# C_2013226EN.01002302.xml

| 3.8.2013 | EN | Official Journal of the European Union | C 226/23 |
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3.8.2013

EN

Official Journal of the European Union

C 226/23

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Action brought on 12 June 2013 — Portugal v Commission

(Case T-314/13)

(2013/C 226/32)

Language of the case: Portuguese

Parties

Parties

Applicant: Portuguese Republic (represented by: L. Inez Fernandes, Agent, M. Gorgão-Henriques and J. da Silva Sampaio, lawyers)

Applicant:

Defendant: European Commission

Defendant:

Form of order sought

Form of order sought

The applicant claims that the General Court should:

| — | annul Articles 1 and 2 of Commission Decision C(2013) 1870 final; |
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annul Articles 1 and 2 of Commission Decision C(2013) 1870 final;

| — | declare that Regulation (EC) No 16/2003 (1) is not applicable in the present case, in particular Article 7 thereof, since it infringes essential procedural requirements and Regulation (EC) No 1164/94 (2) or, in any event, general principles of European Union law; |
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declare that Regulation (EC) No 16/2003 (1) is not applicable in the present case, in particular Article 7 thereof, since it infringes essential procedural requirements and Regulation (EC) No 1164/94 (2) or, in any event, general principles of European Union law;

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| — | declare that the European Commission is required to pay the outstanding balance; |
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declare that the European Commission is required to pay the outstanding balance;

| — | in the alternative:






  (a) | declare that the limitation period has expired in respect of the procedure for recovering sums already paid and the right to retain the outstanding balance; |
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in the alternative:

(a)

declare that the limitation period has expired in respect of the procedure for recovering sums already paid and the right to retain the outstanding balance;

| (b) | declare that the Commission is required to reduce the correction it made in relation to irregularities which could determine non-payment of the full outstanding balance and the recovery in full of payments made after 3 June 2003 but invoiced between June 2002 and February 2003; |
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(b)

declare that the Commission is required to reduce the correction it made in relation to irregularities which could determine non-payment of the full outstanding balance and the recovery in full of payments made after 3 June 2003 but invoiced between June 2002 and February 2003;

| — | in any event, order the European Commission to pay the costs. |
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in any event, order the European Commission to pay the costs.

Pleas in law and main arguments

Pleas in law and main arguments

In support of the action, the applicant relies on five pleas in law.

| 1. | First plea in law, alleging that Regulation (EC) No 16/2003 is unlawful, since it infringes essential procedural requirements and a higher-ranking legal norm
  Regulation (EC) No 16/2003 is unlawful since it was not adopted by the College of Commissioners in accordance with the authorisation procedure or the written procedure, or any other simplified procedure in accordance with the Rules of Procedure of the Commission, (3) as in force at the time of adoption of Regulation (EC) No 16/2003, and did not comply with Article 18 of the Rules of Procedure of the Commission as in force on the date of adoption of that regulation, and in so far as the Commission failed to interpret Article 7 of that regulation in conformity with Regulation (EC) No 1164/94. |
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1.

First plea in law, alleging that Regulation (EC) No 16/2003 is unlawful, since it infringes essential procedural requirements and a higher-ranking legal norm

Regulation (EC) No 16/2003 is unlawful since it was not adopted by the College of Commissioners in accordance with the authorisation procedure or the written procedure, or any other simplified procedure in accordance with the Rules of Procedure of the Commission, (3) as in force at the time of adoption of Regulation (EC) No 16/2003, and did not comply with Article 18 of the Rules of Procedure of the Commission as in force on the date of adoption of that regulation, and in so far as the Commission failed to interpret Article 7 of that regulation in conformity with Regulation (EC) No 1164/94.

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| 2. | Second plea in law, alleging infringement of European norms on the eligibility of expenditure
  The contested decision infringes legal norms implementing the Treaty, in particular in so far as concerns the question whether payments made after and during the beginning of the eligibility period, though invoiced prior to that period, constitute expenditure which is eligible for European financing. |
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2.

Second plea in law, alleging infringement of European norms on the eligibility of expenditure

The contested decision infringes legal norms implementing the Treaty, in particular in so far as concerns the question whether payments made after and during the beginning of the eligibility period, though invoiced prior to that period, constitute expenditure which is eligible for European financing.

| 3. | Third ground of appeal, alleging infringement of the principles of legitimate expectations and legal certainty and the obligation on administrative bodies to observe their own acts
  The European Commission has consistently interpreted the legislative norm in question in the way defended by the Portuguese Republic.
  That interpretation came from authorised Commission sources, which was communicated to the Portuguese Republic as well as other Member States; the context thereof was clearly such that the Portuguese Republic could legitimately expect that the invoices received prior to, and paid after, receipt by the European Commission of the request for full payment were eligible.
  The interpretation which the Commission now defends manifestly infringes the principle of legal certainty in that it imposes a substantial financial burden on the Portuguese Republic, even though that interpretation was neither certain nor foreseeable. |
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3.

Third ground of appeal, alleging infringement of the principles of legitimate expectations and legal certainty and the obligation on administrative bodies to observe their own acts

The European Commission has consistently interpreted the legislative norm in question in the way defended by the Portuguese Republic.

That interpretation came from authorised Commission sources, which was communicated to the Portuguese Republic as well as other Member States; the context thereof was clearly such that the Portuguese Republic could legitimately expect that the invoices received prior to, and paid after, receipt by the European Commission of the request for full payment were eligible.

The interpretation which the Commission now defends manifestly infringes the principle of legal certainty in that it imposes a substantial financial burden on the Portuguese Republic, even though that interpretation was neither certain nor foreseeable.

| 4. | Fourth plea in law, alleging, in the alternative, infringement of the principle of proportionality
  Although it is true that, in accordance with Article H of Annex II to Regulation (EC) No 1164/94, the European Commission is empowered to make financial corrections as its deems necessary, and which may imply full or partial annulment of the aid granted for the project, it must observe the principle of proportionality, taking account of the circumstances of the individual case, such as the type of irregularity and the possible financial impact of potential deficiencies in the management or monitoring systems. In that regard, it is incomprehensible why it was regarded necessary to cancel all of the aid granted, since corrections at a rate of 100 % apply only when the deficiencies in the management and monitoring systems are so significant, or the irregularity found is so serious, as to constitute a complete disregard of European Union law rendering all of the payments improper.
  Difficulties in interpretation are a decisive attenuating circumstance which should always be taken into account by the European Commission. In the light of the circumstances described, less restrictive means exist — such as the application of a reduced rate or even no correction at all — to achieve the desired objective. |
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Fourth plea in law, alleging, in the alternative, infringement of the principle of proportionality

Although it is true that, in accordance with Article H of Annex II to Regulation (EC) No 1164/94, the European Commission is empowered to make financial corrections as its deems necessary, and which may imply full or partial annulment of the aid granted for the project, it must observe the principle of proportionality, taking account of the circumstances of the individual case, such as the type of irregularity and the possible financial impact of potential deficiencies in the management or monitoring systems. In that regard, it is incomprehensible why it was regarded necessary to cancel all of the aid granted, since corrections at a rate of 100 % apply only when the deficiencies in the management and monitoring systems are so significant, or the irregularity found is so serious, as to constitute a complete disregard of European Union law rendering all of the payments improper.

Difficulties in interpretation are a decisive attenuating circumstance which should always be taken into account by the European Commission. In the light of the circumstances described, less restrictive means exist — such as the application of a reduced rate or even no correction at all — to achieve the desired objective.

| 5. | Fifth plea in law, in the alternative, alleging that the limitation period has expired
  In any event, the limitation period in relation to expenditure predating 3 June 2003 has already expired, given that the last invoice was dated 28 February 2008, namely three months and two days earlier than the date at issue.
  In accordance with Regulation (EC) No 2988/95 (4) of 18 December 1995, the limitation period for proceedings is four years as from the time when the irregularity was committed. |
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5.

Fifth plea in law, in the alternative, alleging that the limitation period has expired

In any event, the limitation period in relation to expenditure predating 3 June 2003 has already expired, given that the last invoice was dated 28 February 2008, namely three months and two days earlier than the date at issue.

In accordance with Regulation (EC) No 2988/95 (4) of 18 December 1995, the limitation period for proceedings is four years as from the time when the irregularity was committed.

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(1)  Commission Regulation (EC) No 16/2003 of 6 January 2003 laying down special detailed rules for implementing Council Regulation (EC) No 1164/94 as regards eligibility of expenditure in the context of measures part-financed by the Cohesion Fund (OJ 2003 L 2, p. 7).

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(2)  Council Regulation (EC) No 1164/94 of 16 May 1994 establishing a Cohesion Fund (OJ 1994 L 130, p. 1).

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(3)  OJ 2000 L 308, p. 26.

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(4)  Council Regulation (EC, Euratom) No 2988/95 of 18 December 1995 on the protection of the European Communities financial interests (OJ 1995 L 312, p. 1).

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