Appeal brought on 27 November 2018 by the Portuguese Republic against the judgment delivered by the General Court (Fourth Chamber) on 26 September 2018 in Case T-463/16 Portugal v Commission

(Case C-737/18 P)

(2019/C 35/18)

Language of the case: Portuguese

Parties

Appellant: Portuguese Republic (represented by: L. Ines Fernandes, P. Barros da Costa, P. Estêvão and J. Saraiva de Almeida, Agents)

Other party to the proceedings: European Commission

Form of order sought

The appellant claims that the Court should:

1. Set aside the judgment under appeal, in so far as, by that judgment, the General Court dismissed the action for annulment of European Commission (EC) Decision C(2016) 3753 (1) of 20 June 2016;

2. Annul European Commission (EC) Decision C(2016) 3753 of 20 June 2016, given that the Court of Justice is in a position to ascertain the validity of the claims made by the Portuguese Republic;

3. Order the European Commission to pay the costs.

Grounds of appeal and main arguments

The Portuguese Republic requests that the judgment under appeal be set aside and, accordingly, that the decision at issue be annulled, on the following grounds:

1) Error of law and infringement of the principle of legal certainty — Infringement of Article 24 of Regulation (EC) No 73/2009 (2), and the provisions of the second subparagraph of Article 54(1)(c), and Article 71(1) of Regulation (EC) No 1122/2009; (3) and clear contradiction, arising from an error of law, with the findings in paragraphs 43 and 44 of the judgment under appeal, in that, in finding that the Commission’s second ground was unfounded, the General Court presupposed that Portugal’s cross-compliance control system was an effective control system, and, thus, in rejecting the ground while failing to annul the decision at issue, the General Court committed a manifest error of law and contradicted its own findings, thereby also infringing the principle of legal certainty.

2) Error of law, inconsistency, and infringement of the principle of proportionality, in so far as the judgment under appeal allows, in paragraph 41, the unequivocal distinction between eligibility and the cross-compliance control system, and, in paragraphs 46 and 47, it affirms, in a contradictory manner, that the total amount of the aid paid to farmers had to be corrected. Thus, in paragraph 43 of the judgment under appeal, the General Court erred in finding that the risk for the fund cannot be limited to the control sample, and in upholding the Commission’s financial correction applied to the entirety of the costs, which is neither appropriate nor necessary for the aim pursued, and is, as such, disproportionate. The General Court’s conclusion infringes the provisions of Article 5 TEU, Article 31(2) of Regulation No 1290/2005 (4) and Article 50(1) of Regulation No 1122/2009, from which it is apparent that the correction rate applies solely to that part of the costs exposed to the risk, that is, 1 %. Thus, the judgment under appeal contained a manifest error of law and was inconsistent in its reasoning, thereby infringing general principles and the rules laid down in the first and sixth paragraphs of point 2 of Commission Working Document, AGRI-2005-64043, through their incorrect application, and also infringed Commission Working Document DS/2010/29 REV and the principle of proportionality.

(1) Commission Implementing Decision (EU) 2016/1059 of 20 June 2016 excluding from European Union financing certain expenditure incurred by the Member States under the European Agricultural Guarantee Fund (EAGF) and under the European Agricultural Fund for Rural Development (EAFRD) (notified under document C(2016) 3753) (OJ 2016 L 173, p. 59).

(2) Council Regulation (EC) No 73/2009 of 19 January 2009 establishing common rules for direct support schemes for farmers under the common agricultural policy and establishing certain support schemes for farmers, amending Regulations (EC) No 1290/2005, (EC) No 247/2006, (EC) No 378/2007 and repealing Regulation (EC) No 1782/2003 (OJ 2009 L 30, p. 16).

(3) Commission Regulation (EC) No 1122/2009 of 30 November 2009 laying down detailed rules for the implementation of Council Regulation (EC) No 73/2009 as regards cross-compliance, modulation and the integrated administration and control system, under the direct support schemes for farmers provided for that Regulation, as well as for the implementation of Council Regulation (EC) No 1234/2007 as regards cross-compliance under the support scheme provided for the wine sector (OJ 2009 L 316, p. 65).

(4) Council Regulation (EC) No 1290/2005 of 21 June 2005 on the financing of the common agricultural policy (OJ 2009 L 209, p. 1).