Opinion of the Advocate General — ECLI:EU:C:2020:200
Date: 2020-03-12
Language of the case: Czech
Subject matter: Agriculture and Fisheries;European Agricultural Guidance and Guarantee Fund (EAGGF)
Procedure: Action for annulment;Appeal - unfounded;Appeal - successful
Origin: Czechia

Summary Report when it found that the Commission had taken issue with the Czech Republic for financing an investment project although that investment had been completed in its entirety before the national aid programme had even been put in place. The Czech Republic observes that the project at issue, namely that realised on 29 September 2009, was realised after the approval of the national aid programme. 104 The Commission contends that the third ground of appeal should be rejected. Findings of the Court 105 By its third ground of appeal, the Czech Republic in essence challenges the General Court’s rejection of part of its arguments raised against the correction concerning retroactive payments as being ineffective. 106 It should be noted that, according to the Court’s settled case-law, it follows from the second subparagraph of Article 256(1) TFEU and from the first paragraph of Article 58 of the Statute of the Court of Justice of the European Union that the Court of Justice has no jurisdiction to establish the facts or, in principle, to examine the evidence which the General Court accepted in support of those facts. Provided that such evidence has been properly obtained and the general principles of law and the rules of procedure in relation to the burden of proof and the taking of evidence have been observed, it is for the General Court alone to assess the value which should be attached to the evidence produced before it. That appraisal therefore does not, save where that evidence has been distorted, constitute a point of law which is subject, as such, to review by the Court of Justice (judgment of 27 February 2020, Lithuania v Commission, C‑79/19 P, EU:C:2020:129, paragraph 70). 107 There is such distortion where, without recourse to new evidence, the assessment of the existing evidence is clearly incorrect. However, such distortion must be obvious from the documents on the Court’s file, without there being any need to carry out a new assessment of the facts and the evidence. Moreover, where an appellant alleges distortion of the evidence by the General Court, he or she must indicate precisely the evidence alleged to have been distorted by that court and show the errors of appraisal which, in his or her view, led to that distortion (judgment of 27 February 2020, Lithuania v Commission, C‑79/19 P, EU:C:2020:129, paragraph 71). 108 In paragraph 48 of the judgment under appeal, the General Court found that the Czech Republic did not refer to specific circumstances or evidence such as to demonstrate the veracity of its claim that solely in eight cases had investments received an aid although they had been realised before the national aid programme had been implemented. 109 In paragraph 49 of that judgment, the General Court found that the Czech Republic’s arguments in relation to aid paid for investments realised after the implementation of the national aid programme, but before the approval of the individual aid application, were ineffective. 110 It observed in that regard in paragraph 50 of that judgment that, according to point 7.1.1.1. of the Summary Report, the correction at issue was based exclusively, first, on the fact of investments having received an aid even though they had been realised before the national aid programme had been implemented and, secondly, on the fact that the Czech authorities had not supplied evidence demonstrating that those investments concerned only eight cases. 111 Inasmuch as the Czech Republic claims that the rejection of that argument as ineffective is vitiated by an error of law, on the ground that the General Court distorted the facts apparent from the contents of point 7.1.1.1. of the Summary Report by holding that the Commission had imposed a financial correction ‘exclusively’ because of investments realised before the implementation of the national aid programme, the Czech Republic still has to prove that distortion, as required by the case-law cited in paragraph 107 of the present judgment. 112 Without referring to a specific part of that summary report or other documents produced before the General Court, that Member State merely claimed that it was apparent – contrary to what was found by the General Court – from the correspondence exchanged with the Commission before the adoption of the contested decision and from the Summary Report, from the reference in point 7.1.1.1. of that summary report to an example of an investment allegedly realised after the implementation of the national aid programme, and from a statement in the defence submitted before the General Court, that the financial correction had also been imposed on account of investments in the wine sector realised after the implementation of the national aid programme but before the submission of the aid application. 113 It follows that since the General Court had observed in paragraph 50 of the judgment under appeal that no finding had been made in the Summary Report regarding those investments, it was able, correctly, to find that the Czech Republic’s arguments relating to the aids paid for such investments were ineffective. 114 In those circumstances, the third ground of appeal must be rejected as unfounded. The fourth ground of appeal Arguments of the parties 115 By its fourth ground of appeal, the Czech Republic submits that the General Court erred in law in finding, in paragraph 56 of the judgment under appeal, that Article 77(5) of Regulation No 555/2008 did not allow investments in the wine sector to be checked by means of sampling. 116 In the first place, according to the Czech Republic, Article 19 of Regulation No 555/2008 does not constitute a lex specialis with regard to Article 77(5) of that regulation, since that provision does not represent a general rule but a special provision laying down the specific procedures for checks in the field of investment operations. That provision refers expressly to Article 15 of Regulation No 479/2008, which does not concern all of the wine sector but only investments. 117 In the second place, the Czech Republic claims that the General Court’s interpretation in paragraph 61 of the judgment under appeal renders meaningless the reference to Article 27 of Regulation No 1975/2006 in Article 77(5) of Regulation No 555/2008, since it renders it impossible to proceed in accordance with that reference. 118 In the third place, it argues that that reference to Article 27 of Regulation No 1975/2006 was of a decisive nature since, in 2013, the Commission was obliged to make a legislative amendment consisting, in particular, in deleting that reference from the text of Regulation No 555/2008. 119 Lastly, in the fourth place, the Czech Republic submits that the Commission cannot impose on a Member State a correction that results from the unclear wording of a rule of which it itself is the author. It points out that according to paragraph 60 of the judgment under appeal, Regulation No 555/2008 ‘lays down two requirements that differ in scope’. 120 The Commission contends in response that the reference to ‘all the operations’ in Article 19 of Regulation No 555/2008 means that the Member States must carry out checks on all investments and not only on a minimal sample. In addition, in paragraph 56 of the judgment under appeal, the General Court refers to Article 77 of that regulation as a whole, and not only to Article 77(5). Moreover, Article 19 of that regulation constitutes a lex specialis with regard to Article 77 of that regulation, since, as the General Court noted in paragraph 56 of the judgment under appeal, the obligation set out in in Article 19 of Regulation No 555/2008 constitutes precisely one of the cases where, under Article 77(3) of that regulation, ‘systematic on the spot checks are foreseen …by this Regulation’. 121 Furthermore, it is clear from Article 77 of Regulation No 555/2008 that Articles 26 to 28 of Regulation No 1975/2006, which lay down the detailed rules for control procedures in respect of rural development measures financed by the EAFRD, apply mutatis mutandis to investments in the wine sector. Article 26 of Regulation No 1975/2006 provides for administrative checks, namely checks carried out by the Member States before on-the-spot checks are carried out, on all applications for support or payment claims and which may be regarded as constituting a ‘first check’ carried out by the Member States. 122 The Commission also takes the view that Articles 27 and 28 of Regulation No 1975/2006 contain rules in greater detail on the sample of expenses controlled, which must represent ‘at least 4% of the eligible public expenditure’, and on the effective content of the on-the-spot checks. In addition, the scope of the provisions of Regulation No 1975/2006, which covers a wide range of rural development measures, is much broader than that of Articles 19 and 77 of Regulation No 555/2008, which extends only to investments in the wine sector. It points out that, while some of the rural development measures covered by Regulation No 1975/2006 fall within the scope of ‘investments’, many of those measures are of a different nature. Findings of the Court 123 By its fourth ground of appeal, the Czech Republic in essence alleges that the General Court erred in law as regards the interpretation of Article 19 and Article 77(5) of Regulation No 555/2008 by ruling out the possibility that on-the-spot checks could be performed by sampling. 124 In that regard, in paragraphs 54 to 56 of the judgment under appeal, the General Court held in essence, following a reading of Article 19 of Regulation No 555/2008 in conjunction with Article 77 thereof, that Article 19 of that regulation constitutes a lex specialis in relation to Article 77 thereof and that Article 19 lays down a systematic requirement for an on-the-spot check before any payment of investment aid. 125 It is therefore necessary to interpret those provisions in order to examine the merits of the present ground of appeal. 126 In this connection, it is settled case-law of the Court of Justice that it is necessary, in interpreting a provision of EU law, to take into account not only the wording of the provision concerned, but also its context and the general scheme of the rules of which it forms part and the objectives pursued thereby (judgment of 5 July 2018, X, C‑213/17, EU:C:2018:538, paragraph 26). 127 In the present case, it must be observed that Article 77 of Regulation No 555/2008, entitled ‘General principles’, is included in Chapter I, entitled ‘Principles of control’, of Title V, entitled ‘Controls in the wine sector’, of that regulation. Under Article 77(3), the Member States are to perform on-the-spot checks on beneficiaries of aid by sampling, ‘except for the cases where systematic on the spot checks are foreseen by … [that] Regulation’. Furthermore, Article 77(5) of that regulation requires, in respect of investment measures in the wine sector, as defined in Article 15 of Regulation No 479/2008, now Article 103u of Regulation No 1234/2007, the application mutatis mutandis of Articles 27 and 28 of Regulation No 1975/2006, which lay down the specified procedures for on-the-spot checks of those investments by sampling. 128 Article 19 of Regulation No 555/2008, entitled ‘Financial management’, included in Section 6, entitled ‘Investments’, of Chapter II, entitled ‘Eligible measures’, which falls under Title II, entitled ‘Support programmes’, of that regulation, provides in the first subparagraph of paragraph 1 thereof that support is to be paid once it is ascertained that either a single operation or all the operations covered by the support application, according to the choice made by the Member State for the management of the measure, have been implemented and controlled on the spot. 129 As the Advocate General observed in point 77 of her Opinion, it must be noted that the wording of the first subparagraph of Article 19(1) of Regulation No 555/2008 does not provide for any obligation on the Member States to carry out systematic controls. That provision merely indicates that Member States must carry out on-the-spot checks of the measures implemented. 130 That literal interpretation is also consistent with the context and general scheme of that regulation. 131 In that regard, first, it follows from the title and the position of Article 19 of Regulation No 555/2008 in that regulation that the purpose of that article is to govern the procedure for the financial management of aid for the purposes of investments in the wine sector, and not the procedure for on-the-spot checks in respect of those investments. That article provides that the payment of the aid is dependant a prior on-the-spot check of the single operation or all the operations covered by the support application, but without specifying the procedure for that on-the-spot check. The wording and the purpose of that provision therefore do not preclude those operations from being represented by a sample that has been controlled on the spot. 132 Secondly, as the Advocate General observed in point 78 of her Opinion, it can be inferred from the general scheme of Regulation No 555/2008 that if that regulation requires Member States to make systematic checks, it does so expressly. It follows that, since no express obligation to that effect is included in the first subparagraph of Article 19(1) of that regulation, no obligation of that nature may be imposed on the Member States. 133 It follows that Article 19 of Regulation No 555/2008 is not capable of forming a basis for a derogation from Article 77(3) of that regulation, which provides for the performance of on-the-spot checks by sampling except, inter alia, where systematic on-the-spot checks are foreseen by that regulation. 134 It follows from all the foregoing considerations that the General Court erred in law in holding, in paragraph 56 of the judgment under appeal, that Article 19 of Regulation No 555/2008 requires the Member States to perform systematic checks. 135 In those circumstances, the fourth ground of appeal must be upheld, without it being necessary to examine the other arguments put forward in connection with that ground. The action before the General Court 136 In accordance with the second sentence of the first paragraph of Article 61 of the Statute of the Court of Justice of the European Union, the Court of Justice may, after quashing the decision of the General Court, itself give final judgment in the matter, where the state of the proceedings so permits, or refer the case back to the General Court for judgment. 137 In the present case, the Court of Justice does not have all the information necessary to rule definitively on the merits of the contested decision in so far as, by that decision, the Commission imposed, first, a one-off correction of EUR 462 517.83 in respect of the financial years 2013 to 2015 on the grounds, inter alia, of several deficiencies of various natures in the risk analysis, and, secondly, a flat-rate correction of EUR 636 516.20 in respect of the financial years 2011 to 2014 on the grounds both of payments made in connection with investments finalised before the support application was approved and insufficient on-the-spot checks so far as concerns investments financed in the wine sector. 138 As regards the one-off correction of EUR 462 517.83, it is apparent from paragraph 19 of the judgment under appeal that the Commission, as well as basing the contested decision on evidence of which the General Court’s assessment is criticised as incorrect in law in the first ground of appeal, also based it on the finding of divergences between the rates of irregularities shown by the on-the-spot checks by remote sensing based on a risk analysis and those shown by that same type of check, but based on samples selected at random. 139 Although the comparison of those rates of irregularities might be such as to give rise to serious and reasonable doubts as to the effectiveness of the on-the-spot checks by remote sensing, in particular as to whether the risk analysis on which those on-the-spot checks were based was relevant, the General Court did not examine the evidence which could have been provided by the Czech Republic in order to demonstrate, in that context, the effectiveness of its control system. 140 Furthermore, as regards the flat-rate correction of EUR 636 516.20, the Court does not have available to it the necessary information to determine the part of that correction which is affected by the upholding of the fourth ground of appeal, since that correction is based on several grounds. 141 It follows that the case must be referred back to the General Court in order for that court to rule on the matters set out in paragraphs 139 and 140 of the present judgment. Costs 142 Since the case is being referred back to the General Court, it is appropriate to reserve the costs. On those grounds, the Court (Fourth Chamber) hereby: 1. Sets aside the judgment of the General Court of the European Union of 13 September 2018, Czech Republic v Commission (T‑627/16, not published, EU:T:2018:538), in so far as, by that judgment, the General Court rejected the plea in law concerning the one-off correction of EUR 462 517.83 in respect of the financial years 2013 to 2015, to the extent to which it concerns the ground relating to deficiencies in the risk analysis, and the plea in law concerning a flat-rate correction of EUR 636 516.20, in respect of the financial years 2011 to 2014, to the extent to which it concerns the ground relating to insufficient on-the-spot checks so far as investments financed in the wine sector are concerned; 2. Dismisses the appeal as to the remainder; 3. Refers the case back to the General Court of the European Union; 4. Reserves the costs. [Signatures] * Language of the case: Czech.