Case T-231/04

Hellenic Republic

v

Commission of the European Communities

(Action for annulment – Common diplomatic mission in Abuja (Nigeria) – Recovery of a debt by offsetting – Regulations (EC, Euratom) Nos 1605/2002 and 2342/2002 – Principle of good faith in public international law)

Summary of the Judgment

1.      Actions for annulment – Jurisdiction of the Community judicature – Cooperation between the Commission and the Member States in the context of the Union’s common foreign and security policy – Agreement entered into between the Commission and certain Member States involving financial contracts

(Art. 230 EC; Art. 46 EU; Council Regulation No 1605/2002; Commission Regulation No 2342/2002)

2.      Public international law – Principles – Good faith – Community law – Protection of legitimate expectations

3.      Budget of the European Communities – Financial regulation – Substantive scope

(Art. 268 EC; Council Regulation No 1605/2002, Arts 1 and 73(1))

4.      Procedure – Production of opinions of Community institutions’ legal services before the Court of First Instance – Conditions

1.      Under the EU Treaty, in the version arising from the Treaty of Amsterdam, the powers of the Court of Justice are exhaustively listed in Article 46 EU. That article makes no provision for any jurisdiction of the Court in respect of the provisions of Title V of the EU Treaty.

However, where the Commission proceeds to recover by offsetting amounts which have arisen in the context of an arrangement between the Commission and the Member States resulting from cooperation within the scope of Title V, by means of an act adopted pursuant to Regulation No 1605/2002 on the Financial Regulation applicable to the general budget of the European Communities and Regulation No 2342/2002 laying down detailed rules for the implementation of the Financial Regulation, that act of offsetting is covered by Community law and is open to challenge by way of an action for annulment under Article 230 EC.

(see paras 73-74)

2.      The appraisal of the obligations of a Member State which is a participating partner in a joint project between the Commission and certain Member States undertaken in the context of cooperation coming within the Union’s common foreign and security policy cannot be based solely on the memoranda recording the agreements entered into by the partners, but must also take into account the expectations which that Member State’s conduct led its partners to entertain. In fact, as a signatory of those memoranda, each partner is required to act in good faith as regards the other partners.

The principle of good faith is a rule of customary international law, the existence of which has been recognised by the Permanent Court of International Justice established by the League of Nations, and subsequently by the International Court of Justice and which has been codified by Article 18 of the Vienna Convention of 23 May 1969 on the Law of Treaties. Consequently, it is binding on the Community and on its partners in the framework of those agreements.

(see paras 84-87, 97)

3.      It is apparent from the scope of Regulation No 1605/2002 applicable to the general budget of the European Communities, and in particular Article 1 thereof, that the procedure of recovery by offsetting laid down in Article 73(1) thereof applies only to sums falling under the Community budget. The Commission is authorised, under Article 268 EC, which provides for both Community expenditure and certain expenditure occasioned for the institutions by the provisions of the Treaty on European Union relating to the common foreign and security policy, to assign to the Community budget the costs incurred in respect of projects in the context of cooperation coming within those provisions of the EU Treaty.

(see para. 111)

4.      It would be contrary to the public interest, which requires that the institutions should be able to benefit from the advice of their legal service given in full independence, to allow such internal documents to be produced in proceedings before the Court by persons other than the services at whose request they were drawn up, unless such production has been authorised by the institution concerned or ordered by that Court.

(see para. 134)