Judgment — ECLI:EU:T:2003:238
Date: 2003-09-18
Based on: Treaty establishing the European Economic Community (1957)
Subject matter: External relations
Concepts: General;Costs;Budgetary rules
Procedure: Action for annulment - successful
Origin: Germany

summary letters and only subsequently providing the reasons for the decision by telephone. It nevertheless asks the applicant to explain how the failure to state reasons for the decision of 12 October 1993 can affect the validity of the letter of 16 October 2001 which is the subject of the dispute. The Commission observes in that regard not only that the applicant did not challenge the letter of 12 October 1993 on account of a failure to state reasons but, in addition, that failure was rectified by the letter of 29 July 1996. 50. Third, the Commission maintains that the applicant never received funding under the co-financing budget line in respect of which the contested decision was adopted. It nevertheless acknowledges that the applicant received Community funding under another budget line in 1991, in the context of emergency humanitarian aid and, in 1998, in the context of the programme for technical assistance to the New Independent States of the former Soviet Union and Mongolia (TACIS). 51. The Commission observes that financing conditions vary from one programme to another. Therefore, it is not in principle excluded that the applicant could have satisfied the conditions of eligibility for one programme and not for another. Moreover, since it was in 1991 that the applicant obtained funding in the context of emergency assistance, it cannot be ruled out that the Commission service responsible for managing that budget line did not have the same information available to it as that which the service in charge of the budget line for NGO co-financing was able to obtain two years later. As regards the TACIS project, the Commission points out that its services encountered considerable difficulties in implementing the applicant's project. Following termination of the contract by the Commission in October 1999, a letter seeking recovery was issued against the applicant on 22 June 2000. The defendant also points out that the applicant lodged a complaint with the Ombudsman against another of the Commission services, namely the European Community Humanitarian Office (ECHO), which had refused to sign a partnership agreement with the applicant following its refusal to submit to an eligibility audit. The Commission accordingly concludes that the experience of some of its services other than the one involved in the present case confirms that the contested decision is well founded. 52. The Commission also maintains that it is not accurate to claim that there is inconsistency in the fact that the service responsible for the NGO co-financing budget line continued to communicate with the applicant concerning projects which it submitted, since the purpose of that dialogue was to make it possible to find a solution at some point to the problem of the applicant's eligibility. 53. Fourth, as regards the bad faith supposedly demonstrated by the Commission's invitation to the applicant to submit a new file, the Commission states that the arguments and information submitted by the applicant following the decision of 16 October 2001 were not sufficient to convince it to reverse that decision. However, as soon as the applicant submits new information which warrants a different assessment as regards the criteria for eligibility, the Commission will reverse its decision to consider the applicant ineligible. Findings of the Court 54. The General Conditions for the co-financing of projects set out the conditions governing the eligibility of applicant NGOs and the eligibility of projects. Those cumulative requirements must be met in order for a project proposed by an organisation to receive Community co-financing. 55. It should be recalled that every application for co-financing is in principle autonomous and self-sufficient and must be judged in its entirety and on its own merits. Therefore, for each application submitted, the Commission must consider whether the NGO in question satisfies the conditions for eligibility and subsequently decide whether the project being proposed in the application for co-financing will be granted financial support. 56. It is worth pointing out in this connection that, in its letter of 29 July 1996, the Commission states: This clearly does not prevent [your agent] from submitting new applications to the Commission relating to the co-financing of development projects. In that case, it will be necessary to verify again whether the NGO satisfies our criteria. 57. It follows that the Commission was bound to examine the eligibility of the applicant before taking a decision on the co-financing of the 1996 and 1997 projects. 58. However, the Commission did not do so. First of all it will be noted that, in the contested decision, the Commission, after informing the applicant that co-financing was refused, states: Nevertheless, the Commission is of the view that the characteristics of your NGO may have changed sufficiently so that the reasons which justified the decision of ineligibility no longer apply. 59. It must also be noted that in its pleadings the Commission several times confirmed that it did not carry out an assessment of the applicant's eligibility. In particular, in response to the written question put by the Court of First Instance in that regard, it stated: The Commission, as it explained in its defence and in its reply, did not at the time the contested letter was drafted in October 2001 review the applicant's eligibility .... 60. It is true that at the hearing the Commission showed some hesitation and made some contradictory statements on the subject. In addition, it asserts, in its defence, that the applicant cannot have provided new information which would have led to a different assessment of its eligibility. Nevertheless, when it was questioned to that effect during the hearing, the Commission did not provide the slightest evidence or indication that it assessed the eligibility of the applicant before it adopted the contested decision. 61. It must therefore be found that at the time it adopted the contested decision the Commission did not examine the eligibility of the applicant as an NGO, following the submission of the 1996 and 1997 projects for co-financing. 62. The Commission explains the failure to examine the applicant's eligibility by stating that when its services find that an NGO is not eligible for Community co-financing, that decision automatically results in the rejection of subsequent project proposals by that NGO, until such time as the NGO satisfies the eligibility criteria. It adds that the decision on eligibility may be reviewed if and in so far as new financial or technical information is submitted by the NGO. 63. The applicant challenges the validity of that automatic rejection procedure. It maintains, inter alia, that such a practice leads to an anticipatory finding against the NGO. 64. Although it is not necessary to rule on the validity of automatic rejection, it must be stated that that practice may in any event be used only in cases where, after the Commission has found that an NGO is not eligible for Community co-financing, the NGO has not presented new arguments in support of its eligibility. If an NGO, when it submits a new application for co-financing, also submits new arguments to establish its eligibility, the Commission must reconsider the eligibility of the NGO in the light of those new arguments and thus cannot have recourse to an automatic rejection procedure. Moreover, the Commission confirms that conclusion by stating, in its pleadings, that the decision concerning eligibility can be reviewed if and in so far as new financial or technical information is submitted. 65. Accordingly, it must be considered whether, in particular after the letter of 29 July 1996, the applicant has presented new arguments which demonstrate that it satisfies the required conditions for eligibility. 66. Questioned on this point at the hearing, the applicant at first stated that it had sent the Commission new arguments in support of its eligibility but that those documents were not part of the file. 67. However, it must be noted that on 5 December 1996, the applicant sent the Commission, in the context of its application for co-financing, a report which set out inter alia the personnel of IH and the financial accounts of its activities during the preceding years. It also referred to audit reports for 1994, 1995 and 1996. 68. Moreover, the applicant sent a letter to the Commission on 20 August 1997 to which it appended the annual financial management report up to 31 December 1996 drawn up by the auditing firm KPMG. 69. Although hardly necessary, it should be noted that on 14 July 1997 the chairman of IH sent the Commission a letter indicating that the NGO had been admitted into VENRO (Verband Entwicklungspolitik deutscher Nichtregierungsorganisationen) and that a detailed check had been carried out by the association on the development policy of German NGOs. That letter also refers to the audit documents drawn up by KPMG. 70. Accordingly, in the light of the new arguments put forward by the applicant for the purpose of establishing its potential eligibility for Community co-financing, the Commission could not apply an automatic rejection procedure but had, on the contrary, to examine the applicant's eligibility on the basis of that new information. 71. As noted in paragraphs 58 to 61 above, the Commission did not examine the applicant's eligibility. Consequently, there is no need to examine the other claims put forward by the applicant since, in the light of the foregoing considerations, the first plea must be upheld and the contested decision annulled as a result. Second plea in law 72. Since the first plea has been upheld, there is no need to examine the second plea. 73. It follows from all the foregoing that the contested decision must be annulled. Costs 74. Under Article 87(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party's pleadings. 75. Since the Commission has been unsuccessful, it must be ordered to pay the costs. 76. The applicant also claims that the Commission should reimburse the costs of the proceedings before the Ombudsman. 77. The Commission disputes the fact that costs relating to the proceedings before the Ombudsman can be recovered, since they are not considered to be expenses necessarily incurred by the parties for the purposes of these proceedings. 78. Under Article 91(b) of the Rules of Procedure, the following shall be regarded as recoverable costs: ... expenses necessarily incurred by the parties for the purpose of the proceedings, in particular the travel and subsistence expenses and the remuneration of agents, advisers or lawyers. 79. It follows from that provision that recoverable costs are confined to expenses which are both incurred for the purpose of the proceedings before the Court and indispensable for such purposes (order of the Court of Justice of 9 November 1995 in Case C-89/85 DEP Ahlström Osakeyhtiö and Others v Commission, not published in the ECR, paragraph 14, and order of the Court of First Instance of 25 June 1998 in Joined Cases T-177/94 DEP, T-377/94 DEP, and T-99/95 DEP Altmann and Others v Commission [1998] ECR-SC I-A-299 and II-883, paragraph 18). 80. Moreover, the Court has held that even though substantial legal work is carried out in the course of the proceedings preceding the judicial phase, by proceedings Article 91 of the Rules of Procedure refers only to proceedings before the Court of First Instance, to the exclusion of any prior stage. That follows in particular from Article 90 of the Rules of Procedure, which refers to proceedings before the Court of First Instance (order of 24 January 2002, T-38/95 DEP Groupe Origny v Commission [2002] ECR II-217, paragraph 29, and the case-law there cited). 81. As it therefore appears from the case-law, the costs relating to proceedings before the Ombudsman cannot be considered necessary costs within the meaning of Article 91(b) of the Rules of Procedure. On those grounds, THE COURT OF FIRST INSTANCE (Third Chamber), hereby: 1. Annuls the Commission's decision of 16 October 2001 refusing the applications for co-financing made by the applicant in December 1996 and September 1997; 2. Orders the Commission to pay the costs of the applicant in addition to its own costs. Lenaerts Azizi Jaeger Delivered in open court in Luxembourg on 18 September 2003. H. Jung K. Lenaerts Registrar President 1: Language of the case: French.