Language of document : ECLI:EU:T:2018:714

JUDGMENT OF THE GENERAL COURT (Second Chamber)

24 October 2018 (*)

(Arbitration clause — Contracts concluded under the Seventh Framework Programme for research, technological development and demonstration activities (2007-2013) — Interest in bringing proceedings — Eligible costs — Suspension of payment — Application for annulment — Decision to register the applicant in the central database of the Early Detection and Exclusion System (EDES) — Act not open to challenge — Inadmissibility)

In Case T‑477/16,

Epsilon International SA, established in Marousi (Greece), represented by D. Bogaert and A. Guillerme, lawyers,

applicant,

v

European Commission, represented by J. Estrada de Solà, A. Katsimerou and A. Kyratsou, acting as Agents,

defendant,

APPLICATION, first, under Article 272 TFEU for a declaration (i) that the amounts paid by the Commission under the Briseide, i-SCOPE and Smart-Islands grant agreements constitute eligible costs; (ii) that the Commission’s decisions to suspend payments in respect of the i-Locate, eENV-Plus, GeoSmartCity and c-Space projects are unfounded; (iii) that the Commission’s unlawful conduct caused damage to the applicant; and, second, (i) under Article 263 TFEU for annulment of the decision of the Commission of 17 June 2016 (Ares (2016) 2835215) registering EPSILON in the Early Detection and Exclusion System (EDES) database and (ii) under Article 268 TFEU for the award of compensation in respect of the damage allegedly suffered by the applicant as a result of that act,

THE GENERAL COURT (Second Chamber),

composed of M. Prek, President, F. Schalin and M.J. Costeira (Rapporteur), Judges,

Registrar: S. Spyropoulos, Administrator,

having regard to the written part of the procedure and further to the hearing on 13 March 2018,

gives the following

Judgment

 Background to the dispute

1        The applicant, Epsilon International SA, is a company incorporated under Greek law, which specialises in large-scale international projects and has for a number of years participated in the implementation of several projects funded by the European Union.

2        Under the Information and Communication Technologies (ICT) Policy Support Programme, one of the specific programmes intended to achieve the objectives of the Competitiveness and Innovation Framework Programme (2007 to 2013) established by Decision No 1639/2006/EC of the European Parliament and the Council of 24 October 2006 (OJ 2006 L 310, p. 15), the applicant concluded the following grant agreements with the European Commission:

–        Grant Agreement number 250474 for the implementation of the project Briseide (BRIdging SErvices, Information and Data for Europe), with a duration of 30 months from 1 March 2010 to 31 August 2012;

–        Grant Agreement number 270998 for the implementation of the project Smart-Islands (3D Smart Webservices for Mediterranean Islands), with a duration of 30 months from 1 August 2011 to 31 January 2014;

–        Grant Agreement number 297284 for the implementation of the project i-SCOPE (interoperable Smart City services through an Open Platform for urban Ecosystems), with a duration of 44 months from 15 January 2012 to 14 September 2015;

–        Grant Agreement number 325232 for the implementation of the project eENV-Plus, with a duration of 36 months from 1 January 2013 to 31 December 2015;

–        Grant Agreement number 611040 for the implementation of the project c-Space, with a duration of 33 months from 30 November 2013 to 31 July 2016;

–        Grant Agreement number 621040 for the implementation of the project i-Locate, with a duration of 36 months from 1 January 2014 to 31 December 2016;

–        Grant Agreement number 621150 for the implementation of the project GeoSmartCity, with a duration of 36 months from 1 March 2014 to 28 February 2017.

3        In December 2014, the Commission appointed the auditing firm PKF Littlejohn LLP to audit the financial statements, submitted by the applicant, relating to the grant agreements for the projects Briseide, i-SCOPE and Smart-Islands.

4        By letter of 12 March 2015, the auditing firm PKF Littlejohn sent the findings of its preliminary audit report to the applicant.

5        In their report, the auditors found, in essence, that the time-recording system used by the applicant was unreliable and that the applicant could not adequately support the variations in the consultants’ hourly rates and in the costs claimed as personnel costs.

6        By letter of 20 April 2015, the applicant contested the findings of the preliminary audit report.

7        By letter of 8 May 2015, the Commission informed the applicant that payments in respect of the eENV-Plus project would be suspended.

8        By letter of 11 May 2015, the Commission informed the applicant that payments in respect of the i-Locate project would be suspended.

9        By letter of 21 May 2015, the Commission, in response to the applicant’s letter of 13 May 2015 concerning the suspensions of payments decided in respect of the i-Locate and eENV-Plus projects, stated that the suspensions were in accordance with Article II.5.3(d) of the general conditions of the grant agreements.

10      By letter of 13 October 2015, the Commission informed the applicant that payments in respect of the c-Space project would be suspended.

11      By letter of 16 October 2015, the Commission sent the final audit report to the applicant, informing it that the Commission confirmed the findings of the report and considered the audit closed.

12      By letter of 29 October 2015, the Commission informed the applicant that the amount of EUR 149 288 would be recovered under the Briseide grant agreement.

13      By letter of 16 November 2015, the applicant contested the Commission’s letter of 16 October 2015 confirming the findings of the audit conducted by PKF Littlejohn.

14      By debit note of 31 March 2016, the Commission requested that the applicant reimburse the amount of EUR 149 288 under the Briseide grant agreement.

15      By letter of 27 April 2016, the Commission acknowledged receipt from the applicant of two audit reports, prepared by the firm SOL AE at the request of the applicant, regarding the i-SCOPE and Smart-Islands agreements.

16      On 27 April 2016, the applicant sent the Commission the audit report regarding the Briseide agreement prepared by the firm SOL AE at the request of the applicant.

17      By decision Ares(2016) 2835215 of 17 June 2016 (‘the contested decision’), the Commission informed the applicant that it would be registered in the Early Detection and Exclusion System (EDES) database.

18      By letter of 24 June 2016, the Commission repeated its request for reimbursement of the amount of EUR 149 288 under the Briseide grant agreement.

19      By letter of 30 June 2016, the Commission informed the applicant that payments in respect of the i-Locate project would continue to be suspended.

20      By letter of 29 July 2016, the Commission informed the applicant that payments in respect of the GeoSmartCity project would be suspended.

21      By letters of 7 July and 12 August 2016, the applicant contested its registration in the EDES database.

22      On 24 August 2016, the applicant’s name was registered in the EDES database.

 Facts arising following the lodging of the application

23      By letter of 8 September 2016, the Commission confirmed that the applicant’s name would remain registered in the EDES database.

24      By letter of 14 November 2016, the Commission informed the applicant that payments in respect of the eENV-Plus project would continue to be suspended.

25      By letter of 21 June 2017, the Commission informed the applicant that payments in respect of the i-Locate project would continue to be suspended.

26      On 23 June 2017, the applicant’s name was removed from the EDES database.

27      By letter of 9 August 2017, the Commission informed the applicant that payments in respect of the GeoSmartCity project would continue to be suspended.

 Procedure and forms of order sought

28      By application lodged at the Court Registry on 26 August 2016, the applicant brought the present action.

29      On 9 December 2016, the Commission’s defence was lodged at the Court Registry.

30      On 15 March 2017, the reply was lodged at the Court Registry.

31      On 8 May 2017, the rejoinder was lodged at the Court Registry.

32      By letter lodged at the Court Registry on 14 June 2017, the applicant made a request pursuant to Article 85 of the Rules of Procedure of the General Court for additional evidence to be admitted in support of its application.

33      By letter lodged at the Court Registry on 6 July 2017, the Commission, in answer to that request, submitted written observations. In support of those observations, the Commission also submitted additional evidence.

34      By letter lodged at the Court Registry on 20 July 2017, the Commission made a request pursuant to Article 85 of the Rules of Procedure for an additional item of evidence to be admitted.

35      By letter of the Registry of 5 February 2018, acting upon a proposal of the Judge-Rapporteur, the Court (Second Chamber), in the context of measures of organisation of procedure under Article 89 of the Rules of Procedure, requested the parties to answer certain questions in writing, which they did within the prescribed period.

36      By letter lodged at the Court Registry on 7 March 2018, the Commission submitted written observations on the evidence produced by the applicant in support of its answers to the written questions asked by the Court. The Commission requested the Court not to accept the additional evidence produced by the applicant.

37      By letter lodged at the Court Registry on 12 March 2018, the applicant made a second request pursuant to Article 85 of the Rules of Procedure of the General Court for an additional item of evidence to be admitted in support of its application and also asked to adapt one of the heads of claim of the application.

38      At the hearing on 13 March 2018, the parties presented oral argument and replied to the oral questions put by the Court concerning, inter alia, the admissibility of the evidence produced by the parties before the close of the oral part of the procedure and of the amendment of one of the heads of claim of the application.

39      The applicant claims, in essence, that the Court should:

–        on the basis of Article 272 TFEU:

–        declare that the amounts paid by the Commission to the applicant under the Briseide (EUR 220 505), i-SCOPE (EUR 129 165) and Smart-Islands (EUR 33 318) grant agreements constitute eligible costs and that the applicant committed no errors of a systematic nature in the performance of those agreements;

–        declare that the Commission’s requests for reimbursement of the amounts paid under the Briseide and Smart-Islands agreements are wholly unfounded and that those amounts should not be repaid;

–        declare that the Commission’s decisions to suspend payments regarding the i-Locate, eENV-Plus, GeoSmartCity and c-Space grant agreements are unfounded;

–        order the Commission to reimburse the amounts paid by the applicant to carry out additional financial audits to contradict the erroneous findings of the auditors mandated by the Commission and to provide compensation for the non-material damage suffered by the applicant, assessed provisionally ex aequo et bono at EUR 10 000;

–        on the basis of Articles 263 TFEU and 268 TFEU:

–        annul the contested decision;

–        order the Commission to compensate the applicant for the non-material damage suffered on account of its registration in the EDES database;

–        order the Commission to pay the costs of the proceedings.

40      The Commission contends, in essence, that the Court should:

–        concerning the application based on Article 272 TFEU:

–        dismiss the action, in so far as it relates to the i-SCOPE and Smart-Islands grant agreements, as inadmissible;

–        dismiss all of the applicant’s claims regarding the Briseide grant agreement, in particular the request for payment of the balance and of damages, as inadmissible and, in any event, unfounded;

–        dismiss, as unfounded, all of the applicant’s claims regarding the suspension of the other grant agreements;

–        concerning the application based on Articles 263 TFEU and 268 TFEU:

–        dismiss the applicant’s claim for annulment concerning its registration in the EDES database as inadmissible and, in any event, declare that the claim is unfounded;

–        dismiss the claim for compensation in respect of the non-material damage allegedly suffered as a result of the applicant’s registration in the EDES database as inadmissible and, in any event, declare that that claim is unfounded;

–        order the applicant to pay the costs of the proceedings.

 Law

41      The applicant’s action consists of two claims.

42      The first claim, based on Article 272 TFEU, contains, in essence, three pleas in law. The first plea, concerning the Briseide, i-SCOPE and Smart-Islands grant agreements, alleges breach of Article II.21 of the general conditions of the grant agreements regarding the eligibility of personnel costs. The second plea, concerning the i-Locate, eENV-Plus, GeoSmartCity and e-Space grant agreements, alleges breach of Article II.5.3(d) of the general conditions of the grant agreements. The third plea seeks, in support of a claim for compensation, a declaration that the Commission was in breach of its contractual obligations in the performance of the grant agreements.

43      The second claim, based on Articles 263 TFEU and 268 TFEU, contains, in essence, two pleas in law. The first plea alleges breach of Articles 106(3) and 108(2)(b) of Regulation (EU, Euratom) No 966/2012 of the European Parliament and of the Council of 25 October 2012 on the financial rules applicable to the general budget of the Union and repealing Council Regulation (EC, Euratom) No 1605/2002 (OJ 2012 L 298, p. 1) (‘the Financial Regulation’), as amended by Regulation (EU, Euratom) 2015/1929 of the European Parliament and of the Council of 28 October 2015 (OJ 2015 L 286, p. 1). The second plea alleges breach of the rights of the defence and, more specifically, of the right to be heard.

 Admissibility of the request to amend one of the heads of claim of the application

44      By letter lodged at the Court Registry on 12 March 2018, the applicant requested to adapt one of the heads of claim of its application. In essence, the applicant requested that the head of claim seeking a declaration that the Commission’s request for reimbursement of the amount paid under the Briseide agreement is unfounded be extended to the Commission’s request for reimbursement of the amount paid under the Smart-Islands agreement.

45      It should be borne in mind that, in accordance with Article 76(d) of the Rules of Procedure, the applicant is required to set out in its application the form of order sought. Thus, as a general rule, only the form of order set out in the originating application may be taken into consideration and the substance of the application must be examined solely with reference to the order sought in the application initiating proceedings (see judgment of 13 September 2013, Berliner Institut für Vergleichende Sozialforschung v Commission, T‑73/08, not published, EU:T:2013:433, paragraph 42 and the case-law cited).

46      Article 84(2) of the Rules of Procedure allows new pleas in law to be introduced on condition that they are based on matters of law or of fact which came to light in the course of the procedure. It is apparent from the case-law that that condition governs a fortiori any amendment to the forms of order sought and that, in the absence of matters of law or of fact which came to light in the course of the written procedure, the form of order sought in the application may alone be taken into consideration (see judgments of 13 September 2013, Berliner Institut für Vergleichende Sozialforschung v Commission, T‑73/08, not published, EU:T:2013:433, paragraph 43 and the case-law cited, and of 10 November 2017, Jema Energy v Joint Undertaking Fusion for Energy, T‑668/15, not published, EU:T:2017:796, paragraph 110).

47      In the present case, the applicant submits that it was not able to raise this plea during the written part of the procedure as the debit note relating to the Smart-Islands agreement was not sent to it until 9 August 2017.

48      However, pursuant to Article 84(2) of the Rules of Procedure, the applicant is required to submit its request to amend its form of order as soon as matters justifying that amendment come to its knowledge, which is, moreover, borne out by the case-law cited in paragraph 46 above.

49      It must, however, be observed that the applicant allowed a period of seven months to elapse between the sending of the debit note by the Commission and the making of the applicant’s request for amendment to the Court, without providing any justification for that delay.

50      It follows that that request must be declared inadmissible.

 Admissibility of the documents produced before the close of the oral part of the procedure

51      As stated in paragraphs 32 to 34, 36 and 37 above, the applicant and the Commission produced additional evidence before the close of the oral part of the procedure.

52      The evidence produced by the applicant is as follows:

–        evidence produced by the letter of 14 June 2017:

–        final audit report concerning the eligibility of the costs declared by the applicant in the context of the ArcFuel project;

–        letter of 7 June 2016 of the Commission communicating that audit report to the applicant;

–        evidence annexed to the written answer to the questions asked by the Court in the context of the measure of organisation of procedure:

–        Commission decisions of 11 May 2015 and 21 June 2017 suspending payments in respect of the i-Locate project;

–        Commission decision of 14 November 2016 suspending payments in respect of the eENV-Plus project;

–        Commission decision of 9 August 2017 suspending payments in respect of the GeoSmartCity project;

–        evidence produced by the letter of 12 March 2018:

–        Commission debit note concerning the Smart-Islands project.

53      The evidence produced by the Commission is as follows:

–        evidence annexed to the letter of 6 July 2017:

–        email of 5 July 2017 from an auditor of the Commission’s Directorate-General (DG) for Environment;

–        list of personnel audited in the context of the audit concerning the ArcFuel project;

–        global working time records for Ms L. provided by the applicant to the auditors in the context of the audit of the projects Briseide, i-SCOPE and Smart-Islands;

–        global working time records for Ms L. provided by the applicant to the auditors in the context of the audit of the ArcFuel project;

–        evidence produced by letter of 20 July 2017 and annexed to the written answer to the questions asked by the Court in the context of the measure of organisation of procedure:

–        screenshot of the EDES database of 19 July 2017.

54      In order to justify the late submission of those documents, the parties argued that they were not available before the close of the written part of the procedure.

55      The Commission nonetheless contends that the documents produced by the applicant in the context of the measure of organisation of procedure should be declared inadmissible owing to their late unjustified submission.

56      As a preliminary point, it should be borne in mind that, pursuant to Article 85(3) of the Rules of Procedure, it is only exceptionally that the main parties may produce or offer further evidence before the oral part of the procedure is closed or before the Court’s decision to rule without an oral part of the procedure, provided that the delay in the submission of such evidence is justified.

57      In the first place, as regards the documents produced by the parties in the context of the measure of organisation of procedure, those documents must be considered admissible in so far as they support the parties’ answers to the questions asked by the Court.

58      In the second place, with regard to the documents produced by the applicant in the letter of 14 June 2017, those documents must be considered admissible. As argued by the applicant in its letter, given that the final audit report concerning the ArcFuel project was not sent to it until 7 July 2017 by the Commission, it was therefore unable to produce that report and the letter accompanying the report before the close of the written part of the procedure on 16 May 2017.

59      In the third place, as regards the documents produced by the Commission in the letter of 6 July 2017, those documents must be considered admissible. Those documents support the Commission’s observations in response to the applicant’s arguments in the letter of 14 June 2017.

60      In the fourth place, as regards the document produced by the applicant in the letter of 12 March 2018, that document must be considered inadmissible, as the delay in its submission has not been justified. The applicant allowed a period of seven months to elapse between the sending of the debit note by the Commission and the applicant’s presentation of that document to the Court, without providing any justification for that delay.

 The claim based on Article 272 TFEU

61      By its first plea in law, relating to the Briseide, i-SCOPE and Smart-Islands agreements, alleging breach of Article II.21 of the general conditions of the grant agreements regarding the eligibility of personnel costs, the applicant claims, in essence, that the Court should declare unfounded the claim established in the debit note. By its second plea, concerning the i-Locate, eENV-Plus, GeoSmartCity and e-Space grant agreements, alleging breach of Article II.5.3(d) of the general conditions of the grant agreements, the applicant claims, in essence, that the Court should declare that the decisions to suspend payments are unlawful. By its third plea, the applicant claims that the Court should order the Commission to pay compensation in respect of the damage that its unlawful conduct caused to the applicant.

 The admissibility of the claim concerning the eligibility of the costs relating to the i-SCOPE and Smart-Islands grant agreements

62      The applicant submits that, notwithstanding the case-law stating that the interest of a beneficiary of an EU grant in bringing proceedings may exist only from the issuance of a debit note, it demonstrated such an interest at the time when the present action was brought with regard to the agreements concerning the i-SCOPE and Smarts-Islands projects. Although no debit note had been issued by the Commission, the applicant, relying on the order of 4 December 2014, Talanton v Commission (T‑165/13, not published, EU:T:2014:1027), asserts, in essence, that it had an interest in bringing proceedings once the Commission had informed it, by its letter of 16 October 2015, of the existence of a specific claim, the exact amount thereof and its intention to recover the claim.

63      The Commission disputes the applicant’s arguments.

64      As a preliminary point, it must be recalled that it is settled case-law that, in order to ensure the proper administration of justice, any person bringing legal proceedings must have a vested and current interest in doing so. That interest should be assessed, as a general rule, as at the day on which the application is made (see order of 6 November 2014, ANKO v Commission, T‑17/13, not published, EU:T:2014:957, paragraph 38 and the case-law cited).

65      In addition, if the interest pleaded by an applicant concerns a future legal situation, it must be demonstrated that the prejudice to that situation is already certain. An applicant cannot therefore rely upon future uncertain circumstances in order to establish its interest in bringing legal proceedings (see order of 6 November 2014, ANKO v Commission, T‑17/13, not published, EU:T:2014:957, paragraph 39 and the case-law cited).

66      In the present case, the question is whether, in the context of an action under Article 272 TFEU, an applicant can establish a vested and current interest in bringing proceedings in the absence of a recovery or debit note sent to it by the Commission.

67      In this regard, it must be observed that, according to the case-law, if there is no specific evidence that establishes by way of exception the existence of a vested and current interest, or even a prior interest, the applicant has a vested and current interest, in the context of an action pursuant to Article 272 TFEU, only once the Commission has informed it unconditionally that it considers a concrete claim to exist under a grant agreement, that is, an amount owed by the applicant that is determined or can be sufficiently determined, in both principle and quantum, and that the Commission intends to recover that amount (order of 4 December 2014, Talanton v Commission, T‑165/13, not published, EU:T:2014:1027, paragraph 41).

68      Contrary to the applicant’s claims, however, it is not apparent from the letter sent to it by the Commission on 16 October 2015 that the Commission intended to inform it unconditionally of a specific claim against the applicant, regarding the i-SCOPE and Smart-Islands agreements, which the Commission had the intention of recovering.

69      By its letter of 16 October 2015, the Commission merely confirms the findings of the audit, which it considers closed, and merely requests the applicant not to take any measures to implement adjustments for the periods audited, adding that its services could do so by issuing an order for recovery or adjusting future payments.

70      It should be borne in mind in this regard that the findings of an audit report, even if they are confirmed by the Commission, do not allow it to be inferred unconditionally that the Commission will then go on to establish certainly and definitively that there is a claim which allows it to require the debtor to pay its debt. An audit procedure is merely a preliminary and preparatory procedure, separate from a procedure that might potentially result in recovery, further to it being established by the authorising officer — who is no way bound by the findings in the audit report — that a certain, liquid and payable debt exists, which alone allows (i) an order for recovery instructing the accounting officer to recover the established debt and (ii) a debit note sent to the debtor, setting out payment conditions and the date from which interest will be payable, to be issued (see, to that effect, orders of 6 November 2014, ANKO v Commission, T‑17/13, not published, EU:T:2014:957, paragraphs 46 to 51, and of 4 December 2014, Talanton v Commission, T‑165/13, not published, EU:T:2014:1027, paragraphs 43 to 47).

71      It cannot therefore be inferred from the wording of the Commission’s letter of 16 October 2015 that the Commission requested clearly and definitively that the applicant pay a claim which the Commission had established and to which it considered itself entitled, made up of amounts paid corresponding to costs which it regarded as ineligible pursuant to the agreements in question, together with payment conditions and a date from which interest would be payable.

72      It should also be pointed out that the applicant has not adduced any evidence demonstrating that, at the time when the present action was brought, the action was based by way of exception on a vested and current interest requiring legal protection, despite the fact that the Commission had not yet set out its position regarding the existence of a sufficiently specific claim and its intention to recover it.

73      The applicant has therefore not shown that, at the time when the present action was brought, it had a vested and current interest regarding the claim relating to the i-SCOPE and Smart-Islands agreements.

74      Accordingly, the claim concerning the permissibility of the costs relating to those agreements is inadmissible.

75      The examination of the first plea will therefore cover only the eligibility of the personnel costs declared by the applicant in the context of the performance of the Briseide grant agreement.

 The first plea, alleging breach of Article II.21 of the general conditions of the grant agreements regarding the eligibility of personnel costs

76      The applicant argues, in essence, that the findings of the audit report concerning the unreliability of the time-recording system are incorrect and that all the personnel costs declared must be considered eligible. It is claimed that there were no systematic errors resulting in the rejection of all personnel costs of the projects. Firstly, the time-recording system complied with the Commission’s requirements laid down in the Briseide grant agreement and in the Guide to Financial Issues relating to ICT grant agreements. Secondly, the time-recording system was reliable as a whole, notwithstanding some isolated IT errors.Thirdly, no contractual provision applicable to the audited projects prevented in-house consultants from working more than eight hours per day. In addition, the reference to the acceptable number of working hours on the Greek employment market was irrelevant as, according to settled case-law, disputes arising from the performance of a contract must be settled, in principle, on the basis of the contractual requirements alone. Fourthly, the differences in hourly rates found for the same consultant between the various projects were, it is argued, not only lawful but justified by the complexity of the work carried out in the context of each project. Fifthly, there is no obligation under Greek law to submit consultant contracts to the tax authorities, with the result that the applicant has therefore not breached any taxation or social security obligation. Sixthly, the auditors and the Commission cannot legitimately argue that the costs declared as personnel costs for the two owners of the applicant are not eligible, owing to the absence of invoices or pay slips, as this practice follows the specific rules put in place by the Commission. In addition, according to the applicant, the personnel costs declared during the performance of the agreements are not subject to the limits provided for in the Commission’s decision of 8 December 2011 in relation to hourly rates and the standard number of productive hours per small or medium-sized enterprise (SME) owner.

77      The Commission disputes the applicant’s arguments.

78      First, it must be recalled that the Commission is bound, in accordance with Article 317 TFEU, by an obligation of sound financial management of the resources of the European Union. The Commission is in particular obliged to check that the budgetary resources of the European Union are used for the purposes intended. Pursuant to that obligation, in the grant or financial aid agreements which the Commission concludes in the name of and on behalf of the European Union, the Commission subjects the award of a grant or financial aid to conditions which guarantee that the financial contribution of the European Union will in fact be used to fund the project or action for the performance of which the contribution was granted. The award of the grant or financial aid is therefore conditional on compliance with certain criteria which determine which costs are to qualify as eligible costs to be reimbursed in the context of the project or action concerned and on the compliance, by the beneficiary, with certain obligations relating to, inter alia, the financial justification of the costs declared to have been incurred for the performance of that project or action. The beneficiary of the grant or financial aid therefore acquires a definitive right to payment of the EU financial contribution only if all the conditions to which the award of the grant or financial aid is subject are satisfied. Given the objective which they pursue, the conditions thus laid down are of fundamental importance in the structure of grant or financial aid agreements (see judgment of 8 September 2015, Amitié v Commission, T‑234/12, not published, EU:T:2015:601, paragraph 146 and the case-law cited).

79      In the present case, the Commission took the view, in the light of the findings in the final audit report, that the contractual conditions for the costs declared by the applicant as personnel costs to be considered eligible had not been met.

80      In that regard, it must be borne in mind that Article II.20(1) of the general conditions of the grant agreements states:

‘Eligible costs are the costs defined in Articles II.21 and II.22. They shall fulfil the following conditions:

–        be indicated in the indicative breakdown of the budget and the financial contribution of the Union between beneficiaries in Annex I;

–        be necessary for the implementation of the project;

–        be actually incurred by the beneficiary;

–        be identifiable and verifiable, be recorded in the beneficiary’s accounts and determined in accordance with the applicable accounting standards of the country where the beneficiary is established and with the usual cost accounting practices of the beneficiary. The beneficiaries’ internal accounting and auditing procedures must permit the direct reconciliation of the costs and receipts declared in respect of the project with the corresponding financial statements and supporting documents;

–        comply with the requirements of the applicable tax and social legislation;

–        be reasonable and justified and comply with the requirements of sound financial management, in particular regarding economy and efficiency; and

–        be incurred during the duration of the project.’

81      Article II.21.2(a) of the general conditions of the grant agreements states:

‘With regard to personnel costs,

(a)      Only the costs of the actual hours worked by the persons directly carrying out work under the project may be charged to the grant agreement.

Such persons must:

–        be directly hired by the beneficiary in accordance with its national legislation;

–        work under the sole technical supervision and responsibility of the beneficiary, and

–        be remunerated in accordance with the normal practices of the beneficiary, provided that these are regarded as acceptable by the Commission.’

82      Article II.23 of the general conditions of the grant agreements states that the beneficiary, for the purpose of the reimbursement of eligible costs, must provide the Commission with precise, complete and effective documentation justifying its actual costs.

83      The Commission must thus be able to determine with certainty that the costs declared by the beneficiary were genuine and necessary and were actually incurred in respect of the implementation of the projects and in the course thereof. Grants are designed to reimburse the costs actually incurred by the beneficiary, without the latter deriving any advantage from those grants.

84      It is apparent, however, from the final audit report that, first, the applicant did not have a reliable time-recording system which made it possible to verify the time actually spent by the consultants on carrying out each of the audited agreements. The auditors observed a number of contradictions and inconsistencies between the various working time records provided by the applicant. The hours recorded in the global working time records in Excel format, which specify the number of hours spent per day, by a given consultant, on all of the EU projects for the month in question (‘the daily time sheets’) differed from those recorded in the monthly working time records in Access format, which specify the total number of hours spent per month, by the same consultant, on each project (‘the monthly time sheets’).

85      Secondly, the number of work hours per year declared for the in-house consultants, including the two owners of the applicant, was unreasonable, as it greatly exceeded the number of acceptable hours on the Greek employment market. The auditors concluded, inter alia, that the number of hours per year declared for the two owners of the applicant was particularly unreasonable, having regard to the fact that they were pursuing other professional activities at the same time. Moreover, the auditors noted that the costs declared as personnel costs for the two owners of the applicant were not supported by any invoices or pay slips.

86      Thirdly, the working hours recorded in respect of the audited agreements included, in some cases, the hours of work carried out in the context of other projects and activities.

87      Fourthly, hourly rates between the audited projects varied significantly for the same consultants. The Commission therefore considered that it was not possible to guarantee that the costs declared by the applicant were genuine and necessary and were actually incurred in respect of the implementation of the projects and in the course thereof.

88      The applicant has not produced any evidence to call that finding into question or to demonstrate the reliability and integrity of the costs declared.

89      In the first place, it is necessary to reject the argument that the costs are eligible on the ground that the time-recording system complies with the requirements laid down by the grant agreements and by Article II.21.2 of the Guide to Financial Issues relating to ICT grant agreements in the version applicable in the present case.

90      The mere fact that a time-recording system which complies with contractual requirements has been set up does not allow it to be concluded that the costs declared in performance of those agreements are eligible and justified costs, that is, inter alia, costs which were actually incurred for the implementation of the project, which were necessary for that project, and which have not already been declared and reimbursed under another grant agreement.

91      In the second place, it is necessary to reject the argument that the inconsistencies established by the auditors in the time sheets were minor, that they were due generally to isolated IT rounding errors which occurred when the data in the daily time sheets was merged and that they do not concern the Briseide agreement.

92      As a preliminary point, it must be noted that if, as the applicant argues, all the hours of work were carried over into a single time-recording system or database from which all of the time sheets were drawn up, those time sheets should not diverge as regards the hours worked by the consultants.

93      It must be observed, contrary to the findings in the audit report commissioned by the applicant, that, first of all, the daily and monthly time sheets produced by the applicant contained inconsistencies that cannot be classified as isolated IT rounding errors; next, those errors did not concern the period prior to October 2011 alone and, finally, they also concerned the Briseide agreement.

94      First, the table in Annex B.17 to the defence lists 31 inconsistencies in the daily time sheets and monthly time sheets of nine different people, for the three projects audited and for the period from 2010 to 2013. More specifically, as the Commission points out, in 16 cases the monthly time sheets record more hours worked than the daily time sheets, that is, an established difference of 426 hours. In 15 cases, the daily time sheets record more hours worked than the monthly time sheets, that is, an established difference of 315 hours.

95      Secondly, Annexes B.13 and B.14 to the defence, which correspond to the daily time sheets and monthly time sheets respectively, declared for the same consultant in the context of the implementation of the Smart-Islands project, indicate a difference of six hours between the sets of time sheets for August 2011.

96      Thirdly, Annex B.19 to the defence, which corresponds to the monthly time sheets and daily time sheets declared for the same consultant in the context of the implementation of the Briseide project, indicates a difference of 18 hours and 58 minutes between the sets of time sheets for December 2010.

97      Fourthly, the tables in paragraphs 57 and 58 of the defence, which collate the monthly time sheets and daily time sheets, respectively, of two consultants in the context of the implementation of the i-SCOPE project, highlight the inconsistencies between the two sets of time sheets in respect of identical periods as follows:

Month

Project

Hours according to Access

Hours according to Excel

Difference in hours

07/2012

i-SCOPE

15.00

0.00

15.00

08/2012

i-SCOPE

15.00

15.00

0.00

09/2012

i-SCOPE

7.00

15.00

-8.00

10/2012

i-SCOPE

20.00

7.00

13.00

11/2012

i-SCOPE

12.00

20.00

-8.00


Month

Project

Hours according to Access

Hours according to Excel

Difference


07/2012

i-SCOPE

60.00

0.00

60.00

08/2012

i-SCOPE

60.00

60.00

0.00

09/2012

i-SCOPE

30.00

60.00

-30.00

10/2012

i-SCOPE

75.00

30.00

45.00

11/2012

i-SCOPE

45.00

75.00

-30.00

12/2012

i-SCOPE

30.51

45.00

-14.49

01/2013

i-SCOPE

0.00

28.40

-28.40


98      It follows that, contrary to the applicant’s claims, the errors in the daily time sheets and the monthly time sheets established by the auditors and by the Commission cannot be considered to be minor and justify the uncertainty as to the sincerity and reliability of the applicant’s time-recording system.

99      In the third place, it is necessary to reject the argument that no contractual provision applicable to the audited projects prevents in-house consultants from working more than eight hours per day.

100    In this regard, it should first be borne in mind, as recalled in paragraph 82 above, that, where a decision is challenged, it is for the applicant, as the beneficiary of the grant agreement, to demonstrate, by producing precise, complete and effective documentation, the genuine, necessary and economic nature of the incurred costs the reimbursement of which it is claiming from the Commission. The applicant cannot therefore reasonably dispute the auditors’ finding that the number of hours of work per year declared by the in-house consultants, including its two owners, was not reasonable merely by asserting that no contractual provision applicable to the projects prevented in-house consultants from working more than eight hours per day.

101    Secondly, it must be pointed out that the applicant has not been able to demonstrate that the number of hours of work per year declared for the in-house consultants, including its two owners, was reliable, whereas (i) it is apparent from the table, which the applicant provided to the auditors, on page 22 of the final audit report that, between 2010 and 2014, the in-house consultants took only 10 days on average of annual leave per year, never took sick leave and had no statutory holidays and (ii) page 18 of that audit report shows that the two owners of the applicant declared 211 hours more than the in-house consultants for 2012, although they pursued other activities at the same time.

102    In the fourth place, it is necessary to reject the argument that the differences in hourly rates established for the same consultant between the various projects were not only lawful but justified by the complexity of the work carried out in the context of each project.

103    In this regard, it should, firstly, again be recalled that, where a decision is challenged, it is for the applicant, as the beneficiary of the grant agreement, to demonstrate, by producing precise, complete and effective documentation, the genuine, necessary and economic nature of the incurred costs the reimbursement of which it is claiming from the Commission. The applicant cannot therefore validly dispute the auditors’ finding that hourly rates varied significantly for the same consultants between the projects audited merely by arguing that no contractual provision applicable to the projects prevented it from applying different hourly rates for the same consultants depending on the project. Moreover, it should be added that, by that observation, the auditors did not intend to call into question the legality of the applicant’s practice, but sought rather to demonstrate the unreliability of the evidence produced by the applicant for the purpose of obtaining reimbursement of the personnel costs incurred.

104    Secondly, even if, as the applicant claims, those differences in hourly rates for the same consultant between the projects audited are justified by the difficulty of those projects, it should nonetheless be noted that this cannot explain the year-on-year differences in hourly rates observed for the same consultant in the Briseide project.

105    In the fifth place, it is necessary to reject the argument that the auditors and the Commission cannot legitimately argue that the costs declared as personnel costs for the two owners of the applicant are not eligible, owing to the absence of invoices or pay slips, as this practice, it is argued, follows the specific rules put in place by the Commission.

106    In this regard, it should first be noted that the applicant’s reading of the final audit report is incorrect. The costs at issue were not regarded by the auditors as ineligible on the ground that they were not supported by invoices or pay slips, but because the number of hours of work per year declared was particularly unreasonable in the light of the fact that they greatly exceeded the number of acceptable hours on the Greek employment market and the fact that the two owners of the applicant pursued other professional activities at the same time.

107    In addition, the argument that the personnel costs declared during the performance of the grant agreements are not subject to the limits provided for in the Commission’s decision of 8 December 2011 in relation to hourly rates and the standard number of productive hours per SME owner cannot demonstrate that the number of hours of work per year declared by the two owners of the applicant was reasonable.

108    Secondly, the mere fact that this practice corresponds to the specific rules put in place by the Commission, if that practice is indeed established, is not sufficient to prove that the costs declared are eligible. Those costs must also satisfy the conditions recalled in paragraphs 80 and 81 above, something which the applicant has not shown, even though the onus was on it to provide proof thereof, as stated in paragraph 82 above.

109    In the sixth place, the applicant cannot show that the costs declared are eligible merely by claiming that it has not breached any taxation or social security obligation by failing to submit the consultant contracts to the tax authorities, since it had no obligation under Greek law to do so. Even if this should prove to be the case, that circumstance would not be sufficient in itself, in the light of all of the foregoing, to demonstrate the reliability and integrity of the costs declared.

110    It follows from all of the foregoing that, contrary to what the applicant claims, the inconsistencies established by the auditors were such as to justify the doubts as to the sincerity and reliability of the applicant’s time-recording system.

111    Accordingly, the Commission was fully entitled to take the view that all of the personnel costs declared under the audited agreements were ineligible and therefore non-reimbursable, with the result that the grant paid to the applicant under the Briseide agreement had to be repaid (see, to that effect, judgment of 8 September 2015, Amitié v Commission, T‑234/12, not published, EU:T:2015:601, paragraphs 211 and 212 and the case-law cited).

112    In addition, it must be pointed out that, in so far as none of the direct costs declared by the applicant was considered to be eligible, none of the indirect costs can be considered eligible since, according to Article II.22.1 of the general conditions of the grant agreements, indirect costs are all those eligible costs that can be identified and justified by the beneficiary’s accounting system as being incurred in direct relationship with the eligible direct costs.

113    It follows that the present plea in law must be rejected as unfounded.

 The second plea, alleging breach of Article II.5.3(d) of the general conditions of the grant agreements

114    The applicant challenges the Commission’s decisions suspending payments regarding the i-Locate, eENV-Plus, GeoSmartCity and c-Space grant agreements. In essence, the applicant claims, in the first place, that the Commission unfairly applied the third indent of Article II.5.3(d) of the general conditions of the grant agreements, on the ground that the Commission never officially mentioned that the provisions of those agreements had been infringed, or that it suspected that they had been infringed, following an audit and that no audit of those projects was commissioned. In addition, the applicant alleges that the Commission referred to an incorrect legal basis in each of the decisions and did not mention the legal basis to which it had in fact intended to refer, namely the fifth indent of Article II.5.3(d) of the general conditions of the grant agreements. In the second place, the applicant considers, in any event, that the conditions set out in the fifth indent of Article II.5.3(d) of the general conditions of the grant agreements are not met, as it did not commit any serious and systematic irregularity affecting the performance of the i-Locate, eENV-Plus, GeoSmartCity and c-Space grant agreements.

115    The Commission disputes the applicant’s arguments.

116    As a preliminary point, it should be borne in mind that, first, the third indent of Article II.5.3(d) of the general conditions of the grant agreements provides that the Commission may suspend the payment at any time, in whole or in part, of the amount intended for the beneficiary concerned if the provisions of the grant agreement have been infringed or if there is a suspicion or presumption thereof, in particular following any checks and audits provided for in Articles II.28 and II.29.

117    Secondly, the fifth indent of Article II.5.3(d) of the general conditions of the grant agreements provides that the Commission may suspend the payment at any time, in whole or in part, of the amount intended for the beneficiary concerned if there is a suspected or established irregularity committed by one or more beneficiaries in the performance of another grant agreement funded by the general budget of the European Union or by budgets managed by the latter. In such cases, the payments are suspended where the irregularity or suspected irregularity is of a serious and systematic nature likely to affect the performance of the grant agreement in question.

118    In the first place, as regards the improper or incorrect application of the third indent of Article II.5.3(d) of the general conditions of the grant agreements, on which the Commission allegedly based its decisions suspending the payments regarding the i-Locate, eENV-Plus, GeoSmartCity and c-Space grant agreements, it must be noted that it is in fact apparent from the examination of those decisions that they are formally based on the third indent of Article II.5.3(d) of the general conditions of the grant agreements and not on the fifth indent of Article II.5.3(d) of those general conditions, applicable in the light of the facts of the case.

119    However, having regard to the circumstances, the applicant was fully in a position to understand that this was a purely material error on the part of the Commission and that those decisions should have been based on the fifth indent of Article II.5.3(d) of the provisions in question.

120    It must be noted that, first, as pointed out by the Commission in the defence, to the extent to which no financial audit of the i-Locate, eENV-Plus, GeoSmartCity and c-Space grant agreements had been conducted, the suspension of payments relating to those projects could be based only on suspicions of serious and systematic irregularities established further to the audit conducted in the context of the Briseide, i-SCOPE and Smart-Islands agreements and, therefore, on the fifth indent of Article II.5.3(d) of the general conditions of the grant agreements, which expressly provides for that possibility.

121    Secondly, the letter from the Commission of 21 May 2015 relating to the suspension of payments in respect of the i-Locate and eENV-Plus projects expressly quotes the wording of the fifth indent of Article II.5.3(d) of the general conditions of the grant agreements.

122    Thirdly, it should be noted that the applicant was perfectly able to identify the error made by the Commission and understand that, having regard to the context, the decisions should have been based on the fifth indent of Article II.5.3(d) and not on the third indent of Article II.5.3(d) of the general conditions of the grant agreements, since it spontaneously argued that it had not committed any serious and systematic irregularity in order to preclude the application of the fifth indent of Article II.5.3(d) of the general conditions.

123    It is thus apparent that the applicant was manifestly in a position to identify the Commission’s purely material error and to understand that the decisions should have been formally based on the fifth indent of Article II.5.3(d) of the provisions in question.

124    It follows that, contrary to the applicant’s claim, that error cannot lead to the decisions to suspend payments being regarded as infringing Article II.5.3(d) of the general conditions of the grant agreements.

125    In the second place, with regard to the conditions for applying the fifth indent of Article II.5.3(d) of the general conditions of the grant agreements, it must be stated that those conditions are satisfied in the present case. Although several decisions to suspend payment had already been made before the final audit report was submitted, it should nevertheless be pointed out that the findings of the preliminary audit report, confirmed by the final audit report, already highlighted significant serious and systematic irregularities in the performance of the Briseide, Smart-Island and i-SCOPE agreements.

126    Therefore, having regard to the irregularities established in those three agreements by the preliminary audit report, the Commission was legitimately entitled to harbour suspicions that irregularities of the same kind existed in the context of the performance of all the contractual agreements concluded between the Commission and the applicant.

127    Those circumstances were therefore such as to justify the suspension of payments in the projects in question, in accordance with the fifth indent of Article II.5.3(d) of the general conditions of the grant agreements, in order to protect the financial interests of the European Union and to minimise any risk relating to the management of public resources paid to the applicant in the context of the projects in question.

128    It follows that this plea in law must be rejected as unfounded.

 The third plea, relating to the order that the Commission compensate the applicant for the damage suffered

129    In support of its claim for compensation, the applicant submits, in essence, that the Commission infringed the provisions of the grant agreements concerning the eligibility of the costs declared and the suspension of payments and that those infringements, which it defines as breaches of contract, caused it material and non-material damage for which it seeks to be compensated. In that regard, the applicant states that, inasmuch as the grant agreements do not contain any provisions governing the Commission’s non-performance or unsatisfactory performance of those agreements, the agreements are governed, in the alternative, by Belgian and Luxembourg civil law. The applicant recalls that, in accordance with the Belgian and Luxembourg Civil Codes, an applicant is entitled to compensation when he proves wrongful conduct, damage and a causal link between the two.

130    The Commission disputes the applicant’s arguments.

131    Under the first paragraph of Article 340 TFEU, the contractual liability of the European Union is governed by the law applicable to the contract in question.

132    Under Article 10 of the grant agreements in question, the agreements are governed by their terms, the EU acts related to the Competitiveness and Innovation Framework Programme, the Financial Regulation, other EU legal rules and, in the alternative, by Luxembourg law as regards the Briseide, eENV-Plus, c-Space, i-Locate and GeoSmartCity agreements and by Belgian law as regards the Smart-Islands and i-SCOPE agreements.

133    It follows that the grant agreements are governed primarily by their own terms, including the general conditions in Annex II to each agreement, by the relevant provisions of EU law, that is, in the present case, the Financial Regulation, and, in the alternative, in order to fill any gaps in the contractual terms or in the relevant provisions of EU law, by the national law specified in each agreement, namely, in this case, Belgian law and Luxembourg law.

134    It should be noted that the grant agreements, including the general conditions in Annex II to each agreement, and the Financial Regulation do not contain any provisions governing the non-performance or unsatisfactory performance of the terms of the grant agreements by the Commission. Accordingly, the national law specified in each agreement is applicable.

135    In that regard, Article 1142 of the Belgian Civil Code and Article 1142 of the Luxembourg Civil Code provide that ‘any obligation to act or to refrain from acting shall give rise to payment of damages in the event of non-performance by the party on whom the obligation is imposed’.

136    Article 1147 of the Belgian Civil Code and Article 1147 of the Luxembourg Civil Code provide, in addition, that ‘the party on whom an obligation is imposed shall be ordered, when appropriate, to pay damages, either by reason of the non-performance of the obligation, or because of delayed performance, whenever he cannot demonstrate that the cause of non-performance is external and cannot be attributed to him, and that there was no bad faith on his part’.

137    As the applicant points out, it follows from those provisions that three cumulative conditions must be met in order for damage of contractual origin to be the subject of compensation under Belgian civil law and Luxembourg civil law: a failure properly to perform the contract, that is, the total or partial non-performance of the contract attributable to one of the parties to the contract, damage and a causal link between the first and second conditions.

138    However, it is clear from the findings of the Court in respect of the first and second pleas that the applicant has not established that the Commission has in any way failed properly to perform the grant agreements.

139    It follows that the claim for compensation must be rejected as unfounded, without it being necessary to examine the other conditions of liability. Therefore, without it being necessary to rule on the admissibility, disputed by the Commission, of the claim in respect of the Briseide agreement, the applicant’s claim based on Article 272 TFEU must be rejected.

 The claims based on Articles 263 TFEU and 268 TFEU

140    By its first plea, alleging infringement of Articles 106(3) and 108(2)(b) of the Financial Regulation, and its second plea, alleging breach of the rights of the defence and, more specifically, the right to be heard, the applicant claims, in essence, that the Court should declare that its registration in the EDES database was unlawful.

 Continuing interest in bringing proceedings

141    It should be borne in mind, as stated in paragraph 26 above, that, as from 23 June 2017, the applicant’s name was removed from the EDES database.

142    According to the Court’s settled case-law, an action for annulment brought by a natural or legal person is admissible only in so far as that person has an interest in having the contested act annulled. Such an interest requires that the annulment of that act must be capable, in itself, of having legal consequences and that the action may therefore, through its outcome, procure an advantage to the party which brought it. An applicant’s interest in bringing proceedings must be vested and current. It may not concern a future and hypothetical situation. That interest must, in the light of the purpose of the action, exist at the stage of lodging the action, failing which the action will be inadmissible, and continue until the final decision, failing which there will be no need to adjudicate (see judgment of 17 September 2015, Mory and Others v Commission, C‑33/14 P, EU:C:2015:609, paragraphs 55 to 57 and the case-law cited).

143    If the applicant’s interest in bringing proceedings disappears in the course of proceedings, a decision of the Court on the merits cannot bring him any benefit (see order of 14 April 2015, SolarWorld and Solsonica v Commission, T‑393/13, not published, EU:T:2015:211, paragraph 35 and the case-law cited).

144    The interest in bringing proceedings is thus an essential and fundamental prerequisite for any legal proceedings (see judgment of 17 September 2015, Mory and Others v Commission, C‑33/14 P, EU:C:2015:609, paragraph 58 and the case-law cited).

145    Thus, it falls to the applicant to justify in a relevant manner that he has a continuing interest in bringing proceedings (see, to that effect, judgment of 4 June 2015, Andechser Molkerei Scheitz v Commission, C‑682/13 P, not published, EU:C:2015:356, paragraphs 27 and 28 and the case-law cited).

146    In various circumstances, the EU Courts have acknowledged that an applicant’s interest in bringing proceedings does not necessarily disappear because the act challenged by him has ceased to have effect in the course of proceedings. In particular, they have thus held that an applicant may retain an interest in claiming the annulment of a decision either in order to be restored to his original position or in order to induce the author of the contested act to make suitable amendments in the future, and thereby avoid the risk that the unlawfulness alleged in respect of that act may be repeated (see order of 14 April 2015, SolarWorld and Solsonica v Commission, T‑393/13, not published, EU:T:2015:211, paragraph 36 and the case-law cited).

147    It is apparent from that case-law that an applicant’s continuing interest in bringing proceedings must be assessed in the light of the specific circumstances, taking account, in particular, of the consequences of the alleged unlawfulness and of the nature of the damage claimed to have been sustained (see order of 14 April 2015, SolarWorld and Solsonica v Commission, T‑393/13, not published, EU:T:2015:211, paragraph 37 and the case-law cited).

148    In the present case, it must be noted that, in addition to the annulment of the contested decision, the applicant seeks to be compensated for the non-material damage which it suffered due to the alleged unlawfulness of its registration in the EDES database. Such a claim, however, can be upheld only if it is in fact established that the registration was unlawful.

149    It follows that, notwithstanding the removal of its name from the EDES database, the applicant still has an interest in bringing proceedings for the purpose of having the registration declared unlawful.

 Admissibility of the claim for annulment

150    The applicant, relying in particular on the judgment of 22 April 2015, Planet v Commission (T‑320/09, EU:T:2015:223), argues that its claim is admissible for the purposes of Article 263 TFEU in so far as the contested decision is an act intended to produce legal effects. That decision, it claims, also gave rise to legal consequences for the applicant, such as the suspension of payments under all the grant agreements performed by the applicant.

151    The Commission disputes the applicant’s arguments.

152    As a preliminary point, it should be borne in mind that, according to settled case-law, an action for annulment is available in the case of all measures adopted by the institutions, whatever their nature or form, which are intended to have legal effects. In particular, any measure the legal effects of which are binding on, and capable of affecting the interests of, the applicant by bringing about a distinct change in its legal position is considered to be open to challenge in accordance with Article 263 TFEU (see order of 13 April 2011, Planet v Commission, T‑320/09, EU:T:2011:172, paragraph 37 and the case-law cited).

153    On the other hand, actions directed against decisions which only constitute measures internal to the administration and which, as a consequence, have no effect which is external to the administration are inadmissible (see order of 13 April 2011, Planet v Commission, T‑320/09, EU:T:2011:172, paragraph 38 and the case-law cited). However, the fact that the administration processed data for purely internal purposes, inter alia by collecting that data, by managing it and by using it, does not rule out the possibility that such activities may damage the interests of the persons concerned. The existence of such damage depends on several factors, inter alia, on the nature of the data processed, on the specific objective of that processing, on the precise consequences to which that processing may give rise and on the correspondence between, on the one hand, the objective and the consequences of the processing in question and, on the other hand, the applicable provisions which define the powers of the administration (order of 13 April 2011, Planet v Commission, T‑320/09, EU:T:2011:172, paragraph 39).

154    In the present case, the question is whether the contested decision to register the applicant in the EDES database pursuant to Article 108(4) of the Financial Regulation constitutes a measure the legal effects of which are binding on, and capable of affecting the interests of, the applicant by bringing about a distinct change in its legal position.

155    In this regard, it must be noted that, first, the first subparagraph of Article 108(4) of the Financial Regulation pursues the objective of protecting the European Union’s financial interests by means of an early risk detection system and by imposing financial penalties, which are provided for in Article 105a(1) of the Financial Regulation.

156    Secondly, the first subparagraph of Article 108(4) of the Financial Regulation provides that, in the context of the early detection and exclusion system, the Commission is required to transmit the information referred to in Article 108(3) of that regulation without delay to its authorising officers and those of its executive agencies, all other institutions, bodies, European offices and agencies in order to allow them to carry out the necessary verification in respect of their ongoing procurement procedures and existing contracts.

157    Thirdly, Article 108(3) of the Financial Regulation provides that, except where information is to be submitted in accordance with sector-specific rules, the information to be transmitted is to include the identification of the economic operator concerned, a summary of the risks detected or the facts in question and information that could assist the authorising officer in carrying out the verification referred to in Article 108(4) of the Financial Regulation.

158    Having regard to the foregoing, the Court finds that the effects of registering an entity in the EDES database cannot remain purely internal to EU institutions, bodies, offices and agencies. Such a registration, in the light of the information transmitted, necessarily affects relations between the authorising officers concerned and the registered entity (see, to that effect and by analogy, order of 13 April 2011, Planet v Commission, T‑320/09, EU:T:2011:172, paragraph 44).

159    Nevertheless, this does not imply that the external effects are automatically such as to bring about a distinct change in the legal position of the entity concerned. The Court must, rather, ascertain on a case by case basis whether there is such a change (see, to that effect, judgment of 19 December 2012, Commission v Planet, C‑314/11 P, EU:C:2012:823, paragraph 44).

160    In the first place, it is apparent that the registration of an entity in the EDES database does not constitute, in itself, a decision that results in binding legal effects or consequences that automatically affect the position of the entity concerned.

161    It must be noted, first, that it is apparent from Article 108(4) of the Financial Regulation that the registration of an early detection case in the EDES database enables the competent authorising officers merely to carry out the necessary verification in respect of ongoing procurement procedures and existing contracts. It follows that such registration merely makes it possible for authorising officers to satisfy themselves that the rules of sound financial management have been observed and that the agreements have been properly performed, but does not result in an automatic measure or penalty. It does not therefore in itself produce any binding legal effects.

162    Secondly, registration does not in itself constitute a final measure that brings about a change in the legal position of the entities concerned, in contrast to the registration of an exclusion, provided for in Article 106(1) of the Financial Regulation, the automatic consequence of which is that the entity is excluded from participating in any tendering procedures or calls for proposals. The Commission points out in its defence that any legal effects that are binding on, and capable of affecting the interests of, the applicant by bringing about a distinct change in its legal position derive solely from the assessment made by the authorising officer once the verification has been carried out. Registration is therefore merely a measure preparatory to the decision of the authorising officer. Thus, only a decision that is the result of a verification constitutes an act that is open to challenge.

163    Thirdly, in carrying out verifications, the authorising officer is required to exercise his or her powers as set out in Article 66 of the Financial Regulation and must not go beyond what is provided for in the terms and conditions of the procurement documents and contractual provisions.

164    In the second place, it is apparent that the registration of the applicant in the EDES database did not, in the present case, bring about a distinct change in its legal position.

165    It should be borne in mind that, first, the legal effects alleged by the applicant have not arisen as a consequence of its registration in the EDES database. As is apparent from paragraphs 125 to 127 above, the payments were suspended pursuant to the contractual terms and were therefore purely contractual, irrespective of whether a decision to register was adopted.

166    Secondly, it is not disputed that the applicant was able to participate in new calls for tenders or new procurement or grant award procedures after its registration. It must be noted in this regard that Article 110(1)(b) of the Financial Regulation provides that contracts are awarded on the basis of award criteria provided that the contracting authority has verified that the candidate or tenderer is not excluded under Article 106 of the Financial Regulation or rejected under Article 107 thereof.

167    It follows that the applicant has not shown that its registration in the EDES database produced binding legal effects capable of directly and immediately affecting its interests by bringing about a distinct change in its legal position.

168    The contested decision does not therefore constitute an act adversely affecting the applicant within the meaning of Article 263 TFEU.

169    The Court therefore finds that the claim for annulment must be rejected as inadmissible and, as a result, that the related claim for damages must also be rejected.

170    It thus follows from all of the foregoing that the action must be dismissed in its entirety.

 Costs

171    Under Article 134(1) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings.

172    Since the applicant has been unsuccessful, it must be ordered to pay the costs, in accordance with the form of order sought by the Commission.

On those grounds,

THE GENERAL COURT (Second Chamber)

hereby:

1.      Dismisses the action;

2.      Orders Epsilon International SA to pay the costs.


Prek

Schalin

Costeira

Delivered in open court in Luxembourg on 24 October 2018.


E. Coulon

 

H. Kanninen

Registrar

 

President


*      Language of the case: English.