Opinion of the Advocate General — ECLI:EU:C:2003:174
Date: 2003-03-20
Language of the case: Spanish
Based on: Treaty establishing the European Economic Community (1957)
Subject matter: Agriculture and Fisheries;European Agricultural Guidance and Guarantee Fund (EAGGF)
Procedure: Action for annulment - unfounded
Origin: Spain

summary report of 19 June 2001, the Commission takes the view that the Kingdom of Spain applied Article 1 of Regulation No 1357/96 and not Article 5. Spain should therefore have made the adjustment required under the regulation in order to take account of the number of animals conferring entitlement to the premium in 1996. The financial correction applied is 2% of the expenditure incurred by the Kingdom of Spain in 1996 by way of additional payments. The action 29. In support of its action, the Kingdom of Spain relies on two pleas in law. The first alleges an error in the Commission's assessment of compliance with the Community legislation applicable to the case. The second plea alleges failure by the Commission to observe the time-limits for notification laid down in that legislation. The first plea 30. The Kingdom of Spain alleges, in its first plea in law, that the Commission has made an error in claiming that it had not complied with Regulation No 1357/96. 31. In support of that plea, it claims that, when the additional payments were granted, it relied on the derogation in Article 5 of Regulation No 1357/96. It takes the view that the conditions for operation of that provision were fulfilled. First of all, the criterion for allocation was objective, since it concerned additional premiums. In this regard, nothing precluded the use of the same payment criterion as that laid down in Regulation No 1357/96. Secondly, having regard to the small amount of the premium, representing 2.9% of the price of the animals concerned, given the decrease of more than 30% in prices between February and June 1996, the compensation was not higher than the loss of income to such producers. Finally, there was no distortion of competition since all the beneficiaries received identical additional payments. 32. The Spanish Government further notes that the amount which was paid to the producers on the basis of the information for the 1996 financial year exceeded that which was actually paid on the basis of the information relating to the 1995 financial year. 33. The Spanish Government claims that the application of Article 5 of Regulation No 1357/96 was justified by urgency and the requirement, pursuant to Article 7 of the regulation, to make the payments before 15 October 1996. It points out that the two conditions laid down in the fifth recital of the regulation are separated by the terms and/or and that, therefore, the second condition regarding the date of the payments was sufficient to justify the application of Article 5. According to the Spanish Government, urgency was evidenced by the type of provision used, namely a Ministerial Order, and by the preamble thereto. 34. The Spanish Government disputes the fact that the letter of 8 June 1998 constitutes an acknowledgement of the application of Articles 1 and 4 of Regulation No 1357/96. If this letter cited provisions, it did so in a manner consistent with Article 5 of the Regulation, which provides that the Member States may grant the total amount of aids resulting from the application of Article 1 and Article 4(a) to producers of bovine animals according to objective criteria. The letter was intended to indicate that the amounts paid to the producers under Article 5 took account of the amounts provided for in Article 1 and Article 4(a). 35. The fact that the expenditure was declared under budget posts 2133.001 and 2133.002, entitled respectively additional payment to the suckler cow premium and additional payment to the special premium, which are for the application of Article 1 of Regulation No 1357/96, cannot be interpreted as an application thereof. The Spanish Government claims in this connection that it should have declared the expenditure under budget post 2133.004, for the application of Article 5 of Regulation 1357/96, only if it had relied on the first of the two conditions laid down in the fifth recital of the regulation, that is to say if it had relied on a system of payment other than the increase in premiums. 36. The Spanish Government concludes that, having applied Article 5 of Regulation No 1357/96, it was not required to make the adjustments referred to in the regulation in order to take account of entitlement to a premium for 1996. 37. The Commission points out that the Kingdom of Spain used the criteria for the allocation of additional payments laid down in Regulation No 1357/96. It also states that, on several occasions, Spain reported the application of Article 1 and Article 4(a) and (b) of the regulation, not of Article 5. Accordingly, the letter of 8 June 1998 only refers to Article 1 and Article 4(a) and (b) of the Regulation. That document was sent to the Commission again on 2 October 1998, following a request for further information by the Commission at the time of the inspection. In addition, the expenditure incurred was declared under budget posts 2133.001 and 2133.002, provided for the application of Article 1 of the Regulation, rather than 2133.004, provided for the application of Article 5. 38. It therefore takes the view that, contrary to its claims, the Kingdom of Spain has not applied Article 5, but rather Article 1 and Article 4(a) of Regulation No 1357/96. It follows that the Spanish Government must comply with Article 1(3) of the Regulation and make the adjustments required in terms of premiums in respect of the 1996 calendar year. 39. In the alternative, the Commission contends that, even if the Kingdom of Spain were considered to have applied Article 5 of Regulation No 1357/96, it did not comply with the conditions laid down in that provision. 40. First, it follows from the fifth recital of Regulation No 1357/96 that the aid in question should have been granted other than by means of the increase in premiums. Secondly, in order to comply with Article 5 of Regulation No 1357/96, the Kingdom of Spain should have set criteria linked to the loss of revenue to the producers in 1996, the year of the BSE crisis referred to in the regulation, rather than grant aid to those who had ceased or considerably restricted their activities during 1995 and 1996. Thirdly, Spain had not given the reason for which reliance on Article 5 was justified on the ground of urgency. The time-limit for payment laid down in Community legislation applied to all the Member States. Moreover, the information on the premiums for 1995 were available and enabled additional payments to be made as provided for in the regulation. Findings of the Court 41. It must be noted at the outset that Regulation No 1357/96 was adopted in order to help producers of beef and veal by means of rapid additional payments following the BSE crisis which broke out in March 1996. 42. It is also important to point out that, for the sake of transparency between Member States, monitoring and sound administration of additional payments, Regulation No 1504/96 provided for the communication to the Commission of specific information within certain time-limits, namely no later than 15 November 1996 and 31 July 1997 respectively. 43. In this case, it was only in the letter of 8 June 1998, that is to say with a delay of 17 months, that the Spanish Government submitted to the Commission information making reference to Article 1 and Article 4 of Regulation No 1357/96. On the basis of that letter the Commission had every reason to believe that the Spanish Government had applied Article 1 of the regulation, above all since it is not disputed that the expenditure was declared under budget posts 2133.001 and 2133.002 for the application of Article 1 of the regulation, and not under 2133.004 for the application of Article 5. 44. The Spanish Government relies on the fact that the Ministerial Order of 19 September 1996, which was not communicated to the Commission until the end of September 1998, states that Article 5 of Regulation No 1357/96 is applicable. In this connection it should first be noted that, although this provision was actually referred to, the Ministerial Order adopts the same criteria for the grant of additional payments as those provided in Article 1 of the regulation for provisional payments, namely entitlements to premiums for animals kept in the 1995 calendar year. 45. Next, the Ministerial Order contains no ground consistent with the requirements of Regulation No 1357/96 for the use of Article 5 of the regulation. The urgency arising from the prescribed deadlines for payment is only referred to for reasons of national law, to justify the powers of the Minister for Agriculture, Fisheries and Food to adopt the order. In any event, as the Advocate General notes in points 46 to 48 of her Opinion, the Spanish Government has not shown the existence of any special and exceptional urgency justifying the application of Article 5 since the deadlines for payment were the same for all the Member States and, as is stated in the Ministerial Order, the information on the premiums for 1995 was available. 46. Finally, the only ground for reliance on Article 5 of the Regulation set out in the Ministerial Order is that in relation to the need to render more flexible the system for obtaining aid by the producers and simplify the formalities and administrative procedures for payment as much as possible, since the right to aid in 1995 has already been clearly established in each concrete case. This ground leads to the conclusion that reliance on Article 5 could only have been justified by the aim of avoiding the administrative procedures associated with the adjustments intended to take into account entitlements to premiums for 1996. 47. The Commission's alternative ground of defence regarding the incorrect application of Article 5 of Regulation No 1357/96 could be held to be justified. It is sufficient to state, without the need to establish whether the conditions set out in the fifth recital of Regulation No 1357/96 are of a cumulative or alternative nature, that the sole justification pleaded by the Spanish Government of urgency is not proven, as has been pointed out in paragraph 45 above. 48. However, having regard to the circumstances of the present case, the Commission's main ground of defence, in relation to the non-compliance with Articles 1 to 3 of Regulation No 1357/96, must be upheld. The Commission is right to consider that in actual fact the Spanish Government applied Article 1 of Regulation No 1357/96. In that regard the Commission was able to take into consideration the procedures for granting additional payments, which reflected those laid down in that provision; the fact that the conditions for the application of Article 5 of the Regulation were not fulfilled; the absence of grounds for the use of Article 5; and information supplied to the Commission by the Kingdom of Spain, in particular in the letter of 8 June 1998 and in the detailed accounts of the expenditure of the year in question. 49. Accordingly, the first plea in law put forward by the Kingdom of Spain must be dismissed. The second plea 50. In its second plea in law, the Kingdom of Spain claims that the Commission failed to comply with the 24-month period laid down in Article 5(2)(c) of Regulation No 729/70. In fact the expenditure in respect of the additional payments had been incurred in 1996, whereas the first notification relating to them was in a letter of the Commission of 12 April 1999. 51. To refute the argument of the Commission that the year to be taken into consideration is the year during which it was necessary to make the adjustments, that is 1997, the Spanish Government quotes the report of the conciliation body, which found the following in particular: - The express obligation to recover excess payments exists where Article 1 and Article 2 are applied, but does not appear in the context of Article 5; - In the context of their interpretation of Article 5, the Spanish authorities had no reason to consider that the payments they had made should in part give rise to recovery, and they were only informed of this after the 24 months; until that time the expenditure in question was in the nature of definitive expenditure from a legal and accounting point of view; - Even if the Commission's position is to reclassify the payments as having been made under Article 5, it must be stated that this reclassification did not take place until the 24 months had passed ... 52. The Spanish Government takes the view, furthermore, that if the Commission had really wanted to make a financial correction for the 1997 financial year, it should have taken account of the expenditure of that year for which amounts in excess of entitlements had been paid and applied the 2% correction to them. It also states that there was no budgetary post 2133 in the nomenclature of expenditure for that financial year. It would have been absurd to apply a financial correction to a year for which the appropriate budgetary post did not exist. 53. Finally it draws attention to the objective of legal certainty pursued by Article 5(2)(c) of Regulation No 729/70. 54. The Commission contends that the assertions of the Spanish Government in relation to the different budgetary posts do not put in question the obligation laid down in Article 1(3) and Article 2 of Regulation No 1357/96 to review the entitlement to additional payments paid in 1995 in terms of the number of animals for which the producer obtained a premium in 1996. This process could only take place in 1997. 55. On the question of the reference year for the calculation of the financial correction, the Commission submits that the Spanish Government does not take into account the fact that the expenditure which should have been recovered during the 1997 financial year corresponded to additional payments granted during the 1996 financial year to producers who were not entitled to them and declared by the Spanish authorities in budgetary post 2133. It takes the view therefore that the fact that this budgetary post was modified in respect of the 1997 financial year is of no relevance. The change in the nomenclature of a financial year in relation to that of the previous financial year does not preclude the financial correction from relating to the 1997 financial year, as in this case. 56. Finally, the Commission notes that the reference to legal certainty is unfounded in the context of this case, since it was the Spanish authorities themselves who told the Commission that Articles 1 and 4 of Regulation No 1357/96 were the provisions under which the payments were made. Findings of the Court 57. As was stated in paragraph 48 above, the Commission is right to consider that in actual fact the Kingdom of Spain applied Article 1 of Regulation No 1357/96. 58. It follows that, in accordance with Articles 1 to 3 of Regulation No 1357/96, the Kingdom of Spain had to make adjustments in order to take into account entitlements to premiums for 1996. 59. Since those adjustments could only take place during the 1997 financial year, the 24-month period laid down in Article 5(2)(c) of Regulation No 729/70 was complied with. 60. In any event, in order to check whether the 24-month period was complied with, the Kingdom of Spain cannot take into consideration only the date of the expenditure incurred, without taking into account the date on which it informed the Commission of relevant and sufficient information on such expenditure, allowing the latter to carry out the clearance of accounts. 61. As is clear from the fourth recital of Regulation No 1287/95, the shortening of the time-limit for the adoption of clearance of accounts decisions was connected with computerisation of the information to be submitted to the Commission and full and immediate access for the Commission, when carrying out checks, to information on expenditure held in both documents and electronic files. 62. It should also be noted that, in accordance with Article 4(2) of Regulation No 1663/95, all the documents required for the clearance of accounts of a financial year must be sent to the Commission by 10 February of the year following the end of that financial year. It follows from this provision by implication that the Member States must communicate the necessary documents promptly so that the Commission has sufficient time in which to carry out the checks. 63. In this case it was not until the end of September 1998 during the inspection and at the request of the Commission that the Kingdom of Spain communicated the Ministerial Order stating that it had applied Article 5 of Regulation No 1357/96. However, on the one hand, under Article 1(b) of Regulation No 1504/96 the total amounts of aid paid and the number of beneficiaries and animals concerned should have been communicated on 15 November 1996 and 31 July 1997 respectively and, on the other hand, the methods used to grant the aid referred to should have been communicated without delay, namely before 15 November 1996, if the provision was to be effective. 64. If the argument of the Spanish Government were followed and assuming that the additional payments were made on the permitted deadline, here 15 October 1996, the Commission would only have had three weeks, from 25 September 1998, the date on which the inspection was completed, to 15 October 1998, to contest the conformity of the expenditure entered into by the Kingdom of Spain. Nor is it inconceivable, in situations where the Member State has not sent in any of the information required for the checking and clearance of accounts, that the Commission would be out of time to contest the conformity of that State's expenditure before the existence of such expenditure even comes to its knowledge. 65. The Court has already held that the purpose of the exclusion period for the adjustment of accounts is to protect Member States against the absence of legal certainty which would exist if the Commission were able to call into question expenditure incurred several years before the adoption of a compliance decision (Case C-130/99 Spain v Commission [2002] ECR I-3005, paragraph 133). A Member State may only however claim the protection of this period to the extent that it complies with its own obligations under Community legislation, in particular with regard to the spontaneous communication of information required for checks. 66. It follows from the foregoing considerations that the second plea in law of the Kingdom of Spain is unfounded and that, accordingly, its application must be dismissed. Costs 67. Under Article 69(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. Since the Kingdom of Spain has been unsuccessful and the Commission has applied for costs, the Kingdom of Spain must be ordered to pay the costs. On those grounds, THE COURT (First Chamber), hereby: 1. Dismisses the application; 2. Orders the Kingdom of Spain to pay the costs. Wathelet Jann Rosas Delivered in open court in Luxembourg on 11 September 2003. R. Grass M. Wathelet Registrar President of the First Chamber 1: Language of the case: Spanish.