JUDGMENT OF THE COURT (First Chamber)

4 September 2014 ( *1 )

‛Appeals — Cohesion fund — Reduction of the financial assistance — Adoption of the decision by the European Commission — Existence of a time-limit — Failure to comply with the time-limit — Consequences’

In Case C‑192/13 P,

APPEAL under Article 56 of the Statute of the Court of Justice of the European Union, brought on 15 April 2013,

Kingdom of Spain , represented by A. Rubio González, acting as Agent,

appellant,

the other party to the proceedings being:

European Commission , represented by S. Pardo Quintillán and D. Recchia, acting as Agents, with an address for service in Luxembourg,

defendant at first instance,

THE COURT (First Chamber),

composed of A. Tizzano, President of the Chamber, A. Borg Barthet, E. Levits, S. Rodin and F. Biltgen (Rapporteur), Judges,

Advocate General: M. Wathelet,

Registrar: M. Ferreira, Principal Administrator,

having regard to the written procedure and further to the hearing on 13 March 2014,

having decided, after hearing the Advocate General, to proceed to judgment without an Opinion,

gives the following

Judgment

1By its appeal the Kingdom of Spain asks the Court of Justice to set aside the judgment of the General Court of the European Union in Spain v Commission T‑235/11, EU:T:2013:49 (‘the judgment under appeal’), by which the General Court dismissed the action, seeking primarily the annulment of Commission Decision C(2011) 1023 final of 18 February 2011 reducing the assistance granted from the Cohesion Fund to the stages of projects entitled ‘Supply and assembly of track materials on the high-speed line Madrid-Zaragoza-Barcelona-French border. Section Madrid-Lleida’ (CCI 1999.ES.16.C.PT.001), ‘High-speed railway line Madrid-Barcelona. Section Lleida-Martorell (Platform, 1st phase)’ (CCI 2000.ES.16.C.PT.001), ‘High-speed line Madrid-Zaragoza-Barcelona-French border. Railway access to the new station at Zaragoza’ (CCI 2000.ES.16.C.PT.003), ‘High-speed line Madrid-Barcelona-French border. Section Lleida-Martorell. Subsection X-A (Olérdola-Avinyonet del Penedés)’ (CCI 2001.ES.16.C.PT.007), ‘New high-speed railway access to Levante. Subsection La Gineta-Albacete (Platform)’ (CCI 2004.ES.16.C.PT.014) (‘the decision at issue’) and, in the alternative, for annulment of that decision in so far as it concerns the corrections made by the European Commission.

Legal context

2In the judgment under appeal, the General Court described the legislative framework as follows.

3Under Article 2(1) of Council Regulation (EC) No 1164/94 of 16 May 1994 establishing a Cohesion Fund ( OJ 1994 L 130, p. 1 ), as amended by Council Regulation No 1264/1999 of 21 June 1999 ( OJ 1999 L 161, p. 57 ) and by Council Regulation No 1265/1999 of 21 June 1999 ( OJ 1999 L 161, p. 62 ) (‘Regulation No 1164/94, as amended’):

‘The Fund shall provide financial contributions to projects, which contribute to achieving the objectives laid down in the Treaty on European Union, in the fields of the environment and trans-European transport infrastructure networks in Member States with a per capita gross national product (GNP), measured in purchasing power parities, of less than 90% of the Community average which have a programme leading to the fulfilment of the conditions of economic convergence referred to in Article [126 TFEU].’

4Article 8(1) of Regulation No 1164/94, as amended, provides:

‘Projects financed by the Fund shall be in keeping with the provisions of the Treaties, with the instruments adopted pursuant thereto and with Community policies, including those concerning environmental protection, transport, trans-European networks, competition and the award of public contracts.’

5Article H of Annex II to Regulation No 1164/94, as amended, relating to ‘Implementing Provisions’, that article being headed ‘Financial Corrections’, provides:

‘1.

If, after completing the necessary verifications, the Commission concludes that:

(a)

the implementation of a project does not justify either part or the whole of the assistance granted to it, including a failure to comply with one of the conditions in the decision to grant assistance and in particular any significant change affecting the nature or conditions of implementation of the project for which the Commission’s approval has not been sought, or

(b)

there is an irregularity with regard to assistance from the Fund and that the Member State concerned has not taken the necessary corrective measures,

the Commission shall suspend the assistance in respect of the project concerned and, stating its reason, request that the Member State submits its comments within a specified period of time.

If the Member State objects to the observations made by the Commission, the Member State shall be invited to a hearing by the Commission, in which both sides make efforts to reach an agreement about the observations and the conclusions to be drawn from them.

2.At the end of the period set by the Commission, the Commission shall, subject to the respect of due procedure, if no agreement has been reached within three months, taking into account any comments made by the Member State, decide to:

…

(b)

make the financial corrections required. This shall mean cancelling all or part of the assistance granted to the project.

These decisions shall respect the principle of proportionality. The Commission shall, when deciding the amount of a correction, take account of the type of irregularity or change and the extent of the potential financial impact of any shortcomings in the management or control systems. Any reduction or cancellation shall give rise to recovery of the sums paid.

…

4.The Commission shall lay down the detailed rules for implementing paragraphs 1 to 3 and shall inform the Member States and the European Parliament thereof.’

6Article 18 of Commission Regulation (EC) No 1386/2002 of 29 July 2002 laying down detailed rules for the implementation of Council Regulation (EC) No 1164/94 as regards the management and control systems for assistance granted from the Cohesion Fund and the procedure for making financial corrections ( OJ 2002 L 201, p. 5 ) is worded as follows:

‘1. The period of time within which the Member State concerned may respond to a request under the first subparagraph of Article H(1) of Annex II to Regulation (EC) No 1164/94 to submit its comments shall be two months, except in duly justified cases where a longer period may be agreed by the Commission.

2. Where the Commission proposes financial corrections on the basis of extrapolation or at a flat rate, the Member State shall be given the opportunity to demonstrate, through an examination of the files concerned, that the actual extent of irregularity was less than the Commission’s assessment. In agreement with the Commission, the Member State may limit the scope of this examination to an appropriate proportion or sample of the files concerned.

Except in duly justified cases, the time allowed for this examination shall not exceed a further period of two months after the two-month period referred to in paragraph 1. The results of such examination shall be examined in the manner specified in the second subparagraph of Article H(1) of Annex II to Regulation (EC) No 1164/94. The Commission shall take account of any evidence supplied by the Member State within the time-limits.

3. Whenever the Member State objects to the observations made by the Commission and a hearing takes place under the second subparagraph of Article H(1) of Annex II to Regulation (EC) No 1164/94, the three-month period within which the Commission may take a decision under Article H(2) of Annex II to that Regulation shall begin to run from the date of the hearing.’

Background to the dispute and the decision at issue

7The background to the dispute was set out at paragraphs 13 to 23 of the judgment under appeal and may be summarised as follows.

8By Decision C(2000) 2113, of 13 September 2000, as amended, the Commission approved the granting of financial assistance from the Cohesion Fund for certain project stages of the Madrid-Barcelona (Spain) high-speed railway line.

9For each of the project stages, by letter of 23 October 2009, by letter of 30 March 2010 and by three letters of 21 April 2010, respectively, the Commission sent to the Kingdom of Spain a winding-up proposal. Each of those proposals included financial corrections due to irregularities in the application of public procurement legislation.

13In that decision, which was notified to the Kingdom of Spain on 21 February 2011, the Commission found several irregularities in the application of European Union rules on public procurement affecting the project stages in question, and accordingly reduced by EUR 31 328 947.63 the total assistance granted to those stages.

The action before the General Court and the judgment under appeal

14By application lodged at the Registry of the General Court on 29 April 2011, the Kingdom of Spain brought an action, primarily, for annulment of the decision at issue, and, in the alternative, for annulment of that decision in so far as it concerns the corrections made by the Commission.

15In support of that action, the Kingdom of Spain relied primarily on two pleas in law alleging, respectively, non-compliance by the Commission with the time-limit laid down in Article H(2) of Annex II to Regulation No 1164/94, as amended, and the incorrect application of Article 20(2) of Council Directive 93/38/EEC of 14 June 1993 coordinating the procurement procedures of entities operating in the water, energy, transport and telecommunications sectors ( OJ 1993 L 199, p. 84 ), and, in the alternative, a plea alleging an error of law in the application of Article 20(2)(f) of that directive.

16In the judgment under appeal the General Court dismissed the action as unfounded.

17Concerning the first plea, by which the Kingdom of Spain essentially claimed that compliance with the three-month period provided for in both Article H(2) of Annex II to Regulation No 1164/94, as amended, and Article 18(3) of Regulation No 1386/2002 means that the decision on financial corrections should have been adopted within a period of three months from the date of the hearing, or at the very least the date on which the Commission had received the additional information from the Spanish Government with the result that the decision at issue is adopted out of time and is therefore unlawful. The General Court held in paragraph 32 of the judgment under appeal that it is clear from its judgment in Greece v Commission (T‑404/05, EU:T:2008:510 , paragraph 44), which was confirmed by the order of the Court of Justice in Greece v Commission (C‑43/09 P, EU:C:2010:36 ), that Article H(2) of Annex II to Regulation No 1164/94, as amended, does not specify any period within which the Commission must take its decision. Furthermore, that interpretation is made explicitly clear by the wording of the provision. The three-month period referred to relates to the conclusion of an agreement between the Commission and the Member State concerned.

18The General Court went on to state, at paragraph 33 of the judgment under appeal, that, although it is true that the French-language version of the provision in question provides that ‘[à] l’expiration d’un délai fixé par la Commission, dans le respect de la procédure applicable, en l’absence d’accord et compte tenu des observations éventuelles de l’État membre, la Commission décide, dans un délai de trois mois’ [‘[a]t the end of the period set by the Commission, the Commission shall, subject to the respect of due procedure, if no agreement has been reached, and taking into account any comments made by the Member State, decide within a period of three months to’], all the language versions, apart from the French version of that provision, are drafted differently, in that the phrase ‘within three months’ relates to the lack of an agreement between the parties. As is clear from the judgment in Bacardi (C‑253/99, EU:C:2001:490 , paragraph 41 and the case law cited), the need for a uniform interpretation of European Union regulations makes it impossible for a given piece of legislation to be considered in isolation and requires that, in case of doubt, it should be interpreted and applied in the light of the versions existing in the other official languages.

19In those circumstances, the three-month period laid down in Article H(2) of Annex II to Regulation No 1164/94, as amended, makes it possible for the Member State concerned to present additional information to the Commission following the hearing and for the Commission to take that information into account, and it would only be ‘if no agreement has been reached within three months, and taking into account any comments made by the Member State, that the Commission should adopt a decision’ (paragraph 34 of the judgment under appeal).

20Concerning the argument set out in paragraph 35 of the judgment under appeal and put forward by the Kingdom of Spain at the hearing in response to a question put by the General Court that there are two concomitant time-limits starting on the date of the hearing, that is to say, one laid down in Article H(2) of Annex II to Regulation No 1164/94, as amended, which refers to an agreement being reached with the Member State concerned, and the other set by Article 18(3) of Regulation No 1386/2002, which refers to the adoption of a decision by the Commission in order to make the financial corrections required, the General Court held that this could not be accepted.

21It held at paragraph 36 of the judgment under appeal that ‘Article 18(3) of Regulation No 1386/2002 merely fixe[d] the date when the period for taking the decision under Article H(2) of Annex II to Regulation No 1164/94 [as amended] start[ed] to run’, but, as is clear from paragraph 32 of that judgment, that provision does not lay down ‘a period in which the Commission had to take its decision’.

Forms of order sought by the parties before the Court of Justice

—

set aside the judgment under appeal;

—

give final judgment in the proceedings by annulling the decision at issue; and

—

order the Commission to pay the costs.

—

dismiss the appeal in its entirety, and

—

order the Kingdom of Spain to pay the costs.

The appeal

28In support of its appeal, the Kingdom of Spain relies on two grounds of appeal claiming that the General Court erred in law with regard to (i) non-compliance with the time-limit laid down in Article H(2) of Annex II to Regulation No 1164/94, as amended, for the purposes of adopting the decision at issue; and (ii) the concept of an ‘award’ of a contract for the purposes of Directive 93/38.

The first ground of appeal

Arguments of the parties

29The Kingdom of Spain claims that the General Court erred in law in holding that Article H(2) of Annex II to Regulation No 1164/94, as amended, does not impose a time-limit on the Commission for adopting the decision at issue.

30According to that Member State, that provision must, on the contrary, be understood as imposing a time-limit on the Commission, in the absence of an agreement with the Member State concerned at the hearing provided for in Article H(1) of the same annex, to take a decision to reduce the payment on account or to make financial corrections within three months.

31Only the interpretation put forward by the Kingdom of Spain is such as to give meaning and practical effect to the relevant provisions.

32Thus Article H(2) of Annex II to Regulation No 1164/94, as amended, lays down a period of three months which starts to run ‘at the end of the period set by the Commission’, and that period can only be the period laid down in the final part of the first subparagraph of Article H(1) which states that ‘the Commission shall … request … that the Member State submits its comments within a specified period of time’. That period of time expires before the hearing provided for in Article H(1), and its purpose is to enable the Commission and the Member State concerned to reach an agreement. By contrast, Article 18(3) of Regulation No 1386/2002 alludes to another three-month period by expressly referring to Article H(2) of Annex II to Regulation No 1164/94, as amended, and that period of time starts to run from the date of the hearing provided for in Regulation No 1164/94, as amended. The purpose of those combined provisions is to set the period of time at the end of which the Commission, in the event that no agreement has been reached between the parties, is obliged to adopt a decision on financial corrections. If Article 18(3) had to be interpreted as merely setting the starting point of the three-month period for the parties to reach an agreement, it would be devoid of any practical effect, as Article H of Annex II to Regulation No 1164/94, as amended, clearly establishes at what point that period expires.

33Consequently, if, on the expiry of the three-month period following the hearing date, the Commission has not adopted a decision on financial corrections, it must make the payment and any correction made, as in the present case, after that period has expired would be unlawful, as the Commission no longer has the legal basis needed to apply such a measure. The view cannot be taken that the Commission may determine at its discretion at what point it should adopt a decision of major importance for the financial planning of the national authorities concerned.

34Moreover, such an interpretation would allow Member States, in accordance with the principle of legal certainty, to know within a sufficiently brief period, which is determined in advance, whether the costs incurred are to be financed by the Cohesion Fund. That interpretation is, furthermore, supported by the fact that the Communication from the Commission to the European Parliament, the Council and the Court of Auditors — Annual accounts of the European Union — Financial year 2010 (2011/C 332/01) ( OJ 2011 C 332, p. 1 ), states at page 63, concerning the cohesion policy, that ‘the Commission has three months from the date of a formal hearing with the Member State (six months for 2007-2013 programmes) to adopt a formal financial correction decision and issues a recovery order to obtain repayment from the Member State’.

35In addition, when it supported its reasoning, in paragraph 32 of the judgment under appeal, by referring to its judgment in Greece v Commission ( EU:T:2008:510 ) and the order of the Court of Justice in Greece v Commission ( EU:C:2010:36 ), the General Court misread those decisions in that, first, as the Court of Justice explicitly stated in that order, Article 18(3) of Regulation No 1386/2002 was not applicable to the project at issue in the case giving rise to those two decisions, and, secondly, the Court of Justice has not ruled on the substance of the legal question currently raised by the Kingdom of Spain.

36The Commission contends, first, that the Kingdom of Spain does not explain in its appeal in what way the General Court committed an error of law by invoking, in the judgment under appeal, its judgment in Greece v Commission ( EU:T:2008:510 ) and the order of the Court of Justice in Greece v Commission ( EU:C:2010:36 ). That part of the ground of appeal must be regarded only as an abstract statement which does not set out coherent legal arguments specifically criticising the assessment made by the General Court and it is, therefore, inadmissible.

37In any event, that part is unfounded since the General Court did not err in law in basing its reasoning on the interpretation of Regulation No 1164/94, as amended, which it gave in that judgment, and which was confirmed implicitly, but necessarily, by the Court in the order in Greece v Commission ( EU:C:2010:36 ), according to which interpretation Article H(2) of Annex II to that regulation does not impose any time-limit on the Commission to take its decision on financial corrections.

38Secondly, the Commission considers that the Kingdom of Spain is, in essence, merely repeating before the Court of Justice the arguments which it had already put forward at first instance.

39In particular, the appeal is inadmissible because, in claiming that the three-month period is a period beyond which the Commission could no longer apply financial corrections once it has expired, the Kingdom of Spain does not explain in what way that claim is linked to the judgment under appeal or what infringement the General Court committed in that regard, so that the claim is merely a request to re-examine the application made at first instance.

40Moreover, that part of the ground of appeal is, in any event, unfounded. First of all, even if Regulation No 1164/94, as amended, makes provision for a three-month period, the fact that that period has overrun cannot in any way prevent the Commission from acting. Since the purpose of that regulation is to ensure that national expenditure has been incurred by Member States in accordance with the rules of EU law, such a time-limit may be regarded only as indicative, unless the interests of a Member State have been adversely affected, proof of which the Kingdom of Spain has failed to provide in the present case. Next, in view of the fact that, in the present case, the Kingdom of Spain sent additional information to the Commission on 23 July 2010, after the hearing of 23 June 2010, the period of 6 months and 16 days between that date and the date on which the decision at issue was adopted should be regarded as entirely reasonable. Finally, the interpretation put forward by the Kingdom of Spain is not only unfounded, but also illogical and contradictory. The General Court was right to hold that the three-month period laid down in Article H(2) of Annex II to Regulation No 1164/94, as amended, concerns only the possible conclusion of an agreement between the Commission and the Member State concerned, and that Article 18(3) of Regulation No 1386/2002 cannot be interpreted as imposing on the Commission a three-month period in which to take a decision on financial corrections.

Findings of the Court

– Admissibility

41Concerning the admissibility of the first ground of appeal, the pleas of inadmissibility raised by the Commission must be rejected.

46The first ground of appeal satisfies those requirements.

47In the present case, the Kingdom of Spain claims, essentially, that the General Court, in holding that Article H(2) of Annex II to Regulation No 1164/94, as amended, imposes no time-limit on the Commission for adopting a decision on financial corrections, infringed EU law.

48Thus, far from merely repeating arguments which have already been raised before the General Court and pursuing a fresh examination of the merits of its initial application, the Kingdom of Spain is challenging that Court’s answer to a point of law which was expressly raised in the judgment under appeal and which may be reviewed by the Court of Justice in an appeal.

49An 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).

50Moreover, and contrary to the Commission’s submissions, the Kingdom of Spain clearly sets out the legal arguments which it relies on in that regard.

51It follows that the first ground of appeal of the Kingdom of Spain is admissible.

– Merits

52Concerning the merits of the first ground of appeal, it must be stated, as the General Court did in paragraph 33 of the judgment under appeal, that the meaning of Article H(2) of Annex II to Regulation No 1164/94, as amended, varies depending on the language versions of that provision.

53It is clear from the French version, according to which, in the absence of an agreement between the parties, the Commission must take a decision ‘within three months’, the three-month period referred to in that provision relates to the adoption of the decision on financial corrections.

54However, in the other language versions of that provision, that three-month period concerns the absence of an agreement between the parties.

55It 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).

89In the light of all the foregoing considerations, it must be held that the General Court erred in law in holding, in paragraphs 32 and 36 of the judgment under appeal, that Article H(2) of Annex II to Regulation No 1164/94, as amended, makes no provision for any period within which the Commission should adopt its decision on financial corrections because the three month period to which that provision refers concerns the conclusion of an agreement between the Commission and the Member State concerned.

90It follows that the first ground of appeal is well founded and that the judgment under appeal must be set aside, without it being necessary to examine the second ground of appeal.

The action at first instance

91Under the first paragraph of Article 61 of the Statute of the Court of Justice, if the appeal is well founded, the Court of Justice is to quash the decision of the General Court. It may then itself give final judgment in the matter, where the state of the proceedings so permits.

92In the present case, the Court has the necessary information to give final judgment on the action for annulment of the decision at issue brought by the Kingdom of Spain before the General Court.

95Thus, 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.

96In 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.

97In 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.

99Concerning 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.

101In those circumstances, it appears that, in the present case, the Commission did not observe the six-month time-limit laid down in Article 100(5) of Regulation No 1083/2006.

102Contrary 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.

104Therefore, the decision at issue was not validly adopted and consequently must be annulled.

Costs

105Under Article 184(2) of the Rules of Procedure of the Court of Justice, where the appeal is well founded and the Court itself gives final judgment in the case, the Court is to make a decision as to costs.

106Under Article 138(1) of those Rules, applicable to appeal proceedings by virtue of Article 184(1) thereof, 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 Kingdom of Spain has been successful on appeal, and the action before the General Court was upheld, in accordance with the forms of order sought by the Kingdom of Spain, the Commission must be ordered to bear its own costs and to pay those incurred by that Member State, both at first instance and on appeal.

On those grounds, the Court (First Chamber) hereby:

1.Sets aside the judgment of the General Court of the European Union in Spain v Commission (T‑235/11, EU:T:2013:49 );

2.Annuls Commission Decision C(2011) 1023 final of 18 February 2011 reducing the assistance granted from the Cohesion Fund to the stages of projects entitled ‘Supply and assembly of track materials on the high-speed line Madrid-Zaragoza-Barcelona-French border. Section Madrid-Lleida’ (CCI 1999.ES.16.C.PT.001), ‘High-speed railway line Madrid-Barcelona. Section Lleida Martorell (Platform, 1st phase)’ (CCI 2000.ES.16.C.PT.001), ‘High-speed line Madrid-Zaragoza-Barcelona-French border. Railway access to the new station at Zaragoza’ (CCI 2000.ES.16.C.PT.003), ‘High-speed line Madrid-Barcelona-French border. Section Lleida-Martorell. Subsection X-A (Olérdola-Avinyonet del Penedés)’ (CCI 2001.ES.16.C.PT.007), ‘New high-speed railway access to Levante. Subsection La Gineta-Albacete (Platform)’ (CCI 2004.ES.16.C.PT.014);

3.Orders the European Commission to pay the costs of the Kingdom of Spain and to bear its own costs of both the proceedings at first instance and of the present appeal proceedings.

[Signatures]

( *1 ) Language of the case: Spanish.