**Case C-15/06 P**

**Regione Siciliana**

**v**

**Commission of the European Communities**

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

Judgment of the Court (Fifth Chamber), 22 March 2007

Summary of the Judgment

1.     *Actions for annulment – Natural or legal persons – Measures of direct and individual concern to them*

*(Art. 230, fourth para., EC)*

2.     *European Communities – Judicial review of the legality of the acts of the institutions – Need for natural or legal persons
to have recourse to a reference for a preliminary ruling on validity*

*(Arts 10 EC, 230, fourth para., EC and 234 EC)*

1.     On the basis of the fourth paragraph of Article 230 EC, a local or regional entity may, to the extent that it has legal personality
under national law, institute proceedings against a decision addressed to it or against a decision which, although in the
form of a regulation or a decision addressed to another person, is of direct and individual concern to it. The condition
that the decision forming the subject-matter of the proceedings must be of direct concern to a natural or legal person requires
the contested Community measure to affect directly the legal situation of the individual and leave no discretion to its addressees,
who are entrusted with the task of implementing it, such implementation being purely automatic and resulting from Community
rules without the application of other intermediate rules.

The designation of a regional or local entity as the authority responsible for the implementation of a project of the European
Regional Development Fund does not imply that that entity is itself entitled to the financial assistance in question. The
fact that, in the annex to the decision to grant that assistance, that regional entity is referred to as the authority responsible
for the application for financial assistance is also irrelevant. The position of ‘authority responsible for the application’,
to which the annex to the decision to grant refers, does not have the effect of putting that authority in a direct relationship
with the Community assistance, which the same decision states moreover was applied for by the government of a Member State
and granted to the latter.

(see paras 29, 31-32, 36)

2.     Individuals are entitled to effective judicial protection of the rights they derive from the Community legal order. The judicial
protection of natural or legal persons who are unable, by reason of the conditions for admissibility laid down in the fourth
paragraph of Article 230 EC, directly to challenge Community measures must be guaranteed effectively by a right of action
before national courts. Those are required, in accordance with the principle of cooperation in good faith laid down by Article 10 EC,
so far as possible, to interpret and apply national procedural rules governing the exercise of rights of action in a way that
enables those persons to challenge before the courts the legality of any decision or other national measure relative to the
application to them of a Community act by pleading the invalidity of such an act and by asking them to make a reference to
the Court of Justice for a preliminary ruling on validity.

(see para. 39)

JUDGMENT OF THE COURT (Fifth Chamber)

22 March 2007 (*)

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

In Case C‐15/06 P,

APPEAL under Article 56 of the Statute of the Court of Justice, lodged on 4 January 2006,

**Regione Siciliana,** represented by G. Aiello, avvocato dello Stato, with an address for service in Luxembourg,

appellant,

the other party to the proceedings being:

**Commission of the European Communities,** represented by E. de March and L. Flynn, acting as Agents, assisted by G. Faedo, avvocatessa, with an address for service
in Luxembourg,

defendant at first instance,

THE COURT (Fifth Chamber),

composed of R. Schintgen, President of the Chamber, A. Borg Barthet and M. Ilešič (Rapporteur), Judges,

Advocate General: J. Mazák,

Registrar: L. Hewlett, Principal Administrator,

having regard to the written procedure and further to the hearing on 17 January 2007,

having decided, after hearing the Advocate General, to proceed to judgment without an Opinion,

gives the following

**Judgment**

1       In this appeal, the Regione Siciliana asks the Court of Justice to set aside the judgment of the Court of First Instance of
the European Communities of 18 October 2005 in Case T‐60/03 *Regione Siciliana* v *Commission* [2005] ECR II‐4139 (‘the judgment under appeal’), dismissing as inadmissible its action for annulment of Commission Decision
C (2002) 4905 of 11 December 2002 relating to the cancellation of the aid granted to the Italian Republic by Commission Decision
C (87) 2090 026 of 17 December 1987 concerning the provision of assistance by the European Regional Development Fund as infrastructure
investment, for a sum no less than EUR 15 million, in Italy (region: Sicily), and to the recovery of the advance on that assistance
made by the Commission (‘the contested decision’).

**Legal context**

2       In order to strengthen economic and social cohesion, within the meaning of Article 158 EC, the Council adopted Regulation
(EEC) No 2052/88 of 24 June 1988 on the tasks of the Structural Funds and their effectiveness and on coordination of their
activities between themselves and with the operations of the European Investment Bank and the other existing financial instruments
(OJ 1988 L 185, p. 9), as amended by Council Regulation (EEC) No 2081/93 of 20 July 1993 (OJ 1993 L 93, p. 5) (‘Regulation
No 2052/88’), and Regulation (EEC) No 4253/88 of 19 December 1988 laying down provisions for implementing Regulation No 2052/88
as regards coordination of the activities of the different Structural Funds between themselves and with the operations of
the European Investment Bank and the other existing financial instruments (OJ 1988 L 374, p. 1), as amended by Council Regulation
(EEC) No 2082/93 of 20 July 1993 (OJ 1993 L 193, p. 20; ‘Regulation No 4253/88’).

3       The first subparagraph of Article 4(1) of Regulation No 2052/88 provides:

‘Community operations shall be such as to complement or contribute to corresponding national operations. They shall be established
through close consultations between the Commission, the Member State concerned and the competent authorities and bodies ...
designated by the Member State at national, regional, local or other level, with all parties acting as partners in pursuit
of a common goal. These consultations shall hereinafter be referred to as the “partnership”. The partnership shall cover the
preparation and financing, as well as the *ex ante* appraisal, monitoring and *ex post* evaluation of operations.’

4       Under the title ‘Additionality’, Article 9(1) of Regulation No 4253/88 provides that ‘[i]n order to achieve a genuine economic
impact, Structural Funds ... appropriations may not replace public expenditure on structural or comparable expenditure undertaken
by the Member State in the whole of the territory eligible under an objective’.

5       Under Article 24 of the same regulation:

‘1.      If an operation or measure appears to justify neither part nor the whole of the assistance allocated, the Commission shall
conduct a suitable examination of the case in the framework of the partnership, in particular requesting that the Member State
or authorities designated by it to implement the operation submit their comments within a specified period of time.

2.      Following this examination, the Commission may reduce or suspend assistance in respect of the operation or a measure concerned
if the examination reveals an irregularity or a significant change affecting the nature or conditions for the implementation
of the operation or measure for which the Commission’s approval has not been sought.

3.      Any sum received unduly and to be recovered shall be repaid to the Commission. ...’

**Facts giving rise to the dispute**

6       By request received at the Commission on 23 September 1986, the Italian Republic sought the grant of ERDF assistance towards
infrastructure investment in Sicily, for the third part of construction work on a dam across the Gibbesi. The request provided
for the construction of works connected to the main body of the dam and indicated its dual purpose: the water was to be used
to ensure a reliable water supply for the industrial centre yet to be built in Licata and for the irrigation of some 1 000
hectares of agricultural land.

7       By Decision C (87) 2090 026 (‘the decision to grant’), the Commission granted the Italian Republic ERDF assistance of the
maximum sum of ITL 94 490 620 056 (approximately EUR 48.8 million). In all the Italian Republic received an advance of ITL 75 592 496 044
(approximately EUR 39 million) on that assistance.

8       By letter of 23 May 2000, the Italian authorities indicated to the Commission that the work on the main body of the dam had
been complete since 11 November 1992, but that the dam was not, however, operational. In the same letter, the Italian authorities
sent the Commission a note from the Regione Siciliana of 17 January 2000, in which the latter formally undertook to have the
necessary work done in order to make the dam operational and capable of being put into use.

9       By letter of 29 March 2001 the Italian authorities submitted to the Commission their claim for payment of the balance and
forwarded a note of 5 March 2001 from the Regione Siciliana. That note made it clear that the Ente minerario siciliano (the
Sicilian Mines Authority, the project supervisor for the dam) had been wound up, that it had proved impossible to build the
industrial centre of Licata and that, therefore, the original destined use of the dam waters had to be changed. A study had
therefore been ordered with a view to defining the potential uses of the reservoir water.

10     On the basis of those facts, the Commission decided to initiate the examination provided for by Article 24 of Regulation No 4253/88
and by the decision to grant. By letter of 26 September 2001 it sent to the Italian Republic the items of evidence capable
of constituting irregularities and of justifying a possible decision to cancel the assistance. It requested the Italian authorities,
the presidency of the Regione Siciliana and the end‐beneficiary to submit their observations within a period of two months.

11     By letter of 29 November 2001, the Italian Republic forwarded the Regione Siciliana’s observations to the Commission. It was
clear from those that no date, even a provisional one, had been fixed for bringing the project into operation.

12     By letter of 21 February 2002, the Regione Siciliana submitted other information about the project’s progress together with
a timetable showing the predicted completion of the works before 2 February 2003.

13     The Commission took the view that that information amounted to confirmation of various irregularities within the meaning of
Article 24 of Regulation No 4253/88 and on 11 December 2002 it adopted the contested decision. By the contested decision the
Commission cancelled the assistance, withholding the sum reserved in order to pay the balance and demanding repayment of the
sums paid by way of advances.

**Procedure before the Court of First Instance and the judgment under appeal**

14     On 20 February 2003, the Regione Siciliana brought an action for annulment of the contested decision. By the judgment under
appeal, the Court of First Instance dismissed the action as unfounded.

15     Before ruling on the substance, the Court of First Instance dismissed the objection of inadmissibility raised by the Commission
on the ground that the Regione Siciliana lacked standing to bring proceedings. The Commission did not deny that the appellant
was individually concerned by the contested decision within the meaning of the fourth paragraph of Article 230 EC but maintained
that it was not directly concerned by it.

16     The essential grounds of the judgment under appeal regarding the admissibility of the action are the following:

‘47      By revoking the assistance in its entirety, the [contested] decision has principally ... rescinded the Commission’s obligation
to pay the balance of the assistance (EUR 9.8 million) and demanded repayment of the advances paid to the Italian Republic
and passed on to the applicant (approximately EUR 39 million).

48      The Court considers that such a decision must necessarily have directly affected the applicant’s legal situation in several
ways. In addition, the [contested] decision leaves the Italian authorities no discretion, its implementation being purely
automatic and resulting from Community rules alone without the application of other intermediate rules.

...

53      With regard first of all to the alteration of the applicant’s legal situation, the [contested] decision has had the initial
direct and immediate effect of changing the applicant’s financial situation by depriving the applicant of the balance of the
assistance (approximately EUR 9.8 million) remaining to be paid by the Commission. The unpaid balance of the assistance will
not be paid to the Italian Republic by the Commission, for the assistance has been cancelled. The Italian authorities will
not, therefore, be able to pay it on to the applicant. ...

54      The [contested] decision also directly alters the applicant’s legal situation with regard to the duty to repay the sums paid
by way of advances (approximately EUR 39 million). In point of fact, the effect of the [contested] decision is directly to
change the applicant’s legal status from that of unarguably being a creditor in respect of those sums to that of debtor, at
least potentially. ...

...

56      As regards, next, the criterion that the [contested] decision should be automatically applicable, it may be noted that it
is automatically and of itself that the [contested] decision produces the twofold effect on the applicant mentioned in paragraphs 53 and 54
above.

57      That twofold effect of the [contested] decision follows from Community law alone, namely, the provisions of the third indent
of Article 211 EC in conjunction with the fourth paragraph of Article 249 EC. In this connection the national authorities
enjoy no discretion in their duty to implement the decision.

58      The conclusions reached in paragraphs 56 and 57 above are not shaken by the Commission’s argument that the national authorities
may in theory decide to release the applicant from the financial consequences that the [contested] decision entails for it
directly, by funding out of State resources the balance of the Community assistance withheld, on the one hand, and the repayment
of the Community advances received by the applicant, on the other, or just one of those two.

59      A national decision providing funding of that magnitude would not in fact mean that the Commission’s decision ceased to apply
automatically. Legally speaking, the national decision would remain extraneous to the application in Community law of the
[contested] decision. Its effect would be to put the applicant back in the situation it occupied before the [contested] decision
was adopted, by bringing about in its turn a second alteration of the applicant’s legal situation which was changed in the
first place, and automatically, by the [contested] decision. This second alteration of the applicant’s legal situation would
be the consequence of the national decision alone and not of the implementation of the [contested] decision.’

**Main appeal and cross-appeal**

17     By its appeal, the appellant claims that the Court should set aside the judgment under appeal and declare that the contested
decision is invalid. To that end, it relies on a number of grounds of challenge alleging errors of law and incoherent reasoning
which, it claims, vitiate the Court of First Instance’s assessment of the substance of the dispute.

18     The Commission not only contends that the appeal should be dismissed but that the judgment under appeal should be set aside.
In regard to the latter claim, it has lodged a cross-appeal in which it maintains that the Court of First Instance infringed
the fourth paragraph of Article 230 EC and erred in its reasoning when it dismissed the objection of inadmissibility that
the Commission had brought before it.

19     Since the cross-appeal relates to the admissibility of the action brought by the Regione Siciliana before the Court of First
Instance, an issue which precedes the questions of substance raised by the main appeal, it is necessary to examine it first.

**Cross-appeal**

*Arguments of the parties*

20     In its cross-appeal, the Commission contends that the Court of First Instance’s reasoning as to the admissibility of the action
starts from a false premiss, namely, that the decision to grant puts the Regione Siciliana directly in the position of a creditor
in respect of the assistance granted. According to the Commission, the Regione Siciliana’s ability to receive ERDF assistance
for the dam on the Gibbesi was dependent on the autonomous decisions of the Italian Republic.

21     In addition, even if it were to be admitted that the Regione Siciliana was effectively a creditor of the Community assistance,
such a situation arose from provisions or decisions of national law.

22     According to the Commission, if the Court were to confirm the interpretation adopted by the Court of First Instance in the
judgment under appeal, this would have unacceptable consequences from the point of view of the judicial protection of recipients
of the Structural Funds. Any person or entity recognised by law which is an end‐beneficiary of Structural Funds would be directly
concerned by the Commission decisions regarding the funds granted.

23     The judgment under appeal is, moreover, contradictory. Thus, the Court of First Instance found that the alterations to the
appellant’s legal situation arose directly and automatically from the contested decision whilst also recognising that the
Italian authorities played an indispensable role. In addition, by using at paragraph 54 of the judgment under appeal the expression
‘debtor, at least potentially’, the Court of First Instance accepted that the Italian Republic had a discretion concerning
whether or not to pass on to the appellant the effects of the contested decision.

24     According to the appellant, that decision directly affected its legal position, since it went from being the recipient of
assistance to a debtor required to pay back advances received by way of assistance.

25     In fact, the Italian authorities enjoyed no discretion in implementing the contested decision. In that regard, the Court of
First Instance correctly stated that a possible financial reorganisation at the initiative of the Italian Republic would be
the result of a national decision extraneous to the obligation to implement the contested decision.

26     The appellant states next that the projected dam across the Gibbesi falls within its powers and that in the annex to the decision
to grant it is referred to as the body responsible for the application for financial assistance.

27     It also points out that the contested decision has prevented it from exercising its powers as it understands them. That decision
obliged it in particular to cease to apply the legislation on the project and to activate the procedure for the recovery of
the aid from recipients.

28     At the hearing, the appellant again pointed out that a declaration that its action was inadmissible would constitute a denial
of justice, since, as an infra‐State entity, it cannot bring an action against the Italian Republic before the national courts.

*Findings of the Court*

29     On the basis of the fourth paragraph of Article 230 EC, a local or regional entity may, to the extent that it has – like the
Regione Siciliana – legal personality under national law, institute proceedings against a decision addressed to it or against
a decision which, although in the form of a regulation or a decision addressed to another person, is of direct and individual
concern to it (see Case C‐452/98 *Nederlandse Antillen* v *Council* [2001] ECR I‐8973, paragraph 51; Case C‐142/00 P *Commission* v *Nederlandse Antillen* [2003] ECR I‐3483, paragraph 59; and Case C‐417/04 P *Regione Siciliana* v *Commission* [2006] ECR I‐3881, paragraph 24).

30     In the present case, the Court of First Instance limited its examination to whether the appellant was directly concerned by
the contested decision, the Commission not having disputed that that decision was of individual concern to the appellant.

31     In accordance with settled case-law, the condition that the decision forming the subject-matter of the proceedings must be
of direct concern to a natural or legal person, as laid down in the fourth paragraph of Article 230 EC, requires the contested
Community measure to affect directly the legal situation of the individual and leave no discretion to its addressees, who
are entrusted with the task of implementing it, such implementation being purely automatic and resulting from Community rules
without the application of other intermediate rules (see, in particular, Case C‐404/96 P *Glencore Grain* v *Commission* [1998] ECR I‐2435, paragraph 41; Case C‐486/01 P *National Front* v *Parliament* [2004] ECR I‐6289, paragraph 34; and *Regione Siciliana* v *Commission*, paragraph 28).

32     As the Court of Justice has already held at paragraphs 29 and 30 of its judgment in *Regione Siciliana* v *Commission*, the designation of a regional or local entity such as the Regione Siciliana as the authority responsible for the implementation
of an ERDF project does not imply that that entity is itself entitled to assistance. According to the Court, nothing in the
documents in the case giving rise to that judgment supports the conclusion that the appellant was directly concerned within
the meaning of the fourth paragraph of Article 230 EC in its capacity as the authority responsible for the implementation
of the project.

33     The Court went on to say that that analysis is not weakened by the first subparagraph of Article 4(1) of Regulation No 2052/88
and Article 9(1) of Regulation No 4253/88. In fact, those articles, which set out the principle that Community financial assistance
is complementary to national assistance, are not relevant to cases in which the Commission has closed financial assistance
(*Regione Siciliana* v *Commission*, paragraph 31).

34     Those considerations also fall to be applied in the present case.

35     They are in no way called into doubt by the Regione Siciliana’s argument that in the Italian legal system it enjoys more extensive
competences in those matters to which the dam project across the Gibbesi relates than in the sphere of the motorway network,
to which the project concerned by the judgment in *Regione* *Siciliana* v *Commission* relates. In fact, that distinction drawn from domestic law cannot have any effect on whether the appellant is directly concerned.

36     The fact that, in the annex to the decision to grant, the Regione Siciliana is referred to as the authority responsible for
the application for financial assistance is also without relevance even though, in the case which *Regione Siciliana* v *Commission* decided, it was referred to as the authority responsible for the implementation of the project. In fact, the position of
‘authority responsible for the application’, to which the annex to the decision to grant refers, does not have the effect
of putting the appellant in a direct relationship with the Community assistance, which the same decision states moreover was
applied for by the Italian Government and granted to the Italian Republic.

37     In the absence of any other factor which may, regarding the condition of direct concern, distinguish significantly the present
case from that considered in *Regione Siciliana* v *Commission*, it must be held that the Court’s assessment in that regard in that judgment can be transposed in its entirety to the present
case.

38     Consequently, the Court of First Instance erred in law in considering that the Regione Siciliana was directly concerned by
the contested decision. Therefore, the judgment under appeal must be set aside.

39     Contrary to the appellant’s assertion, that conclusion does not constitute a denial of justice. In that regard, it is sufficient
to bear in mind that individuals are entitled to effective judicial protection of the rights they derive from the Community
legal order (see Case C‐263/02 P *Commission* v *Jégo-Quéré* [2004] ECR I‐3425, paragraph 29 and the case‐law cited). The judicial protection of natural or legal persons who are unable,
by reason of the conditions for admissibility laid down in the fourth paragraph of Article 230 EC, to challenge directly Community
measures of the kind in the present case, must be guaranteed effectively by a right of action before national courts. Those
are required, in accordance with the principle of cooperation in good faith laid down by Article 10 EC, so far as possible,
to interpret and apply national procedural rules governing the exercise of rights of action in a way that enables those persons
to challenge before the courts the legality of any decision or other national measure relative to the application to them
of a Community act such as that at issue, by pleading the invalidity of such an act and by asking them to make a reference
to the Court of Justice for a preliminary ruling on validity (*Commission* v *Jégo-Quéré*, paragraphs 30 to 32 and the case‐law cited).

**Admissibility of the Regione Siciliana’s action**

40     Under the first paragraph of Article 61 of the Statute of the Court of Justice, the Court, where it quashes a decision of
the Court of First Instance, may either itself give final judgment in the matter, where the state of the proceedings so permits,
or refer the case back to the Court of First Instance for final judgment.

41     In the present case, the Court considers that it has all the elements necessary for it to rule on the admissibility of the
Regione Siciliana’s action before the Court of First Instance. In fact, the arguments relied on by the Regione Siciliana in
that respect correspond to those which it developed in the context of its observations on the Commission’s cross‐appeal and
rely substantially on the contention, which has already been raised, that the appellant is directly concerned by the contested
decision, since as a result of that decision it went from being the recipient of assistance to being a debtor required to
pay back advances received under that assistance.

42     For the reasons set out at paragraphs 31 to 38 above, the Regione Siciliana cannot be considered to be directly concerned
by the contested decision.

43     In those circumstances, the Regione Siciliana’s action before the Court of First Instance must be dismissed as inadmissible.

**Main appeal**

44     In the light of the inadmissibility of the Regione Siciliana’s action before the Court of First Instance, the Regione Siciliana’s
appeal against the judgment under appeal to the extent that it ruled on the substance of that action has become devoid of
purpose, and therefore no longer needs to be considered.

**Costs**

45     Under Article 69(2) of the Rules of Procedure of the Court of Justice, which is applicable to appeals by virtue of Article
118 thereof, the unsuccessful party is to be ordered to pay the costs if they are applied for in the successful party’s pleadings.
Under Article 69(6) of those rules, also applicable to appeals by virtue of Article 118, where a case does not proceed to
judgment, the costs are at the discretion of the Court.

46     Since the Commission has applied for costs and the Regione Siciliana has been unsuccessful in the cross-appeal, the Regione Siciliana
must be ordered to pay the costs relating to the cross-appeal.

47     The finding that the main appeal is devoid of purpose, as a result of the upholding of the Commission’s cross-appeal, means
that the Regione Siciliana must also be ordered to pay the costs of the main appeal.

48     Since the Commission has applied for costs of the procedure before the Court of First Instance and the action before that
Court has been dismissed as inadmissible, the Regione Siciliana must be ordered to pay the costs relating to the procedure
at first instance.

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

1.      **Sets aside the judgment of the Court of First Instance of the European Communities of 18 October 2005 in Case T‐60/03 Regione Siciliana v Commission ;**

2.      **Rejects as inadmissible the Regione Siciliana’s action for annulment of Commission Decision C (2002) 4905 of 11 December 2002
relating to the cancellation of the aid granted to the Italian Republic by Commission Decision C (87) 2090 026 of 17 December 1987
concerning the provision of assistance by the European Regional Development Fund as infrastructure investment, for a sum no
less than EUR 15 million, in Italy (region: Sicily), and for the recovery of the advance on that assistance made by the Commission;**

3.      **Declares that it is not necessary to rule on the appeal brought by the Regione Siciliana against the judgment referred to
in paragraph 1 of the present operative part;**

4.      **Orders the Regione Siciliana to pay the costs of the proceedings before the present Court and also those connected with the
procedure at first instance.**

[Signatures]

---

- Language of the case: Italian.