Kingdom of Spain v European Commission.
Date: 2014-09-04
10. As the Spanish authorities expressed their disagreement with the winding-up proposals by three letters of 16 February 2009 and by letter of 15 July 2008 respectively, a hearing was held on 11 March 2010.
11. The Kingdom of Spain provided the Commission with additional information by letter of 26 March 2010 and by four e-mails of 3 May 2010.
12. On 13 September 2010, the Commission adopted the decision at issue.
42. It must be borne in mind that, under Article 256 TFEU and the first paragraph of Article 58 of the Statute of the Court of Justice of the European Union, an appeal is limited to points of law and must be based on the grounds of lack of competence of the General Court, breach of procedure before it which adversely affects the interests of the appellant, or infringement of EU law by the General Court (see, to that effect, Case C‑136/92 P Commission  v Brazzelli Lualdi and Others  [1994] ECR I‑1981, paragraph 47).
43. Furthermore, it follows from Article 256 TFEU and the first paragraph of Article 58 of the Statute of the Court of Justice and also from Articles 168(1)(d) and 169(2) of the Rules of Procedure of the Court of Justice that an appeal must indicate precisely the contested elements of the judgment which the appellant seeks to have set aside and also the legal arguments specifically advanced in support of the appeal (see, inter alia, the judgments in Bergadem and Goupil  v Commission , C‑352/98 P, EU:C:2000:361, paragraph 34; Interporc  v Commission , C‑41/00 P, EU:C:2003:125, paragraph 15; and Reynolds Tobacco and Others  v Commission , C‑131/03 P, EU:C:2006:541, paragraph 49).
44. Thus, where an appeal merely repeats or reproduces verbatim the pleas in law and arguments submitted to the General Court, including those based on facts expressly rejected by that Court (see, inter alia, Interporc  v Commission , EU:C:2003:125, paragraph 16), it fails to satisfy the requirement to state reasons under those provisions. Such an appeal amounts to no more than a request for a re-examination of the application submitted to the General Court, a matter which falls outside the jurisdiction of the Court of Justice (see, inter alia, Reynolds Tobacco and Others  v Commission , EU:C:2006:541, paragraph 50).
45. However, provided that an appellant challenges the interpretation or application of EU law by the General Court, the points of law examined at first instance may be discussed again in the course of an appeal (judgment in Salzgitter  v Commission  C‑210/98 P, EU:C:2000:397, paragraph 43). If an appellant could not thus base its appeal on pleas in law and arguments already relied on before the General Court, an appeal would be deprived of part of its purpose ( Interporc  v Commission , EU:C:2003:125, paragraph 17).
49. An appellant is in fact entitled to lodge an appeal relying, before the Court of Justice, on pleas arising from the judgment under appeal itself which seek to criticise, in law, its merits (judgment in Stadtwerke Schwäbisch Hall and Others  v Commission , C‑176/06 P, EU:C:2007:730, paragraph 17).
55. It is settled case-law that, for the purposes of ensuring a uniform application and interpretation of the same text, the version of which in one European Union language diverges from those in other languages, the provision in question must be interpreted by reference to the purpose and general scheme of the rules of which it forms part (see, inter alia, DR and TV2 Danmark , C‑510/10, EU:C:2012:244, paragraph 45 and the case-law cited).
56. As for the context of Article H(2) of Annex II to Regulation No 1164/94, as amended, it must be stated that the Cohesion Fund was created in accordance with the second paragraph of Article 130d EC by Regulation No 1164/94 in its original version.
57. Article H(2) of Annex II to that regulation in its original version merely provides that, if there is an irregularity or one of the conditions in the decision to grant assistance is not satisfied, the Commission may reduce, suspend or cancel assistance in respect of the measures concerned without the exercise of that power being subject to a time-limit.
58. As was stated in paragraph 3 above, the original version of that regulation was amended, inter alia, by Regulation No 1265/1999, which replaced the text of Article H of Annex II with the text cited in paragraph 5 above, of which the first subparagraph of paragraph 2 is the subject of this dispute. That amendment was made on the basis of Article 16(1) of Regulation No 1164/94 in its original version, according to which the Council of the European Union, acting on a proposal from the Commission in accordance with the procedure laid down in Article 130d EC, must re-examine that regulation before the end of 1999.
59. It is clear from the preamble to Regulation No 1265/1999, in particular recitals 1, 2, 4 and 5, that Annex II was amended, in order to make the Cohesion Fund more effective, to simplify the system of financial management while making provision for improved checks that expenditure has actually been incurred and to improve and to put on a more systematic basis cooperation between the Commission and the Member State concerned on the checking of projects.
60. Regulation No 1164/94 thus amended was applicable during the period from 2000 to 2006. Regulations No 1264/1999 and No 1265/1999, having amended Regulation No 1164/94 in its original version, came into force on 1 January 2000 and, in accordance with Article 1(11) of Regulation No 1264/1999, Regulation No 1164/94 as amended in 1999 was to be re-examined at the latest by 31 December 2006.
61. Regulation No 1386/2002 was adopted by the Commission in order to lay down the procedure for implementing Regulation No 1164/94, as amended. According to Article 23, Regulation No 1386/2002 came into force on 7 August 2002 and applies by virtue of Article 1 to projects first approved after 1 January 2000.
62. It follows from Article 18(3) of Regulation No 1386/2002, which refers expressly to Article H(2) of Annex II to Regulation No 1164/94, as amended, that the Commission has, by virtue of Article H(2), a three-month period to take a decision on financial corrections, and that period begins to run from the date of the hearing.
63. All the various language versions of Article 18(3) of Regulation No 1386/2002 concur in that respect.
64. During the same period as that referred to in paragraph 60 above, Council Regulation (EC) No 1260/1999 of 21 June 1999 laying down general provisions on the Structural Funds (OJ 1999 L 161, p. 1), which in accordance with its Article 2 applied to the European Regional Development Fund, the European Social Fund, the European Agricultural Guidance and Guarantee Fund, Guidance Section, and the Financial Instrument for Fisheries Guidance, established in Article 39(3) that ‘[a]t the end of the period set by the Commission, the Commission may, if no agreement has been reached and the Member State has not made the corrections and taking account of any comments made by the Member State, decide within three months’ to reduce the payment on account or make the financial corrections required by cancelling all or part of the contribution of the Funds to the assistance concerned.
65. As regards the wording of that provision in its different language versions, there are no divergences comparable to those described in paragraphs 53 and 54 above.
66. In terms comparable to those in Article 18(3) of Regulation No 1386/2002, Article 5(3) of Commission Regulation (EC) No 448/2001 of 2 March 2001 laying down detailed rules for the implementation of Council Regulation (EC) No 1260/1999 as regards the procedure for making financial corrections to assistance granted under the Structural Funds (OJ 2001 L 64, p. 13) provides that, whenever a Member State objects to the observations made by the Commission and a hearing takes place under the second subparagraph of Article 39(2) of Regulation (EC) No 1260/1999, ‘the three-month period within which the Commission may take a decision under Article 39(3) of that Regulation shall begin to run from the date of the hearing’.
67. Similarly, as regards the legal issue which is the subject-matter of the present dispute, the drafting of that provision does not present any divergences in the different language versions of that regulation.
68. Regulation No 1260/1999 was repealed by Council Regulation (EC) No 1083/2006 of 11 July 2006 laying down general provisions on the European Regional Development Fund, the European Social Fund and the Cohesion Fund (OJ 2006 L 210, p. 25), which, according to Article 1(1), applies to those Funds without prejudice to the specific provisions laid down by the regulations governing those Funds.
69. The financial corrections which may be adopted by the Commission are now subject to rules that are common to those three Funds; these are set out in Articles 99 to 102 of that regulation.
70. Article 100(5) of Regulation No 1083/2006, entitled ‘Procedure’, provides that ‘[i]n the absence of agreement, the Commission shall take a decision on the financial correction within six months of the date of the hearing taking account of all information and observations submitted during the course of the procedure. If no hearing takes place, the six-month period shall begin to run two months after the date of the letter of invitation sent by the Commission’.
71. In that connection, it must be stated first that, as regards the issue between the parties to the present dispute, Article 100(5) is drafted in identical terms in the different language versions of Regulation No 1083/2006, and secondly that Council Regulation (EC) No 1084/2006 of 11 July 2006 establishing a Cohesion Fund and repealing Regulation (EC) No 1164/94 (OJ 2006 L 210, p. 79) contains no provision relating to the procedure for financial corrections, the same being true of Commission Regulation (EC) No 1828/2006 of 8 December 2006 setting out rules for the implementation of Council Regulation (EC) No 1083/2006 and of Regulation (EC) No 1080/2006 of the European Parliament and of the Council on the European Regional Development Fund (OJ 2006 L 371, p. 1).
72. The same applies to Regulation (EU) No 1303/2013 of the European Parliament and of the Council of 17 December 2013 laying down common provisions on the European Regional Development Fund, the European Social Fund, the Cohesion Fund, the European Agricultural Fund for Rural Development and the European Maritime and Fisheries Fund and laying down general provisions on the European Regional Development Fund, the European Social Fund, the Cohesion Fund and the European Maritime and Fisheries Fund and repealing Council Regulation (EC) No 1083/2006 (OJ 2013 L 347, p. 320). Article 145(6) of that regulation provides that ‘[i]n order to apply financial corrections the Commission shall take a decision, by means of implementing acts, within six months of the date of the hearing, or of the date of receipt of additional information where the Member State agrees to submit such additional information following the hearing. The Commission shall take account of all information and observations submitted during the course of the procedure. If no hearing takes place, the six month period shall begin to run two months after the date of the letter of invitation to the hearing sent by the Commission’.
73. The terms of that provision are comparable in the different language versions of Regulation No 1303/2013.
74. Moreover, Regulation (EU) No 1300/2013 of the European Parliament and of the Council of 17 December 2013 on the Cohesion Fund and repealing Council Regulation (EC) No 1084/2006 (OJ 2013 L 347, p. 281) does not govern the procedure applicable to financial corrections. The same applies to the draft Commission Delegated Regulation (EU) supplementing Regulation No 1303/2013, which was sent to the European Parliament on 3 March 2014.
75. It is clear from the foregoing that only the rules applicable to the initial period from 1994 to 1999 do not set a time-limit for the Commission to adopt a decision on financial corrections.
76. Conversely, it must be noted that from 2000, both Regulation No 1260/1999 and Regulations No 1083/2006 and No 1303/2013, which entered into force respectively on 1 January 2007 and 1 January 2014, and the various regulations implementing those regulations adopted by the Commission, do set such a time-limit.
77. Given that Article H(2) of Annex II to Regulation No 1164/94, as amended, in force since 1 January 2000, varies depending on the language versions of that regulation, it is necessary to determine the exact meaning by reference to the context of that provision, that is to say, in the present case, similar regulations relating the management of the European Union’s Funds.
78. All the applicable regulations in this area since 2000 support the argument put forward by the Kingdom of Spain that the Commission must adopt the decision on financial corrections within a certain period; the calculation of that period may indeed vary depending on the rules in force, but provision is made for it unambiguously by the European Union legislature.
79. The fact that Regulation No 1260/1999 does not apply to the Cohesion Fund as such does not preclude such an interpretation, since the text of Article 39(3) of that regulation and the text of Article H(2) of Annex II to Regulation No 1164/94, as amended, are almost identical, and there appears to be no basis for finding that, in the second regulation, the time-limit should relate to the absence of an agreement between the parties, while in the first regulation, that time-limit relates to the taking of a decision by the Commission.
80. Such an interpretation is all the more justified since all the earlier regulations, enacted both by the Council and by the Commission, confirm that the Commission is obliged to comply with a certain time-limit when it adopts a decision on financial corrections.
81. In addition, concerning more particularly Regulation No 1386/2002, the purpose of which is to lay down the procedure for implementing Regulation No 1164/94, as amended, of which the provision at issue in the present dispute forms part, the view advanced by the Commission, and affirmed by the General Court in paragraphs 33 and 36 of the judgment under appeal, that Article 18 of Regulation No 1386/2002 merely fixes the date when the time-limit for taking a decision under Article H(2) of Annex II to Regulation No 1164/94, as amended, starts to run, cannot be accepted, since the European Union legislature could not have set the starting point for a time-limit for adopting a decision under Article H if such a time-limit did not exist.
82. Consequently, it must be held that, as from 2000, the Commission is obliged to comply with a time-limit for adopting a decision on financial corrections.
83. That conclusion, derived from a schematic interpretation of the relevant regulations both of the Council and of the Commission, is, moreover, further supported by the wording of the passage on page 63 of Communication 2011/C 332/01 from the Commission itself, relied on by the Kingdom of Spain in support of its appeal, as is apparent from paragraph 34 above.
84. That conclusion is also in keeping with the objective, set out in the first paragraph of Article 161 EC (now Article 177 TFEU), that the European Union legislature is to lay down ‘the general rules applicable to [the Funds]’, and that approach must necessarily lead to harmonisation of the relevant applicable rules. Such a step is all the more necessary in relation to the rules of procedure. In that regard, it must be noted that, since 2007, the rules of procedure in particular have been effectively standardised by a Council regulation laying down general provisions for all the European Union Funds. The rules of procedure contained in that regulation fully support the interpretation that the adoption of a decision on financial correction is subject to a time-limit predetermined by the legislature.
85. Furthermore, that interpretation will not affect the coherence and effectiveness of the procedure for financial corrections laid down by EU law, as the time-limit laid down by the legislature allows the Commission a sufficient period in which to adopt its decision whilst taking due account of its consultations with the Member State concerned.
86. On the contrary, as is apparent from recital 5 in the preamble to Regulation No 1265/1999, the procedure which the legislature of the European Union has put in place for financial corrections is based on cooperation between the Member State concerned and the Commission, which must be founded on a balance between the rights and obligations of the parties. It would, in those circumstances, be contrary to that requirement for balance between the rights and obligations of the parties in this procedure if the Member State is obliged to respect certain time-limits, while the Commission is not.
88. Concerning, in this case, decisions with important budgetary implications, it is in the interests both of the Member State concerned and of the Commission that the length of the procedure for financial corrections be predictable, which implies the setting of a predetermined time-limit for adopting the final decision. It should also be stated that failing to comply with the time-limit laid down for adopting a decision on financial corrections is not compatible with the general principle of sound administration.
93. As is clear from paragraphs 56 to 89 above, the adoption by the Commission of a decision on financial corrections, as from 2000, is subject to the observance of a certain time-limit.
94. The length of that time-limit varies depending on the applicable rules.
95. Thus, pursuant to the combined provisions of Article H(2) of Annex II to Regulation No 1164/94, as amended, and Article 18(3) of Regulation No 1386/2002, the period at the end of which the Commission must adopt a decision on financial corrections was three months from the date of the hearing.
96.  In accordance with Article 100(5) of Regulation No 1083/2006, the Commission is to take a decision on the financial correction within six months of the date of the hearing, and, if no hearing takes place, the six-month period is to begin to run two months after the date of the letter of invitation sent by the Commission.
97. In accordance with Article 145(6) of Regulation No 1303/2013, the Commission must take a decision within six months of the date of the hearing or of the date of receipt of additional information where the Member State agrees to submit such additional information following the hearing. If no hearing takes place, the six-month period will begin to run two months after the date of the letter of invitation to the hearing sent by the Commission.
98. In that regard, it must be made clear that, although Regulation No 1265/1999, which amended Regulation No 1164/94, entered into force on 1 January 2000, it is nevertheless apparent from the second paragraph of Article 108 of Regulation No 1083/2006 that Article 100 of that regulation is to apply from 1 January 2007, including to programmes from before the period from 2007 to 2013. Indeed, that is in keeping with the principle that rules of procedure apply immediately after their entry into force.
99. Concerning Article 145 of Regulation No 1303/2013, under the terms of the second paragraph of Article 154 of that regulation, it applies with effect from 1 January 2014.
102. Contrary to what the Commission has claimed, the fact that the relevant rules do not expressly provide that, in the event of non-compliance with the time-limit laid down for adopting a decision on financial corrections, the Commission may no longer adopt such a decision is irrelevant, since the setting of a time-limit within which a decision of that nature must be adopted is in itself sufficient.
103. In addition, failure to comply with the procedural rules relating to the adoption of an act adversely affecting an individual constitutes an infringement of essential procedural requirements (see, to that effect, the judgment in United Kingdom  v Council , 68/86, EU:C:1988:85, paragraphs 48 and 49), which it is a matter for the Union judicature to raise, even of its own motion (see, to that effect, the judgments in Commission  v ICI , C‑286/95 P, EU:C:2000:188, paragraph 51, and Commission  v Solvay , C‑287/95 P and C‑288/95 P, EU:C:2000:189, paragraph 55). The fact that the Commission did not adopt the decision at issue within the period set by the Union legislature constitutes an infringement of essential procedural requirements.