62015TJ0381(02)_RES
Case T‑381/15 RENV II
International Management Group (IMG)
v
European Commission
Judgment of the General Court (Ninth Chamber, Extended Composition) of 4 September 2024
(Non-contractual liability – EU financial legislation – Implementation of the EU budget under indirect management by an international organisation – Decision refusing to recognise a legal person as an international organisation – Sufficiently serious breach of a rule of law conferring rights on individuals – Duty of diligence – Material damage – Loss of opportunity to conclude indirect management agreements with the Commission as an international organisation and to receive the corresponding administrative costs – Causal link – Requirement of a direct and certain causal link – Unlawful act found has no bearing on the status of international organisation necessary for compensation – Occurrence of an event subsequent to the unlawful act which may be taken into account by the EU Courts – Retroactive decision finding that the status of international organisation necessary for compensation had not been achieved during the period in question)
Judicial proceedings – Judgment of the Court of Justice binding the General Court – Conditions – Reference back following an appeal – Points of law finally determined by the Court of Justice in the context of the appeal – Res judicata – Scope
(Statute of the Court of Justice, Art. 61, second para.; Rules of Procedure of the General Court, Art. 215)
(see paragraphs 27, 28)
Non-contractual liability – Conditions – Unlawfulness – Sufficiently serious breach of EU law – Breach by the Commission of the duty of diligence when examining the status of an international organisation – Adoption of a decision manifestly lacking legal and factual justification
(Art. 340, second para., TFEU)
(see paragraphs 37-43)
EU budget – Financial regulation – Implementation of the budget – Implementation by indirect management – Special procedure reserved for international organisations – Unlawful Commission decision refusing the conclusion of indirect management agreements with an entity on account of doubts as to its status as an international organisation – Loss of opportunity to conclude those agreements and to receive financial compensation for indirect costs – Whether permissible
(European Parliament and Council Regulation No 966/2012, Arts 58(1)(c)(ii) and 60(2))
(see paragraphs 47-50)
Non-contractual liability – Conditions – Unlawfulness – Damage – Causal link – Unlawful Commission decision refusing the conclusion of indirect management agreements with an entity on account of doubts as to its status as an international organisation – Breach of the duty of due diligence – Unlawful act found has no bearing on the status of international organisation necessary for compensation – No direct and certain causal link between that unlawfulness and the damage alleged – Action for damages dismissed in its entirety
(Art. 340, second para., TFEU)
(see paragraphs 58-66, 84)
Non-contractual liability – Conditions – Unlawfulness – Damage – Causal link – Unlawful Commission decision refusing the conclusion of indirect management agreements with an entity on account of doubts as to its status as an international organisation – Retroactive decision finding that the status of international organisation had not been achieved during the period in question – No real and certain damage – Action for damages dismissed in its entirety
(Art. 340, second para., TFEU)
(see paragraphs 67-69, 84)
Non-contractual liability – Conditions – Unlawfulness – Assessment of whether the institution’s act or conduct was unlawful – Obligation to take into account the facts and the law as they stood at the time when the act or conduct was adopted
(Art. 340, second para., TFEU)
(see paragraphs 74, 75)
Non-contractual liability – Conditions – Unlawfulness – Damage – Causal link – Assessment – Possibility for the EU Courts to take into account matters of fact or of law subsequent to the adoption of the unlawful act or conduct
(Art. 340, second para., TFEU)
(see paragraphs 76-79)
Résumé
Sitting in extended composition, the General Court dismisses as unfounded the action for damages brought by International Management Group (IMG) and seeking compensation for the financial damage it claims to have suffered as a result of the European Commission’s decision of 8 May 2015 to no longer enter into new delegation agreements with it using the indirect management method provided for by the EU financial legislation (
1
) in force at the time, for the benefit of international organisations until its legal status has been definitively clarified (‘the decision of 8 May 2015’). By its judgment, the Court recognises, for the first time, the possibility for an international organisation faced with an unlawful refusal by the Commission to conclude a delegation agreement for the management of the EU budget using the indirect management method to seek compensation for the loss of the opportunity to conclude such an agreement.
The applicant, International Management Group (IMG), was created on 25 November 1994 to provide the Member States and international organisations participating in the reconstruction of Bosnia and Herzegovina with an entity specifically created for that purpose.
On 7 November 2013, the Commission adopted the implementing decision on the Annual Action Programme 2013 in favour of Myanmar/Burma (
2
) to be financed from the general budget of the European Union, on the basis of Regulation No 966/2012. (
3
) That decision provided, inter alia, for a trade development programme the cost of which was to be financed by the European Union and implemented by joint management with the applicant.
On 17 February 2014, the European Anti-Fraud Office (OLAF) informed the Commission that it had opened an investigation into the applicant’s status. In its final report, OLAF stated, in essence, that the applicant was not an international organisation within the meaning of Regulations No 1605/2002 (
4
) and No 966/2012.
Lastly, the Commission adopted the decision of 8 May 2015 by which it decided that, until there was absolute certainty regarding the applicant’s status as an international organisation, its department would no longer enter into any new delegation agreement with it using the indirect management method provided for in Regulation No 966/2012.
The applicant brought an action before the Court seeking annulment of the decision of 8 May 2015 and for compensation for the damage caused by that decision. Following the dismissal of that action, by the judgment of 2 February 2017, IMG v Commission, (
5
) the applicant brought an appeal before the Court of Justice. By judgment of 31 January 2019, International Management Group v Commission, (
6
) the Court of Justice set aside the judgment of the General Court and annulled the decision of 8 May 2015 and referred Case T‑381/15 back to the General Court for a ruling on the claim for damages submitted by the applicant in respect of the harm allegedly caused by that decision.
By judgment of 9 September 2020, IMG v Commission, (
7
) the General Court rejected the applicant’s claim for damages. The applicant brought an appeal before the Court of Justice.
On 8 June 2021, the Commission adopted a decision refusing to accord the applicant, with retroactive effect from 16 December 2014, (
8
) the status of an international organisation provided for by the EU financial legislation for the implementation of EU funds using the indirect management method (‘the decision of 8 June 2021’).
By judgment of 22 September 2022, IMG v Commission, (
9
) the Court of Justice set aside the initial judgment in part and referred Case T‑381/15 RENV back to the General Court for a ruling on the applicant’s claim for damages for the material harm allegedly caused by the decision of 8 May 2015.
Findings of the Court
As a preliminary point, it must be recalled that, when a decision of the General Court has been set aside by the Court of Justice and the case has been referred back to the General Court, the General Court is seised of the case by the judgment of the Court of Justice (
10
) and must rule on all the claims submitted by the applicant, apart from those reflected in the elements of the operative part of the initial decision of the General Court that were not set aside by the Court of Justice and the grounds constituting the necessary basis of those findings, which have acquired the force of res judicata. (
11
)
The Court begins by recalling that the European Union may incur non-contractual liability only if a number of conditions are fulfilled, namely the existence of a sufficiently serious breach of a rule of law intended to confer rights on individuals, the fact of damage and the existence of a causal link between the breach of the obligation resting on the author of the act and the damage sustained by the injured parties.
In the first place, as regards the condition relating to the existence of a sufficiently serious breach of a rule of law intended to confer rights on individuals, the Court notes that the Commission enjoys a broad discretion when exercising its responsibility for implementing the EU budget using the indirect management method, which allows that institution to entrust budget implementation tasks to international organisations. (
12
) Moreover, the Court also points out that the duty of diligence, which is inherent to the principle of good administration (
13
) and which applies generally to the action of the EU administration in its relations with the public, requires the EU institutions to act with care and caution by examining all the relevant aspects of the individual case.
In the present case, it follows from the judgment on appeal (
14
) that the Court of Justice found that there had been a sufficiently serious breach of the Commission’s duty of diligence when adopting the decision of 8 May 2015. Consequently, the General Court finds that, by adopting the decision of 8 May 2015, the Commission failed to comply with its duty of diligence, and, in so doing, committed a sufficiently serious breach of EU law such as to render it liable.
In the second place, any damage for which compensation is sought in an action for non-contractual liability of the European Union under the second paragraph of Article 340 TFEU must be actual and certain. Moreover, in order for the non-contractual liability of the European Union to be capable of being established, the damage must flow in a sufficiently direct manner from the unlawful conduct of the institutions.
In any event, it is for the party seeking to establish the European Union’s non-contractual liability to adduce conclusive proof as to the existence and extent of the damage it alleges and as to the existence of a sufficiently direct causal nexus between the conduct of the institution concerned and the damage alleged. Furthermore, the existence of actual and certain damage cannot be considered in the abstract by the EU Courts but must be assessed in relation to the specific facts characterising each particular case in point.
In particular, the Court finds that, where the Commission unlawfully refuses to conclude a delegation agreement using the indirect management method with an international organisation, it is possible that the organisation concerned may thereby suffer damage corresponding to the lost opportunity to obtain that delegation. The total exclusion, in respect of the damage for which compensation may be granted, of the loss of opportunity to conclude a delegation agreement using the indirect management method, cannot be accepted in the event of an infringement of EU law since, especially in the case of economic disputes, such total exclusion of that loss of opportunity would be such as to make it practically impossible to make good the damage suffered.
Thus, it follows from foregoing considerations that, in circumstances such as those in the present case, where the Commission unlawfully refuses to conclude a delegation agreement using the indirect management method with an international organisation, the organisation concerned may seek compensation for harm corresponding not to financial compensation for the indirect costs which the implementation of such an agreement would have entailed, but to the loss of the opportunity to obtain such compensation.
In that respect, as regards, first, the question of whether there is a sufficiently direct causal link between the legal defect vitiating the decision of 8 May 2015 and the loss of opportunity relied on by the applicant, the Court recalls that that illegality consists of the breach of the duty of diligence incumbent on the Commission in the exercise of its discretion. The unlawfulness resulting, when a decision is adopted by an EU institution, from a breach of the duty of diligence does not necessarily affect the merits of the decision concerned. That is true of the legal defect affecting the decision of 8 May 2015.
It follows from the judgment on appeal (
15
) that the finding that the decision of 8 May 2015 was unlawful did not entail any obligation for the Commission to recognise the applicant’s status as an international organisation, which it claimed, even though such recognition was, under the EU financial legislation and in the applicant’s case, a mandatory condition for it to be able to continue to implement the EU budget using the indirect management method and, therefore, for the Court to be in a position to find, in the context of the present action for damages, that it justifies a loss of opportunity to conclude new management agreements under that method with the Commission.
Consequently, the breach of the duty of diligence vitiating the decision of 8 May 2015 cannot be regarded as the direct and certain cause of the financial harm which it alleges, namely the loss of the opportunity to conclude, after that date, as an international organisation, new delegation agreements for the management of the EU budget using the indirect management method and to receive the sums set out by way of compensation for indirect costs.
As regards, second, the question whether the harm alleged by the applicant is actual and certain, it follows from the decision of 8 June 2021, the legality of which the Court has confirmed by judgment of 4 September 2024, IMG v Commission, (
16
) by dismissing as unfounded the action for annulment brought by the applicant against that decision, that the applicant has been unable to claim the status of international organisation since 16 December 2014.
Thus, since, in accordance with the decision of 8 June 2021, the applicant did not satisfy, on the date of adoption of the decision of 8 May 2015 and subsequently, the condition of holding the status of an international organisation provided for by the EU Financial Regulations, it did not have the slightest chance of continuing to implement the EU budget using the indirect management method and of receiving, as a result, the sums set out by way of compensation for indirect costs.
In the light of the foregoing considerations, the present action for damages, which is based on the premiss that the applicant constituted an international organisation within the meaning of the EU Financial Regulations and, to that end, had a serious chance of continuing to implement the EU budget using the indirect management method, cannot succeed.
The annulment of a decision by the EU Courts does not imply a right to compensation for the financial harm alleged by the addressee of that decision if, after the judgment ordering the annulment, the institution concerned adopts a retroactive decision the operative part of which is identical and if the EU Courts consider that the operative part of that new decision is lawful.
(
1
)	Regulation (EU, Euratom) No 966/2012 of the European Parliament and of the Council of 25 October 2012 on the financial rules applicable to the general budget of the Union and repealing Council Regulation (EC, Euratom) No 1605/2002 (OJ 2012 L 298, p. 1).
(
2
)	Implementing Decision C(2013) 7682 final.
(
3
)	Article 84 of Regulation No 966/2012.
(
4
)	Council Regulation (EC, Euratom) No 1605/2002 of 25 June 2002 on the Financial Regulation applicable to the general budget of the European Communities (OJ 2002 L 248, p. 1).
(
5
)	Judgment of 2 February 2017, IMG v Commission (T‑381/12, not published, EU:T:2017:57).
(
6
)	Judgment of 31 January 2019, International Management Group v Commission (C‑183/17 P and C‑184/17 P, EU:C:2019:78).
(
7
)	Judgment of 9 September 2020, IMG v Commission (T‑381/15 RENV; ‘the initial judgment’, EU:T:2020:406).
(
8
)	On that date, 16 December 2014, the Commission decided to entrust the implementation, by indirect management, of the trade development programme provided for in the abovementioned implementing decision to an organisation other than the applicant.
(
9
)	Judgment of 22 September 2022, IMG v Commission (C‑619/20 P and C‑620/20 P; ‘the judgment on appeal’, EU:C:2022:722).
(
10
)	In accordance with Article 215 of the Rules of Procedure of the General Court.
(
11
)	Under the second paragraph of Article 61 of the Statute of the Court of Justice of the European Union, where a case is referred back to the General Court, the General Court is to be bound by the decision of the Court of Justice on points of law.
(
12
)	In accordance with Article 58(1)(c) of Regulation No 966/2012 and Article 62 of Financial Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council of 18 July 2018 on the financial rules applicable to the general budget of the Union, amending Regulations (EU) No 1296/2013, (EU) No 1301/2013, (EU) No 1303/2013, (EU) No 1304/2013, (EU) No 1309/2013, (EU) No 1316/2013, (EU) No 223/2014, (EU) No 283/2014, and Decision No 541/2014/EU and repealing Regulation (EU, Euratom) No 966/2012 (OJ 2018 L 193, p. 1).
(
13
)	Enshrined in Article 41 of the Charter of Fundamental Rights of the European Union.
(
14
)	Paragraphs 189 to 194 of the judgment on appeal.
(
15
)	In particular, paragraphs 113 and 156 of the judgment on appeal.
(
16
)	Judgment of 4 September 2024, IMG v Commission (T‑509/21, EU:T:2024:590).