The State has been fined €5m by the EU Court of Justice over its failure to assess the environmental impact of a wind farm in Co Galway.
The legal action surrounding the Derrybrien Wind Farm dates back to 2008 when Ireland was ordered by the court to carry out an environmental impact assessment of the project.
The CJEU said in its judgment issued today that the duration of Ireland's infringement over the past 11 years had been "considerable".
Given the "seriousness" of the infringement, the court also imposed a fine of €15,000 per day until the State complies with the 2008 ruling to assess the impact of the 70-turbine wind farm.
Issues arising from the development came to light in 2003 when tonnes of peat became dislodged during construction at Derrybrien, causing the death of thousands of fish in the nearby Owendalulleegh River.
The landslide resulted in damage to the environment, as well as disruption to the local water supply.
The legal team representing Ireland had argued that it had not been proven that the landslide was caused by the construction of the wind farm.
The court said today that impact assessments were "fundamental" in protecting the environment as they can prevent damage being caused prior to the construction of a project, rather than trying to deal with the effects later.
It said it would issue the financial penalty given how "urgent" it is that the State complies with its obligations under the 2008 ruling.
Environmental groups welcomed today's judgment, with Friends of the Irish Environment saying that it was "only the beginning".
Spokesman Tony Lowes said: "The wheels of justice in Europe move slowly but they move.
"The Commission is aware of the High Court’s recent striking down of Minister Bruton and Minister Murphy’s attempt to exempt peat extraction from planning controls.
This deviousness has only increased the State’s vulnerability to yet more fines for flouting EU environmental law as no peat extractors, including Bord na Mona, have ever been subject to the Environmental Assessment Directive.
The Environmental Pillar, a coalition of 28 national environmental organisations, said that the ruling is"not just a further stain on the Irish State’s environmental record, but constitutes yet another veritable landslide in terms of the criticism levelled at the State’s handling of this case".
Attracta Ui Bhroin, Environmental Law Officer at the Irish Environmental Network, said: "If ever there was a need for an example to show how deeply problematic and flawed the State’s position on environmental law is – this morning’s judgement sets that out with knobs on.
“Not only did Ireland’s original failure lead to the 2008 judgment, but there has been 11 years of failure to properly understand and address what needed to be done.
"The taxpayer now has to foot the bill, and the local community has been left suffer for well over a decade. The most serious questions now need to be posed about the legal advice given in this case, as this was a wholly avoidable situation" she said.