Kingdom of Spain v Commission of the European Communities.

• Jurisdiction: European Union
• Celex Number: 61997CC0443
• ECLI: ECLI:EU:C:1999:531
• Court: Court of Justice (European Union)
• Docket Number: C-443/97
• Procedure Type: Recours en annulation - irrecevable
• Date: 28 October 1999

Important legal notice

|

61997C0443

Opinion of Mr Advocate General La Pergola delivered on 28 October 1999. - Kingdom of Spain v Commission of the European Communities. - Coordination of structural instruments - Internal Commission guidelines - Net financial corrections. - Case C-443/97.

European Court reports 2000 Page I-02415

Opinion of the Advocate-General

I - Introduction

1 By this reference for a preliminary ruling, the Kingdom of Spain applied, pursuant to Article 173 of the EC Treaty (now, after amendment, Article 230 EC), for the annulment of an act adopted by the European Commission (hereinafter `the Commission'), entitled `Internal guidelines concerning net financial corrections in the context of the application of Article 24 of Council Regulation (EEC) No 4253/88' of 19 December 1988, laying down provisions for implementing Regulation (EEC) No 2052/88 as regards the coordination of the activities of the different Structural Funds between themselves and with the operations of the European Investment Bank and other existing financial instruments (hereinafter, respectively, `the internal guidelines' (1) and the `coordination regulation' (2)).

2 According to the Spanish Government, the internal guidelines involve new financial sanctions for the Member States. They consist of net corrections (or reductions or cancellations) of Community assistance due to failure to fulfil the obligation, imposed on the Member States by Article 23 of the coordination regulation (see below, paragraph 5), to verify that the operations co-financed by the Structural Funds are properly carried out. The Commission indicated Article 24 of the said regulation as the legal basis for the adoption of the internal guidelines. The Spanish Government, with the Italian and Portuguese Governments intervening in support, maintains that the Commission is not competent to adopt this act, which is also without adequate grounds.

II - Legal framework of the act in question

3 The origins of this dispute can be found in the Community legislation concerning the Structural Funds. Firstly, I would refer to the provisions of the EC Treaty on economic and social cohesion (Articles 130a to 130e of the EC Treaty, now, after amendment in some cases, Articles 158 EC to 162 EC), which lay down the general principles relating to the action of the Funds and other financial instruments and give the Community institutions the task of implementing them. Council Regulation (EEC) No 2052/88 of 24 June 1988 on the tasks of the Structural Funds and their effectiveness and on coordination of their activities between themselves and with the operations of the European Investment Bank and the other financial instruments (hereinafter `the framework regulation'), (3) and the coordination regulation contain the essential regulations on this matter.

4 The Structural Funds provide assistance to reinforce economic and social cohesion, and, in particular, to reduce the discrepancy between the various regions and the backwardness of those which are less favoured. As this assistance takes the form of co-financing by the Community of individual projects chosen by the Member States, it is essential to check that the Funds contribute only to the financing of projects, initiatives or `operations' which satisfy the `conditions of eligibility' for the subsidies in accordance with the relevant Community provisions. According to Article 23(1) of the coordination regulation (see below, paragraph 5) the aforementioned controls - whose arrangements have been more closely regulated by Regulation No 2064/97 (see below, paragraph 6) - should be carried out by the Member States, who are responsible for managing 80% of the Community costs.

5 In particular, and so far as it relates to the present case, Article 23(1) of the coordination regulation, entitled `Financial control', provides that:

`In order to guarantee completion of operations carried out by public or private promoters, Member States shall take the necessary measures in implementing the operations:

- to verify on a regular basis that operations financed by the Community have been properly carried out,

- to prevent and to take action against irregularities,

- to recover any amounts lost as a result of an irregularity or negligence ... .

As soon as this regulation enters into force, the Commission shall draw up detailed arrangements for implementation of this paragraph ...'.

Under Article 24 of the coordination regulation, which is the provision on which the act challenged here is based, entitled `Reduction, suspension and cancellation of assistance':

`1. If an operation or measure appears to justify neither part nor the whole of the assistance allocated, the Commission shall conduct a suitable examination of the case in the framework of the partnership, (4) in particular requesting that the Member State or authorities designated by it to implement the operation submit their comments within a specified period of time.

2. Following this examination, the Commission may reduce or suspend assistance in respect of the operation or a measure concerned if the examination reveals an irregularity or a significant change affecting the nature or conditions for the implementation of the operation or measure for which the Commission's approval has not been sought ...'.

6 The Commission adopted two regulations for the application of Article 23 of the coordination regulation, one of which is Regulation (EC) No 2064/97 of 15 October 1997, establishing arrangements for the implementation of Council Regulation (EEC) No 4253/88 as regards the financial control by Member States of operations co-financed by the Structural Funds (hereinafter `Regulation No 2064/97'), (5) in which the Commission, in order to ensure that the controls carried out by the Member States are sufficiently rigorous, specified some minimum requirements (see second recital). On the same date, the Commission adopted the internal guidelines referred to in this case, notified to the Member States on 23 October 1997.

III - The content of the contested measure

7 The internal guidelines, to be used by the Commission's various departments which are involved from time to time, specify the circumstances in which the Commission might carry out net financial corrections in applying Article 24 of the coordination regulation. Generally, a decision of this kind will be adopted if, in the implementation of the operations co-financed by the Community, the financial control operated in the Member States reveals significant failures or weaknesses.

8 In the internal guidelines, four categories of corrections are identified: net corrections (points 3 and 4), financial corrections greater than the sum relating specifically to the irregularity or irregularities discovered (point 5; hereinafter `greater corrections'), flat-rate corrections (points 6 and 7) and provisional net corrections (point 9). Normally, once an irregularity is found concerning a particular operation, the financial correction takes the form of the reallocation of the funds to another operation. However, according to the internal guidelines, depending on how serious the irregularity is for which the Member State concerned is responsible, this correction may take the form of a `net correction', or purely and simply a reduction, thus excluding any possibility of reallocation.

9 In particular, a net correction could be applied in the case of `significant' failure to meet the obligations of control stated in Article 23(1) of the coordination regulation, which consist of verifying on a regular basis that the operations financed by the Community have been properly carried out, preventing and taking action against irregularities, and recovering any amounts lost as a result of an irregularity or negligence. In order to establish the `significant' nature of such a failure, the Commission shall examine whether the irregularity or irregularities can be attributable to a significant weakness affecting the competent authorities of the Member State concerned, relating in particular to the institution of prudent financial management and control procedures and systems.

10 A net correction relates exclusively to the irregularity or irregularities discovered by the Commission, unless the Commission has good reason to take the view that the irregularity is systemic, that is due to a systemic weakness of financial control and as such likely to be found in a series of similar cases (the example is given of a systematic failure to comply with a specific eligibility rule). Any such instance would...