Appeal brought on 2 September 2014 by Quimitécnica.com — Comércio e Indústria Química, SA and José de Mello- Sociedade Gestora de Participações Sociais, SA against the judgment delivered by the General Court (Eighth Chamber) on 26 June 2014 in Case T-564/10 Quimitécnica.com and de Mello v Commission
(Case C-415/14P)
Language of the case: Portuguese
Parties
Appellants: Quimitécnica.com — Comércio e Indústria Química, SA and José de Mello- Sociedade Gestora de Participações Sociais, SA (represented by: J. Calheiros, advogado)
Other party to the proceedings: European Commission
Form of order sought
Set aside, pursuant to the second subparagraph of Article 256(1) TFEU, the judgment of the General Court of the European Union of 26 June 2014 in Case T-564/10 dismissing the proceedings brought by the appellants against the European Commission for the annulment of the Commission’s decision, adopted by its accounting officer by letter of 8 October 2010, in so far as that decision required that the financial guaranteed to be provided in accordance with Article 85 of Regulation (EC EURATOM) No 2342/2002 1 should be a guarantee from a bank with a long-term ‘AA’ credit rating, and ordered the appellants to bear their own costs and to pay the costs incurred by the Commission.
Order the Commission to pay the costs.
Grant, further to the setting aside of the judgment under appeal, the appellants’ claims at first instance and, as a consequence, annul in part the decision adopted by the Commission’s accounting officer by letter of 8 October 2010 in so far as that decision required that the financial guaranteed to be provided in accordance with Article 85 of Regulation (EC EURATOM) No 2342/2002 should be a guarantee from a bank with a long-term ‘AA’ credit rating.
Order the Commission to pay the costs of the proceedings at first instance.
Pleas in law and main arguments
The appellants rely on two grounds of appeal:
1. First ground of appeal — error of law in the grounds of the judgment under appeal, which dismissed as unfounded the appellants’ argument before the General Court to the effect that the decision adopted by the Commission on 8 October 2010 failed to state adequate reasons, in so far as it required the provision of a financial guarantee from a bank with a long-term ‘AA’ credit rating.
– The judgment under appeal recognises that the decision adopted on 8 October 2010 does not give express reasons for the requirement that the bank issuing the guarantee should have a credit rating. However, it is argued that the basis of the Commission’s reasoning relies on that very requirement.
– Article 296 TFEU requires all legal acts, including decisions, to state the reasons on which they are based.
– The ‘basis of the Commission’s reasoning’ takes as its starting point the grounds of the judgment, not contested measure itself.
– That applies all the more so because the ‘protection of the financial interests of the Union’, which formed the ‘basis of the Commission’s reasoning’ may be adequately safeguarded in particular by means of the guarantee proposed by the appellants in the letter sent to the Commission on 3 September 2010.
– Moreover, in 2010, when the Commission imposed that requirement, to choose as criterion for the provision of a bank guarantee simply the credit rating was at that time wholly inappropriate, so that that criterion, since it was open to question from an objective standpoint, called for a stronger, clearer and more specific statement of reasons.
– Furthermore, since, where the Commission grants an additional period within which to make a payment, it does so in the exercise of its discretion, the requirement to give reasons is even more pronounced than that which applies when the Commission is exercising a circumscribed power.
– It should be added that the decision does not refer to any Community rule on which such a requirement could be based.
– In view of the fact that, as recognised in the judgment under appeal, the decision adopted by the Commission on 8 October 2010 does not contain any express reason for the requirement for the bank issuing the guarantee to have a credit rating, the judgment under appeal was incorrect in so far as it found that the contested measure was not vitiated by an inadequate statement of reasons, as claimed by the appellants in the proceedings before the General Court.
2. Second ground of appeal — error of law in the grounds of the judgment under appeal, in so far as it dismissed as unfounded the appellants’ argument before the General Court alleging breach of the Treaty — the principle of proportionality.
– It is apparent from Article 85 of Regulation No 2342/2002 that, as long as the requirements and conditions laid down in that provision are fulfilled, the person responsible on behalf of the Community for taking a decision (in this case, the accounting officer) must determine the request submitted to that person by the undertaking concerned for an additional specific period within which to complete payment and grant that request, as long as those requirements are satisfied and the lawful conditions for the granting of such permission fulfilled.
– The ‘broad powers of discretion’ conferred on the Commission’s accounting officer under Article 85 of Regulation No 2342/2002 cover the determination of the request submitted to that person by the undertaking concerned for an additional specific period within which to complete payment and the granting of the request, not the type of bank guarantee which the Commission’s accounting officer considers acceptable, so that, in reviewing the contested measure, it is not sufficient merely to check whether the measure is manifestly inappropriate for the purpose of attaining the objectives pursued, as claimed, incorrectly, in the judgment under appeal.
– An at-first-demand guarantee, along the lines of the model required by the Commission, issued by a credit institution, constitutes a proper and appropriate means of ensuring payment of the amounts due. Thus, the whole Portuguese legal system (and, in general, that of the other countries of the European Union) accepts the provision of a bank guarantee for the most diverse purposes, including that of suspending the execution of judicial decisions, in particular any enforcement proceedings brought by the Commission before the national courts and tribunals in connection with a failure to pay.
– In the present case, the guarantee proposed by the appellants (and not accepted by the Commission) would be issued by the Banco Comercial Português, S.A., a credit institution having its head office in the European Union, subject to the rules of supervision and consolidation defined by the Community institutions. Thus, there seems to be no justification, in order to defend the Community’s rights, for ruling out the possibility of the guarantee being issued by the said bank and requiring it to be issued by a bank with long-term ‘AA’ rating.
– Furthermore, the public is aware of the current situation in which the ratings of Portuguese banks have been affected by the change in the rating of the Portuguese Republic. Thus, there is no bank based in Portugal that fulfils the rating criteria (long-term ‘AA’) required in the Commission decision. That situation was referred to in the judgment under appeal, under the heading ‘Facts of the dispute’. Nevertheless, it was not taken into account in the grounds of that judgment.
– Accordingly, the Commission decision does not fulfil the criterion of necessity (which constitutes an important dimension of the principle of proportionality) since, of the possible measures, the Commission opted for the one that, in the current circumstances, is most prejudicial to the interests of the appellants.
– Thus, there is a clear lack of proportionality between the requirement imposed by the Commission (guarantee issued by a European bank with long-term ‘AA’ rating) and the objective sought (protection of the right of the Commission to receipt of the amounts due), so that the judgment under appeal erred in so far as it considered that the contested measure did not infringe the principle of proportionality.
____________1 Commission Regulation (EC, Euratom) No 2342/2002 of 23 December 2002 laying down detailed rules for the implementation of Council Regulation (EC, Euratom) No 1605/2002 on the Financial Regulation applicable to the general budget of the European Communities (OJ 2002 L 357, p. 1).