Judgment of the Court (Second Chamber) of 4 June 1992. - Cipeke - Comércio e Indústria de Papel Ldª v Commission of the European Communities. - European Social Fund - Application for annulment of a reduction in financial assistance originally granted. - Case C-189/90.



European Court reports 1992 Page I-03573



Summary

Parties

Grounds

Decision on costs

Operative part



Keywords

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Acts of the institutions ° Statement of reasons ° Obligation ° Scope ° Commission decision reducing the assistance granted by the European Social Fund to a vocational training programme

(EEC Treaty, Art. 190)

Summary

Whilst in the context of the original application for assistance from the European Social Fund, a summary statement of the reasons for the Commission' s refusal to grant assistance satisfies the requirements of Article 190 of the Treaty, a decision reducing the amount of assistance originally granted must, on the other hand, since it entails more serious consequences for the applicant, clearly state the grounds justifying the reduction of the assistance in relation to the amount originally approved.

That requirement is not satisfied by a decision based on the fact that certain items of expenditure incurred were not approved on the grant of the assistance, where no detailed and specific decision of approval had been notified and no indication was given of the manner in which the amount of the reduction notified to the recipient was arrived at.

Parties

In Case C-189/90,

Cipeke ° Commércio e Indústria de Papel, Ld.ª, a company incorporated under Portuguese law, whose registered office is in Lisbon, represented by João Paulo Teixeira de Matos, of the Lisbon Bar, with an address for service in Luxembourg at the Portuguese Embassy, 33, Allée Scheffer,

applicant,

v

Commission of the European Communities, represented by Herculano Lima, Legal Adviser, acting as Agent, with an address for service in Luxembourg at the office of Roberto Hayder, of the Legal Service, Wagner Centre, Kirchberg,

defendant,

APPLICATION for the annulment of the Commission decision of 15 March 1990 disallowing expenditure amounting to ESC 11 104 748 relating to Application for Assistance No. 871012 P1 from the European Social Fund

THE COURT (Second Chamber),

composed of: F.A. Schockweiler, President of the Chamber, G.F. Mancini and J.L. Murray, Judges,

Advocate General: M. Darmon,

Registrar: H.A. Ruehl,

having regard to the Report for the Hearing,

after hearing oral argument from the parties at the hearing on 7 January 1992,

after hearing the Opinion of the Advocate General at the sitting on 25 February 1992,

gives the following

Judgment

Grounds

1 By application lodged at the Court Registry on 13 June 1990, Cipeke ° Commércio e Indústria de Papel, Ld.ª, brought an action under the second paragraph of Article 173 of the EEC Treaty for the annulment of the Commission decision of 30 March 1990 disallowing expenditure originally approved by the European Social Fund (hereinafter "the Fund") for a training programme on behalf of the applicant.

2 Article 1(2)(a) of Council Decision 83/516/EEC of 17 October 1983 on the tasks of the European Social Fund (OJ 1983 L 289, p. 38), provides that the Fund is to participate in the financing of operations concerning vocational training and guidance.

3 By virtue of Article 5(1) of Council Regulation (EEC) No 2950/83 on the implementation of Decision 83/516/EEC (OJ 1983 L 289, p. 1, (hereinafter "the Regulation")), the approval by the Fund of an application for assistance under Article 3(1) of the abovementioned Decision 83/516 is followed by the payment of an advance of 50% of the assistance approved on the date on which the training programme is scheduled to begin. Article 5(4) provides that final payment claims are to contain a detailed report on the content, results and financial aspects of the relevant operation.

4 Article 6(1) of the Regulation provides that when Fund assistance is not used in conformity with the conditions set out in the decision of approval, the Commission may suspend, reduce or withdraw the aid after having given the relevant Member State an opportunity to comment. Article 6(2) provides that sums paid which are not used in accordance with the conditions laid down in the decision of approval are to be refunded, and that the Member State concerned has secondary liability for the repayment of the sums, unwarranted payment of which was made for operations whose successful completion is guaranteed by that Member State in accordance with Article 2(2) of Decision 83/516, mentioned above.

5 The Department of European Social Fund Affairs in Lisbon (DESFA), acting for the Portuguese Republic and on behalf of a group of undertakings which included the applicant, made an application for Fund assistance in respect of 1987.

6 The training programme for which assistance was requested and the file for which was allocated the number ESF 871012 P1 was approved on 31 April 1987 by a Commission decision, subject to certain amendments. That decision was notified to DESFA which in turn notified it to the applicant.

7 On completion of the training programme the applicant submitted to DESFA the final payment claim together with the quantitative and qualitative evaluation report referred to in Article 5(4) of the Regulation.

8 Pursuant to that provision, the Portuguese Republic certified the accuracy of the facts and accounts in the payment claim and forwarded it to the Commission.

9 On examination of the final payment claim, the Commission, by letter of 5 September 1989 noted the existence of a certain amount of ineligible expenditure. Following an exchange of corrrespondence between DESFA and the Commission, the Commission, by letter of 2 March 1990, reduced the amount of the Fund assistance originally granted. The applicant was advised of that decision by letter from DEFSA dated 30 March 1990.

10 Reference is made to the Report for the Hearing for a fuller account of the facts of the case, the procedure and the pleas and arguments of the parties, which are mentioned or discussed hereinafter only in so far as is necessary for the reasoning of the Court.

11 The contested decision was communicated by the Commission to DESFA in the form of a letter advising it that, pursuant to Article 6(1) of the Regulation, Fund assistance was reduced to an amount less than that originally approved.

12 To that extent, the contested decision, although addressed to the Portuguese Republic, is of direct and individual concern to the applicant within the meaning of the second paragraph of Article 173 of the EEC Treaty, inasmuch as it deprives it of part of the assistance which had originally been granted to it, the Member State not having any discretion of its own in that respect.

13 In support of its application, Cipeke submits, first of all, that the Commission committed an infringement of essential procedural requirements, inasmuch as the contested decision does not satisfy the requirement, laid down in Article 190 of the Treaty, to state the reasons on which it is based.

14 The Court has consistently held that the purpose of the obligation to state the reasons on which an individual decision is based is to enable the Court to review the legality of the decision and to provide the person concerned with sufficient information to make it possible to ascertain whether the decision is well founded or whether it is vitiated by a defect which may permit its legality to be contested. The extent of that obligation depends on the nature of the measure in question and on the context in which it was adopted (see Case 32/86 Sisma v Commission [1987] ECR 1645, paragraph 8).

15 In the context of an initial application for Fund assistance, the Court has held, as the Advocate General has pointed out in paragraph 74 of his Opinion, that a statement of reasons in summary form satisfies the requirements of Article 190 of the Treaty (Case C-213/87 Gemeente Amsterdam and Via v Commission 1990 ECR I-223). That solution is justified by the fact that the rejection of such a request merely entails the refusal of the financial assistance applied for.

16 On the other hand, where the initial application has been approved, the decision reducing the amount of assistance originally approved entails more serious consequences for the applicant.

17 Such an applicant has received an advance covering 50% of the expenditure approved so that he himself is obliged to advance considerable sums against the expectation of the payment of the balance which he may legitimately hope to receive, provided that he proves that he used the Fund assistance in accordance with the conditions laid down in the decision of approval.

18 Accordingly, a decision reducing assistance must clearly state the grounds justifying the reduction in the assistance in relation to the amount originally approved.

19 As to the grounds relied on by the Commission in support of its decision reducing the assistance, approval was given for a global amount and the final payment claim was submitted globally for the whole of the programme, no detailed and specific decision of approval having been notified to each of the undertakings concerned.

20 Moreover, it appears that the Commission allocated the reductions between the members of the group of undertakings, including the applicant, in proportion to the size of the share of each of them under the items considered and not in accordance with the precise amount of the irregular expenditure. That method of calculation was never brought to the applicant' s notice.

21 Although the applicant was in fact informed of the total amount of the reduction, it was unaware of the exact list of items or headings concerned, and of the itemization and method of calculation of that reduction.

22 Since the applicant did not receive notification of the manner in which the Fund assistance was reduced, the contested decision must be held to be insufficiently reasoned for the purposes of Article 190 of the Treaty.

23 Accordingly, the contested decision reducing the assistance must be annulled.

Decision on costs

Costs

24 Under Article 69(2) of the Rules of Procedure the unsuccessful party is to be ordered to pay the costs. Since the Commission has been unsuccessful, it must be ordered to pay the costs.

Operative part

On those grounds,

THE COURT (Second Chamber)

hereby:

1. Annuls the Commission decision of 15 March 1990 declaring ineligible expenditure in an amount of ESC 11 104 748 relating to Application for Assistance No 871012 P1, submitted to the European Social Fund;

2. Orders the Commission to pay the costs.