Judgment of the General Court (First Chamber) of 16 June 2015 —

Portugal v Commission

(Case T‑3/11)

‛EAGGF — Guarantee Section — EAGF and EAFRD — Expenditure excluded from financing — Deficiencies in the Land Parcel Identification System and the Geographic Information System (LPIS-GIS) in the performance of on-the-spot checks and in calculation of sanctions (financial years 2005 to 2007)’

1. Agriculture — Common agricultural policy — EAGGF, EAGF and EAFRD financing — Clearance of accounts — Procedure — Subject-matter — Financial correction not constituting a penalty (Council Regulations No 1258/1999, Art. 7(4), and No 1290/2005, Art. 31(2)) (see para. 25)

2. Agriculture — Common agricultural policy — EAGGF, EAGF and EAFRD financing — Clearance of accounts — Disallowance of expenses arising from irregularities in applying EU rules — Challenge by the Member State concerned — Burden of proof — Shared by the Commission and the Member State (Council Regulation No 1258/1999) (see paras 26-29, 39, 40)

3. Agriculture — Common agricultural policy — EAGGF, EAGF and EAFRD financing — Grant of aid and premiums — Obligation on the Member States to organise an effective system of administrative and on-site inspections — Unreliable controls — Disallowance by the Fund — Observance of the principle of proportionality — Justification for failing to establish controls based on internal organisation — Not permissible (Council Regulation No 1782/2003, Art. 20; Commission Regulation No 796/2004, Arts 6(2), 24(1)(c), and 27) (see paras 43-48, 53, 55, 56, 77, 82)

4. Agriculture — Common agricultural policy — EAGGF, EAGF and EAFRD financing — Clearance of accounts — Disallowance of expenses arising from irregularities in applying EU rules — Condition — Error attributable to an EU institution (Council Regulation No 1782/2003; Commission Regulation No 796/2004, Art. 49(1), second para.) (see para. 99)

5. Agriculture — Common agricultural policy — Integrated administration and control system for certain aid schemes — Single payment scheme and other ‘surface’ aid schemes — Intentional error in the declaration of area — National legislation making application of sanctions subject to the prior existence of a court decision confirming intentional non-compliance — Not permissible (Commission Regulation No 796/2004, Art. 53) (see paras 108, 110, 111, 113, 114)

6. Agriculture — Common agricultural policy — EAGGF, EAGF and EAFRD financing — Grant of aid and premiums — Obligation on the Member States to organise an effective system of administrative and on-site inspections — Scope (Council Regulation No 1782/2003, Art. 86; Commission Regulation No 2419/2001, Art. 16) (see paras 124, 126)

Re:

ACTION for annulment of Commission Decision 2010/668/EU of 4 November 2010 excluding from European Union financing certain expenditure incurred by the Member States under the Guarantee Section of the European Agricultural Guidance and Guarantee Fund (EAGGF), the European Agricultural Guarantee Fund (EAGF) and the European Agricultural Fund for Rural Development (EAFRD) (OJ 2010 L 288, p. 24), in so far as it applied financial corrections on the Portuguese Republic totalling EUR 40 690 655.11 on account of ‘[w]eaknesses in LPIS-GIS [Land Parcel Identification System and Geographic Information System] system, performance of on-the-spot checks and in calculation of sanctions’ in the financial years 2005 to 2007.

Operative part

The Court:

1. Dismisses the action;