EN Official Journal of the European Union C 95/7

Action brought on 21 January 2011 — Republic of Hungary v European Commission

(Case T-37/11)

2011/C 95/12

Language of the case: Hungarian

Parties

Applicant(s): Republic of Hungary (represented by: M.Z. Fehér, K. Szíjjártó and G. Koós, Agents)

Defendant(s): European Commission

Form of order sought

— Annulment of the Commission debit note and recovery order No 3241011280, in so far as, in respect of the Republic of Hungary, it classifies as not eligible for subsidy under the Schengen Facility certain expenditure relating to measures 1, 3, 4, 5 and 6 of objective III/A, to the customs objective III/B and, under objective I/C, to the Mohács inland waterway border control facility and the railway station at Eperjeske.

— In the alternative, partial annulment of the Commission debit note and recovery order No 3241011280, in so far as, in respect of the Republic of Hungary, it classifies as not eligible or only partially eligible for subsidy under the Schengen Facility certain expenditure relating to measures 1, 3, 4, 5 and 6 of objective III/A, and to the customs objective III/B.

— An order that the Commission pay the costs.

Pleas in law and main arguments

The applicant raises the following pleas in law in support of its application:

1. Principal claim: breach of legitimate expectations, breach of trust and breach of the principle of legal certainty

The applicant states that, having regard to the lack of clarity in the legal background and the considerable amount of aid paid out of the Schengen Facility, it considered it reasonable to rely, throughout the implementation of the programme, on the information provided by the Commission in response to express requests for its position and in the frequent reports issued on the Indicative Schedule.

In the opinion of the applicant, approval of the Indicative Schedule, by way of prior authorisation, the checks carried out by the Commission during the implementation of the schedule and the cooperation with the Member States entail that, given that the Commission carries out ex post facto checks of the eligibility for subsidy of projects, the eligibility for subsidy of projects reviewed several times without being criticised by the Commission may not be questioned. The applicant states that the Commission gave ‘guarantees’ in the financing decisions which caused it to have a legitimate expectation that the measures listed in the Indicative Schedule were eligible for subsidy.

The principle of cooperation in good faith also imposes reciprocal obligations on the institutions of the European Union to cooperate with the Member States.

In the view of the applicant, if, in such an unclear legislative context, in which the rules are still malleable, it were not even possible to expect the Commission to give prior and definite information as to whether a project is eligible for subsidy, the principle of legal certainty would be seriously undermined.

2. Claim in the alternative: misinterpretation of the concept of full border controls and lack of any justification for financial corrections

The applicant takes the view that, in the contested decision, the Commission considered not eligible or only partially eligible for subsidy the expenditure mentioned in the claim in the alternative on the ground that it was not, or was only partly, for the purpose of a full border control. In the view of the applicant, the Commission reached that conclusion as a result of a misinterpretation of the concept of full border control.

The applicant adds that the Commission, as regards the information made available, did not carry out the required checks to determine the exact amount which needed to be paid back in relation to all the measures and, as regards some of them, erroneously fixed the amounts at a flat rate. According to the applicant, the Commission fixed that flat rate on the basis of the supposed ratio between the border control activities and other activities carried out by the competent authorities, rather than basing it on the provisions contained in Article 22(3)(b) of Commission Decision C(2004) 248 of 5 February 2004 on the management and monitoring of the Schengen Facility and, therefore, on the seriousness of the breaches of the legislation found, or on the scale of the faults in the system of management and control and the financial consequences thereof which gave rise to the irregularities complained of.