Court of Justice of the European Communities (including Court of First Instance Decisions)

Relevant provisions

Community legislation

The procedure for clearance of accounts

1. Member States shall at regular intervals transmit to the Commission the following information concerning the accredited paying agencies and coordinating bodies referred to in Article 4 and relating to transactions financed by the Guarantee Section of the EAGGF:

(a) statements of expenditure and estimates of financial needs;

(b) annual accounts, accompanied by the information required for clearance and an attestation regarding the integrality, exactitude and veracity of the accounts transmitted.

2. The Commission, after consulting the Fund Committee:

...

(b) shall, before 30 April of the year following the financial year concerned, on the basis of the information referred to in point (b) of paragraph 1, clear the accounts of the paying agencies.

The accounts clearance decision shall cover the integrality, exactitude and veracity of the accounts submitted.

The decision shall not prejudice the adoption of a subsequent decision pursuant to point (c);

(c) shall decide on the expenditure to be excluded from the Community financing referred to in Articles 2 and 3 where it finds that expenditure has not been effected in compliance with Community rules.

Before a decision to refuse financing is taken, the results of the Commission's checks and the replies of the Member State concerned shall be notified in writing, after which the two parties shall endeavour to reach agreement on the action to be taken.

If no agreement is reached, the Member State may ask for a procedure to be initiated with a view to mediating between the respective positions within a period of four months, the results of which shall be set out in a report sent to and examined by the Commission, before a decision to refuse financing is taken.

The Commission shall evaluate the amounts to be excluded having regard in particular to the degree of non-compliance found. The Commission shall take into account the nature and gravity of the infringement and the financial loss suffered by the Community.

A refusal to finance may not involve expenditure effected prior to twenty-four months preceding the Commission's written communication of the results of those checks to the Member State concerned. ...

Whereas the time limit for the clearance of accounts decision must be shortened; whereas, therefore, information technology must be used as fully as possible for producing the information to be sent to the Commission; whereas, when carrying out checks, the Commission must have full and immediate access to information on expenditure held in both documents and electronic files;

Whereas a single annual decision for the clearance of accounts creates numerous difficulties in that, for a given financial year, in respect of all measures covered by the Guarantee Section of the EAGGF and in all the Member States, it fulfils simultaneously an accounting objective and a recognition that expenditure has been effected in accordance with Community rules; whereas considerable time lags accompany the taking of this single decision, which is nevertheless subject to reservations and disjunctions; whereas it is accordingly necessary to separate the procedure into two types of decision, one concerning the clearance of the accounts of the Guarantee Section of the Fund, the other determining the consequences, including financial corrections, to be drawn from the results of the checks on conformity;

Whereas the checks on conformity and the ensuing clearance decisions will therefore no longer be linked to the implementation of the budget in a particular financial year; whereas the maximum period to which the consequences to be drawn from the checks on conformity may be applied must be determined.

If, as a result of an enquiry, the Commission considers that expenditure has not been effected according to Community rules, it shall notify the Member State concerned of the results of its checks and indicate the corrective measures to be taken to ensure future compliance.

Legislation on additional payments

The extent to which a producer is entitled to each of the additional payments referred to in paragraphs 1 and 2 and received in respect of the 1995 calendar year shall depend upon the number of animals for which he establishes entitlement to a premium in the 1996 calendar year.

By way of derogation from Articles 1, 2, 3 and 4, Member States may grant the total amount of aids resulting from the application of Article 1(1) and (2) and Article 4(a) to producers of bovine animals according to objective criteria, provided that the compensation will not be higher than the loss of income to such producers and that there is no distortion of competition.

Whereas Member States, in which the structure of production makes a system of payment other than by means of the said increase in premiums more appropriate and/or where the need to complete all payments by 15 October makes this necessary, should be authorised, in derogation from the above, to distribute the total of the aid which would otherwise have been payable by way of increases in premiums and the amount provided for in the Annex to producers of bovine animals on the basis of objective criteria.

The Community shall finance the expenditure incurred by Member States in relation to the payments referred to in Article 1 and Article 4(a) and Article 5 only where such payments are made by them by 15 October 1996 at the latest.

As regards the additional aid provided for in Regulation (EC) No 1357/96, the Member States shall communicate to the Commission:

(a) where Articles 1 to 4 of that Regulation are applied:

- no later than 15 November 1996 and 31 July 1997, the number of additional amounts granted pursuant to Article 1, broken down according to the arrangements ...,

- without delay, the methods used to grant the amounts and aids referred to in Article 4(a) and, where applicable, Article 4(b), and in particular the type or category of animals concerned, the unit amounts provided for, their method of calculation and the final dates for payment,

- no later than 15 November 1996 and 31 July 1997 respectively, the total amounts of aid paid pursuant to Article 4(a) and, where applicable, Article 4(b) and the number of beneficiaries and animals concerned;

(b) where Article 5 and, where applicable, Article 4(b) of that Regulation are applied:

- without delay, the methods used to grant the aid referred to therein, and in particular the type or category of animals concerned, the unit amounts provided for, their method of calculation and the final dates for payment,

- no later than 15 November 1996 and 31 July 1997 respec tively, the total amou nts of aid paid pursu ant to Article 5 and Article 4(b), and the numb er of benefi ciaries and animal s concer ned.

National legislation

To that effect, under Article 5 of Regulation (EC) No 1357/96, by way of derogation from Articles 1 to 4, Member States may grant the total amount of aid resulting from the application of Article 1(1) and (2) and Article 4(a) to producers of bovine animals according to objective criteria, provided that the compensation will not be higher than the loss of income to such producers and that there is no distortion of competition.

It was therefore conside red necessary to use as the most objective criterion for the grant of aid the number of animals of each producer which conferred entitlement to a premium in 1995. The system for obtaining aid by the producers can thus be rendered more flexible and the formalities and administrative procedures for payment simplified as much as possible, since the entitlement to aid in 1995 has already been clearly established in each concrete case.

The correction procedure in question

The action

The first plea

Findings of the Court

The second plea

- The express obligation to recover excess payments exists where Article 1 and Article 2 are applied, but does not appear in the context of Article 5;

- In the context of their interpretation of Article 5, the Spanish authorities had no reason to consider that the payments they had made should in part give rise to recovery, and they were only informed of this after the 24 months; until that time the expenditure in question was in the nature of definitive expenditure from a legal and accounting point of view;

- Even if the Commission's position is to reclassify the payments as having been made under Article 5, it must be stated that this reclassification did not take place until the 24 months had passed ...

Findings of the Court

Costs