The State has been fined €5m over its failure to assess the environmental impact of a wind farm in south Co Galway.
Further penalties of €15,000 a day will be imposed until Ireland complies with a 2008 instruction to properly examine the consequences of the 70-turbine development.
The Court of Justice of the European Union rejected arguments put forward by the State over its failures in relation to the Derrybrien Wind Farm.
In a ruling the court says that there was an obligation to take "all measures necessary" to remedy the failures in question.
It rejected the arguments put forward for failing to do this.
The saga dates back to October 2003 when a subsidiary of the ESB dislodged around half a million cubic metres of peat from the Slieve Aughty mountains during the early stages of construction of the wind farm.
Over a number of days, trees and debris flowed down the side of the mountain, causing a significant fish kill and disrupting life in the area.
In the immediate aftermath, remedial works were carried out. Deep channels were cut into the mountain, leading to a faster run-off of rainwater during the winters that followed.
In 2008, the Court of Justice found Ireland was in breach of its obligations and ordered that a retrospective Environmental Impact Assessment be carried out at Derrybrien.
The State argued the landslide had been caused by poor construction work, but the court found that it was because a proper assessment had not been carried out in advance.
On 3 July 2008 the ECJ ruled that Ireland had breached an EU environmental directive because an EIA had not been carried out ahead of construction.
Following that ruling, the Irish government was obliged to facilitate the operator of the wind farm in complying with EU law.
However, the ECJ found that the operator had not undergone that procedure, nor had it been initiated by the Irish authorities of their own initiative.
As such the European Commission took a second action for failure to comply with the ECJ obligations.
The ECJ ruled that all member states must comply with court judgments, and that following the earlier failure of the state to carry out an EIA, the State must also take into account not only the future impact of the plant, but also the environmental impact from the time of its completion.
The ECJ rejected Ireland's arguments that national law limited the possibilities for the authorities to regularise the situation following the 2008 judgement.
The court pointed out that both the national authorities and the operator of the wind farm were required to remedy the failure to carry out an impact assessment.
The judgment says that "in light of the seriousness and duration of the failure to fulfill obligations", the State must now pay the European Commission a lump sum of €5m and a periodic penalty of €15,000 every day, until the 2008 ruling is fully complied with.
Last year, Ireland was brought back to the European Courts because of the failure to comply with the 2008 judgment.
Additional reporting: Tony Connelly