Case Note by Muhammad Danish*<\/p>\n\n\n\n
Introduction<\/strong><\/p>\n\n\n\n On 13 February 2025, the Court of Justice of the European Union (CJEU) in Swissgrid AG v European Commission <\/em>(C-121\/23P) confirmed that an informal decision may also be subject to judicial review where it produces binding legal effect. This ruling has far-reaching implications as it not only addresses the legal status of the third-country parties challenging the EU institutional decisions, but also the evolution of the administrative law with regard to the European energy law.<\/p>\n\n\n\n Facts of the case<\/strong><\/p>\n\n\n\n Swissgrid AG (the \u201ccompany\u201d) is the sole TSO[1]<\/sup><\/a> in Switzerland and has participated in European electricity balancing mechanisms for years (para. 4). In 2017, it partnered with the EU TSOs in the ENTSO-E[2]<\/sup><\/a> meeting and established theTERRE platform3<\/sup>. The legal basis thereof is provided under Article 1 (7) of the Commission Regulation European Union (EU)2017\/2195 (paras. 5\u20137). In 2017 and 2018, the EU TSOs and the Agency4 <\/sup>gave favorable opinions on the company\u2019s participation in European balancing platforms under Article 1 (7) (paras. 6\u20137).<\/p>\n\n\n\n However, in July 2020, the Commission\u2019s representative expressed reservations about the company\u2019s membership, claiming itdid not align with EU norms (para. 8). The company asserted that its participation is backed by both the Agency and EU TSOs(paras. 9\u201310) and therefore, requested formal authorization to participate in the balancing platforms under Regulation 2017\/2195 (para. 11). However, the Commission denied and sent a letter to the EU TSOs. The letter stated that the criteria for the company\u2019s participation in the TERRE platform were not met. It mandated the EU TSOs to remove the company from the TERRE [3]<\/sup><\/a>platform \u2018as of 1 March 2021\u2019 <\/em>(para. 12).<\/p>\n\n\n\n Consequently, the company filed a case before the General Court under Article 263 TFEU for dismissal of the Commission\u2019sletter (para. 13). The General Court dismissed the company\u2019s case and held that the matter could not be disputed as the letter was not a challengeable act under Article 263 TFEU (paras. 15\u201316). The company then filed an appeal before the CJEU to setaside the General Court\u2019s decision (paras. 19\u201320). The CJEU ruled in the company\u2019s favor. The CJEU held that the letter constituted a challengeable act under Article 263 TFEU and that the company had standing under Regulation 2017\/2195.[4]<\/sup><\/a>The CJEU reverted the case back to the General Court for its appraisal with certain directions.<\/p>\n\n\n\n Procedural Background (para. 13\u201318)<\/strong><\/p>\n\n\n\n The case arose when the Commission delivered a letter to the EU TSOs prohibiting the company from using EU energytransmission frameworks. On 26 February 2021, the company brought an action under Article 263 TFEU before the General Court to dismiss the Commission\u2019s decision for the company\u2019s removal (para. 13). On 19 May 2021, the Commission arguedthat the company\u2019s case was inadmissible as the letter did not constitute a binding decision and that the company did not have standing to sue as they were not the actual addressee of the letter (para. 14.)<\/p>\n\n\n\n On 7 October 2021, the General Court decided in favor of the Commission\u2019s plea of inadmissibility and held that the letter constituted an informal exchange and could not be disputed under Article 263 TFEU (paras. 15\u201316). The company appealed tothe CJEU to set aside the order under appeal. It argued that even if the letter was directed to the company, it was neverthelessformally addressed to the EU TSOs and provided binding obligations on them to remove the company from the balancing platforms (paras. 22\u201324). The Commission inter alia <\/em>maintained that the company had no legal standing to sue as the letter wasnot addressed to them (paras. 25\u201331).<\/p>\n\n\n\n Key Findings of the judgment<\/strong><\/p>\n\n\n\n A. Binding legal effects of an informal letter (paras. 38\u201346)<\/strong><\/p>\n\n\n\n The CJEU stated that the General Court committed a procedural error by applying the wrong legal test when dismissing the company\u2019s case as inadmissible. The General Court found that the letter was addressed to the EU TSOs and not the company, so it failed to confer binding legal effects on the latter. However, the CJEU held that the focus should be on whether the measure produces binding legal effects on its addressees, the EU TSOs in this case, to exclude the company from the balancing platforms. The CJEU clarified that the substance of the act determines whether a disputable action exists under Article 263 TFEU, regardless of the form and the rank of the official who signed it. Such an act denied the company the effective judicial protection envisaged by EU law.<\/p>\n\n\n\n B. Misapplication of legal test by the General Court (para. 37 and paras. 48\u201349)<\/strong><\/p>\n\n\n\n The CJEU decided that an action of annulment can be initiated under Article 263 TFEU against any act adopted by the EUinstitutions that itself aims to have binding legal consequences that can influence the interests of an individual. To ascertain this, it is important to examine the substance of that measure rather than its form. The CJEU held that the General Court failedto take sufficient account of the substance of the letter at issue that found the company\u2019s participation in the TERRE platform to be unlawful. The CJEU stated that to avoid scrutiny by the EU judicature, it is obligatory that the Commission fulfills the formality requirements and cannot intentionally disregard those requirements in informal decisions made under the presence of informal communication.<\/p>\n\n\n\n Analysis and Evaluation<\/strong><\/p>\n\n\n\n This decision is evolutionary within the context of EU administrative law. It expands the scope of judicial review in cases involving non-EU parties interacting with EU institutions.<\/p>\n\n\n\n The Swiss AG c Commission marks a shift from the formalistic approach of IBM v Commission[5]<\/sup><\/a> and Belgium v Commission[6]<\/sup><\/a>, focusing on the practical legal effects of Commission acts rather than their procedural form. It recognizes that even non-binding letters can affect positions in regulated sectors like energy, enhancing judicial protection and accountability. However, this broadens reviewability, on other hand it may also create some uncertainty about which acts can be challenged, but overall it modernizes EU judicial review to reflect the realities of multi-level governance.<\/p>\n\n\n\n The ruling signifies that the substance of an act takes precedence over its form. By this, the ECJ confirms that even informalacts of EU institutions are subject to judicial review (para. 37 and paras. 48\u2013<\/strong>49). This builds trust in the EU legal machinery andprevents the EU institutions from evading their responsibilities and creating binding obligations under the pretext of informal or unofficial forms of communication. In today\u2019s world, informal decision-making processes have become increasinglycommon. Such decisions do not allow the redressed parties a chance to express their grievances. Such practice undermines the principle of the rule of law within the EU legal order.<\/p>\n\n\n\n Another important aspect is that the judgment allows the company to appeal against the Commission\u2019s alleged refusal to allow it to participate in a European electricity platform (paras. 61\u2013<\/strong>63). This legal protection allows for the control of the liability ofan EU institution, which is essential for the implementation of the principles of EU law as a whole.<\/p>\n\n\n\n Conclusion and Outlook<\/strong><\/p>\n\n\n\n The judgment demonstrates a strong commitment to enforcing stricter judicial scrutiny over EU Institutions, particularly in cases involving non-EU nationals. The judgment is likely to serve as an important point of reference for future cases. The case allowed the company, based in a non-EU state, to challenge the Commission\u2019s decision barring it from entering into the EU electricity balancing platforms, provided certain conditions are met. The CJEU referred the case back to the General Court and held in para. 63 that the Court has to rule on whether the company is directly and individually concerned by the letter at issue. And after that, there can be a decision on the merits.<\/p>\n\n\n\n * Muhammad Danish, LL.M., is current student at the University of Salzburg, Austria for the program MA European Union Studies. He holds an LL.M. in European and International Law from the Europa-Institut Saarland University, Germany and Bachelor of Laws Honors LL.B. from the University of London. <\/p>\n\n\n\n [1]<\/sup><\/a>Transmission System Operator.<\/p>\n\n\n\n [2]<\/sup><\/a> European Network of Transmission System Operators for Electricity.<\/p>\n\n\n\n [3]<\/sup><\/a> Trans European Replacement Reserves Exchange Platform.<\/p>\n\n\n\n [4]<\/sup><\/a> Agency for the Cooperation of Energy Regulators.<\/p>\n\n\n\n\n
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