOPMENTS LIMITED AND PATRICK McKILLEN

APPLICANTS

- AND -

NATIONAL ASSET MANAGEMENT AGENCY, IRELAND

AND THE ATTORNEY GENERAL

RESPONDENTS

JUDGMENT of Mr. Justice Fennelly delivered the 3rd day of February 2011.

1. The appellants claim a “declaration that the powers vested in [NAMA] under the [National Asset Management Agency Act 2009]

Act must be exercised in accordance with Articles 107 and 108 of the Treaty on the Functioning of the European Union (“TFEU”) and,

in particular with European Commission Decision of 26th February 2010………..the effect of which decision is clarified in the European

Commission’s letter of 8th September 2010.” The appellants seek a declaration that NAMA has failed to exercise its powers in

accordance with the Treaty and/or the Commission Decision by purporting to acquire credit facilities with which they are connected

(“the appellants’ loans”) “absent any consideration as to whether the appellants… were impaired borrowers.” Although the appellants

do not expressly seek an injunction, that is the effect of the declaration sought. Furthermore, the appellants’ case is fundamentally

based on the Commission Decision having direct effect.

2. Although the Court has decided that NAMA has not in fact made any decision to acquire the loans of the appellants, this aspect of

the appeal is capable of being decided. It is based entirely on the effect of the Commission Decision of 26th February 2010.

3. For reasons which I will explain this must be understood as a claim that the proposal by NAMA to acquire the appellants’ loans

would constitute the unlawful grant of state aid contrary to Articles 107 and 108 TFEU and that NAMA should be restrained from

acquiring the loans. The legal ground for this contention is that NAMA maintains that it is not required to give any consideration to

whether the appellants’ loans were “impaired.”

4. It is common case that the NAMA scheme entails the grant of state aid within the meaning of Articles 107 and 108 TFEU. The

state implicitly acknowledged this fact when it duly notified the Commission of its proposals. The Commission in its Decision of 26

February 2010 (case N725/2009 “Establishment of a National Asset Management Agency (NAMA): Asset relief scheme for banks in

Ireland,” hereinafter “the Commission Decision”) determined that the NAMA scheme would constitute aid provided from state

resources to the participating institutions within the meaning of Article 107(1) TFEU.

5. The Commission concluded, however, that the scheme fulfilled the requirements of Article 107(3) (b) TFEU and that it was thus

compatible with the internal market. It communicated to the government its Decision which took the form that it “raised no objections

to the scheme.”

6. The appellants argued both in the High Court and on the hearing of the appeal that, pursuant to the terms of the Commission

Decision, NAMA is not empowered to acquire the appellants’ loans from participating institutions given the fact that NAMA will not

consider and has not considered and claims that it does not need to consider whether the appellants’ loans were impaired loans.

7. In advancing this argument, the appellants place special reliance on the later explanation of the Commission Decision said to be

contained in a letter addressed by the Director of Competition at the Commission to Senator Eugene Regan (hereinafter “the

Commission letter”).

8. The essence, therefore, of the appellants’ claim is that the Commission Decision, interpreted in the light of the Commission letter

has direct effect and that this Court is obliged to give effect to its terms. They rely on the judgment of the Court of Justice in Case

9/70 Grad v Finanzamt Traunstein [1970] ECR 825 as authority for the direct effect of decisions of the institutions of the Union.

9. The respondents, in the High Court, raised by way of legal objection to this argument the principle that, in accordance with settled

case law, the question of the compatibility with the internal market of any particular scheme of state aid falls within the exclusive

competence of the Commission and that the national court has no authority to rule whether any particular grant of state aid is

compatible with the internal market. The High Court did not find it necessary to rule on this objection. Following detailed substantive

analysis of the Commission Decision, it found that the Commission did not confine its approval of the NAMA scheme to the acquisition

of impaired assets. It decided that the Commission letter addressed to Senator Regan was inadmissible for the purpose of interpreting

the Commission Decision and that, even if it had been admissible, it did not bear the meaning contended for.

10. Whether the implementation of the NAMA scheme by the acquisition of the loans granted to the appellants constitutes the grant

of unlawful state aid requires consideration, in the first instance, of the form and nature of the Commission Decision. Depending on

whether the Decision is capable of having direct effect, it may be necessary to consider its content. I will commence by setting out

the history and background to that Decision.

11. Articles 107 and 108 TFEU (formerly Articles 87 and 88 and originally Articles 92 and 93 of the Treaty Establishing the European

Community) contain the Treaty provisions on “Aids granted by States.” Article 107(1) lays down a general prohibition on the grant of

state aid in the following terms:

“Save as otherwise provided in the Treaties, any aid granted by a Member State or through State resources in any form

whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of

certain goods shall, in so far as it affects trade between Member States, be incompatible with the internal market.”

12. Article 107 (2) provides that in three special exceptional cases, of no relevance to the present case, aid “shall be compatible with

the internal market.” Article 102(3) lists types of aid which may be considered “compatible with the internal market.” Paragraph (b),

the second part of which was successfully invoked by the Irish government in the present case, covers:

“aid to promote the execution of an important project of common European interest or to remedy a serious disturbance in

the economy of a Member State.” (emphasis added)

13. Article 108 lays down procedures for the review by the Commission of state aid. Firstly, the Commission is required, in cooperation

with Member States, to “keep under constant review all systems of aid existing in those States.” (existing aid). Secondly, Article

108(3) obliges Member States to inform the Commission of any plans to grant new state aid. It is a fundamental feature of this

scheme that the Commission has the exclusive function of ruling on the compatibility of aid, whether existing or new, with the internal

market.

14. The courts of the Member States are obliged to support the Commission in the exercise of its functions. Most importantly, they

must give effect to the standstill provision of Article 108(3) and are obliged to make orders, where appropriate, restraining the state

from implementing aid where the state in question has failed to notify the Commission or, where notice has been given, without

awaiting the Commission decision on compatibility. Aid granted in contravention of Article 108(3) is described as “unlawful aid.” (see

Commission Notice 2009/C 85/01 of 9th April 2009 on enforcement of State Aid law by national courts, especially paragraph 28). The

national court may also be obliged to make orders for the recovery of unlawful aid, a matter which does not arise in the present case.

In addition, it is common case that the State duly notified the Commission of its intention to grant the aid in the present case. There

is no suggestion of any deficiency in that notification.

15. The government, on 29th September 2009, in advance of the introduction of the legislation, notified the Commission of its

intention to introduce the NAMA scheme as an “asset relief measure.” From that time there was regular contact by way of meetings

and otherwise between the Irish authorities and the Commission services. The National Asset Management Agency Bill 2009 was

introduced in Dáil Eireann on 16th September 2009. The National Asset Management Agency Act 2009 was enacted on 22nd

November 2009 and came into effect on 21st December 2009. On 23rd December 2009 the Irish government gave formal notice of the

NAMA scheme to the Commission. Further submissions and exchanges of information took place between that date and February

2010. The Commission Decision was communicated to the Irish government on 26th February 2010.

16. The Commission determined that the notified measures would, if implemented, constitute aid to the participating institutions for

the purposes of Article 107(1) TFEU for three principal reasons, which can be summed up by saying that, through the NAMA scheme,

the State provides State guaranteed bonds designed to enable NAMA to finance an asset relief scheme by the purchase of assets

from financial institutions at a price above market value and that this distorts competition by conferring benefits on the participating

financial institutions.

17. The Decision considered all aspects of the NAMA scheme in great detail. The Commission concluded that the scheme fulfilled the

requirements of Article 108(3)(b) TFEU as being designed “to remedy a serious disturbance in the economy of a Member State...”

Thus, it made a “decision of no objection” to “NAMA as a scheme.”

18. This was a “decision not to raise objections” which is made when “the Commission, after a preliminary examination,” finds that “no

doubts are raised as to the compatibility with the common [now the internal] market of a notified measure.” This procedure is

described in Article 4 of Council Regulation (EC) No 659/1999 of 22 March 1999 laying down detailed rules for the application of Article

93 of the EC Treaty (now Article 108 TFEU). Under that procedure, the Commission simply decides that the “measure is compatible

with the [internal] market.” The form of the decision is “not to raise objections,” the Commission has no power to impose conditions

and the member state may introduce the aid.

19. By way of contrast, the Commission may initiate the formal investigation envisaged by Article 108(2) TFEU, in which case, the

Commission may make a positive decision that the aid is compatible but may also impose conditions (see Article 7 of Council

Regulation (EC) No 659/1999).

20. It is firstly necessary to identify the precise ground of the appellants’ complaint. The appellants contend that, on a correct

interpretation of the Commission Decision, an assessment of what are eligible assets requires NAMA to consider impairment at the

borrower level and that the appellants have the right to rely in this Court upon the direct effect of the Decision and to ask that the

Court make an order declaring the transfer of the appellants’ loans to NAMA to be incompatible with Articles 107 and 108. The wording

of the declaration sought is that NAMA’s powers “must be exercised in accordance with” those Articles and with the Commission

Decision. Furthermore, the appellants argue that, in accordance with the principle of conforming interpretation, the term “eligible bank

assets,” in the Act must be interpreted as requiring consideration of whether the borrower in respect of the credit facilities in

question is “impaired.”

21. The appellants claim that the NAMA scheme was approved by the Commission on the basis that it applied to impaired borrowers

only. In support, they rely on a number of paragraphs of the Commission Decision, principal among them paragraph 18, which reads:

“According to the Irish authorities, eligible assets are expected to be concentrated on a small number of very large real

estate developers, involved across the whole cycle of property development. Loans to such developers are closely

interconnected and interlinked (through cross default and cross guarantee clauses for example as described in footnote 6)

which is viewed as significantly contributing to the impairment problems currently threatening credit institutions in Ireland.

Therefore, the approach to determining asset eligibility under the scheme is based on the concept of impairment at the

borrower relationship level as opposed to impairment at the asset level only(impaired borrower relationship).”

22. The expression “impaired borrower relationship” or cognate expressions occur at a number of other points in the Decision.

Paragraph 15 states that the

“Irish authorities intend to concentrate on assets from the riskiest parts of the portfolios of the participating institutions,

namely land and development loans and associated loans.”

23. The appellants also draw attention to paragraph 138 of the Commission Decision, which reads:

“Concerning the format, scale and scope of the measure, the Commission firstly recalls that the choice of management

arrangement for impaired assets is the responsibility of each Member State. Further, the eligibility criteria proposed by the

Irish authorities for both participating institutions and bank assets are in line with the provisions of the IAC (paragraphs

(106) and (112)). In particular, the Commission views the inclusion of the associated commercial loans as necessary to

capture the entire exposure to the impaired borrower relationship as well as to help with aligning the measure with public

policy objectives5. Concerning the potential participation of Anglo Irish Bank in the Scheme, this participation will be

assessed according to eligibility criteria for applicant institutions which the Commission has found to be objective and

non-discriminatory.”

24. The appellants also submit that the Commission Decision expressly incorporated the requirements of Section 5.4 of the

Commission’s own February, 2009 Communication Concerning the Treatment of Impaired Assets in the Community Banking Sector (“the

Impaired Assets Communication”), referring to the requirement for a clear identification of impaired assets, and concluded that the

scope of assets to be included in NAMA was in line with the eligibility requirements of the Impaired Assets Communication.

25. Insofar as it will be necessary, as explained below, for the appellants to demonstrate that the term of the Commission Decision

upon which reliance is placed is unconditional, clear and precise, it is significant that they conceded both in the High Court and before

this Court that “the Commission’s conclusions approving NAMA could, on one interpretation, be viewed as accepting the application of

a more general definition of eligible bank assets.”

26. Faced with this difficulty, the appellants call in aid the Commission letter of 8th September 2010 addressed to Senator Regan.

Senator Regan had participated in the Commission’s decision-making process: he had lodged a formal complaint against some aspects

of the NAMA scheme and had met with members of the Commission services. Following the Commission Decision, he wrote to the

Commission seeking confirmation that the NAMA scheme applied only to “impaired loans” and an “impaired borrower.” The appellants’

submit that the Court should take this letter into account when interpreting the Commission Decision.

27. In her letter written on behalf of the Commission, Dr. Irmfried Schwimann referred in detail to the Commission Decision. She

quoted paragraph 18, which I have quoted above, as containing a “more detailed definition of the concept of impaired borrower.” The

appellants rely on the following elucidation of that paragraph:

“According to the definitions above, the relevant concept to determine whether an asset is eligible or not to be

transferred to NAMA is that the debtor on the loan in question is regarded as an ‘impaired borrower’. Impaired borrowers,

as considered by the Irish authorities ‘are expected to be concentrated on a small number of very large real estate

developers, involved across the whole cycle of property development.’ Furthermore, it stems from paragraph 18 and

footnote 6 that it is the concept ‘impaired borrower’ which is relevant, instead of ‘impairment at the asset level’ due to

the existence of contractual links among loans, which may trigger a ‘technical events of default’[sic]”

28. The High Court determined that it “ought not to take the contents of the letter into account at all.” It declined to have regard to

the Commission letter. It said:

“The Decision has to be construed by reference to itself and cannot be amended or altered save by a subsequent

decision of the Commission. Neither can subsequent correspondence emanating from a Commission official, regardless of

status or distinction, be utilised to construe the terms of the Decision itself.”

29. The appellants submit that this refusal to take account of external material is not supported by case law of the Court of Justice.

That Court, it is claimed, often refers to external materials, such as travaux preparatoires, in the course of its decision-making and

says that this letter has similar status, in light of the ongoing review by the Commission of the NAMA acquisitions. The authorities

cited in support of this proposition are: Case C-324/98, Telaustria Verlags GmbH Telefonadress GmbH v Telekom Austria AG [2000]

E.C.R.-I 10745; Case C-368/96, R v The Licensing Authority established by the Medicines Act 1965, ex parte Generics [1998] ECR I-

7967; Case C-322/88 Grimaldi v Fonds des Maladies Professionnelles [1989] ECR 4407; Joined Cases C-317/08, C-318/08, C-319/08 &

C-320/08 Alassini v Telecom Italia SPA (judgment 18th March 2010 nyr) [2010] 3 C.M.L.R. 17; Case C-310/90 Nationale Raad van de

Orde van Architecten v Ulrich Egle [1992] E.C.R. I-177; Case C-188/91 Deutsche Shell AG v Hauptzollamt Hamburg-Harburg [1993]

E.C.R. I-363.

30. The appellants also rely on the duty of sincere co-operation between Member States and EU institutions as being incumbent on

the courts of the Member States, by virtue of Article 4.3 of the Treaty on European Union which provides:

“Pursuant to the principle of sincere co-operation, the Union and the Member States shall, in full and mutual respect,

assist each other in carrying out which flow from the Treaties.”

Consideration of the effect of the Commission Decision

31. The appellants ask the Court for orders affecting the exercise by NAMA of its powers under the 2009 Act to acquire the lenders’

rights in credit facilities granted to them. The object, therefore, of the proceedings is to restrain NAMA in the exercise of its decision-

making powers under the Act.

32. Section 84 confers power on NAMA to “acquire an eligible bank asset of a participating institution if NAMA considers it necessary

or desirable to do so having regard to the purposes of this Act and in particular the resources available to the Minister.” The term,

"eligible bank asset" is, as the appellants acknowledge, defined in an extremely broad fashion by the National Asset Management

Agency (Designation of Eligible Assets) Regulations 2009 pursuant to the power conferred on the Minister by section 69 of the Act.

Section 84(2) provides:

“For the avoidance of doubt, NAMA may acquire, from a participating institution, performing or non-performing eligible

bank assets.”

33. The terms performing and non-performing eligible bank assets are defined in section 4 of the Act. Non-performing assets include,

in particular, an asset where payments are not being or have not been met or covenants are not being or have not been complied

with.

34. Nothing in the Act, therefore, restricts the Minister to acquisition only of “impaired” or “non-performing” loans or credit facilities

and that was the view expressed by the High Court. As the High Court points out in its judgment (paragraph 9.8), the appellants

abandoned an argument originally made that the definition of “eligible bank assets” in the 2009 Act had to take account of the

concept of impairment.

35. The first and principal argument of the appellants is that the Commission Decision has direct effect and that NAMA may

accordingly acquire only "impaired loans." The principle that decisions of the institutions of the Community, now the Union, are

capable of having direct effect and of being invoked by individuals before the courts of the Member States is established by the

decision of the Court of Justice in Case 9/70 Grad v Finanzamt Traunstein [1970] ECR 825. That case concerned a decision of the

Council concerning turnover taxes in the transport sector. The Council decision imposed two obligations on the Member States: firstly,

to apply a common system of turnover tax in that sector; secondly to replace existing taxes with that system prior to a specific date.

The latter obligation was interpreted by the Court as implying "a prohibition on introducing or re-introducing" such existing taxes. It

was this latter negative obligation which the court considered to be "unconditional and sufficiently clear and precise to be capable of

producing direct effects in the legal relationships between the Member States and those subject to their jurisdiction."

36. These conditions for the invocation of direct effect, namely that the provision be unconditional and sufficiently clear and precise,

originated, of course, in the foundation judgment in Case 26/62 Van Gend en Loos [1963] ECR 1, in that case, in respect of a Treaty

provision. In every case, it is necessary to consider the nature and wording of the provision and the scheme of which it forms part.

Similarly, for a provision of a directive to have direct effect, the Court of Justice has said that it is necessary that it be “unconditional

and sufficiently precise…” (Case 8/81 Becker v Finanzamt Münster-Innenstadt [1982] ECR 53.

37. The High Court proceeded on the hypothesis, but without so deciding, that the Commission Decision had direct effect. This had

the consequence that the Court did not address the conditions to be met before a particular provision is considered to have direct

effect.

38. The High Court pointed out that the Commission Decision contained 140 paragraphs and that the parts cited by the appellants

had to be seen in the context of the Decision as a whole. The High Court carried out a detailed and comprehensive analysis and

assessment of the Commission Decision. It arrived at the conclusion that:

“Impairment either at borrower or asset level is not a condition for eligibility under the Act. Neither is it made so by the

Decision. It is the view of the Court that the Commission understood that the category of eligible bank assets comprised

all loans in the land and development category.”

39. While it is possible to approach the matter by conducting a substantive review of what the Commission intended, I believe the

first and essential question is whether the Commission Decision or any its provisions satisfies the requirements for direct effect. Here

it is appropriate to recall the essential principles.

40. Firstly, the national court has no power to pronounce on the compatibility of any system of state aid with the Treaty. The Court

of Justice in Case 6/64 Costa v ENEL [1964] ECR 585 explained that “[b]y so expressly undertaking to inform the Commission ‘in

sufficient time’ of any plans for aid, and by accepting the procedures laid down in Article 93, the States have entered into an

obligation with the Community, which binds them as States but creates no individual rights except in the case of the final provision of

Article 93(3), which is not in question in the present case.” Secondly, it has not been suggested that the NAMA scheme was not duly

and fully notified to the Commission in accordance with Article 108 TFEU: thus this Court is not called on to enforce the standstill

provision in Article 108(3). Thirdly, the Commission did not open the formal investigation procedure under Article 108(2); following a

preliminary investigation, it made a decision not to raise objections, which meant that the aid could be implemented. Fourthly, it

followed that the Commission had no power to impose conditions on the State as part of its decision and it did not purport to do so.

41. In these circumstances, the technical position is that the State proposes to implement a state-aid scheme, which it has duly

notified to the Commission, which, considering it compatible with the Treaty, has not objected. It follows, that the NAMA scheme may

be implemented. The appellants might conceivably have challenged the Commission Decision in the General Court, a matter on which it

is not necessary to comment. What is clear is that there is no condition attached to the Commission decision whose direct effect can

be invoked by the appellants. It is evident from the decision cited by the appellants, Grad v Finanzamt Traunstein, that the

conditions for the direct effect of a decision of an institution of the Union are that it be unconditional and sufficiently clear and

precise.

42. The appellants say that the NAMA scheme was cleared by the Commission on the basis that it applied to impaired borrowers only.

At one point in their written submissions, they go so far as to claim that the Decision imposes an obligation on NAMA to acquire only

the loans of impaired borrowers, but the Decision contains no provision purporting to impose any such an obligation. However, the

essential argument is that the Commission made its decision “on the basis that……,” which apparently means on the understanding or

assumption that, only the loans of impaired borrowers would be acquired. When one reviews the extracts from the Decision most

relied upon, it becomes clear that the Commission there refers to the content of the scheme as submitted by the State. Each of

these extracts refers in one way or another to what is proposed by “the Irish authorities,” not to anything approaching the imposition

of a requirement by the Commission. Paragraph 18 commences: According to the Irish authorities…; paragraph 15 says that the “Irish

authorities intend to concentrate on assets from the riskiest parts of the portfolios……;” paragraph 138 refers to “the eligibility criteria

proposed by the Irish authorities…” In none of these paragraphs does the Commission purport to lay down a requirement or a

condition. That is, of course, explained by the fact that the Decision was merely not to object.

43. The appellants correctly and fairly concede that the Commission’s conclusions approving NAMA could, on one interpretation, be

viewed as accepting the application of a more general definition of eligible bank assets than that for which they contend. That

commendable concession makes it impossible for the appellants to contend that the decision is unconditional, clear and precise.

44. If that concession is correctly made, it is difficult to accept that the letter addressed to Senator Regan could possibly lead to a

different result. Accepting the principle that a provision of a Decision may have direct effect, one is compelled to ask how a decision

which, read alone, does not meet the criteria for direct effect could become sufficiently clear and precise when read in the light of a

subsequent letter.

45. The crucial paragraph of the Commission letter is quoted above. It relates and refers throughout to the terms of the original

Commission Decision. It uses the expression, “the definitions above” to refer to paragraph 18 of the Commission Decision, which, in

turn, refers back to the explanation of “eligible assets” “provided by the Irish authorities.” It goes on to state that “[i]mpaired

borrowers, as considered by the Irish authorities ‘are expected to be concentrated on a small number of very large real estate

developers, involved across the whole cycle of property development.’” At several points both the Decision and the letter refer to the

existence of contractual links among loans, which may trigger a ‘technical events of default’ [sic]”

46. It should be noted that the appellants go no further than to submit that the Commission letter should be “taken into account” as

an aid to the interpretation of the Commission Decision. When considering the extensive case law cited by the appellants, it must be

borne in mind that the letter offered as an aid to interpretation post-dates the Decision which it is supposed to interpret.

47. The appellants cite some paragraphs from my opinion as Advocate General and the judgment of the Court in Case C-324/98,

Telaustria Verlags GmbH Telefonadress GmbH v Telekom Austria AG. In deciding whether concessions were included within the scope

of a public procurement directive, regard was had to the prior legislative history, especially of changes during the legislative process,

of directives in the same field. In R v The Licensing Authority established by the Medicines Act 1965, ex parte Generics, it was held

that a declaration recorded in the minutes of the Council which adopted a directive could be taken into consideration inasmuch as it

served to clarify a general concept used in the directive. In Grimaldi v Fonds des Maladies Professionnelles, the Court held that

national courts were bound to take into consideration recommendations of the Council made pursuant to what was then Article 189 of

the Treaty “where they cast light on the interpretation of national measures adopted in order to implement them or where they are

designed to supplement binding Community measures.” (Paragraph 18 of the judgment). In Case C-310/90 Nationale Raad van de Orde

van Architecten v Egle, the Court found confirmation for its interpretation of a directive in “a joint declaration of the Commission and

the Council, contained in the minutes of the session at which the directive was adopted…” (paragraph 12 of the judgment). Case C-

188/91 Deutsche Shell AG v Hauptzollamt Hamburg-Harburg concerned the implementation of an international convention regulating

the carriage of goods between the Community and the then EFTA states. The Convention entrusted responsibility for its

administration to a joint committee, which was given power to take decisions and make recommendations. Although the

recommendations did not confer rights on individuals, the Court held that the arrangement under the Convention formed part of

Community law and that national courts were obliged to take them into consideration in the resolution of disputes.

48. It is apparent that none of the cited cases involved giving interpretative effect to a letter written by a Commission official even

one of high position and importance subsequent to the making of a Decision. A decision is one of the legal acts mentioned in Article

288 TFEU by which the Union exercises its competence. A decision made under Article 108 such as the Commission Decision of 26th

February 2010 was one such act. From a reading of the Decision it is apparent that the Commission examined the proposals of the

government with great care. While it is not possible, at the level of principle, to exclude entirely the possibility of reference to a

subsequent letter, for example, to clarify or correct an error or omission, I do not accept that the Commission letter in this case can

be used in order to make a key and important change or addition to the Commission Decision itself.

49. I agree with the judgment of the High Court both as to the admissibility of the letter and as to its contents.

50. I conclude that there is no term of the Commission Decision, invoked by the appellants, which meets the requirements for the

Decision to have direct effect by conferring rights on the appellants capable of being relied upon before this Court. The Decision did

not purport to lay down any requirement and certainly not one which was unconditional, clear and precise.

51. The appellants also cite Article 4.3 of the Treaty on European Union, which provides:

“Pursuant to the principle of sincere cooperation, the Union and the Member States shall, in full mutual respect, assist

each other in carrying out tasks which flow from the Treaties.

The Member States shall take any appropriate measure, general or particular, to ensure fulfilment of the obligations arising

out of the Treaties or resulting from the acts of the institutions of the Union.

The Member States shall facilitate the achievement of the Union's tasks and refrain from any measure which could

jeopardise the attainment of the Union's objectives.”

52. I cannot see that this adds anything to the appellants’ case. I have no difficulty in accepting that the Court is bound, by virtue of

Article 4.3 to apply the principle of sincere co-operation. The question is, however, whether the Commission’s approval of the NAMA

scheme contained a requirement that only loans made to “impaired borrowers” would be acquired. If the Decision does not bear that

meaning, Article 4 TEU cannot alter that fact.

53. By precisely the same process of reasoning, I am satisfied that the principle of conforming interpretation cannot assist the

appellants. They submit that the term “eligible bank assets” in the Act must be interpreted as requiring consideration of whether the

borrower in respect of the credit facilities in question is “impaired, ” an argument which can succeed only if the terms of the Decision

require that result. For reasons already given, it does not.

54. In the result, I am satisfied that the appellants have not shown that they are entitled to any declaration to the effect that NAMA

is attempting to exercise its powers in breach of Articles 107 and 108 TFEU or of the Commission Decision.