Action brought on 29 December 2010 - Hellenic Republic v Commission

(Case T-588/10)

Language of the case: Greek

Parties

Applicant: Hellenic Republic (represented by: I. Khalkias, E. Leftheriotou and X. Basakou)

Defendant: European Commission

Form of order sought

The applicant claims that the General Court should:

grant the application;

annul the Commission decision of 4 November 2010 excluding from European Union financing certain expenditure incurred by the Member States under the Guarantee Section of the European Agricultural Guidance and Guarantee Fund (EAGGF), under the European Agricultural Guarantee Fund (EAGF) and under the European Agricultural Fund for Rural Development (EAFRD), in so far as the decision concerns financial corrections to the detriment of the Hellenic Republic;

order the Commission to pay the costs.

Pleas in law and main arguments

By its action, the Hellenic Republic seeks the annulment of the Commission decision of 4 November 2010 excluding from European Union financing certain expenditure incurred by the Member States under the Guarantee Section of the European Agricultural Guidance and Guarantee Fund (EAGGF), under the European Agricultural Guarantee Fund (EAGF) and under the European Agricultural Fund for Rural Development (EAFRD), notified as document C(2010) 7555 final and published in the Official Journal of the European Union on 5 November 2010 (OJ 2010 L 288, p. 24) as Decision 2010/668/EU, in so far as it concerns financial corrections that were imposed to the detriment of the Hellenic Republic in the areas of (a) direct aid - arable land, (b) tobacco, (c) cross compliance, (d) dried grapes, (e) the islands of the Aegean and (f) animal premiums.

In relation to the correction for direct aid - arable land, the applicant pleads first that there was no valid legal basis for applying the old guidelines to the new common agricultural policy (CAP) and to the new single payment scheme and that that new scheme fails to define the key and ancillary controls in such a way that flat-rate corrections can be applied.

Second, the applicant maintains that the application of the old guidelines to the new CAP seriously infringes the principle of proportionality.

Third the applicant submits that imposition of the correction, and specifically one of more than three times the amount in question, infringes the principle of the protection of legitimate expectations since by reason of judicial decisions it was not possible to renew/complete the Land Parcel Identification System - Geographical Information System (LPIS-GIS) and Greece agreed with the European Union on an action plan to complete the LPIS-GIS, a plan which was adhered to absolutely.

Fourth, the applicant pleads that (a) the facts have been assessed poorly and incorrectly (as regards the alleged belatedness in the carrying out and poor quality of the on-the-spot controls) and (b) it is apparent from a comparison of the data from the LPIS-GIS that was used for the 2006 claim year with the data of the 2009 LPIS-GIS which, as the Commission confirmed by an on-the-spot control, was a complete and reliable system, that the differences and failings are minimal and do not exceed 2.5%.

In relation to the correction for tobacco, the applicant contends, first, that Article 31 of Regulation (EC) No 1290/2005 ¹ has been interpreted and applied incorrectly because the complaints that are relied upon by the European Union gave rise to absolutely no risk for the EAGGF.

Second, the applicant maintains that the conditions for payment of the support were defined exhaustively and exclusively in Article 5 of Regulation (EC) No 2075/92 ² and therefore the Commission acted unlawfully in laying down in Article 16(1) of Regulation (EC) No 2848/1998 ³ as an additional condition for payment of a premium that the tobacco must be delivered to the first producer by 30 April of the year following the year of harvest (late deliveries of tobacco).

Third, the applicant maintains that Article 16(1) of Commission Regulation (EC) No 2848/1998 offends against the principle of proportionality since lateness of a few days in delivery of the tobacco that was attributable not to the tobacco producers but to the traders purchasing the tobacco deprives the producers of their entire annual income without there being the requisite scaling down/reduction of the premium, and simultaneously infringes Article 39(1)(b) TFEU and Article 3(3) of Regulation (EEC) No 2075/92.

Fourth, the applicant submits that it is not lawful to deny the producers the premium because of the few days' lateness in delivering the tobacco, particularly as the undertaking pleaded the presence of exceptional circumstances which did not allow it to produce the letters of guarantee in time and to participate in the tobacco deliveries.

Fifth, the applicant maintains that the Commission was mistaken in taking the view that transfer of the cultivation contracts is not permitted by Regulation (EEC) No 2075/92 and Regulation (EC) No 2848/98.

Sixth, the applicant pleads that (a) Articles 5 and 6(2)(b) of Regulation (EEC) No 2075/92 have been incorrectly appraised and applied as regards approval of the three first producers who did not own their own equipment (non-eligible undertakings) and (b) the Commission did not take into account in particular the information of the Monada Epexergasias Kapnou Kentrikis Elladas, A.T.P.L (Tobacco Processing Unit of Central Greece).

In relation to cross compliance, the applicant pleads, first, that there was no valid legal basis for imposing a correction in the area of cross compliance.

Second, the applicant maintains that it is not permissible to apply the matters laid down in document AGRI 64043/9-6-06 retroactively to the 2005 control year.

Third, the applicant submits that the Commission did not comply with its obligation of cooperation that is imposed by the Treaty, since 2005 was the first year in which the new system was applied, and that the applicant complied immediately and fully with the recommendations of the European Union, so that, on the basis also of the general principle of equity, there is no justification for corrections, in particular of 10%, in a new area of obligations.

Fourth, the applicant contends that the Commission erred in its assessment of the facts as regards also the six points relied upon by the European Union.

In relation to dried grapes, the applicant submits, first, that the unlawful and unjustifiable restrictions are based on an error as to the facts and on misappraisal of the facts and of the provisions of Article 3(2)(d) of Regulation (EC) No 1621/1999. ⁴

Second, the applicant maintains that the fivefold increase, from 2% to 10%, in the correction for sultanas from the 2002-03 period to the 2003-04 period and the more than doubling of the correction, from 10% to 25%, from the 2003-04 period to the 2004-05 period and the 2005-06 period result from incorrect application of the guidelines for flat-rate deductions and incorrect assessment of the facts, constitute a clear breach of the principle of proportionality and exceed the discretion available to the European Union.

Third, the applicant pleads that (a) the fivefold increase in the correction for currants from 5% in the 2004-05 period to 25% in the 2005-06 period results from an incorrect interpretation and application of the guidelines for flat-rate deductions, clearly infringes the principle of proportionality and exceeds the discretion available to the European Union in respect of imposition of the correction and (b) that the assessment of 5% in the 2004-05 period, a period in which no aid was granted for vineyard plots which did not achieve the minimum yield, is arbitrary and not justified.

Fourth, the applicant pleads misappraisal of the facts in relation to the alleged deficiencies in the vineyard register and to identification and measurement of vineyard plots.

Fifth, the applicant maintains that the facts have been assessed incorrectly so far as concerns the alleged shortcomings in respect of the requirements for management and supervision of the measure.

In relation to the islands of the Aegean, the applicant pleads, first, infringement of the principle of res judicata, given that, by its judgment of 27 October 2005 in Case C-175/03 Greece v Commission, not published in the ECR, the Court of Justice annulled the financial correction which had been imposed in this field for the same years, or, in the alternative, infringement of Articles 264 TFEU and 266 TFEU.

Second, the applicant contends that Article 7(4) of Regulation (EC) No 1258/1999, ⁵ which provides that corrections are to be imposed on the basis of the 24-month rule, has been interpreted and applied incorrectly, in the alternative, that essential procedural requirements have been breached, in the further alternative, that the European Union was not empowered, ratione temporis, to impose a correction in 2010 based on the letter of 17 August 2000, or finally that the imposition of corrections in 2010 for shortcomings of the control system in 1999, 2000 and 2001 infringes the general principle of legal certainty and the general principles requiring action to be taken within a reasonable time and the European Union to act timeously, on account of the unjustified and excessively long duration of the procedure.

Lastly, in relation to animal premiums, the applicant maintains, first, that the procedure for clearance of the accounts is invalid because the Commission was not empowered, ratione temporis, to impose financial corrections and, second, that the facts have been assessed incorrectly, and the principle of proportionality has been infringed, as regards appraisal of the risk to the fund posed by the specific issues.

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¹ - Council Regulation (EC) No 1290/2005 of 21 June 2005 on the financing of the common agricultural policy.

² - Council Regulation (EEC) No 2075/92 of 30 June 1992 on the common organisation of the market in raw tobacco.

³ - Commission Regulation (EC) No 2848/98 of 22 December 1998 laying down detailed rules for the application of Council Regulation (EEC) No 2075/92 as regards the premium scheme, production quotas and the specific aid to be granted to producer groups in the raw tobacco sector.

⁴ - Commission Regulation (EC) No 1621/1999 of 22 July 1999 laying down detailed rules for the application of Council Regulation (EC) No 2201/96 as regards aid for the cultivation of grapes to produce certain varieties of dried grapes.

⁵ - Council Regulation (EC) No 1258/1999 of 17 May 1999 on the financing of the common agricultural policy.