i.

set aside the judgment of the General Court (Fifth Chamber) of 27 October 2023 in Case T-723/22 and, in place of that court, annul Commission Decision (EU) 2022/1414 (1) of 4 December 2020 on aid scheme SA.21259 (2018/C) (ex 2018/NN) implemented by Portugal for Zona Franca da Madeira; and

ii.

in so far as the foregoing claim is upheld, order the respondent to pay the costs.

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Contrary to what was held by the General Court, the Commission required the Portuguese State to apply the Annual Labour Units/Full-Time Equivalent (ALU/FTE) method – see, to that effect, recitals 173 to 179 and 216 of the Commission decision;

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It is apparent from the order under appeal that, in the General Court’s view, both the 2007 and 2013 Decisions, on the one hand, and the very rationale underlying authorisation of Regime III, on the other, militate in favour of the use of the ALU/FTE method being mandatory. The appellants submit that that reasoning has no basis in law, since neither the 2007 and 2013 Decisions nor section 5 of the 2007-2013 Regional Aid Guidelines (RAG) – applicable to operating aid, the category to which Regime III belongs – includes any reference to the ALU/FTE method;

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That method appears only in footnote 52 in section 4 of the 2007-2013 RAG, which applies solely to investment aid, a category which does not include Regime III;

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Since footnote 52 of the 2007-2013 RAG does not apply and there is no definition of ‘job creation’ that applies across the board in EU law, for the purposes of implementing Regime III that definition must be met in the light of national law, thereby complying with the principles of proportionality and subsidiarity, which, in matters of shared competences, limit the legislative action of the Union to what is necessary to achieve the objectives of the Treaties;

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There is no contradiction between Portuguese employment law and the provisions of EU law, specifically the State aid rules, capable of justifying the exclusion of Portuguese employment law;

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The application of Portuguese employment law does not lead to inevitably abusive outcomes, and does not preclude the calculation of actual working time on the terms proposed by the Commission.

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Uncritical application of the ALU/FTE criterion is at odds with Portuguese law, since it fails to take into account situations of vulnerability protected by that law, such as parenthood and sickness;

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The General Court is required to justify, on the basis of deductive reasoning, the exclusion of national law as a result of the preferential application of a method established in EU law, which it did not do, with the effect that the order under appeal is unlawful and must therefore be set aside and replaced by another that annuls Commission Decision (EU) 2022/1414 of 4 December 2020 in its entirety.

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Neither the 2007 and 2013 Decisions nor the 2007-2013 RAG define the method applicable for the purposes of determining whether the ‘job creation’ criterion is met, and consideration of both the Commission’s normal practice and the scope and structure of Regime III in fact leads to the conclusion that the ALU/FTE methodology for defining jobs is inapplicable. Accordingly, should it be understood, as the General Court held, that the criterion in question can only be interpreted as proposed by the Commission, the inevitable conclusion is that the legal provisions at issue lack clarity;

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The General Court erred when it found that the Commission’s prolonged lack of reaction (for, at least, eight years) had no adverse effect, while that lack of reaction is not free of legal consequences because no time limit is laid down for review by that body;

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The appellants believed that Regime III was fully compatible with the internal market, a belief that arose from the fact that the regime was authorised by the Commission and, furthermore, replaced a regime – Regime II – that was similar in all respects, in respect of which no doubts arose at any time as to its compatibility with EU law;

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The fact that the Portuguese State periodically provided information to the Commission making it possible to review the implementation of that aid, together with the absence of any public declaration by the Commission to the effect that the aid was unlawful constitute precise assurances that the implementation of the aid by the Portuguese State was lawful, giving rise to legitimate expectations to that effect on the part of the beneficiaries of Regime III;

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It cannot plausibly be concluded that the ‘average beneficiary’ of the aid (within the meaning of the legal concept of an ‘average person’), placed in the appellants’ position, would, given the Commission’s inaction and the lack of express references to that effect, apply the concept of ‘job creation’ as defined in footnote 52 of the 2007-2013 RAG – that is to say, using the ALU/FTE method – or would even consider that that might be the applicable concept, since nothing pointed to that being the case;

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It is, therefore, clear that the order under appeal contains an error of assessment, in so far as it found that the principles of legal certainty and legitimate expectations were not infringed, and that it should be set aside.