Case T-500/04

Commission of the European Communities

v

IIC Informations-Industrie Consulting GmbH

(Arbitration clause – Jurisdiction of the Court of First Instance – Repayment of the advance paid by the Community for projects financed in the domain of trans-European telecommunications networks – Forfeiture – Eligibility of the costs purportedly incurred)

Summary of the Judgment

1.      Budget of the European Communities – Community financial assistance – Duty of the beneficiary to comply with the conditions for grant of the aid

(Art. 274 EC)

2.      Budget of the European Communities – Community financial assistance – Duty of the beneficiary to comply with the conditions for grant of the aid

1.      Under Article 274 EC, the Commission is bound by the obligation of sound financial management of Community resources. Under the arrangements for the grant of Community financial aid, the use of that aid is subject to rules which may result in the partial or total repayment of aid that has already been granted. Thus, the beneficiary of financial assistance for which the application was approved by the Commission does not thereby acquire any definitive right to full payment of the assistance if he does not satisfy the conditions to which the support was subject.

In that connection, according to a fundamental principle of Community financial aid, the Community can subsidise only expenses which have actually been incurred. Accordingly, in order for the Commission to be able to carry out checks, the beneficiaries of such aid must show that the costs attributed to subsidised projects are genuine, as the provision by those beneficiaries of reliable information is indispensable for the successful operation of the system of control and evidence established in order to check whether the conditions for the grant of aid are satisfied. It is not sufficient, therefore, to show that a project has been carried out for the allocation of a specific subsidy to be justified. The beneficiary of the aid must, in addition, produce evidence that he has incurred the expenses declared in accordance with the conditions laid down for the grant of the aid concerned, with only those expenses which are properly justified being capable of being regarded as eligible. His obligation to satisfy the prescribed financial conditions is even one of his essential commitments and accordingly determines the allocation of Community financial aid.

(see paras 93-94)

2.      In the context of proceedings brought by the Commission for the repayment of advances made under a contract granting Community financial aid, the Commission’s insistence on the defendant’s scrupulous compliance with its contractual obligations in relation to statements of expenditure and evidence of the expenses incurred cannot be described as formalistic. Rather, the onus is on the defendant to demonstrate that its obligations in respect of accounting evidence have in fact been fully met.

That conclusion is not affected by the rules on the burden of proof. According to those rules, it is indeed the Commission, as the applicant, which is required to establish that its right to repayment is well founded, with the result that the onus is on the Commission to demonstrate conclusively and, if its claim is disputed, to prove that its payments exceeded the financial contribution owed. The Commission owes contributions only in respect of the costs which have been incurred in accordance with the terms of the contract and which have, in particular, been properly documented. It is only if the defendant has submitted the relevant cost statements that the Commission must, if appropriate, prove that it owes no reimbursement of the costs incurred because the contractual service provided was defective or the cost statements were inaccurate.

(see paras 97-99)