CELEX: 62004CJ0417
Appeal
European Regional Development Fund (ERDF)
Closure of Community financial assistance
Action for annulment
Admissibility
Local or regional entity
Measures of direct and individual concern to that entity
Direct concern

In this appeal, the Regione Siciliana asks the Court of Justice to set aside the order of the Court of First Instance of the
European Communities of 8 July 2004 in Case T-341/02
Regione Siciliana
v
Commission
[2004] ECR II-2877 (‘the contested order’), dismissing as inadmissible its action for annulment of Commission Decision D (2002) 810439
of 5 September 2002 closing the financial assistance (No 93.05.03.001) from the European Regional Development Fund (ERDF)
for the Messina-Palermo Motorway major project (‘the contested decision’).

Legal context
In order to strengthen economic and social cohesion, within the meaning of Article 158 EC, the Council adopted Regulation
(EEC) No 2052/88 of 24 June 1988 on the tasks of the Structural Funds and their effectiveness and on coordination of their
activities between themselves and with the operations of the European Investment Bank and the other existing financial instruments
(OJ 1988 L 185, p. 9), as amended by Council Regulation (EEC) No 2081/93 of 20 July 1993 (OJ 1993 L 193, p. 5; ‘Regulation
No 2052/88’), and Regulation (EEC) No 4253/88 of 19 December 1988 laying down provisions for implementing Regulation (EEC)
No 2052/88 as regards coordination of the activities of the different Structural Funds between themselves and with the operations
of the European Investment Bank and the other existing financial instruments (OJ 1988 L 374, p. 1), as amended by Council
Regulation (EEC) No 2082/93 of 20 July 1993 (OJ 1993 L 193, p. 20; ‘Regulation No 4253/88’).
The first subparagraph of Article 4(1) of Regulation No 2052/88 provides:
‘Community operations shall be such as to complement or contribute to corresponding national operations. They shall be established
through close consultations between the Commission, the Member State concerned and the competent authorities and bodies ...
designated by the Member State at national, regional, local or other level, with all parties acting as partners in pursuit
of a common goal. These consultations shall hereinafter be referred to as the “partnership”. The partnership shall cover the
preparation and financing, as well as the
ex ante
appraisal, monitoring and
ex post
evaluation of operations.’
Under the title ‘Additionality’, Article 9(1) of Regulation No 4253/88 provides that ‘[i]n order to achieve a genuine economic
impact, Structural Funds … appropriations may not replace public expenditure on structural or comparable expenditure undertaken
by the Member State in the whole of the territory eligible under an objective’.
Under Article 24 of the same Regulation:
‘1. If an operation or measure appears to justify neither part nor the whole of the assistance allocated, the Commission shall
conduct a suitable examination of the case in the framework of the partnership, in particular requesting that the Member State
or authorities designated by it to implement the operation submit their comments within a specified period of time.
2. Following this examination, the Commission may reduce or suspend assistance in respect of the operation or a measure concerned
if the examination reveals an irregularity or a significant change affecting the nature or conditions for the implementation
of the operation or measure for which the Commission's approval has not been sought.
3. Any sum received unduly and to be recovered shall be repaid to the Commission. …’

Facts of the case
By decision of 22 December 1993 addressed to the Italian Republic (‘the decision to grant’), the Commission of the European
Communities granted financial assistance from the ERDF for the construction of a motorway between Palermo and Messina in Sicily
(‘the ERDF project’). The works necessary for the implementation of the project were divided into 10 lots.
In accordance with Article 4(1) of Regulation No 2052/88, Community operations are established through close consultations
between the Commission, the Member State concerned and the competent authorities and bodies designated by the Member State
at national, regional, local or other level. In that respect, it is apparent from the annex to the decision to grant that
the appellant was designated as the authority responsible for the implementation of the project.
By letter of 26 September 1997, the appellant asked the Commission for an extension of the times allowed for payment for several
lots.
In its letter in response of 30 October 1997, the Commission, after pointing out that an extension had already been granted
until 31 December 1997, stated that all the necessary steps were to be taken as a matter of urgency to complete the works
by that date at the latest.
By letter of 17 June 1998, the appellant submitted to the Italian Ministry of the Treasury and to the Commission the final
certification of expenditure undertaken up to 31 December 1997, the request for payment by the ERDF and the final implementation
report.
On 23 July 1998, the Commission returned that report to the Ministry of the Treasury on the ground that it did not contain
all the information necessary to close the ERDF project and asked the Italian authorities to submit a new final report containing
in particular, in respect of each lot, a statement on the technical and financial progress achieved by 31 December 1997 and
appropriate proof of the reasons for the delay in the execution of the works.
After having examined the new final report, the Commission, by letter of 10 February 1999, informed the Ministry of the Treasury
that that report showed that the appellant’s commitment to finance the execution of the works relating to the said project
by 31 December 1997 at the latest had apparently not been complied with, only 2 of the 10 lots provided for having been completed
by that date with, moreover, a delay of two years. In those circumstances, the Commission explained that any settlement of
the balance of the assistance would be made taking into account the expenditure actually incurred in respect of the two lots
completed, provided that the executed works were in compliance with the original project.
On 21 December 2001, the Commission sent the Italian Republic a proposal for closure of the ERDF project on account of the
delays established in the execution of the works. That proposal for closure was drawn up on the basis of expenditure incurred
by 31 December 1997 in respect of works completed by 31 December 1999.
By letter of 14 February 2002, the applicant submitted its written comments on that proposal.
On 5 September 2002, the Commission sent to the Italian Republic the contested decision taking into account the expenditure
incurred by December 1997 in respect of works completed by 5 September 2002. Under that decision, a copy of which was sent
to the appellant, the unspent balance to be withdrawn is EUR 26 378 246 and the amount to be recovered is EUR 58 036 177.

The contested order
On 14 November 2002, the applicant brought an action for annulment of the contested decision. By the contested order, the
Court of First Instance dismissed that action as inadmissible. The main grounds for that order are as follows:
‘55      [T]he contested decision … had the effect, on the one hand, of disengaging the ERDF to the extent of the amounts of assistance
not yet granted in respect of expenditure which had become ineligible and, on the other, of allowing the Commission to recover
the amounts already paid by the ERDF in respect of that expenditure. The contested decision thus had the effect of “cutting
off” the ERDF financial assistance (order in Case T-105/01
SLIM Sicilia
v
Commission
[2002] ECR II-2697, paragraph 47).
56      With regard to the determination of the effect of that decision on the applicant, it must be pointed out that, under the original
decision granting the disputed assistance, dated 22 December 1993, the applicant was the authority responsible for carrying
out the project …
57      In that situation, the contested decision could be regarded as having directly affected the applicant’s legal situation only
if, by virtue of that decision, and without the Italian Republic’s having had any discretion in that regard, that applicant
had, on the one hand, been deprived of payment of the withdrawn amounts corresponding to sums not yet received from the ERDF
by way of the disputed assistance and relating to expenditure which had become ineligible and was, on the other hand, obliged
to refund the amounts unduly paid corresponding to sums already received by way of that assistance and intended for the implementation
of expenditure which had become ineligible.
58      However, the Court has already held that no such consequences derive either from a Commission decision terminating ERDF financial
assistance or from any other provision of Community law intended to govern the effect of such a decision (order [of the Court
of First Instance] in
SLIM Sicilia
v
Commission
… paragraph 51).
59      In that regard, it must, as a preliminary point, be recalled that, according to the institutional system of the Community
and the rules which govern the relations between the Community and the Member States, it is for the Member States, in the
absence of any contrary provision of Community law, to ensure that Community regulations are implemented within their territory
(judgments in Joined Cases 205/82 to 215/82
Deutsche Milchkontor and Others
v
Germany
[1983] ECR 2633, Joined Cases 89/86 and 91/86
Étoile commerciale and CNTA
v
Commission
[1987] ECR 3005, paragraph 11 … ). As regards more particularly financing measures adopted within the framework of the ERDF,
it is incumbent upon the Member States … to take the measures necessary to recover sums lost as a result of abuse or negligence.
…
61      Within that system, it is therefore for the Member States, according to the case-law of the Court of Justice, to implement
the Community regulations and to take the necessary individual decisions regarding the traders concerned ...
…
65      It is clear that in this case there is nothing to prevent the Italian Republic from deciding to defray out of its own funds
the withdrawn portion of the Community financing so as to finance the completion of the works relating to the project in question.
In that regard, it must, in particular, be pointed out that, under Article 4(1) of Regulation No 2052/88, ERDF assistance
is to be such as to complement or contribute to corresponding national operations and that Article 9 of Regulation No 4253/88
further provides that, in accordance with the principle of additionality, Community assistance may not replace public expenditure
undertaken by the Member State.
66      With regard … to restitution of sums unduly paid, it must be pointed out that, in the contested decision, the Commission did
no more than inform the Italian Republic that sums covered by a Community payment and corresponding to expenditure which had
become ineligible had to be recovered by the ERDF. In contrast to the practice usually followed by the Commission in connection
with unlawful aid declared incompatible with the common market, the contested decision does not include any provision requiring
the Italian Republic to recover the sums unduly paid from their beneficiaries …
…
68      The proper implementation of the contested decision therefore requires only, as the Commission rightly maintains in its written
submissions, that the Italian Republic refund to the ERDF the sums unduly paid which are indicated therein …
…
71      As regards ERDF financial assistance, the Court has already held that there [is] no evidence to indicate that the Member State
has no discretion or indeed no decision-making powers as regards such reimbursement (order [of the Court of First Instance]
in
SLIM Sicilia
v
Commission
… paragraph 52).
…
73      It cannot … be excluded that particular circumstances may lead the Italian Republic to decide not to claim reimbursement of
the disputed assistance and itself to bear the burden of reimbursing to the ERDF the amounts which it wrongly considered itself
authorised to pay …
…
80      It follows that the contested decision did not directly affect the applicant’s legal situation.

Forms of order sought
The appellant claims that the Court should set aside the contested order and, consequently, take the appropriate measures
to continue the proceedings and make an order as to costs.
The Commission claims that the Court should dismiss the appeal and order the appellant to pay the costs.

The application for the contested order to be set side
In support of its appeal, the appellant puts forward four pleas in law:
–        infringement of Articles 113 and 114 of the Rules of Procedure of the Court of First Instance;
–        infringement of Article 230 EC;
–        infringement of the first subparagraph of Article 4(1) of Regulation No 2052/88 and of Article 9(1) of Regulation No 4253/88,
and
–        defective reasoning.
In its second and third pleas, which it is appropriate to examine together and first of all, the appellant submits that the
contested order is based on a false premiss, that is, that the Regione Siciliana is a person separate from the Italian Republic,
the Member State which was the recipient of the financial assistance, whereas, being a territory forming an integral part
of that Republic, it has the right, in the same way as the latter, to bring an action for annulment of the contested decision.
In that respect, it is sufficient to point out that the Court has already held that an action by a local or regional entity
cannot be treated in the same way as an action by a Member State, the term Member State within the meaning of the second paragraph
of Article 230 EC referring only to government authorities of the Member States. That term cannot include the governments
of regions or other local authorities within Member States without undermining the institutional balance provided for by the
Treaty (order in Case C-180/97
Regione Toscana
v
Commission
[1997] ECR I‑5245, paragraphs 6 and 8, and Case C-452/98
Nederlandse Antillen
v
Council
[2001] ECR I‑8973, paragraph 50).
It follows that the Court of First Instance did not err in law by treating the Regione Siciliana as a person separate from
the Italian Republic.
Next, the appellant claims that the Court of First Instance erred in law in taking the view that the appellant could not rely
on the fourth paragraph of Article 230 EC to bring an action against the contested decision.
On the basis of that provision, a local or regional entity may, to the extent that it has – as does the Regione Siciliana
– legal personality under national law, institute proceedings against a decision addressed to it or against a decision which,
although in the form of a regulation or a decision addressed to another person, is of direct and individual concern to it
(see
Nederlandse Antillen
v
Council
, paragraph 51, and Case C‑142/00 P
Commission
v
Nederlandse Antillen
[2003] ECR I-3483, paragraph 59).
In the case in point, the Court of First Instance limited its examination to whether the appellant was directly concerned
by the contested decision, the Commission not having disputed that that decision was of individual concern to it.
It is apparent from paragraphs 65 and 73 of the contested order that the conclusion of the Court of First Instance that the
appellant was not directly concerned was based primarily on the fact that the Italian Republic could decide to bear the burden
of reimbursing the ERDF itself and to defray out of its own funds the withdrawn portion of the Community financing so as to
finance the completion of the works.
The appellant submits that this reasoning, far from substantiating the absence of direct concern, is incompatible with the
principles of complementarity and additionality in relation to the Structural Funds set out respectively in the first subparagraph
of Article 4(1) of Regulation No 2052/98 and Article 9(1) of Regulation No 4253/88 according to which Community action accompanies
national action and does not replace it.
In order to reply to that argument, it should be borne in mind from the outset that, in accordance with settled case-law,
the condition that the decision forming the subject-matter of the proceedings must be of direct concern to a natural or legal
person, as laid down in the fourth paragraph of Article 230 EC, requires the contested Community measure to affect directly
the legal situation of the individual and leave no discretion to its addressees, who are entrusted with the task of implementing
it, such implementation being purely automatic and resulting from Community rules without the application of other intermediate
rules (see, in particular, Case C-404/96 P
Glencore Grain
v
Commission
[1998] ECR I-2435, paragraph 41, and Case C-486/01 P
National Front
v
Parliament
[2004] ECR I‑6289, paragraph 34).
In the present case, as stated at paragraph 7 of this judgment, the annex to the decision to grant refers to the appellant’s
designation as the authority responsible for the execution of the ERDF project.
However, there is nothing in the documents before the Court which leads to the conclusion that the appellant was directly
concerned, within the meaning of the fourth paragraph of Article 230 EC, in that capacity. In that respect, it should be pointed
out that the fact of being the authority responsible for the execution of the project, mentioned in the annex to the decision
to grant, did not imply that the applicant was itself entitled to the financial assistance.
This analysis is not weakened by the first subparagraph of Article 4(1) of Regulation No 2052/88 and Article 9(1) of Regulation
No 4253/88, relied upon by the appellant. In fact, those articles, which set out the principle that Community financial assistance
is complementary to national assistance, are not relevant to cases in which the Commission has closed financial assistance.
It follows from the foregoing that the appellant was not directly concerned by the contested decision and that its action
before the Court of First Instance was therefore inadmissible.
The second and third pleas must therefore be rejected.
Nor can the first and fourth pleas put forward by the appellant, in which it complains that the contested order infringed
Articles 113 and 114 of the Rules of Procedure of the Court of First Instance and was vitiated by defective reasoning, lead
to the setting aside of the contested order.
In its first plea, the appellant makes three complaints: first, that the Court of First Instance erroneously applied Article
113 of its Rules of Procedure when there existed, in the case in point, no absolute bar to proceedings, within the meaning
of that article; second, that, as the Court of First Instance ruled on the application without holding an oral procedure,
the appellant was not able to defend itself; and third, that the Commission should have raised an objection of inadmissibility
by separate document, in accordance with Article 114 of the Rules of Procedure of the Court of First Instance.
In that respect, it should be remembered that the plea of inadmissibility based on the condition laid down in the fourth paragraph
of Article 230 EC that proceedings brought by a natural or legal person against a decision not addressed to it are admissible
only if the decision is of direct and individual concern to it raises an absolute bar to proceeding, so that the Community
judicature may raise that plea of inadmissibility at any time, even of its own motion (see, to that effect, order in Case
C-341/00 P
Conseil national
des professions de l’automobile and Others
v
Commission
[2001] ECR I-5263, paragraph 32). Consequently, on the basis of Article 113 of its Rules of Procedure, the Court of First
Instance may rule that an action is inadmissible for this reason even if an objection of inadmissibility has not been raised
by separate document by one of the parties before it.
It should, on the other hand, be noted that the application of Article 113 of the Rules of Procedure of the Court of First
Instance does not guarantee that an oral procedure will take place, as the Court of First Instance may, under Article 114(3)
of its Rules of Procedure, to which Article 113 of those rules refers, give judgment following a solely written procedure
(Case C‑547/03 P
AIT
v
Commission
[2006] ECR I-0000, paragraph 35).It is apparent moreover from the contested order that the Court of First Instance had sufficient
information on which to base its decision without hearing the oral arguments of the parties. It is apparent, finally, that
the appellant presented its observations on the objection of inadmissibility in its reply.
As regards the fourth plea, in which the appellant submits that the findings of the Court of First Instance are inconsistent,
arbitrary and not adequately reasoned in that they are based on an insufficient preparatory enquiry and on unsubstantiated
presumptions, it is sufficient to refer to the grounds of the contested order, set out at paragraph 16 of this judgment, from
which it may be seen that the Court of First Instance examined in a detailed and consistent manner whether the appellant had
standing to bring proceedings.
It follows from all the above considerations that the appeal must be dismissed.

Costs
Under Article 69(2) of the Rules of Procedure, which applies to appeal proceedings by virtue of Article 118 thereof, the unsuccessful
party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. Since the Commission
has applied for costs and the appellant has been unsuccessful, the latter must be ordered to pay the costs.
On those grounds, the Court (Grand Chamber) hereby:
1.
Dismisses the appeal;
2.
Orders the Regione Siciliana to pay the costs.
[Signatures]
*
Language of the case: Italian.