# C_2004094EN.01002601.xml

| 17.4.2004 | EN | Official Journal of the European Union | C 94/26 |
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17.4.2004

EN

Official Journal of the European Union

C 94/26

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Action brought on 20 February 2004 by the Commission of the European Communities against the Portuguese Republic

(Case C-84/04)

(2004/C 94/56)

An action against the Portuguese Republic was brought before the Court of Justice of the European Communities on 20 February 2004 by the Commission of the European Communities, represented by A.M. Alves Vieira, acting as Agent, with an address for service in Luxembourg.

The applicant claims that the Court should:

| — | declare that, by permitting IFADAP to introduce, and by allowing to remain in force, a procedure for granting financial assistance from Community Structural Funds, which includes substantive requirements involving the payment of levies which are neither voluntary nor optional and which do not constitute remuneration for services rendered but rather serve to finance missions for which the Portuguese State is, of necessity, responsible by virtue of, inter alia, Community law, the Portuguese Government has failed to fulfil its obligations under Regulation (EEC) No 4253/88 (1) and Article 10 EC; |
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declare that, by permitting IFADAP to introduce, and by allowing to remain in force, a procedure for granting financial assistance from Community Structural Funds, which includes substantive requirements involving the payment of levies which are neither voluntary nor optional and which do not constitute remuneration for services rendered but rather serve to finance missions for which the Portuguese State is, of necessity, responsible by virtue of, inter alia, Community law, the Portuguese Government has failed to fulfil its obligations under Regulation (EEC) No 4253/88 (1) and Article 10 EC;

inter alia

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| — | order the Portuguese Republic to pay the costs. |
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order the Portuguese Republic to pay the costs.

Pleas in law and main arguments

The Portuguese authorities impose an obligation on persons benefiting from the European Agricultural Guidance and Guarantee Fund (EAGGF), Guidance Section, to pay the expenses relating to public-service duties for which the Member States are responsible in the case of ‘indirect’ management of financial instruments, namely management which entails the Member State concerned selecting projects, paying eligible expenditure and declaring it to the Commission.

However, Article 21(5) of Regulation (EEC) No 4253/88, as amended, clearly imposes on the Member State concerned an obligation to ensure that the beneficiaries receive the advances and payments and to refrain from making any deduction or retention from payment made to beneficiaries. The terms ‘retention’ and ‘deduction’ must be interpreted broadly in the light of their effect, which is the decisive factor.

The links and the relationship of subordinacy between the draft private-law contract for a supply of services signed by the beneficiaries and IFADAP (Instituto do Financiamento e Apoio ao Desenvolvimento da Agricultura e Pescas) and the form annexed to the ‘contract for the grant of aid’, pursuant to which the beneficiary authorises sums to be debited from its account and paid to IFADAP in respect of the service provided by the latter in the context of the aid contract, leave little room for doubt that the beneficiary has no freedom of choice, particularly if account is taken of the fact that the beneficiary knows that IFADAP is the body which oversees the investment project and is responsible for checking that it is properly implemented.

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(1)  Council 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).

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