# 62017CJ0004

JUDGMENT OF THE COURT (Third Chamber)

6 September 2018 (
  *1
  )

*1

(Appeal — European Agricultural Guarantee Fund (EAGF) — Expenditure eligible for European Union financing — Expenditure by the Czech Republic — Regulation (EC) No 479/2008 — Article 11(3) — Concept of ‘restructuring of vineyards’)

In Case C‐4/17 P,

APPEAL under Article 56 of the Statute of the Court of Justice of the European Union, brought on 4 January 2017,

Czech Republic, represented by M. Smolek, J. Pavliš and J. Vláčil, acting as Agents,

Czech Republic

appellant,

the other party to the proceedings being:

European Commission, represented by P. Ondrůšek and B. Eggers, acting as Agents,

European Commission

defendant at first instance,

THE COURT (Third Chamber),

composed of L. Bay Larsen, President of the Chamber, J. Malenovský, M. Safjan, D. Šváby (Rapporteur) and M. Vilaras, Judges,

Advocate General: J. Kokott,

Registrar: I. Illéssy, Administrator,

having regard to the written procedure and further to the hearing on 1 March 2018,

after hearing the Opinion of the Advocate General at the sitting on 12 April 2018,

gives the following

Judgment

Judgment

| 1 | By its appeal the Czech Republic seeks to have set aside the judgment of the General Court of the European Union of 20 October 2016, Czech Republic v Commission (T‐141/15, not published, ‘the judgment under appeal’, EU:T:2016:621), dismissing its action for the annulment of Commission Implementing Decision (EU) 2015/103 of 16 January 2015 excluding from European Union financing certain expenditure incurred by the Member States under the European Agricultural Guarantee Fund (EAGF) and under the European Agricultural Fund for Rural Development (EAFRD) (OJ 2015 L 16, p. 33), in so far as it excludes expenditure by the Czech Republic under the European Agricultural Guarantee Fund (EAGF) on the measure to protect vineyards against damage caused by animals and birds for 2010 to 2012 (‘the contested protection measure’) in the total amount of EUR 2 123 199.04 (‘the contested decision’). |
| --- | --- |

1

By its appeal the Czech Republic seeks to have set aside the judgment of the General Court of the European Union of 20 October 2016, Czech Republic v Commission (T‐141/15, not published, ‘the judgment under appeal’, EU:T:2016:621), dismissing its action for the annulment of Commission Implementing Decision (EU) 2015/103 of 16 January 2015 excluding from European Union financing certain expenditure incurred by the Member States under the European Agricultural Guarantee Fund (EAGF) and under the European Agricultural Fund for Rural Development (EAFRD) (OJ 2015 L 16, p. 33), in so far as it excludes expenditure by the Czech Republic under the European Agricultural Guarantee Fund (EAGF) on the measure to protect vineyards against damage caused by animals and birds for 2010 to 2012 (‘the contested protection measure’) in the total amount of EUR 2 123 199.04 (‘the contested decision’).

Czech Republic

Commission

EU law

EU law

Regulation (EC) No 1493/1999

Regulation (EC) No 1493/1999

| 2 | Council Regulation (EC) No 1493/1999 of 17 May 1999 on the common organisation of the market in wine (OJ 1999 L 179, p. 1) provided in Title II, Chapter III, ‘Restructuring and conversion’, Article 11:
  ‘1.   A system for the restructuring and conversion of vineyards is hereby established.
  2.   The objective of the system shall be the adaptation of production to market demand.
  3.   The system shall cover one or more of the following measures:





  (a) | varietal conversion, including by means of grafting-on; |
| --- | --- | --- |

2

Council Regulation (EC) No 1493/1999 of 17 May 1999 on the common organisation of the market in wine (OJ 1999 L 179, p. 1) provided in Title II, Chapter III, ‘Restructuring and conversion’, Article 11:

‘1.   A system for the restructuring and conversion of vineyards is hereby established.

2.   The objective of the system shall be the adaptation of production to market demand.

3.   The system shall cover one or more of the following measures:

(a)

varietal conversion, including by means of grafting-on;

| (b) | relocation of vineyards; |
| --- | --- |

(b)

relocation of vineyards;

| (c) | improvements to vineyard management techniques related to the objective of the system. |
| --- | --- |

(c)

improvements to vineyard management techniques related to the objective of the system.

The system shall not cover the normal renewal of vineyards which have come to the end of their natural life.

...’

Regulation (EC) No 479/2008

Regulation (EC) No 479/2008

| 3 | Council Regulation (EC) No 479/2008 of 29 April 2008 on the common organisation of the market in wine, amending Regulations (EC) No 1493/1999, (EC) No 1782/2003, (EC) No 1290/2005, (EC) No 3/2008 and repealing Regulations (EEC) No 2392/86 and (EC) No 1493/1999 (OJ 2008 L 148, p. 1) states in recital 11:
  ‘One key measure eligible for national support programmes should be the promotion and marketing of Community wines in third countries. Restructuring and conversion activities should continue to be covered on account of their positive structural effects on the wine sector. Support should also be available for investments in the wine sector which are geared towards improving the economic performance of the enterprises as such. ...’ |
| --- | --- |

3

Council Regulation (EC) No 479/2008 of 29 April 2008 on the common organisation of the market in wine, amending Regulations (EC) No 1493/1999, (EC) No 1782/2003, (EC) No 1290/2005, (EC) No 3/2008 and repealing Regulations (EEC) No 2392/86 and (EC) No 1493/1999 (OJ 2008 L 148, p. 1) states in recital 11:

‘One key measure eligible for national support programmes should be the promotion and marketing of Community wines in third countries. Restructuring and conversion activities should continue to be covered on account of their positive structural effects on the wine sector. Support should also be available for investments in the wine sector which are geared towards improving the economic performance of the enterprises as such. ...’

| 4 | Article 4 of Regulation No 479/2008, ‘Compatibility and consistency’, provided in paragraph 1:
  ‘Support programmes shall be compatible with Community law and consistent with the activities, policies and priorities of the Community.’ |
| --- | --- |

4

Article 4 of Regulation No 479/2008, ‘Compatibility and consistency’, provided in paragraph 1:

‘Support programmes shall be compatible with Community law and consistent with the activities, policies and priorities of the Community.’

| 5 | In accordance with Article 5 of that regulation, ‘Submission of support programmes’:
  ‘1.   Each producer Member State referred to in Annex II shall, for the first time by 30 June 2008, submit to the Commission a draft five-year support programme containing measures in accordance with this Chapter.
  The support measures in the support programmes shall be drawn up at the geographical level which the Member States deem most appropriate. Before being submitted to the Commission, the support programme shall be subject to consultation with the competent authorities and organisations at the appropriate territorial level.
  Each Member State shall submit one single draft support programme, which may accommodate regional particularities.
  2.   Support programmes shall become applicable three months after their submission to the Commission.
  However, if the submitted support programme does not comply with the conditions laid down in this Chapter, the Commission shall inform the Member State thereof. In such case, the Member State shall submit a revised support programme to the Commission. The revised support programme shall become applicable two months after its notification unless an incompatibility persists in which case this subparagraph shall apply.
  ...’ |
| --- | --- |

5

In accordance with Article 5 of that regulation, ‘Submission of support programmes’:

‘1.   Each producer Member State referred to in Annex II shall, for the first time by 30 June 2008, submit to the Commission a draft five-year support programme containing measures in accordance with this Chapter.

The support measures in the support programmes shall be drawn up at the geographical level which the Member States deem most appropriate. Before being submitted to the Commission, the support programme shall be subject to consultation with the competent authorities and organisations at the appropriate territorial level.

Each Member State shall submit one single draft support programme, which may accommodate regional particularities.

2.   Support programmes shall become applicable three months after their submission to the Commission.

However, if the submitted support programme does not comply with the conditions laid down in this Chapter, the Commission shall inform the Member State thereof. In such case, the Member State shall submit a revised support programme to the Commission. The revised support programme shall become applicable two months after its notification unless an incompatibility persists in which case this subparagraph shall apply.

...’

| 6 | Article 11 of that regulation, ‘Restructuring and conversion of vineyards’, provided:
  ‘1.   The objective of measures relating to the restructuring and conversion of vineyards shall be to increase the competitiveness of wine producers.
  2.   Restructuring and conversion of vineyards shall be supported in accordance with this Article only if Member States submit the inventory of their production potential in accordance with Article 109.
  3.   Support for restructuring and conversion of vineyards may only cover one or more of the following activities:





  (a) | varietal conversion, including by means of grafting-on; |
| --- | --- | --- |

6

Article 11 of that regulation, ‘Restructuring and conversion of vineyards’, provided:

‘1.   The objective of measures relating to the restructuring and conversion of vineyards shall be to increase the competitiveness of wine producers.

2.   Restructuring and conversion of vineyards shall be supported in accordance with this Article only if Member States submit the inventory of their production potential in accordance with Article 109.

3.   Support for restructuring and conversion of vineyards may only cover one or more of the following activities:

(a)

varietal conversion, including by means of grafting-on;

| (b) | relocation of vineyards; |
| --- | --- |

(b)

relocation of vineyards;

| (c) | improvements to vineyard management techniques. |
| --- | --- |

(c)

improvements to vineyard management techniques.

The normal renewal of vineyards which have come to the end of their natural life shall not be supported.

4.   Support for restructuring and conversion of vineyards may only take the following forms:

| (a) | compensation of producers for the loss of revenue due to the implementation of the measure; |
| --- | --- |

(a)

compensation of producers for the loss of revenue due to the implementation of the measure;

| (b) | contribution to the costs of restructuring and conversion. |
| --- | --- |

(b)

contribution to the costs of restructuring and conversion.

...’

Background to the dispute

Background to the dispute

| 7 | The relevant background to the dispute was described as follows in paragraphs 1 to 17 of the judgment under appeal:





  ‘1 | On 9 July 2008 the Czech Republic submitted to the Commission of the European Communities a draft support programme for 2009 to 2014 pursuant to Article 5(1) of [Regulation No 479/2008]. |
| --- | --- | --- |

7

The relevant background to the dispute was described as follows in paragraphs 1 to 17 of the judgment under appeal:

‘1

On 9 July 2008 the Czech Republic submitted to the Commission of the European Communities a draft support programme for 2009 to 2014 pursuant to Article 5(1) of [Regulation No 479/2008].

| 2 | The measures in the draft programme included [the contested protection measure], which was to be implemented by mechanical means, namely fencing vineyards or using various devices for frightening animals and birds, or by active means involving human beings producing sounds ... |
| --- | --- |

2

The measures in the draft programme included [the contested protection measure], which was to be implemented by mechanical means, namely fencing vineyards or using various devices for frightening animals and birds, or by active means involving human beings producing sounds ...

| 3 | By letter of 8 October 2008, the Commission raised objections to the draft programme pursuant to Article 5(2) of Regulation No 479/2008. However, the Commission’s objections did not relate to the contested protection measure. |
| --- | --- |

3

By letter of 8 October 2008, the Commission raised objections to the draft programme pursuant to Article 5(2) of Regulation No 479/2008. However, the Commission’s objections did not relate to the contested protection measure.

| 4 | The Czech Republic revised the draft programme in the light of the Commission’s objections and sent it a new draft on 12 February 2009. The second draft again contained the contested protection measure, unchanged in form from the original draft. The Commission no longer raised any objections to the second draft. |
| --- | --- |

4

The Czech Republic revised the draft programme in the light of the Commission’s objections and sent it a new draft on 12 February 2009. The second draft again contained the contested protection measure, unchanged in form from the original draft. The Commission no longer raised any objections to the second draft.

| 5 | On the occasion of an audit investigation under reference VT/VI/2009/101/CZ, intended to ascertain the compatibility of the measures adopted by the Czech Republic in connection with the restructuring and conversion of vineyards with the conditions for granting support for restructuring and conversion, in relation to the 2007/2008 wine year, the Commission on 20 February 2009 sent the Czech Republic a communication under Article 11(1) of Commission Regulation (EC) No 885/2006 of 21 June 2006 laying down detailed rules for the application of Council Regulation (EC) No 1290/2005 as regards the accreditation of paying agencies and other bodies and the clearance of the accounts of the EAGF and of the EAFRD (OJ 2006 L 171, p. 90). That communication read, in part, as follows:
  “This result shows, however, that the restructuring work has essentially been limited to protecting existing vineyards against animals, with no other intervention. That approach raises a problem of conformity with respect to Article 11(2) of Regulation (EC) No 1493/1999, which provides that the objective of the system is the adaptation of production to market demand. In so far as restructuring in the Czech Republic was confined solely to protecting existing vineyards against animals, the expenditure is prima facie not eligible, as it is not related to the requirements of the legal provisions.” In that letter the Commission indicated that the Czech authorities should “take all measures necessary to remedy the defects and lack of conformity”. |
| --- | --- |

5

On the occasion of an audit investigation under reference VT/VI/2009/101/CZ, intended to ascertain the compatibility of the measures adopted by the Czech Republic in connection with the restructuring and conversion of vineyards with the conditions for granting support for restructuring and conversion, in relation to the 2007/2008 wine year, the Commission on 20 February 2009 sent the Czech Republic a communication under Article 11(1) of Commission Regulation (EC) No 885/2006 of 21 June 2006 laying down detailed rules for the application of Council Regulation (EC) No 1290/2005 as regards the accreditation of paying agencies and other bodies and the clearance of the accounts of the EAGF and of the EAFRD (OJ 2006 L 171, p. 90). That communication read, in part, as follows:

“This result shows, however, that the restructuring work has essentially been limited to protecting existing vineyards against animals, with no other intervention. That approach raises a problem of conformity with respect to Article 11(2) of Regulation (EC) No 1493/1999, which provides that the objective of the system is the adaptation of production to market demand. In so far as restructuring in the Czech Republic was confined solely to protecting existing vineyards against animals, the expenditure is prima facie not eligible, as it is not related to the requirements of the legal provisions.” In that letter the Commission indicated that the Czech authorities should “take all measures necessary to remedy the defects and lack of conformity”.

| 6 | By letter of 22 September 2009, the Commission stated that it intended to carry out another audit investigation, under reference VT/VI/2009/004/CZ. That investigation was to relate to the measures concerning the restructuring and conversion of vineyards in the Czech Republic in the wine year 2008/2009. |
| --- | --- |

6

By letter of 22 September 2009, the Commission stated that it intended to carry out another audit investigation, under reference VT/VI/2009/004/CZ. That investigation was to relate to the measures concerning the restructuring and conversion of vineyards in the Czech Republic in the wine year 2008/2009.

| 7 | From 26 to 29 January 2010 the Commission carried out that investigation in the Czech Republic. |
| --- | --- |

7

From 26 to 29 January 2010 the Commission carried out that investigation in the Czech Republic.

| 8 | In a communication of 22 March 2010 pursuant to Article 11(1) of Regulation No 885/2006 ... the Commission, in connection with the investigation under reference VT/VI/2009/004/CZ, stated inter alia:
  “During the on-the-spot check the audit team expressed doubts as to whether active and passive protection against birds and wild animals was an eligible activity in connection with restructuring and conversion.” |
| --- | --- |

8

In a communication of 22 March 2010 pursuant to Article 11(1) of Regulation No 885/2006 ... the Commission, in connection with the investigation under reference VT/VI/2009/004/CZ, stated inter alia:

“During the on-the-spot check the audit team expressed doubts as to whether active and passive protection against birds and wild animals was an eligible activity in connection with restructuring and conversion.”

| 9 | In that document, moreover, the Commission informed the Czech Republic that “active and passive protection against birds and wild animals cannot be regarded as a new measure by which vineyard management will be improved so as to adapt production to market demand”. The communication noted, finally, that “Regulation (EC) No 1493/1999 clearly states that the objective [of restructuring operations] is ‘the adaptation of production to market demand’”. |
| --- | --- |

9

In that document, moreover, the Commission informed the Czech Republic that “active and passive protection against birds and wild animals cannot be regarded as a new measure by which vineyard management will be improved so as to adapt production to market demand”. The communication noted, finally, that “Regulation (EC) No 1493/1999 clearly states that the objective [of restructuring operations] is ‘the adaptation of production to market demand’”.

| 10 | On 31 January 2011 the Commission sent the Czech Republic the minutes of a bilateral meeting that had been held, pursuant to the third subparagraph of Article 11(1) of Regulation No 885/2006, between representatives of the Czech Republic and of the Commission on 13 December 2010, concerning the above two investigations. From 31 January 2011 a reference to both investigations appeared at the head of all correspondence from the Commission in the present case. |
| --- | --- |

10

On 31 January 2011 the Commission sent the Czech Republic the minutes of a bilateral meeting that had been held, pursuant to the third subparagraph of Article 11(1) of Regulation No 885/2006, between representatives of the Czech Republic and of the Commission on 13 December 2010, concerning the above two investigations. From 31 January 2011 a reference to both investigations appeared at the head of all correspondence from the Commission in the present case.

| 11 | In the minutes the Commission took the view that the expenditure in the Czech Republic on the basis of the contested protection measure constituted non-permitted operations, and required from the Czech Republic the exact amount of the expenditure declared for the financial years 2008 to 2010. |
| --- | --- |

11

In the minutes the Commission took the view that the expenditure in the Czech Republic on the basis of the contested protection measure constituted non-permitted operations, and required from the Czech Republic the exact amount of the expenditure declared for the financial years 2008 to 2010.

| 12 | On 3 December 2012 the Commission sent the Czech Republic a communication under the third subparagraph of Article 11(2) of Regulation No 885/2006. In that communication it repeated and clarified its view that the forms of active and passive protection of vineyards applied by the Czech Republic were not covered by the concept of restructuring and conversion referred to in Article 11 of [Regulation No 1493/1999] and Article 11 of Regulation No 479/2008. In this respect, the Commission proposed a financial correction of CZK 52 347 157.43 (approximately EUR 2040737) and EUR 11 984 289.94 for the financial years 2007 to 2010, Regulation No 1493/1999 being applied to the years 2007 and 2008 and Regulation No 479/2008 to the other years. |
| --- | --- |

12

On 3 December 2012 the Commission sent the Czech Republic a communication under the third subparagraph of Article 11(2) of Regulation No 885/2006. In that communication it repeated and clarified its view that the forms of active and passive protection of vineyards applied by the Czech Republic were not covered by the concept of restructuring and conversion referred to in Article 11 of [Regulation No 1493/1999] and Article 11 of Regulation No 479/2008. In this respect, the Commission proposed a financial correction of CZK 52 347 157.43 (approximately EUR 2040737) and EUR 11 984 289.94 for the financial years 2007 to 2010, Regulation No 1493/1999 being applied to the years 2007 and 2008 and Regulation No 479/2008 to the other years.

| 13 | Following a request made by the Czech Republic on 17 January 2013, the conciliation body arranged a meeting on 19 June 2013 and on 2 July 2013 drew up a final report on the conciliation procedure under reference 13/CZ/552. In the report the conciliation body invited the Commission not to propose any financial correction for the expenditure under the support programme as a whole for the period 2009 to 2014 and to reconsider its decision to impose the proposed financial correction of CZK 52 347 157.43 (approximately EUR 2040737) and EUR 11 984 289.94. |
| --- | --- |

13

Following a request made by the Czech Republic on 17 January 2013, the conciliation body arranged a meeting on 19 June 2013 and on 2 July 2013 drew up a final report on the conciliation procedure under reference 13/CZ/552. In the report the conciliation body invited the Commission not to propose any financial correction for the expenditure under the support programme as a whole for the period 2009 to 2014 and to reconsider its decision to impose the proposed financial correction of CZK 52 347 157.43 (approximately EUR 2040737) and EUR 11 984 289.94.

| 14 | By letter of 22 April 2014, the Commission sent the Czech Republic a final opinion after the submission of the conciliation body’s report. In the opinion the Commission repeated that in its view the contested protection measure could not be regarded as permitted in connection with the programme for restructuring and conversion of vineyards. |
| --- | --- |

14

By letter of 22 April 2014, the Commission sent the Czech Republic a final opinion after the submission of the conciliation body’s report. In the opinion the Commission repeated that in its view the contested protection measure could not be regarded as permitted in connection with the programme for restructuring and conversion of vineyards.

| 15 | With respect to the financial years 2007 to 2009, the Commission observed that the lack of objections on its part to the support programme as regards the contested protection measure had allowed the Czech Republic legitimately to believe that the support for that measure was permitted. In the Commission’s view, the Czech Republic could not, however, have any legitimate expectation in that respect after receiving its letter of 22 March 2010. For that reason the Commission considered that a financial correction was justified for all the expenditure for which a commitment was entered into after 22 March 2010. It further proposed a financial correction for the financial years 2010 to 2012 in a total amount of EUR 2 123 199.04. |
| --- | --- |

15

With respect to the financial years 2007 to 2009, the Commission observed that the lack of objections on its part to the support programme as regards the contested protection measure had allowed the Czech Republic legitimately to believe that the support for that measure was permitted. In the Commission’s view, the Czech Republic could not, however, have any legitimate expectation in that respect after receiving its letter of 22 March 2010. For that reason the Commission considered that a financial correction was justified for all the expenditure for which a commitment was entered into after 22 March 2010. It further proposed a financial correction for the financial years 2010 to 2012 in a total amount of EUR 2 123 199.04.

| 16 | Finally, the Commission adopted [the contested decision] on the basis of Article 52 of Regulation (EU) No 1306/2013 of the European Parliament and of the Council of 17 December 2013 on the financing, management and monitoring of the common agricultural policy and repealing Council Regulations (EEC) No 352/78, (EC) No 165/94, (EC) No 2799/98, (EC) No 814/2000, (EC) No 1290/2005 and (EC) No 485/2008 (OJ 2013 L 347, p. 549, corrigendum OJ 2016 L 130, p. 6). |
| --- | --- |

16

Finally, the Commission adopted [the contested decision] on the basis of Article 52 of Regulation (EU) No 1306/2013 of the European Parliament and of the Council of 17 December 2013 on the financing, management and monitoring of the common agricultural policy and repealing Council Regulations (EEC) No 352/78, (EC) No 165/94, (EC) No 2799/98, (EC) No 814/2000, (EC) No 1290/2005 and (EC) No 485/2008 (OJ 2013 L 347, p. 549, corrigendum OJ 2016 L 130, p. 6).

| 17 | In the contested decision the Commission excluded the expenditure of the Czech Republic under the [EAGF] on the contested protection measure in connection with the programme for restructuring and conversion of vineyards for 2010 to 2012 in the total amount of EUR 2 123 199.04.’ |
| --- | --- |

17

In the contested decision the Commission excluded the expenditure of the Czech Republic under the [EAGF] on the contested protection measure in connection with the programme for restructuring and conversion of vineyards for 2010 to 2012 in the total amount of EUR 2 123 199.04.’

The procedure before the General Court and the judgment under appeal

The procedure before the General Court and the judgment under appeal

| 8 | By application lodged at the Registry of the General Court on 25 March 2015, the Czech Republic sought the annulment of the contested decision and an order that the Commission pay the costs. |
| --- | --- |

8

By application lodged at the Registry of the General Court on 25 March 2015, the Czech Republic sought the annulment of the contested decision and an order that the Commission pay the costs.

| 9 | In support of its action, the Czech Republic put forward two pleas in law, alleging, first, an infringement of Article 5 of Regulation No 479/2008 and the principles of legal certainty and the protection of legitimate expectations and, second, an infringement of Article 41 of the Charter of Fundamental Rights of the European Union (‘the Charter’) in conjunction with Articles 11 and 16 of Regulation No 885/2006 and Article 31 of Council Regulation (EC) No 1290/2005 of 21 June 2005 on the financing of the common agricultural policy (OJ 2005 L 209, p. 1). |
| --- | --- |

9

In support of its action, the Czech Republic put forward two pleas in law, alleging, first, an infringement of Article 5 of Regulation No 479/2008 and the principles of legal certainty and the protection of legitimate expectations and, second, an infringement of Article 41 of the Charter of Fundamental Rights of the European Union (‘the Charter’) in conjunction with Articles 11 and 16 of Regulation No 885/2006 and Article 31 of Council Regulation (EC) No 1290/2005 of 21 June 2005 on the financing of the common agricultural policy (OJ 2005 L 209, p. 1).

| 10 | The General Court dismissed the action and ordered the Czech Republic to pay the costs. |
| --- | --- |

10

The General Court dismissed the action and ordered the Czech Republic to pay the costs.

Forms of order sought by the parties

Forms of order sought by the parties

| 11 | The Czech Republic claims that the Court should:





  – | set aside the judgment under appeal and annul the contested decision and |
| --- | --- | --- |

11

The Czech Republic claims that the Court should:

–

set aside the judgment under appeal and annul the contested decision and

| – | order the Commission to pay the costs. |
| --- | --- |

–

order the Commission to pay the costs.

| 12 | The Commission contends that the Court should:





  – | dismiss the appeal and |
| --- | --- | --- |

12

The Commission contends that the Court should:

–

dismiss the appeal and

| – | order the Czech Republic to pay the costs. |
| --- | --- |

–

order the Czech Republic to pay the costs.

The appeal

The appeal

| 13 | In support of its appeal, the Czech Republic relies on three grounds of appeal, alleging:





  – | infringement of Article 11 of Regulation No 479/2008; |
| --- | --- | --- |

13

In support of its appeal, the Czech Republic relies on three grounds of appeal, alleging:

–

infringement of Article 11 of Regulation No 479/2008;

| – | infringement of Article 5(2) of Regulation No 479/2008 and the principles of the protection of legitimate expectations and legal certainty; and |
| --- | --- |

–

infringement of Article 5(2) of Regulation No 479/2008 and the principles of the protection of legitimate expectations and legal certainty; and

| – | infringement of Article 41 of the Charter in conjunction with Article 31 of Regulation No 1290/2005 or Article 52 of Regulation No 1306/2013 and with Articles 11 and 16 of Regulation No 885/2006. |
| --- | --- |

–

infringement of Article 41 of the Charter in conjunction with Article 31 of Regulation No 1290/2005 or Article 52 of Regulation No 1306/2013 and with Articles 11 and 16 of Regulation No 885/2006.

Admissibility of the first ground of appeal, alleging infringement of Article 11 of Regulation No 479/2008

Admissibility of the first ground of appeal, alleging infringement of Article 11 of Regulation No 479/2008

Arguments of the parties

Arguments of the parties

| 14 | By its first ground of appeal, which is directed against paragraphs 83 to 90 of the judgment under appeal, the Czech Republic complains that the General Court misinterpreted Article 11 of Regulation No 479/2008. |
| --- | --- |

14

By its first ground of appeal, which is directed against paragraphs 83 to 90 of the judgment under appeal, the Czech Republic complains that the General Court misinterpreted Article 11 of Regulation No 479/2008.

| 15 | The Commission submits that the first ground of appeal is both inadmissible and ineffective. |
| --- | --- |

15

The Commission submits that the first ground of appeal is both inadmissible and ineffective.

| 16 | It argues, first, that this is a ground of appeal, put forward in support of the annulment of the contested decision, which was not pleaded in its own right before the General Court. It is therefore new and consequently inadmissible. |
| --- | --- |

16

It argues, first, that this is a ground of appeal, put forward in support of the annulment of the contested decision, which was not pleaded in its own right before the General Court. It is therefore new and consequently inadmissible.

| 17 | It argues, second, that this ground of appeal is moreover ineffective, in that it concerns only a partial aspect of the General Court’s analysis of the plea in law alleging infringement of the principle of legal certainty. In those circumstances, whether or not the ground of appeal is well founded, it cannot call in question the General Court’s conclusion that that principle was not disregarded. |
| --- | --- |

17

It argues, second, that this ground of appeal is moreover ineffective, in that it concerns only a partial aspect of the General Court’s analysis of the plea in law alleging infringement of the principle of legal certainty. In those circumstances, whether or not the ground of appeal is well founded, it cannot call in question the General Court’s conclusion that that principle was not disregarded.

| 18 | The Czech Republic replies that, although infringement of Article 11 of Regulation No 479/2008 was not put forward as a plea in law before the General Court, the first ground of appeal is admissible because at first instance its argument was based on the premiss that in the prior assessment of the support programme the Commission had accepted that the contested protection measure was compatible with that provision. |
| --- | --- |

18

The Czech Republic replies that, although infringement of Article 11 of Regulation No 479/2008 was not put forward as a plea in law before the General Court, the first ground of appeal is admissible because at first instance its argument was based on the premiss that in the prior assessment of the support programme the Commission had accepted that the contested protection measure was compatible with that provision.

| 19 | It contends, moreover, that the ground of appeal cannot be ineffective, since the General Court wrongly considered that the contested protection measure did not comply with the conditions of Article 11 of the regulation. It is therefore decisive to find that that is not the case. |
| --- | --- |

19

It contends, moreover, that the ground of appeal cannot be ineffective, since the General Court wrongly considered that the contested protection measure did not comply with the conditions of Article 11 of the regulation. It is therefore decisive to find that that is not the case.

Findings of the Court

Findings of the Court

| 20 | As a preliminary point, although the Czech Republic argued before the General Court that the contested protection measure was compatible with Article 11 of Regulation No 479/2008, it did not put forward in its action for annulment a plea in law alleging infringement of that provision. Point 10 of the reply lodged with the General Court by the Czech Republic states that ‘since the compatibility of the contested support programme with EU law as a whole follows from the irrebuttable legal presumption under Article 5(2) of Regulation No 479/2008 which the Commission itself gave rise to by its conduct, there is no longer any need to address Article 11 of Regulation No 479/2008’. |
| --- | --- |

20

As a preliminary point, although the Czech Republic argued before the General Court that the contested protection measure was compatible with Article 11 of Regulation No 479/2008, it did not put forward in its action for annulment a plea in law alleging infringement of that provision. Point 10 of the reply lodged with the General Court by the Czech Republic states that ‘since the compatibility of the contested support programme with EU law as a whole follows from the irrebuttable legal presumption under Article 5(2) of Regulation No 479/2008 which the Commission itself gave rise to by its conduct, there is no longer any need to address Article 11 of Regulation No 479/2008’.

| 21 | Its action was thus based on the premiss that the compatibility of the contested protection measure with Article 11 of Regulation No 479/2008 had been accepted by the Commission, as the Commission had not criticised the second version of the draft support programme for 2009 to 2014 which the Czech Republic had sent it on 12 February 2009. |
| --- | --- |

21

Its action was thus based on the premiss that the compatibility of the contested protection measure with Article 11 of Regulation No 479/2008 had been accepted by the Commission, as the Commission had not criticised the second version of the draft support programme for 2009 to 2014 which the Czech Republic had sent it on 12 February 2009.

| 22 | In paragraphs 83 to 90 of the judgment under appeal, the General Court explained why a measure such as the contested protection measure, which did not clearly appear to contribute to increasing the competitiveness of wine producers, evidently did not in its view fall within the activities listed in Article 11(3) of Regulation No 479/2008. |
| --- | --- |

22

In paragraphs 83 to 90 of the judgment under appeal, the General Court explained why a measure such as the contested protection measure, which did not clearly appear to contribute to increasing the competitiveness of wine producers, evidently did not in its view fall within the activities listed in Article 11(3) of Regulation No 479/2008.

| 23 | The General Court thus, as the Advocate General observes in point 40 of her Opinion, based itself on those considerations in rejecting, in the judgment under appeal, the first plea in law of the action for annulment. |
| --- | --- |

23

The General Court thus, as the Advocate General observes in point 40 of her Opinion, based itself on those considerations in rejecting, in the judgment under appeal, the first plea in law of the action for annulment.

| 24 | In this respect, it should be recalled that according to settled case-law an appellant is entitled to lodge an appeal relying on grounds which arise from the judgment under appeal itself and seek to criticise, in law, its correctness (see, to that effect, judgments of 29 November 2007, Stadtwerke Schwäbisch Hall and Others v Commission, C‐176/06 P, not published, EU:C:2007:730, paragraph 17, and of 16 June 2016, Evonik Degussa and AlzChem v Commission, C‐155/14 P, EU:C:2016:446, paragraph 55). |
| --- | --- |

24

In this respect, it should be recalled that according to settled case-law an appellant is entitled to lodge an appeal relying on grounds which arise from the judgment under appeal itself and seek to criticise, in law, its correctness (see, to that effect, judgments of 29 November 2007, Stadtwerke Schwäbisch Hall and Others v Commission, C‐176/06 P, not published, EU:C:2007:730, paragraph 17, and of 16 June 2016, Evonik Degussa and AlzChem v Commission, C‐155/14 P, EU:C:2016:446, paragraph 55).

| 25 | It also follows from settled case-law that an argument which was not raised at first instance does not constitute a new plea that is inadmissible at the appeal stage if it is simply an amplification of an argument already developed in the context of a plea set out in the application before the General Court (see, to that effect, inter alia, judgments of 19 December 2013, Siemens and Others v Commission, C‐239/11 P, C‐489/11 P and C‐498/11 P, not published, EU:C:2013:866, paragraph 287, and of 10 April 2014, Areva and Others v Commission, C‐247/11 P and C‐253/11 P, EU:C:2014:257, paragraph 114). |
| --- | --- |

25

It also follows from settled case-law that an argument which was not raised at first instance does not constitute a new plea that is inadmissible at the appeal stage if it is simply an amplification of an argument already developed in the context of a plea set out in the application before the General Court (see, to that effect, inter alia, judgments of 19 December 2013, Siemens and Others v Commission, C‐239/11 P, C‐489/11 P and C‐498/11 P, not published, EU:C:2013:866, paragraph 287, and of 10 April 2014, Areva and Others v Commission, C‐247/11 P and C‐253/11 P, EU:C:2014:257, paragraph 114).

| 26 | It its action for annulment, the Czech Republic argued, in its first plea in law, inter alia that the principle of legal certainty had been infringed, submitting that the contested protection measure complied with the conditions laid down in Article 11 of Regulation No 479/2008. |
| --- | --- |

26

It its action for annulment, the Czech Republic argued, in its first plea in law, inter alia that the principle of legal certainty had been infringed, submitting that the contested protection measure complied with the conditions laid down in Article 11 of Regulation No 479/2008.

| 27 | It follows that, in so far as the Czech Republic’s argument at first instance necessarily assumed that the contested protection measure was compatible with Article 11 of Regulation No 479/2008 and in so far as that compatibility was called in question by the General Court in the judgment under appeal, the ground of appeal alleging an infringement of that article must be regarded as an amplification of the first plea in law in the application bringing the proceedings, which alleged inter alia a breach of the principle of legal certainty. That ground must therefore be considered to be admissible. |
| --- | --- |

27

It follows that, in so far as the Czech Republic’s argument at first instance necessarily assumed that the contested protection measure was compatible with Article 11 of Regulation No 479/2008 and in so far as that compatibility was called in question by the General Court in the judgment under appeal, the ground of appeal alleging an infringement of that article must be regarded as an amplification of the first plea in law in the application bringing the proceedings, which alleged inter alia a breach of the principle of legal certainty. That ground must therefore be considered to be admissible.

Substance

Substance

Arguments of the parties

Arguments of the parties

| 28 | The Czech Republic contests the judgment under appeal in so far as the General Court found in that judgment, first, that Article 11(3) of Regulation No 479/2008 manifestly did not cover national measures which, like the contested protection measure, were aimed at protecting vineyards against damage caused by animals and birds and, second, that it was not evident that that measure contributed to increasing the competitiveness of wine producers, which, in accordance with paragraph 1 of that article, is the objective of measures of restructuring and conversion of vineyards. |
| --- | --- |

28

The Czech Republic contests the judgment under appeal in so far as the General Court found in that judgment, first, that Article 11(3) of Regulation No 479/2008 manifestly did not cover national measures which, like the contested protection measure, were aimed at protecting vineyards against damage caused by animals and birds and, second, that it was not evident that that measure contributed to increasing the competitiveness of wine producers, which, in accordance with paragraph 1 of that article, is the objective of measures of restructuring and conversion of vineyards.

| 29 | In the Czech Republic’s view, measures aimed at protecting vineyards against damage caused by animals and birds satisfy the three conditions in Article 11 of Regulation No 479/2008, and are consequently eligible for support within the meaning of that article. |
| --- | --- |

29

In the Czech Republic’s view, measures aimed at protecting vineyards against damage caused by animals and birds satisfy the three conditions in Article 11 of Regulation No 479/2008, and are consequently eligible for support within the meaning of that article.

| 30 | In the first place, those measures are improvements to vineyard management techniques within the meaning of Article 11(3)(c) of Regulation No 479/2008, in that they contribute to better harvests by protecting vines and grapes against pests. The appellant states that each year in the Czech Republic animals and birds cause extensive damage to vineyards. Animals nibble at the vine stocks, with a plant thus damaged bearing less fruit or none at all. Birds, in particular the common starling, descend on the grapes while they are ripening, thus causing a problem specific to vineyards in central Europe where starlings occur during that period. That can cause complete destruction of the crop or damage to the grapes, which are no longer capable of producing good quality wine. The grapes are also more vulnerable to diseases, which may then spread. |
| --- | --- |

30

In the first place, those measures are improvements to vineyard management techniques within the meaning of Article 11(3)(c) of Regulation No 479/2008, in that they contribute to better harvests by protecting vines and grapes against pests. The appellant states that each year in the Czech Republic animals and birds cause extensive damage to vineyards. Animals nibble at the vine stocks, with a plant thus damaged bearing less fruit or none at all. Birds, in particular the common starling, descend on the grapes while they are ripening, thus causing a problem specific to vineyards in central Europe where starlings occur during that period. That can cause complete destruction of the crop or damage to the grapes, which are no longer capable of producing good quality wine. The grapes are also more vulnerable to diseases, which may then spread.

| 31 | That is why collective protection by fencing off vineyards and individual protection by means of posts to avoid individual vines being nibbled were installed in the period concerned. The greater part of the resources concerned by the financial correction at issue was allocated to protection against animals, as only about CZK 4000000 (approximately EUR 155938) was spent on protection against birds, in the form of active protection — the physical presence of persons in the vineyards, patrols and scaring off birds — and passive protection by means of repellent devices functioning mechanically, optically or acoustically. |
| --- | --- |

31

That is why collective protection by fencing off vineyards and individual protection by means of posts to avoid individual vines being nibbled were installed in the period concerned. The greater part of the resources concerned by the financial correction at issue was allocated to protection against animals, as only about CZK 4000000 (approximately EUR 155938) was spent on protection against birds, in the form of active protection — the physical presence of persons in the vineyards, patrols and scaring off birds — and passive protection by means of repellent devices functioning mechanically, optically or acoustically.

| 32 | In the second place, none of the measures intended to protect vineyards against damage caused by animals and birds can be equated with the normal renewal of vineyards which have come to the end of their natural life within the meaning of Article 11(3) of Regulation No 479/2008. |
| --- | --- |

32

In the second place, none of the measures intended to protect vineyards against damage caused by animals and birds can be equated with the normal renewal of vineyards which have come to the end of their natural life within the meaning of Article 11(3) of Regulation No 479/2008.

| 33 | In the third place, in accordance with Article 11(1) of Regulation No 479/2008, measures intended to protect vineyards against damage caused by animals and birds increase the competitiveness of wine producers. They make it possible to respond to the high demand for quality wines with attributes by limiting the competitive disadvantage caused by common starlings. The contested protection measure strengthened the competitiveness of Czech wine producers in the EU wine market by making it possible to triple Czech production of quality wines with attributes, which increased from 51000 hectolitres in 2005 to 121000 hectolitres in 2008 and reached 161000 hectolitres in 2012, the last year in which that measure was implemented. |
| --- | --- |

33

In the third place, in accordance with Article 11(1) of Regulation No 479/2008, measures intended to protect vineyards against damage caused by animals and birds increase the competitiveness of wine producers. They make it possible to respond to the high demand for quality wines with attributes by limiting the competitive disadvantage caused by common starlings. The contested protection measure strengthened the competitiveness of Czech wine producers in the EU wine market by making it possible to triple Czech production of quality wines with attributes, which increased from 51000 hectolitres in 2005 to 121000 hectolitres in 2008 and reached 161000 hectolitres in 2012, the last year in which that measure was implemented.

| 34 | The General Court thus erred in law by holding that the contested protection measure was not eligible for financing, in accordance with Article 11(3) of Regulation No 479/2008. |
| --- | --- |

34

The General Court thus erred in law by holding that the contested protection measure was not eligible for financing, in accordance with Article 11(3) of Regulation No 479/2008.

| 35 | The Commission submits that the first ground of appeal is not well founded, since the sole objective of the contested protection measure is to preserve the volume of production, not to adapt production to market demand or to increase the competitiveness of wine producers. |
| --- | --- |

35

The Commission submits that the first ground of appeal is not well founded, since the sole objective of the contested protection measure is to preserve the volume of production, not to adapt production to market demand or to increase the competitiveness of wine producers.

| 36 | Moreover, the measure cannot have the objective of compensating for the competitive disadvantage of winegrowers in central Europe caused by the presence of common starlings during the harvest. The objective of support for the restructuring and conversion of vineyards is not, as in the case of the Cohesion Fund, to compensate for disadvantages resulting from geographical location and natural conditions or to reduce regional differences but, on the contrary, to maintain and increase the competitiveness of wine producers throughout the European Union, regardless of the region in which they carry on their activities. |
| --- | --- |

36

Moreover, the measure cannot have the objective of compensating for the competitive disadvantage of winegrowers in central Europe caused by the presence of common starlings during the harvest. The objective of support for the restructuring and conversion of vineyards is not, as in the case of the Cohesion Fund, to compensate for disadvantages resulting from geographical location and natural conditions or to reduce regional differences but, on the contrary, to maintain and increase the competitiveness of wine producers throughout the European Union, regardless of the region in which they carry on their activities.

| 37 | Furthermore, measures for the restructuring and conversion of vineyards must contribute to varietal conversion and improvements to vineyard management techniques. Even supposing that the protection of production against pests makes it possible to produce wine in greater quantity and of better quality, that protection is nonetheless limited to maintaining the existing production volume. Bird-scaring techniques, which have been used for centuries, and methods of protection against animals do not therefore constitute a qualitative improvement of vineyard management. |
| --- | --- |

37

Furthermore, measures for the restructuring and conversion of vineyards must contribute to varietal conversion and improvements to vineyard management techniques. Even supposing that the protection of production against pests makes it possible to produce wine in greater quantity and of better quality, that protection is nonetheless limited to maintaining the existing production volume. Bird-scaring techniques, which have been used for centuries, and methods of protection against animals do not therefore constitute a qualitative improvement of vineyard management.

| 38 | Finally, in order to protect production against animals, Regulation No 479/2008 provides for financial participation in the cost of insurance premiums paid by producers, not exceeding 50% of the cost, in accordance with Article 14(2) of that regulation. In those circumstances, Article 11 of the regulation bears witness to the EU legislature’s wish to give financial support to increasing the competitiveness of wine producers, going beyond increasing or maintaining their production volumes. The rules in Article 14 of the regulation show that the EU legislature did not neglect measures limited to protecting production against pests. |
| --- | --- |

38

Finally, in order to protect production against animals, Regulation No 479/2008 provides for financial participation in the cost of insurance premiums paid by producers, not exceeding 50% of the cost, in accordance with Article 14(2) of that regulation. In those circumstances, Article 11 of the regulation bears witness to the EU legislature’s wish to give financial support to increasing the competitiveness of wine producers, going beyond increasing or maintaining their production volumes. The rules in Article 14 of the regulation show that the EU legislature did not neglect measures limited to protecting production against pests.

| 39 | In its reply, the Czech Republic counters that the Commission’s argument amounts to adding conditions to Article 11 of Regulation No 479/2008 that do not appear in the wording of that article. In particular, the article does not make eligibility for support subject to the use of a new technique of managing vineyards. All that matters is that the technique used, whether modern or ancient, allows the management of the vineyard to be improved. Moreover, the existence of another measure of protecting production against animals, such as that in Article 14 of the regulation, cannot affect the conditions of granting support covered by Article 11 of the regulation. |
| --- | --- |

39

In its reply, the Czech Republic counters that the Commission’s argument amounts to adding conditions to Article 11 of Regulation No 479/2008 that do not appear in the wording of that article. In particular, the article does not make eligibility for support subject to the use of a new technique of managing vineyards. All that matters is that the technique used, whether modern or ancient, allows the management of the vineyard to be improved. Moreover, the existence of another measure of protecting production against animals, such as that in Article 14 of the regulation, cannot affect the conditions of granting support covered by Article 11 of the regulation.

| 40 | In its rejoinder, the Commission states that it never claimed that only inventions may be regarded as ‘improvements to vineyard management techniques’. Existing or even age-old techniques may, in combination with new technologies and concepts, lead to increased competitiveness. However, the contested protection measure, in particular the scaring of birds in vineyards by emitting sounds or installing scarecrows, merely reproduces methods that have been known for centuries and makes no change to the grape variety or to vineyard management techniques. |
| --- | --- |

40

In its rejoinder, the Commission states that it never claimed that only inventions may be regarded as ‘improvements to vineyard management techniques’. Existing or even age-old techniques may, in combination with new technologies and concepts, lead to increased competitiveness. However, the contested protection measure, in particular the scaring of birds in vineyards by emitting sounds or installing scarecrows, merely reproduces methods that have been known for centuries and makes no change to the grape variety or to vineyard management techniques.

Findings of the Court

Findings of the Court

| 41 | By its first ground of appeal, the Czech Republic criticises paragraphs 83 to 90 of the judgment under appeal, in so far as the General Court found in those paragraphs that the wording of Article 11(3) of Regulation No 479/2008 clearly does not cover measures intended to protect vineyards against damage caused by animals and birds, such as the contested protection measure, and that it is not evident how those measures could serve to increase the competitiveness of wine producers. |
| --- | --- |

41

By its first ground of appeal, the Czech Republic criticises paragraphs 83 to 90 of the judgment under appeal, in so far as the General Court found in those paragraphs that the wording of Article 11(3) of Regulation No 479/2008 clearly does not cover measures intended to protect vineyards against damage caused by animals and birds, such as the contested protection measure, and that it is not evident how those measures could serve to increase the competitiveness of wine producers.

| 42 | It should be observed, as a preliminary point, that the contested protection measure cannot be classified as a measure for the ‘restructuring of vineyards’ within the meaning of Article 11 of Regulation No 479/2008. It follows that the examination of the merits of the first ground of appeal requires only an assessment of whether that measure may be classified as a measure of ‘restructuring of vineyards’ within the meaning of that provision. |
| --- | --- |

42

It should be observed, as a preliminary point, that the contested protection measure cannot be classified as a measure for the ‘restructuring of vineyards’ within the meaning of Article 11 of Regulation No 479/2008. It follows that the examination of the merits of the first ground of appeal requires only an assessment of whether that measure may be classified as a measure of ‘restructuring of vineyards’ within the meaning of that provision.

| 43 | It follows from the need for uniform application of EU law and from the principle of equality that the terms of a provision of EU law which makes no express reference to the law of the Member States for the purpose of determining its meaning and scope must normally be given an autonomous and uniform interpretation throughout the European Union, having regard not only to its wording but also to the context of the provision and the objective pursued by the legislation in question (see, inter alia, judgments of 18 January 1984, Ekro, 327/82, EU:C:1984:11, paragraph 11, and of 18 May 2017, Hummel Holding, C‐617/15, EU:C:2017:390, paragraph 22). |
| --- | --- |

43

It follows from the need for uniform application of EU law and from the principle of equality that the terms of a provision of EU law which makes no express reference to the law of the Member States for the purpose of determining its meaning and scope must normally be given an autonomous and uniform interpretation throughout the European Union, having regard not only to its wording but also to the context of the provision and the objective pursued by the legislation in question (see, inter alia, judgments of 18 January 1984, Ekro, 327/82, EU:C:1984:11, paragraph 11, and of 18 May 2017, Hummel Holding, C‐617/15, EU:C:2017:390, paragraph 22).

| 44 | A literal interpretation of the term ‘restructuring’ demonstrates the ambiguity of the term. In everyday language, restructuring denotes the act of reorganising on new principles or with new structures an entity that is not considered to be sufficiently well performing. Restructuring of a vineyard can thus derive from changes both to the principles of its management and to the land on which the wine-growing activity is carried on. |
| --- | --- |

44

A literal interpretation of the term ‘restructuring’ demonstrates the ambiguity of the term. In everyday language, restructuring denotes the act of reorganising on new principles or with new structures an entity that is not considered to be sufficiently well performing. Restructuring of a vineyard can thus derive from changes both to the principles of its management and to the land on which the wine-growing activity is carried on.

| 45 | Where, as in the present case, a provision of EU law is ambiguous and hence open to several interpretations, preference must be given to the interpretation which ensures that the provision retains its effectiveness by interpreting it to that end in the light of the purposes of the legislation of which it forms part (see, to that effect, judgments of 19 June 1980, Roudolff, 803/79, EU:C:1980:166, paragraph 7, and of 24 February 2000, Commission v France, C‐434/97, EU:C:2000:98, paragraph 21). |
| --- | --- |

45

Where, as in the present case, a provision of EU law is ambiguous and hence open to several interpretations, preference must be given to the interpretation which ensures that the provision retains its effectiveness by interpreting it to that end in the light of the purposes of the legislation of which it forms part (see, to that effect, judgments of 19 June 1980, Roudolff, 803/79, EU:C:1980:166, paragraph 7, and of 24 February 2000, Commission v France, C‐434/97, EU:C:2000:98, paragraph 21).

| 46 | According to Article 11 of Regulation No 479/2008, the purpose of measures for the restructuring of vineyards is to increase the competitiveness of wine producers. |
| --- | --- |

46

According to Article 11 of Regulation No 479/2008, the purpose of measures for the restructuring of vineyards is to increase the competitiveness of wine producers.

| 47 | In the light of that objective, a comparatively modest measure, limited to managing the vines better by protecting the plants by various means, which leads to a significant increase in competitiveness for growers is capable of being classified as a restructuring measure. In particular, contrary to the Commission’s submission, it does not follow from the wording of Article 11 of Regulation No 479/2008 that measures having recourse to existing or even age-old techniques can be eligible for support for the restructuring of vineyards only on condition that they are combined with new technologies and concepts. |
| --- | --- |

47

In the light of that objective, a comparatively modest measure, limited to managing the vines better by protecting the plants by various means, which leads to a significant increase in competitiveness for growers is capable of being classified as a restructuring measure. In particular, contrary to the Commission’s submission, it does not follow from the wording of Article 11 of Regulation No 479/2008 that measures having recourse to existing or even age-old techniques can be eligible for support for the restructuring of vineyards only on condition that they are combined with new technologies and concepts.

| 48 | On the contrary, a specific assessment must be made of the improvement of vineyard management techniques, and that requirement must be assessed by reference to the conditions of vineyard management that are current at the time when the support is applied for. |
| --- | --- |

48

On the contrary, a specific assessment must be made of the improvement of vineyard management techniques, and that requirement must be assessed by reference to the conditions of vineyard management that are current at the time when the support is applied for.

| 49 | It is true that Article 6(2) of Commission Regulation (EC) No 555/2008 of 27 June 2008 laying down detailed rules for implementing Council Regulation (EC) No 479/2008 on the common organisation of the market in wine as regards support programmes, trade with third countries, production potential and on controls in the wine sector (OJ 2008 L 170, p. 1), in the version of Commission Implementing Regulation (EU) No 202/2013 of 8 March 2013 (OJ 2013 L 67, p. 10), excludes from support for restructuring of vineyards measures intended to protect vineyards against damage by game, birds or hail. It must, however, be observed that Implementing Regulation No 202/2013, which entered into force on 12 March 2013, is inapplicable ratione temporis to the facts of the present dispute. It cannot therefore provide any indication for the interpretation of Article 11 of Regulation No 479/2008. |
| --- | --- |

49

It is true that Article 6(2) of Commission Regulation (EC) No 555/2008 of 27 June 2008 laying down detailed rules for implementing Council Regulation (EC) No 479/2008 on the common organisation of the market in wine as regards support programmes, trade with third countries, production potential and on controls in the wine sector (OJ 2008 L 170, p. 1), in the version of Commission Implementing Regulation (EU) No 202/2013 of 8 March 2013 (OJ 2013 L 67, p. 10), excludes from support for restructuring of vineyards measures intended to protect vineyards against damage by game, birds or hail. It must, however, be observed that Implementing Regulation No 202/2013, which entered into force on 12 March 2013, is inapplicable ratione temporis to the facts of the present dispute. It cannot therefore provide any indication for the interpretation of Article 11 of Regulation No 479/2008.

ratione temporis

| 50 | In the present case, as submitted by the Czech Republic in its pleadings, the contested protection measure made it possible to triple Czech production of quality wines with attributes, which increased from 51000 hectolitres in 2005 to 161000 hectolitres in 2012, the last year in which that measure was applied. |
| --- | --- |

50

In the present case, as submitted by the Czech Republic in its pleadings, the contested protection measure made it possible to triple Czech production of quality wines with attributes, which increased from 51000 hectolitres in 2005 to 161000 hectolitres in 2012, the last year in which that measure was applied.

| 51 | Since the Commission has not challenged those assertions or shown that there was no consumer demand for such wines, it must be considered that the contested protection measure contributed to improving the competitiveness of Czech wine producers, as the Advocate General observes in points 76, 77 and 81 of her Opinion. |
| --- | --- |

51

Since the Commission has not challenged those assertions or shown that there was no consumer demand for such wines, it must be considered that the contested protection measure contributed to improving the competitiveness of Czech wine producers, as the Advocate General observes in points 76, 77 and 81 of her Opinion.

| 52 | So, as Regulation No 479/2008 is silent as to the eligibility for support of measures to protect vineyards inter alia against damage caused by game and birds, it is apparent that there is no legal basis for refusing to allow the Czech Republic to include the contested protection measure among measures for the restructuring and conversion of vineyards. |
| --- | --- |

52

So, as Regulation No 479/2008 is silent as to the eligibility for support of measures to protect vineyards inter alia against damage caused by game and birds, it is apparent that there is no legal basis for refusing to allow the Czech Republic to include the contested protection measure among measures for the restructuring and conversion of vineyards.

| 53 | It follows that the General Court erred in law by finding that the wording of Article 11(3) of Regulation No 479/2008 did not cover measures intended to protect vineyards against damage caused by animals and birds, such as the contested protection measure. |
| --- | --- |

53

It follows that the General Court erred in law by finding that the wording of Article 11(3) of Regulation No 479/2008 did not cover measures intended to protect vineyards against damage caused by animals and birds, such as the contested protection measure.

| 54 | The first ground of appeal must therefore be declared well founded. |
| --- | --- |

54

The first ground of appeal must therefore be declared well founded.

| 55 | As that ground of appeal has been allowed, the judgment under appeal must be set aside, without there being any need to consider the second and third grounds of appeal. |
| --- | --- |

55

As that ground of appeal has been allowed, the judgment under appeal must be set aside, without there being any need to consider the second and third grounds of appeal.

The action before the General Court

The action before the General Court

| 56 | The first paragraph of Article 61 of the Statute of the Court of Justice of the European Union provides that, if an appeal is well founded and the Court sets aside the decision of the General Court, it may itself give final judgment in the case, where the state of the proceedings so permits, or refer the case back to the General Court for judgment. |
| --- | --- |

56

The first paragraph of Article 61 of the Statute of the Court of Justice of the European Union provides that, if an appeal is well founded and the Court sets aside the decision of the General Court, it may itself give final judgment in the case, where the state of the proceedings so permits, or refer the case back to the General Court for judgment.

| 57 | In the present case, the Court should give final judgment in the case, as the state of the proceedings so permits. |
| --- | --- |

57

In the present case, the Court should give final judgment in the case, as the state of the proceedings so permits.

| 58 | As the Advocate General states in point 65 of her Opinion, the principle of legal certainty requires that rules must enable those concerned to know precisely the extent of the obligations imposed on them, in particular where there is a risk of financial consequences. The Commission thus cannot choose, at the time of the clearance of EAGF accounts, an interpretation which departs from the usual meaning of the words used and is not necessary (see, to that effect, judgment of 1 October 1998, Ireland v Commission, C‐238/96, EU:C:1998:451, paragraph 81 and the case-law cited). It follows from the considerations set out in paragraphs 42 to 52 above that the Commission’s interpretation in the present case departs from the usual meaning of the words of Article 11(3) of Regulation No 479/2008, in so far as the Commission considered that the contested protection measure was not permitted in connection with the programme inter alia of restructuring of vineyards. |
| --- | --- |

58

As the Advocate General states in point 65 of her Opinion, the principle of legal certainty requires that rules must enable those concerned to know precisely the extent of the obligations imposed on them, in particular where there is a risk of financial consequences. The Commission thus cannot choose, at the time of the clearance of EAGF accounts, an interpretation which departs from the usual meaning of the words used and is not necessary (see, to that effect, judgment of 1 October 1998, Ireland v Commission, C‐238/96, EU:C:1998:451, paragraph 81 and the case-law cited). It follows from the considerations set out in paragraphs 42 to 52 above that the Commission’s interpretation in the present case departs from the usual meaning of the words of Article 11(3) of Regulation No 479/2008, in so far as the Commission considered that the contested protection measure was not permitted in connection with the programme inter alia of restructuring of vineyards.

| 59 | The first plea put forward by the Czech Republic at first instance, alleging in particular a breach of the principle of legal certainty, must therefore be allowed, and the contested decision must be annulled. |
| --- | --- |

59

The first plea put forward by the Czech Republic at first instance, alleging in particular a breach of the principle of legal certainty, must therefore be allowed, and the contested decision must be annulled.

Costs

Costs

| 60 | Under Article 184(2) of the Rules of Procedure of the Court of Justice, where the appeal is well founded and the Court itself gives final judgment in the case, the Court is to make a decision as to costs. |
| --- | --- |

60

Under Article 184(2) of the Rules of Procedure of the Court of Justice, where the appeal is well founded and the Court itself gives final judgment in the case, the Court is to make a decision as to costs.

| 61 | Article 138(1) of those rules, which is applicable to appeal proceedings by virtue of Article 184(1) of the rules, provides that 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 Czech Republic has been successful on appeal and the action before the General Court has been upheld, the Commission must, in accordance with the form of order sought by the Czech Republic, be ordered to bear its own costs and to pay those incurred by the Czech Republic both at first instance and on appeal. |
| --- | --- |

61

Article 138(1) of those rules, which is applicable to appeal proceedings by virtue of Article 184(1) of the rules, provides that 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 Czech Republic has been successful on appeal and the action before the General Court has been upheld, the Commission must, in accordance with the form of order sought by the Czech Republic, be ordered to bear its own costs and to pay those incurred by the Czech Republic both at first instance and on appeal.

| | On those grounds, the Court (Third Chamber) hereby: |
| --- | --- |

On those grounds, the Court (Third Chamber) hereby:

| | 1. | Sets aside the judgment of the General Court of the European Union of 20 October 2016, Czech Republic v Commission (T‐141/15, not published, EU:T:2016:621); |
| --- | --- | --- |

1.

1.

Sets aside the judgment of the General Court of the European Union of 20 October 2016, Czech Republic v Commission (T‐141/15, not published, EU:T:2016:621);

Sets aside the judgment of the General Court of the European Union of 20 October 2016, Czech Republic v Commission (T‐141/15, not published, EU:T:2016:621);

| | 2. | Annuls Commission Implementing Decision (EU) 2015/103 of 16 January 2015 excluding from European Union financing certain expenditure incurred by the Member States under the European Agricultural Guarantee Fund (EAGF) and under the European Agricultural Fund for Rural Development (EAFRD), in so far as it excludes expenditure by the Czech Republic under the EAGF on the measure to protect vineyards against damage caused by animals and birds for 2010 to 2012 in the total amount of EUR 2 123 199.04; |
| --- | --- | --- |

2.

2.

Annuls Commission Implementing Decision (EU) 2015/103 of 16 January 2015 excluding from European Union financing certain expenditure incurred by the Member States under the European Agricultural Guarantee Fund (EAGF) and under the European Agricultural Fund for Rural Development (EAFRD), in so far as it excludes expenditure by the Czech Republic under the EAGF on the measure to protect vineyards against damage caused by animals and birds for 2010 to 2012 in the total amount of EUR 2 123 199.04;

Annuls Commission Implementing Decision (EU) 2015/103 of 16 January 2015 excluding from European Union financing certain expenditure incurred by the Member States under the European Agricultural Guarantee Fund (EAGF) and under the European Agricultural Fund for Rural Development (EAFRD), in so far as it excludes expenditure by the Czech Republic under the EAGF on the measure to protect vineyards against damage caused by animals and birds for 2010 to 2012 in the total amount of EUR 2 123 199.04;

| | 3. | Orders the European Commission to bear its own costs and to pay those incurred by the Czech Republic both in the proceedings at first instance and on the present appeal. |
| --- | --- | --- |

3.

3.

Orders the European Commission to bear its own costs and to pay those incurred by the Czech Republic both in the proceedings at first instance and on the present appeal.

Orders the European Commission to bear its own costs and to pay those incurred by the Czech Republic both in the proceedings at first instance and on the present appeal.

| | [Signatures] |
| --- | --- |

[Signatures]

---

(
  *1
  )	Language of the case: Czech.

*1