137
Support for Photovoltaic Power Plants –
Czech Legislator’s Dilemma from
the perspective of both the EU
and International law
David Sehnálek*
Summary: Czech subsidies on production of electricity from renewable
energy sources represent a sensitive and highly discussed topic in
the Czech Republic, in particular where photovoltaic power plants are
concerned. The legal viewpoint is not necessarily limited to only the
constitutional and criminal-law implications. The issue is also of great
interest from the systemic and theoretical viewpoints, especially where
assessed comprehensively in the context of the EU law and, simultaneously,
in conjunction with the public international law. The protection
of investments into photovoltaic power plants is often protected under
international law by bilateral treaties. However, the subsidies itself may
not be under certain occasions in accordance with the EU law which put
the two in conflict that must be solved by the Czech legislator. This article
tries to find a solution to this conflict. On the other hand, the validity
of the Czech legislation or its substantive analysis are not in the centre
of the interest of the article. Accordingly, the article does not deal with
the question whether or not the Czech law complies with the EU law.
The article rather focuses on the relation between the Czech, EU law and
international and the implications for the EU law and, in particular, for
public international law.
Keywords: Agreements on the protection of investments; state aid; relation
between the EU and international law; photovoltaic power plants.
1. Introduction
The support for the production of electricity from renewable energy sources is
a sensitive and highly discussed topic in the Czech Republic, in particular where
photovoltaic power plants are concerned, with political, economic and legal
*
JUDr. David Sehnálek, Ph.D., Department of International and European Law; Faculty of Law;
Masaryk University, Czech Republic. Contact: david.sehnalek@gmail.com.
SUPPORT FOR PHOTOVOLTAIC POWER PLANTS – CZECH LEGISLATOR’S DILEMMA
138
implications. The legal viewpoint is not necessarily limited to only the constitutional
and criminal-law implications. The issue is also of great interest from
the systemic and theoretical viewpoints, especially where assessed comprehensively
in the context of the EU law and, simultaneously, in conjunction with the
public international law. The adoption of the Czech regulation on support for
renewable sources of electricity has indeed created otherwise unprecedented
legislative pattern. The reason is that the state of affairs caused by the Czech
legislator has no truly correct legal solution.Any solution to be adopted now will
necessarily involve more or less substantial violation of the law – either the EU
law or the international law, depending on circumstances. What’s more, even the
legislator’s inaction would have the same consequences. Having regard to the
rather sensitive nature of the issue, where legal opinions are easily affected by
personal interests, the author wishes to point out that he has never had any stake
whatsoever in the issue of support for photovoltaic power plants. The author of
this article is interested only and solely in the conflict of laws arising from three
different legal systems.1
The analysis presented in this article focuses on the
possible solutions to the aforementioned conflict. Consequently, the article will
in no way review the validity of the Czech legislation or offer its substantive
analysis. Accordingly, the article will not offer any conclusions as to whether or
not the provision of this kind of support complies with the EU law. The article
rather focuses on the implications for the EU law and, in particular, for public
international law. Indeed, the later makes the topic even more interesting. The
reason is its twofold parallel effect, as it affects both the external obligations of
the Czech Republic and the obligations of the European Union. This twofold
effect of the public international law substantially influences the possible solutions
to the issue at hand.
2. Description of the issue
Having regard to the relevance for the following analysis itself, this part first
explains, or rather summarises, the facts and state of affairs in the Czech
Republic that gave rise to the legal issues at hand. In simple terms, by the
1
The author is aware that the concept of EU law and international law as two separate legal systems
is problematic, to say the least. Nonetheless, the simplification may hopefully be tolerated
for the purposes of this article. For the mutual relation between the two legal systems and the
issue of independence and autonomy of the EU law, see Malenovský., J. Důvěřuj, ale prověřuj:
prověrka principu přednosti unijního práva před vnitrostátními měřítky pramenů mezinárodního
práva (Trust, but verify: Review of the principle of priority of the EU law over the national rules
concerning sources of international law), in Právník 8/2010, p. 778.
SUPPORT FOR PHOTOVOLTAIC POWER PLANTS – CZECH LEGISLATOR’S DILEMMA
139
adoption of the Act on Support for the Use of Renewable Energy Sources2
,
the Czech Republic granted support to individuals for their business under
clear and concrete pre-defined conditions, specifically under Section 6 (1)(b)
of the Act, which guarantees a 15-year period of return of investments; and
under para. (4) of the cited provision, which stipulates the statutory mechanism
of gradual price decrease for the same purpose. The legislation implied
a unilateral obligation of the State that influenced the conduct of a number
of individuals. In fact, the adopted legislation had such a great incentive effect
that the entrepreneurs actually made use of the arrangements stipulated
by the Act to an extent the legislator had neither considered nor anticipated.
One could sarcastically describe what followed the adoption of the Act could
as an extraordinary success; however, it was not as much the success of the
legislation as the associated costs what truly astonished the legislator. Finding
a solution to the resulting situation proved to be extremely complicated.3
Indeed,
once the legislator realised what has happened, it had to face a problem
as difficult as sailing between Scylla and Charybdis. In this case, the legislator
had to reconcile the requirements of the Czech constitutional law, on the one
hand,4
and the limits stipulated by the public international law, on the other
hand. Indeed, rights once vested in individuals are subject to protection, which
is guaranteed by the Constitution of the Czech Republic as well as by several
international agreements.5
2
Act No. 180/2005 Coll., on the support for production of electricity from renewable energy
sources (Act on Support for Use of Renewable Sources).
3
Instead of directly amending the already implemented support arrangements, a new tax was
imposed on the production of electricity. For more on this issue, see Kouba, S. Zdanění výroby
elektřiny ze solárních elektráren (Taxation of Production of Electricity from Photovoltaic Power
Plants) in Dávid, R. Sehnálek, D., Valdhans, J. Dny práva – 2010 – Days of Law [online]. Brno:
Masaryk University, 2010, [retrieved on: 25. 2. 2016]. ISBN 978-80-210-5305-2 Available
at: https://www.law.muni.cz/sborniky/dny_prava_2010/files/prispevky/03_ekonomicke_aspek-
ty/Kouba_Stanislav_(4375).pdf
4
The national aspect of the issue was reviewed by the Constitutional Court, which expressed
its opinion on the matter in its judgement of 15 May 2012, Pl.ÚS 17/11 ECLI:CZ:US:2012:Pl.
US.17.11.2, concerning the introduction of levies and taxation of electricity generated by photovoltaic
(solar) power plants. However, by definition, the judgement does not adequately deal
with the aspects of international and EU laws.
5
This includes in particular agreements aimed to ensure protection of foreign investments under
international law. The Czech Republic has concluded dozens of such agreements. See the list
of applicable agreements concerning the reciprocal promotion and protection of investments
prepared by the Ministry of Finance of the Czech Republic and available at http://www.mfcr.
cz/cs/legislativa/dohody-o-podpore-a-ochrane-investic/prehled-platnych-dohod-o-podpore-a-
ochra
SUPPORT FOR PHOTOVOLTAIC POWER PLANTS – CZECH LEGISLATOR’S DILEMMA
140
2.1. Consequences of the Czech legislation
for the public international law and EU law
As noted above, this article focuses exclusively on systemic issues, rather than
on substantive solution of the issue within the scope of the Czech laws. Accordingly,
regarding further analysis it suffices to say that any further measures the
Czech legislator may adopt are substantially limited by the Czech Republic’s
international obligations. For this reason, an ill-advised amendment to the Czech
legislation could have impact not only in terms of the Czech constitutional law,
but also in terms of responsibility under public international law. Moreover,
the agreements on the protection of investments, which are most likely to be
affected, contain provisions allowing even certain affected individuals to invoke
responsibility of the State for breach of its obligations where the persons concerned
fall under the definition of an investor.6
Therefore, the most appropriate
solution seems to lie in retaining the status quo or amending its certain parameters
within the limits respecting the rights of the investors guaranteed by the
concluded agreements. 7
However, the outlined solution is complicated by factors that could be described
as external to the Czech law. The reason is that the support for the production
of electricity from renewable sources provided by the Czech Republic could
be qualified as unauthorised State aid.8
While we admit that such interpretation
of the concept of State aid is rather extensive, it nonetheless cannot be excluded.9
6
The investors from Cyprus and the Netherlands are of particular importance for the Czech
Republic, considering the amount of their investments. The Czech Republic has concluded
agreements on the protection of investments with both countries. The entitlement to sue the State
is vested in the individuals (investors) under Article 8 (2) of the Agreement for the Promotion
and Mutual Protection of Investments between the Czech Republic and the Kingdom of the
Netherlands. The agreement with Cyprus, too, stipulates the right to sue the Czech Republic in
court or arbitration proceedings in Article 8 (2) of the Agreement on the Promotion and Mutual
Protection of Investments between the Czech Republic and the Republic of Cyprus. a summary
of all such concluded agreements is available at the website of the Ministry of Finance of the
Czech Republic at http://www.mfcr.cz/cs/legislativa/dohody-o-podpore-a-ochrane-investic/pre-
hled-platnych-dohod-o-podpore-a-ochra.
7
Having regard to the fact that this article is not intended to provide a legal analysis of the given
situation, but merely strives to clarify and classify the individual relationships within the system
of the international, EU and national laws, we refer to expert literature for a more detailed analysis
of the mechanism of protection of the rights of individuals through agreements on the protection
of investments. In the Czech literature, the topic is addressed inter alia by Bělohlávek, A. J.
Ochrana přímých zahraničních investic v energetice (Protection of Direct Foreign Investments
in the Energy Sector). 1st edition. Prague: C H. Beck, 2011, p. 199 et seq.
8
See Article 107 (1) of the Treaty on the Functioning of the European Union.
9
As noted above, this article does not focus on substantive issues and, consequently, the question
of whether or not the support qualifies as State aid is not addressed either. Nonetheless,
SUPPORT FOR PHOTOVOLTAIC POWER PLANTS – CZECH LEGISLATOR’S DILEMMA
141
Indeed, if this were the case, this would mean the whole issue would also have
implications in the area of the EU law. However, under such circumstances, the
requirements of the EU law would be in direct conflict with the Czech legislation,
as well as the agreements binding on the Czech Republic; such a situation could
hardly be acceptable, especially in the latter case.10
As mentioned above, in the relevant area the Czech Republic is bound both
by the public international law as well as the EU law. The EU law takes precedence
over the Czech law, as follows from the established case law of the Court
of Justice of the EU.11
Assuming that an international agreement binding on the
Czech Republic has been concluded under the Czech laws and its effects are thus
conveyed through the Czech legislation, the international agreement must, too,
be subordinated to the EU law. Such an approach, however, is somewhat simplistic
and, as will be demonstrated below, inaccurate because it fails to reflect
the mutual systemic links among the individual legal systems. Moreover, while
such solution might be applicable purely in the relation between the Czech Republic
and the European Union, it cannot apply to any non-Member State, given
its unilateral nature. However, non-Member States cannot be omitted as they are
indeed counter-parties to the agreements on the protection of investments concluded
with the Czech Republic. The external obligations of the Czech Republic
therefore must be taken into account even in its otherwise internal relations with
the European Union.
For the sake of clarity, we can thus change the perspective. From the viewpoint
of a non-Member State, there is an obligation provided for by the public
international law and stipulated in an international agreement on the protection
of investments. The obligation consists in the rights and duties that both the
Czech Republic and the non-Member State must comply with. However, the
non-Member State has no direct relation towards the European Union. The requirements
of the EU law can therefore be perceived as third-party requirements,
the features of State aid might be indicative, as sufficiently explained in literature; see, e.g.,
Plender, R. Definition of Aid in Biondi, A., Eeckhout, P., Flynn, J. (eds.) The Law of State
Aid in the European Union. Oxford University Press, 2004. ISBN 9780199265329. p. 5 et al.;
in Czech literature, see e.g. Běhan, P. Státní podpory slučitelné se společným trhem(Forms of
State aid Compatible with the Common Market) (Part I) . Právní fórum (Law Forum) 2005, No.
8, p. 297–301.
10
The European Union is obliged to respect the public international law and this duty is also
emphasised in the EU law in Article 3 (5) TEU. The author believes that this duty needs to
be interpreted broadly in that it also includes respect for the obligations of the Member States
following from international law.
11
See e.g. the Judgment of the Court of Justice of 15 June 1964 in Flaminio Costa v E.N.E.L. Case
6-64. ECLI:EU:C:1964:66; or in SVOBODA, Pavel: K povaze práva Evropské unie. (On the
Nature of the European Union Law). 1994, No. 11, p. 940 et seq.
SUPPORT FOR PHOTOVOLTAIC POWER PLANTS – CZECH LEGISLATOR’S DILEMMA
142
which the relevant non-Member State does not have to respect, on account of
there being no grounds under the public international law obliging non-Member
States to comply with the EU law.12
Any consideration to the contrary would mean that the non-Member State
would be bound, without its consent and perhaps even against it will, by a treaty
to which it is not a party13
and which was concluded by other subjects of
the public international law. However, the public international law does not,
in principle, allow such a situation, as is indeed confirmed by the two Vienna
Conventions on the Law of Treaties. Pursuant to the Vienna Convention on the
Law of Treaties (1969), a third State may be bound by a treaty concluded by
other countries only where the third State assents thereto.14
Similar solution was
adopted by the Vienna Convention on the Law of Treaties between States and
International Organizations or between International Organizations (1987).15,16
The EU regulation and prohibition of State aid therefore cannot serve as adequate
argument to support non-application or even violation of international
agreements on the protection of investments concluded by the Czech Republic.
Indeed, an obligation of the Czech Republic following from such agreements
may in no way be affected by the EU law in relations with non-Member States
and therefore remains unchanged. This fact is also reflected to a certain degree
by the EU law, which stipulates that the rights and obligations arising from
12
Naturally, the conclusion above only applies provided that we consider the Czech Republic and
the European Union to be two separate entities under the public international law. So far, there
are no indications that this would not be the case. Other arrangements of mutual relationships
and their effects under the public international law thus need not be reviewed.
13
Reference is naturally made to the Treaty on the Functioning of the EU.
14
The conditions are stipulated in Article 36 of the Vienna Convention on the Law of Treaties and
are based on fulfilment of two conditions. The Signatory states must intend the treaty to establish
an obligation and the third State concerned must expressly assent thereto in writing.
15
The Convention has not yet come into force. Nonetheless, it is referenced even in the case law
of the Court of Justice of the EU. See e.g. the judgment of the Court of Justice of 9 June 1994
in The French Republic v. the Commission of the European Communities. Case C-327/91.
ECLI:EU:C:1994:305. In the cited judgement, the Court of Justice refers to the definition of
an international treaty as provided in the Vienna Convention II, without mentioning that the
Convention has not yet come into force.
16
The argument based on the 1987 Vienna Convention would not apply only if the original wording
of the draft treaty containing Article 36 bis were approved; the cited provision permitted the
establishment of a consent to be bound towards a third party in case of an international organization.
However, the wording of the aforementioned provision was considered controversial,
did not reflect the then-current practice in the public international law and, simultaneously, was
perceived as too progressive to be generally applied to all international organizations with the exception
of the European Union. See Fitzmaurice, M. Third parties and the Law of Treaties. Max
Planck Yearbook of United Nations Law Online, Volume 6, str. 65 [online], [cit. 25. 2. 2016],
available athttp://www.mpil.de/files/pdf1/mpunyb_fitzmaurice_6.pdf.
SUPPORT FOR PHOTOVOLTAIC POWER PLANTS – CZECH LEGISLATOR’S DILEMMA
143
agreements concluded before 1 January 1958 or, for acceding States, before the
date of their accession, between one or more Member States on the one hand,
and one or more non-Member States on the other, shall not be affected by the
provisions of the EU law.17
Focusing again on the Czech legal environment, the Czech Republic is currently
in a situation where if it complies with its obligations under the international
law and actually provides the promised support, it will comply with the
relevant binding international agreement but in doing so, it will violate the EU
law prohibiting the provision of State aid, save for certain exemptions.
The situation would get even more interesting if the Czech Republic did
not provide the support promised by the Act. The Czech Republic would thus
comply with the EU law, but at the cost of breaching its obligations under the
international law towards a non-Member State. Naturally, this could have legal
consequences since, as a rule, agreements on the protection of investments envisage
the possibility of protection of the individuals concerned through arbitration
proceedings against the State.18
If the State loses the arbitration, it could
entail the obligation to pay to the affected investors a financial compensation
for frustrated investment. However, where applying an extensive interpretation
of the term “State aid”19
, such financial compensation, if provided, could also
be hypothetically construed as a form of State aid.20
Should this hypothesis be
17
See Article 351 TFEU. However, this provision does not address the problem of a conflict between
the EU legislation and an agreement concluded by a Member State with a non-Member
State during the former’s membership in the European Union, where this problem is caused by
an amendment to the primary law and the transfer of competences from the Member State to
the European Union. It is therefore necessary to anticipate and provide for this situation, where
possible, for example in a protocol or at least a memorandum to the amending treaty, where the
Member State concerned shall specify its international obligations that must not be affected by the
transfer of competences resulting from the amendment to the primary law. However, the problem
is that the possible consequences of a transfer of competences are often difficult to predict.
18
By way of example, we can cite the provisions of Article 8 (2) of the Agreement for the Promotion
and Mutual Protection of Investments between the Czech Republic and the Kingdom of
the Netherlands; such a provision is indeed typical for BITs, as mentioned by Bělohlávek in his
publication focused on the issue of investments . See Bělohlávek, A. J. Ochrana přímých zahraničních
investic v energetice (Protection of Direct Foreign Investments in the Energy Sector).
1st edition. Prague: C H. Beck, 2011, p. 30 et seq.
19
State aid is defined in very general terms as any public funds made available by the State, i.e.
irrespective of the underlying legal title. From this point of view, a broader interpretation under
which also funds paid following an unsuccessful arbitration would constitute State aid cannot
be excluded.
20
This would in fact involve funds selectively provided by the State or from public resources,
the provision of which could potentially affect or distort competition and affect trade between
the Member States. Although the aid would not be provided voluntarily by the State, from the
viewpoint of the EU the fact alone that the State assumed such obligation could be interpreted
SUPPORT FOR PHOTOVOLTAIC POWER PLANTS – CZECH LEGISLATOR’S DILEMMA
144
correct, the payment of the financial consideration would again violate the EU
law.21
The provision of such aid would therefore be impermissible, or any aid
provided would have to be claimed back, on the grounds of non-compliance
with the EU law. However, this results in a dilemma for the State that lacks any
reasonable solutions since no matter what steps the State takes, it will violate
the law – either the EU law, or international law. Any violation in this respect
will have substantial financial consequences for the public budget of the Czech
Republic. In the end, it is essentially irrelevant whether the State will be forced
to compensate the investors, provided naturally that they succeed in the dispute,
or to pay fines to the European Union.
2.2. (Non-) permitted solutions to the issue
This apparently no-win situation can only be resolved in co-operation with the
European Union. In fact, the EU is involved in the matter more that could be
apparent prima facie and more than the EU probably wished to be. The internal
relations of the European Union and its Member States can also have consequences
towards non-Member States in terms of public international law if these
relations have effects outside the EU. This is exactly the case in the assessed situation.
If the European Union requires the Czech Republic to comply with the EU
regulations concerning State aid, this would have effects towards non-Member
States, manifested already through the breach of the bilateral agreements on the
protection of investments. The responsibility for such a breach would be borne
not only by the Czech Republic, where the responsibility is apparent, but, under
certain circumstances, also by the European Union.22
For agreements concluded
as expression of the will of the State. In terms of international law, the payment would constitute
compensation for frustrated investments; however, such qualification is irrelevant from the
perspective of the EU regulations on State aid.
21
Nonetheless, the author believes that such interpretation is supported neither by the current case
law nor expert literature. Any thus-provided funds would indeed be provided by the State from
public resources, but not on the basis of the State’s own decision. The relevant decision would
be issued by an arbitration tribunal, over which the Czech Republic exerts no control whatsoever.
This at least follows, in our opinion, from the conclusions derived by the Court of Justice of
the European Union in para. 35 of judgement Pearle BV. See judgment of the Court of Justice
(Fifth Chamber) of 15 July 2004 in Pearle BV, Hans Prijs Optiek Franchise BV and Rinck
Opticiëns BV v. Hoofdbedrijfschap Ambachten. Case C-345/02 Court Reports 2004 I-07139.
ECLI:EU:C:2004:448. Possible ambiguities are pointed out on p. 71 in Hancher, L., Ottervanger,
T., Slot, P., J., EU State Aids. 4th edition Sweet & Maxwell, 2012. ISBN 9780414046566
22
For the responsibility of international organizations, see e.g. Scheu, H. Ch. Pojem odpovědnosti
v mezinárodním právu (The concept of responsibility in international law) [online], [cit.
25. 2. 2016], available at http://www.pravnickeforum.cz/archiv/dokument/doc-d33488v42932-
pojem-odpovednosti-v-mezinarodnim-pravu/.
SUPPORT FOR PHOTOVOLTAIC POWER PLANTS – CZECH LEGISLATOR’S DILEMMA
145
before the accession to the European Union, the solution can be found in Article
351 TFEU, indicating that such agreements shall not be affected by the EU
legislation.As concerns other agreements, the situation is more complicated and
may have consequences in terms of responsibility.
The problem is that the issue of responsibility of international organizations
has not yet been adequately addressed and codified in the public international
law. Nonetheless, the Draft articles on the responsibility of international organizations
prepared by the International Law Commission may provide guidelines
for solution of possible problems. In this context, it is apparent that the European
Union will be responsible in cases where it has itself, through the acts of its
own bodies or employees, violated the public international law. However, the
situation at hand is of a different nature. The Czech Republic would violate the
international law, but only having been forced to do so based on the requirement
of the European Union to comply with the EU law. Under the theory of the
public international law, it is irrelevant in such a case who exercises effective
control over the relevant act, whether the EU or the State.23
In this respect, the interpretation of the term “effective control” as such represents
a rather complex legal issue, which is moreover usually addressed in
relation to military or police missions, rather than situations such as the one analysed
herein.24
Nonetheless, the current state of affairs is probably best reflected
in the approach placing responsibility on the person who in reality had direct
influence on the violation of international law and who could effectively prevent
the violation. In practice, this means that each situation has to be assessed
separately and on the basis of different decisive aspects, which will under any
circumstances include the consideration as to whether or not the State could have
exerted its own discretion and acted in some other way. Nonetheless, having
regard to the supranational law of the European Union and the control and sanction
mechanisms available to the European Union against its Member States, all
23
See Article 7 of the Draft articles on the responsibility of international organizations, which
stipulates as follows: “The conduct of an organ of a State or an organ or agent of an international
organization that is placed at the disposal of another international organization shall be
considered under international law an act of the latter organization if the organization exercises
effective control over that conduct.”
24
Based on an analysis of the current case law, Šturma, but also the commentaries on the Draft
articles, come to the conclusion that the courts have not adopted a uniform approach towards
interpretation of the term “effective control”. They distinguish between the ultimate control
and the operational control. See Šturma, P. Drawing a Line between the Responsibility of International
Organization and its Member States under International Law in Czech Yearbook of
Public & Private International Law (Vol.2) [online], p. 13 et seq. [cit. 25. 2. 2016], available
at http://www.cyil.eu/contents-cyil-2011/ a Draft articles on the responsibility of international
organizations, with commentaries – 2011 str. 23 [online], [cit. 25. 2. 2016], available at http://
legal.un.org/ilc/texts/instruments/english/commentaries/9_11_2011.pdf
SUPPORT FOR PHOTOVOLTAIC POWER PLANTS – CZECH LEGISLATOR’S DILEMMA
146
circumstances support the assumption that the European Union exercises, rather
than not, effective control over its Member States.25
It follows from the above that if the European Union enforced its regulations
on State aid against the Czech Republic in a manner leading to breach of a bilateral
agreement, the European Union itself could be responsible for the breach of
the agreement,26
despite not being a party thereto. Its responsibility would follow
from the international law and, accordingly, could be invoked only by the affected
non-Member State and not by an individual, i.e. specifically the investor who actually
incurred damage due to non-compliance with the original Czech legislation.
As a matter of fact, the potential arbitration proceedings and their outcome
represent another variable. It is certainly questionable whether the arbitrators
would even decide that the EU law must be taken into account in the case at
hand.27
If the EU law were taken into account, all the problems the Czech Republic
faces would be satisfactorily resolved. However, as mentioned above,
the relevant agreements on the protection of investments are not binding on
the European Union and no direct obligations arise between the EU and the
affected non-Member State. From the viewpoint of the latter, the EU law thus
can be viewed merely as a special provision of the public international law with
no implications for the non-Member State in question other than the ones mentioned
earlier in this article. The arbitrators might interpret the circumstances
similarly. Moreover, even from the substantive viewpoint, there is no reason for
the application of the EU law in the arbitral proceedings unless the prohibition
of the provision of State aid stipulated by the EU law could be subsumed under
the EU public policy, which may in fact be possible.28
25
The overall situation is indeed complex in legal terms. The reason is that irrespective of their
internal relations, the European Union and its Member States continue to act as separate entities
towards non-Member States, both in the area concerning the State aid and in the area of direct
foreign investments, despite the transfer of competences implemented through the Lisbon Treaty.
The European Union thus has not implicitly entered into the obligations of its Member States,
which would mean that the European Union would be solely responsible for any breaches and
violations. See Šturma, P. Drawing a Line between the Responsibility of International Organization
and its Member States under International Law in Czech Yearbook of Public & Private
International Law (Vol.2) [online], p. 18 et seq. [cit. 26. 2. 2016], available at http://www.cyil.
eu/contents-cyil-2011/
26
This is not a responsibility underArticle 340 TFEU, which is internal and governed by the EU law.
27
The EU law naturally does not prevent this. It even appears that its approach might be benevolent,
including the willingness to respond to a preliminary reference if submitted to the arbitrator.
See Basedow, J. EU Law in InternationalArbitration: Referrals to the European Court of Justice.
Max Planck Private Law Research Paper No. 15/16. pp. 72 and 73. [cit. 25. 2. 2016], available
at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2642805.
28
According to Drličková, public policy includes the rules essential and fundamental for the functioning
of the internal market; she mentions inter alia the rule for the protection of competition
SUPPORT FOR PHOTOVOLTAIC POWER PLANTS – CZECH LEGISLATOR’S DILEMMA
147
3. Conclusion
This leads us to the final conclusion. The preceding text implies an unequivocal
and absolute necessity to primarily respect the obligations of the Czech Republic
under the international law, even on the part of the European Union. The State
aid law must reflect this situation. This does not mean that no other solutions are
possible. Nevertheless, it is apparent that the Czech Republic cannot rely on any
simple and direct solution based on the EU law and the prohibition of State aid
contained therein. In simple terms, the European Union cannot solve the current
problem for the Czech Republic.
Nonetheless, the situation is not without solution. The easiest way seems
to be to prefer the narrower interpretation of the concept of State aid in the EU
law, which, however, the Czech Republic itself can hardly influence. Under any
circumstances, the rights already vested in individuals must be respected both
by the Czech law and the EU law. Consequently, the State may consider amending
certain parameters of the current system to achieve the declared purpose of
the Czech legislation while complying with its obligations under the EU and
international law. However, should any of the outlined options be assessed to
constitute unlawful State aid, the Czech Republic will be held responsible for
a violation of the EU law, including potential penalties. The EU law as such does
not provide any easy solutions to the problem and indeed makes the situation
even more complex in legal terms.
under Article 101 TFEU. Following this logic, public policy would necessarily also include the
provisions governing State aid. Cf. Drličková, K. Vliv legis arbitri na uznání a výkon cizího
rozhodčího nálezu (Effects of legis arbitri on recognition and enforcement of foreign arbitral
awards). 1st ed. Brno: Masaryk University, 2013. 204 s. Edition S, Theoretical Series of the
Faulty of Law of MU, No. 443. ISBN 978-80-210-6419-5. p. 66; or Kyselovská, T. Interakce
rozhodčího řízení a evropského práva (Interaction between arbitration proceedings and the EU
law). In Dny Práva – 2009 – Days of Law: The Conference Proceedings. 1st ed. Brno: Brno:
Masaryk University, 2009. ISBN 978-80-210-4990-1.