Action brought on 27 January 2022 — Czech Republic v Commission

(Case T-48/22)

(2022/C 128/40)

Language of the case: Czech

Parties

Applicant: Czech Republic (represented by: M. Smolek, J. Vláčil, J. Očková and O. Serdula, acting as Agents)

Defendant: European Commission

Form of order sought

The applicant claims that the Court should:

— annul the contested decision to the extent to which it excludes expenditure of in the total amount of EUR 43 470 836,30 incurred by the Czech Republic, and

— order the European Commission to pay the costs of the proceedings.

Pleas in law and main arguments

By this action, the applicant seeks annulment of Commission Implementing Decision (EU) 2021/2020 of 17 November 2021 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(2021) 8168 final) to the extent that it excludes expenditure incurred by the Czech Republic in the total amount of EUR 43 470 836,30.

In support of the action, the applicant relies on pleas in law under six headings.

First, it is necessary to annul the financial correction made in connection with the finding concerning the application of the status of ‘active farmer’. The applicant claims that the Commission infringed Article 52(1) of Regulation No 1306/2013, (1) since it imposed the correction despite the fact that the Czech Republic in the checks on the status of active farmer did not infringe EU law by virtue of the fact that EU law does not preclude, in the case of two conditions provided for in the third subparagraph of Article 9(2) of Regulation No 1307/2013, the application of the criterion of the share of receipts from agricultural activity. EU law further does not require that in the checks on the status of active farmer ‘connected’ companies should be taken into consideration. In any event, the Commission infringed Article 52(2) of Regulation No 1306/2013 and the principle of proportionality, since it imposed the financial correction in an amount which does not have regard to the gravity of the alleged non-conformity.

Secondly, it is necessary to annul the financial correction imposed in connection with the finding concerning ‘permanent grassland’. The applicant claims that the Commission infringed Article 52(1) of Regulation No 1306/2013, the principle of sound administration, the principle of legitimate expectations and the obligation to state reasons under Article 296 TFEU when it imposed the correction, despite having previously accepted that the system of the records of permanent grassland in the Czech Republic was in accordance with EU law. The Commission furthermore failed to state reasons for taking that latter step.

Thirdly, it is necessary to annul the financial correction imposed in connection with the finding concerning the minimum control rate. The applicant claims that the Commission infringed Article 52(1) of Regulation No 1306/2013 when it imposed the correction, despite the Czech Republic having complied with the minimum control rate required under EU law. The Commission furthermore failed to define one of the alleged shortcomings in the first communication in the audit, thereby infringing Article 34(2) of Regulation No 908/2014. (2) In any event, the Commission infringed Article 52(2) of Regulation No 1306/2013 and the principle of proportionality, since it imposed the financial correction in an amount which fails to have regard to the gravity of the alleged non-conformity.

Fourthly, it is necessary to annul the financial correction imposed in connection with the finding concerning the recovery of undue payments. The applicant claims that the Commission infringed Article 52(1) of Regulation No 1306/2013 when it imposed the correction despite the fact that the relevant provision of EU law does not require the systematic monitoring of the ineligibility of areas in previous years. In any event, the Commission infringed Article 52(2) of Regulation 1306/2013 and the principle of proportionality when it imposed the financial correction in an amount which fails to have regard to the gravity of the alleged non-conformity.

Fifthly, it is necessary to annul the financial correction imposed in connection with the finding concerning the late submission of the application. The applicant claims that the Commission infringed Article 52(1) of Regulation No 1306/2013 when it imposed the correction despite fact that the possibility to add the signature to the application within five days does not constitute the late submission of the application under Article 13 of Regulation No 640/2014. (3)

Sixthly, it is necessary to annul the financial correction imposed in connection with all the auditory findings under the budgetary heading concerning ‘budgetary discipline’. The applicant claims that the Commission infringed Article 52(2) of Regulation No 1306/2013 and the principle of proportionality in calculating that correction incorrectly, not least with regard to the effects of the other pleas in the application.

(1) Regulation (EU) No 1306/2013 of the European Parliament and of the Council of 17 December 2013 on the financing, management and monitoring of the common agricultural policy and repealing Council Regulations (EEC) No 352/78, (EC) No 165/94, (EC) No 2799/98, (EC) No 814/2000, (EC) No 1290/2005 and (EC) No 485/2008 (OJ 2013 L 347, p. 549).

(2) Commission Implementing Regulation (EU) No 908/2014 of 6 August 2014 laying down rules for the application of Regulation (EU) No 1306/2013 of the European Parliament and of the Council with regard to paying agencies and other bodies, financial management, clearance of accounts, rules on checks, securities and transparency (OJ 2014 L 255, p. 59).

(3) Commission Delegated Regulation (EU) No 640/2014 of 11 March 2014 supplementing Regulation (EU) No 1306/2013 of the European Parliament and of the Council with regard to the integrated administration and control system and conditions for refusal or withdrawal of payments and administrative penalties applicable to direct payments, rural development support and cross compliance (OJ 2014 L 181, p. 48).