CELEX: 62001CC0330
Language: en
Date: 2003-04-03
Title: Opinion of Mr Advocate General Alber delivered on 3 April 2003. # Hortiplant SAT v Commission of the European Communities. # Agriculture - EAGGF - Cancellation and request for repayment of financial assistance - Regulation (EEC) No 4253/88 - Article 24(1) and (2) - Obligation on the Commission to request the Member State concerned to submit observations before cancelling financial assistance. # Case C-330/01 P.

OPINION OF ADVOCATE GENERALALBER delivered on 3 April 2003  (1)
         Case C-330/01 P Hortiplant S.A.T.vCommission of the European Communities
            ((Appeal – Agriculture – EAGGF – Cancellation of financial assistance))
            
      
         
        I ─ Introduction
      
       1.  The appeal concerns the question of the extent to which the Commission is required, before adopting a decision to reduce,
      suspend or cancel financial assistance granted under the Structural Funds, to obtain the observations of the Member State
      concerned.
       II ─ Legal background and facts
      
       2.  Article 24, as per Regulation (EEC) No 2082/93,  
      
         			(2)
         		 provides as follows: 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.
      
      
       3.  For a presentation of the wider legal framework and of the facts of the case, I would refer to paragraphs 1 to 27 of the contested
      judgment in Case T-143/99  
      
         			(3)
         		 delivered by the Court of First Instance on 14 June 2001.  To avoid repetition, only the main points are stated here. 
      
       4.  By decision C(92) 3125 of 3 December 1992 the Commission granted Hortiplant S.A.T. (hereinafter  
      Hortiplant) financial assistance.  As there were grounds for suspecting irregularities, the Commission carried out an on-the-spot check
      on 29 and 30 September 1997.  An official from the Spanish Finance Ministry (Intervención General del Estado) was present
      during the check. Reports on the check were drawn up by the Commission, which then sent the file to the Spanish Public Prosecutor.
      
       5.  On 3 April 1998 the Commission sent a letter to Hortiplant drawing attention to facts that might warrant a demand for repayment
      of the financial assistance.  It asked Hortiplant to submit observations on these allegations within six weeks, which Hortiplant
      proceeded to do on 26 May 1998.
      
       6.  The Spanish authorities received a copy of the Commission's letter of 3 April 1998 and were also requested to submit their
      comments thereon within six weeks.
      
       7.  On 4 March 1999, having examined Hortiplant's observations, but without having received comments from the Spanish authorities,
      the Commission, on the basis of Article 24 of Council Regulation (EEC) No 4253/88 of 19 December 1988,  
      
         			(4)
         		 issued the contested demand for repayment.
       III ─ Judgment of the Court of First Instance
      
       8.  In its judgment of 14 June 2002 the Court of First Instance dismissed the action for annulment of the demand for repayment.
       In paragraphs 103 and 104 of the judgment, the Court made the following points concerning Article 24 of Regulation No 4253/88: 
       103.  Lastly, as regards the alleged need for the Commission to receive the observations of the Member State concerned before cancelling
      financial assistance, it should be noted that Article 24 of Regulation No 4253/88 provides only that the Commission is to
      conduct a suitable examination of the case, in particular requesting that the Member State concerned or other authorities
      designated by it to implement the operation submit their comments within a specified period of time, and that, following this
      examination, the Commission may take the necessary measures if the examination reveals an irregularity.
      
       104.  It does not follow from the wording of that article that the Commission must receive observations from the Member State concerned
      before cancelling the financial assistance if the examination it has conducted confirms an irregularity.
      
       IV ─ The appeal and the Commission's position
      
       9.  Hortiplant bases its appeal on a plea of misinterpretation of Article 24 of Regulation No 4253/88.  The Court of First Instance
      wrongly assumed in its judgment that the Commission did not need to obtain observations by Spain before adopting its decision.
       Under Article 24(2), the Commission was empowered to reduce, suspend or cancel financial assistance only where it had had
      an opportunity to consider all facts relevant to the decision.  These included in particular the observations of the beneficiary
      and of the Member State concerned.
      
       10.  As interpreted in the contested judgment, that provision would however mean that the comments of the Member State concerned
      are required only where the Commission continues to entertain doubts as to whether the financial assistance has been used
      properly but has been unable in the course of its own investigations to confirm those doubts.  This would however signify
      that the Commission is not even under an obligation to consult the Member State concerned if it concludes from its investigations
      alone that it is appropriate to reduce, suspend or cancel the financial assistance.
      
       11.  Hortiplant refers to Article 4(1) of Regulation No 2052/88,  
      
         			(5)
         		 which states that Community operations in the field of structural development are to be such as  
      to complement or contribute to corresponding national operations.  They are to be established through close consultations between the Commission, the Member State concerned and the competent
      authorities designated by the latter.  The consultations are regarded as  
      the partnership which cover the preparation, financing, monitoring and assessment of operations.  This conception is inconsistent with the
      view that the Commission may in certain circumstances dispense with the observations of the State concerned.
      
       12.  With reference to the case-law concerning the Social Fund,  
      
         			(6)
         		 Hortiplant emphasises that the submission of comments by the Member State concerned is an essential procedural requirement.
       The Commission's letter of 3 April 1998, in which it simply invited Spain, as a matter of mere courtesy, to provide its observations
      in the matter, did not meet that requirement.  The Commission had, in particular, also omitted to transmit Hortiplant's observations
      on the Commission's complaints to the Spanish Government.
      
       13.  The Commission, on the other hand, contends that the Court of First Instance interpreted Article 24 correctly.  Under that
      provision it suffices for the Member State to be given an opportunity to submit its comments on the facts established within
      an appropriate period of time.  There is however no requirement for the Member State actually to submit observations.  The
      Commission may reduce, suspend or cancel financial assistance without having received such observations.  The Commission bases
      its opinion on the wording of Article 24, according to which the Member State concerned is  
      requested to submit its comments and to do so within a period of time specified by the Commission.  If the Member State submits comments,
      this is to be taken into account in the subsequent decision-making process. If however it fails to submit comments within
      the specified period, the Commission is then free to pursue the procedure and adopt a decision.
      
       14.  In the Commission's view, the case-law cited by Hortiplant is not applicable. It was handed down in respect of another structural
      fund and provisions that were formulated very differently.
      
       15.  In addition, it follows from those provisions that the Member State concerned only has to be given an opportunity to submit
      comments.  The Court thus annulled the Commission's decisions in  
      Oliveira
         			(7)
         		 and  
      Foyer culturel du Sart-Tilman
         			(8)
         		 because the Member States concerned had not been given an opportunity to submit comments on the facts established.
      
       16.  In the present case, Spain was offered an opportunity to submit comments when it was sent the letter of 3 April 1998.  Furthermore,
      a Spanish official was present at the 1997 on-the-spot check in the course of which the irregularities were ascertained.
      
       17.  Finally, the Commission points out that in the present case the financial assistance was approved and paid out directly by
      the Commission without any intervention by national authorities.  It was understandable in these circumstances that the Member
      State concerned should have had little interest in submitting comments.
       V ─ Appraisal
      
       18.  According to the wording of Article 24(1), the Commission requests the Member State concerned to submit, within a specified
      period of time, its comments on the examination undertaken by the Commission.  The text says nothing, at least not expressly,
      about what happens if the Member State does not submit comments within the specified period of time.
      
       19.  Paragraphs 2 and 3 of Article 24 do not address this question either. They simply empower the Commission to reduce or suspend
      financial assistance if the examination confirms the evidence of irregularities.  The provisions state further that any sums
      received are to be repaid.  It follows that the wording of Article 24 cannot support the appellant's contention.  The wording
      is more consistent with the Commission's view that it is sufficient to give the Member State concerned an opportunity to comment
      on the outcome of the investigation, but that possession of such comments is in no way a mandatory precondition.
      
       20.  Hortiplant relies further on the fact that financial assistance from structural funds is provided in the form of a  
      partnership between the Commission and the national authorities.  On this point, it refers in particular to Article 4 of Regulation No
      2052/88.
      
       21.  This reference also fails to convince.  The fact that a  
      partnership exists between the authorities concerned does not of itself make the Commission's decision, taken on the basis of Article
      24 of Regulation No 4253/88, a legal act requiring participation by the Member States in the form of the submission of comments.
       It is equally compatible with the concept of such a  
      partnership that the Member State simply be given an opportunity to comment but that it be open to it to express a view or to say nothing,
      so that its comments do not become an essential precondition for adoption of the decision by the Commission.
      
       22.  The  
      partnership, invoked by the appellant, between the Commission and the authorities of the Member States does however seem to be relevant
      in another respect to the interpretation of Article 24.  The 20th and 25th recitals and Article 4 of Regulation No 2052/88
      specify that Community operations in the field of structural development should simply complement corresponding national operations.
       Close consultations between the Commission and the Member State concerned are called for and all parties are required as
      partners, each within the framework of its responsibilities and powers, to pursue a common goal.  It follows from these provisions
      that the two sovereign authorities involved in the financial assistance, namely the Commission and the Member States, must
      contribute to its success.  The Member States, when called upon by the Commission to comment, are consequently required to
      respond if they have observations to make.  It is on account of this obligation on the Member States' authorities to cooperate,
      laid down in Regulation No 2052/88, that a failure on the part of the Member States to respond to a request to submit comments
      cannot have the effect that the Commission is prevented from taking the procedure further.  The Member State's silence would
      otherwise be able to be used as a veto.  Support for such a power of veto is however to be found neither in the wording of
      Article 24 nor in the spirit of the participatory procedure, less still in the Member State's shared responsibility for successful
      implementation of the financial assistance.  This is also borne out by the fact that the Member State has to submit comments
      on the outcome of the Commission's investigation within a specified period of time.
      
       23.  Furthermore, even if the Member State concerned is of a different view, that does not stop the Commission from proceeding
      to reduce, suspend or cancel the financial assistance.  The Commission is required to examine any comments submitted by the
      Member State concerned.  But that does not mean that it must arrive at the same conclusion.  There is thus still less reason
      for the Commission to be bound by the silence of a Member State in such a way that no decision may be adopted by it until
      the Member State has stated its position.
      
       24.  It is even more important that a possible failure by the Member State concerned to submit comments should not prevent a demand
      for repayment from being made where, as in the present case, the monies are paid to the beneficiary by the Commission direct,
      rather than by the Member State. Usually, the assistance from the structural funds and from the EAGGF takes the form, in the
      first instance, of a payment by the Commission to the Member State concerned, the latter then passing the monies on to the
      final beneficiary.  This is clear from Article 21 of Regulation No 4253/88, as amended by Regulation No 2082/93.  Such an
      approach is in keeping with the principle of subsidiarity, according to which implementation of the forms of action proper
      to the concepts governing Community assistance falls mainly within the area of competence of the Member States, as can be
      seen from the sixth recital in the preamble to Regulation No 2082/93. According to Article 14(1) of Regulation No 4253/88,
      as amended by Regulation No 2082/93, applications for assistance are however to be submitted directly to the Commission, rather
      than via the Member States, in the case of the technical assistance measures referred to in Article 5(2)(e) of Regulation
      No 2052/88 undertaken at the initiative of the Commission.  In such cases the entire process of financial assistance takes
      place directly between the Commission and the final beneficiary.  In such cases the involvement of the Member State in which
      the financial assistance is granted is less extensive.  It may therefore see less cause to comment on the facts ascertained
      by the Commission.  It would however run counter to the entire course of such financial assistance, which has been granted
      by the Commission to the final beneficiary direct, for the submission of comments by the Member State concerned to become
      a precondition for the Commission to be able to demand repayment on the basis of Article 24 of Regulation No 4253/88, as amended
      by Regulation No 2082/93 in such cases.
      
       25.  Even the case-law cited by Hortiplant regarding in particular ─ at least indirectly ─ Article 6 of the Social Fund Regulation
       
      
         			(9)
         		 ultimately confirms this understanding.  Although the case-law does say that the Member State concerned must be given an
      opportunity to submit comments ─ as regards the principle and the amount ─ on the proposed demand for repayment,  
      
         			(10)
         		 there is no need, firstly, for a formal hearing procedure; any form of contact, for example an exchange of letters, is sufficient
      for this purpose.  
      
         			(11)
         		  To this extent Hortiplant's objection that the invitation to the Spanish Government to submit comments took the form of
      a courtesy letter only does not seem pertinent.
      
       26.  Secondly, it is clear from this case-law that the Court does not, even in cases where the financial assistance is provided
      via the authorities of the Member State, require the Member State concerned actually to submit comments. It suffices for it
      to be given an opportunity to do so.  
      
         			(12)
         		  Similarly, in its judgment in  
      Socurte, cited by Hortiplant in the oral procedure, the Court required only that the Member State be given an opportunity to comment
      before the assistance was reduced.  
      
         			(13)
         		  Furthermore, in the various cases cited by Hortiplant, the Member State's position as a link in the chain between the Commission
      and the final beneficiary was precisely the reason why the opportunity of stating a position was viewed as an essential procedural
      requirement.  
      
         			(14)
         		  In the present case, however, it is this position as intermediary that does not apply, which again supports the view that
      the submission of comments by Spain should not be regarded as an essential precondition for adoption of the contested decision.
      
       27.  According to the findings of the Court of First Instance steps were taken to involve Spain, the Member State concerned.  Hortiplant
      disputes these findings in so far as it considers that Spain was sent no more than a courtesy letter, which in the appellant's
      view was insufficient as a means of formally calling on the Member State to be involved.
      
       28.  According to Article 225(1) EC an appeal is confined to points of law.  That limit is laid down in more detail in the first
      paragraph of Article 51 of the EC Statute of the Court of Justice.  As the Court has held on several occasions, an appeal
      may be based only on grounds relating to the infringement of rules of law, to the exclusion of any appraisal of the facts.
       An appeal is therefore admissible only in so far as it is claimed that the decision of the Court of First Instance is incompatible
      with the rules of law the application of which it was under a duty to ensure.  
      
         			(15)
         		
       29.  In so far, however, as the Court of First Instance, in ruling that transmission of the copy of the letter of 3 April 1998
      addressed to Hortiplant constituted a request to submit comments within the meaning of Article 24 of Regulation No 4253/88
      not only assessed the facts but also assigned to them a classification, the Court has jurisdiction to examine this plea. 
      
      
         			(16)
         		
       30.  With reference to the abovementioned case-law, according to which any form of involvement is sufficient, including an exchange
      of letters, Hortiplant's plea must be rejected.  According to the findings of the Court of First Instance, Spain was sent
      a copy of the letter to Hortiplant of 3 April 1998 setting out the Commission's claims against Hortiplant.  In the accompanying
      letter Spain was, moreover, set a time-limit for submitting observations.  Consequently, the finding of the Court of First
      Instance that the steps taken constituted proper involvement of the Member State concerned within the meaning of Article 24
      of Regulation No 4253/88 is not obviously defective.
      
       31.  Nor does the fact that Hortiplant's comments in response to the Commission's claims were not passed on to the Spanish authorities
      constitute a misapplication of Article 24.  Neither the wording of that provision nor the spirit and purpose of the participatory
      procedure require the comments submitted by the beneficiary to be passed on in this way.  In this respect also, therefore,
      Article 24 of Regulation No 4253/88 cannot be said to have been misapplied or misinterpreted.
      
       32.  It is to be concluded from the foregoing that the judgment of the Court of First Instance in Case T-143/99 does not contain
      any error of law.  The appeal should therefore be dismissed.
       VI ─ Costs
      
       33.  In accordance with Article 122 in conjunction with Articles 118 and 69(2) of the Rules of Procedure, the unsuccessful party
      is to be ordered to pay the costs if they have been applied for in the successful party's pleadings.  The Commission has asked
      for Hortiplant to be ordered to pay the costs.  As the appeal is to be dismissed, Hortiplant should be ordered to pay the
      costs.
        VII ─ Conclusion
      
       34.  In the light of the foregoing I propose that the Court:
      (1) dismiss the appeal; 
      
      (2) order the appellant to pay the costs. 
      
      
      
       1 –
         
           Original language: German.
      
      2 –
         
         Council Regulation (EEC) No 2082/93 of 20 July 1993 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 between themselves
            and with the operations of the European Investment Bank and the other existing financial instruments (OJ 1993 L 193, p. 20).
         
      
      3 –
         
         Judgment of the Court of First Instance in Case T-143/99  
            Hortiplant S.A.T. v  
            Commission [2001] ECR II-1665.
         
      
      4 –
         
         Council Regulation (EEC) No 4253/88 of 19 December 1988, laying down provisions for implementing Regulation (EEC) 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).
         
      
      5 –
         
         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).
         
      
      6 –
         
         Hortiplant cites Case T-73/95  
            Oliveira v  
            Commission [1997] ECR II-381, paragraph 32, Case C-304/89  
            Oliveira v  
            Commission [1991] ECR I-2283, Joined Cases T-432/93, T-433/93 and T-434/93  
            Socurte and Others v  
            Commission [1995] ECR II-503, and Case C-199/91  
            Foyer culturel du Sart-Tilman v  
            Commission [1993] ECR I-2667 and Case C-200/89  
            FUNOC v  
            Commission [1990] ECR I-3669.
         
      
      7 –
         
         Cited in footnote 6.
      
      8 –
         
         Cited in footnote 6.
      
      9 –
         
         Article 6(1) of Council Regulation (EEC) No 2950/83 of 17 October 1983 on the implementation of Decision 83/516/EEC on the
            tasks of the European Social Fund (OJ 1983 L 289, p. 1) provides:  
            When Fund assistance is not used in conformity with the conditions set out in the decision of approval, the Commission may
            suspend, reduce or withdraw the aid after having given the relevant Member State an opportunity to comment.
         
      
      10 –
         
         .Socurte and Others v  
            Commission, cited in footnote 6, paragraphs 65, 71 and 76, and  
            Sart-Tilman v  
            Commission, cited in footnote 6, paragraph 32.
         
      
      11 –
         
         .Sart-Tilman v  
            Commission, cited in footnote 6, paragraph 27 et seq.; the Opinion delivered in the same case by Advocate General Darmon, point 32,
            goes even further (
            ... in whatever form, a prior hearing ...).
         
      
      12 –
         
         Judgment in  
            Sart-Tilman v  
            Commission, cited in footnote 6, paragraph 34.
         
      
      13 –
         
         Judgment in  
            Socurte and Others v  
            Commission, cited in footnote 6, paragraphs 71 and 76. Paragraph 66 of that judgment, introducing examination of this question, is expressed
            confusingly in so far as it states that the submission by the Member State of its comments must be established with a sufficient
            degree of certainty and clarity.
         
      
      14 –
         
         See the Opinion delivered on 5 March 1991 by Advocate General Darmon in Case C-304/89  
            Oliveira v  
            Commission [1991] ECR I-2283, I-2292, point 17 et seq., and the judgment in  
            Sart-Tilman v  
            Commission, cited in footnote 6, paragraph 33.
         
      
      15 –
         
         Order in Case C-89/95 P  
            D. v  
            Commission [1996] ECR I-53, paragraph 13; order in Case C-325/94 P  
            An Taisce and WWF UK v  
            Commission [1996] ECR I-3727, paragraph 28.
         
      
      16 –
         
         Case C-39/93 P  
            SFEI and Others v  
            Commission [1994] ECR I-2681, paragraph 26; order in  
            An Taisce and WWF UK v  
            Commission, cited in footnote 15, paragraph 30.