CELEX: C2002/191/28
Language: en
Date: 2002-08-10 00:00:00
Title: Case C-193/02: Action brought on 27 May 2002 by the Kingdom of the Netherlands against the Commission of the European Communities

C 191/16                 EN                   Official Journal of the European Communities                                       10.8.2002
Appeal brought on 21 May 2002 against the judgment                       Action brought on 27 May 2002 by the Kingdom of the
delivered on 6 March 2002 by the Third Chamber,                          Netherlands against the Commission of the European
Extended Composition, of the Court of First Instance of                                             Communities
the European Communities in Joined Cases T-92/00 and
T-103/00 (not yet published) between Territorio His-
tórico de Álava — Diputación Foral de Álava and Others                                        (Case C-193/02)
      and Commission of the European Communities
                                                                                                  (2002/C 191/28)
                          (Case C-188/02 P)
                           (2002/C 191/27)
                                                                         An action against the Commission of the European Communi-
                                                                         ties was brought before the Court of Justice of the European
                                                                         Communities on 27 May 2002 by the Kingdom of the
An appeal against the judgment delivered on 6 March 2002
                                                                         Netherlands, represented by H.G. Sevenster, acting as agent.
by the Third Chamber, Extended Composition, of the Court of
First Instance of the European Communities in Joined Cases
T-92/00 and T-103/00 between Territorio Histórico de Álava
— Diputación Foral de Álava and Others and Commission of               The applicant claims that the Court should:
the European Communities was brought before the Court of
Justice of the European Communities on 21 May 2002 by
Territorio Histórico de Alava — Diputación Foral de Alava,             1.    Annul Commission Decision C(2002) 970 of 12 March
represented by Antonio Creus Carreras and Begoña Uriarte                      2002 reducing by 31,3 %, that is to say by
Valiente, Abogados, of Calle Velázquez no 63, Madrid.                         EUR 147 459 365, the assistance granted from the
                                                                               European Social Fund under Commission decisions
                                                                               approving certain programme documents for Com-
The appellant claims that the Court should:                                    munity structural measures in the Netherlands under
                                                                               objectives 1, 2, 3 and 5b;
1.    declare the present appeal admissible and consequently:
                                                                         2.    Order the Commission to pay the costs.
2.    set aside the judgment of the Court of First Instance of
      6 March 2002;
3.    itself give final judgment in the matter on the basis of the
      appellant’s pleadings at first instance and, in particular,        Pleas in law and main arguments
      annul the decision of the Commission of 22 December
      1999 inasmuch as the tax credit of 45 % of investment              —     Commission’s lack of competence: The Commission
      and the reduction of the taxable amount provided for by                  bases the financial sanction on an (alleged) infringement
      Alava regional legislation in respect of newly-established               of the obligation imposed on the Netherlands by
      undertakings does not constitute aid within the meaning                  Article 23 of Council Regulation (EEC) No 2082/93 (1) to
      of Article 87 EC or, if it should be deemed so to be, is                 establish an adequate management and control system in
      existing aid, pursuant to Article 88 EC and Article 1 of                 order to ensure the efficient implementation of the
      the State aid Rules;                                                     programmes. However, Article 24 of Regulation
                                                                               No 2082/93, on which the financial sanction at issue is
4.    in the alternative, refer the case back to the Court of First            based, does not refer to that obligation but merely
      Instance for judgment, if the Court of Justice should deem               authorises the Commission to reduce or suspend the
      that appropriate;                                                        assistance for the relevant operation or measure if an
                                                                               irregularity occurs ‘in respect of the operation or measure’.
5.    order the Commission to pay the costs in both sets of                    Thus, a financial correction, as referred to in that article,
      proceedings.                                                             may be applied only in the event of irregularities relating
                                                                               to implementation itself or to ‘the nature or conditions
                                                                               for the implementation’ of a (specific) operation or a
                                                                               (specific) measure. At most the financial correction may
                                                                               relate to the amounts established to have been unduly
Pleas in law and main arguments                                                paid; in that connection, therefore, each irregularity must
                                                                               be established individually. A financial correction cannot
                                                                               be based on general failings or defects in the management
are similar to those put forward in Case C-187/02 P.                           and control system governing the implementation of one
                                                                               or (as in this case) several operations or measures. Even if
                                                                               there is a defect in a management and control system,
                                                                               that does not mean that that shortcoming affects the
 ---pagebreak--- 10.8.2002               EN                  Official Journal of the European Communities                                         C 191/17
     ‘nature’ or the ‘conditions for the implementation’ of the              during which records must be kept with payment by
     operation or measure. It was only in Article 39 of Council              the Commission of the final balance confirms, in the
     Regulation No 1260/1999 (2) that the Commission                         Netherlands Government’s view, that in the preceding
     acquired competence in regard to financial corrections                  programme period that period was likewise coupled to
     which take account of ‘the extent and financial impli-                  the last payment by the Member States in respect of the
     cations of the shortcomings found in the management or                  specific project.
     control systems of the Member States’.
                                                                             If nevertheless at the time of the audit by the departmental
                                                                             accountants service the period during which records had
                                                                             to be kept must be deemed not to have expired,
                                                                             infringement of Article 23(3) of Regulation No 2082/93
                                                                             does not warrant a full reduction in assistance.
—    Infringement of Article 24(2) of Regulation No 2082/93:                 On the basis of the data provided by the Netherlands
     To the extent to which the Commission is also authorised                Government in the context of the Article 24 procedure,
     to apply a financial correction in the event of a short-                viewed separately but also together, it is fully and in detail
     coming in the management and control system and                         proven that the reduction of 23,7 % made by the
     provided an interpretation of Article 24 of Regulation                  Commission is incorrect. The photocopies of the original
     No 2082/93 in its internal guidelines of 15 October                     decisions collated (by the external accountant in the
     1997, the Commission is bound from the point of view                    course of his auditing activities, including those made by
     of predictability and legal certainty by those guidelines               him) have the same evidentiary value as the original
     notified to the Member States concerning the approach                   decisions themselves. The alleged limited value of an
     to be followed in regard to financial corrections. The                  external audit does not affect the probative value of the
     Commission has not demonstrated that the shortcoming                    photocopies made by an external accountant and is not
     in the Netherlands system at that time, namely that the                 relevant in this context.
     external accountants ‘merely applied the normal national
     accountancy rules and did not check whether the relevant
     provision of Community law had been observed, such
     as the applicable regulations and certain programme               —     Infringement of the principles of proportionality and
     documents’, gave rise to the irregularity of the lack of any            protection of legitimate expectations: In view of the fact
     project administration or other documents. Since the                    that, after approval of the new management control
     irregularity of the lack of project administration is not of            system in May 1997, the Commission expressed no
     a systematic nature the Commission cannot extrapolate                   reservations in regard to the years 1994 to 1996, it
     the percentage figure of 23,7 % based on it.                            aroused the expectation that the requisite and appropriate
                                                                             corrective measures had already been adopted. The
                                                                             Netherlands Government was no longer required to
                                                                             expect that a correction in the form of an extrapolation
                                                                             could be applied on the basis of a shortcoming established
                                                                             by the Commission in the previous management and
                                                                             control system. It was only in the context of the Article 24
                                                                             procedure that the Commission’s interpretation of
—    Infringement of Article 23(3) of Regulation No 2082/93:                 Article 23(3) of Regulation No 2082/93 became apparent
     The allegation of a lack of project administration at the               together with the consequences attached by it to an
     time of the audit by the departmental accountants service               infringement of obligation there under, irrespective of the
     was in breach of Article 23(3) of Regulation No 2082/                   fact that at the time when the project was being carried
     93. In regard to the individual projects conducted and                  out it was being soundly administered. Those conse-
     completed in the years 1994 to 1996 the project                         quences go beyond what is appropriate and necessary in
     administration only had to keep available records for                   order to attain the objective of the obligation to keep
     three years following the last payment in respect of the                records (which was not clearly and plainly formulated in
     project. At the time of the audit by the departmental                   Regulation No 2082/93).
     accountants service in Summer 2000 that period had
     already expired.
                                                                       (1) Amending Regulation (EEC) No 4253/88 laying down provisions
                                                                           for implementing Regulation (EEC) No 2052/88 as regards
                                                                           coordination of the activities of the different structural funds
     In respect of the new programme period from 2000 to                   between themselves and with the operations of the European
     2006 Article 38(6) of Regulation No 1260/1999 now                     Investment Bank and the other existing financial instruments (OJ
                                                                           1993 L 193, p. 20).
     provides expressly and unambiguously that the support-            (2) OJ 1999 L 161, p. 1.
     ing documents must be kept available for a period of
     three years (...) following the payment by the Commission
     of the final balance in respect of any assistance. The
     fact that the Community legislature plainly intended
     unambiguously to couple commencement of the period