CELEX: C1996/269/28
Language: en
Date: 1996-09-14 00:00:00
Title: Action brought on 10 July 1996 by the United Kingdom against the Commission of the European Communities (Case C-239/96)

14 . 9 . 96            EN                    Official Journal of the European Communities                                      No C 269/ 13
     9 613 206,00 from expenditure declared by Ireland for                     Article 8 of Regulation ( EEC ) No 729/70 in each of the
     public storage of beef for 1991 being 2% of such                          said years constitutes an infringement of the Treaty
     expenditure,                                                              and/or an infringement of rule of law relating to the
                                                                               application of the Treaty;
— declare , pursuant to Article 173 of the Treaty
     establishing the European Community, that                          4 . in so far as the amount of the corrections determined by
     Commission Decision 96/31 1 /EC of 10 April 1996 on                       the Commission for the years 1990 and 1991 exceed the
     the clearance of accounts presented by Member States in                   amount of the probable losses to the EAGGF in each of
     respect of expenditure for 1992 of the Guarantee Section                  the said years as a consequence of irregularities
     of the European Agricultural Guidance and Guarantee                       attributable to the alleged failure by the Irish authorities
     Fund and in respect of certain expenditure for 1993 is                    to fulfil their obligations under Article 8 of Regulation
     void in so far as it purports to disallow a sum of £ Irl                  ( EEC ) No 729/70 , they constitute a penalty and as such
     8 862 144,00 from the expenditure declared by Ireland                     infringe the Treaty and/or rules of law relating to the
     for the public storage of beef for 1992 being 2 % of such                 application of the Treaty;
     expenditure ,
                                                                        5 . the failure by the Commission to adhere to the published
— make such further or other order as may be necessary                         guidelines on the calculation of financial consequences
     and appropriate for the purpose of the relief which                       when preparing the decision regarding the clearance of
     Ireland seeks in these proceedings,                                       accounts of the EAGGF Guarantee ( DOC.VI/2 16/93 of
                                                                               3 June 1993 — the Belle Group Report ) constitutes an
                                                                               infringement of an essential procedural requirement
— order the Commission of the European Communities to
                                                                               and/or an infringement of the Treaty and/or of a rule of
     pay the costs of these proceedings .                                      law in relation to the application of the Treaty .
Pleas in law and main arguments adduced in support:                     Breach of Regulation ( EEC ) No 859/89 ( 3 )
Breach of Article 8 of Regulation ( EEC ) No 729/70 ( 2 )               Ireland submits that in 1991 and 1992 there was no
                                                                        Community rule within the meaning of Article 3 of
Ireland submits that the Decision is invalid in so far as it            Regulation ( EEC ) No 729/70 of which Ireland was in breach
disallows £ Irl 26 222 656,62 ( being 10% of the                        in accepting separate tenders from companies within the
expenditure declared and already cleared for Ireland in                 same group of companies and, accordingly , the Commission
respect of the year 1990 ) and £ Irl 24 020 455,64 ( being 5 %          Decision refusing to charge 2 % of public storage costs in
of the expenditure declared and already cleared for Ireland             Ireland in 1991 and 1992 is invalid .
for the year 1991 ) from the expenditure declared by Ireland
for 1992 on one or more of the following grounds :                      If the Court determines that any such Community rule
                                                                        existed in 1991 and 1992 then the Commission is precluded
1 . the failure by the Commission to state any or any valid             by the principles of legal certainty, legitimate expectation
      reasons for the quantum of the financial corrections              and proportionality and by the criteria in the Belle Group
      determined following its conclusion that during the               Report from refusing to charge the said 2 % of the public
      years 1990 and 1991 the Irish authorities did not fulfil          storage costs in Ireland to the EAGGF and accordingly the
                                                                        Decision is invalid .
      their obligations under Article 8 of Regulation ( FTC )
      No 729/70 constitutes a lack of essential procedural
      requirements and/or an infringement of the Treaty                  (>) OJ No L 117, 14 . 5 . 1996 , p . 19 .
      and/or a rule of law relating to the application of the            ( 2 ) Council Regulation ( EEC ) No 729/70 of 21 April 1970 on the
      Treaty;                                                                  financing of the common agricultural policy ( OJ No L 94 , 28 . 4 .
                                                                               1970 , p. 13 ).
                                                                         (') Commission Regulation ( EEC ) No 859/89 of 29 March 1989
2 . the failure by the Commission to state any or any valid                    laying down detailed rules for the application of intervention
      reasons for its conclusion that very large amounts had                   measures in the beef and veal sector ( OJ No L 91 , 4 . 4 . 1989 ,
      been wrongly charged to EAGGF in each of the years                       p. 5 ).
      1990 and 1991 by reason of the alleged failure of the
      Irish authorities to fulfil their obligations under Article 8
      of Regulation ( EEC ) No 729/70 in each of the said years
      constitutes an infringement of an essential procedural
      requirement and/or an infringement of the Treaty
      and/or a rule of law relating to the application of the
      Treaty;                                                            Action brought on 10 July 1996 by the United Kingdom
                                                                             against the Commission of the European Communities
 3 . the failure by the Commission to make any or any                                              ( Case C-239/96 )
      proper assessment of the probable loss to EAGFF, the                                           ( 96/C 269/28 )
      risk to which Community funds were put by reason of
      irregularities which may have occurred in each of the
      years 1990 and 1991 by reasons of the alleged failure of            An action against the Commission of the European
      the Irish authorities to fulfil their obligations under             Communities was brought before the Court of Justice of the
 ---pagebreak--- No C 269/ 14        1 EN                Official Journal of the European Communities                                      14 . 9 . 96
European Communities on 10 July 1996 by the United                 Action brought on 10 July 1996 by the United Kingdom
Kingdom, represented by John E. Collins, Assistant                   against the Commission of the European Communities
Treasury Solicitor, acting as agent, assisted by Mr Derrick                               ( Case C-240/96 )
Wyatt, QC, of the English Bar, with an address for service in
Luxembourg at the British Embassy, 14 boulevard                                             ( 96/C 269/29 )
Roosevelt .
The applicant claims that the Court should:                        An action against the Commission of the European
                                                                   Communities was brought before the Court of Justice of the
                                                                   European Communities on 10 July 1996 by the United
— annul the decision or act comprised in or referred to by         Kingdom, represented by John E. Collins, Assistant
    implication in the memorandum of 2 May 1996 ,                  Treasury Solicitor, acting as agent, assisted by Mr Derrick
                                                                   Wyatt, QC, of the English Bar, with an address for service in
— award costs against the Commission pursuant to                   Luxembourg at the British Embassy, 14 boulevard
    Article 69 of the Rules of Procedure .                         Roosevelt .
Pleas in law and main arguments adduced in support:
                                                                   The applicant claims that the Court should:
All Community expenditure must be based on both a
budgetary appropriation and a basic measure . It is accepted
that the power of initiative of the Commission authorizes          — annul the decision comprised in or referred to by
pilot studies and preparatory action designed to assess the            implication in the memorandum of 15 May 1996 ,
policy pros and cons of making a proposal for a basic
measure , but the power of initiative cannot justify the
initiation of a substantive programme for a basic measure .        — award costs against the Commission pursuant to
Nor can the power of initiative justify expenditure in                 Article 69 of the Rules of Procedure .
connection with a proposal for a basic measure where it is
clear that the basic measure will not be adopted . In any
event, expenditure which purports to be derived from the
Commission 's power of initiative must be authorized by a          Pleas in law and main arguments adduced in support:
properly reasoned Commission decision which indicates the
legal basis , establishes the framework and criteria for the
expenditure in question, and is notified to the Member             All Community expenditure must be based on both a
States .                                                           budgetary appropriation and a basic measure . It is accepted
                                                                   that the power of initiative of the Commission authorizes
                                                                   pilot studies and preparatory action designed to assess the
In the present case the Commission, in a memorandum                policy pros and cons of making a proposal for a basic
circulated to national authorities and to the public ,             measure, but the power of initiative cannot justify the
published an invitation to organizations to apply for grants       initiation of a substantive programme for a basic measure .
to assist the elderly. The proposed expenditure in question        Nor can the power of initiative justify expenditure in
would if incurred comprise expenditure indistinguishable           connection with a proposal for a basic measure where it is
from that authorized under a previous Council decision on          clear that the basic measure will not be adopted. In any
Community actions for the elderly and from that which              event, expenditure which purports to be derived from the
would have been authorized if a Commission proposal                Commission 's power of initiative must be authorized by a
under Article 235 of the EC Treaty had been adopted ( but          properly reasoned Commission decision which indicates the
the proposal was not adopted), and it was unlawful for the         legal basis , establishes the framework and criteria for the
Commission to invite applications for such expenditure             expenditure in question , and is notified to the Member
without a basic measure and on the basis of a budget line          States .
alone . Furthermore, the invitation could not be justified on
the basis that the grants would support pilot studies or
preparatory action because it amounted to the initiation of
substantive action, and exceeded the powers of initiative of       In the present case the Commission, in a memorandum
the Commission . The invitation was also unsupported by            circulated to national authorities and to the public,
adequate reasoning.                                                published an invitation to organizations to apply for grants
                                                                   in respect of poverty and social exclusion . The proposed
                                                                   expenditure in question would if incurred comprise
It follows that the decision to seek applications for grants       expenditure indistinguishable from that covered by
comprised in or referred to by implication in the                  ( expired ) Poverty 3 and ( draft ) Poverty 4 . Such expenditure
Commission 's memorandum should be annulled for lack of            ( Poverty 3 and 4 ) required authorization by a Council
competence, infringement of an essential procedural                decision under Article 235 of the EC Treaty and it was
requirement, and infringement of the Treaty .                      unlawful for the Commission to invite applications for such
                                                                   expenditure without a basic measure and on the basis of
                                                                   budgetary remarks alone . Furthermore, the invitation could
                                                                   not be justified on the basis that the grants would support