Judgment of the General Court (Fifth Chamber) of 4 October 2012 — Greece v Commission

(Case T-215/10)

EAGGF — Guarantee Section — Expenditure excluded from Community financing — Cotton — Aid to the least well-off — Rural development — Effectiveness of supervision — Proportionality

1. Agriculture — EAGGF — Grant of aids and subsidies — Obligation on Member States to organise an efficient system of administrative controls and on-the-spot checks — Scope — Unreliable controls — Disallowance by the Fund (Council Regulations No 1258/1999, Art. 8(1), and No 1782/2003, as amended by Regulation No 796/2004, Arts 18 and 20) (see paras 30, 137, 138, 153)

2. Agriculture — EAGGF — Clearance of accounts — Disallowance of expenses arising from irregularities in applying EU rules — Challenge by the Member State concerned — Burden of proof — Allocation between the Commission and the Member State (Council Regulation No 1258/1999, Art. 7(4)) (see para. 31)

3. Acts of the institutions — Regulations — Regulation prescribing specific control measures — No Member State discretion — Non-implementation — Justification — Other control system more efficient — Difficulties in application — Inadmissibility (Council Regulation No 1258/1999, Art. 8) (see paras 41, 156-158)

4. Acts of the institutions — Statement of reasons — Obligation — Scope — Decision relating to the clearance of accounts in respect of expenditure financed by the EAGGF (Art. 296 TFEU) (see paras 51-54, 154, 155)

5. Agriculture — Common agricultural policy — EAGGF financing — Principles — Disallowance of expenses arising from irregularities in applying EU rules — Financial correction — Conditions — Existence of a significant failure exposing the EAGGF to a real risk of loss (Council Regulation No 1258/1999, Art. 7(4)) (see paras 75, 76, 80-83)

6. European Union law — Principles — Rights of the defence — Compliance when communicating the results of checks carried out in the context of managing the EAGGF — Scope (Commission Regulation No 1663/95, Art. 8(1)) (see paras 104-108, 131-134)

7. Agriculture — EAGGF — Clearance of accounts — Elaboration of decisions — Written communication by the Commission to Member States of the results of its checks — Content — Conditions — Non-compliance — Effect (Council Regulations No 729/70, Art. 5(2)(c), fifth para., and No 1258/1999, Art. 7(4), fifth para; Commission Regulation No 1663/95, Art. 8(1)) (see paras 115-119)

8. European Union law — Principles — Protection of legitimate expectations — Conditions — Specific assurances given by the authorities (see paras 179, 185)

9. Agriculture — Common agricultural policy — EAGGF financing — Principles — Obligation on the Commission to disallow irregular expenses — Expiry of regulatory deadlines established for that purpose — Derogation from that obligation under the principle of legal certainty — Exclusion (Commission Regulation No 3149/92, as amended by Regulation No 1098/2001) (see para. 186)

10. Actions for annulment — Grounds — Misuse of powers — Concept — Decision relating to the clearance of accounts in respect of expenditure financed by the EAGGF (see paras 187, 188)

11. European Union law — Principles — Proportionality — Scope — Entire withdrawal of financial assistance granted by the EAGGF — Lawfulness — Conditions (see paras 193, 194, 214)

Re:

APPLICATION for annulment of Commission Decision 2001/152/EU of 11 March 2010 excluding from Community financing certain expenditure incurred by the Member States under the European Agricultural Guarantee Fund (EAGGF), Guarantee Section of the European Agricultural Guarantee Fund (EAGF) and the European Agricultural Fund for Rural Development (EAFRD) (OJ 2010 L 63, p. 7) in so far as it excludes certain expenditure incurred by the Hellenic Republic.

Operative part

The Court:

1. Dismisses the action;