CELEX: 61981CC0310
Language: en
Date: 1983-09-29
Title: Opinion of Mr Advocate General Mancini delivered on 29 September 1983. # Ente Italiano di Servizio Sociale (EISS) v Commission of the European Communities. # Intervention by the European Social Fund - Compensation for reduction of payment. # Case 310/81.

OPINION OF MR ADVOCATE GENERAL MANCINI
      DELIVERED ON 29 SEPTEMBER 1983 (
            1
         )
      
         Mr President,
      
      
         Members of the Court,
      
      
               1. 
            
            
               The Court is asked to adjudicate upon a claim for damages brought by the Ente Italiano di Servizio Sociale [Italian Social Services Board, hereinafter referred to as “the Board”] against the Commission of the European Communities. The Board complains that it did not receive part of the funds allocated by the European Social Fund [hereinafter referred to as “the Fund”] and claims payment of the interest incurred through being unable to use the sum claimed when it was due.
               The facts are as follows. The Italian Republic had asked the Commission for a contribution from the Fund for a vocational training project for “workers of both sexes who are unemployed or in precarious employment, between 21 and 45 years of age”. By decision of 27 December 1973, the Commission accepted that request; however, it restricted the group of beneficiaries to “some 1150 unemployed young persons from the Mezzogiorno [Southern Italy], to be reemployed as social workers or assistants in the Mezzogiorno or in areas with a high proportion of immigrant workers from the Mezzogiorno”. The decision referred to the Board as the body responsible for the project and established the total amount of the assistance to be charged to the Fund at LIT 1726207592. That sum, spread over 1973 and 1974, represented half of the total costs envisaged, it being understood that the Italian Minister for Labour and National Insurance would take over the remaining 50%.
               Subsequently, the Italian Republic asked that the apportionment of the contribution between the two financial years mentioned be modified as a result of delays which had occurred in the execution of the project concerned. That request was accepted by the Commission by decisions of 30 December 1974 and 18 May 1976; but the first of those measures did not mention the estimated contribution for 1973, limiting itself to dividing the quota which had initially been allocated to that year between the years 1974 and 1975. A check carried out in loco between 25 June and 3 July 1974 by officials of the Commission and of the Ministry of Labour had revealed that the operations carried out in 1973 differed wholly or in part from those envisaged in the decision accepting the request for aid.
               That decision provided, I repeat, that the beneficiaries of the contribution should be “unemployed young persons from the Mezzogiorno”. However, the check demonstrated that:
               
                        (a)
                     
                     
                        many beneficiaries were long past their youth;
                     
                  
                        (b)
                     
                     
                        others were not unemployed because, pursuant to agreements made by the Board, they gave paid service as assistant social workers in outlying offices of the Ministry of Labour, Alitalia and other bodies;
                     
                  
                        (c)
                     
                     
                        others again were not from the Mezzogiorno;
                     
                  
                        (d)
                     
                     
                        the number, the content and the progress of the training courses did not accord with the programme laid down.
                     
                  The results of the check were explained by the Commission to the Minister for Labour in letters of 25 July 1974 and 16 January 1981.
               By an application dated 5 December 1981 the Board brought an action before the Court claiming that the Commission should be ordered to compensate it for the damage which it had suffered : (a) by not having received the sum which should have been paid to it in settlement from April 1978, pursuant to Article 2 (2) of the decision of 27 December 1973; (b) by having had to incur a substantial bank overdraft which caused the further damage of a huge burden of interest as a result of not having had the use of that sum when it was due.
            
         
               2. 
            
            
               First it is appropriate to recall the system of allocation of contributions by the Fund which was in force at the time. It is based on the Council Decision of 1 February 1971 on the reform of the European Social Fund (Decision 71/66/EEC, Official Journal, English Special Edition 1971 (I), p. 52), Regulation (EEC) No 2396/71 of the Council of 8 November 1971 implementing that decision, Regulation (EEC) No 2397/71 of the Council of 8 November 1971 on aid which may qualify for assistance from the European Social Fund (both in Official Journal, English Special Edition 1971, (III), at pp. 924 and 929 respectively) and Regulation (EEC) No 858/72 of the Council of 24 April 1972 on certain administrative and financial procedures for the operation of the European Social Fund (Official Journal, English Special Edition, 1972 (II), p. 353).
               To summarize, the Fund's financing procedure consists of the following steps : (a) requests for grants are submitted by the Member States to the Commission; (b) if it is of the view that the request falls within the objectives of the Fund and qualifies for priority, the Commission addresses a decision to the Member State, having first received the opinion of the Committee of the Fund. That decision is the parameter in the light of which projects are assessed and it imposes a series of obligations upon the claimant State. In particular the State undertakes to assume a financial burden equal to the sum. claimed from- -the Commission to meet the - cost of the projects; to assemble documentation on those projects and to check its accuracy; to claim payments on account from the Fund and the final balance based on the projects' state of progress; to facilitate the checks carried out by the Commission in order to ascertain whether the projects completed or in the course of completion comply with the provisions applicable in the matter.
               It follows that, to be granted the refund of the costs incurred, the Board should have acted so that the projects entrusted to it complied with the Commission's decisions and with the Community rules on assistance from the Fund. Moreover compliance may be verified on the basis of the information collected by the Italian Government and by means of checks on the spot.
            
         
               3. 
            
            
               In its reply the Board has specified that its application is an action for damages pursuant to the second paragraph of Article 215 of the EEC Treaty. That relieves me from having to express my opinion upon the objection of inadmissibility put forward by the Commission and based on the assumption that the application was an action for failure to act under Article 175 of the EEC Treaty.
               The principles which govern the liability of Community institutions have been stated several times by the Court. For liability to arise, the Court has said, it is necessary to demonstrate “the unlawfulness of the acts alleged against the institution, the fact of damage, and the existence of a direct link in the chain of causality between the wrongful act and the damage complained of” (see, most recently, the judgment of 4 March 1980 in Case 49/79 Pool v Council, [1980] ECR 569, at paragraph 7 of the decision).
               The Board states that the damage is in re because it had a legitimate expectation of drawing the sums advanced. Its argument that the Commission's conduct is illegal is more complex. Its representative claims that the Commission has no discretion in approving requests for grants submitted to it by Member States; therefore it may be said that, when it does so, it accepts them without reservation and that the projects which the States submit to it become an integral part of the Commission's decisions. The decision of 17 December 1973 should be read in that light; it will be clear that the observations made by Community officials regarding the operations carried out by the Board are not reasoned. In fact the Board scrupulously observed the procedures for the project which the Italian Government had annexed to its request. It was, on the other hand, the Commission which, having approved that request, acted unlawfully when it exploited those observations to reduce the allocation which had been provided for.
               That contention appears to me to be fundamentally ill founded. In the first place it is not true that the Commission has no discretion in accepting the requests of Member States. The contrary is true and for proof of that it suffices to refer to the rules governing intervention by the Fund. As we have seen, in fact, they grant it a series of powers: to check whether the intervention requested falls within the areas which the Council reserves to the competence of the Fund; to evaluate its compatibility with the economic and social objectives of the EEC; to accept in whole or in part the States' requests; to specify the conditions under which the contribution is granted. In this case, there is no doubt that the Italian request was only partially accepted, since the Commission restricted the much wider category of persons contemplated in the request to “unemployed young persons from the Mezzogiorno”.
               Since the premise upon which the Board's reasoning is based falls, obviously all its corollaries fall. Thus, reference to the projects of the Member State are out of place because the frame of reference for any appraisal of the procedures and the content of the operations is, and can only be, the Community decision. Similarly, the comment that officials of the Commission “erroneously” assessed the activities carried out by the Board is baseless.
               On the contrary, the Board's contention in that second point is expressly contradicted by a precise legislative provision. Article 5 (2) of the aforementioned Regulation No 858/72, governing the Commission's power to carry out checks, provides that servants authorized to make investigations on the spot may check: “(a) that the administrative practices conform to Community rules; (b) that the necessary supporting documents exist and tally with the operations financed by the Fund; (c) the manner in which the operations ... are carried out and supervised”. The same regulation provides that the Commission may suspend payment of contributions if a check reveals either irregularities or an essential change in the nature or the details of an operation (Article 4 (3)).
               It has been proved that the difference between the sum estimated and that effectively paid to the Board arises solely from the differences encountered in the course of the check to which I have frequently referred. The Board is solely responsible for those differences. The allegations of unlawful conduct which it makes against the Commission are therefore unjustified.
            
         
               4. 
            
            
               For the reasons set out above, I propose that the Court reject the application submitted by the Ente Italiano di Servizio Sociale on 5 December 1981 against the Commission of the European Communities and, pursuant to Article 69 (2) of the Rules of Procedure, order the unsuccessful party to pay the costs.
            
         (
            1
         )	Translated from the Italian.