Judgment of the General Court (Seventh Chamber) of 11 July 2019 –

IPPT PAN v Commission and REA

(Case T‑805/16)

(Arbitration clause — Sixth and Seventh Framework Programmes for research, technological development and demonstration activities — Decision to recover by offsetting claims of the European Union arising from the performance of a contract — Effective judicial protection — Right to refer to the Ombudsman — Financial regulation — Debts which are certain — Legitimate expectations — Principle of non-discrimination — Principle of sound administration — Misuse of powers — Contractual liability — Audit report — Eligible costs)

1. Judicial proceedings — General Court seised under an arbitration clause — Jurisdiction of the Court defined exclusively by Article 272 TFEU and the arbitration clause — Application of substantive law applicable to the contract (Art. 272 TFEU) (see para. 43)

2. EU budget — EU financial assistance — Obligation on the beneficiary to comply with the conditions for grant of the assistance — Contracts concluded under a specific research, technological development and demonstration programme — Financing covering only expenses actually incurred — Demonstration that the costs have actually been incurred — None — Ineligible costs (Art. 317 TFEU) (see paras 61, 115)

3. EU budget — EU financial assistance — Obligation on the beneficiary to comply with the conditions for grant of the assistance — Financing covering only expenses actually incurred — Demonstration that the costs have actually been incurred — Allocation of the burden of proof (Art. 272 TFEU) (see para. 65)

4. Judicial proceedings — General Court seised under an arbitration clause — Contracts concluded under a specific research, technological development and demonstration programme — Refusal by the Commission to take into account additional remuneration in assessing the economic nature of staff costs for the performance of contracts — Request for recognition of the non-existence of the claims — Invocation of the principle of the protection of legitimate expectations — Not permissible — Limits — Compliance with the principle of the performance of contracts in good faith (Art. 272 TFEU) (see paras 95-97, 117)

5. Judicial proceedings — Application initiating proceedings — Formal requirements — Clear and precise statement of the pleas relied on — Similar requirements for submissions made in support of a plea (see para. 101)

6. Judicial proceedings — Measures of organisation of procedure — Measures of inquiry — Request to be provided with information — Discretion of the Courts of the Union (see para. 122)

7. EU budget — Financial regulation — Recovery of debts due to the Union from third parties — Procedure of recovery by offsetting — Audit report conclusions — No impact on the possibility to use that procedure (see para. 132)

8. EU law — Principles — Right to effective judicial protection — Scope (Charter of Fundamental Rights of the European Union, Art. 47) (see paras 154, 155)

9. Action for annulment — Actionable measures — Meaning — Commission decision to make an out-of-court set-off between debts and claims on the basis of Regulation No 966/2012 — Included (Art. 263 TFEU; European Parliament and Council Regulation No 966/2012) (see paras 171-173)

10. Action for annulment — Action directed against a decision to recover by extrajudicial offsetting sums paid in the context of a grant agreement — Decision that can be challenged on the basis of Article 263 TFUE or Article 272 TFEU — Admissibility — Pleas relating to contractual stipulations and the applicable national law — Inadmissibility (Art. 263 TFEU) (see paras 176, 177, 180)

11. EU budget — Financial regulation — Recovery of debts due to the Union from third parties — Procedure of recovery by offsetting — Contesting of the debt by the debtor — No impact on the possibility to use that procedure (see para. 190)

12. EU law — Principles — Protection of legitimate expectations — Conditions — Specific assurances given by the authorities (see paras 206, 207)

13. EU law — Principles — Equal treatment — Infringement — Meaning (see para. 216)

14. EU law — Principles — Rights of defence — Right to be heard — Scope (see para. 221)

15. Acts of the institutions — Statement of reasons — Obligation — Scope — Decision taken in a context known to the addressee (Art. 296 TFEU) (see paras 224-226)

16. Action for annulment — Pleas in law — Misuse of powers — Meaning (see para. 234)

Re:

Action, first, under Article 263 TFEU, seeking annulment of the Commission Decision of 6 September 2016 to recover alleged claims against the applicant under two contracts concluded in the context of the Sixth Framework Programme of the European Community for research, technological development and demonstration activities, by offsetting them against sums owing to the applicant by the Research Executive Agency (REA) under a grant agreement concluded in the context of the Seventh Framework Programme of the European Community for research, technological development and demonstration activities and, second, under Article 272 TFEU, seeking a declaration that the alleged claims of the Commission under the two contracts concluded in the context of the Sixth Framework Programme referred to above are invalid and an order directing the Commission and REA to pay the applicant the sum of EUR 69 623.94 in relation to the grant agreement concluded in the context of the Seventh Framework Programme referred to above plus default interest.

Operative part

The Court:

1. Dismisses the action;

2. Orders the Instytut Podstawowych Problemów Techniki Polskiej Akademii Nauk (IPPT PAN) to bear two thirds of its own costs and pay those incurred by the Research Executive Agency (REA);

3. Orders the European Commission to bear its own costs and pay one third of the costs incurred by IPPT PAN;