CELEX: 62015TJ0381(01)
Non-contractual liability
Development cooperation
Implementation of the EU budget under indirect management
Decision suspending the applicant’s ability to conclude new delegation agreements for indirect management with the Commission
Unlawfulness
Sufficiently serious breach of a rule of law intended to confer rights on individuals
Application for injunctive relief
Late submission of application
Modification of the nature of the reparation sought
Inadmissibility

Factual background to the dispute
The applicant
According to its statute, as included in the Court’s case file, the applicant, International Management Group (IMG), was established on 25 November 1994 as an international organisation named ‘International Management Group – Infrastructure for Bosnia and Herzegovina’, with its headquarters in Belgrade (Serbia), in order to provide the States participating in the reconstruction of Bosnia and Herzegovina with an entity specifically created for that purpose. Since then, the applicant has gradually broadened the scope of its activities and, on 13 June 2012, concluded an agreement concerning the seat of the organisation with the Kingdom of Belgium.
In the course of its activities, the applicant concluded a number of agreements with the European Commission, using inter alia the ‘indirect or joint management’ method for implementing the EU budget established by the EU Financial Regulation and described below (‘delegation agreements for indirect management’).
Mechanism for joint management with international organisations (indirect management)
Indirect management is a mechanism for implementing the EU budget laid down in Articles 53 and 53d of Council Regulation (EC, Euratom) No 1605/2002 of 25 June 2002 on the Financial Regulation applicable to the general budget of the European Communities (
OJ 2002 L 248, p. 1
), as amended by Commission Regulation (EC, Euratom) No 1995/2006 of 13 December 2006 (
OJ 2006 L 390, p. 1
) and in Article 43 of Commission Regulation (EC, Euratom) No 2342/2002 of 23 December 2002 laying down detailed rules for the implementation of Regulation No 1605/2002 (
OJ 2002 L 357, p. 1
), as amended by Commission Regulation (EC, Euratom) No 478/2007 of 23 April 2007 (
OJ 2007 L 111, p. 13
) (together with Regulation No 1605/2002, ‘the 2002 financial regulations’).
Article 53 of Regulation No 1605/2002 provides:
‘The Commission shall implement the budget in accordance with the provisions set out in Articles 53a to 53d in any of the following ways:
(a)
on a centralised basis;
(b)
by shared or decentralised management;
(c)
by joint management with international organisations.’
Article 53d of that regulation states that
‘1.   Where the Commission implements the budget by joint management, certain implementation tasks shall be delegated to international organisations …
…
2.   Individual agreements concluded with international organisations for the award of financing shall contain detailed provisions for the implementation of the tasks entrusted to such international organisations.
…’
Article 43(2) of Regulation No 2342/2002 reads as follows:
‘The international organisations referred to in Article 53d of [Regulation No 1605/2002] shall be:
(a)
international public sector organisations set up by intergovernmental agreements, and specialised agencies set up by such organisations;
…’
Regulation No 1605/2002 was replaced, with effect from 1 January 2013, by Regulation (EU, Euratom) No 966/2012 of the European Parliament and of the Council of 25 October 2012 on the financial rules applicable to the general budget of the Union and repealing Council Regulation No 1605/2002 (
OJ 2012 L 298, p. 1
). However, Article 212(a) of Regulation No 966/2012 provided, inter alia, that Articles 53 and 53d of Regulation No 1605/2002 would continue to apply to all commitments made up to 31 December 2013.
Regulation No 2342/2002 was replaced, with effect from 1 January 2013, by Commission Delegated Regulation (EU) No 1268/2012 of 29 October 2012 on the rules of application of Regulation No 966/2012 (
OJ 2012 L 362, p. 1
) (together with Regulation No 966/2012, ‘the 2012 financial regulations’).
In accordance with the first paragraph of Article 214 of Regulation No 966/2012, the regulation entered into force on 27 October 2012. It has been applicable since 1 January 2013, in accordance with the second paragraph of that article, without prejudice to the dates of specific application provided in respect of certain of its articles.
Those articles include Article 58, entitled ‘Methods of implementation of the budget’, which is applicable to commitments made as from 1 January 2014. Article 58(1) is worded as follows:
‘The Commission shall implement the budget in the following ways:
(a)
directly (“direct management”), by its departments, …
(b)
under shared management with Member States (“shared management”); or
(c)
indirectly (“indirect management”) … by entrusting budget implementation tasks to:
(i)
third countries or the bodies they have designated;
(ii)
international organisations and their agencies;
…’
Article 43 of Delegated Regulation No 1268/2012, entitled ‘Specific provisions for indirect management with international organisations’, provides, in paragraph 1 thereof:
‘The international organisations referred to in point (ii) of Article 58(1)(c) of [Regulation No 966/2012] shall be:
(a)
international public sector organisations set up by intergovernmental agreements, and specialised agencies set up by such organisations;
…’
The OLAF investigation and actions taken as a result of the investigation
On 17 February 2014, the European Anti-Fraud Office (OLAF) informed the Commission, in accordance with Article 7(6) of Regulation (EU, Euratom) No 883/2013 of the European Parliament and of the Council of 11 September 2013 concerning investigations conducted by the European Anti-Fraud Office (OLAF) and repealing Regulation (EC) No 1073/1999 of the European Parliament and of the Council and Council Regulation (Euratom) No 1074/1999 (
OJ 2013 L 248, p. 1
), that it had opened an investigation (OF/2011/1002) into the applicant’s legal status as an ‘international organisation’ within the meaning of the 2002 and 2012 financial regulations.
On 9 December 2014, the OLAF issued its final report (‘the OLAF report’) which was received by the Commission on 15 December 2014. The OLAF report contained a series of recommendations for administrative and financial actions to be taken.
In its report, the OLAF found, in essence, that the applicant is not an ‘international organisation’ within the meaning of the 2002 and 2012 financial regulations and that it may even lack legal personality. The OLAF therefore recommended that the Commission should impose administrative and financial penalties on the applicant and recover the sums paid to it.
On 8 May 2015, the Commission wrote to the applicant (‘the letter of 8 May 2015’), to inform it of the actions it intended to take pursuant to the OLAF report.
In the letter of 8 May 2015 the Commission stated, first, that it had accepted the OLAF’s recommendation concerning monitoring activities and strengthened audits and that a verification warning relating to the applicant had been introduced in the early warning system (‘EWS’).
Secondly, the Commission indicated that it would not seek reimbursement of the funds attributed to the applicant under direct management agreements and that, on the basis of the evidence available, it did not envisage seeking to recover the funds attributed to the applicant under indirect management. According to the Commission, therefore, the agreements concluded with the applicant and still in force would continue to be implemented, with the effect that the Commission would pay the amounts owed to the applicant in consideration for work actually done by it. However, the Commission indicated that there would be ‘thorough monitoring’ of implementation of the ongoing agreements and ‘appropriate additional measures’ to protect the financial interests of the European Union.
Thirdly, the Commission stated that ‘until there was absolute certainty regarding [the applicant’s] status as an international organisation’, its departments would not conclude new delegation agreements for indirect management with the applicant.
Earlier proceedings before the General Court and the Court of Justice
By application lodged at the Registry of the General Court on 14 July 2015, the applicant brought an action, which was registered under number T‑381/15. That action sought, in essence, annulment of the letter of 8 May 2015 in so far as the Commission, in that letter, first, ordered strengthened audit and monitoring measures and a verification warning in the EWS and, secondly, denied the applicant the status of an international organisation within the meaning of the 2002 and 2012 financial regulations. The applicant also claimed reparation for the material and non-material damage caused to it.
The Commission sought an order dismissing the action as inadmissible, in full or in part, and, in the alternative, that the action should be dismissed as unfounded.
By its judgment of 2 February 2017, IMG v Commission (
T‑381/15
, not published,
EU:T:2017:57
; ‘the original judgment’), the General Court:
–
found that there was no longer any need to adjudicate on the action in so far as the applicant was seeking annulment of the introduction of a verification warning with regard to it in the EWS;
–
dismissed the action as inadmissible to the extent that it concerned, first, the strengthened audit and monitoring measures and, secondly, additional measures to protect the financial interests of the European Union, since these were not challengeable acts;
–
dismissed the action for annulment as unfounded as to the remainder;
–
dismissed the action for damages.
By application lodged at the Registry of the Court of Justice on 11 April 2017, the applicant brought an appeal against the original judgment, registered under number C‑184/17 P. The applicant claimed that the Court should:
–
‘set aside the [original judgment]:
–
consequently, grant the applicant the benefit of its forms of order sought at first instance as reviewed, and therefore:
–
annul the Commission’s decision of 8 May 2015 denying [it] the status of an international organisation under the Financial Regulation;
–
order the defendant to pay compensation for material and non-material damage estimated at EUR 28 million and EUR 1 respectively;
–
…’
In addition to seeking an order dismissing the main appeal, the Commission brought a cross appeal, by which it applied to the Court, first, to set aside the original judgment to the extent that the General Court had rejected its objections of inadmissibility and, secondly, to give final judgment in the proceedings, dismissing the action as inadmissible.
By decision of 20 March 2018 of the President of the Court of Justice, Case C‑184/17 P was joined to Case C‑183/17 P concerning an appeal brought by the applicant against the judgment of 2 February 2017, International Management Group v Commission (
T‑29/15
, not published,
EU:T:2017:56
), by which the General Court had dismissed its action seeking annulment of the Commission’s decision to reallocate implementation, under indirect management, of a trade development programme for Myanmar/Burma to an entity other than the applicant.
By judgment of 31 January 2019, International Management Group v Commission (
C‑183/17 P and C‑184/17 P
,
EU:C:2019:78
; ‘the judgment under appeal’), the Court of Justice:
‘1.
[set] aside the [judgment] of the General Court of the European Union of 2 February 2017, International Management Group v Commission (
T‑29/15
, not published,
EU:T:2017:56
), and [the original judgment];
…
3.
[annulled] the decision of the European Commission not to conclude any new delegation agreements for indirect management with [the applicant], contained in its letter of 8 May 2015;
4.
[referred] Case T‑381/15 back to the General Court of the European Union for a ruling on the claim for damages submitted by [the applicant] in respect of the harm allegedly caused to that entity by the decision of the Commission referred to in paragraph 3 of the operative part of [that] judgment;
5.
[dismissed] the cross-appeals;
6.
[ordered] the Commission to pay the costs in Cases C‑183/17 P, C‑184/17 P and T‑29/15, and
7.
[reserved] the costs in Case T‑381/15.’
Procedure and forms of order sought by the parties after the General Court’s decision was set aside and the case referred back to it
By letters of 6 February 2019, the Registry of the General Court invited the parties, under Article 217(1) of the Rules of Procedure of the General Court, to lodge their written observations on the future conduct of the proceedings (‘observations on the future conduct of the proceedings’). The applicant and the Commission filed such observations at the Registry of the General Court within the time limit given.
By letters of 26 April 2019, the Registry of the General Court invited the parties to lodge supplementary statements of written observations under Article 217(3) of the Rules of Procedure (‘supplementary statements’). The applicant and the Commission filed their supplementary statements at the Registry of the General Court within the time limit given, as extended on application by the applicant.
In its supplementary statement, the Commission applied for the proceedings to be stayed, under Article 69 of the Rules of Procedure, until such time as the applicant’s legal status had been reassessed in the context of enforcement of the judgment under appeal.
By letter lodged at the Registry of the General Court on 12 July 2019, the applicant objected to the Commission’s application to stay proceedings. That application was dismissed by decision of 16 July 2019 of the President of the Seventh Chamber of the General Court.
On 24 July 2019, the Commission applied to present oral argument at a hearing, under Article 106(2) of the Rules of Procedure.
Since the composition of the General Court had changed, by decision of 16 October 2019 under Article 27(3) of the Rules of Procedure, the President of the General Court reassigned the case to a new Judge-Rapporteur, attached to the Seventh Chamber, in its new composition.
At the proposal of the Judge-Rapporteur, the General Court (Seventh Chamber) commenced the oral phase of the proceedings and, as a measure of organisation of procedure under Article 89 of the Rules of Procedure, put questions to the parties to be answered in writing before the hearing. The parties replied to those questions within the time limit given.
In its reply to the Court’s questions, the Commission stated that the applicant had made an application to the Court of Justice for interpretation of the judgment under appeal, and invited the General Court to stay proceedings until the Court of Justice had ruled on that application.
By decision of 28 February 2020, the President of the Seventh Chamber of the General Court rejected the Commission’s application to stay proceedings.
By order of 9 June 2020, International Management Group v Commission (
C‑183/17 P‑INT
, not published,
EU:C:2020:447
), the Court of Justice dismissed the application for interpretation as manifestly inadmissible.
At the hearing on 12 March 2020, the parties presented oral argument and their replies to the oral questions put by the General Court.
The applicant claims that the Court should:
–
declare the present action admissible and well founded;
–
order the Commission to pay compensation for material and non-material damage;
–
order the Commission to pay the costs.
The Commission claims that the Court should:
–
dismiss the applicant’s action for damages as inadmissible in part and, in any event, unfounded;
–
order the applicant to pay the costs.
Law
Subject matter of the proceedings after the General Court’s decision was set aside and the case referred back to it
At the hearing, in reply to a question from the Court, the parties confirmed that the subject matter of the present proceedings was confined to reparation of the damage resulting from the Commission’s decision, contained in its letter of 8 May 2015 and annulled by the Court of Justice, not to conclude further delegation agreements for indirect management with the applicant ‘until there was absolute certainty regarding [its] status as an international organisation’ (‘the contested decision’). Their statements on that matter were recorded in the minutes of the hearing.
Admissibility
In its observations on the future conduct of the proceedings the applicant applied to the Court as follows in respect of the reparation of material damage:
–
‘to order the Commission to entrust [it] with a volume of business of EUR 68.5 million to compensate for the loss of business incurred [between 2015 and 2019]’;
–
to instruct the Commission ‘to do so for a limited period of time which [it] considers can reasonably be set at [three] years’;
–
‘together with that injunction, to order the Commission to pay default interest, from 1 January 2021, of 3.5% of such amount of the [EUR] 68.5 million of business as has not been entrusted to the applicant by 31 December 2020’;
–
to order the Commission to pay it EUR 6.841 million, plus default interest of 3.5% per annum, composed of the following amounts:
–
EUR 2.45 million ‘in order to replenish reserves’, in respect of both the reduction in existing reserves between the end of 2014 and the end of 2018 and the additional reserves which the applicant would under normal circumstances have been able to set aside;
–
EUR 3 million by way of the ‘indirect cost envelopes’ from which the applicant would have benefited if the Commission had concluded delegation agreements for indirect management with it for EUR 42.5 million, noting for the avoidance of doubt that this damage would no longer exist if such agreements were concluded pursuant to the measures ordered by the Court;
–
EUR 120000 in respect of staff redundancy payments;
–
EUR 516000 in respect of reestablishment of its staff;
–
EUR 305000 in respect of reestablishment of its IT system;
–
EUR 150000 in respect of reinstatement of other operating expenditure;
–
EUR 300000 in respect of the communication campaign required to restore the applicant’s image and international reputation.
In respect of non-material damage, the applicant seeks, first, by way of reparation, EUR 10 million plus interest at the statutory rate of 3.5% per annum from 8 May 2015.
Secondly, by way of reasonable satisfaction, the applicant applies to the Court to order the Commission:
–
‘to publish a press release in which [it] acknowledges clearly and publicly that [the applicant] is an international organisation within the meaning of the Financial Regulation and international law’;
–
‘accordingly to acknowledge that [the applicant] has full access to the credit delegation system reserved for international organisations and other eligible bodies’;
–
‘to bear the cost of publishing substantial articles formally denying the accusations and rumours concerning [the applicant], on the front pages of the newspapers and journals indicated by [the latter]’.
The Commission argues, first, that the applicant’s claims that the Court should grant injunctive relief against it are inadmissible since they were not made in the initial application and the applicant is not entitled to modify the nature of its claims in the proceedings taking place after the General Court’s decision was set aside and the case referred back to it. The Commission adds, in relation to the injunctions applied for in respect of material damage, that the EU Courts should not encroach upon the rights and powers of the administrative authorities and therefore cannot grant injunctions against the institutions. It also contends that the injunctions applied for by the applicant are contrary to the principle of sound financial management and the Commission’s discretion to choose the arrangements for implementing the EU budget.
Secondly, the Commission observes that the EUR 6.841 million that the applicant is claiming it should pay corresponds partly to heads of damage other than those claimed in the proceedings before the General Court’s decision was set aside and the case referred back to it. The applicant has modified the subject matter of the proceedings in a manner incompatible with the rules governing proceedings before the General Court. The Commission nevertheless concedes that the claim for payment of EUR 3 million in respect of ‘indirect cost envelopes’ is not a new claim.
Thirdly, the Commission notes that, in the application, the applicant had claimed symbolic damages of EUR 1 as reparation for non-material damage. According to the Commission, although the applicant did state that it was making that claim ‘subject to the right to adjust the sum during the proceedings’, it has not set out the reasons why that damage now amounts to EUR 10 million. The Commission notes that the evidence produced by the applicant to support its new claim, annexed to its observations on the future conduct of the proceedings, consists of press articles published before the original application was lodged, and the applicant has not explained the delay in producing those documents. That evidence is therefore inadmissible, under Article 85 of the Rules of Procedure.
In its written replies to the General Court’s questions (paragraph 32 above), on the pleas of inadmissibility advanced by the Commission in its supplementary statement, the applicant maintains, first, that the heads of damage of which it is seeking reparation are identical to those in the application. It argues that it merely clarified its claims, updated the amounts sought and explicitly identified the head of damage relating to its ‘reestablishment’. The applicant emphasises that its claim for symbolic damages of EUR 1 in relation to non-material damage had been made ‘subject to the right to adjust the sum during the proceedings’.
Referring to the judgment of 10 May 2006, Galileo International Technology and Others v Commission (
T‑279/03
,
EU:T:2006:121
) among others, the applicant then asserts that it has already been held in the case-law that a party can, in an action for damages, apply to the General Court to grant an injunction requiring the defendant institution to do or not to do something. It notes that it is inherent in an injunction that it limits an institution’s discretion to determine the measures to be used to implement the public service mission entrusted to it. The principle of the separation of powers, to which the Commission refers, does not in its view prevent a court from limiting the power of the authorities. Further, according to the applicant, its claim leaves the Commission a margin of discretion as to how it intends to define the EUR 68.5 million volume of business it is to allocate to the applicant.
Lastly, the applicant states that the claims in the first to third indents of paragraph 40 above replaced the claim for damages it made to the General Court in the proceedings before its decision was set aside and the case referred back to it, seeking EUR 14 million per annum for 2015 and 2016.
In the first place, in respect of the applicant’s claims for reparation in kind of material damage, set out in the first to third indents of paragraph 40 above, and for the reparation in kind of non-material damage, set out in the first to third indents of paragraph 42 above, it is necessary to recall that, under Article 76(e) of the Rules of Procedure, the applicant must indicate in its application the forms of order it seeks. Thus, as a general rule, only the forms of order set out in the originating application may be taken into consideration and the substance of the application must be examined solely with reference to the orders sought in the application initiating proceedings (judgment of 24 October 2018, Epsilon International v Commission,
T‑477/16
, not published,
EU:T:2018:714
, paragraph
; see also, to that effect, judgments of 8 July 1965, Krawczynski v Commission,
83/63
,
EU:C:1965:70
, p.
, and of 25 September 1979, Commission v France,
232/78
,
EU:C:1979:215
, paragraph
).
Under Article 84(1) of the Rules of Procedure new pleas in law may be introduced in the course of proceedings provided they are based on matters of law or of fact which come to light in the course of the procedure. It is apparent from the case-law that that condition governs a fortiori any amendment to the forms of order sought and that, in the absence of matters of law or of fact which came to light in the course of the written procedure, the form of order sought in the application may alone be taken into consideration (judgments of 13 September 2013, Berliner Institut für Vergleichende Sozialforschung v Commission,
T‑73/08
, not published,
EU:T:2013:433
, paragraph
, and of 24 October 2018, Epsilon International v Commission,
T‑477/16
, not published,
EU:T:2018:714
, paragraph
).
Those principles apply during these proceedings taking place after the General Court’s decision was set aside and the case referred back to it, since these proceedings are a partial extension of the same proceedings which commenced with the lodgement of the application (to that effect, judgment of 13 December 2018, Kakol v Commission,
T‑641/16 RENV and T‑137/17
, not published,
EU:T:2018:958
, paragraph
).
Accordingly, although, given the time that has elapsed since the application was lodged, the applicant may be permitted to adjust the amounts in its original claims for damages at this stage of the proceedings, provided it sets out the reasons for so doing, it nevertheless cannot modify the nature of the reparation sought itself (see, to that effect, judgments of 15 July 1963, Plaumann v Commission,
25/62
,
EU:C:1963:17
, p 107, and of 11 January 2002, Biret et Cie v Council,
T‑210/00
,
EU:T:2002:3
, paragraphs
and
; see also, to that effect and by analogy, judgment of 8 March 1990, Schwedler v Parliament,
T‑41/89
,
EU:T:1990:19
, paragraph
).
In the present case, it should be noted that, in the originating application, the applicant did not apply to the Court for the injunctions to do or not to do something referred to in the first to third indents of paragraph 40 and in the first to third indents of paragraph 42 above, which it sought in its observations on the future conduct of the proceedings. Nor do those claims appear in the reply, or the minutes of the hearing held before the General Court on 20 October 2016, which constitute an official record under Article 114(1) of the Rules of Procedure. It emerges from the application, the reply and those minutes that, during the proceedings before the referral back to the General Court, the applicant had sought symbolic damages of EUR 1 in respect of non-material damage and damages of EUR 14 million per year from the time at which the contested decision was adopted in respect of material damage (paragraph 22 above).
Furthermore, the applicant confirmed those claims when, in the appeal it brought against the original judgment, it requested the Court of Justice to grant it the benefit of the forms of order it had sought at first instance (paragraph 22 above). The Court of Justice found that the requirements necessary for it to rule itself on the applicant’s claim for damages were not satisfied and that, on that point, it should refer the case back to the General Court. The claims for reparation that the applicant had put before the Court of Justice are however not the same as those it is now making in these proceedings taking place after the General Court’s decision was set aside and the case referred back to it.
Moreover, in relation to the applicant’s claims referred to in the first to third indents of paragraph 40 above for reparation in kind of material damage, it should also be noted that, according to the case-law, it follows from Article 34(2) and Article 268 TFEU – which do not preclude the grant of compensation in kind – that the EU Courts have the power to impose on the European Union any form of reparation that accords with the general principles of non-contractual liability common to the laws of the Member States, including, if it accords with those principles, compensation in kind, if necessary in the form of an injunction to do or not to do something (judgments of 10 May 2006, Galileo International Technology and Others v Commission,
T‑279/03
,
EU:T:2006:121
, paragraphs
and
, and of 8 November 2011, Idromacchine and Others v Commission,
T‑88/09
,
EU:T:2011:641
, paragraph
).
However, in the present case, the injunctions that the applicant seeks, under which, for a maximum period of three years, delegation agreements for indirect management with a value of EUR 68.5 million would be concluded with the applicant, make it impossible to uphold the principle of sound financial management, which is a general principle of EU law referred to in Article 310(5) and the first paragraph of Article 317 TFEU, among other provisions. Indeed, were the Commission required by a court to conclude such delegation agreements for indirect management with the applicant it would no longer be able, in the exercise of its discretion and in accordance with the principles of sound administration and sound financial management, to determine the amount of the EU budget that should be allocated to certain types of projects, the most appropriate method of implementing that budget or, in the case of indirect management, the partner best placed for a particular project.
Furthermore, if the General Court granted injunctions for the purposes indicated above, it would be prejudging the outcome of the Commission’s assessment, as a result of the contested decision being annulled by the judgment under appeal, of the applicant’s status as an international organisation within the meaning of the relevant provisions of EU law. That assessment is necessary in order to determine whether the Commission can award development cooperation projects to the applicant by concluding delegation agreements for indirect management.
The considerations set out in paragraph 57 above apply equally to the injunctions sought by the applicant in the first to third indents of paragraph 42 above, requiring the Commission, in essence, to make public statements acknowledging that the applicant is an international organisation and eligible to conclude delegation agreements for indirect management with the Commission.
The applicant’s claims referred to in the first to third indents of paragraph 40 and in the first to third indents of paragraph 42 above must therefore be rejected as inadmissible.
In the second place, it should be noted that the amounts referred to in the applicant’s claim in the fourth indent of paragraph 40 above correspond to heads of material damage other than those referred to in the proceedings before the General Court’s decision was set aside and the case was referred back to it, as can be seen from paragraphs 53 and 54 above, with the exception of the sum of EUR 3 million claimed in respect of ‘indirect cost envelopes’. The applicant’s claims for reparation under those new heads of damage are therefore inadmissible at this stage in the proceedings.
As the parties confirmed at the hearing, the sum of EUR 3 million corresponding to ‘indirect cost envelopes’ concerns the ‘indirect costs’ referred to in Article 14.4 of the document entitled ‘Conditions générales applicables aux conventions de contribution de l’Union européenne avec des organisations internationales’ (‘General conditions applicable to contribution agreements between the European Union and international organisations’), annexed to the Commission’s observations on the future conduct of the proceedings. Under that article, the entity awarded the contract can receive a lump sum percentage of eligible actual costs, capped at 7%, by way of indirect costs, to cover its general administrative expenses. The sum of EUR 3 million being claimed at this stage in the proceedings has been calculated, in essence, as that percentage of the sum of EUR 42.5 million at which the appellant estimated the value of the delegation agreements for indirect management it would have been able to conclude with the Commission between 2015 and 2019 had it not been for the contested decision.
Since, as the Commission acknowledged at the hearing (paragraph 44 above), the amount of EUR 3 million corresponds to adjustment of a head of material damage which was one of the heads of damage for which the applicant claimed reparation in the proceedings before the General Court’s decision was set aside and the case referred back to it, the claim for payment of that amount is admissible.
In the third place, in relation to the claim for reparation of non-material damage of EUR 10 million (paragraph 41 above), first, it should be noted that, when it applied to be awarded symbolic damages of EUR 1 as reparation for that damage, the applicant stated that this claim was made ‘subject to the right to adjust the sum during the proceedings’. However, it must be observed that, since the amount claimed at the stage of these proceedings after the General Court’s decision was set aside and the case referred back to it can no longer be described as symbolic, since the applicant has modified the nature of its claim for reparation of the non-material damage relied upon.
Secondly, it is necessary to examine the Commission’s plea of inadmissibility relating to the evidence submitted by the applicant as an annex to its observations on the future conduct of the proceedings (paragraph 45 above).
Under Article 85(1) of the Rules of Procedure, evidence produced or offered is to be submitted in the first exchange of pleadings. According to Article 85(2), the main parties may still produce or offer evidence in support of their arguments, in the reply and the rejoinder, provided that the delay in the submission of such evidence is justified. Article 85(3) states that, exceptionally, the main parties may still produce or offer evidence before the oral part of the procedure is closed or before the decision of the General Court to rule without an oral part of the procedure, provided that the delay in the submission of such evidence is justified.
In the present case, the application was lodged at the Registry of the General Court on 14 July 2015 and the reply on 13 May 2016. However, with only two exceptions, the press articles in the annex referred to in paragraph 64 above are dated before the application was lodged. The first exception is an article published in August 2015 and the second an article which is undated but which can be understood from its contents to have been published in 2015.
Since the applicant has not provided any explanation of why it did not produce those articles annexed to the application or, failing that, to the reply, the conditions established in Article 85 of the Rules of Procedure are not met and that evidence is therefore inadmissible.
In the light of the foregoing, the present action for damages must be found to be inadmissible save to the extent that it seeks reparation for the material damage allegedly suffered in respect of the ‘indirect cost envelopes’, valued at EUR 3 million, and for non-material damage valued, in the originating application, as the symbolic sum of EUR 1.
Substance
According to settled case-law, the European Union may incur non-contractual liability under the second paragraph of Article 340 TFEU only if a number of conditions are met, namely the unlawfulness of the conduct alleged against the EU institution, the fact of damage and the existence of a causal link between the conduct of that institution and the damage complained of (see judgment of 5 September 2019, European Union v Guardian Europe and Guardian Europe v European Union,
C‑447/17 P and C‑479/17 P
,
EU:C:2019:672
, paragraph
and the case-law cited).
Unlawfulness of the conduct alleged against the Commission
The condition that the conduct alleged against the institutions must be unlawful means that there must be a sufficiently serious breach of a rule of law intended to confer rights on individuals (judgment of 19 April 2007, Holcim (Deutschland) v Commission,
C‑282/05 P
,
EU:C:2007:226
, paragraph
and the case-law cited).
The parties disagree as to whether that principle applies to the present case.
First, the applicant argues that the relevant provisions of the 2002 and 2012 financial regulations confer rights on the international organisations to which they relate. Those rights include an entity’s right to be recognised as an international organisation provided it satisfies the requirements laid down by that legislation to that effect, and a real chance of being entrusted with budget implementation tasks and granted the corresponding funding under indirect management. According to the applicant, once it has recognised an entity as having status as an international organisation, the Commission may not go back on that status which in its view has become vested under international law. The Commission must comply with international law, particularly when it is applying provisions of EU law that refer to international law concepts. The applicant further argues that the principle of sound administration precludes the Commission from calling the applicant’s status as an international organisation into question. At the hearing, replying to a question from the General Court, the applicant stated that according to that principle the Commission was required to examine its situation carefully and impartially in the light of all relevant information.
Secondly, according to the applicant, under the relevant provisions of the 2002 and 2012 financial regulations the Commission has no discretion whatsoever, and that the mere infringement of those regulations is therefore a sufficiently serious breach.
The Commission refutes the applicant’s arguments.
As a preliminary point, it must be recalled that it is for the party invoking the liability of the European Union to demonstrate that the necessary conditions are met, including the condition that there must be a sufficiently serious breach of a rule of law that is intended to confer rights on individuals (see, to that effect, judgments of 23 March 2004, Médiateur v Lamberts,
C‑234/02 P
,
EU:C:2004:174
, paragraph
; of 6 June 2019, Dalli v Commission,
T‑399/17
, not published, appeal pending,
EU:T:2019:384
, paragraph
; and of 18 November 2014, McCoy v Committee of the Regions,
F‑156/12
,
EU:F:2014:247
, paragraph
).
In the present case, the applicant correctly notes that when the 2002 and 2012 financial regulations use the terms ‘international organisations’ and ‘international public-sector organisations’ in the provisions relating to indirect management, they borrow those concepts from international law.
It is clear from consistent case-law that EU legislation must, so far as possible, be interpreted in a manner that is consistent with international law (judgments of 14 July 1998, Bettati,
C‑341/95
,
EU:C:1998:353
, paragraph
, and of 8 September 2015, Philips Lighting Poland and Philips Lighting v Council,
C‑511/13 P
,
EU:C:2015:553
, paragraph
).
The foregoing applies to the concept of ‘international organisation’ which appears in, among other instruments, the Vienna Convention on the Law of Treaties of 23 May 1969, which codified rules of customary international law. According to the case-law, those rules are binding upon the European Union institutions and form part of the EU legal order (judgment of 16 June 1998, Racke,
C‑162/96
,
EU:C:1998:293
, paragraph
). It should nevertheless be clarified that in the 2002 and 2012 financial regulations the concept of ‘international organisation’, borrowed from international law, serves purposes which, being inherent to implementation of the EU budget, are specific to EU law.
It should be recalled that in implementing the EU budget the Commission must above all uphold the principle of sound financial management (paragraph 56 above).
This means that, when examining whether the applicant is an international organisation for the purposes of concluding delegation agreements for indirect management, the Commission is required not only to have regard to the principles of international law relating to international organisations but also to take all the measures necessary to protect the financial interests of the European Union, in accordance with the principle referred to above.
Accordingly, assuming for the purposes of argument that, as the applicant claims, under international law an entity’s status as an international organisation may not be called into question on the grounds that such status has become definitively vested, that prohibition would nevertheless not apply to the Commission where, in performance of its duty to implement the EU budget, it applies the concept of ‘international organisation’, contained in the 2002 and 2012 financial regulations solely for the purposes of that legislation.
The absence of any such prohibition also emerges from the judgment under appeal, in which the Court of Justice held as follows:
‘88 In that regard, it must be noted that, according to Articles 53 and 53d(1) of Regulation No 1605/2002 and Article 58(1) of Regulation No 966/2012 …, the Commission may implement the EU budget by, inter alia, entrusting budget implementation tasks to international organisations.
89 It follows from those provisions that, when the Commission plans to adopt a decision entrusting budget implementation tasks to a given entity on that basis, it has a duty to satisfy itself that that entity has international organisation status.
90 In addition, when, after a decision entrusting budget implementation tasks to a given entity which has international organisation status has been adopted, the Commission adopts decisions such as the [contested decision], on the basis of factors that are, in its view, such as to call that status into question, those decisions must be justified in law and in fact.’
It follows that, according to the Court of Justice and contrary to the thesis of the applicant, whose arguments are summarised in paragraph 72 above, the Commission can, where it has recognised certain entities as having international organisation status for the purposes of concluding delegation agreements for indirect management, call that status into question, provided that questioning is justified in fact and law.
Admittedly, in the judgment under appeal, the Court of Justice set aside the original judgment and annulled the contested decision in so far as the Commission and, following dismissal of the applicant’s action, the General Court, questioned the applicant’s status as an international organisation. Nevertheless, the Court of Justice highlighted that:
‘91 … The term “international organisation”, referred to [in the 2002 and 2012 financial regulations] includes “international public sector organisations set up by intergovernmental agreements, and specialised agencies set up by such organisations”.
92 In the present case, it is clear that the General Court did not review the legality of the decisions at issue in the light of that definition, but merely asserted that the arguments and evidence put forward by [the applicant] did not call into question the Commission’s doubts as to [its] status as an international organisation.
93 That assertion is vitiated by an error of law, as none of the considerations put forward by the General Court concluding that the Commission’s doubts were founded … can justify those doubts in law.
94 Regarding the first of those considerations, concerning whether several Member States presented by [the applicant] as being members of the organisation are in fact members, it is apparent from the General Court’s own findings that the Commission’s doubts in that respect concerned only “some” of [the applicant’s] members – more specifically, 5 out of a total of 16. However, the consequence in international law of such doubts, even if they were in fact well founded, would not be to deprive the entity of which those States are not – or no longer – members of its status as an “international organisation”, all the less so when, as in the present case, the States concerned form only a small part of the entity in question.
95 In respect of the second consideration, connected to the existence of doubts concerning the powers of the persons who represented certain States when [the applicant] was established, it should, similarly, be noted that those doubts could, potentially, call into question the validity of the signature, by those States in particular, of the act establishing [the applicant], but not the validity of the actual creation of that entity, given that any irregularities in representation referred to concerned only a small number of participating States.
…
97 Having regard to all the foregoing considerations, the Court finds that the second ground raised by [the applicant] alleging that the General Court erred in holding … that the Commission had not erred in law or made a manifest error of assessment by justifying the adoption of the [contested decision] by the doubts it had regarding [its] status as an “international organisation” within the meaning of the 2002 and 2012 financial regulations, is well founded. …
…
104 It follows from paragraphs 92 to 96 above that the [contested decision is] unlawful in so far as the factors relied on by the Commission in support of [that decision] are not such as to call into question [the applicant’s] status as an international organisation within the meaning of the 2002 and 2012 financial regulations. Consequently, the Court sets aside [that decision in its] entirety.’
Those grounds make it clear that the Court of Justice set aside the General Court’s judgment and annulled the Commission’s decision on the strength of the error of law and manifest error of assessment committed by the Commission when it called into question the applicant’s status as an international organisation solely in reliance on factors which did not justify that decision either in fact or law.
However, that finding by the Court of Justice does not affect the principle, which emerges from paragraphs 89 and 90 of the judgment under appeal, that the Commission’s recognition of status as an international organisation for the purposes of the 2002 and 2012 financial regulations is not definitive and, under certain circumstances, may be called into question at any time. Accordingly, it does not follow from the fact that the Court of Justice set aside the General Court’s judgment and annulled the Commission’s decision that those financial regulations conferred on the applicant a right to continue to be recognised as an international organisation and therefore to conclude new delegation agreements for indirect management with the Commission.
It is appropriate to add that the applicant has not indicated in what respect the error of law and manifest error of assessment identified by the Court of Justice in the judgment under appeal amount to a breach of provisions of EU law containing a rule of law intended to confer rights on individuals. In fact, after referring to those errors and submitting that the provisions of the 2002 and 2012 financial regulations on ‘international public sector organisations’ conferred rights on those organisations, the applicant founds its claims on the argument that under international law the Commission is prevented from reconsidering the position it had taken in the past. That argument must be rejected on the grounds set out in paragraphs 81 to 83 above. The applicant does not specify which rules of law, intended to confer rights upon the applicant, the Commission purportedly breached when it based its decision not to conclude new delegation agreements for indirect management with the applicant on doubts which the Court of Justice found to be insufficiently substantiated.
It must therefore be found that the provisions on indirect management of the 2002 and 2012 financial regulations which refer to international organisations are not rules of law intended to confer on entities which the Commission has recognised as having status as international organisations a right not to have such status called into question, and that the applicant has not established that the doubts which the Commission expressed in the contested decision amounted to unlawfulness capable of giving rise to non-contractual liability on the part of the European Union.
As regards the principle of sound administration established in Article 41 of the Charter of Fundamental Rights of the European Union, which the applicant alleges has been breached, does not, in itself, confer rights upon individuals, except where it constitutes the expression of specific rights such as the right to have affairs handled impartially, fairly and within a reasonable time, (judgments of 4 October 2006, Tillack v Commission,
T‑193/04
,
EU:T:2006:292
, paragraph
, and of 29 November 2016, T & L Sugars and Sidul Açúcares v Commission,
T‑103/12
, not published,
EU:T:2016:682
, paragraph
; see also, to that effect, order of 22 March 2010, SPM v Council and Commission,
C‑39/09 P
, not published,
EU:C:2010:157
, paragraphs
to
).
Nevertheless, in the present proceedings after the General Court’s decision was set aside and the case referred back to it, the applicant is relying on the principle of sound administration in support of its argument that the Commission was not entitled to call into question the status as an international organisation that it had recognised the applicant as having in the past. At the hearing, replying to a question from the General Court, the applicant claimed that, by virtue of that principle, the Commission was required to examine its situation carefully and impartially in the light of all relevant information.
It should be recalled that the Commission has a duty to ensure that the entity with which it concludes a delegation agreement for indirect management is an international organisation, even where it has already concluded such an agreement with that entity, since that status cannot be regarded as having definitively become vested (see paragraphs 81, 83 and 86 above). Under the principle of sound administration and the principle of sound financial management (see paragraph 56 above), the Commission cannot be criticised for not concluding new delegation agreements for indirect management with an entity where that entity’s international organisation status can be called into question as a result of relevant factors of which that institution has been made aware.
Furthermore, the applicant has not indicated in what respect the error of law and manifest error of assessment which led the Court of Justice to set aside the contested decision constituted a breach of the principle of sound administration, in particular in respect of the Commission’s duty to act impartially, such as to meet the conditions laid down in the case-law set out in paragraph 89 above and therefore giving rise to liability on the part of the European Union.
In the light of the foregoing, it must be held that the applicant has failed to establish that the Commission breached a rule of law intended to confer rights on individuals.
In any event, assuming for the purposes of argument that the Commission has breached such a rule of law, in order for the European Union to be found liable, it would still be necessary to establish that breach to be sufficiently serious.
According to the case-law, a sufficiently serious breach implies that the institution concerned manifestly and gravely disregarded the limits set on its discretion, the factors to be taken into consideration in that connection being, inter alia, the complexity of the situations to be regulated, the degree of clarity and precision of the rule breached and the measure of discretion left by that rule to the EU institution (see judgment of 10 September 2019, HTTS v Council,
C‑123/18 P
,
EU:C:2019:694
, paragraph
and the case-law cited).
The applicant contends (paragraph 73 above) that the mere infringement of the provisions of the 2002 and 2012 financial regulations on indirect management constitutes a sufficiently serious breach, since, according to the applicant, the Commission has no discretion as regards complying with those provisions.
However, the lack of discretion on which the applicant relies flows from its argument that under international law the Commission may not call into question the applicant’s status as an international organisation as recognised by the Commission. Since that argument has been rejected, the applicant must be found not to have established that the question whether or not the Commission should recognise its international organisation status is not a complex question. It follows from those considerations that the Commission does have discretion in that respect.
Under those circumstances, it must be found that the first requirement for finding the European Union to be liable is not met.
Conclusions
According to settled case-law, because the three conditions for the European Union to incur liability are cumulative, wherever one of those conditions is not met, the action for compensation must be dismissed and it is not necessary to examine the other conditions (judgments of 9 September 1999, Lucaccioni v Commission,
C‑257/98 P
,
EU:C:1999:402
, paragraph
; of 30 April 2009, CAS Succhi di Frutta v Commission,
C‑497/06 P
, not published,
EU:C:2009:273
, paragraph
; and of 22 May 2007, Mebrom v Commission,
T‑198/05
, not published,
EU:T:2007:147
, paragraph
).
Accordingly, to the extent that it seeks reparation for the material damage, of EUR 3 million, allegedly suffered in respect of the ‘indirect cost envelopes’, and symbolic damages of EUR 1 for non-material damage, the present action for damages must be dismissed as unfounded.
In the light of the foregoing, the action for damages must be dismissed in its entirety.
Costs
Under Article 219 of the Rules of Procedure, in decisions given after its decision has been set aside and the case referred back to it, the General Court is to decide on the costs relating, first, to the proceedings instituted before the General Court and, secondly, to the proceedings on the appeal before the Court of Justice.
However, in the judgment under appeal the Court of Justice, whilst reserving costs relating to Case T‑381/15, decided itself on the costs relating to Case C‑184/17 P (see paragraph 25 above).
It is therefore for the General Court to decide on the costs relating to the proceedings conducted before it.
Under Article 134(3) of the Rules of Procedure, where each party succeeds on some and fails on other heads, the parties are to bear their own costs. Furthermore, under Article 137 of those rules, where a case does not proceed to judgment, costs are in the discretion of the General Court.
First, it should be noted that, according to the judgment under appeal, which annulled the contested decision, the applicant was partially successful in respect of the claims for annulment contained in its application to the General Court. Secondly, that judgment did not overturn the findings that there was no need to adjudicate and of the partial inadmissibility, as regards the applicant’s claims for annulment referred to in the first and second indents of paragraph 21 above. Thirdly, it can be seen from paragraphs 68 and 100 above that the applicant’s claims for damages must be rejected.
Under those circumstances, each party should be ordered to bear its own costs in respect of the proceedings before the General Court.

On those grounds,
THE GENERAL COURT (Seventh Chamber)
hereby:

1.
Dismisses the action for damages;

2.
Orders each party to bear its own costs in respect of the proceedings before the General Court.

da Silva Passos
Truchot
Sampol Pucurull
Delivered in open court in Luxembourg on 9 September 2020.
[Signatures]
(
*1
)	Language of the case: French.