# C_2011331EN.01002203.xml

| 12.11.2011 | EN | Official Journal of the European Union | C 331/22 |
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12.11.2011

EN

Official Journal of the European Union

C 331/22

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Action brought on 23 June 2011 — Republic of Bulgaria v Commission

(Case T-335/11)

2011/C 331/45

Language of the case: Bulgarian

Parties

Parties

Applicant: Republic of Bulgaria (represented by: Tsvetko Ivanov and Elina Petranova)

Applicant:

Defendant: European Commission

Defendant:

Re:

Re:

Application for annulment of the Commission Implementing Decision of 15 April 2011 excluding from European Union financing certain expenditure incurred by the Member States under the Guarantee Section of the European Agricultural Guidance and Guarantee Fund (EAGGF), under the European Agricultural Guarantee Fund (EAGF) and under the European Agricultural Fund for Rural Development (EAFRD) [notified under document C(2011) 2517]

Forms of order sought

Forms of order sought

The applicant claims that the court should:

| — | annul the Commission Implementing Decision of 15 April 2011 excluding from European Union financing certain expenditure incurred by the Member States under the Guarantee Section of the European Agricultural Guidance and Guarantee Fund (EAGGF), under the European Agricultural Guarantee Fund (EAGF) and under the European Agricultural Fund for Rural Development (EAFRD) [notified under document C(2011) 2517 (1)] in so far as it concerns the Republic of Bulgaria, or, in the alternative, |
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annul the Commission Implementing Decision of 15 April 2011 excluding from European Union financing certain expenditure incurred by the Member States under the Guarantee Section of the European Agricultural Guidance and Guarantee Fund (EAGGF), under the European Agricultural Guarantee Fund (EAGF) and under the European Agricultural Fund for Rural Development (EAFRD) [notified under document C(2011) 2517 (1)] in so far as it concerns the Republic of Bulgaria, or, in the alternative,

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| — | reduce the correction, applied to expenses pursuant to the single area payment scheme under the EAGF from 10 % to 5 %, and reduce the correction under EAFRD Axis 2 (‘Improving the environment and the countryside’) of the rural development programme, from 10 % to 5 %, and |
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reduce the correction, applied to expenses pursuant to the single area payment scheme under the EAGF from 10 % to 5 %, and reduce the correction under EAFRD Axis 2 (‘Improving the environment and the countryside’) of the rural development programme, from 10 % to 5 %, and

| — | order the European Commission to pay the costs. |
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order the European Commission to pay the costs.

Pleas in law and main arguments

Pleas in law and main arguments

In support of its action, the applicant makes four pleas in law.

1.   First plea, claiming infringement of Article 31 of Regulation (EC) No 1290/2005
   (2)

First plea, claiming infringement of Article 31 of Regulation (EC) No 1290/2005

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First, the Republic of Bulgaria argues that the Commission has not demonstrated any infringement of EU legislation by Bulgaria. In the contested decision, the Commission proposed financial corrections of 10 % for expenses under the single area payment scheme and Axis 2 (‘Improving the environment and the countryside’) of the rural development programme, on the ground of alleged weaknesses in the functioning of the LPIS-GIS, making it impossible to carry out a ‘key’ control, such impossibility evidencing serious defects in the control system, entailing a major risk of significant losses for the fund. A correction of 5 % has also been proposed in respect of complements to direct payments, on the ground of the said weaknesses in the functioning of the LPIS-GIS. The applicant produces evidence that administrative cross checks and on-the-spot checks took place, disproving the Commission’s allegations.

Secondly, the applicant argues that, as regards the amounts excluded from financing, neither the nature nor the gravity of the infringement of the relevant legislation were correctly assessed by the Commission. In that context, the applicant argues that a ‘key’ control even more rigorous than that required by the relevant legislation was carried out, and that the Commission’s conclusion that there was no such control does not reflect the actual state of control systems in the Republic of Bulgaria.

Thirdly, the applicant argues that the risk of loss arising to the EU budget has not been correctly assessed. It argues that the Commission erred on the subject of the financial consequences of the infringement of EU legislation, basing its reasoning on the final report of the conciliation body in Case 10/BG/442, where it is expressly stated that the Bulgarian authorities monitored permanent pastures on-the-spot 100 %.

2.   Second plea, claiming infringement of the principle of proportionality

Second plea, claiming infringement of the principle of proportionality

According to the applicant, which bases its argument on Article 31(2) of Regulation No 1290/2005 and the requirement of the General Court that the amount of the correction must be clearly linked to possible loss to the Union, the percentage of the financial correction must be proportionate to the irrregularities found and the risk for the EU budget. The corrections imposed in this case exceed the limits of what is appropriate and necessary for achieving the aim pursued by the clearance procedure, and must therefore be reduced.

3.   Third plea, claiming infringement of the principle of legal certainty

Third plea, claiming infringement of the principle of legal certainty

The applicant argues that the Commission has infringed the principle of legal certainty by disregarding the guidelines which it itself set out in Document VI/5530/97. (3) Having regard to the fact that the Bulgarian authorities carried out a key control, the Commission should, on the basis of the above-mentioned document, have determined the financial corrections at 5 % instead of 10 % in respect of expenses under the single area payment scheme and Axis 2 (‘Improving the environment and the countryside’) of the rural development programme.

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Moreover, the applicant considers that the provisions relied on by the Commission in order to posit three rules which, it claims, were not complied with by the Republic of Bulgaria burdens Member States with certain obligations which are different from those set out in the official communication. Not only were two of the three rules not provided for in the regulations in question, but nor were there any well-defined assessment criteria for their implementation. Nor were there any well-defined assessment criteria for the implementation of the third rule. The Republic of Bulgaria argues that it has complied with the requirements of Regulation No 796/2004. (4)

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4.   Fourth plea, claiming infringement of Article 296(2) TFEU

Fourth plea, claiming infringement of Article 296(2) TFEU

The contested decision has the effect of excluding from EU financing expenses incurred by the Republic of Bulgaria amounting to EUR 24 543 106,87. According to the applicant, given that the decision adopted is to its detriment, it has a major interest in obtaining from the European Commission duly reasoned explanations as to why financial corrections were imposed. The applicant maintains that the Commission has not set out sufficiently clearly and unequivocally why it imposed financial corrections, and has therefore failed to fulfil its obligation to state reasons for the contested decision in relation to the applicant.

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(1)  OJ 2011 L 102, p. 33

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(2)  Council Regulation (EC) No 1290/2005 of 21 June 2005 on the financing of the common agricultural policy (OJ 2005 L 209, p. 1).

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(3)  Document No VI/5330/97 of the Commission of 23 December 1997, headed ‘Guidelines regarding the calculation of the financial consequences on preparation of the decision for clearance of the EAGGF Guarantee accounts’.

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(4)  Commission Regulation (EC) No 796/2004 of 21 April 2004 laying down detailed rules for the implementation of cross-compliance, modulation and the integrated administration and control system provided for in of Council Regulation (EC) No 1782/2003 establishing common rules for direct support schemes under the common agricultural policy and establishing certain support schemes for farmers (OJ 2004 L 141, p. 18).

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