Judgment of the Court (Sixth Chamber) of 25 May 1993.
Foyer culturel du Sart-Tilman ASBL v Commission of the European Communities.
European Social Fund - Applciation for the annulment of decisions reducing financial assistance initially granted.
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Foyer culturel du Sart-Tilman ASBL v Commission of the European Communities.
Social policy ° European Social Fund ° Contribution to the financing of vocational training operations ° Decision to reduce assistance initially granted ° Opportunity for the Member State concerned to comment before the adoption of a decision ° Essential procedural requirement ° Infringement ° Unlawful
(Council Regulation No 2950/83, Art. 6(1))
In the procedure for granting financial assistance from the European Social Fund for vocational training and guidance operations carried out in a Member State, the latter is the Fund' s sole interlocutor and may incur liability in so far as it certifies the accuracy of the facts and accounts contained in the payment claims submitted by the recipients and may even be required to guarantee the successful completion of the operations financed. In view of the central role of, and the importance of the responsibilities assumed by, that Member State regarding the presentation and monitoring of financing in respect of training operations, the opportunity, provided for by Article 6(1) of Regulation No 2950/83, to comment before the adoption of a final decision reducing the financial assistance initially granted constitutes an essential procedural requirement the infringement of which renders that decision void.
In Case C-199/91,
Foyer Culturel du Sart-Tilman Asbl, in liquidation, a non-profit-making association governed by Belgian law, represented by its liquidators, Michel Mersch and Pierre Cavenaille, of the Liège Bar, with an address for service in Luxembourg at the Chambers of Maître Schmitt, 62 Avenue Guillaume,
Commission of the European Communities, represented by Marie Wolfcarius and Nicholas Khan, of its Legal Service, acting as Agents, assisted by Jean-Luc Fagnart, of the Brussels Bar, with an address for service in Luxembourg at the office of Nicola Annecchino, also of its Legal Service, Wagner Centre, Kirchberg,
APPLICATION for the annulment of Commission decisions notified to the applicant on 7 June 1991, whereby expenditure relating to applications for financial assistance was recognized as eligible only to the extent of BFR 571 762, and for an order that the defendant pay the applicant the sum of BFR 21 707 839 in respect of its final payment claims,
THE COURT (Sixth Chamber),
composed of: C.N. Kakouris, President of the Chamber, J.L. Murray, G.F. Mancini, F.A. Schockweiler and P.J.G. Kapteyn, Judges,
Advocate General: M. Darmon,
Registrar: H.A. Ruehl, Principal Administrator,
having regard to the Report for the Hearing,
after hearing oral argument from the parties at the hearing on 19 November 1992, at which Foyer Culturel du Sart-Tilman was represented by Koenraad Tanghe, of the Liège Bar,
after hearing the Opinion of the Advocate General at the sitting on 17 December 1992,
gives the following
1 By application lodged at the Court Registry on 30 July 1991, Foyer Culturel du Sart-Tilman Asbl, a non-profit-making association, in liquidation (hereinafter "Sart-Tilman"), brought an action under the second paragraph of Article 173 of the EEC Treaty for the annulment of the Commission decisions of 18 October 1990, notified to the applicant on 7 June 1991 ("the contested decisions"), reducing the financial assistance which the European Social Fund ("the Fund") had initially granted for various training projects submitted on behalf of Sart-Tilman, in relation to files Nos 84/3643/B6, 85/0077/B4, 85/0186/B6, 86/0274/B2, 87/0295/B2 and 87/0296/B2, and for an order that the Commission pay it the sum of BFR 21 707 839 by way of its final payment claims in respect of the financial assistance granted.
2 Pursuant to Article 1(2)(a) of Council Decision 83/516/EEC of 17 October 1983 on the tasks of the European Social Fund (OJ 1983 L 289, p. 38), the Fund contributes in particular to the financing of operations concerning vocational training and guidance.
3 The national body governed by public law which is responsible for joint financing of the project applies for assistance to the Fund in the name of the Member State concerned and on behalf of the promoter of the project.
4 Under Article 5 of Council Regulation (EEC) No 2950/83 of 17 October 1983 on the implementation of Decision 83/516 (OJ 1983 L 289, p. 1), the approval by the Fund of an application for financing is to be followed by payment of an advance in respect of the financial assistance granted.
5 Under Article 5(4), final payment claims are to contain a detailed report on the content, results and financial aspects of the relevant operation. The Member State concerned must certify the accuracy of the facts and accounts in payment claims.
6 When Fund assistance is not used in conformity with the conditions laid down in the decision granting approval, the Commission may, pursuant to Article 6(1) of the regulation, suspend, reduce or withdraw the aid after giving the relevant Member State an opportunity to comment. Pursuant to Article 6(2), sums paid which are not used in accordance with the conditions laid down in the decision granting approval are to be refunded and the Member State concerned is to have secondary liability for the repayment of the sums of which unwarranted payment was made for operations whose successful completion it guaranteed under Article 2(2) of Decision 83/516.
7 In the present case, the Belgian Ministry of Employment and Labour ("the Ministry") submitted to the Fund in the name of Belgium and on behalf of Sart-Tilman several applications for assistance for a number of training operations proposed by Sart-Tilman.
8 By successive decisions, the Commission granted Sart-Tilman aid from the Fund, in respect, inter alia, of files Nos 84/3643/B6, 85/0077/B4, 85/0186/B6, 86/0274/82, 87/0295/B2 and 87/0296/B2.
9 With respect to file No 84/3643/B6, the Commission sent Sart-Tilman an order dated 30 November 1988 requiring the sum of BFR 926 513 to be repaid.
10 In December 1988, the Ministry informed the Commission of the winding up of Sart-Tilman and asked the Commission to stop all payments and inform it of the sums not yet disbursed in respect of training operations.
11 On 30 October 1989, the Commission drew up a statement showing a negative balance of BFR 1 096 053 in respect of all the operations. By the decisions of 18 October 1990 to which these proceedings relate, addressed by the Commission to the Ministry, the Commission determined that there were ineligible expenses of BFR 11 558 135 and eligible expenses of BFR 12 129 897, yielding a positive balance in favour of Sart-Tilman of BFR 571 762 in respect of all the approved files. The Commission stated that that sum would be deposited forthwith in the Ministry' s account.
12 On 7 June 1991, the Ministry notified the contested Commission decisions to the liquidators of Sart-Tilman.
13 With respect to file No 86/0274/B2, in its reply Sart-Tilman accepted the Commission' s claims and there is now therefore no dispute concerning that file.
14 Reference is made to the Report for the Hearing for a fuller account of the facts of the case, the procedure and the pleas in law and arguments of the parties, which are mentioned or discussed hereinafter only in so far as is necessary for the reasoning of the Court.
15 The Commission contends that an action for annulment must be confined to the annulment of the measure to which objection is taken. The present action is therefore, in its submission, inadmissible to the extent to which it seeks an order that the Commission pay Sart-Tilman the balance of the financial assistance to which it claims to be entitled.
16 Sart-Tilman considers, on the contrary, that that objection of inadmissibility is devoid of substance since Article 174 of the Treaty enables the Court to restore the applicant to the status of lawful creditor under the provisions of the regulation.
17 In reviewing legality under Article 173 of the Treaty, the Court may only annul the measure in dispute or dismiss the application and cannot therefore order an institution to pay a sum of money. It is incumbent on the Commission, by virtue of Article 176 of the Treaty, to take the necessary measures to comply with a judgment granting annulment (see, in particular, the judgment in Case 53/85 AKZO v Commission  ECR 1965, paragraph 23).
18 The claim that the Commission be ordered to pay BFR 21 707 839 must therefore be rejected as inadmissible.
19 According to the Commission, the application is also inadmissible to the extent to which it criticizes the decision on file No 84/3643/B6 which merely confirms the order for recovery of BFR 926 513 which it sent to Sart-Tilman on 30 November 1988.
20 Sart-Tilman does not deny that it received that order from the Commission on 5 January 1989 but submits that it could not treat such an order as a Commission decision, particularly since the Commission was not entitled to notify it to Sart-Tilman otherwise than through the intermediary of the Member State concerned.
21 It must be observed that the recovery order clearly purports to be a Commission measure definitively reducing the financial assistance initially granted to Sart-Tilman and, in addition, requiring the latter to reimburse part of the advance paid. That order thus produces legal effects such as to affect the interests of Sart-Tilman by changing its legal position and must therefore be regarded, in relation to file No 84/3643/B6, as a decision which may be the subject of an action for annulment.
22 The legal nature of that decision is entirely unaffected by the fact that it was brought directly to Sart-Tilman' s notice by the Commission and not by the Member State concerned, the Fund' s sole interlocutor (see the judgment in Case 310/81 EISS v Commission  ECR 1341, paragraph 15). It is undisputed that that decision is not in issue before the Court.
23 On the other hand, the measure adopted by the Commission in respect of file No 84/3643/B6 on 18 October 1990 and notified to Sart-Tilman on 7 June 1991 by the Ministry does not, since it merely confirms the initial decision taken for the purpose of disposing of that file, affect Sart-Tilman' s position and does not therefore constitute a decision against which an action for annulment may be brought.
24 Consequently, the present action must be declared partially inadmissible in so far as it is directed against a measure which merely confirms a previous decision (see, in particular, the judgment in Joined Cases 166/86 and 220/86 Irish Cement Limited v Commission  ECR 6473, paragraph 16).
Alleged failure to consult the Member State concerned
25 In support of its action for annulment, Sart-Tilman claims first that the Commission infringed Article 6(1) of the regulation since, contrary to the requirements of that provision, it did not, before adopting the contested decisions, give the Member State concerned an opportunity to comment.
26 According to the Commission, on the other hand, that provision does not lay down a formal consultation procedure. It observes that, in view of the frequent informal contacts between the staff responsible for the Fund and the national authorities regarding specific operations by Sart-Tilman, those authorities had an opportunity to comment before the adoption of the contested decisions.
27 The Court observes that, following two requests for information from the Belgian authorities, the Fund, by letter of 30 June 1988, clearly indicated with regard to file No 85/0077/B4 that, of the 189 unemployed adults concerned, 12 did not meet the requirement of having been out of work for more than 12 months laid down in the decision granting approval and that the financing had therefore been calculated on the basis of 177 trainees, thus entailing recovery of part of the advance previously paid.
28 Furthermore, file No 85/0077/B4 had already been the subject of correspondence between the Commission and the national authorities, who were consequently able to identify the ineligible part of the expenses.
29 A letter from the Ministry, responding to a request for information from the Commission, shows that the 12 job-seekers concerned had been unemployed for between one and eight months at the start of the training operation.
30 In those circumstances, the national authorities were in a position, before the adoption of the contested decision reducing the aid, to comment on both the principle and the amount of the reduction which the Commission intended making in relation to file No 85/0077/B4.
31 Sart-Tilman' s plea in law concerning file No 85/0077/B4 must therefore be rejected.
32 However, there is nothing in the documents before the Court to show that, in the case of files Nos 85/0186/B6, 87/0295/B2 and 87/0296/B2, the Belgian authorities were given an opportunity, before the adoption of the contested decisions reducing the aid, to comment on both the principle and the amount of the reductions in Community financial assistance which the Commission intended making.
33 As stated above, the Member State concerned is the Fund' s sole interlocutor. It may even incur liability in so far as it certifies the accuracy of the facts and accounts contained in the final payment claims and may even be required to guarantee that the training operations will be successfully completed.
34 In view of the central role of, and the importance of the responsibilities assumed by, the relevant Member State regarding the presentation and monitoring of financing in respect of training operations, its opportunity to comment before the adoption of a final decision reducing the aid constitutes an essential procedural requirement the infringement of which renders the contested decisions void (see the judgments in Case C-291/89 Interhotel v Commission  ECR I-2257, paragraph 17, Case C-304/89 Oliveira v Commission  ECR I-2283, paragraph 21, and Case C-157/90 Infortec v Commission  ECR I-3525, paragraph 20).
35 It follows that the decisions reducing the aid in relation to files Nos 85/0186/B6, 87/0295/B2 and 87/0296/B2 must be annulled, without there being any need to consider Sart-Tilman' s other pleas in law concerning them.
Alleged failure to state reasons for the decision on file No 85/0077/B4
36 Sart-Tilman also considers that the decision on file No 85/0077/B4 is excessively concise and does not disclose the Fund' s reasons for reducing its aid.
37 The very wording of the contested decision makes it clear that the aid was reduced by reference to the number of trainees who were not long-term unemployed persons.
38 Sart-Tilman' s plea in that regard must therefore be rejected.
Alleged infringement, by the decision on file No 85/0077/B4, of the conditions on which the assistance was approved
39 Sart-Tilman also claims, in contesting the decision reducing the aid relating to file No 85/0077/B4, that the Fund gave its agreement for the training of long-term unemployed persons without reference to age and that it was only after commencement of the training operation that the Fund gave notice that its assistance would be limited to unemployed persons aged over 25.
40 It need merely be pointed out that both the application for assistance and the decision granting approval expressly indicated that the training operation concerned was for persons aged 25 and over.
41 This plea must therefore be rejected.
Alleged illegality of the set-off effected by the contested decisions
42 Sart-Tilman also claims that, by the contested decisions, the Commission illegally set off the former' s claims against its debts in respect of the various files concerned, whereas it should have paid over the sums owing to Sart-Tilman and sought recovery of the sums unduly paid. In its view, the set-off effected by the Commission was also in direct breach of the general principle of the ranking of claims which applies in liquidation proceedings.
43 It is clear from the foregoing findings that, of the contested decisions whose legality has been reviewed by the Court in these proceedings, there is only one which constitutes a claim by the Commission against Sart-Tilman.
44 Accordingly, the plea as to the illegality of the set-off effected by the Commission is devoid of purpose in these proceedings.
Decision on costs
45 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. Article 69(3) provides that the Court may order that the parties bear their own costs if each party succeeds on some and fails on other heads.
46 Since each party has succeeded on some and failed on other heads, they must be ordered to bear their own costs.
On those grounds,
THE COURT (Sixth Chamber)
1. Dismisses the action as inadmissible in so far as it seeks:
° an order that the Commission pay the sum of BFR 21 707 839;
° the annulment of the decision adopted by the Commission on 18 October 1990 in relation to file No 84/3643/B6;
2. Annuls the Commission decisions of 18 October 1990 reducing the assistance from the European Social Fund relating to applications for assistance Nos 85/0186/B6, 87/0295/B2 and 87/0296/B2;
3. Dismisses the remainder of the application;
4. Orders the parties to bear their own costs.