Litigation commenced by ATA Handling
In May 2015, ATA Handling in liquidation and subject to administration notified SEA SpA and the Municipality of Milan of a citation, by which ATA Handling, referring to the decision of the European Commission of December 19, 2012 concerning alleged State Aid in favour of SEA Handling, requested compensation for damages suffered as a result of the above-stated aid, issued in the form of share capital increases, alleging that such gravely affected ATA Handling’s operations: it was alleged in fact that SEA Handling through the systematic coverage of losses applied significantly lower tariffs than those which would have been applied in the absence of such aid. It was put forward that ATA Handling was forced also to apply lower tariffs than would have been applied in an undistorted market and on the other that ATA Handling was prevented from acquiring a greater market share. This situation, it was alleged, restricted ATA Handling from operating under balanced conditions and led to its liquidation. In September 2013 and, for a second time in July 2014, ATA Handling requested compensation for damages due to alleged State Aid, although both these requests did not receive a response and therefore ATA Handling notified the citation, quantifying damages, through a differential analysis of two situations (SEA Handling with share capital increases and SEA Handling without share capital increases), as Euro 93.1 million. SEA has already submitted documentation aimed at invalidating the supposition of a predatory price, moreover since the summoned parties had submitted an objection to lack of jurisdiction, ATA Handling had submitted to the Court of Cassation the Jurisdiction regulation, in order to ascertain if the jurisdiction on the litigation for damages was the jurisdiction of the Civil Judge or Administrative Judge. The Cassation Court confirmed the jurisdiction of the Ordinary court to which the case was referred for continuation on merit.
In line with the previously adopted approach to the closing of the accounts in relation to the European Commission decision of December 19, 2012, also for the dispute taken by ATA Handling – directly based on the above-stated decision and to which it explicitly refers – no risks and charges provisions were accrued in the SEA Financial Statements.
Litigation commenced by Emilio Noseda before the Buenos Aires court
In 2005 SEA was notified of an action brought by Mr. Emilio Noseda before the Buenos Aires court to seek enforcement of alleged commitments made in 1997 by SEA to Delta Group S.A., a Uruguayan company of which he was the legal representative and which supported SEA in the tender phase for the granting of the concession on the Argentine airports.
Mr. Noseda, as assignee of Delta Group’s rights, requested that SEA be ordered:
- to transfer 2% of AA2000 shares against the payment of their current market value;
- pay damages for loss of opportunity relating to Delta Group losing the opportunity to sell the shares in the period in which were worth more than the price then agreed (2 million USD), damages not quantified;
- pay damages for loss of profit relating to the non-award to Delta Group of some concessions in three Argentine airports, damages not quantified.
At the end of the evidentiary phase and pending the judgement, taking also into account that the judge had been replaced in the meantime and that Noseda’s request for legal aid had been upheld, SEA submitted a settlement proposal of USD 500,000 which was not accepted. Noseda requested a sum of USD 3.5 million, in addition to legal costs.
On December 30, 2016 the Commercial Court no. 2 of Buenos Aires filed the judgement, served on February 2, 2017, with which it rejected the application proposed by Mr. Noseda and aimed at obtaining the commitments undertaken in 1997 as mentioned above, sentencing him to pay the court costs. Mr. Noseda filed an appeal against the sentence.
In relation to this risk, SEA has set aside an appropriate amount in the provision for risks and charges.
Judgement 3553/2015 issued by the Milan Court
The Judgement of the Milan Court of Appeal, published in September 2015, refers to ongoing litigation with the Customs Agency for the non-payment of amounts for the use of space made available by SEA. This decision confirmed the grounds of the first instance judgement, which ordered the Customs Agency to pay SEA the sum of Euro 5,591 thousand. In December 2016 the Customs Agency challenged the judgement before the Supreme Cassation Court, objecting to the amount due established by the appeals judge. As not all jurisdictional degrees have been exhausted, no income was recognized in these financial statements.
SEA/ENAV civil litigation
This judgement refers to the action brought by SEA claiming assets erroneously transferred to ENAV with provisional delivery notes dated 1983/1984. The Court of Appeal, reversing the first instance judgement, upheld SEA appeal and ruled out the transfer to ENAV of the assets mentioned above. The appeal judgement, reversing the first instance decision, acknowledged that SEA has a right to build on state-owned areas of the airports of Milan Linate and Milan Malpensa under concession and therefore it has temporary ownership on constructed assets.
In February 2016 both the General Attorney’s Office on behalf of the Ministries and ENAV, appealed to the Supreme Court against the Court of Appeal judgement 3406/2015 which entirely grants SEA's claims. The latter requested in April 2016 that a counterclaim with cross appeal be served on the Ministries and ENAV. A date for the hearing to discuss it has not yet been set.
Litigation is also pending before the Court of Milan related to a claim lodged by SEA against ENAV for the assets included in Ministerial Decree 11/14/2000; the case is in the preliminary phase.
Provisions concerning Firefighters’ fees
Law 296 of December 27, 2006 (2007 Budget Law) art. 1, paragraph 1328, established the Fire Fighting Fund, funded by airport operators in proportion to the traffic generated for a yearly amount of Euro 30 million, in order to reduce the cost, borne by the state, of the fire protection service provided by the National Fire Corps at the airports. However, following the entry into force of the provisions of Article 4, paragraph 3 bis of Law Decree no. 185 of 11/29/2008, introduced with Conversion Law no. 2 of 01/28/2009, the fund's resources have also been allocated to purposes completely unrelated to those originally planned in the 2007 Budget Law.
SEA submitted a number of illegality objections and challenged the law both before the Administrative Court and the Civil Court of Rome.
Over the years, there have been positive and important rulings, some of which have become final, as a result of which it can be seen that all the courts involved have qualified "the levy established by the law as a purpose-related levy”. Up to now the courts have also established that following the entry into force of Law 2/2009 all the amounts of the Fire Fighting Fund have been used to cover costs and purposes completely unrelated to those initially planned of a reduction in the costs incurred by the State for fire fighting services at the airports.
It should be noted that the following provision was added in the 2016 Stability Law, which took effect January 1, 2016:
“Article 39-bis, paragraph 1, of Decree-Law no. 159 of October 1, 2007, converted with amendments by Law no. 222 of November 29, 2007, after the words: “of Law no. 350 of December 24, 2003” the following words are inserted: "and of fees borne by airport management companies with regard to fire fighting services at the airports referred to in Article 1, paragraph 1328, of law no. 296 of December 25, 2006”.
The article reclassifies the contribution to be paid to the Fund, as fee for the services rendered by the Fire Fighting Corps, in order to overcome the objections raised by Airport Managers on the nature of the levy and bring the issue back within the jurisdiction of the ordinary courts, in contrast to the previously issued rulings on the point. There were no updates to report as of the date of presentation of these financial statements.
The Cassation Court, with ruling no. 27074/16 returned it to the Constitutional Court for examination of the constitutionality of this law. The Company began negotiations with the Ministry of Transport in order to define the open position which is still in progress as of today’s date.
Italian Tax Authority - notice of assessment regarding VAT and IRES (corporate tax) for the 2011 tax period
SEA was served two notices of assessment in December 2016 regarding VAT and IRES respectively both for the 2011 tax period. Objecting to the notice of assessment for VAT purposes, linked to the closing and definition of the audits notes of the Customs Agency related to the disputed sales activity of electricity at the Milan and Linate airports, the Company submitted an appeal before the competent Tax Commissions considering the findings in the act objectionable in terms of law and fact. In terms of the notice of assessment regarding IRES, consequent to receiving a Questionnaire and based on the alleged incorrect application of the PEX tax regime with reference to the capital gain resulting from the sale of the investment in Aeropuertos Argentina 2000, the Company submitted a specific request for internal review and, until settled, a tax settlement proposal not considering completely grounded the motivations adopted by the Italian Tax Authority in the assessment.
Report of the Energy Services Operator following auditing of the green certificated from district heating of the Linate power plant
In December 2016, the Energy Services Operator (GSE) sent a report to the subsidiary SEA Energia following inspections (made in March 2016) to verify the data provided for the request of green certificated from district heating for the Linate power plant. GSE asked for the restitution of 17,106 green certificates for the 2010-2014 period (of which 12,435 of the Company and 4,671 of A2A) which led to reporting a future charges provision totalling Euro 1,049 thousand, since such certificates had been collected at December 31, 2016. The Company, represented by its lawyers, submitted an appeal within the prescribed deadline.