JUDGMENT OF THE GENERAL COURT (Third Chamber)
28 February 2019
(*)
(Arbitration clause — Contracts concluded within the sixth framework programme for Research and Technological Development (2002-2006) — Reimbursement of costs incurred by the applicant plus default interest — Eligible costs — Contractual liability)
In Case T‑69/16,
Ateknea Solutions Catalonia, SA, established in Barcelona, (Spain), represented by M. Troncoso Ferrer, C. Ruxió Claramunt and S. Moya Izquierdo, lawyers,
applicant,
v
European Commission, represented initially by L. Grønfeldt and M. Siekierzyńska, and subsequently by M. Siekierzyńska and R. Lyal, acting as Agents,
defendant,
ACTION based on Article 272 TFEU, seeking an order that the Commission pay the applicant an amount of EUR 1 258 533.89 or, in the alternative, an amount of EUR 1 025 845.29,
THE GENERAL COURT (Third Chamber),
composed of S. Frimodt Nielsen, President, I.S. Forrester (Rapporteur) and E. Perillo, Judges,
Registrar: S. Bukšek Tomac, Administrator,
having regard to the written part of the procedure and further to the hearing on 11 April 2018,
gives the following
Judgment
I.      Background to the dispute
1        The applicant, Ateknea Solutions Catalonia, SA, is a Spanish engineering centre active in the field of research, consulting and technological development.
2        Between 2004 and 2007, under its former name of the Centre de Recerca I Investigatió de Catalunya, SA, the applicant entered into a series of contracts with the European Community for the purpose of carrying out certain research projects under the sixth framework programme, which is defined by Decision No 1513/2002/EC of the European Parliament and of the Council of 27 June 2002 concerning the sixth framework programme of the European Community for research, technological development and demonstration activities, contributing to the creation of the European Research Area and to innovation (2002 to 2006) (OJ 2002 L 232, p. 1) (‘the sixth framework programme’).
3        Two types of projects were supported under the sixth framework programme, namely cooperative research projects and collective research projects, both concerning specific actions intended to help small and medium-sized enterprises (SMEs) to boost their technological capacity, improve their access to the best research and technology and develop their ability to operate on a European and international scale.
4        In the context of the first category, research activities are carried out by research, technological development and innovation performers (‘RTD performers’) on behalf of a certain number of SMEs on topics of common interest. The second category includes research activities carried out by RTD performers for industrial associations or industry groupings in entire sectors of industry where SMEs are prominent at the European level.
5        The 24 contracts at issue in the present case were concluded by, on the one hand, the European Community and, on the other hand, the participants in the project concerned. The participants are SMEs, associations or groupings and RTD performers. Under the contract, the participants are required to form consortia to carry out research. The applicant was an RTD performer, acting in part as coordinator of a consortium and in part as a mere contractor. The contracts provided that the financial contributions of the European Community would be paid exclusively to the project coordinator.
6        Article 12 of the contracts under the sixth framework programme provides that Belgian law applies to them.
7        Article 13 of the contracts under the sixth framework programme contains an arbitration clause according to which the General Court or the Court of Justice, as the case may be, is to have jurisdiction to resolve disputes between the European Union and the contractors concerning the validity, application or interpretation of those contracts.
8        Article 14 of the contracts under the sixth framework programme provides that the general conditions set out in Annex II to those contracts (‘the general conditions’) form an integral part of them. Those conditions were established for contracts concluded under the sixth framework programme. In 22 of the 24 contracts in the present case, Article 14 refers at the same time to Annex III, which also contains general conditions, which, in accordance with Article 14(2) of the contract, take precedence over the provisions of Annex II.
9        Following an investigation carried out by the European Anti-Fraud Office (OLAF), concerning suspicions of fraud relating to EU funds committed in the context of the applicant’s earlier activities, for which the final report was drawn up in February 2009, the Commission, by letter of 19 October 2009, informed the applicant that its participation in projects under the sixth framework programme would be subject to a special review.
10      On 4 June 2010, an initial draft audit report was sent to the applicant. On the basis of Article II.19.1.(e) of the general conditions, that report proposed to reject as ineligible some of the declared staff costs, in particular, the costs of staff provided by the company Centre de Transferencia de Technologia, SL
(‘CTT’). The applicant submitted comments on the initial draft report by letter of 30 June 2010.
11      By letter of 17 August 2010, the Commission informed CTT of its decision to subject it to a special review in order to clarify certain issues arising in the context of the special review
concerning the applicant.
12      On 29 February 2012, a new draft audit report was sent to the applicant. The applicant submitted its observations by letter of 29 April 2012.
13      By letter of 19 December 2012, the Commission sent the applicant the final audit report. The auditors made a financial correction in favour of the Commission for a total amount of EUR 3 208 290 (of which EUR 1 713 693 corresponded to the CTT staff costs and EUR 1 071 997 to indirect costs).
14      On 18 July 2013, the Commission issued pre-information letters concerning the implementation of the results of the final audit report. The applicant challenged the content of the pre-information letters by letter of 30 September 2013.
15      On 21 October 2014, a new version of the pre-information letters was sent to the applicant. The applicant replied by letter of 10 December 2014.
16      In December 2014, in the context of the rejection of the CTT costs, the Commission issued 12 debit notes concerning several contracts for a total of EUR 768 590.69, which the applicant paid.
17      The Commission also sent final letters and the communication on final payments concerning the other contracts following the findings of the final report, resulting in an adjustment relating to CTT staff of EUR 1 021 179.19 to the contribution sought from the Commission.
II.    Procedure and forms of order sought
18      By application lodged at the Court Registry on 16 February 2016, the applicant brought the present action.
19      The parties presented oral argument and answered the questions put to them by the Court at the hearing on 11 April 2018.
20      After reformulating its form of order sought in the reply, the applicant claims that the Court should:
–        order the Commission to pay it a total amount of EUR 1 258 533.89 (corresponding to (i) EUR 727 769.40 as a result of the declaration of the costs of CTT as costs relating to in-house consultants, together with the corresponding indirect costs, (ii) EUR 96 358.10 as unlawfully claimed liquidated damages and (iii) EUR 434 406.39 as contractual damages) plus interest, in accordance with Article II.28.7 of the contract, at the rate applied by the European Central Bank (ECB) to its principal refinancing operations, as published in the C series of the Official Journal of the European Union, in force on the first day of the month in which the due date falls, plus three and a half percentage points, according to the methodology and calculations set out in Annex C.29 to the reply, until full payment has been made;
–        in the alternative, order the Commission to pay the applicant a total amount of EUR 1 025 845.29 (corresponding to (i) EUR 594 465.44 as a result of the declaration of the costs of CTT as third party resources, together with the corresponding indirect costs, (ii) EUR 73 873.27 as unlawfully claimed liquidated damages and (iii) EUR 357 506.58 as contractual damages) plus interest, in accordance with Article II.28.7 of the contract, at the rate applied by the ECB to its principal refinancing operations, as published in the C series of the Official Journal of the European Union, in force on the first day of the month in which the due date falls, plus three and a half percentage points, according to the methodology and calculations set out in Annex C.29 to the reply, until full payment has been made;
–        order the Commission to pay the costs.
21      The Commission contends that the Court should:
–        dismiss the action as inadmissible or unfounded;
–        in the alternative, find that the amount claimed is not due;
–        order the applicant to pay the costs.
III. Law
A.      Preliminary observations
22      The applicant puts forward two heads of claim.
23      In the context of the first head of claim, the applicant claims that the Commission failed to fulfil its obligations in respect of the contracts under the sixth framework programme, by rejecting all the costs concerning CTT members of staff. It considers that those members of staff are, principally, in-house consultants or, alternatively, persons made available by a third party.
24      By its first head of claim, the applicant seeks, first, as regards projects which were not completed at the time of the implementation of the final audit report, payment of the contributions sought from the Commission (EUR 727 769.40, or in the alternative EUR 594 465.44) and, second, as regards completed projects, as liquidated damages, reimbursement of the sum paid to the Commission on the basis of debit notes (EUR 96 358.10 or in the alternative EUR 73 873.27).
25      By its second head of claim, the applicant seeks compensation for the damage allegedly caused by the Commission on the ground that, as a result of the special review and the findings of the auditors, the applicant did not receive reimbursement of the costs corresponding to its research activities owed by its contractual partners in the context of cooperative and collective research contracts, which provided for full reimbursement of costs in accordance with the contracts to be concluded by the applicant and the consortia. The applicant estimates the damage suffered at EUR 434 406.39, or in the alternative EUR 357 506.58.
26      The rewording of the form of order sought in the reply is a result of the applicant’s acceptance of the proposals made by the Commission in its defence concerning certain ongoing projects during the implementation of the final audit report. Those changes do not concern the second objection raised in support of the first head of claim, concerning debit notes, because they related only to closed projects.
B.      The first head of claim
27      The applicant raises four pleas in law in support of its first head of claim. The first plea in law alleges manifest errors in the assessment of the facts, leading to infringement of Articles II.19 and II.20 of the general conditions applicable to contracts under the sixth framework programme. The second plea in law alleges a breach of the principle of protection of legitimate expectations. The third plea in law alleges breach of the principle of equal treatment. The fourth plea in law alleges an infringement of the principles of good faith and sound administration in the performance of contracts by the Commission.
1.      The first plea in law, alleging infringement of Articles II.19 and II.20 of the general conditions
(a)    Preliminary observations
28      The applicant disputes the four main findings of the final audit report that led the auditors to consider the costs of the CTT staff ineligible, including in particular:
–        failure to comply with the two conditions that must be fulfilled in order for the staff of an external company to be considered ‘in-house consultants’ of the contractor and, therefore, constitute eligible costs, namely:
–        the condition that the costs of the in-house consultants must not differ significantly from the costs of the contractor’s staff
in the same category; and
–        the condition that the consultant must work under the supervision of the contractor;
–        the unreliability of the time records for the CTT staff;
–        the existence of doubts as to the validity of the cooperation agreement concluded between the applicant and CTT on the ground that it was signed by persons who were not authorised to represent the two companies (that is to say, the fact that Ms L., the representative of CTT, signed instead of Mr C., the applicant’s representative, and vice versa);
–        the existence of a conflict of interests because Mr C. owns both the applicant and CTT.
(b)    Arguments of the parties
(1)    The breach of conditions relating to use of ‘in-house consultants’
29      The applicant disputes the auditors’ findings that (i) the hourly rates charged by the CTT staff were significantly higher than those applicable to the applicant’s staff (in the same category and in the same year), and (ii) the supervision of the research work carried out by CTT staff was not always carried out by the applicant but was often assigned to CTT consultants.
30      As regards the alleged difference in hourly rates between the staff of CTT and that of the applicant, the essential content of the applicant’s arguments can be summarised as follows.
31      First, the applicant criticises the Commission’s auditors for examining staff costs on the basis of the same categories of staff, when those categories changed over the duration of the contract (for example, a project assistant can become a project manager). The applicant maintains that the Commission’s approach of taking as a starting point the category rather than the function of the staff members is incorrect.
32      Secondly, the applicant essentially objects to the fact that the difference between the hourly rates was not detected in the first audit report, whereas the final report comes to a fundamentally different conclusion.
33      Thirdly, the applicant relies on two audit reports made at its request by the auditors, Ernst & Young, that is to say the report of 9 December 2015 (‘the E&Y initial report’) and the complementary report of 29 July 2016 (‘the E&Y complementary report’), which confirm the applicant’s contention that the salaries of the CTT staff and the amounts invoiced were similar to those paid by the applicant to its own staff in the same professional ‘category’.
34      In the reply, the applicant appears to accept the ‘categories’ relied on by the Commission’s auditors. However, according to the applicant, even when using those categories, the CTT staff costs were not significantly different, as demonstrated by the E&Y complementary report.
35      With regard to the alleged lack of supervision of the CTT staff, while acknowledging that the consultants at CTT were sometimes assigned management tasks, the applicant submits that this does not mean that they were working without its supervision. The applicant states that Mr C. closely followed all the projects for both the applicant and CTT and countersigned the monthly project cost summaries and time records. In those circumstances, when he worked daily with the CTT consultants in the same premises, it is unlikely, according to the applicant, that the consultants could have worked independently or without being supervised by the applicant’s management.
36      The applicant also refers to the sworn statements by the relevant CTT consultants collected for the purposes of the E&Y initial report. It submits that the persons who signed such statements were not all employees of CTT, which eliminates any risk of a conflict of interests.
37      The applicant also notes that the initial draft of the audit report acknowledged that the work of the consultants was designed and controlled by the applicant.
38      The Commission maintains that it was correct to dismiss as ineligible the CTT staff costs as relating to ‘in-house consultants’ of the applicant. In theory, the Commission fully accepts that contractors may use consultants from external firms and consider the related costs to be contractor’s staff costs and, hence, eligible costs. However, this is an exception to the basic principle that the work must be performed by the contractor itself.
39      The Commission submits that the contractual requirements relating to subcontracting are very strict; in particular subcontracting may relate
only to part of the project and the tasks to be subcontracted are subject to its prior approval. However, in the applicant’s case, it used in-house consultants to a very large extent (in some cases more than 50% of the staff costs declared for a given project) and without the Commission’s prior approval.
40      As regards the significantly different hourly rates, the Commission maintains that its auditors found that, for most categories of staff and for most periods, CTT’s hourly costs were significantly higher than the costs invoiced by the applicant for its own staff in the corresponding categories and for the corresponding periods.
41      The Commission submits that the categories of staff of the applicant and of CTT compared by the auditors corresponded to categories established by the applicant itself.
42      The Commission maintains that the
E&Y initial report relied upon by the applicant
does not call into question the findings of the final report in so far as, in essence, the calculations made therein are based on amounts and a number of hours declared by the applicant for CTT staff which differ from those used in the calculations of the final audit report. Furthermore, the E&Y initial report has a different scope.
43      In its rejoinder, the Commission adds that it is clear from the E&Y complementary report (in particular from Annex I) that the applicant compares staff members
on a strictly individual basis, that is to say, in many cases, the person in question is compared with himself, since the same person first appears as an employee of CTT and is then ‘compared’ to himself as an employee of the applicant. Thus, according to the Commission, the applicant took as a basis, not a comparison of employees in the same category, but a subjective individual comparison. The Commission also notes that the list of comparable staff drawn up by the applicant itself differs from that drawn up by E&Y in that company’s complementary report.
44      In addition, the Commission argues that the E&Y complementary report contains 47 comparisons between the staff costs of CTT and those of the applicant, from which it appears that the costs of CTT consultants were higher by more than 20% in 12 cases, by 10% in 17 cases and by 5% in 22 cases. In view of those figures, the Commission considers that there were considerable differences between the costs of the CTT staff and those of the applicant’s staff, which justified the Commission’s rejection of the costs of the CTT staff as ineligible.
45      With regard to lack of supervision, the Commission submits that, when a contractor decides to make use of the possibility, laid down in the guide to financial matters relating to indirect actions under the sixth framework programme (‘the financial guide’), of using external staff, it is incumbent upon him to show that all the relevant conditions are satisfied. However, the applicant has not demonstrated that the condition that the work of the in-house consultants must be ‘decided, designed and supervised by the contractor’ was satisfied.
46      According to the Commission, the fact that Mr C. countersigned a summary table covering all the applicant’s staff and listing all the projects cannot be regarded as evidence of supervision of the work of the CTT staff.
47      The Commission submits that the sworn statements signed by the CTT consultants concerned, relied upon by the applicant, are the only evidence of the applicant’s supervision of the work of CTT staff. In any event, such statements cannot call into question the findings of the final report, particularly in view of the fact that the vast majority of the signatories of these statements are still employed by CTT or by the applicant and are therefore in a situation of a conflict of interests.
48      As regards the applicant’s argument that the initial draft report contained a finding different from that contained in the final report, the Commission submits that, by its very nature, a draft report is liable to be amended.
(2)    The unreliability of the CTT consultants’ time records
49      In essence, the applicant criticises the auditors for calling into question the reliability of the time records of CTT staff and not those of the applicant, even though the two companies used the same time recording system. The applicant claims that the hours declared by CTT employees concerning their contribution to projects under the sixth framework programme were justified, invoiced by reasonable and reliable means, in accordance with the financial guide, which was confirmed by the E&Y initial report and by the E&Y complementary report.
50      By way of example, the applicant refers to Annex C.22 to the reply, which includes the working time sheet report for January 2006. The applicant asserts that that document includes, inter alia, the working time of two consultants working for CTT (Mr P. and Mr H.); the applicant also refers to ’Annex B.7 of the Defence’.
51      As regards the reliability of the time records, the Commission submits that the applicant’s complaint that it is not logical to call into question the reliability of the time records of CTT staff but not of the applicant’s staff is inadmissible, inasmuch it reproduces the arguments put forward in the context of the second plea in law alleging infringement of the principle of protection of legitimate expectations.
52      In any event, that complaint is unfounded, since the Commission considers that it has not given the applicant precise, unconditional and consistent assurances that would enable it to rely upon any certainty in that regard.
53      As regards the E&Y initial report relied upon by the applicant, the Commission notes that nowhere in that report is the reliability of the time records confirmed.
54      The Commission also submits that it was not the registration system as such that was criticised in the final audit report, but more precisely the time records. However, according to the Commission, the applicant has not put forward any relevant argument capable of undermining the findings of its auditors.
55      The Commission recalls that the reasons why the reliability of CTT’s time records was called into question are set out in detail in the final audit report. First, as Mr C. confirmed, there was a practice of compensating for longer working days by reporting more hours than actually worked. Secondly, the applicant did not keep the originals of the time records and when they could, nevertheless, be retrieved, it turned out that the time records compiled by the applicant’s administrative staff in charge of encoding the data did not match the originals in question. For want of any evidence that these were isolated cases of error, the Commission argues that the auditors were correct in concluding that the time records of the CTT staff were unreliable.
56      The Commission also adds that CTT’s special review was based on a more complex analysis than that of the E&Y auditors and concerned not only the reasonableness of the time records but also their reliability. The audits performed by the E&Y auditors cannot therefore serve to undermine the findings of the final report.
(3)    The validity of the agreement between the applicant and CTT
57      The applicant submits that the fact that the parties’ signatures in the cooperation agreement concluded in 2004 between it and CTT were
inverted does not render it invalid; and that the fact that the said agreement is valid and enforceable, it argues, is confirmed by an sworn declaration signed by the two persons in question (attached in Annex A.38 to the application) and by a legal opinion.
58      Furthermore, the applicant complains that the Commission did not specify which contractual obligations were not fulfilled by the parties.
59      With regard to the signatures being the wrong way round, the Commission submits that that factor was only one of the reasons why the auditors concluded that the contract was invalid. Moreover, the Commission maintains that, contrary to the applicant’s assertions, no statement by the two persons concerned was attached to the application. Annex A.38 to the application referred to by the applicant contains only Mr C.’s statement concerning the cooperation agreement of 1 September 2008 (English version) and 1 September 2004 (Spanish version).
60      In addition, the Commission submits that the auditors also found that, to a large extent, the parties had not fulfilled their obligations under the cooperation agreement and that the agreement had been concluded only in order to satisfy the conditions of the contracts under the sixth framework programme, with no genuine intention on the part of the parties of fulfilling the obligations arising from them.
61      In answer to the applicant’s complaint in that regard, the Commission submits that the final audit report lists the contractual obligations imposed by the agreement between CTT and the applicant, which have not been fulfilled. These include the following obligations:
–        to agree on the list of researchers required for the projects and to update it;
–        to assign the applicant responsibility for defining, assigning and supervising all work relating to the projects;
–        to agree on the hourly rate per project;
–        to ensure equivalence of the hourly rates applied by the applicant and CTT.
62      The Commission submits that the applicant does not dispute the fact that no list of CTT researchers was agreed by it and CTT, and that no agreement was reached with regard to the hourly rates. On the contrary, CTT charged the costs relating to its staff in part on a flat-rate basis and in part on actual costs. Moreover, there were constant staff movements between the applicant and CTT in the middle of the life-cycle of the project and for no apparent reason. The Commission considers that all those factors, taken as a whole, constitute sufficient proof that the contract was concluded without any real intention of performing the resulting obligations.
(4)    The existence of a conflict of interests
63      The applicant submits that the fact that Mr C. is both its owner and that of CTT does not give rise to a conflict of interests within the meaning of Article II.3.2 of the general conditions. It is in no way apparent from that requirement that such a conflict occurs automatically when a contractor and an external firm providing staff belong to the same owner. The Commission was informed that CTT had been owned by Mr C. throughout the contractual relationship with the applicant which began in 2003. In addition, the applicant states that Ms L. no longer works for CTT or for any other company linked to it, so that there is no possibility of a conflict of interests.
64      As regards the conflict of interests in the head of claim referring to Mr C., the Commission submits that, in accordance with Article II.3.2.1 of the general conditions, it is not necessary that a conflict of interest be actual or that it actually materialise in order for the contractor to be required to take all the precautionary measures necessary to avoid any risk of conflict of interests and to inform the Commission of any situation that could lead to such a conflict of interests. In the present case, it is argued, the applicant has not shown that it had taken all the precautionary measures to avoid the manifest risk of a conflict of interests between the two entities, nor that it had informed the Commission of that potential conflict of interests.
65      Finally, the Commission maintains that the final report puts forward five grounds for rejecting the costs relating to CTT in concluding that they are ineligible. However, three of those grounds would be enough. The two additional grounds, namely: the invalidity of the cooperation agreement between CTT and the applicant, and the conflict of interests in the case of Mr C., who owns and manages the two parties to the agreement, merely support the conclusion that the costs in question were not eligible.
(c)    Findings of the Court
(1)    Preliminary observations
66      The first plea in law focuses primarily on the conditions for subcontracting work associated with the project to third-party undertakings. It is necessary to recall, as the Commission does, that the general conditions strictly govern the use of such subcontracting. As a general rule, all work must, in accordance with Article II.6.1 of the general conditions, be carried out by the contractors themselves with their own resources. The contracts under the sixth framework programme set out two exceptions to that rule:
–        by virtue of Article II.6.1 and Article II.6.2 of the general conditions, certain elements of the work may be subcontracted on condition that it concerns only the execution of a limited part of the project and that the tasks concerned must be mentioned in Annex I to the contracts;
–        Article II.19.1(e) and Article II.1.29 of the general conditions provide for the use of ‘resources made available by a third party’, provided that it is agreed with the Commission ex ante and provided for in Annex I to the contracts.
67      It is not disputed in the present case that neither of the two options was used by the parties. By contrast, the applicant relies on a third possibility for the use of on external staff, provided for in the financial guide (see point 6.1.1 of that guide), which is worded as follows:
‘There are three possible ways of classifying the costs of in-house consultants (in any event costs will only be eligible if they fulfil the conditions of the contract (Article II.19)):
(1)      They can be considered as personnel costs; regardless of whether the intra-muros consultants are self-employed or employed by a third party, if the following cumulative criteria are fulfilled:
(a)      The contractor has a contract to engage a physical person to work for it and some of that work involves tasks to be carried out under the EC project.
(b)      [The in-house consultant] must work under the instructions of the contractor (i.e. the work is decided, designed and supervised by the contractor).
(c)      [The in-house consultant] must work in the premises of the contractor.
(d)      The result of the work belongs to the contractor
...
(e)      The costs of employing the consultant are not significantly different from the personnel costs of employees of the same category working under labour law contract for the contractor
...’
68      It is apparent from the findings of the final audit report drawn up by the Commission’s auditors that the conditions referred to in point 6.1.1(b) and (e) of the financial guide were not considered to have been satisfied. The validity of those findings, called into question by the applicant, is examined by the Court below.
(2)    The breach of conditions relating to the use of ‘in-house consultants’
69      As regards the costs/hourly rates of the CTT consultants, the auditors stated that they based their calculations on the ‘categories’ of staff communicated by the applicant and found that the differences in hourly rates were only lower in the categories ‘researchers’ for 2007 and 2009 and ‘senior researchers’ for 2005 and 2006, while most of the other categories and periods showed that the CTT hourly rates were considerably higher than those declared for the applicant’s staff.
70      The applicant’s arguments are not capable of undermining those findings.
71      First, the applicant criticises the Commission for having relied on ‘categories’ and not the actual ‘functions’ of staff members. According to the applicant, there is a disagreement with the Commission concerning the definition of the concept of ‘category’, which was used as an incorrect starting point for the calculations of the auditors. Moreover, according to the applicant, the Commission was wrong to fail to take into account the professional development of members of staff during the period of performance of the contracts.
72      However, in the reply, the applicant appears to accept that the ‘categories’ used by the Commission’s auditors were appropriate, but submits that, even taking into account those same categories as a starting point, the costs declared in relation to the CTT consultants were not significantly different, which is confirmed by the E&Y complementary report.
73      First, the applicant merely makes general and abstract claims concerning the relevance of the E&Y complementary report and its annexes, without specifically identifying the alleged errors that that report is supposed to reveal in the findings of the final audit report. Second, it is common ground that, as the Commission maintains, the scope of the E&Y complementary report differs from that of the final audit report, in so far as it covers only 24 projects rather than 30.
74      Moreover, it is apparent from a reading of the annexes to the E&Y complementary report (see, for example, Annex C.31 to the reply) that, as the Commission submits, members of staff of the applicant and of CTT are not compared in terms of ‘categories’ but on an individual basis and, sometimes, the same people are compared to themselves, but as members of staff of another company. In addition, Annex C.31 to the reply clearly shows several differences between the salaries of CTT staff and those of the applicant’s staff. That evidence leads to the finding, first, that the E&Y complementary report is based on different criteria from those of the Commission’s final audit report and, second, that its content is not capable of undermining the findings reached by the Commission’s auditors. The applicant does not succeed in supporting its claims with the details required to show that its findings are well founded. It has not adduced sufficient evidence to call into question the findings of the final audit report.
75      As regards the condition that the contractor must ensure supervision of in-house consultants, the Commission’s auditors concluded that the supervision of the research activities was not always performed by the applicant, since it was often assigned to CTT consultants (see page 722 of the final audit report).
76      The applicant acknowledges that certain CTT consultants were project managers. First, it fails to show that such practices were marginal. Second, the mere fact that Mr C. countersigned the monthly cost summaries per project does not satisfy the condition that the work must be ‘decided, designed and supervised by the contractor’, in accordance with point 6.1.1 of the financial guide. The sworn statements on which the applicant relies do not have sufficient evidential value, in so far as they come from interested persons, namely CTT staff members.
77      Since there is no serious evidence calling into question the findings of the final audit report, it must be held that the Commission was right to declare that the two conditions allowing for the use of external staff provided for in the financial guide were not satisfied.
78      The financial guide is based on the concept of a clear distinction between the use of employees of the contractor benefiting from the sixth framework programme and the use of subcontractors. While the applicant chose an approach free of that distinction by moving employees between the two undertakings, it must at least provide a specific and individual reason for the different versions of the concept, which it failed to do, in the present case.
(3)    The unreliability of the CTT consultants’ time records
79      As regards the working time records, it is apparent from the final audit report (see pages 736 to 738 of the final audit report) that the examination of their reliability led the auditors to raise several questions both overall (in essence, the auditors found that the number of working hours declared was inflated and exceeded the productive working time) and in individual cases (the auditors identified four specific examples of inconsistency in the time records of CTT members of staff). To that extent, the final audit report clearly set out the reasons for which the applicant’s time records were considered to be unreliable.
80      The applicant has failed to demonstrate in a substantiated manner how that finding is incorrect.
81      In essence, the applicant merely, first, declares that the time recording system it used was correct and, second, refers, generally, but imprecisely, to the findings in that regard contained in the E&Y initial report.
82      However, as the Commission rightly submits, it was not the time recording system as such which was regarded as defective by the auditors, but rather its implementation and the inconsistencies detected in the time records which cast doubts on their reliability.
83      At the hearing before the Court, the applicant acknowledged, as regards the time records and their reliability, that it had made no precise statement.
84      Since the Commission has not directly witnessed the performance of the applicant’s tasks, it does not have, in checking the accuracy of the staff costs declared by the applicant, any resources other than those deriving inter alia from the production of reliable working time records. Since the applicant was not able to produce reliable working time records to justify the staff costs declared, the Commission was entitled to reject them as ineligible.
(4)    Conclusion
85      In view of the shortcomings noted for the first and second requirement, which justify the Commission’s decision concerning the ineligibility of the CTT staff costs declared, it is not necessary, in any event, for the Court to assess the arguments concerning the other two infringements found by the auditors, namely the problem of the signatures and the conflict of interests regarding Mr C. The audit report is centred on the finding of infringements of the contractual provisions concerning subcontracting and the obligation to produce reliable working time records, with the result that those findings, unless proved to be incorrect, constitute a sufficient base for considering the CTT staff costs to be ineligible.
86      In the light of all those findings, the first ground of appeal must be rejected.
2.      The second plea in law, alleging infringement of the principle of the protection of legitimate expectations
87      The applicant maintains that the Commission’s conduct provided it with precise assurances regarding the correct use of ‘in-house consultants’ and its time recording system. Consequently, the corresponding declared costs were wrongly rejected.
88      The applicant submits that the action is admissible. On the merits, it submits that to claim that an audit report or an oral confirmation cannot help to give assurances to the contractor who is audited is tantamount to depriving the report itself of any reliability and constitutes an abuse of power by the institution concerned.
89      So far as the use of in-house consultants is concerned, the applicant argues that the assurances it relied on derived from the following circumstances:
–        the first audit, carried out by the Commission in December 2005, of the accounting and administrative procedures employed by the applicant, and the resulting report;
–        the audit carried out in June 2006 concerning the applicant’s participation in projects under the fifth and sixth framework programmes; the matter of in-house consultants was specifically discussed during a meeting between the Commission and the applicant and the compliance of the use of CTT staff with the rules for participation in the sixth framework programmes was confirmed; a declaration signed by an external auditor present at that meeting attests to this.
90      Contrary to those indications, the final audit report concluded that the costs relating to CTT in-house consultants were not eligible on the grounds that they ought to have been declared as ‘resources made available by a third party’ within the meaning of Article II.19.1(e) and Article II.1.29 of the general conditions, and that, therefore, they ought to have been identified as such in Annex I to the contracts under the sixth framework programme.
91      The applicant maintains that the fact that it correctly declared the costs of the CTT consultants was also confirmed after the fact in the context of the Signspeak project under the seventh framework programme, for which the Commission requested that all costs relating to CTT staff be declared as costs related to in-house consultants.
92      The Commission also gave rise to a legitimate expectation concerning the reliability of the applicant’s time recording system, in particular, in the context of the first audit procedure carried out in 2006 when an auditor of the Commission gave a favourable opinion about the system used by the applicant, which has not changed since. Moreover, the reasonableness of the applicant’s time recording system was confirmed by an audit report made in 2006 for three contracts under the fifth framework programme which also took account of the system of time records for projects under the sixth framework programme in progress.
93      The Commission submits that the plea in law is inadmissible in a contractual context. In the alternative, the Commission submits that the cumulative conditions established by the case-law that must be satisfied in order for an individual to rely upon the principle of the protection of legitimate expectations are not satisfied in the present case. It follows from the very nature of the checks and audits carried out within the framework of the projects financed by the European Union that the assessments and opinions contained in the relevant reports cannot be regarded as ‘specific assurances’.
94      As regards the use of in-house consultants, the Commission submits that the various audits and verifications it conducted contained no reference in that regard and cannot be deemed to give the applicant the slightest assurance. As for the particular discussions that allegedly took place during the 2006 audit and checks and the statement signed in that respect by an external auditor, the Commission submits that the mere fact that the question of in-house consultants was discussed and that the Commission’s auditors did not detect, at that time, any problems concerning the eligibility of the costs concerned does not amount to precise, unconditional and consistent assurances as required to invoke the principle of protection of legitimate expectations.
95      The Commission considers that the reference to the Signspeak project is irrelevant, inasmuch as the project falls under the seventh framework programme which is postdates the final audit report and is not at issue in the present action.
96      As regards the reliability of the time recording system, the Commission submits, in essence, that the fact that the checks and audits
carried out in respect of the applicant revealed no problems in that regard cannot, by definition, be regarded as communication on the part of the Commission of precise, unconditional and concordant information as to the appropriateness of the CTT staff time records. The Commission argues in this regard that even if a time recording system is properly designed, its actual implementation may give rise to problems. The Commission points out that, by email of 5 May 2006, it clearly told the applicant that its time recording system was the subject of a favourable opinion, but that its use in the sixth framework programme projects in which the applicant participated would have to be checked.
97      As regards the audit of June 2006 relied upon by the applicant, the Commission adds that that audit did not focus on the use of in-house consultants, that the number of projects and persons subject to review had increased significantly since then and that the findings of that audit concerned the design of the time recording systems, and not the manner in which they were implemented. Evidence of manipulation of the system was only later discovered in a more focused and in-depth analysis of the applicant’s use of CTT staff.
98      Contrary to what the Commission maintains, the second plea in law is admissible, in the light of the approach already recognised in the case-law, to the effect that it cannot be ruled out that a form of legitimate expectations may be relied on in contract law as it contributes to respect for the obligation on the parties to a contract to perform it in good faith (see, to that effect, judgment of 18 November 2015, Synergy Hellas v Commission, T‑106/13, EU:T:2015:860, paragraph 72). The applicant and the Commission subjected their contract expressly to Belgian law. In particular, the third paragraph of Article 1134 of the Belgian Civil Code provides that agreements must be performed in good faith, while Article 1135 of that code provides that ‘agreements are binding not only as to their express terms but also as to all the consequences which fairness, custom or the law attach to the obligation [assumed], according to its nature’.
99      Nevertheless, the second plea in law must be rejected on the merits.
100    The cumulative conditions of the principle of the protection of legitimate expectations laid down by the case-law, requiring precise, unconditional and consistent assurances from authorised and reliable sources, are not satisfied in the present case (see, to that effect, judgment of 19 March 2003, Innova Privat-Akademie v Commission, T‑273/01, EU:T:2003:78, paragraph 26). The assessments and opinions expressed during the reviews, audits and checks have no value beyond the particular review procedure carried out. The possible existence of irregularities which have not been investigated or brought to light previously can under no circumstances give rise to a legitimate expectation (see, by analogy, in the context of shared management, judgment of 18 June 2010, Luxembourg v Commission, T‑549/08, EU:T:2010:244, paragraph 77).
101    As regards authorisation, it must be held, in any event, that the auditors have a limited mandate and are authorised to carry out audits, but not to interpret the contractual terms which bind the parties.
102    The second plea in law must therefore be rejected.
3.      Third plea in law, alleging breach of the principle of equal treatment
103    The applicant submits that it proposed to the Commission on 10 December 2014 that all the contracts should be retroactively amended in order to include the costs of CTT consultants as ‘resources made available by a third party’ within the meaning of the general conditions. That proposal was rejected, even though the Commission did the same in other projects under the sixth framework programme, in particular in a project with the University of Barcelona (Spain), whose situation was comparable to that of the applicant. The applicant infers a breach of the principle of equal treatment.
104    The Commission submits in that regard that the possibility of regularising after the fact the use of ‘resources made available by a third party’ not provided for in the contract is exceptional and depends on the circumstances of each case. In the case of the University of Barcelona, certain administrative tasks were delegated to a foundation, which is a practice generally accepted by the Commission. The audits of the University of Barcelona revealed that the foundation was not mentioned as a third party in Annex I to the contracts, but no other irregularity was detected, since all the costs declared to the Commission were, in principle, eligible. It was in those circumstances that the Commission authorised retroactive amendment of Annex I to the contracts with the University of Barcelona.
105    However, the applicant’s situation is different, in that the fact of failing to indicate CTT as a ‘resource made available by a third party’ in Annex I to the contracts was not the only irregularity found. The Commission maintains that (i) the system involving CTT proved to be fraudulent, and that (ii) the CTT staff costs were ineligible because of the unreliability of the time records and for other reasons as well.
106    The Commission submits that the applicant had improperly claimed substantial sums (for the use of ‘back-end’ wages, for actual hours declared exceeding a standard number of annual working hours and for CTT staff charged at a flat rate), which distinguishes its situation from that of the University of Barcelona.
107    In its reply, the applicant submits, on the one hand, that the alleged system of consultants invoiced at a flat rate is not the subject matter of the present action and, on the other, that the time records were reliable and that the declared CTT staffing costs met all the conditions for being considered eligible.
108    In order to assess the third plea in law, it must be recalled in summary that, in essence, the applicant criticises the Commission for not having agreed, in 2014, to regularise its use of CTT staff after the fact by retroactively amending all the contracts in order to include the costs of CTT consultants as ‘resources made available by a third party’ in order to comply with the provisions of the general conditions.
109    It should be recalled in that regard that the general conditions referred to in paragraph 68 above do not provide for the possibility of retroactively amending conditions relating to subcontracting.
110    In addition, when such a request was made — in 2014 — the problems concerning the eligibility of staff costs in relation to CTT had already been found by the auditors. In those circumstances, retroactive amendment would clearly not be appropriate.
111    As regards the principle of equal treatment and the fact that such an amendment was possible for the University of Barcelona, that principle requires that comparable situations must not be treated differently and that different situations must not be treated in the same way unless such treatment is objectively justified. It is apparent from the case file that the applicant’s situation was objectively different from that of the University of Barcelona, in so far as no irregularities concerning eligible expenditure were detected in the latter’s declarations.
4.      The fourth plea in law, alleging breach of the obligation of performance in good faith of contracts and of the principle of sound administration
112    The applicant submits that the Commission concluded the contracts under the sixth framework programme as an institution of the European Union and not merely as a party to a contract. It is from that perspective that the applicant submits that the Commission has infringed the principle of sound administration enshrined in
Article 41 of the Charter of Fundamental Rights of the European Union, having regard, in particular, to the following circumstances:
–        the excessive length of the entire audit procedure (from October 2009 to December 2012) involving long periods of inactivity, for example between January 2011 and February 2012, when the applicant received the second draft audit report;
–        the excessive length of the whole inter partes procedure and the implementation procedure, from December 2012 to December 2014;
–        the lack of communication concerning the suspension of payments which took place in February 2009, the applicant not being informed of this until August 2009, which resulted in a breach of the European Code of Good Administrative Behaviour;
–        the contradictions between the first and the second draft audit reports;
–        interviews with the applicant’s partners and with independent persons, in breach of the confidentiality obligation which binds the Commission.
113    The applicant maintains that the allegedly complex system it put in place incorporating several affiliated companies was merely common practice. In addition, it fails to see how that circumstance and the fact that 31 projects were concerned should have made the audit more complex or lengthy. The applicant suggests that, in those circumstances, the Commission should have entrusted the task to a larger team of auditors.
114    As regards the suspension of payments, the applicant disputes the Commission’s statement that payments were suspended for the Medivoice project alone and refers to a ‘communication dated August 2009 concerning the Lotpim project’ (Annex C.24 to the reply) and the email sent to the applicant on 25 May 2010, informing it of the decision to lift the suspension of payments (Annex C.25 to the reply).
115    As regards the contradictions between the different versions of the draft audit report, the applicant criticises the Commission for modifying the position that it initially communicated and adds that a draft is liable to be amended, provided that the essence of the initial report is preserved.
116    The Commission submits that the fourth plea in law is inadmissible in a contractual context. In the alternative, the Commission proposes that it should be rejected as unfounded.
117    The applicant relies on the principle of sound administration and the principle of good faith governing the performance of contracts by the Commission. However they are labelled, the various arguments raised by the applicant are, in any event, unfounded.
118    First, as regards the alleged excessive length of the whole procedure, the Commission is right to point out the particular nature of the special audit started in 2009. This was a specific review of CTT staff, which differs from an ordinary audit of a single entity, since it had to encompass a large number of entities and projects (more specifically, 31 different projects at different stages of completion). The review involved addressing a complex system set up by the applicant. The length of the procedure was also protracted, in view of the need to examine all the additional information provided in the course of the procedure. In particular, between January 2011 and February 2012, the auditors assessed new evidence obtained during the special review.
119    Secondly, the Commission rightly submits that, as regards 13 ongoing projects under the sixth framework programme, the suspension of payments was duly notified to the applicant and took effect only on 6 August 2009. The only project in respect of which payment was suspended in February 2009 but notification of the suspension of payment was given in August 2009 was the Medivoice project. In that regard, the Commission submits that the situation was fully put in order and, moreover, that the suspension had been lifted on 15 July 2010.
120    Thirdly, with regard to the alleged contradictions between the different versions of the audit report, the applicant’s complaint is not sufficiently precise.
121    Fourthly, with regard to the interviews allegedly giving rise to a breach of the confidentiality obligation, the Commission rightly contends that the interviews were conducted as part of OLAF’s investigation into projects under the fifth framework programme which took place in accordance with the rules applicable to such investigations. Therefore, the applicant’s argument is incorrect.
122    Finally, the Commission is right to add that the system put in place by the applicant involved constant staff movements between the various companies and that some researchers appeared as its own employees, when, in reality, they were employed by CTT for certain of the years in question. In addition, the applicant itself contributed to the length of the audit procedure, in view of the unreliability of the information it provided.
123    In so far as the applicant claims that its criticisms are based on Article 41 of the Charter of Fundamental Rights, in so far as it is entitled to have ‘[its] affairs handled
... fairly and within a reasonable time’, it must be held that, in the present case, the dispute concerns the performance of a civil law contract. The applicant agreed to carry out several tasks under a contract and, in return, the Commission agreed to reimburse the costs. The details concerning the performance of the service and the consideration were set out in detail in the terms of the contract. Moreover, as is not uncommon in business, the general conditions of the contract call for quality checks and penalties in the event of breach. Belgian civil law applies to defects.
124    The applicant maintains that several public powers conferred on the Commission with regard to contracts, with which contractors are required to comply with no power to negotiate definitively equates it with a public authority. In particular, the applicant refers to the Commission’s power to determine the arrangements for payment, to carry out audits or to impose liquidated damages. However, those factors do not in any way affect the predominant contractual nature of the present dispute.
125    In addition, it is apparent from the case-law that the EU institutions are subject to obligations flowing from the general principle of sound administration in regard to the public only in the exercise of their administrative responsibilities. On the other hand, when the relationship between the Commission and the applicant is clearly contractual, the latter can complain, in regard to the Commission, only of breaches of the terms of the contract or of the law applicable to it (see, to that effect, judgment of 3 June 2009, Commission v Burie Onderzoek en advies, T‑179/06, not published, EU:T:2009:171, paragraph 118). In the present case, the contractual nature of the dispute is not open to doubt and is not contested.
126    To that end, specifically as regards contractual disputes, it is necessary to analyse the objections raised by the applicant in the light of the principle of performance in good faith of a contract (see, to that effect, judgment of 20 July 2017, ADR Center v Commission, T‑644/14, under appeal, EU:T:2017:533, paragraphs 74, 75 and 172 to 174). That principle, in the present context, hardly affords less protection than that of sound administration. However, in the light of the above findings (see paragraphs 118 to 122 above), those objections can only be rejected, since the Commission simply performed its contractual obligations.
127    Also, even if established, the Commission’s alleged failures would have no effect on the applicant’s obligations under the contracts at issue, in particular on its obligation to ensure that the costs declared are eligible (see, to that effect and by analogy, judgment of 13 June 2012, Insula v Commission, T‑246/09, not published, EU:T:2012:287, paragraph 274).
128    Consequently, the fourth plea in law is rejected as unfounded.
C.      The second head of claim
129    The applicant seeks compensation for the damage it allegedly suffered in connection with 14 of the cooperative research and collective research contracts.
130    Those contracts included an Annex III, under which the costs incurred by the applicant, as an RTD performer, were to be fully reimbursed by the consortia, provided that they were eligible. However, the findings of the final audit report concerning the ineligibility of the costs relating to the CTT staff and their implementation by the Commission meant that, when disbursing the funds allocated to each project, the parties to the consortia presumed that the applicant’s costs should be reduced by the amount of the costs of the CTT consultants. The applicant therefore did not receive full reimbursement for its expenditure. The applicant limits the subject matter of its claim for damages to 14 contracts, although 22 of the contracts at issue in the present case contained an Annex III which provides for full reimbursement. However, 8 of these contracts had already been closed before the debit notes were issued and had been settled with the consortia before the costs were deemed ineligible by the Commission.
131    The applicant considers that there is a causal link between, on the one hand, the allegedly unlawful rejection attributable to the Commission of the costs relating to the CTT staff as ineligible and, on the other hand, the non-payment by the consortia to the applicant of 100% of its costs incurred in the course of its activities. Consequently, the applicant submits that the Commission must make good the damage in respect of its contractual liability, paying it an amount of EUR 434 406.39 (assuming that the costs relating to CTT are to be regarded as direct costs) or, in the alternative, an amount of EUR 357 506.58 (assuming that the CTT costs should be deemed to relate to ‘resources made available by a third party’).
132    The Commission submits in that regard that, under Articles 1142 and 1147 of the Belgian Civil Code, applicable to the contracts under the sixth framework programme in question, contractual liability is incurred as a result of a breach of contract attributable to one of the contracting parties, and it is for the party seeking compensation to establish a causal link between the breach of contractual obligations and the damage as it occurred.
133    In the present case, the Commission maintains, however, that it is under the consortium agreement, to which it is not a party, that the consortia have an obligation to provide RTD performers, such as the applicant, with full reimbursement of their eligible costs incurred for research activities. The Commission submits that, in so far as it has no contractual obligations in respect of the applicant, no contractual liability can be attributed to it. Consequently, the second head of claim is inadmissible on the ground that the Commission is not the correct defendant. In any event, it is manifestly unfounded,
since there is no causal link between the Commission’s actions undertaken in the context of the contracts concluded with the applicant and those of its other contractual partners.
134    First, it must be noted that the Commission is not a party to the contracts of the consortium from which the harm suffered allegedly arose, namely the contracts between the consortia and the applicant. Accordingly, there is no justification for attributing any contractual liability.
135    Second, even assuming that, on an indirect basis, the Commission’s conduct (that is to say implementing the auditors’ findings that the CTT staff costs were ineligible) could have caused damage to the applicant, in so far as it led, as a consequence, to its activities not being reimbursed by its other contractual partners, the claim for compensation must, in any event, be rejected, since the applicant has not succeeded in establishing that, contrary to the auditors’ findings, the staff costs it incurred in connection with CTT’s services constituted eligible costs. However, the eligibility of the costs was an essential requirement for their reimbursement by the consortia.
136    Third, in any event, the claim for compensation would also be unfounded since there is no evidence of the existence of damage. The applicant merely claims that it was not reimbursed by the consortia without giving details in that regard. It has not produced the consortium contracts nor specified what payments it received from its consortium partners.
137    The second head of claim must, therefore, be rejected.
138    In the light of the foregoing considerations, it is necessary to reject all of the applicant’s arguments and, accordingly, dismiss the action in its entirety as unfounded.
D.      Costs
139    Under Article 134(1) of the Rules of Procedure of the General Court, 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 applicant has been unsuccessful, it must be ordered to pay the costs, in accordance with the form of order sought by the Commission.
On those grounds,
THE GENERAL COURT (Third Chamber)
hereby:
1.      Dismisses the action;
2.      Orders Ateknea Solutions Catalonia, SA to pay the costs.
Frimodt Nielsen
Forrester
Perillo
Delivered in open court in Luxembourg on 28 February 2019.
E. Coulon
S. Frimodt Nielsen
Registrar
President
Table of contents
I.
Background to the dispute
II.
Procedure and forms of order sought
III.
Law
A.
Preliminary observations
B.
The first head of claim
1.
The first plea in law, alleging infringement of Articles II.19 and II.20 of the general conditions
(a)
Preliminary observations
(b)
Arguments of the parties
(1)
The breach of conditions relating to use of ‘in-house consultants’
(2)
The unreliability of the CTT consultants’ time records
(3)
The validity of the agreement between the applicant and CTT
(4)
The existence of a conflict of interests
(c)
Findings of the Court
(1)
Preliminary observations
(2)
The breach of conditions relating to the use of ‘in-house consultants’
(3)
The unreliability of the CTT consultants’ time records
(4)
Conclusion
2.
The second plea in law, alleging infringement of the principle of the protection of legitimate expectations
3.
Third plea in law, alleging breach of the principle of equal treatment
4.
The fourth plea in law, alleging breach of the obligation of performance in good faith of contracts and of the principle of sound administration
C.
The second head of claim
D.
Costs
*      Language of the case: English.