CELEX: 62001CJ0331
Language: en
Date: 2003-09-11
Title: Judgment of the Court (First Chamber) of 11 September 2003. # Kingdom of Spain v Commission of the European Communities. # EAGGF - Clearance of accounts - Additional payments granted to producers of bovine animals in 1996 - Time-limits for notification of results of checks. # Case C-331/01.

Case C-331/01 Kingdom of SpainvCommission of the European Communities
            «(EAGGF – Clearance of accounts – Additional payments granted to producers of bovine animals in 1996 – Time-limits for notification of results of checks)»
            
               
                  Opinion of Advocate General Stix-Hackl delivered on 20 March 2003 
                     
                
               
            
                   
               
               
            
               
                  Judgment of the Court (First Chamber), 11 September 2003  
                     
                
               
            
                   
               
               
            
            Summary of the Judgment
         
         
                  
                  Agriculture – EAGGF – Clearance of accounts – Regulation No 729/70 – Restriction on refusal of financing – Reliance on the 24-month period by a Member State which has not communicated the information required for checks – Not possible  (Council Regulations Nos 729/70, Art. 5(2)(c), and 1287/95) In order to check whether the exclusion period for the adjustment of accounts provided for in Article 5(2)(c) of Regulation
         No 729/70 on the financing of the common agricultural policy, as amended by Regulation No 1287/95, has been complied with,
         a Member State cannot take into consideration only the date of the expenditure incurred, without taking into account the date
         on which it informed the Commission of relevant and sufficient information on such expenditure, allowing the latter to carry
         out the clearance of accounts. The time-limit for the adoption of clearance of accounts decisions is connected to access to
         information on expenditure and it follows from Article 4(2) of Regulation No 1663/95 laying down detailed rules for the application
         of Regulation No 729/70 by implication that the Member States must communicate the necessary documents promptly so that the
         Commission has sufficient time in which to carry out the checks.Accordingly, although the purpose of the period referred to in Article 5(2)(c) of Regulation No 729/70 is to protect Member
         States against the absence of legal certainty which would exist if the Commission were able to call into question expenditure
         incurred several years before the adoption of a compliance decision, a Member State may only however claim the protection
         of this period to the extent that it complies with its own obligations under Community legislation, in particular with regard
         to the spontaneous communication of information required for checks. see paras 60-62, 65
      

      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
            
            JUDGMENT OF THE COURT (First Chamber)11 September 2003 (1)
         
         
            
         
               ((EAGGF – Clearance of accounts – Additional payments granted to producers of bovine animals in 1996 – Time-limits for notification of results of checks))
               
             In Case C-331/01, 
            
            
            Kingdom of Spain, represented initially by M. López-Monís Gallego, and, subsequently, L. Fraguas Gadea, acting as Agents, with an address for
            service in Luxembourg,
            
            
            applicant, 
            
            v
            Commission of the European Communities, represented by S. Pardo Quintillán, acting as Agent, with an address for service in Luxembourg,
            
            defendant, 
            
             APPLICATION for the annulment of Commission Decision 2001/557/EC of 11 July 2001 excluding from Community financing certain
            expenditure incurred by the Member States under the Guarantee Section of the European Agricultural Guidance and Guarantee
            Fund (EAGGF) (OJ 2001 L 200, p. 28) in so far as it concerns the Kingdom of Spain,
            
            
            THE COURT (First Chamber),,
            
             composed of: M. Wathelet, President of the Chamber, P. Jann and A. Rosas (Rapporteur), Judges, 
            
             Advocate General: C. Stix-Hackl, Registrar: H. von Holstein, Deputy Registrar, 
            
            
            having regard to the Report for the Hearing, after hearing oral argument from the parties at the hearing on 5 December 2002,
            
            after hearing the Opinion of the Advocate General at the sitting on 20 March 2003, 
         gives the following
         
         
         Judgment
         1
            
          By application lodged at the Court Registry on 6 September 2001, the Kingdom of Spain brought an action under the first and
         second paragraphs of Article 230 EC for the annulment of Commission Decision 2001/557/EC of 11 July 2001 excluding from Community
         financing certain expenditure incurred by the Member States under the Guarantee Section of the European Agricultural Guidance
         and Guarantee Fund (EAGGF) (OJ 2001 L 200, p. 28) in so far as it concerns the Kingdom of Spain. 
         
         
         2
            
          The Kingdom of Spain contests the exclusion from Community financing of the sum of ESP 185 046 088 in the 1997 financial year
         in respect of livestock premiums. It is apparent from Decision 2001/557 that in issue is budget post 2133 and that the reason
         for exclusion is the existence of a  
         [s]ystem not in conformity with the rules. 
         
            
               Relevant provisions
             Community legislation
          The procedure for clearance of accounts
         
         
         3
            
          Under Article 2(1) and Article 3(1) of Regulation (EEC) No 729/70 of the Council of 21 April 1970 on the financing of the
         common agricultural policy (OJ 1970 L 94, p. 13) as amended by  Council Regulation (EC) No 1287/95 of 22 May 1995 (OJ 1970
         L 125, p. 1;  
         Regulation No 729/70), the Guarantee Section of the EAGGF finances refunds on exports to third countries and intervention intended to stabilise
         the agricultural markets, granted or undertaken according to Community rules within the framework of the common organisation
         of agricultural markets. 
         
         
         4
            
          Article 5 of Regulation No 729/70 governs the clearance of the annual accounts submitted by national agencies authorised to
         incur expenditure to that end. This provision has been heavily amended by Regulation No 1287/95.  
         
         
         5
            
          Article 5(1) and (2) of Regulation 729/70 provide: 
         
         1.
          Member States  shall at regular intervals transmit to the Commission the following information concerning the accredited paying
         agencies and coordinating bodies referred to in Article 4 and relating to transactions financed by the Guarantee Section of
         the EAGGF:
         
         
         (a)
          statements of expenditure and estimates of financial needs; 
         
         
         (b)
          annual accounts, accompanied by the information required for clearance and an attestation regarding the integrality, exactitude
         and veracity of the accounts transmitted. 
         
         
         2.
          The Commission, after consulting the Fund Committee:
         ...
         
         (b)
          shall, before 30 April of the year following the financial year concerned, on the basis of the information referred to in
         point (b) of paragraph 1, clear the accounts of the paying agencies. The accounts clearance decision shall cover the integrality, exactitude and veracity of the accounts submitted. The decision shall not prejudice the adoption of a subsequent decision pursuant to point (c); 
         
         
         (c)
          shall decide on the expenditure to be excluded from the Community financing referred to in Articles 2 and 3 where it finds
         that expenditure has not been effected in compliance with Community rules. Before a decision to refuse financing is taken, the results of the Commission's checks and the replies of the Member State
         concerned shall be notified in writing, after which the two parties shall endeavour to reach agreement on the action to be
         taken. If no agreement is reached, the Member State may ask for a procedure to be initiated with a view to mediating between the
         respective positions within a period of four months, the results of which shall be set out in a report sent to and examined
         by the Commission, before a decision to refuse financing is taken. The Commission shall evaluate the amounts to be excluded having regard in particular to the degree of non-compliance found.
         The Commission shall take into account the nature and gravity of the infringement and the financial loss suffered by the Community.
         A refusal to finance may not involve expenditure effected prior to twenty-four months preceding the Commission's written communication
         of the results of those checks to the Member State concerned. ...
         
         
         
         6
            
          The first subparagraph of Article 8(2) of Regulation No 729/70 refers to irregularities or negligence attributable to administrative
         authorities or other bodies of the Member States. 
         
         
         7
            
          The fourth, fifth and sixth recitals of Regulation No 1287/95 are relevant for the interpretation of Article 5 of Regulation
         No 729/70. Those recitals provide:  Whereas the time limit for the clearance of accounts decision must be shortened; whereas, therefore, information technology
         must be used as fully as possible for producing the information to be sent to the Commission; whereas, when carrying out checks,
         the Commission must have full and immediate access to information on expenditure held in both documents and electronic files;
         Whereas a single annual decision for the clearance of accounts creates numerous difficulties in that, for a given financial
         year, in respect of all measures covered by the Guarantee Section of the EAGGF and in all the Member States, it fulfils simultaneously
         an accounting objective and a recognition that expenditure has been effected in accordance with Community rules; whereas considerable
         time lags accompany the taking of this single decision, which is nevertheless subject to reservations and disjunctions; whereas
         it is accordingly necessary to separate the procedure into two types of decision, one concerning the clearance of the accounts
         of the Guarantee Section of the Fund, the other determining the consequences, including financial corrections, to be drawn
         from the results of the checks on conformity;Whereas the checks on conformity and the ensuing clearance decisions will therefore no longer be linked to the implementation
         of the budget in a particular financial year; whereas the maximum period to which the consequences to be drawn from the checks
         on conformity may be applied must be determined.
         
         
         8
            
          On 7 July 1995 the Commission adopted Regulation (EC) No 1663/95 laying down detailed rules for the application of Regulation
         No 729/70 regarding the procedure for the clearance of the accounts of the EAGGF Guarantee Section (OJ 1995 L 158, p. 6).
         
         
         
         9
            
          Article 4 of Regulation No 1663/95, as amended by Commission Regulation (EC) No 2245/1999 of 22 October 1999 (OJ 1999 L 273,
         p. 5;  
         Regulation No 1663/95) provides that, by 10 February of the year following the end of the financial year which it concerns, the Member State is
         to send to the Commission the annual accounts of the expenditure charged to the Guarantee Section of the EAGGF, the reports
         established by each department or body pursuant to Article 5(1) of the regulation and the certificates and reports established
         by the certifying body or bodies. 
         
         
         10
            
          The first subparagraph of Article 8(1) of Regulation No 1663/95 provides: If, as a result of an enquiry, the Commission considers that expenditure has not been effected according to Community rules,
         it shall notify the Member State concerned of the results of its checks and indicate the corrective measures to be taken to
         ensure future compliance.
          Legislation on additional payments
         
         
         11
            
          In the course of the crisis of bovine spongiform encephalopathy (
         BSE), the Council adopted Regulation (EC) No 1357/96 of 8 July 1996 providing for additional payments to be made in 1996 with
         the premiums referred to in Regulation (EEC) No 805/68 on the common organisation of the market in beef and veal and amending
         that regulation (OJ 1996 L 175, p. 9). 
         
         
         12
            
          Regulation No 1357/96 provides for the payment of additional premiums to producers of bovine animals (
         additional payments). In order to expedite the actual payment of the amounts stipulated as much as possible, Articles 1 to 3 of the regulation
         provide that the additional payments will be made on the basis of the information on the premiums paid for the 1995 calendar
         year and that an adjustment will be made subsequently to take into account the number of animals for which entitlement to
         a premium is established in the 1996 calendar year. Article 1(3) of the Regulation states: The extent to which a producer is entitled to each of the additional payments referred to in paragraphs 1 and 2 and received
         in respect of the 1995 calendar year shall depend upon the number of animals for which he establishes entitlement to a premium
         in the 1996 calendar year. 
         
         
         13
            
          Article 4 of Regulation No 1357/96 allows Member States to make further payments in special circumstances. Article 4(a) relates
         to Community aid and Article 4(b) to national aid. 
         
         
         14
            
          Article 5 of Regulation No 1357/96 provides: By way of derogation from Articles 1, 2, 3 and 4, Member States may grant the total amount of aids resulting from the application
         of Article 1(1) and (2) and Article 4(a) to producers of bovine animals according to objective criteria, provided that the
         compensation will not be higher than the loss of income to such producers and that there is no distortion of competition.
         
         
         15
            
          The fifth recital of the regulation, which is relevant for the interpretation of Article 5 thereof, states:   Whereas Member States, in which the structure of production makes a system of payment other than by means of the said increase
         in premiums more appropriate and/or where the need to complete all payments by 15 October makes this necessary, should be
         authorised, in derogation from the above, to distribute the total of the aid which would otherwise have been payable by way
         of increases in premiums and the amount provided for in the Annex to producers of bovine animals on the basis of objective
         criteria.
         
         
         16
            
          Under the second paragraph of Article 7 of Regulation No 1357/96: The Community shall finance the expenditure incurred by Member States in relation to the payments referred to in Article 1
         and Article 4(a) and Article 5 only where such payments are made by them by 15 October 1996 at the latest.
         
         
         17
            
          On 29 July 1996, the Commission adopted  Regulation (EC) No 1504/96 laying down detailed rules for the application of Council
         Regulation (EC) No 1357/96 (OJ 1996 L 189, p. 77). 
         
         
         18
            
          The first recital of Regulation No 1504/96 states that  
         for the sake of transparency between Member States, and the monitoring and proper administration of the additional payments
         provided for in Regulation (EC) No 1357/96, the Member States should inform the Commission of the grant model used and the
         national detailed rules of application for implementing the measures provided for in that Regulation and of the final balance. 
         
         
         19
            
          Article 1 of Regulation No 1504/96 provides: As regards the additional aid provided for in Regulation (EC) No 1357/96, the Member States shall communicate to the Commission:
         
         (a)
          where Articles 1 to 4 of that Regulation are applied:
         
         
         
               ─
                   no later than 15 November 1996 and 31 July 1997, the number of additional amounts granted pursuant to Article 1, broken down
                  according to the arrangements ..., 
                no later than 15 November 1996 and 31 July 1997, the number of additional amounts granted pursuant to Article 1, broken down
         according to the arrangements ..., 
         
         
         
         
               ─
                   without delay, the methods used to grant the amounts and aids referred to in Article 4(a) and, where applicable, Article
                  4(b), and in particular the type or category of animals concerned, the unit amounts provided for, their method of calculation
                  and the final dates for payment, 
                without delay, the methods used to grant the amounts and aids referred to in Article 4(a) and, where applicable, Article
         4(b), and in particular the type or category of animals concerned, the unit amounts provided for, their method of calculation
         and the final dates for payment, 
         
         
         
         
               ─
                   no later than 15 November 1996 and 31 July 1997 respectively, the total amounts of aid paid pursuant to Article 4(a) and,
                  where applicable, Article 4(b) and the number of beneficiaries and animals concerned; 
                no later than 15 November 1996 and 31 July 1997 respectively, the total amounts of aid paid pursuant to Article 4(a) and,
         where applicable, Article 4(b) and the number of beneficiaries and animals concerned; 
         
         
         
         (b)
          where Article 5 and, where applicable, Article 4(b) of that Regulation are applied: 
         
         
         
               ─
                   without delay, the methods used to grant the aid referred to therein, and in particular the type or category of animals concerned,
                  the unit amounts provided for, their method of calculation and the final dates for payment, 
                without delay, the methods used to grant the aid referred to therein, and in particular the type or category of animals concerned,
         the unit amounts provided for, their method of calculation and the final dates for payment, 
         
         
         
         
               ─
                   no later than 15 November 1996 and 31 July 1997    respectively, the total amounts of aid paid pursuant to Article 5 and
                  Article 4(b), and the number of beneficiaries and animals concerned.
                no later than 15 November 1996 and 31 July 1997    respectively, the total amounts of aid paid pursuant to Article 5 and
         Article 4(b), and the number of beneficiaries and animals concerned.
         
         
          National legislation
         
         
         20
            
          The order of the Spanish Minister for Agriculture, Fisheries and Food of 19 September 1996 (BOE No 228 of 20 September 1996;
          
         the Ministerial Order) governs the procedure on additional payments with premiums to producers of male bovine animals and suckler cows. 
         
         
         21
            
          The Ministerial Order is based on Article 5 of Regulation No 1357/96, but it uses the number of animals of each producer which
         conferred entitlement to a premium in 1995 as the criterion for the grant of additional payments. 
         
         
         22
            
          The preamble to the Ministerial Order states: To that effect, under Article 5 of Regulation (EC) No 1357/96, by way of derogation from Articles 1 to 4, Member States may
         grant the total amount of aid resulting from the application of Article 1(1) and (2) and Article 4(a) to producers of bovine
         animals according to objective criteria, provided that the compensation will not be higher than the loss of income to such
         producers and that there is no distortion of competition.It was therefore conside red necessary to use as the most objective criterion for the grant of aid the number of animals of
         each producer which conferred entitlement to a premium in 1995. The system for obtaining aid by the producers can thus be
         rendered more flexible and the formalities and administrative procedures for payment simplified as much as possible, since
         the entitlement to aid in 1995 has already been clearly established in each concrete case.
         
         
         23
            
          As the Spanish Government argued before the Court, the Ministerial Order refers to urgency in order to justify the adoption
         of a ministerial  order rather than a royal order. 
          The correction procedure in question
         
         
         24
            
          On 8 June 1998 the Spanish Ministry of Agriculture, Fisheries and Food sent a letter to the Commission by fax to inform it,
          
         in accordance with Article 1 of Regulation No 1504/96, of additional payments made under Regulation No 1357/96 (the  
         letter of 8 June 1998). The document consists of four columns setting out, in the first column, the type of animal, in the second column, the number
         of animals having received premiums, in the third column, the unit amount of the premiums  and, in the fourth column, the
         legislative provision under which they were granted. The provisions referred to are Article 1 and/or Article 4(a) and/or Article
         4(b) of Regulation No 1357/96 as appropriate. 
         
         
         25
            
          The Ministerial Order was delivered to the Commission at the time of  an inspection which took place in Spain from 21 to 25
         September 1998 (
         the inspection) for the purpose of assessment of the accounts for the years 1997 and 1998. 
         
         
         26
            
          On 12 April 1999, the Commission sent the Kingdom of Spain a letter pursuant to the first subparagraph of Article 8(1) of
         Regulation No 1663/95 in which it noted that the fact that Spain had not adjusted its additional payments pursuant to Regulation
         No 1357/96 to take account of the premium applications made for 1996 nor recovered overpayments appeared to infringe Article
         2(1) and (2) of Regulation No 1357/96. The Commission invited the Spanish Government to provide information on the amounts
         in question. 
         
         
         27
            
          An exchange of correspondence between the Kingdom of Spain and the Commission resulted in the application of the conciliation
         procedure. 
         
         
         28
            
          According to its summary report of 19 June 2001, the Commission takes the view that the Kingdom of Spain applied Article 1
         of Regulation No 1357/96 and not Article 5. Spain should therefore have made the adjustment required under the regulation
         in order to take account of the number of animals conferring entitlement to the premium in 1996. The financial correction
         applied is 2% of the expenditure incurred by the Kingdom of Spain in 1996 by way of additional payments.     
         The action
         
         29
            
          In support of its action, the Kingdom of Spain relies on two pleas in law. The first alleges an error in the Commission's
         assessment of compliance with the Community legislation applicable to the case. The second plea alleges failure by the Commission
         to observe the time-limits for notification laid down in that legislation. 
          The first plea
         
         
         30
            
          The Kingdom of Spain alleges, in its first plea in law, that the Commission has made an error in claiming that it had not
         complied with Regulation No 1357/96. 
         
         
         31
            
          In support of that plea, it claims that, when the additional payments  were granted, it relied on the derogation in Article
         5 of Regulation No 1357/96. It takes the view that the conditions for operation of that provision were fulfilled. First of
         all, the criterion for allocation was objective, since it concerned additional premiums. In this regard, nothing precluded
         the use of the same payment criterion as that laid down in Regulation No 1357/96. Secondly, having regard to the small amount
         of the premium, representing 2.9% of the price of the animals concerned, given the decrease of more than 30% in prices between
         February and June 1996, the compensation was not higher than the loss of income to such producers. Finally, there was no distortion
         of competition since all the beneficiaries received identical additional payments. 
         
         
         32
            
          The Spanish Government further notes that the amount which was paid to the producers on the basis of the information for the
         1996 financial year exceeded that which was actually paid on the basis of the information relating to the 1995 financial year.
         
         
         
         33
            
          The Spanish Government claims that the application of Article 5 of Regulation No 1357/96 was justified by urgency and the
         requirement, pursuant to Article 7 of the regulation, to make the payments before 15 October 1996. It points out that the
         two conditions laid down in the fifth recital of the regulation are separated by the terms  
         and/or and that, therefore, the second condition regarding the date of the payments was sufficient to justify the application of
         Article 5. According to the Spanish Government, urgency was evidenced by the type of provision used, namely a Ministerial
         Order, and by the preamble thereto. 
         
         
         34
            
          The Spanish Government disputes the fact that the letter of 8 June 1998 constitutes an acknowledgement of the application
         of Articles 1 and 4 of Regulation No 1357/96. If this letter cited provisions, it did so in a manner consistent with Article
         5 of the Regulation, which provides that the Member States may grant the total amount of aids resulting from the application
         of Article 1 and Article 4(a) to producers of bovine animals according to objective criteria. The letter was intended to indicate
         that the amounts paid to the producers under Article 5 took account of the amounts provided for in Article 1 and Article 4(a).
           
         
         
         35
            
          The fact that the expenditure was declared under budget posts 2133.001 and 2133.002, entitled respectively  
         additional payment to the suckler cow premium and  
         additional payment to the special premium, which are for the application of Article 1 of Regulation No 1357/96, cannot be interpreted as an application thereof. The
         Spanish Government claims in this connection that it should have declared the expenditure under  budget post 2133.004, for
         the application of Article 5 of Regulation 1357/96, only if it had relied on the first of the two conditions laid down in
         the fifth recital of the regulation, that is to say if it had relied on a system of payment other than the increase in premiums.
          
         
         
         36
            
          The Spanish Government concludes that, having applied Article 5 of  Regulation No 1357/96, it was not required to make the
         adjustments referred to in the regulation in order to take account of entitlement to a premium for 1996. 
         
         
         37
            
          The Commission points out that the Kingdom of Spain used the criteria for the allocation of additional payments laid down
         in Regulation No 1357/96. It also states that, on several occasions, Spain reported the application of Article 1 and Article
         4(a) and (b) of the regulation, not of Article 5. Accordingly, the letter of 8 June 1998 only refers to Article 1 and Article
         4(a) and (b) of the Regulation. That document was sent to the Commission again on 2 October 1998, following a request for
         further information by the Commission at the time of the inspection. In addition, the expenditure incurred was declared under
         budget posts 2133.001 and 2133.002, provided for the application of Article 1 of the Regulation, rather than 2133.004, provided
         for the application of Article 5.   
         
         
         38
            
          It therefore takes the view that, contrary to its claims, the Kingdom of Spain has not applied Article 5, but rather Article
         1 and Article 4(a) of Regulation No 1357/96. It follows that the Spanish Government must comply with Article 1(3) of the Regulation
         and make the adjustments required in terms of premiums in respect of the 1996 calendar year. 
         
         
         39
            
          In the alternative, the Commission contends that, even if the Kingdom of Spain were considered to have applied Article 5 of
         Regulation No 1357/96, it did not comply with the conditions laid down in that provision. 
         
         
         40
            
          First, it follows from the fifth recital of Regulation No 1357/96 that the aid in question should have been granted other
         than by means of the increase in premiums. Secondly, in order to comply with Article 5 of Regulation No 1357/96, the Kingdom
         of Spain should have set criteria linked to the loss of revenue to the producers in 1996, the year of the BSE crisis referred
         to in the regulation, rather than grant aid to those who had ceased or considerably restricted their activities during 1995
         and 1996. Thirdly, Spain had not given the reason for which  reliance on Article 5 was justified on the ground of urgency.
         The time-limit for payment laid down in Community legislation applied to all the Member States. Moreover, the information
         on the premiums for 1995 were available and enabled additional payments to be made as provided for in the regulation.  
          Findings of the Court
         
         
         41
            
          It must be noted at the outset that Regulation No 1357/96 was adopted in order to help producers of beef and veal by means
         of rapid additional payments following the BSE crisis which broke out in March 1996. 
         
         
         42
            
          It is also important to point out that, for the sake of transparency between Member States, monitoring and sound administration
         of additional payments, Regulation No 1504/96 provided for the communication to the Commission of specific information within
         certain time-limits, namely no later than 15 November 1996 and 31 July 1997 respectively. 
         
         
         43
            
          In this case, it was only in the letter of 8 June 1998, that is to say with a delay of 17 months, that the Spanish Government
         submitted to the Commission information making reference to Article 1 and Article 4 of Regulation No 1357/96. On the basis
         of that letter the Commission had every reason to believe that the Spanish Government had applied Article 1 of the regulation,
         above all since it is not disputed that the expenditure was declared under budget posts 2133.001 and 2133.002 for the application
         of Article 1 of the regulation, and not under 2133.004  for the application of Article 5. 
         
         
         44
            
          The Spanish Government relies on the fact that the Ministerial Order of 19 September 1996, which was not communicated to the
         Commission until the end of September 1998, states that Article 5 of Regulation No 1357/96 is applicable. In this connection
         it should first be noted that, although this provision was actually referred to, the Ministerial Order adopts the same criteria
         for the grant of additional payments as those provided in Article 1 of the regulation for provisional payments, namely entitlements
         to premiums for animals kept in the 1995 calendar year. 
         
         
         45
            
          Next, the Ministerial Order contains no ground consistent with the requirements of Regulation No 1357/96 for the use of Article
         5 of the regulation. The urgency arising from the prescribed deadlines for payment is only referred to for reasons of national
         law, to justify the powers of the Minister for Agriculture, Fisheries and Food to adopt the order. In any event, as the Advocate
         General notes in points 46 to 48 of her Opinion, the Spanish Government has not shown the existence of any special and exceptional
         urgency justifying the application of Article 5 since the deadlines for payment were the same for all the Member States and,
         as is stated in the Ministerial Order, the information on the premiums for 1995 was available. 
         
         
         46
            
          Finally, the only ground for reliance on Article 5 of the Regulation set out in the Ministerial Order is that in relation
         to the need to  
         render more flexible the system for obtaining aid by the producers and simplify the formalities and administrative procedures
         for payment as much as possible, since the right to aid in 1995 has already been clearly established in each concrete case. This ground leads to the conclusion that reliance on Article 5 could only have been justified by the aim of avoiding the
         administrative procedures associated with the adjustments intended to take into account entitlements to premiums for 1996.
              
         
         
         47
            
          The Commission's alternative ground of defence regarding the incorrect application of Article 5 of Regulation No 1357/96 could
         be held to be justified. It is sufficient to state, without the need to establish whether the conditions set out in the fifth
         recital of Regulation No 1357/96 are of a cumulative or alternative nature, that the sole justification pleaded by the Spanish
         Government of urgency is not proven, as has been pointed out in paragraph 45 above. 
         
         
         48
            
          However, having regard to the circumstances of the present case, the Commission's main ground of defence, in relation to the
         non-compliance with Articles 1 to 3 of Regulation No 1357/96, must be upheld. The Commission is right to consider that in
         actual fact the Spanish Government applied Article 1 of Regulation No 1357/96. In that regard the Commission was able to take
         into consideration the procedures for granting additional payments, which reflected those laid down in that provision; the
         fact that the conditions for the application of Article 5 of the Regulation were not fulfilled; the absence of grounds for
         the use of Article 5; and information supplied to the Commission by the Kingdom of Spain, in particular in the letter of 8
         June 1998 and in the detailed accounts of the expenditure of the year in question.  
         
         
         49
            
          Accordingly, the first plea in law put forward by the Kingdom of Spain must be dismissed. 
          The second plea
         
         
         50
            
          In its second plea in law, the Kingdom of Spain claims that the Commission failed to comply with the 24-month period laid
         down in Article 5(2)(c) of Regulation No 729/70. In fact the expenditure in respect of the additional payments had been incurred
         in 1996, whereas the first notification relating to them was in a letter of the Commission of 12 April 1999. 
         
         
         51
            
          To refute the argument of the Commission that the year to be taken into consideration is the year during which it was necessary
         to make the adjustments, that is 1997, the Spanish Government quotes the report of the conciliation body, which found the
         following in particular: 
         
         
         ─
             The express obligation to recover excess payments exists where Article 1 and Article 2 are applied, but does not appear in
            the context of Article 5; 
            
            
            ─
             In the context of their interpretation of Article 5, the Spanish authorities had no reason to consider that the payments they
            had made should in part give rise to recovery, and they were only informed of this after the 24 months; until that time the
            expenditure in question was in the nature of definitive expenditure from a legal and accounting point of view;    
            
            
            
            ─
             Even if the Commission's position is to reclassify the payments  as having been made under Article 5, it must be stated that
            this reclassification did not take place until the 24 months had passed ...
            
          The express obligation to recover excess payments exists where Article 1 and Article 2 are applied, but does not appear in
         the context of Article 5; 
         
         
         ─
          In the context of their interpretation of Article 5, the Spanish authorities had no reason to consider that the payments they
         had made should in part give rise to recovery, and they were only informed of this after the 24 months; until that time the
         expenditure in question was in the nature of definitive expenditure from a legal and accounting point of view;    
         
         
         
         ─
          Even if the Commission's position is to reclassify the payments  as having been made under Article 5, it must be stated that
         this reclassification did not take place until the 24 months had passed ...
         
         
         
         
         
         52
            
          The Spanish Government takes the view, furthermore, that if the Commission had really wanted to make a financial correction
         for the 1997 financial year, it should have taken account of the expenditure of that year for which amounts in excess of entitlements
         had been paid and applied the 2% correction to them. It also states that there was no budgetary post 2133 in the nomenclature
         of expenditure for that financial year. It would have been absurd to apply a financial correction to a year for which the
         appropriate budgetary post did not exist. 
         
         
         53
            
          Finally it draws attention to the objective of legal certainty pursued by Article 5(2)(c) of Regulation No 729/70.  
         
         
         54
            
          The Commission contends that the assertions of the Spanish Government in relation to the different budgetary posts do not
         put in question the obligation laid down in Article 1(3) and Article 2 of Regulation No 1357/96 to review the entitlement
         to additional payments paid in 1995 in terms of the number of animals for which the producer obtained a premium in 1996. This
         process could only take place in 1997. 
         
         
         55
            
          On the question of the reference year for the calculation of the financial correction, the Commission submits that the Spanish
         Government does not take into account the fact that the expenditure which should have been recovered during the 1997 financial
         year corresponded to additional payments granted during the 1996 financial year to producers who were not entitled to them
         and declared by the Spanish authorities in budgetary post 2133. It takes the view therefore that the fact that this budgetary
         post was modified in respect of the 1997 financial year is of no relevance. The change in the nomenclature of a financial
         year in relation to that of the previous financial year does not preclude the financial correction from relating to the 1997
         financial year, as in this case. 
         
         
         56
            
          Finally, the Commission notes that the reference to legal certainty is unfounded in the context of this case, since it was
         the Spanish authorities themselves who told the Commission that Articles 1 and 4 of Regulation No 1357/96 were the provisions
         under which the payments were made. 
          Findings of the Court
         
         
         57
            
          As was stated in paragraph 48 above, the Commission is right to consider that in actual fact the Kingdom of Spain applied
         Article 1 of Regulation No 1357/96. 
         
         
         58
            
          It follows that, in accordance with Articles 1 to 3 of Regulation No 1357/96, the Kingdom of Spain had to make adjustments
         in order to take into account entitlements to premiums for 1996. 
         
         
         59
            
          Since those adjustments could only take place during the 1997 financial year, the 24-month period laid down in Article 5(2)(c)
         of Regulation No 729/70 was complied with. 
         
         
         60
            
          In any event, in order to check whether the 24-month period was complied with, the Kingdom of Spain cannot take into consideration
         only the date of the expenditure incurred, without taking into account the date on which it informed the Commission of relevant
         and sufficient information on such expenditure, allowing the latter to carry out the clearance of accounts. 
         
         
         61
            
          As is clear from the fourth recital of Regulation No 1287/95, the shortening of the time-limit for the adoption of clearance
         of accounts decisions was connected with computerisation of the information to be submitted to the Commission and full and
         immediate access for the Commission, when carrying out checks, to information on expenditure held in both documents and electronic
         files. 
         
         
         62
            
          It should also be noted that, in accordance with Article 4(2) of Regulation No 1663/95, all the documents required for the
         clearance of accounts of a financial year must be sent to the Commission by 10 February of the year following the end of that
         financial year. It follows from this provision by implication that the Member States must communicate the necessary documents
         promptly so that the Commission has sufficient time in which to carry out the checks.    
         
         
         63
            
          In this case it was not until the end of September 1998 during the inspection and at the request of the Commission that the
         Kingdom of Spain communicated the Ministerial Order stating that it had applied Article 5 of Regulation No 1357/96. However,
         on the one hand, under Article 1(b) of Regulation No 1504/96 the total amounts of aid paid and the number of beneficiaries
         and animals concerned should have been communicated on 15 November 1996 and 31 July 1997 respectively and, on the other hand,
         the methods used to grant the aid referred to should have been communicated  
         without delay, namely before 15 November 1996, if the provision was to be effective.  
         
         
         64
            
          If the argument of the Spanish Government were followed and assuming that the additional payments were made on the permitted
         deadline, here 15 October 1996, the Commission would only have had three weeks, from 25 September 1998, the date on which
         the inspection was completed, to 15 October 1998, to contest the conformity of the expenditure entered into by the Kingdom
         of Spain. Nor is it inconceivable, in situations where the Member State has not sent in any of the information required for
         the checking and clearance of accounts, that the Commission would be out of time to contest the conformity of that State's
         expenditure before the existence of such expenditure even comes to its knowledge. 
         
         
         65
            
          The Court has already held that the purpose of the exclusion period for the adjustment of accounts is to protect Member States
         against the absence of legal certainty which would exist if the Commission were able to call into question expenditure incurred
         several years before the adoption of a compliance decision (Case C-130/99  
         Spain v  
         Commission [2002] ECR I-3005, paragraph 133). A Member State may only however claim the protection of this period to the extent that
         it complies with its own obligations under Community legislation, in particular with regard to the spontaneous communication
         of information required for checks. 
         
         
         66
            
          It follows from the foregoing considerations that the second plea in law of the Kingdom of Spain is unfounded and that, accordingly,
         its application must be dismissed. 
         
         Costs
         67
            
          Under Article 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. Since the Kingdom of Spain has been unsuccessful and the Commission has applied
         for costs, the Kingdom of Spain must be ordered to pay the costs. 
         
         On those grounds, 
         
         
         
            
            THE COURT (First Chamber),
         
         
          hereby:  
         
            
            1.
             Dismisses the application;  
            
            
            2.
             Orders the Kingdom of Spain to pay the costs. 
            
            
                  Wathelet 
               
               
                  Jann 
               
               
                  Rosas 
               
            
                  
               
               
                  
               
               
                  
               
            
                  
               
               
                  
               
               
                  
               
            
                  
               
               
                  
               
               
                  
               
            
                  
               
               
                  
               
               
                  
               
            
            
            
            
            
            
            
            
         
         
          Delivered in open court in Luxembourg on 11 September 2003. 
         
         
         
         
                  R. Grass 
               
               
                  M. Wathelet  
               
            
         
         
         
                  Registrar
               
               
                  President of the First Chamber
               
            
      
      
          1 –
            
             Language of the case: Spanish.