Judgment of the General Court (Fifth Chamber) of 6 November 2014 —
Greece v Commission

(Case T‑632/11)

EAGGF — ‘Guarantee’ Section — EAGF and EAFRD — Expenditure excluded from financing — Regulation (EC) No 1782/2003 — Single payment entitlements scheme — Loyal cooperation — Fairness — Proportionality — National reserve — Award criteria — Flat-rate financial correction — Risk for the Fund — Regulation (EC) No 1493/1999 — Wine sector — Distillation schemes and schemes for payments for the use of certain musts — Aid for restructuring and for the conversion of vineyards

1.                     Agriculture — Common agricultural policy — EAGF financing — Clearance of accounts — Disallowance of expenses arising from irregularities in applying EU rules — Condition — Error attributable to an EU institution (Council Regulation No 1782/2003; Commission Regulation No 795/2004) (see para. 29)

2.                     Agriculture — Common agricultural policy — EAGF financing — Clearance of accounts — Disallowance of expenses arising from irregularities in applying EU rules — Challenge by the Member State concerned — Reliance on principle for fairness as basis of an obligation to accept responsibility — Not permissible (Council Regulation No 1782/2003; Commission Regulation No 795/2004) (see para. 33)

3.                     Member States — Obligations — Duty of sincere cooperation with the EU institutions — Reciprocity (Art. 4(3) TEU; Council Regulation No 1782/2003; Commission Regulation No 795/2004, as amended by Regulation No 1974/2004) (see paras 34, 35)

4.                     Agriculture — Common agricultural policy — EAGGF, EAGF and EAFRD financing — Clearance of accounts — Disallowance of expenses arising from irregularities in applying EU rules — Flat-rate correction issued by the Commission in accordance with internal guidelines — Legal basis — Regulations No 729/70, No 1258/1999 or No 1290/2005 (Council Regulations No 729/70, as amended by Regulation No 1287/95, Art. 5(2)(c), No 1258/1999, Art. 7(4), fourth para., and No 1290/2005, Art. 31(1)) (see para. 46)

5.                     Agriculture — Common agricultural policy — AGGF, EAGF and EAFRD financing — Clearance of accounts — Disallowance of expenses arising from irregularities in applying EU rules — Assessment of losses incurred by the Fund — Irregular expenses not capable of determination with sufficient precision — Assessment based on flat-rate corrections — Lawfulness — No breach of principle of proportionality (Council Regulation No 1782/2003; Commission Regulation No 795/2004) (see paras 59, 60, 63)

6.                     Agriculture — Common agricultural policy — Integrated administration and control system for certain aid schemes — Single payment scheme — Calculation of the reference amount — Right to payment from the national reserve — Farmers in a special situation — Discretion of the Member States — Scope — Limits — Priority granting of national reserve rights to young farmers — Justification on the basis that the age criterion conforms with the objectives of the single payment scheme — Lawfulness (Charter of Fundamental Rights of the European Union, Art. 21(1); Council Regulations No 1493/1999, Art. 11 and No 1782/2003, Arts 42 and 128(3); Commission Regulation No 795/2004, Art. 21) (see paras 77-79, 81, 82, 84-87, 89, 94, 95, 98)

7.                     Agriculture — Common agricultural policy — Integrated administration and control system for certain aid schemes — Single payment scheme — Calculation of the reference amount — Right to payment from the national reserve — Farmers in a special situation — Farmers having made investments — Discretion of the Member States — Scope — Limits — Obligation to maintain a correlation between the value of the rights granted and the number of hectares acquired as an investment (Council Regulation No 1782/2003, Art. 42(4); Commission Regulation No 795/2004, Arts 6(5), and 21(1)) (see paras 104-107)

8.                     Actions for annulment — Judgment annulling a measure — Scope — Partial annulment of an EU legal measure — Condition — Severability of the annullable elements of the contested measure — Commission decision on clearance of accounts in relation to expenses financed by EAGGF, EAGF and EAFRD — Severability from a financial correction unduly applied by way of granting national reserve rights to certain farmers — Partial annulment (Art. 263, first para., TFEU; Council Regulation No 1782/2003, Art. 42(3) and (4)) (see paras 111, 113, 114)

9.                     Agriculture — Common agricultural policy — EAGF financing — Clearance of accounts — Disallowance of expenses arising from irregularities in applying EU rules — Challenge by the Member State concerned — Burden of proof — Allocation between the Commission and the Member State (Council Regulations No 1493/1999 and No 1290/2005, Art. 31) (see paras 116-120, 172, 206)

10.                     Agriculture — Common agricultural policy — EAGF financing — Clearance of accounts — Disallowance of expenses arising from irregularities in applying EU rules — Assessment of losses incurred by the Fund — Irregular expenses not capable of sufficiently precise determination — Assessment based on flat-rate corrections — Lawfulness (Council Regulations No 1258/1999, No 1782/2003, Art. 42, and No 1290/2005, Art. 31) (see paras 126, 127)

11.                     Agriculture — Common agricultural policy — EAGF financing — Clearance of accounts — Disallowance of expenses arising from irregularities in applying EU rules — Flat-rate correction issued by the Commission in accordance with internal guidelines — Deficient or unsatisfactory nature of key controls established by the Member State — Whether permissible to apply a flat rate of 10% in case on non-compliance with the criteria governing the grant of rights from the national reserve (Council Regulation No 1290/2005, Art. 31) (see paras 127, 132, 133, 135)

12.                     Agriculture — Common agricultural policy — EAGF financing — Clearance of accounts — Disallowance of expenses arising from irregularities in applying EU rules — Differential treatment of irregularities according to the degree of negligence and the degree of risk for the fund — Challenge by the Member State concerned — Burden of proof (Council Regulation No 1782/2003; Commission Regulation No 795/2004) (see paras 137-139)

Re:

APPLICATION for annulment of Commission Implementing Decision 2011/689/EU of 14 October 2011 on 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) (OJ 2011 L 270, p. 33), in so far as that decision concerns the Hellenic Republic.

Operative part

The Court:

1. Annuls Commission Implementing Decision 2011/689/EU of 14 October 2011 on 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 it imposes a flat-rate correction on the Hellenic Republic relating to the grant of entitlements from the national reserve to new farmers;

2. Dismisses the action as to the remainder;

3. Orders the European Commission and the Hellenic Republic to bear their own costs.