European Commission v Kingdom of Spain.

• Jurisdiction: European Union
• Celex Number: 62015CJ0139
• ECLI: ECLI:EU:C:2016:707
• Court: Court of Justice (European Union)
• Docket Number: C-139/15
• Date: 21 September 2016
• Procedure Type: Recurso de anulación

JUDGMENT OF THE COURT (Tenth Chamber)

21 September 2016 (*1 )

‛Appeal — Cohesion Fund — Reduction of financial assistance — Procedure of adoption of the decision by the European Commission — Existence of a time limit — Non-compliance with the time limit laid down — Consequences’

In Case C‑139/15 P,

APPEAL under Article 56 of the Statute of the Court of Justice of the European Union, brought on 24 March 2015,

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

appellant,

the other party to the proceedings being:

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

applicant at first instance,

supported by:

Kingdom of the Netherlands, represented by B. Koopman and M. Bulterman, acting as Agents,

intervener in the appeal,

THE COURT (Tenth Chamber),

composed of F. Biltgen (Rapporteur), President of the Chamber, A. Borg Barthet and M. Berger, Judges,

Advocate General: M. Wathelet,

Registrar: A. Calot Escobar,

having regard to the written procedure,

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

gives the following

Judgment

1 By its appeal, the European Commission seeks to have the judgment of the General Court of the European Union of 20 January 2015, Spain v Commission (T‑109/12, not published, ‘the judgment under appeal’, EU:T:2015:29), by which it annulled Commission Decision C(2011) 9992 of 22 December 2011 reducing the assistance from the Cohesion Fund granted to the following projects: ‘Measures to be undertaken to implement the second phase of the master plan for urban solid waste management in the Autonomous Community of Extremadura’ (CCI No 2000.ES.16.C.PE.020); ‘Outfall: Middle basin, Getafe and lower basin of the Arroyo del Culebro (Tagus basin — Wastewater drainage)’ (CCI No 2002.ES.16.C.PE.002); ‘Re-use of treated water for the irrigation of green spaces in Santa Cruz de Tenerife’ (CCI No 2003.ES.16.C.PE.003) and ‘Technical assistance for the study and drafting of the project to supply water to the Mancomunidad de Algodor and to increase that supply’ (CCI No 2002.ES.16.C.PE.040) (‘the contested decision’).

I –Legal context

2 Under 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 (EC) No 1264/1999 of 21 June 1999 (OJ 1999 L 161, p. 57) and by Council Regulation (EC) 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].’

3 Article 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.’

4 Article 12 of Regulation No 1164/94, as amended, is worded as follows: ‘1. Without prejudice to the Commission’s responsibility for implementing the Community budget, Member States shall take responsibility in the first instance for the financial control of projects. To that end, the measures they take shall include: … (c) ensuring that projects are managed in accordance with all the applicable Community rules and that the funds placed at their disposal are used in accordance with the principles of sound financial management; …’

5 Article 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.’

6 Article 18 of Commission Regulation (EC) No 1386/2002 of 29 July 2002 laying down detailed rules for the implementation of Regulation 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.’

7 The wording of Article H(2) of Annex II to Regulation No 1164/94, as amended, differs as between the different language versions of that provision. It 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’, that the three-month period referred to in that provision relates to the adoption of the decision on financial corrections. However, in the other language versions of that provision, that three-month period concerns the absence of an agreement between the parties.

8 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. It is apparent from all the language versions of that Article 18(3) that they contain no disparity in the formulation of that provision.

9 Regulation No 1164/94, as amended, was applicable from 2000 to 2006. Regulation No 1386/2002, by virtue of Article 1 thereof, applied to actions approved for the first time after 1 January 2000.

10 Under Article 16(1) of Regulation No 1164/94, as amended, Regulation No 1164/94 was to be re-examined by 31 December 2006 at the latest.

11 Thus, Regulation No 1164/94, as amended, was repealed by Council Regulation (EC) No 1084/2006 of 11 July 2006 establishing a Cohesion Fund and repealing Regulation No 1164/94 (OJ 2006 L 210, p....