Judgment of the Court (Second Chamber) of 7 May 1991. - Estabelecimentos Isodoro M. Oliveira SA v Commission of the European Communities. - European Social Fund - Application for annulment of the reduction of financial assistance originally granted. - Case C-304/89.



European Court reports 1991 Page I-02283



Summary

Parties

Grounds

Decision on costs

Operative part



Keywords

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Social policy - European Social Fund - Assistance in the financing of vocational training measures - Decision reducing the assistance originally granted - Opportunity for the Member State concerned to comment prior to the adoption of the decision - Essential procedural requirement - Infringement - Unlawfulness

(Council Regulation No 2950/83, Art. 6(1))

Summary

In the procedure for the grant by the European Social Fund of financial assistance for vocational training and guidance given in a Member State the Member State concerned is the sole interlocutor of the Fund and assumes responsibility in so far as it certifies the accuracy of the facts and accounts in payment claims submitted by the beneficiaries and in so far as it may even be required to guarantee that training measures are properly implemented and concluded. In view of the central role of the Member State concerned and having regard to the importance of the responsibilities which that State assumes in the presentation and supervision of the financing of training measures, the opportunity which it has under Article 6(1) of Regulation No 2950/83 to comment before a definitive decision to reduce financial assistance originally granted is adopted constitutes an essential procedural requirement the disregard of which renders the contested decision to reduce the assistance void.

Parties

In Case C-304/89,

Estabelecimentos Isodoro M. Oliveira SA, a company incorporated under Portuguese law, represented by Joquim Marques de Ascencao, of the Lisbon bar, with an address for service at the Chambers of Fonseca Autunes, 12 Rue de la Grève,

applicant,

v

Commission of the European Communities, represented by Herculano Lima, Legal Adviser, acting as Agent, with an address for service at the office of Guido Berardis, a member of the Commission' s Legal Service, Centre Wagner, Kirchberg,

defendant,

APPLICATION for the annulment of the Commission' s decisions of 27 June 1989, declaring ineligible expenditure totalling ESC 63 450 244 and ESC 23 713 486 relating to the Applications for Assistance Nos 870708/P1 and 870708/P3 respectively, submitted to the European Social Fund,

THE COURT (Second Chamber),

composed of: T.F. O' Higgins, President of the Chamber, G.F. Mancini and F.A. Schockweiler, Judges,

Advocate General: M. Darmon,

Registrar: H.A. Ruehl, Principal Administrator,

having regard to the Report for the Hearing,

after hearing the oral argument of the parties at the hearing on 15 January 1991,

after hearing the Opinion of the Advocate General at the sitting on 5 March 1991,

gives the following

Judgment

Grounds

1 By application lodged at the Court Registry on 5 October 1989, the company Estabelecimentos Isodoro M. Oliveira (hereinafter referred to as "Oliveira") brought an action under the second paragraph of Article 173 of the EEC Treaty for the annulment of two decisions of the Commission of 27 June 1989 reducing the assistance which the European Social Fund (hereinafter referred to as "the Fund") had originally granted for two training projects submitted on behalf of the applicant.

2 According to Article 1(2)(a) of Council Decision 83/516/EEC of 17 October 1983 on the tasks of the European Social Fund (Official Journal 1988 L 289, p. 38), the Fund is to participate in the financing of operations concerning vocational training and guidance.

3 The approval by the Fund of an application for financial assistance is, according to Article 5(1) of Council Regulation (EEC) No 2950/83 on the implementation of Decision 83/516 (Official Journal 1983 L 289, p. 1, hereinafter referred to as the "regulation"), to be followed by the payment of an advance of 50% of the assistance approved on the date on which the training operations are scheduled to begin. Pursuant to paragraph 4 of the same provision, final payment claims are to contain a detailed report of 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. Paragraph 2 of that article 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 should have secondary liability when it guarantees the successful completion of the operations pursuant to Article 2(2) of Decision 83/516.

5 The Department for the Affairs of the European Social Fund (hereinafter referred to as "the Department"), in Lisbon, acting for the Portuguese Republic and on behalf of the applicant, submitted to the Fund two applications for financial assistance.

6 The two training projects for which assistance was requested were approved by two decisions of the Commission subject to certain amendments relating to the amount of assistance. Those decisions were communicated to the Department and, subsequently, by the Department to the applicant.

7 Once the training measures had been completed the applicant submitted to the Department the documents certifying that the operations had been completed and also the final payment claims and the detailed report on the content and results 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 final payment claims and forwarded the claims to the Commission.

9 After analysing the final payment claims the Commission drew attention to a certain amount of ineligible expenditure. In consequence, by the two contested decisions, which were communicated to the Department and why the Department to the applicant, the Commission reduced the Fund assistance originally granted.

10 In support of its application for the annulment of those decisions, the applicant puts forward four pleas in law based respectively on infringement of essential procedural requirements, breach of general principles of law, failure to respect acquired rights and inadequacy of the statement of the reasons on which the contested decision was based.

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

12 It appears that the two contested decisions were communicated by the Commission to the competent Portuguese authorities in the form of reasoned measures advising them that, pursuant to Article 6(1) of the regulation, the Fund assistance was reduced to an amount lower than the amount originally approved.

13 To that extent, the contested decisions reducing the assistance, although addressed to the Portuguese Republic, are of direct and individual concern to the applicant within the meaning of the second paragraph of Article 173 of the Treaty, inasmuch that they deprive the applicant 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.

14 As regards the first plea in law based on infringement of essential procedural requirements, Oliveira submits that the contested decisions infringed Article 6(1) of the regulation, inasmuch as, contrary to what is laid down in that provision, the Commission did not give the relevant Member State an opportunity to comment before the contested decisions were adopted.

15 The Commission claims that the competent national authorities may either accept the decisions reducing the financial assistance and communicate them to the promoters of the project, or dispute them, in accordance with Article 6(1). In the event that they do dispute them, a new stage of dialogue between the departments of the Fund and the national authorities is embarked upon, following which the decisions are confirmed or amended and become final by being notified to the promoters of the projects. In the case in point, the Portuguese authorities expressly accepted the reductions effected by the Commission and agreed to notify the contested decisions to the applicant. In any event, the applicant is not entitled to avail itself of a right to be consulted which the lawful holder of that right has waived.

16 It must be pointed out, in the first place, that the Commission may not dispute the interest of the applicant in raising this plea.

17 The applicant has a legitimate interest in relying on the possible non-observance of the procedure laid down by Article 6(1) of the regulation, inasmuch as such an irregularity could affect the legality of the contested decisions.

18 In any event, it follows from the case-law of the Court that the Court may of its own motion consider the question of infringement of an essential procedural requirement (see judgments in Case 1/54 France v High Authority [1954] ECR 7, Case 2/54 Italy v High Authority [1954] ECR 73 and in Case 18/57 Nold v High Authority [1959] ECR 89).

19 It is not disputed that, before adopting the contested decision, the Commission did not give the Portuguese Republic an opportunity to comment, thus infringing its clear obligation under Article 6(1) of Regulation No 2950/83.

20 It is further undisputed that the Member State is the sole interlocutor of the Fund (see judgment in Case 310/81 EISS v Commission [1984] ECR 1341, paragraph 15) and that it assumes responsibility in so far as it certifies the accuracy of the facts and accounts in final payment claims and in so far as it may even be required to guarantee that training measures are properly implemented and concluded.

21 Having regard to the central role of the relevant Member State and to the importance of the responsibilities which that State assumes in the presentation and supervision of the financing of training measures, the opportunity for it to comment before a definitive decision to reduce assistance is adopted constitutes an essential procedural requirement the disregard of which renders the contested decisions void.

22 The Commission' s argument based on the possibility for the Member State in question to enter into a dialogue with the Fund once the decisions reducing the assistance have been notified cannot be accepted.

23 It is sufficient to point out, in that respect, that both the recipient of the assistance, informed that this dialogue has been embarked upon, and the Member State concerned would then be barred from bringing an action for annulment against the decisions reducing the assistance when, despite the objections which that Member State puts forward, the Commission confirms its original decisions after the expiry of the period of two months allowed by the third paragraph of Article 173 of the Treaty.

24 Nor, in such a situation, would the recipient of the assistance and the Member State be entitled to seek the annulment of the decisions confirming reductions in the assistance since an action for annulment brought against a decision which merely confirms a decision which was not contested within the time-limit is inadmissible (see order in Case C-12/90 Infortec v Commission [1990] ECR I-4265).

25 It follows that the contested decisions reducing the assistance must be annulled, without its being necessary to examine the other pleas in law put forward by the applicant.

Decision on costs

Costs

26 Under Article 69(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs. As the Commission has been unsuccessful in its submissions, it must be ordered to pay the costs.

Operative part

On those grounds,

THE COURT (second Chamber)

hereby:

1. Annuls the decisions of 27 June 1989 declaring non-eligible expenditure in the sum of ESC 63 450 244 and in the sum of ESC 23 713 486 relating, respectively, to Applications for Assistance Nos 870708/P1 and 870708/P3, submitted to the European Social Fund;

2. Orders the Commission to pay the costs.