C-2/71

It is clear from Articles 17 and 18 of the Financial Regulation, which has been Financial Regulation of 31 January 1961 notified to all the Member States, cannot that the statement of accounts determin­ be regarded as provisional with regard to ing the contributions of the Member one of those States. States and notification thereof to such Since the applicant has tailed to bring an States must be effected within a given period, so that those measures must be action within the period of two months it considered as final decisions and not as may not repair this omission by institut­ provisional statements of position. ing proceedings against a subsequent One and the same statement of accounts letter refusing to reconsider the measures within the meaning of Article 17 of the in question.

In Case 2/71

Government of the Federal Republic of Germany , represented by Dr R. Morawitz, Ministerialrat to the Federal Ministry for Economic Affairs, acting as Agent, with an address for service in Luxembourg at the Office of the Head of Chancery at the Embassy of the Federal Republic of Germany, 3 boulevard Royal, applicant, v

Commission of the European Communities , represented by its Legal Advisers, R. Baeyens and P. Karpenstein, acting as Agents, with an address for service in Luxembourg at the Office of its Legal Adviser, Émile Reuter, 4 boulevard Royal, defendant,

1 — Language of the Case: German. 2 — CMLR.

JUDGMENT OF 6. 7. 1971 — CASE 2/71

Issues of fact and of law

I — Summary of the facts 30.3.1961, p. 509), hereinafter referred to and procedure as 'the Financial Regulation', the Com­ mission by letter of 2 March 1970 sent The facts and procedure may be sum­ to the Permanent Representative of the marized as follows: Federal Republic of Germany with the Under Article 125 of the Treaty estab­ European Communities copies of the lishing the European Economic Com­ Republic's account together with a munity, the European Social Fund is to statement of the general accounting meet 50% of the expenditure incurred position to 31 December 1969. For the by the Member States in attaining the third quarter those copies showed a credit objectives listed in paragraph (1) of that of DM 10 534 963.28 (2 633 740.82 u.a.) article. The aggregate amount of this and a debit of DM 17 904 387.04 expenditure is to be divided amongst (4476 096.76 u.a.) and for the fourth the Member States in accordance with quarter a credit of DM 33 819 359.79 the scale laid down in Article 200 (2) of (9 240 262.24 u.a.) and a debit of DM the Treaty. 26 473 862.12 (7 233 295.66 u.a.). For Under Article 16 if the Financial Regu­ the third quarter the Commission had lation 'relating to the methods and pro­ applied the former parity of the German cedure whereby the contributions of mark (one unit of account=DM 4) Member States specified in Article 200 whilst, for the fourth quarter, it used as (1) and (2) of the Treaty establishing the its basis .the new parity (one unit of European Economic Community, shall be account=DM 3.66). made available to the Commission, and By a letter of 6 March 1970 the Com­ to the technical conditions for conduct­ mission informed the Federal Minister ing the financial affairs of the European of Finance that at 31 December 1969 Social Fund (Article 209 (b) of the the Federal Republic's account showed Treaty)' of 31 January 1961 (JO of a credit balance of 164 610.64 u.a. (DM

602 474.94 according to the new parity). Advocate-General, the Court decided to The Commission had arrived at this open the oral procedure without any amount by balancing the credits and preparatory inquiry. debits which were expressed in units of The parties presented oral argument at account and notified by the letter of the hearing on 27 May 1971. The 3 March 1970. Advocate-General delivered his opinion By a letter of 25 March 1970 the at the hearing on 17 June 1971. Federal Minister of Finance objected to this operation. He requested that the parity of the mark (one unit of account II — Conclusions of the =DM 3.66) prevailing at the date of the parties Regulation (31 December 1969) should also be employed in the final statement The applicant claims that the Court of accounts for 1969. By this method of should: calculation the Federal Republic of '(1) annul the Commission's decision of Germany would obtain a credit balance rejection of 6 November 1970 to­ of 330 982.48 u.a. (DM 1 211 395.86), gether with the statement of accounts that is to say DM 608 920.92 more for the European Social Fund for than the amount determined by the the financial year 1969 on which it is Commission. founded; After two reminders, one from the Per­ (2) order the Commission to bear the manent Representative of the Federal costs'. Republic of Germany with the European Communities of 4 August 1970 and one The defendant contends that the Court from the Federal Minister of Finance should: of 18 September 1970, the Commission, by an interim decision of 19 October, '(1) of its own motion give a ruling on notified the Federal Minister of Finance the admissibility of the application; that it had transferred the sum of DM (2) in any event dismiss the application 602 474.94 'without prejudice to meas­ as unfounded; ures to be taken in pursuance of the (3) order the Federal Republic to bear letter from the Federal Minister of the costs'. Finance of 25 March 1970'. By a letter or 6 November 1970 which reached the Federal Minister of Finance III — Submissions and argu­ on 9 November the Commission finally ments of the parties rejected the former's complaint of 25 March 1970 and declared that the The submissions and arguments of the closure of the accounts of the European parties may be summarized as follows: Social Fund for the financial year 1969, on the basis of the credits and debits A — Admissibility notified in the previous letters and of the credit balance, was final. In its statement of defence the defendant The Government of the Federal Repub­ states that the application is directed not lic of Germany initiated the present against the letter of the Commission of proceedings by an application received 6 November but against the statement of at the Court Registry on 14 January accounts for the financial year 1969 1971. notified to the Federal Government by The written procedure followed the letter of 6 March 1970. Consequently, in normal course. the light of the case-law of the Court, in Alter hearing the report or the juage- particular Case 24/69 (Nebe v Commis­ Rapporteur and the views of the sion, [1970] ECR 145) it appears doubt-

ment of accounts. Consequently such Secondly, the Federal Government was entitled to believe until 6 November credits and debts can in no way be 1970 that the Commission had still not affected by any annulment of the communication of 6 November 1970. taken a definitive decision regarding how to take account of parity changes which (2) The question of how to take ac­ occurred in 1969. In fact the Commis­ count of the alternatives in parities sion allowed a considerable period to occurring in 1969 for the purposes of the statement of accounts for the elapse without explaining that this was merely an implied position and clearly European Social Fund for 1969 was lacked a statement of reasons. Thirdly, thoroughly discussed by the Com­ the Commission's order of payment of mission immediately before it sent the notifications of 2 and 6 March the balance of the Federal Republic of 1970. Germany for the financial year 1969 was delayed for an exceptionally long It may thus be seen from the notifi­ period (until 24 September 1970) and cation of 2 March 1971, albeit in a then it was given "without prejudice to summary manner — by the conversion measures (to be) taken in pursuance of rate laid down for the third quarter the letter from the Federal Minister of of 1969 on the one hand and that Finance of 25 March 1970' (letter of 19 for the fourth quarter on the other October 19701. hand — that this problem had already been solved in terms later confirmed The defendant replies to those argu­ ments in particular: by the communication of 6 Novem­ — a definitive measure does not cease to ber 1970. be definitive merely because it is (3) It also appears that the letter of reconsidered within the administration 6 November 1970 was merely con­ following a complaint by a party firmatory and was solely intended to concerned; give a brief summary of the reasons — although it is true that the case-law which had induced the Commission relied upon relates to the Staff to employ two different parities for Regulations of Officials, the circum­ the statement of accounts for the stances that in each case only the European Social Fund for the finan­ first decision is taken into considera­ cial year 1969. tion is to be explained not by the Finally, the defendant further remarks particular nature of Article 91 of the that an alteration of the accounts for the Staff Regulations but generally by financial year 1969 would affect the the wish to avoid indefinitely calling budgetary situation of all the Member legal certainty in question; States. — both the calculations themselves and The applicant in its reply maintains that the explanatory footnotes contained in the defendant is wrong, in relying on the communications of 2 and 6 March the judgment in Case 24/69, to dispute 1970 showed clearly the method of the admissibility of its application. First, calculating the parities adopted by the legal position under the Staff Regu- the Commission;

— in the light particularly of the judg pressed in national currency to a debt in ment of the Court in Case 22/70 units of account. (Commission v Council, [1971] ECR it The tact that the statement of accounts seems doubtful whether the obligation drawn up by the Commission was based to provide a statement of reasons laid on two different rates of parity of the down by Article 190 of the Treaty also DM results in reimbursing to the applies to a statement of accounts such Federal Republic of Germany less than as that at issue in the present case, since 50% of the expenses in DM which it such an 'act' is merely the mathemati incurs; this is consequently contrary to cal consequence of previous decisions; the provisions of Article 125 of the — even supposing that the contested Treaty. statement of accounts were defective Secondly, according to the applicant, the through lack of a statement of reasons, contested measures infringe the pro this defect should have been contested visions of the Financial Regulation, in within the prescribed period. particular Articles 16, 17, 23 and 24. In the course or the oral procedure the In fact, it is clear from the combined applicant continued to state that since provisions of Articles 16 and 17 of the the defendant only transferred the sum regulation that, whilst the quarterly referred to in Article 18 of the Financial notification of the reimbursements and Regulation on 24 September 1970 it had shares of the Member States is merely itself conceded that the communications informative, on the other hand the of 2 and 6 March 1970 could not be statement of accounts on 31 December considered as a final measure for the of each year creates obligations to pay. purposes of the second paragraph of 'the Furthermore the applicant observes that

Article 125 of the EEC Treaty. Under accounting period. This is also clear by that provision the Member States are reasoning a contrario on the basis of entitled to be compensated for 50% of Article 24 of the Financial Regulation. the expenses which they have incurred. Although that article expressly governs Since those expenses were incurred in instances of an alteration in parity during national currency the Community is in the period between closure of the ac debted in this same national currency counts and payment, it does not contain (cf. also the first paragraph of Article 21 any particular rules regarding an altera of the Financial Regulation).

JUDGMENT OF 6. 7. 1971 — CASE 2/71

Conse direotly from the quarterly accounts quently, the applicant pleads in the without any re-examination of the alternative that the Financial Regulation latter. is inapplicable under Articlie 184 of the In addition, the provisions of Articles 22 Treaty. to 24 of the Financial Regulation show (2) In its statement of defence the that the authors of the regulation were defendant asserts that although in prin familiar with the problem of alterations ciple the Member States are entitled in parties. Consequently, since there is under Article 125 of the Treaty to no express reference to the effect of an obtain a reimbursement of 50% of their alteration in parities on the calculations actual expenses in national currency, it is of the current financial year, it must be on the other hand impossible to apply held that the fixing in units of account this principle to cases of alterations in of the contributions and of the balances,

serves that the Court did not solve the tocol on the Statute of the European problems caused by an alteration in Investment Bank and Article 22 of the parities merely by referring to the prin Financial Regulation of 1961, which in ciple of the nominal value of the national its view are capable of providing support currency whose parity changed but took for its argument. account of the special nature of the With regard to the provisions of the equalization scheme in question. Financial Regulation invoked by the The applicant replies that once a prin applicant, the defendant observes that ciple, such as the one stated in Article the calculation of the 'total amount of 125 of the EEC Treaty, is admitted, it the benefits charged to the European may not be departed from save where Social Fund for the quarter', under express provision is made for this.

On the other should be based on the monetary parities hand, in a clearing system such as that

Grounds of judgment

1 On 11 January 1971 the Government of the Federal Republic of Germany lodged an application under Article 173 of the EEC Treaty for the annul­ ment of the decision of rejection of the Commission of 6 November 1970 together with the statement of accounts for the European Social Fund for the year 1969 on which the decision is based.

2 Under the Financial Regulation relating to the methods and procedure whereby the contributions of Member States specified in Article 200 (1) and (2) of the Treaty and to the technical conditions for conducting the financial affairs of the European Social Fund adopted on 31 January 1961 (JO No 22 1961, p. 509), the Commission, by letters of 2 and 6 March 1970, com­ municated to the Federal Government the statement of accounts of the European Social Fund for the financial year 1969 and notified the Govern­ ment of the amount of the sums to be paid to it. By letter of 25 March 1970, the Federal Minister of Finance raised objections to those measures, but the Commission by a letter of 6 November 1970 dismissed the objections and maintained its decisions.

3 Since the defendant considered that the letter of 6 November 1969 merely constituted a refusal to go back on a prior decision establishing the statement of accounts for the financial year 1969 which was notified to the Federal Government by letters of 2 and 6 March, it pleaded that the application was made out of time.

JUDGMENT OF 6. 7. 1971 — CASE 2/71

4 The applicant replies that as long as the Commission had not stated its attitude to the objections set out in the letter from the Federal Minister of Finance of 25 March 1970 the statement of accounts and the notifications relating thereto could not be regarded as final. Furthermore the behaviour of the Commission gave the impression that it itself considered its decisions in this matter as provisional.

7 It is clear from the foregoing that the letters of the Commission of 2 and 6 March 1970 constituted final measures which were capable of being contested under Article 173. Since the applicant failed to bring an action within the period of two months, it may not repair this omission by instituting proceed­ ings against a subsequent letter refusing to reconsider the measures in question.

8 Consequently, the application must be dismissed as inadmissible.

GERMANY v COMMISSION

Costs

9 Under Article 69 (2) of the Rules of Procedure the unsuccessful party shall be ordered to pay the costs of the proceedings. In this case the applicant has failed in its application and must therefore be ordered to pay the costs of the proceedings.

On those grounds,

Monaco Mertens de Wilmars Pescatore Kutscher

Delivered in open court in Luxembourg on 6 July 1971.

A. Van Houtte R. Lecourt Registrar President