CELEX: 62000TJ0340
Language: en
Date: 2003-03-13 00:00:00
Title: Judgment of the Court of First Instance (Third Chamber) of 13 March 2003. # Comunità montana della Valnerina v Commission of the European Communities. # EAGGF - Withdrawal of financial assistance - Article 24 of Regulation (EEC) No 4253/88 - Principles of proportionality and legal certainty - Statement of reasons - Right to be heard. # Case T-340/00.

Case T-340/00 Comunità montana della ValnerinavCommission of the European Communities
            «(EAGGF – Withdrawal of financial assistance – Article 24 of Regulation (EEC) No 4253/88 – Principles of proportionality and legal certainty – Statement of reasons – Right to be heard)»
            
               
                  Judgment of the Court of First Instance (Third Chamber), 13 March 2003  
                     
                
               
            
                   
               
               
            
            Summary of the Judgment
         
         
                  1..
                  Economic and social cohesion – Structural assistance – Community funding – Decision to grant EAGGF financial assistance – Several parties responsible for implementation of the project – No express provision in the decision identifying the party responsible for repayment of the assistance in the event of irregularities – Demand for repayment of the assistance in full addressed to the party described as the beneficiary – Breach of the principle of proportionality  (Council Regulation No 4256/88) 
         
                  2..
                  Economic and social cohesion – Structural assistance – Community funding for national projects – Applicants for, and beneficiaries of, EAGGF financial assistance required to provide information and to act in good faith
                      
                  
         
                  3..
                  Community law – Principles – Proportionality – Financial assistance granted by the EAGGF withdrawn owing to the recipients' non-compliance with the financial conditions
                     for the investment laid down in the decisions granting the assistance – Infringement – None  
                  (Council Regulation No 4253/88, Art. 24(2)) 
         
         1.
          Where, in the case of financial assistance granted under Regulation No 4256/88 laying down provisions for implementing Regulation
         No 2052/88 as regards the EAGGF Guidance Section for a project which several parties are responsible for carrying out, the
         legislation applicable to the grant of assistance does not state from which of those parties the Commission should demand
         repayment of the assistance in the event of irregularities being committed in the implementation of the project by one or
         more of those parties, and where the award decision and its annexes do not expressly provide that, in the event of irregularities
         being found in the implementation of the project, the party described as the beneficiary is financially liable to the Community
         for the project as a whole, the Commission, by addressing the award decision not only to the beneficiary of the assistance
         but also to an association responsible for implementation of part of the project, creates a direct legal relationship not
         only with the beneficiary of the assistance but also with that association. It follows that the beneficiary may, at least
         at first sight, legitimately assume that in the event of irregularities committed by the other party in the implementation
         of the project, the Commission will address its demand for repayment of the assistance relating to measures that were due
         to be carried out by that party to the latter. Thus, given the serious consequences which repayment of assistance entails for the parties concerned, the Commission, by requiring
         the beneficiary to repay in full the assistance already paid to it and not limiting that demand to the part of the project
         that was to be carried out by it, infringed the principle of proportionality. see paras 52, 56, 62-63, 65-66
         
         2.
          Applicants for, and beneficiaries of, Community assistance are required to satisfy themselves that they are submitting to
         the Commission reliable information which is sufficiently accurate, since otherwise the system of controls and evidence set
         up to determine whether the conditions for granting assistance are fulfilled cannot function properly. In the absence of sufficiently
         accurate information projects which do not fulfil the conditions required could become the subject of assistance. It follows
         that the obligation on applicants for, and beneficiaries of, assistance to provide information and act in good faith is inherent
         in the EAGGF assistance system and essential for its effective functioning. see para. 97
         
         3.
          In view of the very nature of the assistance awarded by the Community, the obligation to comply with the financial conditions
         set out in the award decision constitutes, in the same way as the substantive obligation to carry out the project concerned,
         one of the beneficiary's essential commitments and is therefore a precondition for the grant of Community assistance. The
         provision of sufficiently specific information by applicants for, and beneficiaries of, Community assistance is essential
         for the proper operation of the system of inspection and evidence introduced in order to verify whether the conditions for
         granting such assistance are met. In a case in which the benficiary of assistance committed irregularities for the purposes of co-financing of the project by
         charging unjustified expenditure to it, it was reasonable for the Commission to consider that the only penalty apart from
         total withdrawal of the assistance and recovery of the sums paid from the EAGGF was liable to constitute an invitation to
         fraud in that potential beneficiaries would be tempted either to inflate artificially the amount of expenditure charged to
         the project in order to escape their obligation to provide co-financing and obtain the maximum EAGGF intervention provided
         for in the award decision, or to supply false information or conceal certain data in order to obtain assistance or to increase
         the amount of assistance being sought, with the prospect of the sole penalty being that the assistance would be reduced to
         the level it would have been if the expenditure actually incurred by the beneficiary and/or the correctness of the information
         provided by the beneficiary to the Commission had been taken into account. see paras 145-146, 149
      

      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
            
            JUDGMENT OF THE COURT OF FIRST INSTANCE (Third Chamber)13 March 2003  (1)
         
         
               ((EAGGF – Withdrawal of financial assistance – Article 24 of Regulation (EEC) No 4253/88 – Principles of proportionality and legal certainty – Statement of reasons – Right to be heard))
               
             In Case T-340/00, 
            
            
            Comunità montana della Valnerina,   represented by E. Cappelli and P. De Caterini, lawyers, with an address for service in Luxembourg,
            
            
            applicant,  supported byItalian Republic, represented by U. Leanza and G. Aiello, acting as Agents, with an address for service in Luxembourg,
            
            intervener, 
            
            v
            Commission of the European Communities, represented by C. Cattabriga, acting as Agent, assisted by M. Moretto, lawyer, with an address for service in Luxembourg,
            
            defendant, 
            
             APPLICATION for the annulment of Commission Decision C (2000) 2388 of 14 August 2000 withdrawing the financial assistance
            granted to the Comunità Montana della Valnerina by Commission Decision C (93) 3182 of 10 November 1993 concerning grant of
            a contribution from the EAGGF, Guidance Section, pursuant to Council Regulation (EEC) No 4256/88 of 19 December 1988 laying
            down provisions for implementing Regulation (EEC) No 2052/88 as regards the EAGGF Guidance Section (OJ 1988 L 374, p. 25),
            in connection with Project No 93.IT.06.016 entitled  
            Pilot demonstration project for forestry, agricultural and food programmes in marginal hill areas (France, Italy),
            
            
            THE COURT OF FIRST INSTANCE OF THE EUROPEAN COMMUNITIES (Third Chamber),
            
             composed of: K. Lenaerts, President, J. Azizi and M. Jaeger, Judges,  
            
             Registrar: J. Palacio González, Principal Administrator, 
            
            
            having regard to the written procedure and further to the hearing on 14 November 2002,
         gives the following
         
         
         Judgment
            
               Legal background
            
         
         1
            
          In order to strengthen economic and social cohesion within the meaning of Article 158 EC, Council Regulation (EEC) No 2052/88
         of 24 June 1988 on the tasks of the Structural Funds and their effectiveness and on coordination of their activities between
         themselves and with the operations of the European Investment Bank and the other existing financial instruments (OJ 1988 L
         185, p. 9) entrusted the Structural Funds with the tasks, in particular, of promoting the development and structural adjustment
         of regions whose development was lagging behind, speeding up the adjustment of agricultural structures and promoting the development
         of rural areas with a view to reform of the common agricultural policy (Article 1(1) and (5)(a) and (b)). That regulation
         was amended by Council Regulation (EEC) No 2081/93 of 20 July 1993 (OJ 1993 L 193, p. 5). 
         
         
         2
            
          Article 5(2)(e) of Regulation No 2052/88 originally provided that financial assistance could be given by the Structural Funds
         in the form of support for technical assistance and studies in preparation for operations. As amended by Regulation No 2081/93,
         it provides that financial assistance may be given by the Structural Funds in the form of support for technical assistance,
         including the measures to prepare, appraise, monitor and evaluate operations, and pilot and demonstration projects.  
         
         
         3
            
          On 19 December 1988 the Council adopted Regulation (EEC) No 4256/88 laying down provisions for implementing Regulation (EEC)
         No 2052/88 as regards the EAGGF Guidance Section (OJ 1988 L 374, p. 25). That regulation was amended by Council Regulation
         (EEC) No 2085/93 of 20 July 1993 (OJ 1993 L 193, p. 44). 
         
         
         4
            
          Article 8 of Regulation No 4256/88 stated originally that EAGGF assistance for the measures provided for in Article 5(2)(e)
         of Regulation (EEC) No 2052/88 might cover in particular carrying out pilot projects for promoting the development of rural
         areas, including the development and exploitation of woodland (first indent) and carrying out demonstration projects to show
         farmers the real possibilities of systems, methods and techniques of production which are in accordance with the objectives
         of the reform of the common agricultural policy (fourth indent). As amended by Regulation No 2085/93, that article provides
         that, in achieving its tasks, the EAGGF may devote up to 1% of its annual budget to financing,  
         inter alia, pilot projects for adjusting agricultural and forestry structures and promoting rural development, and demonstration projects,
         including projects for developing and exploiting forests and projects for processing and marketing agricultural products,
         to show the real possibilities of systems, methods and techniques of production and management which are in accordance with
         the objectives of the common agricultural policy. 
         
         
         5
            
          On 19 December 1988 the Council also adopted Regulation (EEC) No 4253/88 laying down provisions for implementing Regulation
         No 2052/88 as regards coordination of the activities of the different Structural Funds between themselves and with the operations
         of the European Investment Bank and the other existing financial instruments (OJ 1988 L 374, p. 1). That regulation was amended
         by Council Regulation (EEC) No 2082/93 of 20 July 1993 (OJ 1993 L 193, p. 20). 
         
         
         6
            
          Article 24 of Regulation No 4253/88, as amended, provides with regard to the reduction, suspension and cancellation of assistance:
         
         
         1.
           If an operation or measure appears to justify neither part nor the whole of the assistance allocated, the Commission shall
         conduct a suitable examination of the case in the framework of the partnership, in particular requesting that the Member State
         or authorities designated by it to implement the operation submit their comments within a specified period of time. 
         
         
         2.
          Following this examination, the Commission may reduce or suspend assistance in respect of the operation or a measure concerned
         if the examination reveals an irregularity or a significant change affecting the nature or conditions for the implementation
         of the operation or measure for which the Commission's approval has not been sought. 
         
         
         3.
          Any sum received unduly and to be recovered shall be repaid to the Commission. Interest on account of late payment shall be
         charged on sums not repaid in compliance with the provisions of the Financial Regulation and in accordance with the arrangements
         to be drawn up by the Commission pursuant to the procedures referred to in Title VIII.
         
         Facts
         
         7
            
          The Comunità montana della Valnerina (
         the applicant) is an Italian regional local authority, set up by the region of Umbria (Italy). 
         
         
         8
            
          In June 1993 the applicant sent the Commission an application for Community assistance for a pilot demonstration project for
         forestry, agricultural and food programmes in marginal hill areas (Project No 93.IT.06.016;  
         the project). 
         
         
         9
            
          It is clear from the project that its overall objective was to set up and carry out a pilot demonstration of two forestry,
         agricultural and food programmes, one by the applicant in Valnerina (Italy), the other by the  
         Route des Senteurs association in the Drôme Provençale region (France) (hereinafter  
         Route des Senteurs), in order to introduce and develop alternative activities such as rural tourism in parallel with the usual agricultural
         activities. The project provided in particular for setting up two tourist promotion and coordination centres, developing production
         of typical local food products such as truffles, spelt wheat and aromatic plants, better integration of the various producers
         operating in the regions concerned, and the improvement and environmental rehabilitation of those regions. 
         
         
         10
            
          By Decision C (93) 3182 of 10 November 1993 addressed to the applicant and to Route des Senteurs, the Commission awarded the
         project a grant from the EAGGF Guidance Section (
         the award decision). 
         
         
         11
            
          The second paragraph of Article 1 of the award decision stated that the applicant and Route des Senteurs were  
         the bodies responsible for the project. Article 2 of the award decision stated that the period for the completion of the project was to be 30 months,
         that is to say, from 1 October 1993 to 31 March 1996. 
         
         
         12
            
          The first paragraph of Article 3 of the award decision stated that the total eligible cost of the project was ECU 1 817 117
         and the maximum financial contribution from the Community was set at ECU 908 558. 
         
         
         13
            
          Annex I to the award decision contained a description of the project. Point 5 of that annex described the applicant as the
          
         beneficiary of the financial assistance and Route des Senteurs as being the  
         other body responsible for the project. Point 8 of the same annex contained a financial scheme for the project with a breakdown of the costs allocated to the various
         measures under the project. The measures under the project and the corresponding costs were set out in four sections, with
         the applicant and Route des Senteurs each carrying out measures coming under two of those four sections. 
         
         
         14
            
          Annex II to the award decision laid down the financial conditions relating to the award of the assistance. In particular,
         it stated that if the beneficiary of the financial assistance intended to make any significant changes to the operations described
         in Annex I it was to inform the Commission beforehand and obtain the latter's agreement (point 1). Point 2 of that annex stated
         that award of the assistance was conditional upon completion of all of the operations described in Annex I to the award decision.
         Annex II also provided as follows: the financial assistance was to be paid direct to the applicant as the beneficiary of the
         assistance and the applicant was responsible for paying Route des Senteurs (point 4); the Commission was authorised, for the
         purposes of verifying the financial information concerning the various expenditure, to ask to examine any original, or a certified
         copy, of a supporting document and to carry out that inspection directly on the spot or request the documents in question
         to be sent to it (point 5); the beneficiary was to keep for the Commission, for a period of five years from the last payment
         by the Commission, all originals of the documents supporting the expenditure (point 6); the Commission could at any time ask
         the beneficiary to send reports on the state of progress of the work and/or the technical results obtained (point 7); and
         the beneficiary was to keep for the Community the results obtained through implementation of the project, although that should
         not give rise to any additional payments (point 8). Lastly, point 10 of Annex II stated in essence that if any of the conditions
         laid down in that annex was not complied with, or if any measures not provided for in Annex I were undertaken, the Commission
         could suspend, reduce or withdraw the assistance and require repayment of what had already been paid, in which case the beneficiary
         would be entitled to send its observations beforehand within a time-limit fixed by the Commission. 
         
         
         15
            
          On 2 December 1993 the Commission paid the applicant an initial advance of approximately 40% of the proposed Community contribution
         and the applicant, in turn, paid Route des Senteurs the sums corresponding to the cost of the measures under the project which
         the latter was to carry out.  
         
         
         16
            
          On 27 December 1994 the applicant sent the Commission an initial report on the state of progress of the project and on the
         expenditure already incurred in respect of each of the proposed measures. At the same time it applied for payment of a second
         advance, confirming in particular that it had evidence of payment in respect of the expenditure incurred, and also that the
         measures that had already been carried out were in accordance with those described in Annex I to the award decision. 
         
         
         17
            
          On 18 August 1995 the Commission paid the applicant a second advance of approximately 30% of the Community contribution and
         the applicant in turn paid Route des Senteurs the sum corresponding to the cost of the measures under the project which the
         latter was to carry out.  
         
         
         18
            
          In June 1997 the applicant sent the Commission the final report on the implementation of the project. At the same time the
         applicant applied for payment of the balance of the Community contribution and again attached confirmation corresponding in
         essence to that described in paragraph 16 above. 
         
         
         19
            
          On 12 August 1997 the Commission informed the applicant that it had instigated a general technical and accounting check for
         all the projects financed under Article 8 of Regulation No 4256/88, including the project concerned in this case, and it requested
         the applicant, under point 5 of Annex II to the award decision, to produce a list of all the supporting documents relating
         to the eligible expenditure incurred in connection with implementing the project, together with a certified true copy of each
         of those documents. 
         
         
         20
            
          On 25 August 1997 the applicant sent the Commission certain documents and a summary of the final report on implementation
         of the project. 
         
         
         21
            
          By letter of 6 March 1998 the Commission informed the applicant of its intention to carry out an on-the-spot inspection in
         respect of the implementation of the project. 
         
         
         22
            
          The on-the-spot inspection took place, on the applicant's premises, from 23 to 25 March 1998 and on the premises of Route
         des Senteurs from 4 to 6 May 1998. 
         
         
         23
            
          On 6 April 1998 the applicant sent the Commission certain documents it had requested during the on-the-spot inspection. 
         
         
         24
            
          On 5 November 1998 the applicant and Route des Senteurs applied to the Commission for final approval for the project and payment
         of the balance of the Community contribution. 
         
         
         25
            
          By letter of 22 March 1999 the Commission informed the applicant that under Article 24 of Regulation No 4253/88, as amended,
         it had carried out an examination of the financial assistance for the project, and that as that examination had uncovered
         evidence that pointed to irregularities, it had decided to initiate the procedure provided for in the abovementioned article
         of Regulation No 4253/88, as amended, and in point 10 of Annex II to the award decision (
         the letter initiating the procedure). In that letter, a copy of which the Commission sent to Route des Senteurs, the Commission set out that evidence, specifically
         as regards the measures for which the applicant and Route des Senteurs respectively were responsible. 
         
         
         26
            
          On 17 May 1999 the applicant submitted its observations in response to the Commission's allegations and gave the Commission
         certain other documents (
         the observations on the letter initiating the procedure). 
         
         
         27
            
          By decision of 14 August 2000 addressed to the Italian Republic and the applicant and notified to the applicant on 21 August
         2000 the Commission, under Article 24(2) of Regulation No 4253/88, as amended, withdrew the financial assistance granted for
         the project and demanded that the applicant repay in full the grant already paid (
         the contested decision). 
         
         
         28
            
          In recital 9 in the preamble to the contested decision the Commission listed 11 irregularities within the meaning of Article
         24(2) of Regulation No 4253/88, as amended, five of which concerned measures carried out by Route des Senteurs and six of
         which related to measures carried out by the applicant. 
         
         
         29
            
          By letters of 14 September and 2 October 2000 the applicant requested Route des Senteurs to repay the sums which it had paid
         it for the purposes of implementing the project and for which Route des Senteurs was liable. At the same time, the applicant
         requested Route des Senteurs to send it information that would establish the incorrect and unlawful nature of the contested
         decision in order to prepare a joint line of defence. 
         
         
         30
            
          On 20 October 2000 Route des Senteurs replied, in essence, that in its view the contested decision was unjustified. 
         Procedure and forms of order sought
         
         31
            
          By application lodged at the Registry of the Court of First Instance on 7 November 2000 the applicant brought the present
         action. 
         
         
         32
            
          By a document lodged at the Registry of the Court of First Instance on 12 April 2001 the Italian Republic applied for leave
         to intervene in the present proceedings in support of the applicant. By order of 1 June 2001 the President of the Third Chamber
         of the Court of First Instance granted the leave sought. The intervener lodged its statement and the other parties lodged
         their observations on it within the time-limit. 
         
         
         33
            
          Upon hearing the report of the Judge-Rapporteur, the Court of First Instance (Third Chamber) decided to open the oral procedure
         and, as measures of organisation of procedure pursuant to Article 64 of its Rules of Procedure, put questions to the parties
         in writing. The parties complied with those requests. 
         
         
         34
            
          The applicant claims that the Court should: 
         
         
         ─
             annul the contested decision; 
          annul the contested decision; 
         
         
         
         ─
             order the Commission to pay the costs. 
          order the Commission to pay the costs. 
         
         
         
         
         35
            
          The Commission contends that the Court should:  
         
         
         ─
             dismiss the application; 
          dismiss the application; 
         
         
         
         ─
             order the applicant to pay the costs. 
          order the applicant to pay the costs. 
         
         
         
         
         36
            
          The Italian Republic supports the forms of order sought by the applicant. 
         Law
         
         37
            
          The applicant relies on four pleas. The first plea alleges infringement of the principles of non-discrimination and proportionality
         in that the Commission did not limit its demand for repayment of the assistance to the sums corresponding to the part of the
         project which, under the award decision, was to be carried out by the applicant. The second plea alleges that the Commission
         committed errors with regard to the various irregularities in the implementation of the part of the project for which the
         applicant itself was responsible, and infringements of the obligation to state reasons and of the right to be heard. The third
         plea relates to an infringement of the principle of proportionality and of Article 24(2) of Regulation No 4253/88, as amended,
         in that the Commission demanded repayment of the full amount of the assistance in so far as it had been granted for the implementation
         of measures by the applicant. The fourth plea is based on misuse of powers. 
         
          1.First plea: infringement of the principles of non-discrimination and proportionality in that the Commission did not limit
         its demand for repayment of the assistance to that part of the project which was to be carried out by the applicant
          Arguments of the parties
         
         
         38
            
          The applicant maintains that the contested decision is vitiated by infringement of the principles of non-discrimination and
         proportionality in that the Commission did not limit its demand for repayment of the assistance to the sums relating to the
         part of the project which, under the award decision, was to be carried out by the applicant, but required the latter to repay
         the assistance in full. 
         
         
         39
            
          The applicant considers that although technically this was a single project with single financing, and although technically
         the applicant was the sole beneficiary of the financial assistance, the measures proposed in the project were to be carried
         out in two separate parts, which were to be managed independently by itself and by Route des Senteurs. In addition, it points
         out that in the contested decision the Commission set out 11 complaints relating to irregularities in the implementation of
         the project, five of which concerned measures that were to be carried out by Route des Senteurs, whilst six related to measures
         which it was to carry out itself. 
         
         
         40
            
          The Italian Republic considers that the Commission should, in its assessment of the contested irregularities, have taken into
         account the respective responsibilities of each of the two bodies responsible for the proposed measures since those measures
         were separate and autonomous. The Commission should therefore have taken a balanced decision and not have penalised the applicant
         more than was due by also attributing to it responsibility for the irregularities committed by Route des Senteurs. 
         
         
         41
            
          The Italian Republic considers that the Commission's arguments concerning the indivisible nature of the project and the role
         of the applicant as the sole beneficiary of the project are unconvincing since they are based on confusion between the administrative
         obligations imposed on the beneficiary and the actual responsibility of both partners in the project for the various measures
         proposed under the project. Therefore, according to the Italian Republic, if the Commission wished to penalise the applicant
         by withdrawing the assistance in full rather than by reducing it, it should have proved that there had been a breach of the
         administrative obligations incumbent upon the applicant as the beneficiary of the assistance. 
         
         
         42
            
          The Italian Republic is also of the view that the Commission's arguments are based on a purely formal and incorrect interpretation
         of the award decision. It points out that, in the second paragraph of Article 1 of that decision, both the applicant and Route
         des Senteurs were described as  
         the bodies responsible for the project. If the concept of  
         responsibility is to have any meaning, it can only be that the bodies responsible for the measures financed under the project should each
         be answerable for the alleged irregularities. 
         
         
         43
            
          The Commission considers that it was entitled to demand that the applicant refund in full the sums paid to implement the project
         without having to see whether the applicant was totally or only partially answerable for the irregularities which had been
         found. 
         
         
         44
            
          In the first place, it was a single project which had a single purpose, namely to set up two forestry, agricultural and food
         programmes in two different territorial areas of the Community. It points out that the project was approved by a single decision
         on the basis of single financing for a sole beneficiary, namely the applicant. 
         
         
         45
            
          Second, the Commission considers that it is clear from the award decision that, as the applicant was the beneficiary of the
         Community assistance, it alone was regarded as being financially liable to the Community. 
         
         
         46
            
          According to the Commission, the wording of the annexes to the award decision shows clearly that the applicant was the sole
         operator financially liable to the Community and that Route des Senteurs was merely responsible for carrying out part of the
         project: both point 5 of Annex I and point 4 of Annex II to that decision described the applicant as the  
         beneficiary of the assistance and Route des Senteurs as merely  
         the other body responsible for the project. Contrary to the contention of the Italian Republic, the Commission is of the view that the concept of  
         the body responsible for the project does not mean that the party which committed irregularities in the implementation of the project must be answerable for them.
         That interpretation would fail to take into account not only the fact that the project is a single project but also the fact
         that financial liability for the project to the Communities lies entirely with the beneficiary, which in this case is the
         applicant. 
         
         
         47
            
          The Commission goes on to state that, under the award decision, only the beneficiary of the assistance is entitled to apply
         to the Commission for payment of sums granted by way of the assistance. It is also the beneficiary which must make the relevant
         payments to the other party responsible for implementing the project, as was done in this case. 
         
         
         48
            
          Furthermore, the Commission considers that point 10 of Annex II to the award decision also makes clear that, as the applicant
         was the beneficiary of the assistance, it was to be held financially liable to the Community for any irregularities which
         might be found in connection with the implementation of the project, irrespective of which of the parties was responsible
         for those irregularities. Under that provision, only the beneficiary and no other body responsible for implementation of the
         project is entitled to submit observations to the Commission before the adoption of a decision to withdraw assistance. 
         
         
         49
            
          The Commission adds that the fact that Route des Senteurs and not the applicant was responsible for certain irregularities
         mentioned in the contested decision is relevant only in relations between those two parties. In that connection, it was for
         the applicant, as the beneficiary of the assistance, to ensure that it had adequate protection with regard to its partner
         by means of appropriate private law instruments such as bank guarantees. 
         
         
         50
            
          Thirdly, the Commission maintains that it is clear from the documents in the case that the applicant was fully aware of its
         financial liabilities to the Community, which stemmed from its capacity as sole beneficiary of the assistance. On the one
         hand, the applicant expressly stated, in connection with the applications for payment of the second advance and the balance
         of the assistance (see paragraphs 16 and 18 above), that the data contained in the tables annexed to those applications accurately
         reflected the expenditure incurred not only by itself but also by Route des Senteurs and that the measures carried out corresponded
         to all those described in the award decision. On the other hand, the Commission draws attention to the fact that, following
         notification of the contested decision, the applicant requested Route des Senteurs by letter of 14 September 2000 to refund
         the share of the advances paid to it in respect of implementation of the measures for which it was responsible. 
          Findings of the Court
         
         
         51
            
          It is appropriate to consider whether, in the particular circumstances of the present case, the Commission was entitled to
         ask the applicant to repay in full the assistance granted for implementation of the whole project or whether, on the contrary,
         under the general principles of law relied on by the applicant, the Commission should in any event have restricted its demand
         for repayment to the sums relating to that part of the project which, under the award decision, was to be carried out by the
         applicant itself. 
         
         
         52
            
          It must be pointed out first of all that where assistance is granted for a project which several parties are responsible for
         carrying out the relevant legislation does not state from which of those parties the Commission should demand repayment of
         the assistance in the event of irregularities being committed in the implementation of the project by one or more of those
         parties. 
         
         
         53
            
          It should also be pointed out that, contrary to what the applicant, supported by the Italian Republic, appears to be stating,
         it is not wrong generally in such a situation for the Commission to designate, in the decision awarding the assistance, one
         of the parties responsible for carrying out the project as being not only its sole interlocutor but also the only party which,
         in the event of irregularities committed by one of the parties concerned, is to be financially liable to the Community for
         the project as a whole. Even in a situation where the project is designed in such a way that implementation of the various
         measures proposed under the project is clearly attributed to each of the various parties concerned, such an arrangement is
         justified in the interests of the effectiveness of Community action as regards both the principle of sound administration
         and the need for sound financial management of the Community budget. That arrangement, as such, cannot therefore be regarded
         as being contrary to the principles of proportionality and non-discrimination. 
         
         
         54
            
          None the less, it is appropriate to take into account the fact that any obligation to repay assistance may entail serious
         consequences for the parties concerned. Therefore, the principle of legal certainty requires that the law applicable to performance
         of the contract should be sufficiently clear and specific to make the parties concerned aware unequivocally of their rights
         and obligations and take the necessary steps ─ that is, in the present context, to agree before the assistance is awarded
         on appropriate private law instruments which will protect their financial interests in relation to each other. 
         
         
         55
            
          Consequently, as regards the present case, it must be considered that the Commission could not, without infringing the principle
         of proportionality, validly demand the applicant alone to repay the assistance granted in order for the applicant and Route
         des Senteurs to carry out measures unless the terms of the award decision and its annexes were sufficiently clear and specific,
         so that the applicant, as a prudent and experienced agent, would necessarily know that in the event of irregularities in the
         implementation of the project, irrespective of whether Route des Senteurs or the applicant itself was answerable for them,
         the applicant would be the only party that would be financially liable to the Community in respect of all the assistance granted.
         
         
         
         56
            
          It is clear, first of all, that the award decision and its annexes do not expressly provide that in the event of irregularities
         being found in the implementation of the project the applicant would be financially liable to the Community for the project
         as a whole. 
         
         
         57
            
          Next, it is necessary to consider whether, in the particular circumstances of the present case, the applicant should, despite
         the absence of an express provision to that effect in the award decision, have understood the extent of its financial liabilities
         to the Community in the way advocated by the Commission. 
         
         
         58
            
          First, the Commission points out that the award decision and Annex II thereto describe the applicant as the  
         beneficiary of the assistance whilst they describe both the applicant and Route des Senteurs as being  
         the bodies responsible for the project. The Commission also states that points 1, 4, 6 to 8 and 10 of Annex II to the award decision (see paragraph
         14 above) state that the award decision has conferred certain rights and obligations to the Community only on the  
         beneficiary of the assistance. 
         
         
         59
            
          In that regard, it should be noted that point 1 of Annex II to the award decision states that in the event of amendments to
         the operations described in Annex I the  
         beneficiary of the assistance is required to inform the Commission beforehand and obtain the latter's agreement. Points 6 to 8 of Annex II to that decision
         state that the  
         beneficiary of the assistance is obliged in essence to take the necessary measures so that the Commission may, if it considers appropriate, check that
         the project has been properly implemented and have available the results obtained from the project. However, contrary to what
         the Commission maintains, those provisions do not concern the financial relationship as such between the Community and the
         parties responsible for carrying out the project. They concern instead the various detailed rules governing implementation
         of the project. Under those rules the applicant may be described as the Commission's sole interlocutor as regards implementation
         of the project. 
         
         
         60
            
          It is of course true however that point 4 of Annex II to the award decision concerns a specific aspect of the financial relationship
         between the Community and those responsible for carrying out the project. Under that provision the assistance was to be paid
         directly to the applicant, as the  
         principal beneficiary, and it was then required to pay Route des Senteurs the sums relating to the measures for which the latter was responsible.
         It should be pointed out, however, that that provision states only how the assistance granted should be paid to the parties;
         it does not state how such assistance should be refunded to the Commission in the event of irregularities being found in connection
         with the implementation of the project. 
         
         
         61
            
          Point 10 of Annex II to the award decision dealt with another specific aspect of the financial relationship between the Community
         and the bodies responsible for implementation of the project: it states in essence that before any suspension, reduction or
         withdrawal of the assistance the  
         beneficiary of the assistance could, within a time-limit set by the Commission, send its observations on the complaints made by the latter. Contrary to
         what the Commission maintains, it need not necessarily be inferred from the fact that under that provision the right to be
         heard in respect of the complaints raised by the Commission was limited solely to the  
         beneficiary of the assistance that it was also the latter which, in the event of irregularities committed by either party in the implementation of the
         project, was the only body that was financially liable to the Community in respect of all the assistance granted. 
         
         
         62
            
          Second, with regard to the Commission's argument that in the present case this was a single project, approved by a single
         decision for a sole beneficiary and having both a single objective and single financing, it is necessary to point out first
         of all that the award decision, although it was a single legal act, was addressed both to the applicant and to Route des Senteurs.
         That is, in principle, sufficient to create a direct legal relationship between the Community, for the one part, and each
         of the persons to whom the award decision was addressed, for the other part. 
         
         
         63
            
          Moreover, although the project was designed to meet a single objective and was based on single financing, it still consisted
         of several measures which were clearly defined both from the financial point of view and from the point of view of the objectives
         to be achieved. In such a situation it must be considered that by addressing the award decision not only to the applicant
         but also to Route des Senteurs the Commission created a direct legal relationship not only with the applicant but also with
         Route des Senteurs, so that the applicant could, at least at first sight, legitimately assume that in the event of irregularities
         committed by Route des Senteurs in the implementation of the project, the Commission would address its demand for repayment
         of the assistance relating to measures that were due to be carried out by Route des Senteurs to the latter. 
         
         
         64
            
          Third, as the Italian Republic rightly pointed out, the lack of clarity in the terms of the award decision and its annexes
         as to the financial liability of the parties to the Community in the implementation of the project is increased still further
         by the use of the terms  
         beneficiary of the assistance and  
         bodies responsible for the project: under the various provisions of Annex II to the award decision (see paragraph 14 above) the Commission attributed to those
         words a meaning different from the one normally attributed to them. Taking into account the applicant's rights and obligations
         under those various provisions of Annex II to the award decision and according to the Commission's intentions, the applicant
         was in fact the body with sole responsibility for the proper implementation of the project. Route des Senteurs, on the other
         hand, was a beneficiary of the assistance in the same way as the applicant. Point 4 of Annex II to the award decision stated
         that the financial assistance was to be paid by the Commission into the applicant's bank account and it in turn was required
         to transfer to Route des Senteurs the sums relating to the measures for which the latter was responsible. Therefore, rather
         than clarifying the scope of the responsibilities incumbent upon the parties concerned, the use of those terms in the award
         decision helped to sow doubt on that matter. 
         
         
         65
            
          That analysis leads to the conclusion that, as regards the question of the financial liability of the parties concerned in
         respect of implementation of the project, the award decision is not sufficiently clear and specific to meet the requirement
         of legal certainty, which is essential in view of the serious consequences that repayment of the assistance has for those
         parties. Moreover, the vagueness and apparent contradictions detected in the text of the award decision and its annexes should
         be regarded as being so important that the objective sought by the Commission of having only one party financially liable
         for the proper implementation of the project, although justified in principle (see paragraph 53 above), cannot legitimately
         be relied upon in the present case. Therefore it must be concluded that in the present case the achievement of that objective
         through the contested decision, demanding full repayment of the assistance from the applicant alone, without seeking to ascertain
         which of the parties was actually and substantively responsible for committing the irregularities in question in the implementation
         of the project, appears to be a measure which is disproportionate in relation to the difficulties caused to the applicant
         by the demand for repayment of the full amount of the assistance already granted. It is settled case-law that the principle
         of proportionality requires that the measures adopted by Community institutions must not exceed what is appropriate and necessary
         for attaining the objective pursued (see, for example, Case 15/83  
         Denkavit Nederland [1984] ECR 2171, paragraph 25, and Case T-260/94  
         Air Inter v  
         Commission [1997] ECR II-997, paragraph 144).  
         
         
         66
            
          So, by requiring the applicant to repay in full the assistance already paid to it and not limiting that demand to the part
         of the project that was to be carried out by the applicant, the Commission infringed the principle of proportionality. 
         
         
         67
            
          That conclusion cannot be overturned by the Commission's argument that the applicant was fully aware of its financial liabilities
         to the Community as a result of being the sole  
         beneficiary of the assistance. As is clear from what was held in paragraphs 54 and 55 above, since it is the award decision that lays down the rights and
         obligations of the parties resulting from the award of the assistance, the Commission is required to inform the parties, clearly
         and specifically, by the time the assistance is awarded at the latest, of the financial obligations incumbent upon them as
         a result of this. In any event, the Commission cannot rely on the fact that the applicant expressly stated, in connection
         with the applications for payment of the second advance and the balance of the assistance (see paragraphs 17 and 19 above),
         that the data contained in the tables annexed to those statements accurately reflected the expenditure incurred not only by
         itself but also by Route des Senteurs and that the measures carried out corresponded to those already described in the award
         decision. Those statements, however significant they may be, did not concern the financial relationship between the bodies
         responsible for carrying out the project and the Community and therefore did not preclude a possible demand for repayment
         being made directly to Route des Senteurs in respect of the part of the project for which it was responsible. Nor can the
         Commission rely on the fact that, following notification of the contested decision, the applicant sought repayment from Route
         des Senteurs of the share of the advances paid to the latter for implementating the measures. As the applicant states, that
         conduct may also be explained by a spontaneous demonstration of prudence, permissible in order for it to protect its own financial
         interests by all means possible. 
         
         
         68
            
          In the light of the above considerations, the contested decision should be annulled in so far as the Commission did not limit
         its demand for repayment to the sums relating to the part of the project which, under the award decision, was to be carried
         out by the applicant itself. 
         
         
         69
            
          In the context of the other pleas put forward by the applicant it will be necessary to consider whether the Commission committed
         errors in establishing the various irregularities alleged against the applicant in respect of the part of the project which
         it was to carry out. 
         
          2.Second plea: errors committed by the Commission with regard to the various irregularities alleged against the applicant, infringement
         of the obligation to state reasons and infringement of the right to be heard
         
         
         70
            
          The second plea is in three parts. In the first, the applicant denies the irregularities established by the Commission in
         the contested decision. In the second, it submits that that decision is vitiated, in respect of the establishment of each
         of those irregularities, by a failure to state reasons. In the third, it maintains that the contested decision was adopted
         in breach of its right to be heard. The Court considers it appropriate to consider the first and second parts of this plea
         together. 
          First and second parts of the plea
          The making of a film by the company  
         Romana Video
         ─ Contested decision
         
         
         71
            
          The sixth indent of the ninth recital in the preamble to the contested decision reads as follows: [The applicant] charged  
         Romana Video, and declared paid, ITL 98 255 000 (ECU 50 672) for making a video as part of the project. At the time of the inspection
         (25 and 26 March 1998) there was still ITL 49 000 000 outstanding. [The applicant] stated that that sum would not be paid
         because it was the cost of selling the rights in the video to the company which made it. [The applicant] submitted expenditure
         ITL 49 000 000 higher than the expenditure actually incurred.
         ─ Arguments of the parties
         
         
         72
            
          The applicant considers that this claim is based on an incorrect assessment of the facts. It points out that the contract
         it entered into with Romana Video provided that the latter would, on the one hand, make on its behalf a film on the Valnerina
         region for approximately ITL 98 million and, on the other hand, acquire the marketing rights in that film for the sum of ITL
         49 million. The applicant states that both aspects of that contract concerned separate legal relationships and that it was
         only due to an error on the part of the bank that the debit and credit relating to those two operations were offset, which
         aroused the suspicions of the Commission inspectors. 
         
         
         73
            
          The applicant does not deny that it made a profit from the sale of the marketing rights in the film to Romana Video. However,
         that fact does not in its view constitute an irregularity within the meaning of Article 24 of Regulation No 4253/88, as amended,
         since neither that regulation nor the annexes to the award decision prohibit the beneficiary of the assistance from making
         a profit from the results obtained due to the assistance. 
         
         
         74
            
          Furthermore, the applicant considers that in order to establish the existence of an irregularity within the meaning of Article
         24 of Regulation No 4253/88, as amended, the Commission should have shown that the sum of ITL 98 million manifestly exceeded
         the value of the service provided by Romana Video. The applicant points out, however, that not only was the price particularly
         advantageous in comparison with the market price, but also neither that price nor the result of the public invitation to tender
         which led to Romana Video producing the film were challenged by the Commission. 
         
         
         75
            
          The Commission maintains that, by failing to deduct from the sale of the marketing rights in the film the profit on the cost
         of making the film as part of the set-off arrangement agreed with Romana Video, the applicant unlawfully charged costs to
         the project that were higher than those actually incurred. 
         ─ Findings of the Court
         
         
         76
            
          The second paragraph of Article 3 of the award decision provides that  
         [w]here the amount of the costs actually incurred leads to a reduction in the eligible expenditure in relation to the original
         estimates, the assistance will be reduced proportionally at the time the balance is paid. 
         
         
         77
            
          The assistance granted was therefore intended to finance a certain percentage of the costs actually incurred by the parties
         concerned in carrying out the project. 
         
         
         78
            
          It is agreed between the parties that in the present case the applicant entered into a contract with Romana Video under which
         it commissioned that company to make a film about the Valnerina in return for the sum allocated for the project, some ITL
         98 million. However, it only paid that company ITL 49 million since, under the same contract, it sold the marketing rights
         in the product back to the company for ITL 49 million. 
         
         
         79
            
          Therefore, as the Commission rightly pointed out, in carrying out that measure the applicant only actually incurred a real
         cost of around half the expenditure allocated for the project. It is indeed the case that, as the applicant states, neither
         Regulation No 4253/88 nor the award decision expressly prohibits the beneficiary of the assistance from profiting from results
         obtained due to that assistance. However, in view of the simultaneity of the transactions and the set-off arrangement between
         the applicant and Romana Video whilst the project was being carried out, the Commission was justified in considering that,
         rather than having profited from the result obtained due to the assistance, the applicant only in fact incurred in carrying
         out that part of the project the cost resulting from that set-off arrangement. 
         
         
         80
            
          The Commission was therefore entitled to consider, without committing any errors, that the applicant charged to the project
         expenditure which it did not in fact incur in carrying out the project. 
         
         
         81
            
          The charging of costs which are not genuine must be regarded as constituting a serious infringement of the conditions for
         granting the financial assistance in question and of the obligation to act in good faith, which is incumbent upon the beneficiary
         of such assistance and may consequently be regarded as an irregularity within the meaning of Article 24 of Regulation No 4253/88,
         as amended. 
         
         
         82
            
          Furthermore, as regards the statement of reasons for this paragraph of the contested decision (see in this regard Joined Cases
         T-141/99, T-142/99, T-150/99 and T-151/99  
         Vela and Tecnagrind v  
         Commission  [2002] ECR II-4547, paragraphs 168 to 170), in the ninth recital in the preamble to the contested decision the Commission
         stated that, due to the set-off arrangement made with Romana Video, the applicant submitted expenditure higher than that actually
         incurred. The Commission therefore showed sufficiently clearly and unequivocally its reasoning, so as to inform the applicant
         of the justification for the measure adopted so that it might defend its rights, and so as to enable the Community Courts
         to exercise their power of review. It did not, therefore, in that regard, infringe the obligation to state reasons. 
         
         
         83
            
          The complaints concerning the making of a film by Romana Video, alleging an error of assessment and infringement of the obligation
         to state reasons, must therefore be rejected. 
          Staff costs
         ─ The contested decision
         
         
         84
            
          The seventh indent of the ninth recital in the preamble to the contested decision reads as follows: [The applicant] charged ITL 202 540 668 (ECU 104 455) to the project, representing the costs of employing five persons on
         the  
         tourist information part of the project. [The applicant] failed to submit supporting documents (contracts of employment, details of activities
         performed) in respect of that expenditure.
         
         
         85
            
          Furthermore, the ninth indent of the ninth recital in the preamble to the contested decision reads as follows: [The applicant] declared ITL 152 340 512 (ECU 78 566) in respect of staff costs in connection with  
         activities other than tourist information. [The applicant] did not submit documents to show that the services were actually provided or that [they] were directly linked
         to the project.
         ─ Arguments of the parties
         
         
         86
            
          The applicant considers that it has adequately shown that the staff costs charged to the project were actually incurred. It
         points out that in the context of its observations on the letter initiating the procedure it submitted to the Commission a
         list of the names of all the employees who were directly assigned to the  
         tourist information measure and  
         activities other than tourist information, indicating in respect of each employee both the period of employment and the costs borne by the applicant in that connection,
         together with copies of pay-slips. It also states that it produced, at the time of the on-the-spot inspection, two decisions
         dated 17 November 1995 by which it assigned those employees to the project and also two notes of 29 March 1996 containing
         an estimate of the staff costs for those two measures under the project. 
         
         
         87
            
          The applicant maintains that, being a public body, it does not have individual employment contracts for its staff. The fact
         that those people were actually employed by it could only be confirmed by a certificate which it would draw up. Lastly, according
         to the applicant, the fact, which is not disputed by the Commission, that the measures which the applicant was due to carry
         out under the project were actually carried out shows to the requisite legal standard that the persons employed did actually
         provide the services stated. 
         
         
         88
            
          The Commission maintains that, despite the fact that it had already stated in its letter initiating the procedure that the
         supporting documents produced by the applicant were inadequate, the applicant did not submit any documents to establish that
         the staff costs charged related directly to the implementation of the project and were appropriate. 
         ─ Findings of the Court 
         
         
         89
            
          The Commission stated in point 3 of Annex II to the award decision that  
         [s]taff costs ... must relate directly to, and be appropriate to, the implementation of the measure. 
         
         
         90
            
          It is therefore necessary to consider whether the Commission committed an error by considering in the contested decision that
         the applicant did not submit documents to it showing that the staff costs charged to the project were directly related to
         the implementation of the project and were appropriate to it. 
         
         
         91
            
          In that regard, it must be stated first of all that the tables which the applicant submitted to the Commission gave only the
         names of the persons concerned, an assessment of the time spent by those persons on the project, their wages and the resulting
         expenditure in respect of the implementation of the project. The tables did not, however, give a detailed description of the
         activities of each of those persons in order to enable the Commission to check that the work they carried out related directly
         to the project and, especially, whether it was appropriate. 
         
         
         92
            
          In addition, the decisions of 17 November 1995 and the notes of 29 March 1996 which the applicant states it submitted to the
         Commission, although the latter disputes this, do not at any event contain any additional information confirming that the
         staff costs related directly to the project or that they were appropriate.  That applies all the more as regards the pay-slips,
         which only establish that the relevant persons worked for the applicant during the period in question, and manifestly contain
         no indication as to the nature of their work. 
         
         
         93
            
          Moreover, as regards the applicant's argument that as it was a public body the Commission could not properly ask it to produce
         employment contracts, it should be noted that the Commission did not require the production of such contracts as the only
         admissible form of evidence. That being so, it should be noted that point 3 of Annex II to the award decision states that
         the applicant should be aware that it should be in a position to submit to the Commission documents which show by some means
         or other the direct link between the staff costs charged to the project and the implementation of the various measures provided
         for under the project, and whether the amount of those costs was appropriate. However, as the Commission rightly stated in
         the letter initiating the procedure, it had already informed the applicant that it was not possible to establish from the
         documents submitted whether the expenditure was genuine and whether it related directly to the project. However, in its observations
         on the letter initiating the procedure, the applicant in essence merely reproduced information which it had already submitted
         to it and added that it seemed to it pointless and unnecessary to detail the activities of its staff since those activities
         were sufficiently well illustrated by the achievement of the proposed objectives. 
         
         
         94
            
          Since the applicant maintains in essence that the fact that the project was actually carried out shows that the staff costs
         were genuine, it should be pointed out that Article 24 of Regulation No 4253/88, as amended, refers expressly to irregularities
         concerning the conditions under which the operation being financed is carried out, which includes irregularities in the management
         of that operation. It cannot therefore be argued that the penalties provided for by that provision only apply where the operation
         being financed has not been carried out in whole or in part. It is not enough for the applicant to show that the project approved
         by the Commission in the award decision has been carried out correctly in substance. The applicant must also be in a position
         to prove that every part of the Community contribution relates to a service actually provided which was essential for the
         implementation of the project (see to this effect  
         Vela and Tecnagrind v  
         Commission, cited in paragraph 82 above, paragraph 201). Furthermore, point 7 of Annex II to the award decision provides that the Commission
         may at any time require the beneficiary to submit information concerning the progress of the operations listed in Annex I
         to that decision or the technical results obtained. Those passages show that a beneficiary of Community aid who is required,
         as in the present case, to provide part-financing for a subsidised project, must fulfil that obligation as the project progresses,
         as is stipulated in the case of Community funding (
         Vela and Tecnagrind v  
         Commission, cited above, paragraph 249). 
         
         
         95
            
          In view of the above, the Commission did not commit an error in considering that the applicant did not submit supporting documents
         to it which would establish that the staff costs charged to the project related directly to its implementation and were appropriate.
         
         
         
         96
            
          The system of subsidies provided for under Community legislation relies in particular on the beneficiary complying with a
         series of obligations which entitle it to obtain the proposed financial assistance. If the beneficiary does not comply with
         all those obligations Article 24(2) of Regulation No 4253/88, as amended, authorises the Commission to reconsider the extent
         of the obligations it assumes under the decision awarding that assistance (see to that effect Joined Cases T-551/93 and T-231/94
         to T-234/94  
         Industrias Pesqueras Campos and Others v  
         Commission [1996] ECR II-247, paragraph 161, and Case T-216/96  
         Conserve Italia v  
         Commission [1999] ECR II-3139, paragraphs 71 and 90 to 94). 
         
         
         97
            
          Also, applicants for, and beneficiaries of, Community assistance are required to satisfy themselves that they are submitting
         to the Commission reliable information which is sufficiently accurate, since otherwise the system of controls and evidence
         set up to determine whether the conditions for granting assistance are fulfilled cannot function properly. In the absence
         of sufficiently accurate information projects which do not fulfil the conditions required could become the subject of assistance.
         It follows that the obligation on applicants for, and beneficiaries of, assistance to provide information and act in good
         faith is inherent in the EAGGF assistance system and essential for its effective functioning. Infringement of those obligations
         must therefore be regarded as an irregularity within the meaning of Article 24 of Regulation No 4253/88, as amended (see,
         to that effect,  
         Conserve Italia v  
         Commission, cited in paragraph 96 above, paragraph 71, and  
         Vela and Tecnagrind v  
         Commission, cited in paragraph 82 above, paragraph 322). 
         
         
         98
            
          Lastly, as regards the statement of reasons for that part of the contested decision, the Commission showed, succinctly but
         none the less sufficiently clearly and unequivocally, that in its view the documents submitted by the applicant during the
         administrative procedure did not enable it to satisfy itself that the staff costs charged to the project related directly
         to its implementation and were appropriate. The contested decision therefore also contains an adequate statement of reasons
         in respect of this point. 
         
         
         99
            
          The complaints concerning the staff costs, alleging an error of assessment and infringement of the obligation to state reasons,
         must therefore be rejected. 
          Overheads
         ─ The contested decision
         
         
         100
            
          The tenth indent of the ninth recital in the preamble to the contested decision reads as follows: [The applicant] charged ITL 31 500 000 (ECU 26 302) to the project, representing overheads (rental of two offices, heating,
         electricity, water and cleaning). That allocation was not supported by any type of document.
         ─ Arguments of the parties
         
         
         101
            
          The applicant points out that in its observations on the letter initiating the procedure it stated that two rooms had been
         allocated and equipped at its head office for the purpose of implementing the project. It explains that it had charged to
         the project a proportion of the overheads commensurate with the size of the project in relation to its other activities, that
         is to say, 28% of the rent on the whole building it occupies and expenditure on water, electricity, cleaning and heating.
         
         
         
         102
            
          Supporting documents for all that expenditure was made available to the two Commission inspectors, who did not express any
         reservations with regard to their probative value or to the accuracy of the applicant's calculations. 
         
         
         103
            
          The applicant disputes the statement that it was expenditure which it would have had to have borne anyway and was therefore
         not chargeable to the project. In its view, first, if it had not accommodated the staff responsible for implementation of
         the project on its own premises they would have had to find some other arrangement elsewhere, which would have entailed additional
         costs. Second, it could have used those premises for other purposes and derived benefit from them. 
         
         
         104
            
          The Commission argues in essence that that expenditure should not have been charged to the project since it had no direct
         link with the project and the applicant did not submit any documents from which it could be concluded otherwise. 
         ─ Findings of the Court
         
         
         105
            
          It is clear from the documents in the case, and in particular from the letter initiating the procedure, that the irregularity
         established by the Commission with regard to the overheads only related to some of the costs which the applicant had charged
         to the project under that heading. The costs concerned were only those relating to the use for the project of premises which
         the applicant had already occupied before the assistance was awarded. 
         
         
         106
            
          In that regard, it should be pointed out that the second paragraph of Article 3 of the award decision states that the assistance
         granted was intended to finance only a certain percentage of the costs actually incurred by the parties concerned in carrying
         out the project (see paragraph 77 above). Therefore, in order to prevent fraudulent practices, the Commission could quite
         properly consider that overheads such as those charged by the applicant in the present case were not actually connected with
         implementation of the project but constituted expenditure which the beneficiary would have borne in any case, as a result
         of its normal activity, irrespective of the implementation of the project. 
         
         
         107
            
          In such a situation it must be concluded, for the same reasons as those set out in paragraph 81 above, that the Commission
         did not commit an error in considering that charging those overheads constituted an irregularity within the meaning of Article
         24 of Regulation No 4253/88, as amended. 
         
         
         108
            
          As regards the reasons stated in the contested decision in this connection, it should be pointed out that it is not necessary
         for the reasoning to go into all the relevant facts and points of law, since the question whether the statement of reasons
         meets the requirements of Article 253 EC must be assessed with regard not only to its wording but also to its context and
         to all the legal rules governing the matter in question (Case C-367/95 P  
         Commission v
         Sytraval and Brink's France [1998] ECR I-1719, paragraph 63, and  
         Vela and Tecnagrind v  
         Commission, cited in paragraph 82 above, paragraph 170). 
         
         
         109
            
          Although, contrary to what the contested decision appears at first sight to imply (see paragraph 100 above), the applicant
         submitted supporting documents to the Commission in order to establish the nature and existence of the services provided,
         as a result of the statement of reasons provided in the letter initiating the procedure, the applicant was aware of the reasons
         why the Commission considered that that particular expenditure could not properly be charged to the project. In the letter
         initiating the procedure the Commission stated that those costs were of a  
         permanent nature and therefore did not have any  
         direct link with the project. It must therefore be considered that the contested decision states adequate reasons in respect of this point. 
         
         
         110
            
          The complaints concerning the overheads, alleging an error of assessment and infringement of the obligation to state reasons,
         must therefore be rejected. 
          Consultancy costs
         ─ The contested decision
         
         
         111
            
          In the eighth indent of the ninth recital in the preamble to the contested decision the Commission notes as follows: [The applicant] charged ITL 85 000 000 (ECU 43 837) to the project, representing the costs for consulting Mauro Brozzi Associati
         S.A.S. That expenditure was not supported by any documents which made it possible to establish the existence and the precise
         nature of the services provided.
         ─ Arguments of the parties
         
         
         112
            
          The applicant submitted to the Court a contract which it signed on 21 December 1992 with the Mauro Brozzi Associati S.A.S.
         consultancy (
         the Brozzi consultancy). It points out that that contract had five specific parts: first, a description of the socio-economic situation of the zones
         to which the project related; second, details of the persons taking part in the project; third, the drafting of the project
         and ensuring its approval; fourth, the technical and administrative scrutiny of the final report on the project and, fifth,
         contact with the individuals involved in the project in order to achieve better marketing of it. For those services the Brozzi
         consultancy was to receive an amount corresponding to 50% of the expenditure appearing under the heading  
         secretarial and managerial staff in the financial plan for the project. 
         
         
         113
            
          According to the applicant, the existence of the expenditure on the first four parts of the contract was clear and, at any
         event, was established by the documents kept by the applicant and duly examined by the two Commission inspectors. As for the
         fifth part, the applicant considers that that expenditure is largely established by documents which it had kept such as reports,
         letters, minutes of meetings, assignments and meetings, documents which were examined by the Commission inspectors during
         the on-the-spot inspection. 
         
         
         114
            
          The Commission considers that the applicant did not provide it with documents which enabled it to establish the existence
         and the precise nature of the services actually provided. At any event, in its view, the expenditure on the first four parts
         of the contract concluded with the Brozzi consultancy was not eligible for the assistance. 
         ─ Findings of the Court
         
         
         115
            
          The Commission alleges that the applicant failed to submit any supporting documents to establish not only the contractual
         link with the Brozzi consultancy, shown by the contract concluded with the latter, but also the existence and precise nature
         of the various services actually provided by that consultancy in the course of implementation of the project. 
         
         
         116
            
          In that regard, it should be observed that, in response to the letter initiating the procedure in which the Commission had
         already raised that complaint, among others, the applicant merely described in brief the various services which the Brozzi
         consultancy was to provide under that contract. However, despite the Commission's express request, it did not attach any supporting
         documents to its observations. Before the Court it merely stated that it presented such documents to the Commission inspectors
         during the on-the-spot inspection, without however producing any documents to support that assertion. 
         
         
         117
            
          In such a situation, it must be concluded that the applicant did not show that the Commission committed an error in considering
         that the consultancy costs were not proved by supporting documents which made it possible to establish the existence and the
         precise nature of the services provided. As point 5 of Annex II to the award decision states, the applicant was under an obligation
         to provide information and act in good faith towards the Community. Breach of that obligation must therefore be regarded as
         an irregularity within the meaning of Article 24 of Regulation No 4253/88, as amended. 
         
         
         118
            
          Lastly, it should be observed that the contested decision contains an adequate statement of reasons in respect of this point.
         Contrary to what the applicant maintains, the Commission did not state in the ninth recital in the preamble to the contested
         decision that the applicant did not submit any document relating to the consultancy costs, but rather set out the reasons
         for adopting its measure, namely that the documents submitted by the applicant did not make it possible to establish the existence
         and precise nature of the services provided. 
         
         
         119
            
          Consequently, without it being necessary to consider whether the expenditure provided for in connection with the five parts
         of the contract concluded with the Brozzi consultancy could have been regarded as being eligible for the assistance, it must
         be concluded that the complaints concerning the consultancy costs, alleging an error of assessment and breach of the obligation
         to state reasons, must therefore be rejected. 
          The irrigation system
         ─ The contested decision
         
         
         120
            
          In the eleventh indent of the ninth recital in the preamble to the contested decision the Commission notes as follows: [A]s part of the  
         cultivation of spelt wheat and truffles operation, the [award decision] provided for making investment in order to improve irrigation systems for the cultivation
         of truffles, amounting to ECU 41 258. That investment was not made and no explanation in that regard was provided to the Commission.
         ─ Arguments of the parties
         
         
         121
            
          The applicant points out that the award decision provided for the creation of  
         back-up irrigation systems. Contrary to what the Commission maintains, that term did not mean that the applicant was to construct a fixed irrigation
         system but rather referred to emergency irrigation for periods of drought by means of mobile tanks drawn by a tractor. The
         applicant relies in this regard on an expert report drawn up on 27 October 2000, from which it is clear, first, that the term
          
         back-up irrigation systems used in the context of that specific project should be understood in the sense indicated by the applicant and, second, that
         the costs incurred by the applicant were adjusted in the light of the prices usually applying in respect of EAGGF operations.
         
         
         
         122
            
          Furthermore, the applicant rejects the Commission's argument that it did not in any event adduce evidence of the existence
         of the expenditure in connection with the mobile irrigation. It refers in that regard to a contract which it concluded with
         a firm for carrying out arboricultural work, which listed in detail the operations to be conducted, including those concerning
         irrigation. It also maintains that the technicians' inspection reports confirmed compliance with all the requirements and
         that this was established by the Commission inspectors during the on-the-spot inspection. Moreover, according to the applicant,
         the fact that the crops were successful shows that the irrigation was in fact carried out. 
         
         
         123
            
          The Commission maintains that it found during the on-the-spot inspections that the applicant did not make the investment proposed
         in the project with regard to the  
         back-up irrigation systems. According to the Commission, that investment could have been properly made only by putting in place fixed irrigation systems
         and not a  
         watering system using  
         barrels drawn by a tractor. It stresses, moreover, that even if the term  
         back-up irrigation system was to be interpreted as stated by the applicant the applicant has not produced the slightest evidence during the administrative
         procedure, such as invoices relating to the acquisition of mobile tanks or the use of a tractor. 
         
         
         124
            
          According to the Commission, the applicant could not properly rely in that regard on a contract it concluded with a firm to
         carry out arboricultural work to which it referred in its observations on the letter initiating the procedure. That reference
         was much too general to enable the Commission inspectors to determine which contract the applicant was referring to. Moreover,
         the Commission points out that during the on-the-spot checks the inspectors found that no irrigation had been carried out
         since a large number of the young plants had died. 
         ─ Findings of the Court
         
         
         125
            
          First of all it should be observed that, although the award decision provides for the financing of a  
         back-up irrigation system (also called  
         emergency irrigation), neither the application the applicant made to the Commission nor the award decision stated what type of irrigation system
         was to be created under the project. 
         
         
         126
            
          Second, it is clear from the applicant's answers to a written question from the Court that during the on-the-spot inspection
         the Commission inspectors had stated that watering plants using mobile tanks drawn by a tractor could not be regarded as creating
         a  
         back-up irrigation system and that in the absence of a fixed irrigation system it had to be concluded that in that regard the project had not been
         carried out as planned. In the letter initiating the procedure the Commission stated that the investment in order to improve
         the irrigation system  
         [had] not been made and invited the applicant to provide evidence to the contrary. 
         
         
         127
            
          In its observations on the letter initiating the procedure the applicant reiterated the explanation it had already given to
         the Commission inspectors, namely that in its opinion  
         in the project [the irrigation system] was not designed as a fixed equipment but as irrigation to be carried out using vehicles
         (tankers). The applicant does not deny that apart from that explanation regarding its interpretation of the terms of the project concerning
         the irrigation system it did not provide the Commission with any supporting documents, such as invoices relating to the acquisition
         of mobile tanks or the use of a tractor, which would have made it possible both to dispel the doubts expressed by the Commission
         with regard to the way in which the irrigation system was to be created and to show that the system which the applicant had
         designed had actually been created. 
         
         
         128
            
          Moreover, before the Court the applicant did not even attempt to establish that the contract, to which it referred in that
         context without producing it before the Court, made it possible to show that that irrigation system had actually been created.
         
         
         
         129
            
          In such circumstances, without the need to rule on whether the watering of plants using mobile tanks drawn by a tractor could
         be regarded as creating a  
         back-up irrigation system within the meaning of the award decision, it must be concluded that the Commission did not commit any error in considering
         that the applicant had not shown that the investment planned in respect of the irrigation system had actually been made. 
         
         
         130
            
          The charging of costs which are not supported by documents or other means must be regarded as constituting a serious infringement
         of the conditions for granting the financial assistance in question and of the obligation to act in good faith, which is incumbent
         upon the beneficiary of such assistance and may consequently be regarded as an irregularity within the meaning of Article
         24 of Regulation No 4253/88, as amended. 
         
         
         131
            
          As regards compliance with the obligation to state reasons, it should be observed that of course it is true that neither in
         the letter initiating the procedure nor in the contested decision did the Commission expressly state the reasons why it considered
         that the irrigation system allegedly planned by the applicant did not correspond to the one set out in the project. However,
         as was mentioned in paragraph 126 above, the applicant confirmed that that complaint had been explained to it by the Commission
         inspectors. This is corroborated, moreover, by the fact that when it made its application the applicant not only put forward
         arguments concerning the allegedly erroneous nature of the interpretation by the Commission of the terms of the award decision,
         but also produced an expert's report in support of its position. Consequently, it must be considered that, in the light of
         the background to the contested decision, the latter contains adequate reasons in that regard. 
         
         
         132
            
          The complaints concerning the irrigation system, alleging an error of assessment and infringement of the obligation to state
         reasons, must therefore be rejected. 
          Conclusion
         
         
         133
            
          On the basis of the above analysis, the first and second parts of the second plea must be rejected. 
          Third part of the plea
         
         
         134
            
          The applicant maintains that the Commission did not draw up a report on the activities and discussions carried out by its
         inspectors and, in particular, it did not prepare a list of the documents photocopied on those occasions. In those circumstances,
         it is not possible for it to reply to the complaints made by the Commission that the applicant did not produce certain documents
         during the administrative procedure. 
         
         
         135
            
          The Commission points out that it did draw up a report on the activities and discussions of its inspectors and a list of the
         documents photocopied but that those documents were intended only for internal use. At any event, it considers that the fact
         that it did not send those documents to the applicant did not affect the latter's position since in the letter initiating
         the procedure it informed the applicant of all the complaints made against it and that it could produce all the documents
         and put forward any arguments likely to prove that it had complied with its obligations under the award decision. 
         
         
         136
            
          The Court points out that observance of the right to be heard is, in all proceedings initiated against a person which are
         liable to culminate in a measure adversely affecting that person, a fundamental principle of Community law which must be guaranteed
         even in the absence of any rules governing the procedure. That principle requires that the addressees of decisions which significantly
         affect their interests should be placed in a position in which they may effectively make known their views (see Case C-32/95 P
          
         Commission v  
         Lisrestaland Others [1996] ECR I-5373, paragraph 21, and Case T-199/99  
         Sgaravatti Mediterranea v  
         Commission [2002] ECR II-3731, paragraph 55). 
         
         
         137
            
          In the present case, the Commission informed the applicant by letter of 12 August 1997 that it was going to verify the implementation
         of the project.  In addition, by the letter initiating the procedure the Commission indicated all the complaints it held against
         it and asked it in essence to submit all the supporting documents relating to the expenditure charged to the project.  Following
         that request, the applicant submitted documents and its observations on them to the Commission on three occasions, by letters
         of 25 August 1997, 6 April 1998 and 17 May 1999.  In addition, by letter of 6 March 1998 the Commission specified the dates
         of the on-the-spot inspection and asked the applicant to have available for the inspectors all the accounts and administrative
         and financial documents concerning the project. 
         
         
         138
            
          In those circumstances, it must be concluded that the Commission gave the applicant sufficient opportunity to show that it
         had properly carried out the measures under the project for which it was responsible by producing the supporting documents
         which it was required to make available to the Commission under the award decision. 
         
         
         139
            
          The third part of the second plea must therefore be rejected and the second plea must be rejected in its entirety. 
         
          3.The third plea: infringement of the principle of proportionality and of Article 24(2) of Regulation No 4253/88, as amended
         
         
         140
            
          The applicant considers that the contested decision is vitiated by infringement of the principle of proportionality and of
         Article 24(2) of Regulation No 4253/88, as amended, in that the various irregularities established in that decision are insufficient
         to justify a penalty as serious as the total cancellation of the assistance which had been granted to the applicant to carry
         out operations under the project. The applicant stresses that all the operations planned for in the project were carried out
         and so the objective of the financial assistance was thus achieved. In those circumstances, the conditions for applying Article
         24(2) of Regulation No 4253/88, as amended, were not met. 
         
         
         141
            
          The Commission considers that the charges made against the applicant constitute  
         irregularities or significant changes within the meaning of Article 24(2) of Regulation No 4253/88, which were so serious that any measure apart from withdrawal
         was liable to constitute incitement to fraud. 
         
         
         142
            
          The Court points out that the principle of proportionality requires, as confirmed by the consistent case-law, that the measures
         adopted by Community institutions must not exceed what is appropriate and necessary for attaining the objective pursued (see
         paragraph 65 above). 
         
         
         143
            
          The Court has also held that the infringement of obligations whose observance is of fundamental importance to the proper functioning
         of a Community system may be penalised by forfeiture of a right conferred by Community legislation, such as entitlement to
         assistance (Case C-104/94  
         Cereol Italia [1995] ECR I-2983, paragraph 24, and the case-law cited therein). 
         
         
         144
            
          As regards the present case, it should be made clear that the purpose of Regulation No 2052/88 and Regulations Nos 4253/88
         and 4256/88 which implement it is to promote, through the EAGGF, within the context of support for economic and social cohesion,
         the adjustment of agricultural structures and the development of rural areas with a view to reform of the common agricultural
         policy. Against that background, as can be seen from the 20th recital in the preamble to Regulation No 4253/88 and Article
         23 of that regulation, the legislature sought to introduce an effective inspection procedure to ensure that beneficiaries
         comply with the conditions laid down when the EAGGF assistance was granted, in order to achieve the abovementioned objectives
         in a proper manner. 
         
         
         145
            
          It is also important to point out that in  
         Industrias Pesqueras Campos and Others   v  
         Commission, cited in paragraph 96 above (paragraph 160), the Court held that in view of the very nature of the assistance awarded by
         the Community, the obligation to comply with the financial conditions set out in the award decision constitutes, in the same
         way as the substantive obligation to carry out the project concerned, one of the beneficiary's essential commitments and is
         therefore a precondition for the grant of Community assistance. 
         
         
         146
            
          Lastly, as has already been stated (see paragraph 97 above), the provision of sufficiently specific information by applicants
         for, and beneficiaries of, Community assistance is essential for the proper operation of the system of inspection and evidence
         introduced in order to verify whether the conditions for granting such assistance are met. 
         
         
         147
            
          In the present case, it is clear from the analysis made in connection with consideration of the second plea that the applicant
         committed irregularities for the purposes of co-financing of the project and charged unjustified expenditure to the project.
         Such conduct constitutes a serious infringement of essential obligations incumbent upon the beneficiaries which may justify
         withdrawal of the assistance in question. 
         
         
         148
            
          As regards the argument alleging that all the operations under the project were carried out, it should be pointed out that
         it cannot be maintained, as the applicant did in essence, that the penalties provided for in Article 24 of Regulation No 4253/88,
         as amended, would only apply if the operation being financed had not been carried out in whole or in part (see paragraph 94
         above). 
         
         
         149
            
          Given such infringements, it was reasonable for the Commission to consider that the only penalty apart from total withdrawal
         of the assistance and recovery of the sums paid from the EAGGF was liable to constitute an invitation to fraud in that potential
         beneficiaries would be tempted either to inflate artificially the amount of expenditure charged to the project in order to
         escape their obligation to provide co-financing and obtain the maximum EAGGF intervention provided for in the award decision,
         or to supply false information or conceal certain data in order to obtain assistance or to increase the amount of assistance
         being sought, with the prospect of the sole penalty being that the assistance would be reduced to the level it would have
         been if the expenditure actually incurred by the beneficiary and/or the correctness of the information provided by the beneficiary
         to the Commission had been taken into account (see to that effect  
         Industrias Pesqueras Campos and Others v  
         Commission, cited in paragraph 96 above, paragraph 163, and  
         Vela and Tecnagrind v  
         Commission, cited in paragraph 82 above, paragraph 402). 
         
         
         150
            
          Consequently, the alleged infringement of the principle of proportionality is unfounded. The third plea must therefore be
         rejected. 
         
          4.Fourth plea: misuse of powers
         
         
         151
            
          The applicant considers that, in view of the questionable nature of the complaints made against it and the way in which the
         on-the-spot checks were carried out by the Commission inspectors, withdrawal must be regarded as being based on a vexatious
         and punitive intention and is therefore vitiated by a misuse of powers. The applicant is of the view that the Commission's
         wish to inflict on it an exemplary punishment is clear from the last sentence of the letter initiating the procedure, in which
         the Director-General in charge of the case stated that  
         [i]f [the] explanations and documents [referred to in that letter] were sufficient to dispel all reasonable doubt, [he] reserv[ed]
         the right to look into other points, in the context of a possible decision, again on the basis of Article 24 of Regulation
         No 4253/88, as amended, to reduce or withdraw the assistance. 
         
         
         152
            
          The Commission considers that withdrawal of financial assistance in the event of particularly serious infringements, like
         those established in the present case, is not the expression of a vexatious intention but rather the only measure that will
         ensure that financial assistance from the EAGGF is used effectively and properly. As regards the extract from the letter initiating
         the procedure referred to by the applicant, the Commission points out that, by using those words, it was seeking to offer
         the applicant a safeguard. The Commission observes that it was only informing the applicant of the possibility that a fresh
         procedure might be initiated if the charges made proved to be unfounded but new evidence appeared which cast doubt on the
         lawfulness of the project. 
         
         
         153
            
          The Court points out that the concept of misuse of powers has a precisely defined scope in Community law and refers to cases
         where an administrative authority has used its powers for a purpose other than that for which they were conferred on it. A
         decision may amount to a misuse of powers only if it appears, on the basis of objective, relevant and consistent evidence,
         to have been taken for purposes other than those stated (
         Industrias Pesqueras Campos and Others v  
         Commission, cited in paragraph 96 above, paragraph 168). 
         
         
         154
            
          In the present case, as the Court held in the context of its consideration of the second plea, the applicant failed to demonstrate
         the existence of errors as regards the finding of irregularities in the implementation of the project. In addition, the applicant
         did not adduce any evidence to establish that the Commission was pursuing any aim apart from that of penalising irregularities
         found in the implementation of the project. The applicant's statement that the Commission sought to  
         make an example of it is not confirmed by any evidence on the file. 
         
         
         155
            
          Similarly, it cannot be inferred from the extract from the letter initiating the procedure relied on by the applicant that
         the Commission sought to punish the applicant by adopting the contested decision. As the Commission states in essence, the
         sole purpose of those words was to inform the applicant of the possibility that the procedure which had been initiated might
         be limited or extended if the charges made proved to be unfounded but new evidence appeared which subsequently cast doubt
         on the lawfulness of the project. 
         
         
         156
            
          The fourth plea must therefore be rejected. 
         
          5.Overall conclusion
         
         
         157
            
          In the light of all the above considerations, the contested decision must be annulled in so far as the Commission did not
         limit its demand for repayment to the sums relating to the part of the project which, under the award decision, was to be
         carried out by the applicant itself. However, the remainder of the application should be dismissed. 
         
         Costs
         158
            
          Under Article 87(3) of the Rules of Procedure, the Court may rule that costs are to be shared or that each party is to bear
         its own costs where each party succeeds on some and fails on other heads. In the circumstances of the present case it is appropriate
         to order the parties to bear their own costs. 
         
         On those grounds, 
         
         
         
            
            THE COURT OF FIRST INSTANCE (Third Chamber)
         
         
          hereby:  
         
            
            1.
             Annuls Commission Decision C (2000) 2388 of 14 August 2000 withdrawing the financial assistance of the European Agricultural
            Guidance and Guarantee Fund granted to the Comunità Montana della Valnerina by Commission Decision C (93) 3182 of 10 November
            1993 on the granting of assistance from the EAGGF Guidance Section, under Regulation (EEC) No 4256/88 of 19 December 1988
            laying down provisions for implementing Regulation (EEC) No 2052/88 as regards the EAGGF Guidance Section, in connection with
            Project No 93.IT.06.016 entitled  
            Pilot demonstration project relating to forestry, agriculture and food production in marginal hill areas (France, Italy), in so far as the Commission did not limit its demand for repayment of the assistance to the sums corresponding to the part
            of the project which, under the award decision, was to be carried out by the applicant itself; 
            
            
            2.
             Dismisses the remainder of the application; 
            
            
            3.
             Orders each party to bear its own costs. 
            
            
                  Lenaerts
               
               
                  Azizi
               
               
                  Jaeger
               
            
                  
               
               
                  
               
               
                  
               
            
                  
               
               
                  
               
               
                  
               
            
                  
               
               
                  
               
               
                  
               
            
                  
               
               
                  
               
               
                  
               
            
            
            
            
            
            
            
            
         
         
          Delivered in open court in Luxembourg on 13 March 2003. 
         
         
         
         
                  H. Jung 
               
               
                  K. Lenaerts  
               
            
         
         
         
                  Registrar
               
               
                  President
               
            
         
            
         
      
          1 –
            
             Language of the case: Italian.