CELEX: 62003CC0199
Language: en
Date: 2005-02-24
Title: Opinion of Mr Advocate General Tizzano delivered on 24 February 2005. # Ireland v Commission of the European Communities. # Action for annulment - European Social Fund - Reduction of Community financial assistance - Manifest error of assessment - Proportionality - Legal certainty - Legitimate expectations. # Case C-199/03.

OPINION OF ADVOCATE GENERALTIZZANOdelivered on 24 February 2005(1)
         Case C-199/03IrelandvCommission of the European Communities
            (European Social Fund  –  Action for annulment  –  Reduction of financial assistance  –  Error in assessment of the facts  –  Proportionality  –  Legal certainty  –  Legitimate expectations)
            
      
         
      I –  Introduction
        1.        By application of 13 May 2003 Ireland sought the annulment, pursuant to Article 230 EC, of Commission Decision C(2003) 99
      of 27 February 2003 reducing assistance granted by the European Social Fund (‘ESF’) for three operational programmes in respect
      of human resources development, tourism and industrial development (‘the contested decision’).
      
      
      II –  Legal background
        2.        Article 4(1) of Council Regulation (EC) 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, 
         			(2)
         		 amended by Council Regulation (EEC) No 2081/93 of 20 July 1993 
         			(3)
         		 (hereinafter ‘Regulation No 2052/88)’ states as follows:
      ‘Community operations shall be such as to complement or contribute to corresponding national operations. They shall be established
      through close consultations between the Commission, the Member State concerned and the competent authorities and bodies –
      including, within the framework of each Member State’s national rules and current practices, the economic and social partner,
      designated by the Member State at national, regional, local or other level, with all parties acting as partners in pursuit
      of a common goal. These consultations shall hereinafter be referred to as the “partnership”. The partnership shall cover the
      preparation and financing, as well as the ex ante appraisal, monitoring and ex post evaluation of operations. 
       The partnership will be conducted in full compliance with the respective institutional, legal and financial powers of each
      of the partners.’
      
      
        3.        Article 13(3) of that regulation then sets the maximum ceiling for the Community contribution granted by the various Structural
      Funds at 75% of public expenditure in the case of measures carried out in the regions eligible for assistance under ‘Objective
      1’. 
         			(4)
         		 In the 1994 to 1999 programming period Ireland was eligible for that type of assistance.
      
      
        4.        Also important here is Council Regulation (EEC) No 4253/88 of 19 December 1988, 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, 
         			(5)
         		 as amended by Council Regulation (EEC) No 2082/93 of 20 July 1993 
         			(6)
         		 (hereinafter ‘Regulation No 4253/88’).
      
      
        5.        Article 17(2) of that regulation provides that:
      ‘The financial contribution from the Funds shall be calculated in relation to either the total eligible cost of, or the total
      public or similar eligible expenditure (national, regional or local, and Community) on, each measure (operational programme,
      aid scheme, global grant, project, technical assistance, study).’
      
      
        6.        Regulation No 4253/88 then lays down in Chapter VI (‘Financial provisions’) rules on financial control (Article 23) and reduction,
      suspension and cancellation of assistance (Article 24).
      
      
        7.        Article 23 provides that:
      ‘1. In order to guarantee completion of operations carried out by public or private promoters, Member States shall take the
      necessary measures in implementing the operations: 
      
        
      –
         to verify on a regular basis that operations financed by the Community have been properly carried out, 
      
      
        
      –
         to prevent and to take action against irregularities, 
      
      
        
      –
         to recover any amounts lost as a result of an irregularity or negligence. Except where the Member State and/or the intermediary
            and/or the promoter provide proof that they were not responsible for the irregularity or negligence, the Member States shall
            be liable in the alternative for reimbursement of any sums unduly paid. 
         
      
      
      … 
       Member States shall inform the Commission of the measures taken for those purposes and, in particular, shall notify the Commission
      of the description of the management and control systems established to ensure the efficient implementation of operations.
      They shall regularly inform the Commission of the progress of administrative and judicial proceedings. 
       Member States shall keep and make available to the Commission any appropriate national control reports on the measures included
      in the programmes or other operations concerned. 
      …
       2. Without prejudice to checks carried out by Member States, in accordance with national laws, regulations and administrative
      provisions and without prejudice to the provisions of Article 206 of the Treaty or to any inspection arranged on the basis
      of Article 209(c) of the Treaty, Commission officials or servants may carry out on-the-spot checks, including sample checks,
      in respect of operations financed by the Structural Funds and management and control systems. 
       Before carrying out an on-the-spot check, the Commission shall give notice to the Member State concerned with a view to obtaining
      all the assistance necessary. If the Commission carries out on-the-spot checks without giving notice, it shall be subject
      to agreements reached in accordance with the provisions of the Financial Regulation within the framework of the partnership.
      Officials or servants of the Member State concerned may take part in such checks. 
       The Commission may require the Member State concerned to carry out an on-the-spot check to verify the regularity of payment
      requests. Commission officials or servants may take part in such checks and must do so if the Member State concerned so requests.
      
       The Commission shall ensure that any checks that it carries out are performed in a coordinated manner so as to avoid repeating
      checks in respect of the same subject-matter during the same period. The Member State concerned and the Commission shall immediately
      exchange any relevant information concerning the results of the checks carried out. 
       3. For a period of three years following the last payment in respect of any operation, the responsible body and authorities
      shall keep available for the Commission all the supporting documents regarding expenditure and checks on the operation.’
      
      
        8.        Article 24 goes on to state the following:
      ‘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. 
      …’
      
      
        9.        Reference should next to be made to Commission Regulation (EC) No 2064/97 of 15 October 1997 establishing detailed arrangements
      for the implementation of Council Regulation (EEC) No 4253/88 as regards the financial control by Member States of operations
      co-financed by the Structural Funds (‘Regulation No 2064/97’). 
         			(7)
         		
      
        10.      In particular, Article 2(1)(c) of that regulation provides that the Member States’ management and control systems are to ‘provide
      a sufficient audit trail’, that is, a clear and accurate path ‘by which the movement of data can be traced forwards and backwards
      within a management and internal control system’. 
         			(8)
         		
      
        11.      Under Article 2(2) of Regulation No 2064/97, a sufficient audit trail is one which permits:
      ‘(a)   reconciliation of the summary amounts certified to the Commission with the individual expenditure records and supporting documents
      at the various administrative and final beneficiary levels, and
      (b)     verification of the allocation and the transfers of the available Community and national funds.’
      
      
        12.      Finally, it is necessary to refer to Commission Regulation (EEC) No 1866/90 of 2 July 1990 on arrangements for using the ecu
      for the purposes of the budgetary management of the Structural Funds (‘Regulation No 1866/90’). 
         			(9)
         		 Article 5(2) of that regulation is of importance here and provides:
      ‘Member States which submit their statements of expenditure in ecus shall convert the amounts of expenditure incurred in national
      currency into ecus applying the rate for the month during which the expenditure was recorded in the accounts of the bodies
      responsible for the financial management of the programme. To this end, the Commission shall inform Member States each month
      of the rate applicable.’
      
      
      III –  Facts and procedure
        13.      By Decision 94/626/EC of 13 July 1994 the Commission established the Community support framework for Community structural
      assistance for the Irish regions concerned by Objective 1, which is the whole country, 
         			(10)
         		 for the programming period 1 January 1994 to 31 December 1999.
      
      
        14.      In implementation of that measure, by three different decisions in 1994 the Commission granted, inter alia, ESF financial
      assistance to operational programmes in respect of human resources development, 
         			(11)
         		 tourism 
         			(12)
         		 and industrial development 
         			(13)
         		 for a total amount of EUR 1 897 206 226.
      
      
        15.      The management authority designated by Ireland to implement projects co-financed by the ESF was the Department of Enterprise,
      Training and Employment (‘the DETE’).
      
      
        16.      From 6 to 10 November and from 4 to 6 December 2000, the Commission carried out, within the meaning of Article 23(2) of Regulation
      No 4253/88, on-the-spot checks and investigations in Dublin in respect of operations co-financed by the ESF for the period
      1994 to 1998. Those checks covered in particular the operations carried out by the National Training and Development Institute
      (NTDI) and by the Central Remedial Clinic, both working under the responsibility of the National Rehabilitation Board. During
      those checks, the Commission also checked the audit trail provided by the DETE in order to reconcile the amounts paid by the
      Commission with the amounts claimed by the different final beneficiaries participating in the operational programmes in question.
      
      
      
        17.      As a result of those controls, the Commission found irregularities in the claims for ESF financial assistance in respect of
      the three operational programmes.
      
      
        18.      In particular, it pointed out that:
      (a)     NDTI had not declared the total amount of national resources actually available for the operational programme in respect of
      human resources development, but only those up to an amount equal to 25% of the total cost of the financing, that is, the
      minimum percentage of national funding required to benefit from ESF co-financing under ‘Objective 1’. That irregularity therefore
      led to an overclaim for the Community contribution to the project;
      (b)     the DETE – after having correctly applied the ecu conversion rate laid down in Article 5(2) of Regulation No 1866/90 – carried
      out adjustments to the amounts obtained after that operation, transferring a part of the non-co-financed public funding to
      the co-financed funding. In that way it had maximised  the ESF contribution initially calculated for the three operational programmes, and consequently overclaimed for co-financing;
      (c)     at the level of the operations carried out by NDTI and the DETE, both the abovementioned irregularities had created breaches
      in the audit trail, as they did not make it possible to reconcile the expenditure incurred with the financing claimed.
      
      
        19.      On the basis of those controls, the Commission prepared an audit report, a copy of which it sent to the Irish authorities
      on 13 February 2001, and invited the DETE to take a view on it.
      
      
        20.      After having conducted an investigation into the alleged irregularities brought to light in the aforesaid report, by letter
      of 20 December 2001 the DETE replied to the objections raised by the Commission.
      
      
        21.      In the Commission’s view, those investigations produced no new facts and it therefore opened the procedure provided for in
      Article 24 of Regulation No 4253/88 and, by letter of 28 February 2002, notified the Irish authorities of its decision, inviting
      it to submit its observations.
      
      
        22.      By letter of 18 June 2002, which was supplemented by the letter of 25 July 2002, the DETE noted that:
      (a)     the original claims for ESF co-financing submitted by NDTI were not in accordance with ESF best practice and they had therefore
      been resubmitted following careful checks, at least in respect of 1998 and 1997. It had however not been possible to conduct
      such checks to the same level of detail for the years prior to 1997, mainly owing to the change in NDTI’s budgetary computer
      system which had led to the loss of various data. Accordingly, Ireland had resorted to extrapolations in order to reconstruct
      the accounts from 1994 to 1996, which in any event made it possible to verify the regularity of the financing granted;
      (b)     although the adjustment mechanism for the ESF co-funding claims was not appropriate, it had not, however, led to any undue
      financing or over-financing by the Community;
      (c)     the checks carried out by the Irish authorities had demonstrated that all of the claims for financing related to eligible
      expenditure, thereby remedying the unintended breaches in the audit trail found by the Commission.
      
      
        23.      On 27 February 2003, having completed its analysis of the response of the Irish authorities, the Commission finally adopted
      the contested decision in which it reduced the total amount of assistance granted by the ESF under the three operational programmes
      by EUR 15 614 261 on the basis of the irregularities found in the implementation of the projects concerned and the respective
      claims for financing.
      
      
        24.      By application lodged on 13 May 2003, Ireland sought the annulment of the contested decision and an order for the Commission
      to pay the costs of the proceedings. Clearly, the Commission opposed those requests, requesting in its turn that the application
      be dismissed as unfounded in its entirety and the applicant be ordered to pay the costs.
      
      
        25.      On closure of the written procedure, during which a reply and a rejoinder were also lodged, the parties were heard at the
      hearing on 13 January 2005.
      
      
      IV –  Legal analysis(1) Manifest error of assessment
        26.      By its first plea, the Irish Government claims that the Commission committed a manifest error of assessment in fact and in
      law when applying the financial correction in question.
      
      
        27.      In particular, it claims that the alleged irregularities found by the Commission are in fact errors of a purely ‘technical’
      or ‘procedural’ nature which had no material impact on the Community budget. In other words, those ‘procedural errors’ should
      not be likened to real ‘irregularities’ so as to justify a reduction in Community assistance.
      
      
        28.      Finally, the Irish authorities assert that the Commission refused, without justification, to take account of the statements
      and revised calculations submitted by it intended to demonstrate that the irregularities found did not give rise to any over-financing
      or undue financing by the ESF.
      
      
        29.      I should state at once that I am not persuaded by the Irish Government’s arguments.
      
      
        30.      As a matter of fact, the Commission decided to reduce the ESF assistance on the basis of an audit report 
         			(14)
         		 which, as noted above, brought to light three types of irregularity in the implementation of the operational programmes (see
      point 17 above). However, the Irish authorities did not deny the existence or the systematic nature of those irregularities,
      either during the administrative procedure or before the Court, but merely attempted to demonstrate that their financial impact
      was limited.
      
      
        31.      The view can therefore be taken that the Irish Government accepted the results of the checks conducted by the Commission.
      In any event, the Commission was certainly not mistaken in its finding of systematic failures in the implementation stage
      of those programmes since those failures, as I have said, had been expressly acknowledged by the Irish authorities themselves.
      
      
        32.      As the Court has stated on several occasions, once the Commission discovers the existence of irregularities in the management
      of Community funds on the part of a Member State, the Commission ‘is required to correct the accounts presented by that Member State’. 
         			(15)
         		 Moreover, that is the express requirement of the principle of ‘sound financial management’ stated in Article 274 EC and,
      more specifically, in Article 24 of Regulation No 4253/88 which governs the ‘reduction, suspension and cancellation’ of assistance
      in the event of irregularities.
      
      
        33.      The Irish Government bases its argument, however, on what it claims is the ‘technical’ nature of the failures in question.
      In its view, since those errors did not cause the ESF financial loss, it cannot be a question of ‘irregularities’ within the
      meaning of Article 24 of Regulation No 4253/88.
      
      
        34.      Without its being necessary to examine the arguments put forward by Ireland on the limited scope of its ‘procedural errors’
      which in any event essentially constitute purely factual evaluations, I think it suffices to point out that the proposed interpretation
      of Article 24 has no basis in the wording or purpose of that article.
      
      
        35.      The provision in question provides that the Commission may reduce or suspend the grant of Community assistance in the event
      of ‘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’. In that regard it does not make any distinction, however,
      in terms of the ‘financial value’ of the irregularity or change in question.
      
      
        36.      Furthermore, it is well known, and also borne out by the extensive Community case-law on the subject, 
         			(16)
         		 that failures or inadequacies (for example in the procedures for management and control of funds) which do not have a specific
      financial impact may be seriously prejudicial to the financial interests of the Union and to compliance with Community law,
      and for that reason they justify the application of financial corrections on the part of the Commission. That is particularly
      so where, as in this case, there are systematic infringements of the relevant provisions, such as, inter alia, inaccurate
      declarations and adjustments ex post of co-financeable and non-co-financeable expenditure, which are likely to compromise the transparency of the flow of funding
      and the regularity of operations and overall, therefore, the sound financing of the entire system.
      
      
        37.      Finally, the Irish Government claims that the Commission was wrong to refuse to take account of the corrections which the
      Irish authorities made in 2001, in reply to the objections raised in the audit report, to the claims for financing submitted
      by them for the three operational programmes. Those corrections were essentially intended to demonstrate that the irregularities
      found by the Commission had not given rise to any overclaims or over-financing, since their amount did not exceed the maximum
      limit for ESF co-financing (in this case 75%). 
      
      
        38.      Irrespective of the issue of the reliability of the Irish authorities’ calculations, 
         			(17)
         		 I am of the opinion that the Commission was correct to reply that those corrections were inadmissible as they were submitted
      out of time. Having identified expenditure and/or national sources of co-financing which had not previously been declared,
      those corrections necessarily involved reprogramming of the ESF commitments which had been fixed on the basis of the annual
      declarations made by the Irish authorities during the 1994 to 1999 programming period. As may be clearly inferred from the
      relevant rules, 
         			(18)
         		 no change to the financing plans could be made after 31 December 1999, which was the deadline laid down for Community commitments
      in respect of the three operational programmes in question. In other words, after that date the financing plans were definitively
      closed and could no longer be changed to take account, as necessary, of the corrections submitted by Ireland.
      
      
        39.      In the light of the foregoing considerations, I think I can conclude that the Commission did not commit a manifest error of
      assessment by reducing the ESF financial assistance in issue and that the first plea in the application should therefore be
      dismissed.
      (2) Infringement of legal rules on the application of the Treaty
      
        40.      By its second plea, the Irish Government denies the infringement of three provisions of delegated legislation concerning the
      Structural Funds.
      
      
        41.     (a) First of all, it claims that the Commission infringed Article 23(1) of Regulation No 4253/88 because:
      
        
      –
         contrary to the terms of that provision, it did not adopt the necessary implementing measures on financial control before
            the date of entry into force of the regulation (3 August 1993), but only in April 1997, in Regulation No 2064/97;
         
      
      
        
      –
         the contested decision applies Regulation No 2064/97 retroactively to the ESF co-financing projects for the years 1994 to
            1997, in particular the notion of audit trail in Article 2 of that regulation, although at the time of the facts in question
            that notion had not yet been clearly defined (point 10 above).
         
      
      
      
      
        42.      On the first point, however, I have to agree with the Commission when it maintains that the late adoption of the implementing
      provisions of Regulation No 4253/88 could be challenged only by means of an action for failure to act as provided for in Article
      232 EC or, possibly, by challenging Regulation No 2064/97, within two months of its adoption, by means of an action for annulment
      as provided for in Article 230 EC. The delay in question cannot, on the other hand, be challenged in a direct action intended
      to obtain, as in this case, the annulment of a decision reducing Community assistance.
      
      
        43.      As regards the alleged retroactive application of Regulation No 2064/97, I note first of all that the contested decision does
      not refer to any provision of that regulation.
      
      
        44.      Next, and more specifically, as regards the definition of ‘sufficient audit trail’ I note that, although that was not formalised
      until 1997, that does not mean that before that date a Member State could implement operational programmes co-financed by
      Structural Funds without delineating a clear and accurate path ‘by which the movement of data can be traced forwards and backwards
      within a management and internal control system’, 
         			(19)
         		 therefore making it possible to evaluate the sound financial management of the projects in question. As appears from paragraph
      16 of the contested decision, even before April 1997 any mechanism which did not make it possible to reconcile the summary
      amounts submitted to the Commission with all the supporting documents regarding expenditure and to check all flows of funding
      relating to the grant of Community assistance was considered contrary to Articles 4(1) and 13(3) of Regulation No 2052/88
      and Article 17(2) of Regulation No 4253/88.
      
      
        45.      In other words, the body of those provisions, in force prior to 1997, required the Member States to ensure the exact reconciliation
      of the expenditure actually incurred under the projects co-financed by the Structural Funds with the respective claims for
      Community assistance, and were alone sufficient to take action against the irregularities committed by the Irish authorities.
      
      
        46.     (b) Secondly, in the opinion of the Irish Government, the Commission infringed Article 24(1) and (2) of Regulation No 4253/88
      because:
      
        
      –
         it did not conduct a suitable examination of all the aspects of the case and in particular it did not take account of the
            corrections made to the claims for Community assistance;
         
      
      
        
      –
         the irregularities found were not serious enough to justify reducing the financial assistance.
      
      
      
      
        47.      I think that that argument simply repeats what the Irish Government maintained in the first plea of the application concerning
      the impact of the irregularities found. I therefore refer to the remarks already made on that point above (points 29 to 32).
      
      
        48.     (c) Finally, Ireland maintains that the Commission infringed the principle of partnership provided for in Article 4(1) of
      Regulation No 2052/88.
      
      
        49.      I must point out, however, that the applicant does not give any reasons whatsoever for that charge. Like the Commission, I
      believe therefore that it is inadmissible since it infringes Article 21 of the Statute of the Court of Justice and Article
      40 of the Rules of Procedure, under which an application must always contain the pleas in law relied on in order to enable
      the defendant to prepare its defence and the Court to rule on the application. 
         			(20)
         		
      
        50.      In the light of the foregoing, I therefore think that the second plea in the application is in part unfounded and in part
      inadmissible.
      (3) Infringement of the principle of proportionality
      
        51.      By it third plea, Ireland claims that the Commission infringed the principle of proportionality because it reduced the ESF
      assistance, while it could have adopted a less restrictive approach and accepted the explanations and corrections submitted
      by the Irish authorities intended to demonstrate the purely ‘technical’ nature and limited impact of the failures in question.
      The Commission should also have taken account of the nature of the beneficiaries of the assistance, since NDTI is a non-profit-making
      body, and of the fact that the three operational programmes had always been implemented in a cost-effective manner in full
      compliance with all the material requirements imposed by Community law.
      
      
        52.      On that point, I note first of all that in this case also the Irish Government merely puts forward, for the most part, the
      same arguments raised in the first part of the application concerning the nature and impact of its own ‘errors’ in the management
      and implementation of the programmes. However, I have already expressed my view in that respect above (points 28 to 32).
      
      
        53.      Next, as far as concerns observance of the principle of proportionality more specifically, I think it appropriate to state
      that, according to settled case-law, reductions in Community assistance which are ‘directly linked to the irregularities detected
      and [are] designed solely to exclude reimbursement of unlawful or unnecessary expenditure’ 
         			(21)
         		 comply with that principle.
      
      
        54.      The contested decision clearly shows that the reduction made in this case corresponds exactly to the amounts of Community
      assistance which, according to the Commission’s calculations, were affected by the irregularities found which, I state once
      more, were not denied by the Irish Government.
      
      
        55.      I therefore consider that the third plea in the application should be dismissed.
      (4) Infringement of the principles of the protection of legitimate expectations and legal certainty
      
        56.      By the third and last plea in the application, the Irish Government maintains that, during the contacts it had with the Commission
      in 2001 and 2002 following the checks carried out by the latter, the Irish authorities were asked to check the claims for
      assistance affected by those investigations. In the opinion of the Irish Government, that gave rise to a legitimate expectation
      that the Commission would accept their explanations and the revised calculations requested by it and would not reduce the
      ESF assistance. Moreover, that legitimate expectation was strengthened also by the different and less restrictive approach
      taken by the Commission in evaluating accounting practices in previous controls of implementation of programmes funded by
      the ESF in Ireland.
      
      
        57.      In disappointing those expectations, adds the Irish Government, the Commission also infringed the principle of legal certainty.
      That principle was further infringed, in the Irish Government’s view, by the fact that the contested decision applied rules
      not provided for by the body of rules in force at the time of the facts of the case, in particular when it claimed that the
      ESF accounts were definitively closed on 31 December 1999 and that therefore after that date no revised claims or corrections
      could be made.
      
      
        58.      For my part, I note above all that, according to Community case-law, the principle of the protection of legitimate expectations
      can be relied on by ‘a person in a situation from which it appears that the Community administration, in providing them with
      specific assurances, has fostered legitimate expectations on their part’. 
         			(22)
         		
      
        59.      The documents produced by the Irish Government itself do not, however, show any type of assurance on the part of the Commission
      that irregularity in the financial and accounting practices in question did not exist and/or that a reduction in the Community
      assistance would not be made. On the contrary, in the audit report referred to, the Commission had already concluded unequivocally
      that the irregularities found had caused an overclaim for ESF co-financing which ought to be the subject of a financial correction.
      
      
        60.      Next, I do not accept that any legitimate expectation may be based, as the Irish Government, on the other hand, seems to be
      suggesting, on the fact that the Commission had not found irregularities in the management of ESF assistance in previous control
      operations in Ireland. The Court has ruled on several occasions that ‘where the Commission has tolerated irregularities on
      grounds of fairness, the Member State concerned does not acquire any right to demand that the same position be taken with
      regard to irregularities committed in the following financial year by virtue of the principle of legal certainty or the principle
      of the protection of legitimate expectations’. 
         			(23)
         		 This applies a fortiori in cases in which the Commission had not detected the type of irregularities in question during the
      preceding financial years. 
         			(24)
         		
      
        61.      I therefore consider that the contested decision of the Commission did not infringe the principle of legitimate expectations.
      
      
        62.      Finally, as regards the principle of legal certainty, I would point out that its application requires that ‘[the relevant]
      legal rules be clear and precise’, and that it ‘aims to ensure that situations and legal relationships governed by Community
      law remain foreseeable’. 
         			(25)
         		 However, I do not see how that principle can have been infringed in this case since, as stated above, first, the rules in
      force clearly provided for the possibility that financial assistance might be reduced in cases of irregularities of the type
      found by the Commission in this case in the management of the Structural Funds (points 30 to 36 and 44 to 45 above), and,
      secondly, no change could be made to the financing plans after 31 December 1999, because, as stated in point 38, those plans
      were definitely closed.
      
      
        63.      I therefore consider that the fourth plea also is unfounded and should be dismissed together with the entire application.
      
      
      V –  Costs
        64.      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 Commission has applied for those costs to be awarded and, given
      what I have said regarding the outcome of the application, I believe that the application should be granted.
      
       
      VI –  Conclusion In the light of the considerations set out above, I therefore propose that the Court dismiss the application and order Ireland
      to pay the costs.
      
      
       1 –
         
         Original language: Italian.
      
      2 –
         
         OJ 1988 L 185, p. 9. That regulation is no longer in force and was replaced by Council Regulation (EC) No 1260/1999 of 21
            June 1999 laying down general provisions on the Structural Funds (OJ 1999 L 161, p. 1).
            
         
      
      3 –
         
         OJ 1993 L 193, p. 5.
            
         
      
      4 –
         
         Article 1 of Regulation No 2052/88 defines that objective as follows: ‘promoting the development and structural adjustment
            of regions whose development is lagging behind’.
            
         
      
      5 –
         
         OJ 1988 L 374, p. 1. That regulation is no longer in force and was replaced by Council Regulation (EC) No 1260/1999 of 21
            June 1999 laying down general provisions on the Structural Funds (OJ 1999 L 161, p. 1).
            
         
      
      6 –
         
         OJ 1993 L 193, p. 20.
            
         
      
      7 –
         
         OJ 1997 L 290, p. 1. That regulation is no longer in force and was replaced by Commission Regulation (EC) No 438/2001 of 2
            March 2001 laying down detailed rules for the implementation of Council Regulation (EC) No 1260/1999 as regards the management
            and control systems for assistance granted under the Structural Funds (OJ 2001 L 63, p. 21).
            
         
      
      8 –
         
         The definition of the term ‘audit trail’ laid down by the Court of Auditors of the EC (Glossary of external control of public
            finances, Court of Auditors of the EC, 1989).
            
         
      
      9 –
         
         OJ 1990 L 170, p. 36. That regulation is no longer in force and was replaced by Commission Regulation (EC) No 643/2000 of
            28 March 2000 on arrangements for using the euro for the purposes of the budgetary management of the Structural Funds (OJ
            2000 L 78 p. 4).
            
         
      
      10 –
         
         OJ 1994 L 250, p. 12.
            
         
      
      11 –
         
         C(94) 3226 of 29 November 1994.
            
         
      
      12 –
         
         C(94) 1972 of 29 July 1994.
            
         
      
      13 –
         
         C(94) 2613 of 15 November 1994.
            
         
      
      14 –
         
         The text of the report, annexed to the contested decision, is set out in Annex 4 to the application.
            
         
      
      15 –
         
         Case C-55/91 Italy  v Commission [1993] ECR I-4813, paragraph 67. My italics.
            
         
      
      16 –
         
         Community case-law has accorded the Commission the power to reduce or suspend Community assistance, inter alia, where funds
            have not been used in accordance with the general requirement of ‘sound financial management’ (see, for example, Case T-142/97
            Branco  v Commission [1998] ECR II-3567, paragraph 66), where  the ‘obligation towards the Commission to provide information and act in good faith’
            has been infringed (Case T-186/00 Conserve Italia v Commission [2003] ECR II-719, paragraph 50) and where national systems of checks are inadequate (see, for example, Case C-346/00 United Kingdom  v Commission [2003] ECR I‑9293, paragraphs 35 to 37).
            
         
      
      17 –
         
         I note, for example, that for the years 1994 to 1996 those calculations were made by means of extrapolations and not on the
            basis of definite data.
            
         
      
      18 –
         
         See Ireland: Community Support Framework 1994-1999 Objective 1, paragraph 19, first indent, annexed to Commission Decision
            94/626; Guidelines on financial closure of operational assistance (1994-1999) of the Structural Funds, SEC(1999) 1316 final,
            paragraph 6.1 and Commission Decisions C(94) 3226, Article 5, C(94) 1975, Article 5, and C(94) 2613, Article 6.
            
         
      
      19 –
         
         Court of Auditors of the EC, Glossary of external control of public finances, cited above.
            
         
      
      20 –
         
         See also Case T-154/01 Distilleria Palma  v Commission [2004] ECR II-0000, paragraph 58, Case T-293/01 Ineichen v Commission [2003] ECR-SC I-A-83 and II-441, paragraph 84, and Joined Cases T-191/98, T-212/98 and T-214/98 Atlantic Container Line and Others  v Commission [2003] ECR II-3275, paragraph 281.
            
         
      
      21 –
         
         Case T-142/97 Branco  v Commission [1998] ECR II-3567, paragraph 110. In cases of serious irregularity, the Court has even acknowledged that only the possibility
            that the beneficiary of assistance may be penalised ‘not by reduction of the aid by an amount corresponding to that irregularity
            but by complete cancellation of the aid can produce the deterrent effect required to ensure the proper management of [Community]
            resources’ (Case C-500/99 P Conserve Italia  v Commission [2002] ECR I-867, paragraph 100).
            
         
      
      22 –
         
         Case T-76/98 Hamptaux  v Commission [1999] ECR-SC I-A-59 and II‑303, paragraph 47. My italics.
            
         
      
      23 –
         
         See, in particular, Case C-339/00 Ireland  v Commission [2003] ECR I-11757, paragraph 81, and Case C-54/95 Germany  v Commission [1999] ECR I-35, paragraph 12.
            
         
      
      24 –
         
         See Ireland  v Commission, cited above, paragraph 81.
            
         
      
      25 –
         
         Case C-63/93 Duff and Others [1996] ECR I-569, paragraph 20.