Action brought on 4 December 2009 - Poland v Commission

(Case T-486/09)

Language of the case: Polish

Parties

Applicant: Republic of Poland (represented by: M. Szpunar, Agent)

Defendant: European Commission

Form of order sought

annul Commission Decision 2009/721/EC of 24 September 2009 (notified under document C(2009) 7044) excluding from Community 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), ¹ in so far it excludes from Community financing the sum of PLN 47 152 775 spent by the paying agency accredited by the Republic of Poland;

order the Commission to pay the costs.

Pleas in law and main arguments

The contested decision provides for a financial correction amounting to 5% of the resources spent within the framework of the Rural Development Plan in 2005 to support agricultural activity in disadvantaged areas and agri-environmental ventures. The basis for the correction was alleged breaches relating to cross-checks in respect of observance of the principles of normal good farming practice, to the system of penalties, to reports of on-the-spot checks, and to linking the checks in respect of all commitments connected with agri-environmental measures.

The applicant questions the existence of all the alleged breaches and advances the following pleas against the contested decision.

First, it pleads infringement of the first subparagraph of Article 7(4) of Regulation No 1258/99 ² and Article 31(1) of Regulation No 1290/2005 ³ and infringement of the guidelines in document VI/5330/97 through the making of a financial correction on the basis of incorrect findings of fact and an incorrect interpretation of the law. In the applicant's submission, none of the alleged breaches forming the basis for the financial correction occurred and the expenditure excluded from Community financing under the contested decision was effected in accordance with the Community provisions.

Within the framework of the first plea, the applicant maintains that the reports of on-the-spot checks reflected checking in respect of all the principles of normal good farming practice, including in respect of observance of the annual limit on the spreading of organic fertilisers, in accordance with Article 28 of Regulation No 796/2004. ⁴ The applicant also submits that administrative cross-checks with the animal identification and registration system were not carried out only on account of the fact that that system was worthless as a basis of reference for cross-checks and therefore the carrying out of cross-checks with that system was not required under Article 68 of Regulation No 817/2004. ⁵ Furthermore, the system of penalties for breaches of the principles of good farming practice was fully effective, appropriate to the situation in the first year of implementation of the Rural Development Plan and even more rigorous than the system of Community penalties currently in force; it was therefore entirely consistent with Article 73 of Regulation No 817/2004. In addition, the applicant maintains in the context of the first plea that the comprehensive on-the-spot checks that were carried out were even wider in scope than required by the third paragraph of Article 69 of Regulation No 817/2004.

Second, the applicant pleads infringement of the fourth subparagraph of Article 7(4) of Regulation No 1258/99 and Article 31(2) of Regulation No 1290/2005, infringement of the guidelines in document VI/5330/97 and infringement of the principle of proportionality through the making of a flat-rate correction of an amount that was grossly excessive in relation to the risk of any financial loss for the Community budget. In the applicant's submission, none of the alleged breaches forming the basis for the correction could have caused the Community financial losses, and in any event the risk of such supposed financial losses was entirely marginal and related to an amount many times lower than the sum excluded from Community financing under the contested decision.

Third, the applicant pleads infringement of the second subparagraph of Article 296 TFEU because the reasons stated for the contested decision are inadequate. In the applicant's submission, the Commission did not explain and did not enable the Polish authorities to ascertain the reasons for the fundamental change in the scope of the alleged breaches.

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¹ - OJ 2009 L 257, p. 28.

² - Council Regulation (EC) No 1258/1999 of 17 May 1999 on the financing of the common agricultural policy (OJ 1999 L 160, p. 103).

³ - Council Regulation (EC) No 1290/2005 of 21 June 2005 on the financing of the common agricultural policy (OJ 2005 L 209, p. 1).

⁴ - Commission Regulation (EC) No 796/2004 of 21 April 2004 laying down detailed rules for the implementation of cross-compliance, modulation and the integrated administration and control system provided for in Council Regulation (EC) No 1782/2003 establishing common rules for direct support schemes under the common agricultural policy and establishing certain support schemes for farmers (OJ 2004 L 141, p. 18).

⁵ - Commission Regulation (EC) No 817/2004 of 29 April 2004 laying down detailed rules for the application of Council Regulation (EC) No 1257/1999 on support for rural development from the European Agricultural Guidance and Guarantee Fund (EAGGF) (OJ 2004 L 153, p. 30; corrigendum at OJ 2004 L 231, p. 24).