C-291/89

3. Article 1 of Council Regulation (EEC) N o 2950/83 of 17 October 1983 2 on the implementation of Decision 83/516/EEC lists the expenditure for which assistance 2. That claim, like that of the company may be granted. It includes, in particular, Oliveira in Case C-304/89, relates to incomes of persons undergoing vocational assistance from the European Social Fund training, the costs of the preparation, which is to be refunded. Article 123 of the operation and administration of vocational EEC Treaty provided for the establishment training, board and lodging, and travelling of such a fund for the task of 'rendering the expenses for the recipients of vocational employment of workers easier and of training. Under Article 4 applications increasing their geographical and occu- relating to expenditure during the following pational ability within the Community'. year must be submitted by Member States Council Decision 83/516/EEC of before 21 October of each year and the 17 October 1983' precisely defined those Commission has to take decisions on these tasks: Article 1(2) states that the fund is to applications before 31 March of the participate in the financing of operations relevant financial year. Under Article 5 the concerning occasional training and approval of an application is followed by the guidance. Article 4 provides that assistance payment of an advance of 5 0 % of the may be granted in order to promote assistance approved on the date on which employment for young people under the age the operations are scheduled to begin. Only of 25 'in particular those whose chances when the operations are concluded does the of employment are especially poor, in Member State make application for payment particular because of lack of vocational of the balance after certifying the accuracy training or inadequate training and those of the facts and accounts contained in the final detailed report by the promoter on the * Original language: French. 1 — OJ 1983 L 289, p. 38. 2 — OJ 1983 L 289, p. 1.

4. Let me now refer to how the applicant's request for assistance was handled. 8. Let me now consider the two pleas in the application in relation to the contested decision. 5. Interhotel made application to the Business Department of the European Social Fund (hereinafter referred to as 'the Department'), Lisbon, which in turn applied 9. Interhotel pleads, first of all, a breach of for assistance from the Fund for 1987 on the Commission's obligation under Article behalf of the Portuguese Republic in favour 190 of the Treaty to state the reasons for its of Interhotel. T h e scheme was generally decisions. The applicant alleges that the approved by a Commission decision subject, contested decision does not contain explicit, as referred to in the notification sent to clear and relevant reasons within the Interhotel by the Portuguese Republic, to meaning of the requirement laid down in a slight reduction in the number of Case 18/57 Nold KG v High Authority.*" It participants and in the amount applied for. 3 states that the alleged reason that 'certain terms in the original proposal were not complied with is patently inadequate, by reason of its obscurity, for an understanding of the decision in question'. 7 6. In a circular to the undertakings concerned 4 the Department stated that the Commission intended to reduce the practical training periods of persons under 10. The Commission, while admitting that 25 so that the period did not exceed that of the statement of reasons on which its the theoretical instruction. decision is based 'does not err on the side of 8 verbosity', replies that its decision shows the origin of the amount of ineligible expen­ diture by reference to the points in the original form to which the categories of 7. Interhotel thereupon reduced the number expenditure clearly identifiable correspond. of hours originally approved and applied for payment of an advance of 5 0 % of the 5 — Annex 12 to the application. 6 — Case 18/57 NoUKGv High Authońty [1959] ECR 41. 3 — Annex 4 to the application. 7 — Application, p. 9. 4 — Annex 5 to the application. 8 — Rejoinder, paragraph 15.

11. A reading of the judgments of the Court on infringements of Article 190 of the Treaty shows that the Court seeks to 13. Can, on the other hand, guidance be establish a balance between the legal obli- found in cases relating to assistance from gation to state reasons and the practical the European Social Fund? In a recent constraints placed on the Community case 15 an action for annulment was brought institutions. Thus, the Court recognizes that against the decision of the Commission refusing assistance from the Fund for a training scheme. In answer to the applicant's claim that there was an insufficient statement of reasons the Court, after 'Although it is true that the Court has referring to the terms of its decision in consistently held that the statement of University of Groningen,16 stated that grounds required by Article 190 of the Treaty must disclose in a clear and 11 — Case 185/83 University of Groningen v Inspecteur der Invoerrechten en Accijnzen [1984] ECR 3623, paragraph unequivocal fashion the reasoning followed 38; my emphasis. by the Community authority which adopted 12 — See to that effect: G. Le Tallec and C. D. Ehlermann in La Motivation des Actes det Communautés Européennes, the measure in question in such a way as to RMC, 1966, p. 179 et seq, 179 to 182; C. Hen in La make the persons concerned aware of the Motivation des Actes des Institutions Communautaires, CDE, 1977, N o 1, p. 49 et seq, 74 to 78. reasons for the measure and thus enable 13 — See the rejoinder, paragraph 15. 14 — In particular, Case 206/85 Beiten v Commission [1987] 9 — Defence, paragraph 14. ECR 5301, paragraph 13. 10 — Case 32/86 SISMA v Commission [1987] ECR 1645 15 — Case C-213/87 Gemeente Amsterdam v Commission [1990] paragraph 8 referring to Case 8/83 Bertolt v Commission ECR 1-221. [1984] ECR 1649; my emphasis. 16 — See footnote 11 above.

17. Furthermore, the Commission attempts to derive an argument from the fact that the 15. The decision challenged in the national authorities are parties to all the Interhotel case relates to a daim for payment procedures. It stresses that the 'immediate of a balance. Decisions on such a claim are addressee' of the contested decision were less numerous than those relating to 'the national authorities' who were in a applications for assistance since the latter position to address to the Fund any obser- include a certain number which are refused. vation or complaint which they considered In addition, final decisions do not have to appropriate. 22 It observes in that respect 23 be given within such a short period as that the Court held in EISS v Commission original applications for approval. Under that the procedure for assistance from the Article 6· of Commission Decision European Social Fund 83/673/EEC of 22 December 1983 on the management of the European Social Fund l9 Member States' payment applications must reach the Commission within ten months of 'creates a financial relationship between the the date of completion of the operations Commission and the Member State on the concerned. Decisions for payment are one hand and between the Member State adopted when the Commission is able to and the institution which is the recipient of check, at the end of the training measures, the financial assistance on the other'. 2 4 the 'detailed report on the content, result and financial aspects of the relevant 20 — Article 5(4) of Regulation N o 2950/83. 21 — Ibid. 17 — Paragraph 28. 22 — Defence, paragraph 15. 18 — Paragraph 3 of this Opinion. 23 — Rejoinder, paragraph 12. 19 — OJ 1983 L 377, p. 1. 24 — Judgment in Case 310/81 [1984] ECR 1341, paragraph 15.

18. Is it possible to draw from this any assessing the scope of the statement of inferences regarding the statement of reasons, it is now necessary to determine reasons? In a case on the application of the whether the statement of the reasons on Common Customs Tariff the Court held which the contested decision is based fulfils that in spite of the 'somewhat laconic' the objective which the case-law invariably statement of grounds for the decision ascribes to it, namely to allow those concerned to know the reasons for the measure adopted in order to enable them to assert their rights and the Court to exercise its power of review.26 'It none the less satisfies the minimum requirements of Article 190 of the Treaty taking into account the fact that the decision is addressed to the Member States which took part in the meetings of the group of experts and are therefore suffi- 21. The decision mentions two reasons: ciently familiar with the details of the case failure to reduce proportionately the to be able to assess the scope of the amounts to correspond to the hours of decision, and that it also contains the indis- training and disregard of items in the pensable elements which permit the original proposal. Since the applicant scientific establishment concerned to complied with the circular on the equality of establish whether the decision is vitiated.'25 the number of hours of theory and practice, it seems that the first reason could refer only to the heading 'salaries of trainees'27 under which Interhotel had originally stated28 that it would adjust the amounts requested taking into account, in its own 19. It does not seem possible to transpose words 'on-the-job training', that is to say that solution to the procedures for given in the context of hotel organization. assistance from the European Social Fund. Although that reason appears to be super- As is shown by the documents in the present fluous, since it also covers the case of case, the national authorities are not really 'disregard of items in the original proposal', associated with the decisions adopted by the which constitutes the second reason, Commission. It is true that Article 6 of Interhotel was able to determine more Regulation No 2950/83 gives them the right precisely the subject of the Commission's to be heard before a decision is reached to complaints to it. reduce assistance but it is still necessary for a dialogue to be entered into, which did not occur in the present case. Thus, I think that the fact that the decision on the payment of the balance was addressed to the Member State does not significantly mitigate the obligation to state reasons. 22. The other reason appears very general since it encompasses expenditure which was not accepted in the decision of approval and also expenditure for which there are no

vouchers. It may therefore be wondered 24. The Commission recognized 30 that the whether it suffices, as the Commission decision to grant assistance adopted after contends, to compare the forms at the the application for approval created points mentioned to determine the subjective rights and 'gave rise to the right differences between the amounts claimed in to claim that assistance'. It must be pointed the application for the balance and those out in that respect that on the first exam- which were approved. If that is done, it ination of the application for assistance the does indeed appear that under the three Commission enjoys quite a wide discretion relevant headings, corresponding to points since, apart from the instruments which I 14.3, 14.6 and 14.8 of the application for have cited above, practically the sole the balance, amounts largely making up the framework within which it must act is amount refused were increased in relation Regulation 2950/83, Article 1 of which lists to the original application or were included, exhaustively the expenditure for which although not expressly inserted in the assistance may be granted. 31 On the other original application. It thus seems to me that hand, when ultimately considering the the statement of reasons meets the application for the balance the aforemen- requirements set out in the abovementioned tioned framework is coupled with that of case-law 29 since it enables those concerned the decision of approval. The Commission's 'to know the reasons for the measure', discretion thus becomes much narrower although it does not specify 'all the various since it may no longer refuse expenditure relevant items of law or fact'. Thus I which it had previously clearly approved if consider that Interhotel's plea of failure to the assistance has been 'used in conformity state reasons is unfounded. with the conditions set out in the decision of approval'. It is therefore necessary to verify whether or not Interhotel exceeded the limits imposed on it in order to determine the validity of the Commission's refusal.

reduced the costs of practical training by number of days and monitors 39 led to an applying a corrective rate of 50% for the increase of ESC 2 508 000. 'on-the-job training' of the trainees as indicated by Interhotel in its original application. 34 It is indeed to be observed that Interhotel made no reduction on that account as stated in the original application. Consequently the Commission could legit- imately make that correction, the details of 28. As regards the item 'Non-teaching which were not challenged by the applicant, technical staff it is to be observed that of which confined itself to alleging that 'the the six persons finally claimed the four posts practical courses were given in the form of of high-grade technician are not included in simulated practice so that they justify a the original application.40 As for the two 100% charge in the same way as the theor- technicians originally claimed, the applicant etical courses'. 35 cannot validly limit itself to maintaining, that it 'was not informed of the refusal in the decision of approval with regard to them' 41 for it was incumbent on it, before incurring any expense under that head, to satisfy itself of the Commission's approval in that respect.

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INTERHOTEL v COMMISSION

30. The amount of the item 'Costs of hire since there was no original claim for it. It is and rent' in relation to what was originally true that there had been a heading 'Accel- claimed' 44 was also clearly exceeded since in erated depreciation' 49 but it had never been the final application there was added the approved by the Commission. cost of fitting the rooms with dataprocessing and audiovisual equipment, amounting to ESC 4 373 600, and an increase in the costs of hire of ESC 468 3 6 9 « which led, as the Commission pointed out, to an increase of ESC 4 841 969.

33. Finally, as regards the heading 'Board and lodging' 50 the whole amount in relation to the lodging of the trainees could legit- imately be refused since the application for approval 51 stated that it was not to be taken into account.

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OPINION OF MR D A R M O N — C A S E C-291/89

35. Having verified that the framework laid parties, 5 8 since Interhotel had confined itself down by the decision of approval of the 'very often to stating the amounts without original application has not been exceeded, giving the slightest information to enable it remains to determine whether the their correctness to be determined'. 59 The Commission, without adversely affecting the same is true of the sums under the heading applicant's acquired rights, has the power to 'Preparation of courses'. 60 reject previously approved expenditure on the grounds of lack of documentation vouching for it. The Commission draws attention 5 3 to the fact that the Court has held that it cannot be disputed that

39. Interhotel has also observed 63 that the 37. Under the heading 'Functioning and Commission had the power under Regu- management of the courses' 5 6 insufficient lation N o 2950/83 M to carry out spot evidence was provided, according to the checks. I think, however, that such rights in Commission, of the expenditure relating to no way affect the company's obligation to board, lodging and travel, management and provide proof of its expenditure. It appears budgetary control, specialized work 57 and other supplies and services provided by third 58 — Defence, p. 6. 59 — Defence, paragraph 32. 53 — Rejoinder, paragraph 26. 60 — Point 14.2 of the application for the balance; 54 — Judgment in Case 84/85 United Kingdom v Commisiion Commission's allegations at paragraph 30 of the defence. [1987] ECR 3765, paragraph 23. 61 — Reply, under 'Law', paragraph 10. 55 — See footnote 20 above. 62 — See Annex 11 to the application. 56 — Point 14.3 of the application for the balance. 63 — Reply under 'Law', paragraph 12. 57 — Defence, paragraph 30. 64 — Article 7.

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INTERHOTEL v COMMISSION

42. In view of the foregoing observations I propose

— that the Commission decision of 19 July 1989 in relation to assistance no 870840/P1 from the European Social Fund should be declared void in part in so far as it refuses Interhotel assistance an amount of ESC 3 321 000 in respect of qualified staff;

— that the parties be ordered to bear their own costs. 65 — The term used in lhe rejoinder, p. 4. 66 — Annex 3 to the application.

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Annex

Non-teaching 7 300 000 Increase in the number of staff in technical staff relation to the original application Refusal of two technicians in the decision of approval

Administrative staff 2 912 955 Increase in the number of staff in relation to the application and the inclusion of new expenditure

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INTERHOTEL v COMMISSION

Headings of expenditure Expenditure Amount refused Reasons in the final payment claim

Board, lodging and 3 286 282 No documentary proof travel Part of the expenditure included under the item 'Teaching staff Expenditure relating to non- teaching staff not approved in the decision of approval

14.8 Board and lodging 5 673 000 According to the application no account should be taken of board

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