Action brought on 3 March 2010 - Portugal v Commission

(Case T-111/10)

Language of the case: Portuguese

Parties

Applicant: Portuguese Republic (represented by: N. Mimoso Ruiz and P. Moura Pinheiro, lawyers, and L. Inez Fernandes, Agent)

Defendant: European Commission

Form of order sought

On 3 March 2010 the Portuguese Republic brought an action pursuant to Article 263 of the Treaty on the functioning of the European Union against the European Commission for annulment of European Commission Decision C (2009) 10624 of 21 December 2009 reducing the assistance granted through the European Regional Development Fund to the Operational Programme 'Modernisation of the economic fabric' CCI: 1994 PT 16 1 PO 004 (ex ERDF ref. 94.12.09.004), in so far as it concerns the financing of the Closed Tourist Real Property Investment Fund (FIIT).

Pleas in law and main arguments

A real property investment fund, set up by the authorities following approval by the European Commission of the Community support framework (CSF II) for action by the structural funds in regions concerned by Objective 1, for the period from 1 January 1994 to 31 December 1999, has been adapted in order to carry out the tasks of the European Regional Development Fund (FEDER).

Regulation (EEC) No 4254/88, amended by Regulation (EEC) No 2083/93, laying down provisions for implementing Regulation (EEC) No 2052/88 as regards the scope of the ERDF, ¹ provides that that fund is to participate in the development of indigenous potential in the regions by measures improving access of small and medium-sized enterprises [sic] to the capital market. In the same way as the provision of guarantees and equity participation, activities mentioned merely by way of example in Regulation (EEC) No 2083/93, a real property investment fund is a funding mechanism appropriate for the purpose of encouraging and developing the activities of small and medium-sized undertakings.

The FIIT is intended, in particular, to fund small and medium-sized undertakings active in the tourism sector in Portugal, which generally own significant real property assets and encounter difficulties in access to the sources of finance available on the market.

The FIIT's activities during the period concerned played a part in supporting the development and modernisation of supply in the tourism sector in Portugal, by means of purchasing tourist establishments and then renting them to small and medium-sized undertakings.

The FIIT's activities are in strict keeping with the European Commission's Decision C (94) 464 approving, within the framework of CSF II, the operational programme 'Modernisation of the economic fabric' and Subprogramme 4 'Tourism and cultural heritage'. That decision provided for the creation of a tourism investment fund whose sphere of priority action included, in particular, the financial restructuring, modernisation and resizing of hotels.

The European Commission has failed to observe the principle audi alteram partem inasmuch as it was only in the contested decision that it raised the issue of the alleged failure to show deficiencies in the market for the financing of the small and medium-sized undertakings supported by the FIIT, and that it criticised the national authorities for supposedly failing to analyse sufficiently the economic viability of those undertakings, doing no more than refinance their debts.

The contested decision fails to observe the principle of the protection of legitimate expectations, by concluding that the FIIT project was ineligible for ERDF cofinancing, for the European Commission, while monitoring the programme, acted in such a way as to engender in the Portuguese authorities the firm and legitimate conviction that the financing of the FIIT would not be called in question, especially because the Community legal framework then in force being in no way unequivocal as to its being permissible or not did not make it possible to determine whether there existed a manifest error of assessment with regard to the lawfulness of that financial instrument.

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¹ - Council Regulation (EEC) No 2083/93 of 20 July 1993 amending Regulation (EEC) No 4254/88 laying down provisions for implementing Regulation (EEC) No 2052/88 as regards the European Regional Development Fund (OJ 1993 L 193, p. 34).