Action brought on 23 November 2006 - Município de Gondomar v Commission

(Case T-324/06)

Language of the case: Portuguese

Parties

Applicant: Município de Gondomar (Gondomar, Portugal) (represented by: J.L. da Cruz Vilaça, D. Choussey and L. Pinto Monteiro, lawyers)

Defendant: Commission of the European Communities

Form of order sought

a declaration that the decision of the Commission of the European Communities C(2006) 3782 of 16 August 2006 on the cancellation of the financial assistance granted by the Cohesion Fund for Project No 95/10/61/07 - Redevelopment of Grande Porto/Sul - Subsistema de Gondomar (Portugal) by Commission Decision C (95) 3281 of 18 December 1995, cancelling the total amount of the assistance of EUR 7 778 535 allocated to the project and ordering the applicant to reimburse the sum of EUR 6 222 828, is vitiated by manifest errors of assessment, is contrary to Regulation No 1164/94 ¹ and to the principles of proportionality and legal certainty and, in consequence,

principally, annulment of the contested decision or,

in the alternative, annulment in part of the contested decision and a declaration that the applicant is entitled to the whole of the Cohesion Fund financing, except for the sum of EUR 537 863;

an order that the Commission should bear its own costs and also those of the applicant.

Pleas in law and main arguments

This action seeks annulment of the contested decision pursuant to Article 230 EC, in so far as that decision cancels the total amount of the assistance of EUR 7 778 535 allocated to Project No 95/10/61/017 and orders the applicant to reimburse the sum of EUR 6 222 828.

In the contested decision, the Commission claims that the applicant committed irregularities, with regard to Regulation No 1164794 and Commission Decision C (95) 3281 which granted the European Community financing for the project. Those irregularities relate in essence to payments made outside the period of eligibility, unjustified expenditure and the fact that the applicant has not completed the works within the period fixed.

First, the applicant maintains that the contested decision is not based on sufficient reasons and that it is contrary to the principle of legal certainty. That is because the Commission on several occasions based the contested decision on unclear criteria and rejected some of the applicant's arguments without providing grounds for its conclusions.

Second, the applicant claims that the contested decision is vitiated by manifest errors of assessment of the facts, in that:

-    due justification has been produced for all amounts put forward by the applicant;

-    the Commission has displayed a lack of clarity in determining the amounts to be justified, not having also examined the evidence presented by the applicant to justify that expenditure;

-    the Commission has rejected the applicant's explanations without establishing the exact legal basis of that rejection;

-    the Commission has misinterpreted the facts and the documents put before it, for the sole purpose of showing fraudulent intent on the applicant's part when there was never any such intent.

Third, the applicant considers that the cancellation of the amount of the aid, in those circumstances, constitutes an infringement of Regulation No 1164/94, in that: (i) all the objectives of that regulation and of Commission Decision C (95) 3281 were attained and (ii) Article H of Annex II was infringed.

Last, the applicant alleges that, having regard to the completion of the project and the lack of any fraudulent intent, the contested decision runs counter to the principle of proportionality and to Article 5 EC.

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¹ - Council Regulation (EC) No 1164/94 of 16 May 1994 establishing a Cohesion Fund.