C-303/90

O P I N I O N O F MR TESAURO — C A S E C-303/90

O P I N I O N O F M R ADVOCATE GENERAL TESAURO delivered on 19 September 1991 *

Mr President, 2. In this regard, the first provisions to be Members of the Court, considered are those of the Treaty on economic and social cohesion (Articles 130a to 130e), which lay down the general prin- ciples regarding the operations of the funds and the other financial instruments and entrust the Community institutions with their implementation. 1. In these proceedings the French Republic seeks the annulment, pursuant to the first paragraph of Article 173 of the EEC Treaty, of a measure adopted by the Commission, entitled 'Code of conduct on the implementing provisions for Article 23(1) of Council Regulation (EEC) N o 4253/88 Council Regulation (EEC) No 2052/88 of relating to irregularities, and the organ- 24 June 1988 on the tasks of the Structural ization of an information system for irregu- Funds and their effectiveness and on coordi- larities'. ' nation of their activities between themselves and with the operations of the European Investment Bank and the other existing financial instruments 2 and Council Regu- lation (EEC) No 4253/88, 3 laying down provisions for implementing that regulation, contain the essential rules governing the matter. According to the French Government, the Code of conduct in question alters the nature of the obligation incumbent upon Member States under the rules in force to inform the Commission of irregularities affecting the Community budget in the field of operations financed by the structural In particular, and as far as is relevant here, funds; at all events, the adoption of such a the first subparagraph of Article 23(1) of set of rules is not within the competence of Regulation No 4253/88 establishes an ob- the Commission. ligation for Member States to take all the necessary measures to (a) verify on a regular basis that operations financed by the Community have been properly carried out; (b) prevent and take action against irregu- larities; and (c) recover any amounts lost as

a result of an irregularity or negligence. The opinion as to the legality of the Code, the Member State is liable in the alternative for delegations agreed that the Code, as the reimbursement of sums unduly paid drafted, would be confined to laying down unless the Member State and/or the inter- the means of implementing Article 23(1) of mediary and/or the promoter provide proof Regulation N o 4253/88. However, as it that they were not responsible for the irre- emerged at the hearing, some Member gularity or negligence. Pursuant to the States insisted that the Code should take the second subparagraph of Article 23(1), form of a regulation, primarily in order to Member States are required to inform the have clearly mandatory rules, given the Commission of the measures taken for those extreme importance and sensitivity of the purposes and, in particular, of the progress matter, binding in the same way on all of administrative and judicial proceedings. Member States. France, in particular, while declaring itself in agreement on the content of the draft Code, expressed reservations with regard to its legal form, which were explained in a telex from its Permanent Representation. Finally, the Code was officially notified to the Member States by 3. It is precisely on the basis of the letter dated 30 July 1990 and subsequently provisions referred to above that the dispute published in the 'C' Series of the Official in question arose. When Regulation Journal. N o 4253/88 was adopted, the Commission placed in the minutes a declaration to the effect that it would take the necessary measures, within its competence, to ensure the application of uniform arrangements in the various Member States for the mon- itoring of any irregularities concerning Community assistance. Some months later the Commission announced its intention to formulate a Code of conduct; for that 4. Given those facts and the further circum- purpose it set up a working group charged stances described in the Report for the with laying down the means of applying the Hearing to which reference is made, it must provisions of Article 23(1) of Regulation be observed that the applicant submits first N o 4253/88. of all that the measure to which it objects is, in substance, a regulation containing provisions implementing Article 23(1) of Regulation N o 4253/88, a measure which the Commission was not competent to adopt, given that the regulation in question gives no powers to the Commission and On 18 December 1989 the Commission that, under Article 3(4) of Regulation approved the resulting draft and then No 2052/88, the specific provisions submitted it to the Community Committee governing operations under each structural for the Coordination of Fraud Prevention fund, including the arrangements for the (hereinafter referred to as 'the Fraud monitoring, assessment, financial Prevention Committee'). Both in this management and checking of measures, are Committee and in the Ecofin Council, the those laid down in the implementing delegations of Member States discussed the decisions adopted pursuant to Article 130e legal form that the Code in question would of the Treaty; the latter provision grants have to take; despite some differences of sole competence to the Council.

Admissibility In particular, with regard to the concept of measures open to review under the first paragraph of Article 173, the Court has held since the AETR judgment 5 that an action for annulment must be available in the case 6. The Commission's objection of inad- of 'all measures adopted by the institutions, missibility is based on the fact that the Code whatever their nature or form, which are of conduct in question is a non-binding act, intended to have legal effects'. This and therefore not open to review under the approach was confirmed more recently in first paragraph of Article 173, which, as is the 'internal instructions' case, 6 in which the well known, empowers the Court to review Court held that 'internal instructions' the legality only of 'acts . . . other than adopted by the Commission, which were at recommendations or opinions'. issue in that case, were open to review in so far as they were intended to have legal effects.

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concrete examination of the content of the taken into account the Commission's measure, it is found that the measure is manifest lack of powers to adopt the intended to have legal effects, it can be held contested measure when assessing the that the measure itself is capable of producing argument that the measure was incapable of legal effects. 7 producing legal effects.

10. In this latter regard, moreover, it must be observed that the other argument Whilst not ruling expressly on this question, adduced by the Commission in support of the Court has confirmed that form is its claim that the application is inadmissible, entirely irrelevant as a criterion and that the namely that it has no powers to adopt measure must therefore be classified solely binding acts in the matter in question (see and exclusively on the basis of its content. pages 3 and 4 of the rejoinder), cannot be accepted. A lack of powers is a defect which affects the substance and not the admiss- ibility of the application.

7 — The need to answer this question was dictated by the belief that, although it is true that the choice of the form cannot alter the nature of the measure itself, it is equally true that the absence of a minimum of essential formal requirements, in other words those that make it possible to identify an act as binding, would mean that it could not be In substance, therefore, the measure which relied upon against third parties, even if an examination of we must consider in this case was one which the content of the measure revealed it to be capable of producing legal effects. In substance, such acts would in was drawn up and announced in a way such any case have no legal effects as against individuals or Member States, irrespective of the fact that the as to render unequivocal the intention for it Commission was empowered to issue binding acts in the sector under consideration. to be binding on the addressees. It is therefore necessary to examine the content 8 — See the judgment in Case 133/79 Sucrimex v Commission [1980] ECR 1299, paragraph 16; the judgment in Case of the measure in order to establish whether 182/80 Gauffv Commission [1982] ECR 799, paragraphs 16-18; the order in Case 151/88 Italy v Commission [1989] it contains legal obligations additional to ECR 1255, paragraphs 21-22; and, most recently, the those laid down by Article 23(1) of Regu- order in Case 50/90 Sunzest v Commission [1991] ECR 1-2917, paragraph 13. lation No 4253/88; for this reason, the

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question of admissibility should be not necessarily. If this were not so, there considered in conjunction with the would be no need for implementing rules. substance of the case.

The Code of conduct first defines its scope by confirming that the reporting Before moving on to such an examination, I requirement applies only to irregularities would like to make some preliminary involving more than ECU 4 000 (paragraph remarks concerning, more generally, the 1); the concept of irregularity is then means of implementing a provision of law. defined as 'any infringement of a The rationale of having provisions for Community or national provision by a implementing a rule consists, in my opinion, natural or legal person and affecting the in the fact that a rule may be applied in Community budget' (paragraph 2). different ways; it follows in principle that a measure laying down implementing provisions at the very least reduces the element of discretion arising from the wording of the rule in question. It is equally true that provisions for applying a rule comprise by definition at least a specification Paragraph 3 provides that Member States of the obligations entailed by the rule and should communicate, within three months thus a set of detailed rules that necessarily after notification of the Code of conduct, not create a series of specific obligations. In only the provisions adopted with a view to substance, therefore, the main purpose of a preventing and taking action against irregu- measure containing implementing provisions larities (an obligation expressly laid down by is to specify and harmonize Member States' Article 23(1)), but also the services obligations, which are assumed to exist from responsible for preventing and taking action the basic rule but which certainly d o not against irregularities and the procedural derive from it automatically, and in any case provisions of their administrative authorities.

Unless it is to be considered that implementing provisions are always and in every case merely declaratory and therefore do not require the adoption of a regulation in so far as the obligations stated therein derive from the basic rule, it must be estab- The Code also lays down that Member lished whether, in the case in point, the States should inform the Commission obligations set out in the Code of conduct immediately of irregularities that reveal the automatically follow from Article 23(1) or use of a new fraudulent practice or where whether instead the Code provides an inter- there is reason to believe that implications pretation which is not limited to making could rapidly arise outside the Member clear the obligations definitely inherent in State's own territory (paragraph 5). All the the basic rule (that is to say, the essential information passed to the Commission is to minimum not affecting its content) but be examined jointly by the Commission and entails an alteration or at the very least representatives of the Member States at makes the obligation laid down in the basic periodic meetings, especially in order to rule more onerous for Member States. It is draw lessons for preventive measures from that viewpoint that the following (paragraph 6); information on the number observations are made. of cases notified to the Commission, the number of cases completed, the sums recovered or in the process of being recovered is to be passed to the Fraud Prevention Committee and to the con- sultative committees of the structural funds concerned (paragraph 8). Finally, the Code 15. It must be observed first of all that provides that Member States and the Article 23(1) of Regulation N o 4253/88 Commission must take the measures confines itself, in so far as is relevant here, necessary to ensure the confidentiality of to requiring Member States to inform the information exchanged between them Commission of the measures adopted to (paragraph 7). prevent and take action against irregularities

and of the progress of administrative and information as laid down by the basic rule judicial proceedings. The Code of conduct, is vitiated should the identity of the on the other hand, specifies periods in beneficiaries or the manner in which the which such information should be provided irregularity was discovered not be notified. and requires additional information as well Moreover, such a conclusion has been as details of the irregularities committed. corroborated by the Commission itself, which maintained during the hearing that a Member State can infringe the Code of conduct without thereby violating Article 23(1) of Regulation No 4253/88.

Secondly, it is legitimate to ask whether notification of the progress of administrative and judicial proceedings can be equated to — or at any event can automatically include — detailed information on irregu- larities, in substance a sufficiently detailed description of each irregularity encountered. 16. In the light of the above, and in order I refer, in particular, to information such as to highlight certain problems raised by the the identity of beneficiaries, the way in Code of conduct, I believe that it would be which the irregularity was discovered, and useful to look briefly at other regulatory the services or bodies that made the arrangements similar to those in question.

concerning a system — similar to that introduced by the Code — for notifying It is certainly possible to maintain that such irregularities committed against the EAGGF information is ancillary to the obligation to Guarantee Section, lists the information that inform the Commission of the progress of administrative and judicial proceedings, but 9 — Council Regulation (EEC) N o 595/91 of 4 March 1991 concerning irregularities and the recovery of sums it is equally evident that such information wrongly paid in connection with the financing of the cannot be considered a mere clarification of common agricultural policy and the organization of an information system in this field and repealing Regulation the obligation in question.

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11 — The importance of such i provision is confirmed by the case-law of the Court, which its judgment in Case 267/78 Commission v Italy [1980] ECR 31 stated at paragraph 22 that: 'Rules which in the national systems of criminal law prevent the communication to certain persons of documents in the criminal proceedings may therefore be relied upon against the Commission in so far as the same restrictions may be relied upon against the national au- thorities', and accordingly held that Italy had not failed to 18. For the sake of completeness, I would meet its obligations by not communicating to the add that on the basis of paragraphs 4 and 5 Commission information covered by the confidentiality of investigations. of the Code of conduct, in order to

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facilitate the submission of the required Member States are invited to provide such information, a form was sent to all the details to the extent that they are useful for Member States, which they must complete an effective campaign against fraud. and send to the Commission in accordance with a set timetable. The applicant considers this form to be further proof of the fact that the contested measure is not simply a recommendation. The Commission, on the 19. The foregoing observations confirm that other hand, maintains that it is a standard the Code of conduct is not confined to clar- form, identical to those already existing in ifying the obligations set out in Article 23(1) other sectors. of Regulation N o 4253/88, but interprets them and widens their scope without never- theless providing appropriate safeguards, especially as regards the protection of indi- viduals.

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contends several times in its defence 21. Nor do I consider that the submissions, that the measure in question is Commission's reference to Article 5 of the no more than a recommendation, an Treaty is such as to alter the terms of the opinion addressed to Member States on the issue. In this regard, it must be observed manner in which to apply Article 23(1) of that the obligation placed on Member States Regulation No 4253/88, it is difficult to by this Article to 'facilitate the achievement understand why the Commission did not of the Community's tasks' is a general ob- describe the measure as such in the title or ligation which, as the Court itself has stated, present it in such a way as to demonstrate cannot be invoked 'in the absence of a clearly, over and beyond the nomen iuris, particular provision in the Treaty or in that it was purely and simply a recommen- binding acts adopted by the institutions'; 14 dation to Member States, 13 thus avoiding this applies in the sense that such an ob- possible confusion and uncertainty, and an ligation on Member States cannot in any artificial dispute. case be invoked to adopt acts of a regu- latory nature. Finally, the Commission may undoubtedly ask Member States, on the basis of Article 5 of the Treaty, to provide specific information on a particular case and it may institute proceedings for breach of the Treaty if a Member State refuses to supply such information, but it certainly cannot use such a legal basis to harmonize, clarify and widen the obligations imposed by a rule, in this instance Article 23(1) of Regulation No 4253/88.

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Article 23 confines itself to indicating the Treaty. Furthermore, Article 7(2) of the obligations of Member States, but does not same regulation confirms that the attribute any power to the Commission to harmonized rules for strengthening checks specify, interpret or increase the obligations on structural operations are to be estab- in question. N o other relevant provision lished on the basis of the provisions in the confers similar competence on the aforesaid Article 3(4) and (5). It follows that Commission. Indeed, Article 3(4) and (5) of in so far as the Code of conduct in question Regulation N o 2052/88 provides that the is intended to have legal effects it must arrangements for checking operations are to be annulled on the grounds of the be laid down in the implementing decisions Commission's lack of competence. adopted pursuant to Article 130e of the

Conclusion

O n the basis of t h e foregoing considerations, I propose that the C o u r t grant the application a n d o r d e r the Commission to pay the costs.

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