Judgment — ECLI:EU:T:2019:558
Date: 2019-09-04
Language of the case: Lithuanian
Court formation: First Chamber
Subject matter: Agriculture and Fisheries;European Agricultural Guidance and Guarantee Fund (EAGGF)
Procedure: Action for annulment - unfounded
Origin: Lithuania

Judgment of the General Court (First Chamber) of 4 September 2019 – Lithuania v Commission (Case T‑603/17) (EAGF and EAFRD — Expenditure excluded from financing — Regulation (EC) No 1698/2005 — Axis 4 ‘Leader’ — Regulation (EU) No 65/2011 — Administrative checks — Obligation to implement a suitable system for evaluating the reasonableness of the costs — Contribution in kind in the form of unpaid voluntary work — Contribution in kind in the form of a contribution of immovable property — On-the-spot checks — Presence of documents supporting payment claims — Implementation of operations financed in accordance with the rules on public procurement) 1. Agriculture — EAGF and EAFRD financing — Grant of aid and premiums — Obligation on the Member States to organise an effective system of administrative and on-site inspections — Scope — Unreliable controls — Disallowance (European Parliament and Council Regulation No 1306/2013, Art. 52(2)) (see paras 38, 39) 2. Agriculture — EAGF and EAFRD financing — Clearance of accounts — Disallowance of expenses arising from irregularities in applying EU rules — Finding of defects in the control system established by a Member State — Challenge by the Member State concerned — Burden of proof — Shared by the Commission and the Member State (European Parliament and Council Regulation No 1306/2013, Art. 52(2)) (see paras 40-43, 79, 85, 109, 126, 127) 3. Agriculture — EAGF and EAFRD financing — Clearance of accounts — Disallowance of expenses arising from irregularities in applying EU rules — Finding of defects in the control system established by a Member State — Assessment of losses suffered by the funds — Irregular expenses not capable of determination with sufficient precision — Assessment based on flat-rate corrections — Lawfulness (European Parliament and Council Regulation No 1306/2013, Art. 52(2)) (see paras 89-91, 94, 95) 4. EU law — Interpretation — Provision containing no express reference to the law of Member States — Independent and uniform interpretation — Concept of provision of land or real estate (Regulation No 1974/2006, Art. 54(1)(a)) (see paras 130-142) 5. Agriculture — EAGF and EAFRD financing — Grant of aid and premiums — Obligation on the Member States to organise an effective system of administrative and on-site inspections — Drawing up a report for every on-the-spot check — Necessary content (Council Regulation No 65/2011, Arts 26(1)(a) and (d) and 27(1)) (see paras 149-152, 160, 161, 167, 168, 176, 177, 183-185, 190) Re: Application under Article 263 TFEU for annulment of Commission Implementing Decision (EU) 2017/1144 of 26 June 2017 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 2017 L 165, p. 37), in so far as it excludes certain expenditure incurred by the Republic of Lithuania. Operative part The Court: 1. Dismisses the action; 2. Orders the Republic of Lithuania to bear its own costs and pay those incurred by the European Commission; 3. Orders the Czech Republic to bear its own costs.