C-10/98

LE CANNE V COMMISSION

OPINION OF ADVOCATE GENERAL COSMAS delivered on 18 March 1999 *

Table of contents

I — Introduction I - 6833 II — Legal background to the dispute I-6833 III — Facts I-6837 IV — Forms of order sought by the parties to the appeal I - 6840 V — Pleas on appeal I - 6840 A — Infringement of the principle of collegiality 1-6841 Β — Infringement and misapplication of Articles 44(1) and 47 of Regulation No 4028/86 and Article 7 of Regulation No 1116/88 I-6844 C — Infringement of the right to be heard I - 6855 D — Lack of a statement of reasons for the Commission decision and misinterpre­ tation of Article 190 of the Treaty I-6856 VI — The claim for compensation I - 6859 VII— Conclusion I-6859

I — Introduction reduction in Community financial aid applied by the Commission and also rejected a claim for compensation for the loss which the applicant alleged it had 1. In this case the Court of Justice is called suffered as a result of that reduction. upon to deliver judgment on an appeal by Azienda Agricola 'Le Canne' Srl brought against a judgment of the Third Chamber of the Court of First Instance of 7 Novem­ ber 1997 1 (hereinafter 'the judgment appealed against').

II — Legal background to the dispute

— if the beneficiary, contrary to the particulars given in his application and incorporated in the decision grant­ 5. Article 44 of Regulation No 4028/86 ing aid, has not begun the work within provides: one year from the date of notification of the decision, or has not, before the end of this period, supplied satisfactory assurances that the project will be carried out, or '1. Throughout the period for which aid is granted by the Community, the authority or agency appointed for the purpose by the Member State shall send to the Commis­ sion on request all supporting documents — if the beneficiary does not complete the and all documents showing that the finan­ work within a period of two years from cial or other conditions imposed for each the start of the project, except in cases of force majeure. 2 — OJ 1986 L 376, p. 7. 3 — Commission Regulation (EEC) No 970/87 of 26 March 1987 laying down transitional measures and detailed rules for the application of Council Regulation (EEC) No 4028/86 with regard to the renewal and restructuring of the fishing fleet, the development of aquaculture and structural works in coastal waters (OJ 1987 L 96, p. 1) laid down the data and information which applications for Decisions shall be notified to the Member financial assistance addressed to the community are to contain. State concerned and to the beneficiary.

I - 6834

LE CANNE V COMMISSION

The Commission shall take steps to recover 3. The Commission shall adopt the mea- any sums unduly paid. sures which shall apply immediately. How- ever, if these measures are not in accor- dance with the opinion of the Committee, the Commission shall forthwith communi- cate them to the Council. In that event the 2. Detailed rules for applying this article - Commission may defer their application for shall be adopted by the Commission in not more than one month from the date of accordance with the procedure laid down such communication. The Council, acting in Article 47'. 4 by a qualified majority, may adopt different measures within one month.'

I - 6835

OPINION OF MR COSMAS — CASE C-10/98 Ρ

documents. They shall be submitted in An (A first) application for partial duplicate in the form shown in the Annex.' payment shall be made only:

9. Article 4 of Regulation No 1116/88 lays — if the rate of implementation has down the following requirements: reached at least 30% of the eligible costs, and

' 1 . Payments in instalments shall not exceed in respect of any one investment — if the interim implementation the rate of implementation of the work report has been drawn up (only relating to that investment. Such rate shall for aquaculture). consist of the ratio between the total amount of the invoices or other documents which have been duly paid and relating to eligible expenditure and the total amount of the eligible costs laid down at the time the grant decision was taken. (c) ...

(a) ... 2. Final payments for all types of project shall be subject to the conditions set out in the decision granting aid, in particular as regards the financial contribution of the Member State and the presentation of the (b) Aquaculture, development of coastal official documents required.' waters

— inform the Member State on whose territory the project was to be carried out, so that it may express its views on the matter, 14. That decision stated that 'the amount of aid that the Commission will actually apply to a completed project depends on the nature of the works carried out in relation to those provided for in the project'. The decision also stipulated that — consult the competent authority 'in conformity with the statement appear­ responsible for forwarding supporting ing in Part Β of the application for assis­ documents, tance submitted by the recipient, the works provided for may not be altered or changed without the prior agreement of the national administration and of the Commission. Important changes made without the Com­ mission's agreement may lead to a reduc­ — ask the beneficiary to provide, through tion or withdrawal of the assistance if they the authority or agency, an explanation are deemed unacceptable by the national for the failure to comply with the administration or the Commission. If conditions laid down.' appropriate, the national administration

I - 6837

OPINION OF MR COSMAS — CASE C-10/98 Ρ

17. By Decision C(94) 1531/99 of 27 July 1994 the Commission acceded to a second request by the applicant for the grant of aid in connection with the completion of modernisation works and installations (project 1/100/94).

19. After verification of the completed 18. In a letter dated 12 December 1994 works the Ministry forwarded to the appli­ addressed to the Italian Ministry of Agri­ cant on 3 June 1995 the certificate of culture (hereinafter 'the Ministry') and to verification of completion of works (here­ the Commission, the applicant pointed out inafter 'the certificate') drawn up on that, owing to circumstances beyond its 24 May 1995. In the Ministry's view, the control which had arisen since the project applicant had made changes additional to was sent to the Ministry, certain modifica­ tions to the works provided for in the context of project I/16/90 had become 6 — Apart from a difference in the location and configuration of essential, although that did not mean that the intensive rearing ponds.

I - 6838

LE CANNE V COMMISSION

7 — These changes were specifically as follows: (a) failure to build 16 ponds, a hydraulic installation and a heating station, all replaced by projected rearing ponds to be built in the context of the completion project approved by the Commission in Decision C(94) 1531/99; (b) failure to 23. By letter of 14 November 1995 the acquire a series of machines; (c) failure to build new store and rearing ponds external to the hangar. Ministry rejected the request for re-exam-

I - 6839

OPINION OF MR COSMAS — CASE C-10/98 Ρ

ination made by the applicant on the same 27. The Court of First Instance dismissed grounds as those set out in telex No 12 497 the action and ordered the applicant to pay of 27 October 1995 from the Commission. the costs.

I - 6840

LE CANNE V COMMISSION

infringement of the principle of collegiality the institution's officials may be empow- governing the Commission's activities, (b) ered to take, in the name of the Commis- infringement of the principle of the right to sion and subject to its control, clearly be heard, (c) infringement and misapplica- defined measures of management or admin- tion by the Court of First Instance of istration, such as the contested decision. Articles 44(1) and 47 of Regulation According to the appellant, delegation of No 4028/86 and Article 7 of Regulation power, as a matter of principle, may be No 1116/88, and (d) failure by the Com- regarded as contrary to the principle of mission to provide a statement of the collegiality which should govern the Com- reasons on which its decision was based, mission's actions. Then, it considers that contrary to Article 190 of the EC Treaty the Court of First Instance was wrong to and, consequently, incorrect and contra- concede that delegations of signature are dictory reasoning by the Court of First the normal means by which the Commis- Instance on this point. sion exercises its competencies. Finally, it submits that, if conversely the view were to be taken that the Court of First Instance accepted that there had been a mere delegation of signature, it wrongly distrib- 31. For methodological reasons, examina- uted the burden of proof in holding (at tion of the first plea will be followed by paragraph 38) that it was for the appellant examination of the third plea, after which to show that the Community administra- comes an analysis of the second plea; I shall tion had failed to comply with the relevant conclude with an analysis of the fourth rules applicable in this sector. Citing the plea. Court's case-law,9 the appellant considers that only the Commission is in a position to adduce such evidence when the question is in doubt.

O P I N I O N OF M R COSMAS — CASE C-10/98 Ρ

action of the Commission as a collegiate quently, a body cannot lawfully alter the body. rules governing its competence unless such alteration is expressly authorised or imposed by those rules which are to be strictly interpreted.

Conse is normally at a lower level in the hierarchy, the right to sign certain documents in its stead and at its direction. Although they 10 — We do not need to dwell on the Commission's submission bear the signature of the delegate of the that the telex of 27 October 1995 constitutes a 'mere power, such acts are deemed to be acts of expression of opinion' in respect of which observance of the principle of collegiality was not required. I would the delegating body. Delegation of signa simply point out that in this connection the Court of First Instance held (at paragraph 28) that: 'telex N o 12 4 9 7 of ture must also be authorised by the provi 27 October 1995, read in conjunction with the order for payment of the balance of the Community financial aid sions determining the powers of the dele issued by the Commission on 5 July 1995, had the effect of gating body. reducing the amount of Community financial aid origin ally granted by Commission Decision C (90) 1923/99.' And it went on to say (at paragraph 29): 'Inasmuch as the contested telex thus deprives the applicant of the full amount of the assistance originally granted to it, without the M e m b e r State concerned having any margin of discretion of its own in the matter, the contested telex constitutes, in regard to the applicant, an individual decision which produces binding legal effects such as to affect its interests by bringing about a distinct change in its legal position' (Case 60/81 IBM ν Commission [1981] ECR 2639, paragraph 9, Case C-291/89 Interhotel ν Commission [1991] ECR I-2257, paragraphs 12 and 13, 36. The Court has repeatedly empha C a s e C - 3 0 4 / 8 9 Oliveira ν Commission [1991] ECR I-2283, paragraphs 12 and 13, and Case C-189/90 sised 1 2 that the functioning of the Com Cipeke ν Commission [1992] ECR 1-3573, paragraphs 11

and T. Dembour: Droit administratif, 3 Edition, Liège, Faculté de Droit d'Economie et des Sciences sociales de l'Université de Liège, 1983, p . 277. Delegation of power 12 — See judgments in Case 5/85 AKZO Chemie ν Commission seeks to enable an authority to transfer certain of its [1986] ECR 2585, paragraph 30, and Commission ν BASF competencies in order to lighten its administrative burden and Others, (cited at footnote 9) paragraph 62. or, whilst retaining control, to allow the competence to be 13 — In actual fact, that principle derives from Article 17 of the exercised by bodies which are better placed to take the Treaty of 8 April 1965 establishing a single Council and a

I - 6842

LE CANNE V COMMISSION

requires decisions to be deliberated on accordance with the conditions laid down collectively and for all members of the in its rules of procedure and within the college to be collectively responsible at a limits which it itself lays down in the act of political level for all the decisions adopted. delegation. Those so delegated may act only within the limits of the powers 16 expressly conferred upon them.

14 —AKZO Chemie ν Commission cited at footnote 12, paragraph 37. 16 — The Commission stresses that such delegations are speci­ 15 — Financial Regulation of 21 December 1977 applicable to fied in detail for each budget line by an annual decision which it takes under Article 205 of the EC Treaty and the the general budget of the European Communities Financial Regulation. (OJ 1977 L 356, p.1).

I - 6843

OPINION OF MR COSMAS — CASE C-10/98 Ρ

clearly defined measures of management or Agricultural Guidance and Guarantee Fund administration, such as the contested deci­ (EAGGF), Guidance Section, which comes sion. Those are therefore delegations of under the responsibility of the Commis­ power which do not have the effect of sion's Directorate General for Fisheries transferring to an authorised official a self- (DG XIV). standing power divested from the Commis­ sion. 1 7 Similarly, the Court has stated that delegations of signature are the normal means by which the Commission exercises its competencies, which the Court has repeatedly acknowledged. 18 43. Moreover, I consider that the Court of First Instance correctly allocated the bur­ den of proof in taking the view (at para­ graph 38) that the applicant had adduced no evidence to show that the Community administration had in this case departed 41. Consequently, the Court of First from the applicable rules. 20 It was for the Instance was right to declare that the applicant to produce material in support of contested measure was properly adopted its allegations. 21 Accordingly, its argu­ under the rules of delegation of power ments to the contrary must be rejected as without there being any infringement of the unfounded. principle of collegiality.

Articles 44(1) and 47 of Regulation percentage of Community financing No 4028/86, and Article 7 of Regulation remains constant. 22 It stresses that the No 1116/88 in adjudging that the proce- fluctuation in eligible expenditure, which dure followed by the Commission in this affects nearly all projects presented, is the case, in which it did not consult the result of purely technical evaluations. Standing Committee on the Fishing Indus- try, was in conformity with those articles. More specifically, the Court of First Instance, it is alleged, was wrong to hold (at paragraph 56) that Articles 44 and 47 of Regulation No 4028/86 apply only on a re-evaluation of the project as a whole and 47. Article 44, interpreted in conjunction not where 'a part of the expenditure for with Article 47 of Regulation No 4028/86 which the applicant claims payment does and with Article 7 of Regulation not relate to the project as originally No 1116/88, lays down an essential formal accepted'. In fact, Article 44 mentions, requirement whose infringement entails the amongst other situations in which it is to invalidity of the decision adopted. Under apply, the case where 'the project is not the terms of Article 44, that procedure carried out as specified'. As the appellant must be applied in all cases where Com- stressed at the hearing, it considers there to munity aid is suspended, reduced or dis- be no warrant under the terms of the rules continued on one of the grounds set out in for distinguishing between eligible expen- that provision. diture and notifiable alterations to the grant-aided project. It maintains, finally, that only an alteration of the agreed project found on subsequent examination to be unacceptable after the procedure under Article 47 has been followed can justify reduction or discontinuance of aid, and not 48. In light of the foregoing, it is first of all any significant change on the sole ground necessary to determine the meaning of 'aid' that it was not approved. and 'reduce', as used in Article 44 of Regulation No 4028/86, and then to clarify what powers are conferred on the Commis- sion under that article.

sions of Regulation No 4028/86 and is not carried out as specified; (b) if certain Annex III thereof, 23 is to be understood conditions imposed are not satisfied; (c) if as meaning the percentage of the total the beneficiary, contrary to the particulars amount needed for the investment which is given in his application and incorporated in approved as Community financing for the the decision granting aid, has not begun the implementation of projects 2 4 relating to work within one year from the date of physical investments in the construction, notification of the decision, or has not, equipment or modernisation or extension before the end of this period, supplied of aquaculture installations. That percen­ satisfactory assurances that the project will tage, which relates to the amount of the be carried out; or (d) if the beneficiary does investment and is set when the project is not complete the work within a period of approved, constitutes the Community two years from the start of the project, financial aid. 2 5 except in cases of force majeure.

I - 6846

LE CANNE V COMMISSION

originally laid down as constituting Com­ less than the amount initially approved, the munity financial aid at the time when the refusal by the Commission to pay the grant-aided project was approved. Sec­ remainder of the balance does not consti­ ondly, a decision to reduce, suspend or tute a reduction under the terms of the discontinue aid refers to the future course legislation. of the project. In other words, there can be a reduction, within the meaning of the applicable provisions, only where the pro­ ject is a current one.

55. Consequently, as the Commission cor­ 57. In any event, provision for a special rectly maintains, there can be no question procedure is in my view justified by the fact of a reduction within the meaning of that 'the decision reducing the amount of Regulation No 4028/86 when the project assistance originally approved entails more is completed and, following a determina­ 2 serious consequences' 6for the realisation tion as to the final state of the project by of the project financed because it substan­ the competent national authorities, there is tially alters the conditions on which the aid merely an adjustment in the amounts paid was approved at the same time, moreover, in respect of work completed as per the approved and completed project. In fact, even though, in that situation, the amount 26 — See judgment in Case C-189/90 Cipeke ν Commission received by the recipient by way of aid is (cited at footnote 10), paragraph 16.

I - 6847

OPINION OF MR COSMAS — CASE C-10/9 8 Ρ

59. Yet, in my view, other provisions, too, permit the inference that there is a distinc­ tion to be drawn between the rate of 62. It should be recalled that, under Arti­ Community financing provided for and cle 4(2) thereof, final payments for all types the amount actually paid on the basis of of project are subject to the conditions set eligible expenditure and work completed, out in the decision granting aid, in parti­ on the one hand, and the possibility, on the cular as regards the financial contribution other, of an adjustment, based on a series of of the Member State and the presentation technical calculations and appraisals, in the of the official documents required. amounts actually paid in respect of the work carried out in connection with the completed project.

63. Moreover, it follows, in my view, from Commission Regulation No 970/87, and in 60. That distinction is, I believe, to be particular the annex relating to projects in inferred from an analysis of Article 4 of the aquaculture sector, that the reduction

I - 6848

LE CANNE V COMMISSION

67. According to the 16th recital in the 64. Moreover, it is only in the case of work preamble to Regulation No 4028/86 'mea­ in progress that it may be demonstrated, sures must be taken to prevent and to under the procedure provided for in Arti­ prosecute any irregularities and to recover cles 44 and 47 of Regulation No 4028/86 the sums lost as a result of any such and Article 7 of Regulation No 1116/88, irregularity or of negligence; ... provision that, the purpose for which the Community should also be made so that Community aid was granted is being attained or can be financing can be suspended, reduced or attained, in spite of modifications, with the discontinued'. In other words the legisla­ result that the amount of Community aid ture is seeking the adoption of measures to does not need to be reduced. That appraisal prevent and prosecute irregularities noted requires a very full legal and financial in the course of a project, owing to which evaluation of the progress of the works as the purpose of the financing has not been

I - 6849

OPINION OF MR COSMAS — CASE C-10/98 Ρ

I - 6850

LE CANNE V COMMISSION

the amount, eligible expenditure differed exclude arbitrary action by the Commis- from initial forecasts, that would result in sion taken without the knowledge of the the immediate blockage of all the pro- Member States concerned and of the ben- grammes governed by the regulation. eficiaries of the aid, and without having sought their opinion first.

73. Specifically, Article 7 of Regulation No 1116/88 provides that, before initiating 71. I consider intervention by the Standing a procedure for suspending, reducing or Committee to be necessary whenever there terminating aid, the Commission is to take is a margin of discretion as regards the certain steps, which are set out exhaus- progress of a current project and a possi- tively: namely it is (a) to inform the bility, on that ground, of taking a decision Member State on whose territory the to reduce, suspend or discontinue aid. project is to be carried out, so that it may Where a project has still to be fully express its views on the matter, (b) to implemented, and the period for comple- consult the competent authority responsi- ting the works has not yet expired, the ble for forwarding supporting documents, Standing Committee must intervene in and (c) to ask the beneficiary to provide, order to determine to what extent it is through the authority or agency, an expla- possible to achieve the purpose for which nation for the failure to comply with the the project was financed, given that, if it is conditions laid down. not possible, the possibility of reducing, suspending or discontinuing the aid could be envisaged.

76. Moreover, other provisions of Regula­ tion No 4028/86, in particular Article 39 thereof, show that whenever the Commu­ nity legislature sought, in regard to projects 78. Support for the Commission's point of under Title IV on the development of view may be found, in my view, in the aquaculture, 27 such as the appellant's pro­ judgment in Cipeke ν Commission. 28 That ject, to give the Commission the opportu­ case concerned the validity of a Commis­ nity to re-examine in whole or in part its sion decision reducing aid granted by the decision to grant aid in the context of a European Social Fund (ESF) for a profes­ review of the results of the project, and sional training programme. However, the chiefly of its financial results, it has legislation governing the grant of the aid expressly stated that the re-examination did not provide for a specific procedure to must be carried out in compliance with the be followed analogous to that under Arti­ procedure under Article 47. In Arti­ cle 44 of Regulation No 4028/86 but cle 39(2) the legislature does not refer to a allowed the Commission to suspend, reduction in the aid, since it has already reduce or discontinue that aid after having been paid, but to reversal in whole or in given the relevant Member State an oppor­ part of the decision to grant aid some time tunity to comment. 29 after (two years after the works in the case of aquaculture development) 'the last pay­ ment of aid'. Since this involves a re- 28 — That judgment has already been cited at footnote 10. See also analogous judgments in Case C-157/90 Infortec ν evaluation of the results of the whole Commission [1992] ECR I-3525, and Case C-181/90 Consorgan ν Commission [1992] ECR I-3557. See also project, the legislature expressly provides Opinion delivered by Advocate General Darmon in those that the Commission is to recover in whole cases. 29 — Article 6(1) of Council Regulation (EEC) No 2950/83 of or in part the sums paid, acting in accor­ 17 October 1983 on the implementation of Decision dance with the procedure laid down in 83/516/EEC on the tasks of the European Social Fund (the regulation was published in OJ 1983 L 289, p. 1 and Article 47. the decision in OJ 1983 L 289, p. 38) provides that when Fund assistance is not used in conformity with the conditions set out in the decision of approval, the Commission may suspend, reduce or withdraw the aid after having given the relevant Member State an opportu­ 27 — Title IV also concerns structural works in coastal' waters. nity to comment.

79. In that case, which raised a particular procedure under Articles 44 and 47 to be issue as to payment of the balance, after applied whenever it is necessary to deter­ completion of the professional training mine whether, in the case of an uncom­ programme, the Commission had indeed pleted current project, the purpose for noted that a given amount related to non- which the aid was granted is capable of eligible expenditure but had not itemised being achieved. In other words, it sought the reductions on the basis of the precise application of the safeguard provision in amount of the irregular expenditure. The Article 47 in order to ensure that the Court held 30 that: 'approval was given for purpose for which the aid was granted is a global amount and the final payment being served, and only if that purpose is not claim was submitted globally for the whole being served or rather risks not being of the programme, no detailed and specific served, did it intend the Commission to decision of approval having been notified reduce, suspend or discontinue the aid, 32 to each of the undertakings concerned.' The its decision affecting only the future pro­ Court continued: 31 'Moreover, it appears gress of the project. Conversely, in the case that the Commission allocated the reduc­ of a refusal to pay, the Commission deci­ tions between the members of the group of sion concerns situations and implementa­ undertakings, including the applicant, in tion of the project until such refusal; in proportion to the size of the share of each other words, it refers to the past, to that of them under the items considered and not part of the project which has already been in accordance with the precise amount of implemented. That constitutes a stable the irregular expenditure.' The Court there­ criterion for distinguishing cases of reduc­ fore quashed the Commission's refusal on tion, suspension or discontinuance of aid the ground that, since the applicant had not for a project in course of completion from a been informed of the manner in which the refusal to pay a portion of an amount of aid Fund assistance was reduced, the Commis­ in the case of a completed project. sion decision was insufficiently reasoned for the purposes of Article 190 of the Treaty. By dint of a contrario reasoning the Commission could have itemised the reductions on the basis of the exact amount of irregular expenditure on examination of the application for payment of the balance, after completion of the professional train­ ing programme, and then the decision to reduce the aid would have presented no problem on that ground. 81. Consequently, the amount of the aid provided for is not altered, that is to say not reduced, within the meaning of Article 44 of Regulation No 4028/86, where the Commission, on the basis of information 80. In conclusion, it is clear from the supplied by the national authorities, deci­ entirety of those provisions that the Com­ des that, since only certain works have been munity legislature intended the special carried out, and the corresponding expen-

83. To require, in addition to observance of the rights of the defence, as will be seen, 85. In light of the foregoing, the Court of application of the procedure provided for First Instance was right to adjudge that the in Article 44 even in cases such as the decision before it did not constitute a present case, by imposing on the Commis­ decision reducing, within the meaning of sion the formal condition of mandatory Article 44(1) of Regulation No 4028/86, consultation, whereas, on a proper inter­ the aid initially granted to the applicant but pretation of the applicable Community rather merely established that a part of the provisions, there is no such obligation on expenditure in respect of which the appli­ that Community institution, would entail cant sought payment did not relate to the the application by analogy of those provi­ project as initially accepted. sions to a case not provided for by Arti­ cle 44(1).

86. Consequently, the third plea on appeal must be rejected as unfounded. 84. Furthermore, to require the application of the procedure provided for in Article 44 even in cases such as this would be 33 — See Case 71/74 Frubo ν Commission [1975] ECR 563.

I - 6854

LE CANNE V COMMISSION

90. However, as regards infringement of the principle of the right to be heard, I would first point out that, under the 88. Secondly, the appellant is maintaining Court's settled case-law,35 observance of that the Court of First Instance was wrong the rights of the defence in any proceedings to find (paragraph 51) that the Commis­ initiated against a person and capable of sion essentially observed the requirements resulting in a decision adversely affecting stipulated in that regard by Article 7 of that person is a fundamental principle of Regulation No 1116/88. Contrary to those Community law which is to be observed findings, the Commission, it is contended, even in the absence of any procedural rules. expressly rejected the appellant's request Under that principle addressees of decisions that the procedure under Article 7 of which significantly affect their interests Regulation No 1116/88 be initiated. must be enabled effectively to make their views known.

89. I concluded above that there was no requirement to observe the special proce­ 91. Since the refusal on 27 October 1995 to pay the balance constituted for the 34 — The Court of First instance observed (at paragraph 50) that the applicant itself stated in its application that the Commission had decided, by telegram dated 7 August 1995, to initiate the procedure for payment of the Community aid, determined on the basis of the estimates 35 — See, in particular, Case C-32/95 Ρ Commission ν Lisrestal given in the certificate. and Others [1996] ECR I-5373, paragraph 21.

I - 6855

OPINION OF MR COSMAS — CASE C-10/98 Ρ

94. In the fourth plea on appeal the appel­ lant maintains that the Court of First Instance was wrong to reject its plea for 92. Consequently, the Court of First annulment of the Commission decision on Instance correctly found that, since the the ground that the statement of reasons appellant had called in question the certi­ was not adequate for the purposes of ficate of verification of completion of the Article 190 of the Treaty. More specifically, works issued on 24 May 1995 by the it concentrates its criticism on para­ competent ministry and had asked for it graph 70 of the judgment appealed against to be reviewed 36 before the Commission according to which the reasoning of the definitively adopted its decision by telex Commission decision, which referred to No 12 497 of 27 October 1995, the explanations given in the certificate of requirements attendant on observance of verification of completion of the works the rights of the defence and the general issued by the competent ministry, gave the principle of the right to be heard were applicant 'sufficient indication of the prin­ satisfied, even if the special procedures cipal points of fact and law on which the under Articles 44 and 47 of Regulation reasoning was based.' In fact, the written No 4028/86 and Article 7 of Regulation observations sent by the appellant to the No 1116/88 was not followed. national and Community authorities (on 28 July and 3 August 1995 respectively) essentially rejected the conclusions of the certificate issued by the national authorities and asked for them to be re-examined by the Standing Committee under Article 47 of Regulation No 4028/86, the procedure 93. In the light of the foregoing, in con­ under Article 7 of Regulation No 1116/88 sidering that the contested measure did not having been observed. According to the constitute a decision to reduce, for the appellant, the Commission was not entitled purposes of Article 44(1) of Regulation to limit the statement of reasons for its No 4028/86, the aid originally granted to decision to a reference to the certificate the applicant, the Court of First Instance issued by the national authorities but ought correctly applied those provisions (para­ to have verified the technical details. To graph 56), irrespective of the reasoning that end, it was strictly bound to observe relied on in the judgment appealed against. the procedure under Article 7 so as to Consequently, the allegations submitted determine, following a comparative and against that judgment are without founda­ adversarial appraisal of the initial project tion and must be rejected, as well as the and the final state of the works (the project entirety of the plea relating thereto. on termination of the works) the reason why the project was not completed as specified and to afford the appellant the 36 — According to the Court of First Instance, the appellant did opportunity of providing justification for so in the written observations which reached the Ministry on 28 July 1995 and the Commission on 3 August 1995. that failure.

95. Without prejudice to the foregoing initially granted by the Community. In analysis of the question whether or not Cipeke ν Commission 8 the Court the special procedure under Articles 44 and observed, first, that 'where the initial 4 7 of Regulation N o 4028/86 and Article 7 application has been approved, the decision of Regulation N o 1116/88 was to be reducing the amount of assistance origin­ observed, I consider that, in regard to the ally approved entails more serious conse­ 39 errors attributed to the statement of rea­ quences for the a p p l i c a n t , before con­ 40 sons, it is sufficient to stress that the Court c l u d i n g that 'a decision reducing assis­ of First Instance did not err in holding (at tance must clearly state the grounds justi­ paragraph 70) that the reasoning was fully fying the reduction in the assistance in adequate. relation to the a m o u n t originally approved'. O n the basis of those considera­ tions the Court h e l d 4 1 that the require­ ments of Article 190 of the Treaty were not met by a decision founded on the fact that certain items of expenditure were not 96. The Court has consistently held that approved at the time when the aid was the statement of reasons required by Arti­ granted, where no detailed and specific cle 190 of the Treaty must be appropriate decision of approval was notified and the to the nature of the measure in question. contested decision gave no indication of the The reasoning of the institution which criteria for calculating the reduced amount adopted the measure must be stated clearly notified to the beneficiary. and unequivocally, so as to inform persons concerned of the justification for the mea­ sure adopted and to enable the Court to exercise its powers of review. It also follows from that case-law that the statement of reasons for a measure is not required to detail every relevant point of fact and law, 98. The Court of First Instance acknowl­ as the question whether the statement of edged in the judgment appealed against reasons satisfies the requirements of Arti­ (paragraph 66) that it was apparent from cle 190 of the Treaty must be considered the background to the case, from the with reference not only to its wording but correspondence exchanged by the applicant also to its context and the whole body of with the national administration and the legal rules governing the matter in ques­ Commission, as well as from the contested tion. 3 7 decision, that the grounds relied on by the Commission in support of that decision appear with sufficient clarity to enable the applicant to assert its rights before the Community judicature and for the latter to review the lawfulness of that decision. 97. The Court is particularly rigorous in regard to the statement of reasons in the case of decisions reducing financial aid 38—Judgment cited at footnote 10. This case, it will be recalled, concerned the validity of a Commission decision to reduce aid granted by the ESF for a professional training programme. 39 — Paragraph 16. 37 — See, for example, judgment in Case C-466/93 Atlanta Fruchthandelsgesellschaft and Others [1995] ECR I-3799, 40 — Paragraph 18. paragraph 16. 41 — Paragraphs 19 to 22.

102. Thirdly, as the Court of First Instance found (paragraph 69), the contested deci­ sion sets out, succinctly but clearly, the 105. Consequently, the fourth plea on grounds relied on by the Commission, on appeal must likewise be rejected as unfoun­ the one hand, in replying to certain of the ded. arguments put forward by the applicant in

43 — See, for example, Case 2/56 Geitling ν High Authority 42 — Cipeke ν Commission (cited at footnote 10), para­ [1957-1958] ECR 3 and Case 8/65 Acciaierie e Ferriere graphs 18 to 22. Pugliesi ν High Authority [1966] ECR 1.

I - 6858

LE CANNE V COMMISSION

VI — The claim for compensation versely, that is to say if the appeal were upheld and the judgment appealed against were set aside, the case would have to be referred to the Court of First Instance for 106. As I am proposing that all the pleas on further clarification of the facts under' appeal be rejected, there is no need to Article 54 of the EC Statute of the Court examine the claim for compensation. Con- of Justice.

VII— Conclusion