Case T‑616/15

Transtec

v

European Commission

(EDF — ACP countries — The Cotonou Agreement — Support programme for cultural initiatives in Portuguese-speaking African countries — Sums paid by the Commission to the body entrusted with the financial implementation of the programme in Guinea-Bissau — Recovery following a financial audit — Offsetting of debts — Proportionality — Unjust enrichment — Non-contractual liability)

Summary — Judgment of the General Court (First Chamber), 3 July 2018

Development cooperation — Projects financed by the European Development Fund in ACP countries — Sums paid by the Commission to the body entrusted with the financial implementation of the programme established by the European Development Fund — Extra-judicial set-off decision adopted by the Commission — Annulment of that set-off decision by the General Court — No requirement to repay the disputed debt on the ground of unjust enrichment of the European Union

Development cooperation — Projects financed by the European Development Fund in ACP countries — Sums paid by the Commission to the body entrusted with the financial implementation of the programme established by the European Development Fund — Recovery following a financial audit — Breach of principle of proportionality — Conditions

Development cooperation — Projects financed by the European Development Fund in ACP countries — Financial Regulation applicable to the 10th European Development Fund — Regulation No 215/2008 — Establishment of amounts receivable — Recovery — Verification of the reality and amount of a debt as well as the conditions under which payment falls due — Discretion of the Commission — Judicial review

Acts of the institutions — Indication of the legal basis — Obligation — Scope — Omission not constituting a substantial defect — Limits — Possibility for determination by way of other aspects of the act

Actions for annulment — Actionable measures — Definition — Measures producing binding legal effects — Extra-judicial decision adopted by the Commission to offset debts and amounts due — Included — Action also seeking a declaration that there is no debt against the applicant — Admissibility — Conditions

Judicial proceedings — Application initiating proceedings — Formal requirements — Identification of the subject-matter of the dispute — Brief summary of the pleas in law on which the application is based — Unambiguous wording of the form of order sought by the applicant

See the text of the decision. (see para. 46)

An action may be brought before the European Union Courts on the basis of Article 263 TFEU where the contested act aims to produce binding legal effects which fall outside of the contractual relationship between the parties and which involve the exercise of the prerogatives of a public authority conferred on the institution acting in its capacity as an administrative authority. In that regard, an act whereby the Commission effects an extra-judicial set-off between debts and amounts due arising from different legal relationships with the same person, is a challengeable act for the purposes of that provision. It is in the context of such an action for annulment that it is for the General Court to examine the legality of one or more set-off decisions in the light of the effects of the failure actually to pay the sums due. In the context of recovery, following a financial audit, of amounts paid by the Commission to the body entrusted with the financial implementation of the programme established by the European Development Fund, the submission of an application for annulment of a set-off decision does not constitute an abuse of procedure, in so far as the action seeks also a declaration that the applicant does not owe the disputed debt to the European Union, where the question of whether the disputed debt exists does not concern the contractual context relating to the conclusion of the service contract between the applicant and the national authorising officer, or the interpretation of the terms of a contract, or any grant agreement, concluded between the applicant and the European Union represented by the Commission. (see paras 58, 60, 65, 66)

See the text of the decision. (see paras 75, 76)

It is apparent from Article 63(1) and Article 65(2) of the Financial Regulation applicable to the 10th European Development Fund that the competent authorising officer appointed by the Commission is required to verify the reality and the amount of the debt, as well as the conditions in which the debt is due, and may cancel or adjust the amount of the debt. Therefore, in the exercise of its discretion in the recovery of debts, the Commission cannot escape judicial review. If that was the case, the discretion enjoyed by the competent authorising officer appointed by the Commission would, in fact, become a quasi-arbitrary power, removing the control of the EU Courts. (see paras 110, 111)

The Commission may have to find a decision for the recovery of an amount paid by the Commission to the body entrusted with the financial implementation of the programme established by the European Development Fund, adopted following a financial audit, to be disproportionate, where, on the one hand, there was no fraud in connection with EU financing on the part of the beneficiary of that amount and, on the other, EU interests relating to the need to ensure compliance with the principle of sound financial management have not been significantly affected in that regard. (see paras 128, 129)

An audit report is not a challengeable act. An audit report merely takes note of the existence of possible pre-existing irregularities and the debts which arise from them, and thus does not modify the legal position of the debtor. The Commission may rely on the conclusions drawn in an audit report only if it regards the conclusions drawn in the report as correct and justified. In that context, it cannot avoid assessing the conclusions drawn in the audit report in the light of the principle of proportionality. (see paras 131, 132)

See the text of the decision. (see para. 145)

See the text of the decision. (see paras 148, 149)

A claim for repayment based on unjust enrichment of the European Union requires, in order to succeed, proof of enrichment on the part of the European Union for which there is no legal basis and of impoverishment on the part of the applicant which is linked to that enrichment. According to the principles common to the laws of the Member States, the right to repayment from the person enriched is conditional upon there being no legal basis for that enrichment. (see paras 156, 157)

In consequence of the annulment of a set-off decision seeking recovery of the amounts paid by the Commission to the body entrusted with the financial implementation of the programme established by the European Development Fund for infringement of the principle of proportionality, the Commission cannot be subject, where the set-off decision was adopted pursuant to the provisions of the Financial Regulation applicable, to the requirement to repay the disputed debt, consisting of the ineligible expenditure identified in the audit report, on the ground of unjust enrichment of the European Union. However, the Commission must give due effect to the annulment of the set-off decisions. (see paras 159, 160)