Judgment of the General Court (Fourth Chamber) of 15 December 2021 –

Czech Republic v Commission

(Case T‑627/16 RENV)

(EAGF and EAFRD – Expenditure excluded from financing – Expenditure incurred by the Czech Republic – Decoupled direct aid – Traditional on-the-spot checks and on-the-spot checks by remote sensing – Discrepancies between the results of the checks – Wine sector – On-the-spot checks of the investments by means of sampling)

1. Agriculture – Financing by the EAGF – Grant of aid and premiums – Obligation on the Member States to organise an effective system of administrative and on-the-spot checks – Traditional on-the-spot checks and on-the-spot checks by remote sensing – Discrepancy between the rates of irregularities found following those checks – Serious and reasonable doubts as regards the effectiveness of on-the-spot checks by remote sensing – Insufficient evidence (Commission Regulation No 1122/2009, Arts 26, 31(2), 33 and 35) (see paras 61, 65, 69, 73)

2. Agriculture – Financing by the EAGF – Grant of aid and premiums – Obligation on the Member States to organise an effective system of administrative and on-the-spot checks – Checks by remote sensing – Randomly selected sample and risk-based sample – Discrepancy between the rates of irregularities found following those checks – Serious and reasonable doubts as regards the effectiveness of on-the-spot checks by remote sensing – None (Commission Regulation No 1122/2009, Arts 26 and 31) (see paras 75, 76, 78, 80, 81, 83, 86)

3. Action for annulment – Judgment annulling a measure – Scope – Partial annulment of an EU legal act – Condition – Severability of the annullable elements from the contested act – Commission decision on the clearance of accounts in relation to expenditure financed by the EAGF – Severability of a financial correction that has been improperly applied (Art. 263 TFEU; European Parliament and Council Regulation No 1306/2013, Art. 52(1)) (see paras 88, 89)

4. Acts of the institutions – Statement of reasons – Obligation – Scope – Commission decision on the clearance of accounts in relation to expenditure financed by the EAGF – Decision setting out, in a sufficiently clear manner, the grounds of irregularity (Art. 296 TFEU) (see paras 113, 114)

5. Agriculture – Common organisation of the markets – Support for restructuring and conversion in the wine sector – Controls in the wine sector – On-the-spot checks – Obligation to carry out systematic on-the-spot checks before the payment of investment aid – None (Commission Regulation No 555/2008, Arts 19 and 77(3)) (see paras 119, 120)

6. Action for annulment – Judgment annulling a measure – Scope – Partial annulment of an EU legal act – Condition – Severability of the annullable elements from the contested act – Non-severability of a financial correction that has been improperly applied – Annulment (Art. 263 TFEU) (see paras 122, 125, 127)

Re:

Application based on Article 263 TFEU seeking annulment of 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) (OJ 2016 L 173, p. 59), in so far as it excludes the payments made by the Czech Republic under the EAGF in the amount of EUR 462 517.83 regarding expenditure for decoupled direct aid and in the amount of EUR 636 516.20 regarding expenditure relating to investments in the wine sector.

Operative part

The Court:

1. Annuls 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) in so far as it excludes the following payments made by the Czech Republic under the EAGF: – in respect of the direct decoupled aid scheme for the financial years 2013 to 2015, the amount of EUR 69 054.23 relating to the deficiencies in the risk analysis; – in respect of the aid scheme for investment in the wine sector for the financial years 2011 to 2014, the amount of EUR 636 516.20.

2. Dismisses the action as to the remainder;

3. Orders the Czech Republic and the European Commission to each bear their own costs relating to the proceedings before the General Court and the Court of Justice;