CELEX: 62000CC0363
Language: en
Date: 2002-07-09 00:00:00
Title: Opinion of Mr Advocate General Geelhoed delivered on 9 July 2002. # Commission of the European Communities v Italian Republic. # Failure of a Member State to fulfil obligations - Communities' own resources - Error in crediting the account opened in the name of the Commission - Default interest. # Case C-363/00.

OPINION OF ADVOCATE GENERALGEELHOED delivered on 9 July 2002  (1)
         Case C-363/00 Commission of the European CommunitiesvItalian Republic
            ((Failure of a Member State to fulfil its Treaty obligations – Infringement of Articles 9, 10 and 11 of Council Regulation (EC, Euratom) No 1150/2000 of 22 May 2000 implementing Decision
               94/728/EC, Euratom on the system of the Communities' own resources – Failure to make available to the Commission the sum of ITL 1 484 936 000 000 by way of own resources within the periods laid
               down in the same regulation – Refusal to pay default interest on that amount))
            
            
      
         
        I ─ Introduction
      
      1.  In this case the Commission claims that the Court should declare that by not making available to the Commission the sum of
      ITL 1 484 936 000 000 by way of own resources within the period laid down by Articles 9 and 10 of Council Regulation (EC,
      Euratom) No 1150/2000 of 22 May 2000 implementing Decision 94/728/EC, Euratom on the system of the Communities' own resources,
       
      
         			(2)
         		 and subsequently refusing to pay default interest on that amount owed pursuant to Article 11 of the same regulation, the
      Italian Republic is in breach of its obligations under Articles 9, 10 and 11 of that regulation.
       II ─ Legal background
      
      2.  Article 9(1) of Council Regulation (EEC, Euratom) No 1552/89 of 29 May 1989 implementing Decision 88/376/EEC, Euratom on the
      system of the Communities' own resources  
      
         			(3)
         		 provides: In accordance with the procedure laid down in Article 10, each Member State shall credit own resources to the account opened
      in the name of the Commission with its Treasury or the body it has appointed.This account shall be kept free of charge.
      
      3.  Under the first paragraph of Article 10(3) of Regulation No 1552/89:VAT resources, the additional resource ─ excluding the own resources for the EAGGF monetary reserve ─ and, where appropriate,
      GNP financial contributions shall be credited on the first working day of each month, the amounts being one-twelfth of the
      relevant totals in the budget, converted into national currencies at the rates of exchange of the last day of quotation of
      the calendar year preceding the budget year, as published in the  
       Official Journal of the European Communities .
      
      4.  Article 11 of Regulation No 1552/89 provides:Any delay in making the entry in the account referred to in Article 9(1) shall give rise to the payment of interest by the
      Member State concerned at the interest rate applicable on the Member State's money market on the due date for short-term public
      financing operations, increased by two percentage points. This rate shall be increased by 0.25 of a percentage point for each
      month of delay. The increased rate shall be applied to the entire period of delay.
      
      5.  Regulation No 1552/89 has been amended several times. These amendments were consolidated by Regulation No 1150/2000. Articles
      9(1), 10(3) and 11 of the original Regulation No 1552/89 have remained virtually unchanged and retained the same numbering.
      In its application the Commission refers to the provisions as they are now incorporated in Regulation No 1150/2000. These
      provisions are set out below. However, in this opinion I will refer to the relevant articles of Regulation No 1552/89 because
      this regulation was in force at the material time.
      
      6.  Article 9(1) of Regulation No 1150/2000: In accordance with the procedure laid down in Article 10, each Member State shall credit own resources to the account opened
      in the name of the Commission with its Treasury or the body it has appointed.This account shall be kept free of charge.
      
      7.  Under the first paragraph of Article 10(3) of Regulation No 1150/2000: VAT resources, the additional resource ─ excluding an amount corresponding to the EAGGF (European Agricultural Guidance and
      Guarantee Fund) monetary reserve, to the reserve relating to loans and loan guarantees and to the reserve for emergency aid
      ─ and, where appropriate, GNP financial contributions shall be credited on the first working day of each month, the amounts
      being one-twelfth of the relevant totals in the budget, converted into national currencies at the rates of exchange of the
      last day of quotation of the calendar year preceding the budget year, as published in the Official Journal of the European
      Communities,  
      C Series.
      
      8.  Article 11 of Regulation No 1150/2000 provides:Any delay in making the entry in the account referred to in Article 9(1) shall give rise to the payment of interest by the
      Member State concerned at the interest rate applicable on the Member State's money market on the due date for short-term public
      financing operations, increased by two percentage points. This rate shall be increased by 0.25 of a percentage point for each
      month of delay. The increased rate shall be applied to the entire period of delay.
       III ─ Facts and pre-litigation procedure
      
      9.  Under Presidential Decree No 321, as amended by Decree No 532, 
      
         			(4)
         		 the Minister for the Treasury opened two accounts. The first account is numbered 435/23203 and is in the name of the Ministry.
      The resources owed to the European Communities were  
      parked in this account. Monthly instalments are to be transferred from this so-called transfer or transit account to the second
      account, account No 414/23200, which is in the name of the Commission. These two non-interest bearing accounts are connected
      to one another but only the latter account is the account which is referred to in Article 9 of the regulation and which must
      be in the name of the Commission.
      
      10.  Pursuant to Article 10 of Regulation No 1552/89, which was in force at the material time, the Italian Republic had to pay,
      by 3 June 1996 at the latest, the sum of ITL 1 486 422 594 526 for June 1996, this being one-twelfth of the Communities' own
      resources.
      
      11.  On 28 May 1996 
      
         			(5)
         		 the ministero del Tesoro, Ragioneria Generale dello Stato (Ministry of the Treasury, State Accounts Department) ordered the
      Direzione Generale del Tesoro (Directorate-General of the Treasury) to transfer from account No 435/23203  
      Ministry of the Treasury ─ Article 7 of Decree of the President of the Republic No 532 of 4 July 1973 to account No 414/23200  
      EC Commission ─ Own resources the sum of ITL 1 486 422 594 526, this being the sum owed by way of VAT resources and GNP resources for June 1996, pursuant
      to Article 10(3) of Regulation No 1552/89. The final sentence of the relevant letter pointed out that the transaction had
      to be completed by 3 July 1996 in order to avoid payment of default interest.
      
      12.  On the same date the Ministry of the Treasury informed the Commission by fax that this order had been given. 
      
         			(6)
         		 The fax stated:  
      to have effected the transfer to the Commission's current account No 414/23200 ─ due date 3 June 1993 ─ the total sum of ITL
      1 486 422 594 526.
      
      13.  On 29 May 1996 the Directorate-General of the Treasury ordered the Tesoreria Centrale dello Stato (State Central Treasury)
      to transfer resources to account No 414/23203 and to issue a receipt for the transfer to account No 414/23200  
      EEC Commission ─ Own resources. The amount stated in letters in this order was correct, but the numbers  
      422 were missing from the amount indicated in figures.
      
      14.  The following day, 30 May 1996, the Central Treasury issued a receipt 
      
         			(7)
         		 indicating that the sum of ITL 1 486 594 526 had been transferred to the Commission's account.
      
      15.  On 27 June 1996 the Directorate-General of the Treasury issued a new order authorising the Central Treasury to transfer and
      credit to account No 414/23200  
      CEE Ris. proprie the sum of ITL 1 484 936 000 000, with a value date of 30 May 1996 and the statement  
      by way of supplement to the transfer referred to in receipt No 12912 of 30 May 1996 of ITL 1 486 594 526 and in full settlement.
      
      16.  On the same date, 27 June 1996, the Central Treasury issued a receipt 
      
         			(8)
         		 stating that the sum of ITL 1 484 936 000 000 had been transferred to the Commission's account, with a value date of 30 May
      1996 and the statement  
      by way of supplement to the transfer referred to in receipt No 12912 of 30 May 1996 of ITL 1 486 594 526 and in full settlement.
      
      17.  The Commission concluded from the statements of account (type 56 T) relating to May and June 1996 from the Italian bank that
      only ITL 1 486 594 526 rather than ITL 1 486 422 594 526 had been credited to account No 23200  
      EEC own resources on 30 May 1996, that the remainder due was not entered until 27 June 1996, and that the Italian Republic had thus failed
      to make available the full sum owed in due time in contravention of Regulation No 1552/86, as subsequently amended, in particular
      Articles 9 and 10 thereof. The Commission therefore decided to apply Article 11 of Regulation No 1552/89.
      
      18.  It considered that, according to the wording of Article 11 of the regulation, the interest rate was 10.24%, that the remainder
      had been paid 24 days late, and that therefore the sum of ITL 9 970 980 092 in interest for delay had to be paid. By letter
      of 28 November 1996 the Commission requested that the Italian authorities make this amount available to it.
      
      19.  However, the Italian Minister for the Treasury refused to comply with this request. 
      
         			(9)
         		 He took the view that there had been no delay in making available the full sum owed for June. There had merely been a substantive
      error in the internal accounting procedure.
      
      20.  The Commission issued a reasoned opinion on 15 November 1999, calling upon the Italian Government to take the measures necessary
      to comply with the opinion within two months. Since the Italian Government failed to do so, the Commission brought the present
      action on 29 September 2000.
       IV ─ Submissions of the parties
      
      21.  The Commission notes that the statements of account from the Italian bank show that part of the sum owed was credited to account
      No 414/23200  
      EEC own resources on 30 May 1996 but that the remainder was not entered until 27 June 1996. It contends that only accurate accounting documents
      which show clearly and beyond doubt the actual entry of own resources can serve as proof that they were made available to
      the Commission within the prescribed periods. In the present case the statements of account and receipt No 12912 show that
      there was a delay in crediting the full sum owed. None of the other documents submitted by the Italian Government can serve
      as evidence to the contrary.
      
      22.  It also considers that Member States cannot make rectifications with retrospective effect such as that made by the Italian
      Ministry of the Treasury on 27 June 1996. Firstly, credits of sums with retrospective effect make no sense in a system of
      non-interest bearing accounts such as the  
      own resources account in the name of the Commission. Secondly, to allow accounting rectifications with retrospective effect would deprive
      the obligation to pay default interest of any practical effect.
      
      23.  The Italian Government observes that as soon as the sum of own resources laid down in the budget is paid into the transit
      account it is de facto no longer available to the Italian Government since under national law it cannot dispose of the funds
      credited to account No 414/23203 other than to the benefit of the Community.
      
      24.  The sum of ITL 2 650 billion had been budgeted for and paid into the transit account half way into May 1996 and therefore
      there was considerably more in this account that was necessary.
      
      25.  Directly after the transfer of the resources from the transit account to the Commission's account had been approved, the Commission
      was informed by fax of the order to effect the transfer. The Italian Government contends that the resources were in fact available,
      given that the transfer had been made to account No 414/23203 and that the exact sum due to the Commission by way of own resources
      was stated.
      
      26.  The Italian Government considers that the orders at the end of May were lawfully issued and carried out even though in the
      latter case the amount had been stated incorrectly in figures. It notes that, in accordance with a general principle of Italian
      law, in the event of a discrepancy between the amount in letters and that in figures, the amount in letters is binding.
      
      27.  Since the transactions are effected between two current, non-interest bearing accounts, they are both operated within the
      same government administration, and the financial resources concerned are reserved for the same purpose, the Italian Government
      considers that the incorrect indication of the amount in figures constitutes a straightforward substantive error which has
      had only a purely internal effect and which is, as a rule, to be rectified without external consequences on the lawfulness
      of the transaction concerned.
      
      28.  As regards the retrospective effect, the Italian Government contends that no manipulation of accounts is involved, but that
      this is an accepted practice in the accounting and banking world to rectify a mistake such as the one at issue here.
      
      29.  The Italian Government also notes that the Commission suffered no adverse effects, the Italian State itself has derived no
      benefit therefrom, and any request by the Commission for the full sum owed to be made available to it could have been complied
      with immediately, even if account No 414/23200 was not in funds, given the availability of the reserved resources paid into
      account No 435/23203.
       V ─ Appraisal
      
      30.  Under Article 9 of the regulation and the first paragraph of Article 10(3) thereof, the Member State is required to enter
      the sums due in the Commission's account on the first working day of the month. Under Article 11 of the regulation, any delay
      in making the entry means that default interest must be paid.
      
      31.  The essential question in this case is whether, by 3 July 1996, the Italian authorities had transferred the required sum to
      account No 414/23200, an account within the meaning of Article 9 of the regulation, in the sense that the sum was also available
      to the Commission in practice.
      
      32.  The fact that there was an intention to do so is evident from the fax which the Italian authorities sent to the Commission
      on 28 May 1996. This intention was followed up by an internal procedure within the Italian administration during which an
      initial error was made in that the amount in figures was incorrectly stated on the order form. This initial error was incorporated
      in a subsequent form (receipt No 12912) which stated an amount which was too low both in letters and in figures. When the
      Italian authorities noticed this error, a new order and authorisation was given and a new receipt issued. The rectification
      operation was given retrospective effect.
      
      33.  The Italian Government considers that the fax of 28 May 1996 is sufficient to establish that the resources were available
      to the Commission in due time and the other documents relate to internal communications. However, the Commission considers
      that the only account documents which it has and which have sufficient probative value establish the contrary. It claims that
      it must be concluded from these documents that there was a delay in making the entry.
      
      34.  I concur with the Commission's view. In other words, the Italian Government has failed to show that the Commission had available
      to it the full sum owed on 3 June 1996. The fax of 28 May 1996 merely states an intention, it does not show that the own resources
      had also in fact been credited by 3 June 1996. Similarly, the order of 29 May 1996 authorising the transfer from the transit
      account to the Commission's account does not constitute proof that the correct sums were credited to the Commission's account
      in due time. Conversely, it must be concluded from the statements of account from the Italian bank and the receipt issued
      on 30 May 1996 that the full sum of own resources had not been made available at the beginning of June. The Italian Government's
      argument that there were sufficient resources in account No 435/23203, a so-called transit account, and that the full sum
      owed was available to the Commission likewise does not hold water. This account is in the name of the Ministry and not in
      that of the Commission. Consequently, the Commission did not have the funds in this account at its disposal.
      
      35.  It follows from the foregoing that on 3 June 1996 the Commission did not have the resources at its disposal and that Italy
      therefore failed to fulfil in due time its obligations under Articles 9 and 10 of Regulation No 1552/89.
      
      36.  As the Commission has correctly observed, there is an inseparable link between the obligation to establish the Communities'
      own resources, the obligation to credit them to the Commission's account within the prescribed time-limit and the obligation
      to pay default interest. 
      
         			(10)
         		 Where it is established that a sum should have been credited to the account on a particular date ─ in this case 3 June 1996
      ─ and the sum is not in that account on that date, Article 11 of the regulation automatically enters into effect. This automatic
      applicability means that default interest is payable in respect of the delay in paying this sum, regardless of the reason
      for the delay in making the entry in the Commission's account. 
      
         			(11)
         		 It was the intention of the Community legislature that such a penalty should be the result of a Member State's failure to
      fulfil its Treaty obligations. 
      
      37.  Nor are there any circumstances which would provide grounds for an exception to this automatic application. The fact that
      the Italian Government acted in good faith and its failure to fulfil its obligations was unintentional is irrelevant 
      
         			(12)
         		 and the proceedings do not relate to force majeure or a dispute over interpretation. As regards the latter, the wording of
      the regulation is clear. In the present case there has been a substantive error. This error is not such that the Italian Government
      can evade its obligations to pay default interest arising from the regulation.
      
      38.  Furthermore, I should also note that the observation made by the Italian Government, namely that the Commission suffered no
      adverse effects, is of no relevance. Failure by a Member State to fulfil an obligation imposed by Community law is sufficient
      to constitute a breach of Treaty obligations and the fact that the failure had no adverse effects is irrelevant. 
      
         			(13)
         		 The contention that no adverse effects were suffered is not only irrelevant but also incorrect. The Commission did not have
      the own resources at its disposal on the abovementioned date and therefore was unable to use them for investments, for example.
      
      39.  Moreover, a rectification with retrospective effect cannot have the effect of making the resources available to the Commission
      on 3 June 1996, quite apart from the fact that rectifying value dates makes no sense in the case of non-interest bearing accounts.
      Finally, the argument that the Italian Government was also unable to derive any benefit from the delay in making the entry
      is also of no relevance. It provides no grounds for the fact that the Italian Republic failed to fulfil its obligations under
      Article 10(3) of the regulation between 3 June 1996 and 27 June 1996.
        VI ─ Conclusion
      
      40.  In the light of foregoing, I would recommend that the Court:
      
      
      ─
         declare that by not making available to the Commission the sum of ITL 1 484 936 000 000 by way of own resources within the
         period laid down by Articles 9 and 10 of Council Regulation (EEC, Euratom) No 1552/89 of 29 May 1989 implementing Decision
         88/376/EEC, Euratom on the system of the Communities' own resources, subsequently consolidated in Council Regulation (EC,
         Euratom) No 1150/2000 of 22 May 2000 implementing Decision 94/728/EC, Euratom on the system of the Communities' own resources,
         and subsequently refusing to pay default interest on that amount owed pursuant to Article 11 of that regulation, the Italian
         Republic is in breach of its obligations under Articles 9, 10 and 11 of Regulation No 1552/89. 
      
      
      
      ─
         order the Italian Republic to pay the costs. 
      
      
      
       1 –
         
           Original language: Dutch.
      
      2 –
         
         OJ 2000 L 130, p. 1.
      
      3 –
         
         OJ 1989 L 155, p. 1.
      
      4 –
         
         Decree No 321 of the President of the Republic of 16 April 1971 implementing the Council Decision of 21 April 1970 on the
            replacement of financial contributions from Member States by the Communities' own resources and the regulations on funding
            the common agricultural policy, pursuant to Article 3 of Law No 1185 of 23 December 1970, Gazette Ufficiale of 9 July 1971,
            No 145.
         
      
      5 –
         
         Letter of 28 May 1996, No 142798.
      
      6 –
         
         Fax of 28 May 1996, No 9835.
      
      7 –
         
         Receipt No 12912, type 80 T.
      
      8 –
         
         Receipt No 16817, type 80 T.
      
      9 –
         
         Letter of 30 January 1997.
      
      10 –
         
         Case C 96/89  
             Commission  v  
             Netherlands  [1991] ECR I-2461, paragraph 38.
         
      
      11 –
         
         In this connection the Commission refers to Case 54/87  
             Commission  v  
             Italy  [1989] ECR 385, paragraph 12.
         
      
      12 –
         
         Case 93/85  
             Commission  v  
             United Kingdom  [1986] ECR 4011, paragraphs 34 and 37.
         
      
      13 –
         
         Case C-348/97  
             Commission  v  
             Germany  [2000] ECR I-4429, paragraph 62.