Judgment of the General Court (Third Chamber) of 4 October 2018.Hellenic Republic v European Commission.EAGF and EAFRD — Expenditure excluded from financing — Expenditure incurred by the Hellenic Republic — Flat-rate financial corrections — Specific financial corrections — Area-related aid scheme — Concept of permanent pasture — Conditions for imposing a flat-rate correction of 25% — Flat-rate correction of 10% — Flat-rate correction of 5% — Article 31(4) of Regulation (EC) No 1290/2005 — Key controls — Ancillary controls — Multiannual measures — Long-term projects.Case T-272/16.

Judgment // 04/10/2018 // 5 min read
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Judgment of the General Court (Third Chamber) of 4 October 2018 –Greece v Commission

(Case T‑272/16)

(EAGF and EAFRD — Expenditure excluded from financing — Expenditure incurred by the Hellenic Republic — Flat-rate financial corrections — Specific financial corrections — Area-related aid scheme — Concept of permanent pasture — Conditions for imposing a flat-rate correction of 25% — Flat-rate correction of 10% — Flat-rate correction of 5% — Article 31 (4) of Regulation (EC) No 1290/2005 — Key controls — Ancillary controls — Multiannual measures — Long-term projects)

  1. Agriculture — EAGF and EAFRD financing — Clearance of accounts — Disallowance of expenses arising from irregularities in applying EU rules — Challenge by the Member State concerned — Burden of proof — Shared by the Commission and the Member State

(Council Regulation No 1290/2005, Art. 31)

(see paras 28, 29, 71, 110)

  1. Agriculture — Common agricultural policy — Direct support schemes — Common rules — Single payment scheme — Permanent pastures — Meaning — Surfaces with a marginal presence of ligneous plants — Included

(Council Regulations No 1782/2003 and No 73/2009; Commission Regulations No 796/2004, Art. 2, first para., point 2, and No 1120/2009, Art. 2(c))

(see paras 38-40, 49, 56)

  1. Agriculture — EAGF and EAFRD financing — Clearance of accounts — Financing of expenditure resulting from a misapplication of EU law — Condition — Error attributable to an EU institution

(Council Regulations No 1782/2003 and No 73/2009; Commission Regulations No 796/2004, Art. 2, first para., point 2, and No 1120/2009, Art. 2(c))

(see para. 57)

  1. Agriculture — EAGF and EAFRD financing — Clearance of accounts — Procedure — Subject-matter — Financial correction not constituting a penalty

(see para. 69)

  1. Agriculture — EAGF and EAFRD financing — Clearance of accounts — Disallowance of expenses arising from irregularities in applying EU rules — Assessment of losses suffered by the funds — Irregular expenses not capable of being determined with sufficient precision — Assessment based on flat-rate corrections — Lawfulness — Breach of principle of proportionality — None

(Council Regulation No 1290/2005, Art. 31)

(see paras 70, 72, 105, 111)

  1. Agriculture — EAGF and EAFRD financing — Grant of aid and premiums — Obligation on the Member States to organise an effective system of administrative and on-site inspections — Scope — Unreliable controls — Disallowance

(Council Regulation No 1782/2003, Arts 43 and 44; Commission Regulations No 796/2004, Art. 2, first para., point 2, and No 1120/2009, Art. 2(c))

(see paras 79, 82, 92)

  1. Agriculture — EAGF and EAFRD financing — Accounts clearance procedure — Conciliation procedure — Opinion of the conciliation body — No binding effect

(Commission Regulation No 885/2006, Art. 12(b) and (c))

(see para. 100)

  1. Acts of the institutions — Statement of reasons — Obligation — Scope — Account-clearing decision for expenses financed by EAGGF and EAFRD — Financial corrections — Addressee State having been closely associated with the process of drawing up the decision — Infringement of the duty to state reasons — None

(Art. 296 TFEU; Commission Regulation No 885/2006, Art. 11)

(see para. 127, 128, 178)

  1. EU law — Principles — Proportionality — Scope

(Art. 5(4) TEU)

(see para. 140)

  1. Agriculture — Common agricultural policy — EAFRD financing — Support for rural development — Eligibility of operations and expenses — Setting eligibility criteria at the national level — Member States’ discretion — Limits — Establishment of selection criteria for eligible projects — Application, by the authority responsible for evaluating projects of different criteria to those fixed by the authority managing the programme — Not permissible

(Council Regulation No 1698/2005, Recital 61 and Art. 71(2) and (3))

(see paras 153-155, 160, 163, 164)

  1. Agriculture — EAGF and EAFRD financing — Clearance of accounts — Limitation of refusal of financing — Twenty-four month period — Point from which time starts to run — Determination in the event of interim and provisional payments followed by a final payment of the sum

(Council Regulation No 1290/2005, Art. 31(4)(c))

(see paras 183-185, 193)

  1. EU law — Principles — Legal certainty — EU rules — Requirements of clarity and foreseeability

(see para. 194)

  1. Agriculture — Common agricultural policy — EAFRD financing — Support for rural development — Eligibility of operations and expenses — Setting eligibility criteria at the national level — Obligation on the Member States to put in place a penalties scheme in the event of failure to fulfil obligations — Scope

(Council Regulation No 1698/2005, Recital 61 and Art. 71(2) and (3); Commission Regulation No 817/2004, Art. 73)

(see paras 207-211, 213)

  1. Agriculture — EAGF and EAFRD financing — Integrated administration and control system for certain aid schemes — Reductions and exclusions where the rules on cross-compliance are not observed — Calculation — Applicability of two regulations laying down different calculation methods — Principle of retroactive application of the lightest penalty — Application of the provisions which are most favourable to the recipient

(Charter of Fundamental Rights of the European Union, Art. 49(1); Council Regulation No 2988/95, Art. 2(2); Commission Regulations No 809/2014, Art. 63, and No 65/2011, Art. 30)

(see paras 224-227, 231)

Re:

Action based on Article 263 TFEU seeking annulment in part of Commission Implementing Decision (EU) 2016/417 of 17 March 2016 excluding from European Union financing certain expenditure incurred by the Member States under the European Agricultural Guarantee Fund (EAGF) and under the European Agricultural Fund for Rural Development (EAFRD) (OJ 2016 L 75, p. 16).

Operative part

The Court:

  1. Dismisses the action;

  2. Orders the Hellenic Republic to pay the costs.

Agriculture and Fisheries