C-339/00

1 — Original language: Italian. 3 — OJ, English Special Edition 1970 (I), p. 218. 2 — OJ 2000 L 180, p. 49. 4 — OJ 1995 L 125. D. 1.

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subject to prior consultation with the Agricultural Guidance and Guarantee Fund EAGGF committee, the power to refuse (EAGGF), Guarantee Section.6 According where appropriate Community funding for to Article 1(1) of that decision, the pro- the expenditure in question. However, such cedure in question is conducted by a body a decision must be preceded by a bilateral (the Conciliation Body) set up in the discussion between the Commission and Commission, whose task it is to try to the Member State concerned regarding the reconcile the divergent positions of the results of the checks on conformity carried parties and to draw up a report on the out by the institution with the purpose of outcome of its efforts at reconciliation, endeavouring to reach agreement between making any remarks it deems useful with the two parties on the action to be taken. If regard to the dispute should the attempt no agreement is reached, the Member State not produce the hoped-for outcome. may ask for a procedure to be initiated with Article 1(2)(a) provides in that regard that a view to mediating between the respective the position of the Conciliation Body is to positions. The outcome of such mediation be 'without prejudice to the Commission's is to be set out in a report which must be final decision on the clearance of the examined by the Commission before decid- accounts...'. ing whether to refuse financing.

— farmers not participating in the early-retirement scheme intro- '1. The aid scheme may comprise: duced by Council Regulation (EEC) No 2079/92 of 30 June 1992 instituting a Community aid scheme for early retirement from farming;

(a) aid for afforestation costs;

— any other private-law, natural or legal person.

(b) an annual premium per hectare afforested to cover maintenance costs in the first five years;

(c) an annual premium per hectare to cover losses of income resulting from 3. The scheme may also comprise a Com- afforestation of agricultural land; munity contribution to the costs of affor- estation of agricultural land undertaken by the competent public authorities of the Member States.'

8. Under Article 4(1) of Regulation No 2080/92:

3. The Commission shall decide on the approval of national or regional pro- 9. Article 5 of the regulation lays down grammes on the basis of the factors listed rules for the programme appraisal pro- in paragraph 2. cedure. In particular, Article 5(1) to (3) provide that:

...'.

' 1 . Member States shall communicate to the Commission, by 30 July 1993, the draft national or regional programmes referred to in Article 4 and any existing or proposed I I — Facts and procedure laws, regulations or administrative provi- sions by which they intend to apply this Regulation, together with an estimate of the annual cost of implementing the pro- 10. Following checks carried out in Ireland grammes. from 30 March to 3 April 1998, the

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Commission examined whether the aid ciliation Body, without taking a position on granted to Coillte Teoranta as compen- Coillte Teoranta's legal status or on sation for loss of income caused by the whether Ireland had legitimate expec- afforestation of agricultural land within the tations, merely stated that it was impossible meaning of Article 2(1 )(c) of Regulation to reconcile the divergent positions of the No 2080/92 complied with Community parties. 9The Commission's services took law. formal note of that report and proposed the financial adjustment previously mentioned in the letter of 3 August 1999. On 5 July 2000, the Commission decided to adopt the proposal.

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— infringement of rules of law relating to force. Nor was Regulation No 1258/1999 the application of the Treaty, inasmuch capable of serving as a legal basis for the as the Commission wrongly considered contested decision, since under Article 20 Coillte Teoranta to be a 'public auth- thereof it applies only to expenditure ority' rather than a 'private-law, natu- effected as from 1 January 2000, whereas ral or legal person' for the purposes of the contested decision is concerned with Regulation No 2080/92 and inasmuch expenditure in respect of the financial years as the Commission itself failed in its 1997 and 1998. duties relating to cooperation in good faith, legal certainty and sound admin- istration and breached the principle of legitimate expectations.

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1 January 2000. According to the defend- clearance of the EAGGF accounts, some ant, it may clearly be concluded from flexibility is called for when determining Regulation No 1258/1999 that it is the period in which a set of rules is intended to replace without a hiatus Regu- applicable, since the process of verifying lation No 729/70, the provisions of which agricultural expenditure continues for sev- it sought to amend and recast. eral years after the expenditure itself has There is, on the other hand, nothing to been effected. indicate that, by repealing the latter regu- lation, the Community legislature intended to deprive the Commission, in the period between 3 July and 31 December 1999, of the power, in the event of irregularities, to refuse financing for agricultural expendi- Assessment ture effected prior to 1 January 2000. That is not to mention the fact, the Com- mission adds, that if Regulation No 729/70 had not been applicable between 3 July and 31 December 1999, the measures taken to 20. Of the two contentions set out above, I implement that regulation for the purpose find myself in agreement with the second of ensuring the reimbursement of the one. I do not believe that the interpretation Member States for agricultural expenditure of Articles 16 and 20 of Regulation incurred during that period would also No 1258/1999 can lead to the result have had no legal basis. suggested by Ireland, which, apart from anything else, appears to me to be mani- festly at variance with the very purposes of the rules laid down by that regulation and, a fortiori, by Regulation No 729/70.

all the financing mechanisms of the com- upheld, it would have to be conceded that, mon agricultural policy. As the Commis- by repealing Regulation No 729/70, Regu- sion has rightly pointed out, the contention lation No 1258/1999 not only abolished, in put forward by Ireland would not only the period from 3 July to 31 December imply that, with the entry into force of 1999, the possibility of verifying the regu- Regulation,No 1258/1999, the Commis- larity of the agricultural expenditure sion could no longer verify compliance incurred by the Member States during the with the Community legislation of the period in which Regulation No 729/70 was agricultural expenditure incurred by the in force, but temporarily suspended Com- M e m b e r States u n d e r R e g u l a t i o n munity financing of the common agricul- No 729/70, since the legal basis for refusing tural policy, contrary to the principle to charge it to the EAGGF would have enshrined in Article 2(2) of Regulation ceased to apply. It would also have the No 25 of the Council, 14 under which the effect of depriving acts adopted by the financial consequences of the implemen- Commission after the entry into force of tation of that policy are to devolve specifi- Regulation No 1258/1999, but pursuant to cally upon the Community. I can only Regulation No 729/70, for the purpose of concur with the defendant on the fact that ensuring financial coverage for agricultural such a radical choice would at least have expenditure effected up to 31 December had to have received a degree of legislative 1999 — primarily the payment of the endorsement, at least at the level of the monthly advances to the Member preamble to Regulation No 1258/1999. States 13 — of any legal basis. If that con- However, that regulation confines itself, tention were well founded, the operation of in the 16th recital, to stating that the repeal the financing mechanisms of the common of Regulation No 729/70 is dictated merely agricultural policy would have been able to by the need to clarify matters in view of the resume only in respect of expenditure numerous amendments made to it up to effected from 1 January 2000 onwards. that time.

legislature to repeal Regulation No 729/70 of the same regulation, and therefore with the sole purpose of recasting its entitled to receive the aid provided for by provisions for greater clarity. At the same Article 2(1)(c). time, it appears to me to be in harmony with the Court's judgment in Klomp, 15in which it held that 'in accordance with a principle common to the legal systems of the Member States... when legislation is amended, unless the legislature expresses a contrary intention, continuity of the legal 26. In the third and fourth parts, which system must be ensured'. 16 likewise merit combined consideration, Ireland then alleges failure by the Commis- sion to comply with the obligations of cooperation in good faith and sound administration and with the principles of legal certainty and legitimate expectations. 24. In my opinion, therefore, pursuant to the combined provisions of Regulations Nos 1258/1999 and 729/70 and in the light of the principles referred to above, the Commission was competent to adopt the contested decision. For those reasons, I 1. Classification of Coillte Teoranta as a therefore take the view that the first plea in 'private-law legal person' for the purposes law is unfounded and should be rejected. of Regulation No 2080/92

Arguments of the parties B — Alleged infringement of rules of law relating to the application of the Treaty

25. Ireland subdivides the second plea in 27. With regard to the first and second law into four parts. In the first and second parts of the second plea in law, the Irish parts, which merit combined consideration, Government explains that Coillte Teoranta it submits that Coillte Teoranta cannot be was established in 1988 as a 'private described as a 'public authority' for the limited company' governed by Irish com- purposes of Article 2(3) of Regulation pany law, in order to attain the objectives No 2080/92, but is a 'private-law legal laid down in the Irish Forestry Act (here- person' for the purposes of Article 2(2)(b) inafter 'the Forestry Act') of the same year. That act made provision for the establish- ment of a company to which the tasks of 15 — Case 23/68 [1969] ECR 43. undertaking, on a commercial basis, fore- 16 — Paragraph 13. stry and related activities, creating and

30. However, Ireland continues, such an interpretation would conflict with the letter of Article 2(2)(b) and with the concept of 'private-law legal person' which stems from 28. That having been said, Ireland main- it. According to the applicant government, tains that the Commission made an error in by that expression the Community legis- excluding Coillte Teoranta from the cat- lature intended essentially to refer to joint egory of beneficiaries of the premium stock companies which cannot invite the provided for in Article 2(1)(c) of Regu- public to subscribe to their own shares, as lation No 2080/92. That is because, in the is the case, in the Irish system, with a submission of the applicant government, 'private limited company', that is to say, that category includes any person classifi- the legal form in which Coillte Teoranta able as a 'private-law legal person' for the was incorporated. purposes of Article 2(2)(b) of Regulation No 2080/92, irrespective of the fact that that person may also act as a 'public authority' for the purposes of Article 2(3) of the same regulation. There is no specific provision in the regulation which is intended to exclude public authorities from 31. According to the applicant govern- the benefit of the premium provided for by ment, moreover, the concept of 'private- Article 2(1)(c). law legal person' for the purposes of Regulation No 2080/92 could derive by converse implication from the concept of 'body governed by public law' used in the Community legislation concerning public contracts. Under that legislation, in order to be deemed to be 'governed by public law', a body must be established for the 29. That conclusion is also consistent, the specific purpose of meeting non-industrial applicant government asserts, with the and non-commercial needs in the public purpose of Regulation 2080/92, which is interest. Coillte Teoranta, which carries out to promote afforestation of the maximum its own activities on a purely industrial and possible proportion of agricultural land. commercial basis, does not satisfy that A r e s t r i c t i v e i n t e r p r e t a t i o n of condition.

34. For its part, the Commission points out first, and in general, that Regulation No 2080/92 draws a clear distinction between aid for 'private-law, natural or legal persons' within the meaning of Article 2(1 )(c) and aid for 'public auth- orities' under Article 2(3). The sixth and seventh recitals in the preamble to the regulation clearly state that the aid referred to in Article 2(1 )(c) is intended for farmers 33. As a secondary point in relation to the and for private persons other than farmers; foregoing considerations, Ireland then sub- the eighth recital, on the other hand, places mits that, even if Coillte Teoranta were not afforestation schemes undertaken by public a 'private-law, natural or legal person' authorities in a different context. The within the meaning of Regulation Commission states that if the Community No 2080/92, it could still not be regarded legislature had not intended to exclude as a 'public authority' for the purposes of public authorities from the benefit of the the Article 2(3) of the same regulation. aid at issue, the distinction drawn by it in In that regard, Ireland disputes the refer- Article 2(2)(a) and (b) between the bene- ence made by the Commission to the ficiaries of the various aid measures pro- judgments in Commission v Ireland 17 and vided for by Regulation No 2080/92 would Connemara Machine Turf, 18 which make no sense. regarded Coillte Teoranta as a 'contracting authority' within the meaning of the legis- lation on public supply contracts (Directive 77/62/EEC). In the first place, according to the Irish Government, those judgments are irrelevant in this case since no uniform concept of 'public authority' exists in Community law. In the second place, those judgments were given per incuriam, since 35. Having said that, and turning to this the Court erred both in applying the 'func- particular case, the Commission points out, tional' approach to the assessment of the with specific references to Irish legislation and practice, that, contrary to what is maintained by the applicant, Coillte Teor- 17 — Case C-3S3/96 [1998] ECR I-8565. anta is subject, in the exercise of its own 18 — Case C-306/97 [1998] ECR I-8761. activities, to far-reaching supervisory

powers wielded by the Irish State and reconstructed by reference to the individual cannot be regarded as an ordinary private legal systems of the Member States. That is company. so not only because it may have a different meaning from one system to another, but also because, as the Irish Government itself has pointed out, it may be completely unknown in others, such as, for example, the Irish and British system and common 36. Finally, the Commission submits that it law systems generally. is to be inferred from the judgments in Commission v Ireland and Connemara Machine Turf that Coillte Teoranta is responsible for performing a public service. Not only is it the owner of 12 national parks, access to which is free of charge, but its objects also include the provision of recreation, sporting, educational, scientific and cultural facilities. 39. In an attempt nevertheless to find a point of reference for the definition of the concept in its own system, the Irish Gov- ernment maintains that it can be inferred from some language versions of Regulation No 2080/92 that the concept in question Assessment coincides with that of a 'private limited company' existing in Irish company law. However, it is clear that if that interpre- tation were accepted, Article 2(2)(b) of Regulation No 2080/92 would be liable not to apply in Member States where there are 37. In my view, in order to establish no forms of company similar to the Irish whether Coillte Teoranta was entitled to 'private limited company'. That would be benefit from the premium in compensation contrary to the principles of effectiveness for loss of income, provided for by and uniform application of provisions of Article 2(1 )(c) of Regulation No 2080/92, Community law. it is first necessary to understand the meaning of the concept of 'private-law legal person' used by Article 2(2)(b) of that regulation. Only when the meaning of that concept is understood will it be possible to establish whether Coillte Teoranta falls within it and therefore whether it benefited lawfully from the abovementioned pre- mium. 40. It is true that, as happens in many other cases, the concept of 'private-law legal person' can only, in my opinion, be a concept of Community law, which must be interpreted by reference to the context in which it is used, namely, in the light of the 38. With that in mind, I would observe, purpose of Regulation No 2080/92 and the first, that the concept in question cannot be provisions contained in that regulation. I - 11772

41. From that point of view, I find that it is possible to agree with the Commission's interpretation of the concept of 'private- 43. Moreover, that such was the legis- law legal p e r s o n ' referred to in lature's intention, as the Commission Article 2(2)(b) of Regulation 2080/92. As rightly observes, is clear from the sixth the Commission has explained, that and seventh recitals in the preamble to the expression reflects the Community legis- regulation, which explain the reasons lature's intention to restrict the benefit of which led the Council to introduce the the premium in compensation for loss of premium for loss of income referred to in income as a result of afforestation of Article 2(1 )(c) of the regulation. agricultural land to farmers and natural or legal persons who are not an emanation of the State, thus excluding from the category of beneficiaries not only 'public authorities' as referred to in Article 2(3) of the regulation, but also any other entity in public ownership. 44. The sixth recital mentions that it is appropriate '... to introduce premiums to compensate for the income loss incurred by farmers during the non-productive period of afforested agricultural land'. The seventh recital adds that, since '... private persons 42. That exclusion, as explained by the other than farmers are in a position to Commission, is justified by the fact that the undertake afforestation of agricultural premium in question was one of the land... provisions should be made for initiatives designed to encourage the aban- incentives to be offered to such persons donment of cultivation of agricultural land. [by introducing] a premium per hectare... In order to increase its effectiveness, the for the benefit of private persons other than Council allowed not only farmers but also farmers who undertake afforestation of other private persons to benefit from that agricultural land'. 19 It seems clear to me measure. However, the Council did not that here the term 'private persons' cannot consider it appropriate to extend that refer either to public authorities or to possibility either to public authorities, which can in any case benefit from the aid for the costs of afforestation provided 19 — Italics added.

46. In this latter regard, I must point out that it would not be plausible to hold, as the Irish Government maintains, that the Community legislature intended the grant 48. That said, I believe that I can now of the premium in question to depend disregard the question whether Coillte solely on the legal form adopted by the Teoranta also constitutes a 'public auth- legal person which owns the agricultural ority' for the purposes of Article 2(3) of the land. Apart from the fact that Ireland does same regulation or a 'body governed by not provide any explanation as to why the public law' within the meaning of the Community legislature would have made Community legislation concerning public such a choice, a system of selecting bene- contracts. If it is agreed that Coillte Teor- ficiaries of aid purely on the basis of the anta is a public undertaking and that, legal form adopted by them would not be therefore, it cannot benefit, for the pur- of much use since, as the Commission poses of Article 2(2)(b), from the premium rightly observes, such a system would be provided for by Article 2(1 )(c) of Regu- too easy to circumvent. I therefore take the lation No 2080/92, that question becomes view that the attribute 'private-law legal totally irrelevant for the purposes of the present action.

20 — On the concept of public undertaking, see, to the same effect, the Opinions of Advocate General Alber delivered 21 —To the same effect, see also the Opinions delivered by on 16 July 1998 in Case C-353/96 Commission v Ireland, Advocate General Alber on 16 July 1998 in Cases cited above, paragraph 42, with further references, and C-353/96 Commission v Ireland, cited above, paragraphs Case C-306/97 Connemara Machine Turf, cited above, 42 and 43, and C-306/97 Connemara Machine Turf, cited paragraph 34. above, paragraphs 34 and 35.

50. These allegations constitute, as I have said, the third and fourth parts of the 52. The Commission never replied to that second plea in law. letter. On 27 April 1994, however, it approved the Irish multiannual Affores- tation Programme and, on 8 December 1994, the Irish Operational Programme for Agriculture, Rural Development and Fore- stry for the period 1994-1999. Those pro- grammes, according to the applicant gov- ernment, contained specific references to 51. The Irish Government maintains that, Coillte Teoranta. Similar references to in the course of the contacts maintained Coillte Teoranta as a beneficiary of Com- between July and October 1992 with a munity aid under the support measures for view to drawing up the multiannual affor- the forestry sector also appeared in the estation programme for Ireland, the Com- Strategic Plan for the Development of the mission departments had expressed doubts Forestry Sector in Ireland, 1996, which was as to the eligibility of Coillte Teoranta, in welcomed by the Commission, so much so view of its particular legal status, to benefit that Mr Fischler, the Commissioner respon- from the compensatory aid referred to in sible for Agriculture, wrote the preface to it Article 2(1)(c) of Regulation No 2080/92, himself.

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own arguments, the Commission relies on benefited from the compensatory aid at the judgment in Cooke, 23 from which, it issue. claims, is to be inferred the principle that the absence of a reply from the Commis- sion to requests from a Member State concerning that Member State's interpre- tation of a Community act does not auth- orise the Member State to infer that that interpretation is correct. On the other Assessment hand, the defendant continues, the letter of 26 January 1993 would not in any case have made it possible to establish whether Coillte Teoranta was in fact a 'private-law legal p e r s o n ' for the purposes of Article 2(2)(b) of Regulation No 2080/92 59. In the light of the foregoing arguments, since it did not contain complete infor- I am of the opinion that the emphasis here mation on the relationship existing between must be primarily on the principle of the that body and the Irish Government. protection of legitimate expectations and It is in that context, according to the secondarily on the duty of cooperation in Commission, that the absence of a reply good faith imposed on the Commission by to the abovementioned letter must be con- Article 10 EC. sidered.

61. That said, I am of the opinion that, in 63. With regard, first, to the absence of a the light of that case-law, Ireland cannot reply to that letter, it appears obvious to me plead breach of the principle of legitimate that it cannot represent a 'precise assur- expectations. On the basis of what the ance', given to the Irish Government, of parties have stated, it seems obvious to me Coillte Teoranta's entitlement to the pre- that the Commission never gave Ireland miums referred to in Article 2(1)(c) of 'precise assurances' that Coillte Teoranta Regulation No 2080/92. As the Court of was eligible to receive premiums to com- First Instance stated in the judgment cited pensate for loss of income as referred to in above, the Commission's failure to reply to Article 2 of Regulation No 2080/92. In a letter, however reprehensible it may be, is fact, in the only instance in which, before not in itself such as to create legitimate initiating the procedure which led to the expectations in favour of the person who adoption of the contested decision, the sent the letter. 27 Commission officials expressed a view on this matter, namely, during the bilateral meetings with the officials of the Irish Government in the second half of 1992, that was in order to raise doubts and certainly not in order to provide assurances as regards Coillte Teoranta's entitlement to receive those premiums. 26 64. Not even the Commission's approval of the multiannual Afforestation Programme (Annex 5 to the application), the Oper- ational Programme for Agriculture, Rural Development and Forestry (Annex 6 to the application) and the Strategic Plan for the Development of the Forestry Sector (Annex 7 to the application) can, in my opinion, be regarded as a 'precise assur- ance', given by the Commission to Ireland, as to the lawfulness of the payment of the premiums in question.

66. With regard, next, to the other two 68. Next, as regards the Irish Govern- programmes, as the Commission has ment's assertion that the Commission offi- rightly observed, whilst Coillte Teoranta cials came to know of the payment of those is mentioned in them, it is not as a potential premiums before the check which gave rise beneficiary of the aid specifically provided to the contested decision was carried out, for by Article 2(1)(c) of Regulation but did not raise any objection, I would No 2080/92. As I have explained above, observe that it is disputed by the Commis- under that regulation public undertakings sion and that Ireland has not furnished any may be eligible for various types of aid, proof in that regard. such as, for example, those provided for by Article 2(1)(a) and (b). Consequently, the fact that Coillte Teoranta was mentioned in those programmes is certainly not a suffi- cient basis for concluding that their appro- val by the Commission constitutes a 'pre- cise assurance' to the Irish Government of the possibility of paying to Coillte Teoranta the premiums in compensation for loss of income referred to in Article 2(1)(c). 69. For the foregoing reasons, I am there- fore of the opinion that, by adopting the contested decision, the Commission did not act in breach of the principle of the protection of legitimate expectations.

72. Moreover, although in a somewhat 74. Even assuming that the Commission different context, it seems to me that the failed to comply with that duty by not Court ruled to that effect in Case C-56/90 replying to the letter of 26 January 1993, 30 Commission v United Kingdom. 28 In its Ireland also committed the same breach by judgment that case, the Court held that a its subsequent conduct. Member State which is bound to imple- ment a directive is not entitled to infer from the Commission's initial failure to react to a communication which that Member State addressed to it concerning the manner in which it intended to implement the direc- tive that the Commission, in the absence of any obligation based on a provision of the directive to express a view within a given period, approved the terms of that com- munication. According to the Court, it is 75. Even though it was specifically obliged for the Commission to decide when it under Article 8(1) of Regulation No 729/70, intends to formulate objections and there which in turn reflects Article 10 EC, 31 to is nothing to prevent it from subsequently do whatever was necessary to satisfy itself initiating an infringement procedure. that its own afforestation programme com- plied with the Community act, it failed, at the time of the submission of that pro- gramme to the Commission in July 1993, to give any specific indication of the type of aid which it intended to grant to Coillte

73. Apart from those considerations, how- 29 — See Case C-275/00 First and Franex |2002] ECR I-10943, ever, it appears to me appropriate at this paragraph 49. point to note that, whilst it is true, as the 30 — I nevertheless have some doubt about that, bearing in mind that the letter of 26 January 1993 merely provided the Irish Government has observed, that Commission with some information but did not request a Article 10 EC also imposes on the Com- reply. 31 — See, amongst many, Case C-2/93 Exportslachterijen van Oordegem [1994] ECR I-2283, paragraphs 17 and 18, Case C-209/96 United Kingdom v Commission [1998] ECR I-5655, paragraph 43, and Case C-235/97 France v 28 — [1993] ECR I-4109, paragraphs 12 to 15. Commission [1998] ECR I-7555, paragraph 45.

(2) order Ireland to pay the costs.

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