ORDER OF THE PRESIDENT OF THE GENERAL COURT
15 March 2010 (*)
(Application for interim measures – Community programmes for research and technological development – Arbitration clause – Order for recovery – Debit note – Application for suspension of operation of a measure – Financial loss – No exceptional circumstances – No urgency)
In Case T-435/09 R,
GL2006 Europe Ltd, established in Birmingham (United Kingdom), represented by M. Gardenal and E. Belinguier-Raiz, lawyers,
applicant,
v
European Commission, represented by S. Delaude and N. Bambara, acting as Agents, and R. Van der Hout, lawyer,
defendant,
APPLICATION for suspension of the operation of the decision contained in the Commission’s letter of 10 July 2009 terminating the applicant’s participation in two Community projects and the debit notes issued on 7 August 2009 by which the Commission claimed repayment of sums paid pursuant to Community projects in which the applicant participated,
THE PRESIDENT OF THE GENERAL COURT,
makes the following
Order
Facts and legal context
1 The applicant, GL2006 Europe Ltd, is a company established in the United Kingdom and is a business and management consultancy.
2 Between 2000 and 2006, Directorate-General (DG) for the Information Society and Media of the Commission concluded 12 contracts with the applicant under the Fifth and Sixth Framework Programmes for Research and Technological Development (the I‑Way, J‑WeB, Care‑Paths, Cocoon, SecurE‑Justice, Qualeg, Lensis, E‑Pharm Up, Liric, Grace, Clinic and E2SP projects).
3 All those contracts contain an arbitration clause attributing to the General Court jurisdiction to hear any disputes between the European Community and the applicants in connection with the validity, the application or any interpretation of the contracts.
4 On 28 August 2006, the Commission sent the applicant a letter informing it that an audit would be carried out by an external audit undertaking. The audit was carried out in January 2007 and concerned 3 of the 12 projects, that is, projects No 507126 (Cocoon), No 507767 (Qualeg) and No 507188 (SecurE‑Justice).
5 In November 2007, the European Anti-Fraud Office (OLAF) requested a meeting with the Information Society and Media DG because of allegations regarding potential irregularities by the applicant in the execution of the contracts at issue. Based on a file note from OLAF of 3 December 2007 regarding that meeting, the Commission decided to suspend the assessment of the draft audit report in order to undertake further investigations.
6 From 8 to 12 December 2008, OLAF carried out a check at the applicant’s premises. After obtaining the applicant’s comments, OLAF drew up a final audit report, dated 25 March 2009 (‘the final report’) which concluded that all claims by the applicant from the Commission for amounts in respect of the 12 projects audited in connection with the programmes concerned should be rejected.
7 On 15 May 2009, the parties began an exchange of correspondence concerning the Commission’s intention to cancel the two projects still ongoing with the applicant and to recover the amounts corresponding to all 12 projects concluded with it. By letter dated 22 June 2009, the Commission, because of the irregularities referred to in the final report, requested repayment of a total amount of EUR 2 258 456.31. By letter of 10 July 2009, the Commission then informed the applicant of the cancellation of the two outstanding projects. Lastly, on 7 August 2009, the Commission sent the applicant debit notes corresponding to all the contracts concluded with it. A reminder of the amounts to be paid was sent by the Commission to the applicant on 22 October 2009.
Procedure and forms of order sought
8 By application lodged at the Court Registry on 22 October 2009, the applicant brought an action, registered as Case T-435/09, based on the arbitration clause, claiming that the Court should declare unlawful the on-the-spot check carried out by OLAF at its premises in Birmingham on 11 December 2008, the audit report of 19 December 2008 and the final report, the decision contained in the Commission’s letter of 10 July 2009 and the 12 debit notes sent on 7 August 2009. The applicant, by that action, also claims that the Court should declare the contracts concerned to be valid.
9 By separate document lodged at the Court Registry on 3 November 2009, the applicant brought an application to suspend the operation of the decision contained in the Commission’s letter of 10 July 2009 and of the 12 debit notes issued on 7 August 2009. It claims, in essence, that the President of the Court should:
– suspend the operation of the decision contained in the Commission’s letter of 10 July 2009 and of the 12 debit notes issued on 7 August 2009;
– order the Commission to pay the costs.
10 In its written observations on the application for interim measures, lodged at the Court Registry on 20 November 2009, the Commission contends, in essence, that the President of the Court should:
– dismiss the application for interim measures as unfounded;
– order the applicant to pay the costs.
11 By letter received at the Court Registry on 1 December 2009, the applicant challenged the suppression of a paragraph contained in OLAF’s note of 3 December 2007, produced by the Commission in annex to its observations on the application for interim measures. On 9 December 2009, in response to the communication by the Registrar of the Court of that objection, the Commission produced the complete version of the document.
Law
12 The judge hearing the application for interim measures considers that, in the light of the court-file, he has all the information necessary to decide the present application without it being necessary first to hear oral argument from the parties.
Preliminary observations
13 In its application for suspension of operation, the applicant has designated both the European Commission and OLAF as defendants.
14 On the basis of Article 162 of the Treaty establishing the European Community, paragraph 2 of which states that the Commission is to adopt its Rules of Procedure so as to ensure both its operation and that of its departments, the Commission adopted Decision 1999/352/EC, ECSC, Euratom of 28 April 1999 establishing the European Anti-fraud Office (OLAF) (OJ 1999 L 136, p. 20, ‘the decision establishing OLAF’).
15 Article 2 of the decision establishing OLAF defines the limits within which that body is to exercise the powers of the Commission with regard to investigations. Article 3 of that decision confers on OLAF full independence in the exercise of its powers of investigation.
16 In the light of the foregoing, OLAF is an internal department of the Commission, the independence of which is purely functional and limited to its investigation activities. On that basis and in the absence of any provision to the contrary, OLAF does not have separate legal personality and it is the Commission which represents it in legal proceedings. Therefore, an action calling into question the legality of OLAF measures adopted in the course of tasks such as those defined in Article 2 of the decision establishing OLAF must be considered to be directed against the Commission alone (see, to that effect, Case T‑309/03 Camós Grau v Commission [2006] ECR II‑1173, paragraph 66).
17 Under Article 44(1) of the Rules of Procedure, the applicant is to designate the party against whom the application is brought. However, the judge hearing the application for interim measures may, if necessary, clarify the formulation of the application for interim measures in that regard (see, to that effect, Case 44/76 Milch-, Fett- und Eier-Kontor v Council and Commission [1977] ECR 393, paragraph 1; order in Case 85/86 Commission v EIB [1986] ECR 2215, paragraph 6; and order of 16 October 2006 in Case T‑173/06 Aisne and Nature v Commission, not published in the ECR, paragraph 17). In the light of the considerations in paragraph 16 above, the Commission should thus in the present case be considered to be the only defendant.
Substance
Arguments of the parties
18 First, as to the existence of a prima facie case, the applicant claims that the Commission infringed certain procedural formalities (i) in the performance of the on-the-spot check, (ii) in drawing up the conclusions of the audit reports and (iii) in the notification of the decision. Moreover, the applicant claims that sufficient reasons were not given for the conclusions of the audit reports and the decision of the Commission, that they contained contradictions and that they were the result of the biased opinion of the inspection team.
19 The Commission contests all of the applicant’s arguments and contends that there is no prima facie case.
20 Second, as to the requirement of urgency, based on the note accompanying the debit notes and the reminder letters concerning the amounts to pay, the applicant claims that the Commission seems very willing to execute its recovery decision. It states that the sum claimed, including default interest, is considerable and very damaging for a small niche consulting firm such as the applicant.
21 Furthermore, the applicant states that it is facing a very difficult financial situation, as evidenced by the report of its director and the unaudited financial statements for the financial year to 30 June 2008. The applicant states that its turnover dropped from EUR 5 023 014 in 2007 to EUR 1 108 133 in 2008, whereas the loss after tax increased from EUR 76 889 in 2007 to EUR 761 298 in 2008.
22 As a result, the applicant claims that it might not survive the dangers of the Commission’s request for recovery. According to the applicant, the danger posed by the enforcement of that request is real and profound and the consequences extremely serious, the most likely of which being insolvency. The applicant indeed states that the recovery of the sums at issue probably will lead to its insolvency.
23 The Commission contends, first, that the applicant has failed to show that its application is urgent because of the nature of the measures taken by the Commission and that the argument concerning the applicant’s financial difficulties is irrelevant in that regard.
24 Thus, with regard to the nature of the contested measures, the Commission notes that the applicant’s action is actually directed against a series of debit notes, an accompanying letter and a letter cancelling the two outstanding contracts. None of those acts is in the nature of a decision. In support of its position, the Commission refers to the order of the President of the Court of 14 November 2008 in Case T‑411/08 R Artisjus v Commission, not published in the ECR, where it was held in paragraph 36 that, with regard to Article 104(2) of the Rules of Procedure, ‘[i]t is not sufficient for the purpose of satisfying the requirements of that provision merely to allege that the measure the suspension of whose operation is being sought is about to be put into effect, but it is for that party to prove that he cannot wait for the outcome of the main proceedings without suffering [serious and irreparable] damage’. It adds, moreover, that it has not yet issued any measure which would be directly enforceable vis-à-vis the debtor since, in Case C‑46/03 United Kingdom v Commission [2005] ECR I‑10167, paragraph 25; Case C‑131/03 P Reynolds Tobacco and Others v Commission [2006] ECR I‑7795, paragraph 54; and Case C‑516/06 P Commission v Ferriere Nord [2007] ECR I‑10685, paragraph 29, the Court held that a debit note does not constitute a challengeable act, but is merely of a preparatory nature.
25 Concerning the lack of relevance of the argument based on the applicant’s financial difficulties, the Commission contends that, in the order of the President of the Court of 2 July 2009 in Case T‑246/09 R Insula v Commission, not published in the ECR, it was stated that ‘the potential insolvency of an undertaking does not necessarily imply that the urgency requirement is fulfilled’. In the present case, the Commission notes that the applicant itself has stated that the EC project budgets had a minimal impact on its turnover.
26 Second, the Commission contends that the applicant has not proved the existence of serious and irreparable damage. The Commission is of the view that, in order to claim urgency, the applicant essentially goes not further than hinting at its financial ruin, whereas it was established in the order of the President of the Court in Case T‑346/06 R IMS v Commission [2007] ECR II‑1781 that a sufficient degree of probability of serious or irreparable harm occurring must exist. In addition, according to the Commission, the likelihood that the alleged insolvency may occur must be assessed in the light of a number of factors, such as the size of the company and its turnover. However, the applicant makes only vague and hypothetical statements, the only supporting information provided being an unaudited financial statement dated June 2008.
Assessment of the judge hearing the application for interim measures
27 It is clear from a reading of Article 278 TFEU and Article 279 TFEU in conjunction with Article 256(1) TFEU that the judge hearing the application for interim measures may, if he considers that circumstances so require, order that operation of the contested act be suspended or prescribe any necessary interim measures.
28 Article 104(2) of the Rules of Procedure provides that applications for interim measures are to state the subject-matter of the proceedings, the circumstances giving rise to urgency and the pleas of fact and law establishing a prima facie case for the interim measures applied for. Accordingly, suspension of the operation of an act and other interim measures may be ordered if it is established that such an order is justified, prima facie, in fact and in law and that it is urgent in so far as it must, in order to avoid serious and irreparable harm to the applicant’s interests, be made and produce its effects before a decision is reached in the main action. Those conditions are cumulative, so that an application for interim measures must be dismissed if any one of them is absent (order in Case C‑268/96 P(R) SCK and FNK v Commission [1996] ECR I‑4971, paragraph 30).
29 Moreover, in the course of his examination of the application as a whole, the judge hearing an application for interim measures has a wide discretion and is free to determine, having regard to the specific circumstances of the case, the manner and order in which the various conditions are to be examined, there being no rule of Community law imposing a pre-established scheme of analysis for assessing the need for interim measures (order in Case C‑149/95 P(R) Commission v Atlantic Container Line and Others [1995] ECR I‑2165, paragraph 23, and order of the President of the Court of 3 April 2007 in Case C‑459/06 P(R) Vischim v Commission, not published in the ECR, paragraph 25).
30 In the circumstances of the present case, it should first be examined whether the urgency condition is fulfilled.
31 First, it is settled case-law that the urgency of an application for interim measures must be assessed in relation to the necessity for interim relief in order to prevent serious and irreparable damage to the party requesting the interim measure (order in Case C‑213/91 R Abertal and Others v Commission [1991] ECR I‑5109, paragraph 18; order in Joined Cases T‑195/01 R and T‑207/01 R Government of Gibraltar v Commission [2001] ECR II‑3915, paragraph 95; and order in Case T‑181/02 R Neue Erba Lautex v Commission [2002] ECR II‑5081, paragraph 82). However, it does not suffice for a party to allege that the enforcement of the measure in question is imminent, rather it is for that party to adduce sound evidence that it cannot wait until the result of the main proceedings without having to suffer damage of that nature (order in Case T‑34/02 R B v Commission [2002] ECR II‑2803, paragraph 85). Although the imminence of damage does not have to be established with absolute certainty, its occurrence must nevertheless be foreseeable with a sufficient degree of probability, particularly where it depends on numerous factors. The applicant is required to prove the facts forming the basis of its claim that serious and irreparable damage is likely (order in Case C‑335/99 P(R) HFB and Others v Commission [1999] ECR I‑8705, paragraph 67, and order in Neue Erba Lautex v Commission, paragraph 83).
32 Financial damage cannot, save in exceptional circumstances, be regarded as irreparable or even as reparable only with difficulty, since it may, as a general rule, be the subject of subsequent financial compensation (order in Case C‑471/00 P(R) Commission v Cambridge Healthcare Supplies [2001] ECR I‑2865, paragraph 113, and order in Case T‑339/00 R Bactria v Commission [2001] ECR II‑1721, paragraph 94). However, an interim measure is justified if it appears that, without that measure, the applicant would be in a position that could imperil its existence before final judgment in the main action (order in Neue Erba Lautex v Commission, paragraph 84).
33 Lastly, to be able to determine whether the harm which the applicant fears is serious and irreparable and therefore provides grounds for, exceptionally, suspending the operation of the contested decision, the judge hearing the application must have hard evidence of a precise nature substantiated by detailed documents showing the applicant’s financial situation and allowing him to determine the precise consequences which the absence of the measures applied for would probably entail (see, to that effect, order in Case 378/87 R Top Hit Holzvertrieb v Commission [1988] ECR 161, paragraph 18; order in Case T‑163/00 R Carotti v Court of Auditors [2000] ECR‑SC I‑A‑133 and II‑607, paragraph 8; order in Case T‑196/01 R Aristoteleio Panepistimio Thessalonikis v Commission [2001] ECR II‑3107, paragraph 32; order in Case T‑420/05 R II Vischim v Commission [2006] ECR II‑4085, paragraphs 83 and 84; order in Case T‑86/96 R Arbeitsgemeinschaft Deutscher Luftfahrt-Unternehmen and Hapag-Lloyd v Commission [1998] ECR II‑641, paragraphs 64, 65 and 67; and order in Case T‑143/99 R Hortiplant v Commission [1999] ECR II‑2451, paragraph 18).
34 In the present case, concerning the evidence of the damaging effect that the repayment of the amount claimed would have on its situation, the applicant merely produced information for the financial year to 30 June 2008, without explaining the lack of more recent information. The information produced thus represents the applicant’s accounting situation more than a year before the present application was brought. However, in proceedings such as these, the financial information required must, in principle, reflect not only the applicant’s current situation, but also inform the judge hearing the application of the impact that the contested decision would have if the suspension of operation or other measures applied for were not to be forthcoming. It cannot be ruled out that even fairly old figures may prove relevant, especially in order to provide a picture of the finances certified by a firm of independent auditors. However, in the present case, the figures provided have not been so certified. The financial information produced has, thus, the three-fold disadvantage of being old for the purposes of the examination that the judge hearing the application is called on to perform, incomplete and not validated by an entity external to the applicant.
35 Second, it is settled case-law that, in the context of the examination of the applicant’s financial viability, its economic circumstances may be assessed in the light of the characteristics of the group of which it forms part by virtue of its shareholding structure (see order in Case C‑12/95 P Transacciones Marítimas and Others v Commission [1995] ECR I‑467, paragraph 12, and order in Case T‑192/01 R Lior v Commission [2001] ECR II‑3657, paragraph 54 and the case-law cited).
36 That approach is based on the idea that the objective interests of the undertaking concerned are not, in principle, independent from those of the legal or natural persons who control it. The serious and irreparable nature of the purported damage may therefore be assessed also with reference to the financial situation of persons who control the undertaking. That coincidence of interests is justification in particular for not assessing the undertaking’s interest in surviving independently from the interest which those who control it attach to its survival (order in HFB and Others v Commission, paragraph 62; order in Case T‑241/00 R Le Canne v Commission [2001] ECR II‑37, paragraph 40; and order in Lior v Commission, paragraph 55).
37 The case-law cited applies not only to legal persons, but also to natural persons who control an undertaking. In that regard, the President of the Court has stated that, with regard to the question of the coincidence of interests, no importance is to be attributed to the fact that the person controlling the undertaking by virtue of being its principal owner is a natural person who is not himself an undertaking (order in HFB and Others v Commission, paragraph 64; see, also, order in Le Canne v Commission, paragraph 42).
38 In the present case, the applicant refers to the fact that it is currently owned by Mr R.D. However, the applicant does not specify whether he is its sole shareholder or whether other shareholders hold interests in its capital. Moreover, even if that person is the applicant’s sole owner, the applicant has provided no information as to his financial situation. In the present case it is thus impossible for the judge hearing the application for interim measures to consider whether or not that owner has sufficient assets capable of serving as guarantees in the context, for example, of a bank loan, in order to preserve the interests of the applicant (see, to that effect, order of 11 October 2007 in Case T‑120/07 R MB Immobilien and MB System v Commission, not published in the ECR, paragraph 41).
39 Therefore, it must be held that the applicant has not provided the judge hearing the application for interim measures with decisive elements enabling a true and global picture of the situation of the undertaking to be constructed. The lack, on the one hand, of relevant financial information for an analysis of the applicant’s recent or indeed current accounting situation and, on the other hand, of explanations concerning its structure which are essential to determine whether the applicant has the option of recourse to financial instruments as an alternative to paying the amounts to be recovered from its own cash-flow means that the applicant’s arguments are so inadequate that they lead the judge hearing the application to find that the applicant has failed to establish that the circumstances of the present case can be termed exceptional, with the result that the damage of a financial nature alleged by the applicant cannot be regarded, in the light of the evidence in the court-file, as serious and irreparable.
40 Consequently, the urgency condition is not fulfilled in the present case.
41 It follows from the foregoing that this application for interim measures must be dismissed for lack of urgency without it being necessary to verify whether the other conditions for the grant of provisional measures applied for, in particular the existence of a prima facie case, are fulfilled.
On those grounds,
THE PRESIDENT OF THE GENERAL COURT
hereby orders:
1. The European Commission shall be regarded as the sole defendant.
2. The application for interim measures is dismissed.
3. The costs are reserved.
Luxembourg, 15 March 2010.