Judgment — ECLI:EU:C:1998:218
Date: 1998-05-12
Language of the case: English
Court formation: Full Court
Based on: Treaty establishing the European Economic Community (1957)
Subject matter: Budget;Financial provisions;Provisions governing the Institutions;Social Policy
Concepts: Effects of a declaration that a measure is void;Budgetary rules
Procedure: Action for annulment - successful
Origin: United Kingdom

Summary of the Judgment
1. Budget of the European Union — Implementation — Commitment of significant expenditure
— Need for a prior basic act — Non-significant nature of an action — Burden of proof borne
by the Commission — Decision to fund a project relating to social exclusion under a given
budget heading and without a basic act — Lack of competence of the Commission — Illegal­
ity
(EC Treaty, Arts 4(1), 205 and 209; Financial Regulation, Art. 22(1))
2. Actions for annulment — Judgment annulling a measure — Effects — Limitation by the
Court — Annulment of a decision
(EC Treaty, Arts 173 and 174, second para.)
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SUMMARY — CASE C-106/96
1. It follows from Articles 205 and 209 of
the Treaty and the second subparagraph
of Article 22(1) of the Financial Regu­
lation, read together with paragraph 3(c)
of Section IV of the Joint Declaration of
30 June 1982 by the European Parlia­
ment, the Council and the Commission,
that implementation of Community
expenditure relating to any significant
Community action presupposes not only
the entry of the relevant appropriation in
the budget of the Community, which is a
matter for the budgetary authority, but in
addition the prior adoption of a basic act
authorising that expenditure, which is a
matter for the legislative authority,
whereas implementation of budgetary
appropriations for Community action
which does not fall within that category
— namely non-significant Community
action — does not require prior adoption
of such a basic act.
The requirement that a basic act must be
adopted before an appropriation is imple­
mented derives directly from the scheme
of the Treaty, in accordance with which
the conditions governing the exercise of
legislative powers and budgetary powers
are not the same. The fact that implemen­
tation of expenditure on the basis of the
mere entry of the relevant appropriations
in the budget is an exception to that fun­
damental rule means that it cannot be
assumed that Community action is non­
significant and the Commission must
therefore prove it to be so.
The appropriations under heading
B3-4103 of the budget for the financial
year 1995 were to cover expenditure
under a programme to combat poverty
and social exclusion to be proposed by
the Commission; however, when its pro­
posal was not adopted by the Council,
the Commission decided to commit that
expenditure to fund the projects to com­
bat social exclusion announced in its
Press Release IP/96/67 of 23 January
1996, but did not succeed in establishing
before the Court that the projects in
question constituted non-significant
action. Consequently, it was not compe­
tent to commit that expenditure, thus act­
ing in breach of Article 4(1) of the Treaty,
and its decision must therefore be
annulled.
2. Since annulment of the Commission's
decision referred to in its Press Release
IP/96/67 of 23 January 1996, announcing
certain grants for European projects seek­
ing to overcome social exclusion, takes
place at a time when all, or almost all, of
the relevant payments have been made,
important considerations of legal cer­
tainty, comparable with those arising
where certain regulations are annulled,
justify the Court in exercising the power
conferred on it by the second paragraph
of Article 174 of the Treaty when it
annuls a regulation and in deciding that
the annulment is not to affect the validity
of payments made or undertakings given
under contracts which were the subject of
the funding in issue.
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