ADR Center v Commission (Financial aid - 'Fundamental Rights and Justice' - Judgment) [2021] EUECJ T-364/15 (15 September 2021)

BAILII is celebrating 24 years of free online access to the law! Would you consider making a contribution?
No donation is too small. If every visitor before 31 December gives just £1, it will have a significant impact on BAILII's ability to continue providing free access to the law.
Thank you very much for your support!

(Financial aid – General Programme ‘Fundamental Rights and Justice’ for the period 2007-2013 – Specific Programme ‘Civil Justice’ – Action for annulment – Enforceable decision – Grant agreements – Recovery of part of the financial contribution paid – Action for a declaratory judgment – Arbitration clause – Force majeure – Eligible costs – Proportionality – Obligation to state reasons)

ADR Center Srl, established in Rome (Italy), represented by A. Guillerme and T. Bontinck, lawyers,

European Commission, represented by J. Estrada de Solà and M. Ilkova, acting as Agents,

APPLICATION seeking, first, annulment, under Article 263 TFEU, of Commission Decision C(2015) 3117 final of 4 May 2015 relating to the recovery of part of the financial contribution paid to the applicant pursuant to two grant agreements concluded under the Specific Programme ‘Civil Justice’ and, second, a declaration that the costs which the Commission declared ineligible in that decision are eligible,

composed of A. Marcoulli, President, S. Frimodt Nielsen and C. Iliopoulos (Rapporteur), Judges,

having regard to the written part of the procedure and further to the hearing on 18 March 2021,

1 The applicant, ADR Center Srl, is a company whose registered office is in Italy and which provides services in the field of alternative dispute resolution (‘ADR’).

2 On 9 May 2011, the applicant and the European Union, represented by the European Commission, concluded two grant agreements with the references JUST/2010/JCIV/AG/0031 and JUST/2010/JCIV/AG/0020 respectively (‘the “Directions” grant agreement’ and ‘the “Judges” grant agreement’ respectively, and, together, the ‘grant agreements’) as part of the implementation of the Specific Programme established by Decision No 1149/2007/EC of the European Parliament and of the Council of 25 September 2007 establishing for the period 2007-2013 the Specific Programme ‘Civil Justice’ as part of the General Programme ‘Fundamental Rights and Justice’ (OJ 2007 L 257, p. 16).

3 The applicant signed the grant agreements as a ‘società per azioni’ (public limited company; SpA) with a share capital of EUR 500 000. On 10 May 2013, the applicant became a ‘società a responsabilità limitata’ (limited liability company; Srl); it retained the same name, but its share capital was reduced to EUR 60 000, fully disbursed.

4 The ‘Directions’ grant agreement concerned an action of the applicant entitled ‘Directions to the directive: promoting European mediation through off-line and on-line training programme’ (‘the “Directions” action’). That action focused essentially on training lawyers to become mediators, in both a domestic and a cross-border context, and on developing the materials for future mediation training programmes.

5 The scope of the ‘Directions’ action was not limited to Italy or another specific Member State, but covered 26 Member States of the European Union. The applicant’s proposal described, among other actions, 10 national events in Bulgaria, the Czech Republic, Greece, Spain, Lithuania, Hungary, Malta, Poland, Portugal and Romania and 6 regional events which ‘could be hosted by France, the United Kingdom, the Netherlands and Italy’. That proposal also provided for the establishment of an online mediation portal.

6 The ‘Judges’ grant agreement concerned an action of the applicant entitled ‘Judges in ADR: improving on-line resources and trainings for judicial referral to mediation in the EU’ (‘the “Judges” action’). The purpose of that action was to improve the online resources and training of judges in order to encourage them to make greater use of mediation and ADR in the European Union.

7 The scope of the ‘Judges’ action was also not limited to Italy or any other specific Member State, but rather covered all the participating EU Member States (namely Bulgaria, Italy, Latvia and Slovenia), with events planned in various States. By way of example, the proposal submitted by the applicant stated that ‘there [would be] 10 national and extra-national training events to develop skills and knowledge for each of the judicial trainees’.

8 Article I.2.2 of the ‘Directions’ grant agreement stipulated that the action would run for 24 months from the date when the last of the two parties signs the agreement. That agreement was signed first on behalf of the Commission on 26 April 2011 and then on 9 May 2011 by the applicant.

9 It is clear from Articles I.3.2 and I.3.3 of the ‘Directions’ grant agreement that the total eligible costs of the action were estimated at EUR 496 400 and that the maximum amount of the grant was set at EUR 395 900, equivalent to 79.75% of the estimated eligible costs. A pre-financing payment of EUR 277 130 was made to the applicant.

10 Article I.2.2 of the ‘Judges’ grant agreement stipulated that the action would run for 24 months from 12 September 2011.

11 It is clear from Articles I.3.2 and I.3.3 of the ‘Judges’ grant agreement that the total eligible costs of the action were estimated at EUR 363 000 and that the maximum amount of the grant was set at EUR 285 000, equivalent to 78.51% of the estimated eligible costs. A pre-financing payment of EUR 199 500 was made to the applicant.

12 The grant agreements both comprised special conditions (the article numbers of which used the Roman numeral I), general conditions (the article numbers of which used the Roman numeral II), and three annexes. The agreements also stated that the terms contained in the special conditions took precedence over the rest of the agreement and that the terms contained in the general conditions took precedence over those contained in the annexes.

13 It is clear from reading Articles I.5 and II.15.4 of the grant agreements together that the applicant was to submit, within three months following the closing date of the action, (i) a final report on the technical implementation of the action, (ii) a final financial statement of the eligible costs actually incurred, following the structure of the estimated budget and using the same description, and (iii) a full summary statement of the receipts and expenditure of the action (those three documents together constituting ‘the final report’).

14 Article I.4 of each grant agreement stipulated that the Commission was to make a pre-financing payment to the beneficiary and that the balance was to be paid after the action had been completed. The request for payment of the balance was to be accompanied in particular by the final report on the technical implementation of the action and by the final financial statement. The Commission was to have 45 days to approve or reject the report on the technical implementation of the action and to pay the balance or to request additional supporting documents or information. The beneficiary was to have 30 days to submit the additional information or a new report on the technical implementation of the action.

15 In accordance with Article II.17 of the grant agreements, and on the basis of the final report submitted and approved by the Commission, the Commission was to determine the amount of the final payment, which was to take into account payments already made by way of pre-financing. Where the aggregate amount of the payments already made exceeded the amount of the final grant, the Commission was to issue a recovery order for the surplus.

16 It is clear from Article II.11.4 of the grant agreements that, in the event of termination of an agreement, payments by the Commission were to be limited to the eligible costs actually incurred in the context of the project up to the date on which termination takes effect, in compliance with the provisions of Article II.17. Costs relating to current commitments that were not due to be executed until after termination were not to be taken into account.

‘The grant is governed by the terms of the agreement, the Union law applicable and, on a subsidiary basis, by the law of the Kingdom of Belgium relating to grants.

The beneficiary may bring legal proceedings regarding decisions by the Commission concerning the application of the provisions of the agreement and the arrangements for implementing it, before the General Court of the European Union and in the event of appeal the Court of Justice of the European Union.’

18 Article II.7 of the grant agreements stated that the beneficiary could suspend implementation of the action if exceptional circumstances made that implementation impossible or excessively difficult, notably in the event of force majeure. In addition, that article provided that the duration of the action was to be extended by a period equivalent to the length of the suspension.

‘… any unforeseeable exceptional situation or event beyond the parties’ control which prevents either of them from fulfilling any of their obligations under this agreement, was not attributable to error or negligence on their part, and proves insurmountable in spite of all due diligence. Defects in equipment or material or delays in making them available (unless due to force majeure), labour disputes, strikes or financial difficulties cannot be invoked as force majeure by the defaulting party … A party faced with force majeure shall inform the other party without delay by registered letter with advice of delivery or equivalent, stating the nature, probable duration and foreseeable effects … Neither of the parties shall be held in breach of their obligations under the agreement if they are prevented from fulfilling them by force majeure.’

‘In duly justified cases, the beneficiary may withdraw his request for a grant and terminate the agreement at any time by giving 60 days’ written notice stating the reasons, without being required to furnish any indemnity on this account. If no reasons are given or if the Commission does not accept the reasons, the beneficiary shall be deemed to have terminated this agreement improperly, with the consequences set out in the third subparagraph of paragraph 4.’

21 It was clear from Article II.13 of the grant agreements that any amendment to the grant conditions had to be the subject of a written supplementary agreement and that, if the request for amendment was made by the beneficiary, it had to send it to the Commission in good time before it was due to take effect and at all events one month before the closing date of the action, except in cases duly substantiated by the beneficiary and accepted by the Commission.

22 As regards eligible costs, Article II.14. of the grant agreements provided as follows:

‘II.14.1 To be considered as eligible costs of the action, costs must satisfy the following general criteria:

– they must be connected with the subject of the agreement and they must be provided for in the estimated budget annexed to it;

– they must be necessary for performance of the action covered by the agreement;

– they must be actually incurred by the beneficiary, be recorded in his accounts in accordance with the applicable accounting principles, and be declared in accordance with the requirements of the applicable tax and social legislation;

The beneficiary’s internal accounting and auditing procedures must permit direct reconciliation of the costs and revenue declared in respect of the action with the corresponding accounting statements and supporting documents.

II.14.2. The eligible direct costs for the action are those costs which, with due regard for the conditions of eligibility set out in Article II.14.1, are identifiable as specific costs directly linked to performance of the action and which can therefore be booked to it direct …’

‘The beneficiary understands that, under Article 299 [TFEU], the Commission may adopt an enforceable decision formally establishing an amount as receivable from persons other than States. An action may be brought against such decision before the General Court of the European Union.’

24 On 8 April 2013, being one month before the conclusion of the ‘Directions’ action, the applicant asked the Commission to suspend that action by four months and to extend it by a further four months. It justified that request by relying on circumstances which it claimed were unforeseeable, beyond its control and which affected its business, namely, first, discord and discussions which had arisen in Italy since 2010 with regard to the law regulating mediation leading to legal actions, strikes and protests by professionals and, second, a judgment of the Corte costituzionale (Constitutional Court, Italy) of 6 December 2012 annulling the legislation on mandatory mediation, before that law was adopted again in June 2013 by the new government.

25 In that regard, it should be noted that, in Italy, on 21 March 2011, a new law on mandatory mediation had entered into force (Legislative Decree No 28 of 2010); this had led the applicant, which had previously been active in the field of optional mediation, to extend its activities into the field of ‘mandatory mediation’. Following a referral from the Tribunale amministrativo regionale del Lazio (Regional Administrative Court, Lazio, Italy) on 12 April 2011, the Corte costituzionale (Constitutional Court) announced, on 24 October 2012, that in an upcoming decision it would declare the mandatory part of that law to be contrary to the Italian Constitution. At the end of 2013, the new Italian Government adopted a new mitigated mandatory mediation model which required the parties to attend only a preliminary information meeting for a limited number of civil disputes.

26 Following the judgment of the Corte costituzionale (Constitutional Court), the applicant’s mediation business, which had recently been expanded, declined. As a result, at the end of 2012, the applicant closed a number of its offices and reduced its members of staff from 31 to 5.

27 By email of 11 April 2013, the Commission informed the applicant that an extension of the action only one month from the conclusion of that action was not possible and requested a brief description of the ‘state of play’ of the ‘Directions’ action.

28 Following receipt of the applicant’s email of 16 April 2013 describing the status of the ‘Directions’ action, the Commission reiterated, by letter of 25 April 2013, that the applicant’s request for an extension could not be granted. The letter stated that the call for proposals was limited to a maximum of 24 months and that extending the ‘Directions’ action beyond that length of time would be contrary to the principle of equal treatment unless justified by very exceptional circumstances (for example, force majeure). However, the applicant had not demonstrated the existence of such circumstances. According to the Commission, although the circumstances invoked had already been present from the beginning of the action in 2011, they were notified by the applicant only belatedly and, moreover, related only to Italy. Furthermore, the implementation of the action was incomplete and delayed, even as regards the activities not compromised by the circumstances invoked by the applicant, such as those planned outside Italy. By letter of 5 June 2013, the Commission asked the applicant to send the final report by 8 August 2013.

29 On 10 July 2013, namely two months before the end of the ‘Judges’ action, the applicant sent a letter to the Commission requesting that that action be terminated in accordance with Article II.8 or Article II.11.1 of the ‘Judges’ grant agreement. Specifically, in that letter, the applicant relied on force majeure which prevented it from discharging its obligations within the assigned time frame. In support of that claim, the applicant referred to the previous correspondence with the Commission concerning the ‘Directions’ action (see paragraph 24 above) and the Commission’s decision refusing to extend the latter action.

30 By letter of 16 August 2013, the Commission informed the applicant that it was refusing to grant its request for termination under Article II.8 of the ‘Judges’ grant agreement since the alleged unforeseen circumstances had been communicated to the Commission belatedly and for substantive reasons, given that the circumstances invoked did not apply to the entire scope of the project. However, the Commission accepted the applicant’s alternative request for termination of the action under Article II.11.1 of the ‘Judges’ grant agreement as from 11 September 2013 and reminded the applicant of the obligation to send the final report by 11 November 2013.

31 The applicant submitted the final report on the technical implementation of the ‘Directions’ action to the Commission on 12 September 2013, without, however, sending the final financial statement which was also due.

32 The final financial statement was sent by the applicant on 6 January 2014. The applicant declared therein that the eligible costs for the implementation of the ‘Directions’ action, initially estimated at EUR 496 400, amounted to EUR 146 905.44.

33 On 11 November 2013, the applicant submitted the final report on the technical implementation of the ‘Judges’ action, also without including the final financial statement.

34 On 21 January 2014, a meeting took place between the applicant and the relevant Commission services in order to discuss the ‘Judges’ and ‘Directions’ actions. The Commission extended the deadline for receipt of the final financial statement for the ‘Judges’ action, deferring it to 5 February 2014. The applicant ultimately sent the final financial statement on 4 February 2014. For the implementation of the ‘Judges’ action, the applicant declared that the eligible costs, initially estimated at EUR 363 000, amounted to EUR 99 245.85.

35 On 24 March 2014, following an analysis of the final report on the ‘Judges’ action, the Commission informed the applicant – through a ‘pre-information letter’ – that certain costs of that action would not be accepted and that, consequently, it would issue a recovery order for EUR 155 507.97, which represented the greater portion of the pre-financing, which amounted to EUR 199 500.

36 Following its analysis of the final report on the ‘Directions’ action, on 7 May 2014, the Commission informed the applicant – also through a ‘pre-information letter’ – that no costs would be accepted in respect of that action and that, consequently, it would issue a recovery order for the entire amount of the pre-financing, namely the sum of EUR 277 130.

37 The Commission annexed tables to the two abovementioned pre-information letters which set out the rejected costs and the reasons for those rejections. It also requested the applicant to provide additional information within two months if it disagreed with the Commission’s conclusions.

38 Since it had not received that additional information from the applicant, on 8 July 2014 and 8 August 2014 in respect of the ‘Judges’ and ‘Directions’ actions respectively, the Commission issued two debit notes for the recovery of the amounts of EUR 155 507.97 for the ‘Judges’ action and EUR 277 130 for the ‘Directions’ action, along with an invitation to pay within one month, that is to say, by 22 August 2014 at the latest in respect of the ‘Judges’ action and by 22 September 2014 at the latest in respect of the ‘Directions’ action. The debit notes were followed by two reminder letters of 2 September and 6 October 2014.

39 On 4 May 2015, on the basis of Article 299 TFEU and Article 79(2) of Regulation (EU, Euratom) No 966/2012 of the European Parliament and of the Council of 25 October 2012 on the financial rules applicable to the general budget of the Union and repealing Council Regulation (EC, Euratom) No 1605/2002 (OJ 2012 L 298, p. 1), the Commission adopted Decision C(2015) 3117 final concerning the recovery of the total amount of EUR 432 637.97 in principal payable by the applicant under the debit notes implementing grant agreements, plus default interest to 31 March 2015 amounting to EUR 8 702.20 and an additional amount of EUR 43.25 for each additional day of delay from 1 April 2015 onwards (‘the contested decision’). The contested decision was notified to the applicant on 6 May 2015.

40 Article 4 of the contested decision stated, inter alia, that that decision was enforceable within the meaning of the first paragraph of Article 299 TFEU.

41 By application lodged at the Court Registry on 4 July 2015, the applicant brought the present action.

42 The written stage of the procedure was closed upon the filing of the rejoinder on 20 January 2016.

43 By separate document lodged at the Court Registry on 21 January 2016, the applicant made an application for interim measures. By order of 22 January 2016, the President of the General Court granted, pursuant to Article 157(2) of the Rules of Procedure of the General Court, a provisional suspension of the enforcement of the contested decision until the adoption of the order ruling definitively on the applicant’s application for interim measures. That application was definitively dismissed by order of 7 April 2016, ADR Center v Commission (T‑364/15 R, not published, EU:T:2016:200) and the costs were reserved.

44 By decision of the President of the Court of 18 April 2016, the present case was allocated to a new Judge-Rapporteur, sitting in the Third Chamber.

45 Following a change in the composition of the Chambers of the Court, the Judge-Rapporteur was assigned to the Fourth Chamber; as a result, the present case was also allocated to that chamber.

46 On a proposal from the Judge-Rapporteur, the General Court (Fourth Chamber), by way of the measures of organisation of procedure provided for under Article 89 of the Rules of Procedure, put, on 21 February 2017, written questions to the applicant to which the latter replied within the prescribed period. On 3 April 2017, the Commission replied that it had no observations to make on those replies.

47 By decision of the President of the Fourth Chamber of the General Court of 11 May 2017, after the parties had been heard, the proceedings were stayed, pursuant to Article 69(d) of the Rules of Procedure, pending the final decision of the General Court in Case T‑644/14, ADR Center v Commission.

48 By decision of the President of the Fourth Chamber of the General Court of 20 November 2017, after hearing the parties, the proceedings were again stayed, in accordance with Article 69(a) of the Rules of Procedure, pending the final decision of the Court of Justice in Case C‑584/17 P, ADR Center v Commission.

49 Following a change in the composition of the Chambers of the General Court, the Judge-Rapporteur was assigned to the Sixth Chamber; as a result, this case was also allocated to that chamber.

50 By judgment of 16 July 2020, ADR Center v Commission (C‑584/17 P, EU:C:2020:576), the Court of Justice disposed of the proceedings in Case C‑584/17 P.

51 On 28 August 2020, in the context of a measure of organisation of procedure provided for in Article 89 of the Rules of Procedure, the General Court (Sixth Chamber) requested that the parties submit their observations on the inferences for the present case to be drawn from the judgment of 16 July 2020, ADR Center v Commission (C‑584/17 P, EU:C:2020:576). The parties complied with that measure of organisation of procedure within the prescribed period. In its reply of 22 September 2020, the applicant stated that it did not maintain the plea alleging that the Commission lacked competence to adopt the contested decision and submitted an application for a measure of organisation of procedure, in accordance with Article 89(2)(d) of the Rules of Procedure, in order to reach an amicable settlement. In response to that measure of organisation of procedure, the Commission stated that it did not maintain the plea of inadmissibility raised with regard to the applicant’s second head of claim. In addition, by its reply of 16 October 2020, the Commission stated that it was not in a position to resolve the dispute by means of an amicable settlement.

52 On a proposal from the Judge-Rapporteur, the General Court (Sixth Chamber) decided, on 11 January 2021, to open the oral part of the procedure.

53 The parties presented oral argument and answered the questions put by the Court at the hearing on 18 March 2021.

54 At the hearing, the applicant introduced additional claims in which it requested that, in the event that certain costs were declared to be ineligible, the amount of default interest relating to those costs be set at zero.

– set at zero the amount of any default interest due for the period between the date of the relevant enforceable decision and the date of delivery of the judgment in the present case, or, in the alternative, set the amount of default interest at zero for the period during which the present case was suspended;

57 The Commission stated that it did not maintain the plea of inadmissibility raised in respect of the applicant’s second head of claim. Nevertheless, given the declaratory nature of that head of claim, it is necessary to determine whether the EU Courts have jurisdiction to hear this type of claim. A question relating to the jurisdiction of the EU Courts must be raised by the Court of its own motion even if none of the parties has asked it to do so (see judgment of 26 February 2015, Planet v Commission, C‑564/13 P, EU:C:2015:124, paragraphs 19 and 20 and the case-law cited).

58 It must be borne in mind that, in its second head of claim, the applicant asks the Court to declare eligible all the costs declared ineligible by the Commission. In its replies to written questions put by the Court, the applicant, first, stated that the present action was to be understood as being based not only on Article 263 TFEU, which constitutes the legal basis of the first head of claim, but also on Article 272 TFEU, which constitutes the legal basis of the second head of claim, and it relied, in support of its argument, on the judgment of 6 October 2015, Technion and Technion Research & Development Foundation v Commission (T‑216/12, EU:T:2015:746). Second, it stated that, in its view, in the light of the judgment of 16 July 2020, ADR Center v Commission (C‑584/17 P, EU:C:2020:576), the Court had jurisdiction to hear and determine pleas for annulment based on matters of fact and of law arising from the contractual relations between the Commission and itself. It maintained its request that the Court reclassify the action in part in so far as necessary. Third, the applicant stated at the hearing that, in its view, a partial reclassification of the action was necessary since an application based on Article 272 TFEU would confer on the Court ‘a wider scope of action’. In that regard, it reiterated its first reply to the written questions put by the Court, stating that the present action had to be understood as being predicated not only on Article 263 TFEU, which constitutes the legal basis of the first head of claim, but also on Article 272 TFEU, which constitutes the legal basis of the second head of claim.

59 In that regard, it should be noted that both the plea of inadmissibility initially raised by the Commission and the request for partial reclassification of the action made initially and at the hearing by the applicant as a result of the plea of inadmissibility raised by the Commission are based on the premiss that, in the context of an action for annulment brought on the basis of Article 263 TFEU, the second head of claim is inadmissible in so far as, in accordance with settled case-law, the EU Courts do not have jurisdiction to hear an action for a declaratory judgment in the context of a broader action for annulment based on Article 263 TFEU (see, to that effect, judgment of 6 October 2015, Technion and Technion Research & Development Foundation v Commission, T‑216/12, EU:T:2015:746, paragraph 57).

60 The Court of Justice has ruled previously that, in order to ensure effective judicial protection under Article 47 of the Charter of Fundamental Rights of the European Union (‘the Charter’), an EU Court hearing an action for annulment pursuant to Article 263 TFEU brought against an enforceable decision of the Commission formally establishing a contractual claim was called upon to hear not only pleas of annulment based on matters of fact and law arising from the actions of the Commission as an administrative authority, but also pleas of annulment based on matters of fact and law arising from the contractual relations between the Commission and the applicant. It indicated that, in so far as that action also included a counterclaim based on the performance of the contract in question, the EU Court could not declare such a claim inadmissible on the ground that this constituted a direction which the court hearing the action for annulment could not issue (judgment of 16 July 2020, ADR Center v Commission, C‑584/17 P, EU:C:2020:576, paragraph 88).

61 It follows that the EU Court hearing an action for annulment under Article 263 TFEU against an enforceable Commission decision formally establishing a contractual claim has jurisdiction to hear pleas which are based on matters of fact and law arising from the contractual relations between the Commission and the applicant and which seek a judgment declaring that the Commission does not have the contractual claim at issue. In order to ensure effective judicial protection under Article 47 of the Charter, that jurisdiction is separate from the need to reclassify the action in part (see, to that effect, judgment of 16 July 2020, ADR Center v Commission, C‑584/17 P, EU:C:2020:576, paragraph 84).

63 As is clear from paragraphs 54 and 55 above, at the hearing, the applicant, in the alternative, introduced additional claims seeking to set at zero the amount of any default interest due in respect of the costs declared ineligible by the Commission.

65 They infringe the requirements of Article 76 of the Rules of Procedure. According to that provision, parties are required to state the subject matter of the proceedings in their originating application. Even though Article 86(1) and (2) of the Rules of Procedure allows, subject to certain conditions, modification of the application, in particular where a measure the annulment of which is sought is replaced or amended by another measure with the same subject matter, it should be noted that the conditions of that provision are not satisfied in the present case. Consequently, new claims put forward for the first time at the hearing cannot be allowed without depriving the defendant of an opportunity to prepare its response and thereby breaching the rights of the defence (see, to that effect, judgments of 17 March 2005, Commission v AMI Semiconductor Belgium and Others, C‑294/02, EU:C:2005:172, paragraph 75, and of 15 February 1996, Ryan-Sheridan v EFILWC, T‑589/93, EU:T:1996:18, paragraph 144).

66 Since the applicant withdrew the plea raised in the application in which it alleged that the Commission lacked competence to adopt the contested decision (see paragraph 51 above), the applicant now relies on only three pleas in law, in which it alleges (i) errors of fact and of assessment made by the Commission affecting its conclusions as to the eligibility of the costs declared by the applicant, (ii) misuse of powers and breach of the principle of proportionality by the Commission, and (iii) infringement of the obligation to state reasons.

1. The first plea in law, alleging errors of fact and of assessment by the Commission which affected its conclusions relating to the eligibility of the costs declared by the applicant

67 The applicant claims that the contested decision is based on errors of fact and of assessment, that the Commission wrongly stated that the technical work carried out in the context of the actions was deficient, and that the Commission wrongly declared certain costs to be ineligible. In that context, it raises five objections which should be examined in turn.

69 The applicant disputes recital 11 of the contested decision, in which the Commission stated that the level and quality of implementation of the actions were deficient. Specifically, the applicant claims that that assertion is incorrect, that the Commission had never alleged that the quality of its work was low, and that the contested decision contains no statement of reasons or evidence in that regard. The applicant claims that, while it is true that the implementation of the actions was incomplete, this results from the fact that the Commission had refused to suspend the ‘Directions’ action and had thus deprived the applicant of the possibility of completing that action.

70 In addition, according to the applicant, the fact that its work served as a basis for a study carried out for the European Parliament, as well as for official requests from the Bulgarian and Polish Ministries of Justice, shows that the quality of that work was not deficient.

71 It should be noted that, under Article 317 TFEU, the Commission is obliged to observe the principle of sound financial management. It also ensures the protection of the financial interests of the European Union in the implementation of its budget. The same is also to apply in contractual matters, since grants awarded by the Commission come from the EU budget. In accordance with a fundamental principle governing EU financial aid, the European Union can subsidise only expenditure that is actually incurred (see judgment of 16 July 2020, ADR Center v Commission, C‑584/17 P, EU:C:2020:576, paragraph 100 and the case-law cited).

72 As a result, the Commission cannot approve expenditure from the EU budget without a legal basis, as otherwise it will breach those principles established by the FEU Treaty. In the context of a grant, it is the grant agreement that governs the conditions for the allocation and use of that grant and, more particularly, the clauses relating to the determination of the amount of that grant on the basis of the costs declared by the party contracting with the Commission (see judgment of 16 July 2020, ADR Center v Commission, C‑584/17 P, EU:C:2020:576, paragraph 101 and the case-law cited).

73 Consequently, if the costs declared by the beneficiary of the grant are not eligible under the relevant grant agreement because they have been judged to be unverifiable or unreliable, the Commission has no choice but to recover an amount of the grant equal to the unsubstantiated amounts, since, pursuant to the legal basis provided by that grant agreement, the Commission can pay out of the EU budget only duly substantiated sums (see judgment of 16 July 2020, ADR Center v Commission, C‑584/17 P, EU:C:2020:576, paragraph 102 and the case-law cited).

74 The Court of Justice has held previously that it was not sufficient for the beneficiary of the grant to show that a project had been carried out in order to justify the award of a particular grant, but that the beneficiary had to prove that the costs declared had been incurred in accordance with the conditions laid down for the award of the grants concerned (see, to that effect, judgment of 16 July 2020, ADR Center v Commission, C‑584/17 P, EU:C:2020:576, paragraph 109).

75 The principle recalled in paragraphs 71 and 74 above is reflected in the terms of the grant agreements relating to the arrangements for the grant of the aid. Thus, pursuant to Articles I.5 and II.15.4 of those agreements, the applicant was, inter alia, required to submit to the Commission, after the closure of the action, a final financial statement of the eligible costs actually incurred and a full summary statement for the receipts and expenditures of the action, the Commission being able, if necessary, to request that additional information and documents be sent. The applicant’s obligation to submit cost statements in accordance with the specific requirements laid down in Article II.14.1 of the grant agreements is therefore one of its fundamental obligations, designed to enable the Commission to have at its disposal the data necessary in order to satisfy itself that the contributions in question have been used in accordance with the provisions of the contracts (see, to that effect, judgment of 17 June 2010, CEVA v Commission, T‑428/07 and T‑455/07, EU:T:2010:240, paragraph 126). It is on the basis of the documents referred to in Article II.15.4 of those agreements that the Commission is to determine, in accordance with Article II.17 of the same agreements and subject to information received at a later stage, the definitive amount of the grant (judgment of 20 July 2017, ADR Center v Commission, T‑644/14, EU:T:2017:533, paragraph 94).

76 It is in the light of those principles that the Court must examine the applicant’s specific plea relating to the rejection of certain expenditure in respect of the actions covered by the grant agreements.

77 It should be borne in mind that neither the quality of the various activities and performance of the two actions nor the fact that their execution was incomplete are disputed by the parties. It was on the basis of that incomplete work that the Commission concluded that the level and quality of the implementation of the actions were deficient. In so doing, contrary to what is claimed by the applicant, the Commission did not exceed its discretion or make an error of assessment.

78 In so far as the applicant claims that the Commission never alleged that the quality of its work was low, it should be noted that, irrespective of the fact that the Commission sent it the pre-information letters concerning the two actions (letters to which, as is not disputed by the parties, the applicant did not respond in order to refute the Commission’s criticisms) with tables annexed to the two pre-information letters providing an explanation of the reasons why the costs declared had been rejected, the Commission is relying, in that regard, on the incomplete nature of the work carried out, a factor of which the applicant is aware and which, according to the latter, can be put down to the fact that the Commission refused to grant it the suspension which it had requested. That question will be dealt with in paragraphs 110 to 119 below in the context of the second plea in law. Furthermore, the question of failure to state reasons will be dealt with in the context of the third plea in law. It follows that the Commission did not, in the contested decision, address the question of the quality of the various activities or the performance of the two actions, but addressed solely the question of the overall implementation of the actions, which the applicant itself acknowledged was incomplete.

(b) Errors of fact and assessment concerning the ineligibility of the costs declared by the applicant

79 The applicant submits that the Commission’s assessment as to the ineligibility of the costs declared by the applicant for the ‘Directions’ and ‘Judges’ actions is the result of an error in the assessment of the facts relating to those costs.

80 As a preliminary point, it should be recalled that the Commission declared that all the costs for the ‘Directions’ action, namely EUR 146 905.44, were ineligible.

81 The applicant criticises the Commission for rejecting all the costs declared, since that implies that absolutely no work was carried out on that action, whereas various samples of the work carried out in connection with that action and annexed to the application show that this was not the case. The applicant claims that, although not all of the outputs could be completed, there is no doubt that work was actually performed in furtherance of the completion of the activities of the action. Invoices and proof of costs were submitted for all the declared costs in accordance with the eligibility rules. By contrast, the additional materials or proof of costs requested by the Commission were not required by the grant agreement.

82 The applicant’s line of argument must be rejected in the light of the principle set out in paragraphs 71 and 74 above, according to which it is not sufficient for the beneficiary of the aid to show that a project has been carried out in order for the allocation of a specific subsidy to be justified. The beneficiary must, in addition, adduce evidence that it 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.

83 In the present case, the Commission, in the table attached to the pre-information letter (Annex A.26, Annex B.4), explained in detail what type of documentation it needed in order to carry out its task referred to in paragraphs 71 to 73 above. Without being challenged on that point by the applicant, the Commission contends that the applicant did not provide, either in response to the pre-information letter or as an annex to the application in the present case, any evidence of the costs rejected in respect of the ‘Directions’ action. The applicant’s general assertion that ‘certainly work was actually performed in furtherance of the completion of the [activities of the action]’ is insufficient to satisfy those requirements and to discharge its burden of proof under the case-law cited in paragraph 74 above and to declare the ‘identifiable and verifiable’ costs to be within the meaning of Article II.14.1 of the grant agreement. The same is true of the two front covers which the applicant submitted as Annex A.29.

84 As a preliminary point, it should be recalled that, in the final financial statement for the action, the applicant claimed EUR 25 000 for the 62.5 days (out of 100 estimated days) of work carried out by Mr A, from 15 January 2011 to 15 January 2013, for the ‘creation of the online portion [of the action]’. The Commission rejected those costs on the ground that that online portion of the action was not created (Annex A.12, page 75, line 5 of the table).

85 The applicant criticises the Commission for rejecting all the costs declared on the sole ground that the online portion of the action had not been set up. After acknowledging that that was indeed the case, it submits that the declared costs cannot be rejected solely on that basis, since the purpose of the reimbursement rules contained in the grant agreement is not to ensure that reimbursement is provided upon the performance of an action, but rather to cover the cost of the resources used.

86 Having regard to the fundamental principle governing EU financial aid relating to the burden of proof borne by the beneficiary of an EU grant (see paragraph 74 above), it must be concluded that it was for the applicant, faced with the Commission’s specific findings, to submit probative evidence demonstrating the performance in part of the online portion of the ‘Judges’ action and the work allegedly carried out for 500 hours (that is to say, 8 hours per day for 62.5 days) by Mr A.

87 It must be held, however, that the applicant did not submit any such evidence either during the pre-litigation procedure or before the Court. As such evidence is lacking, the eligibility conditions, referred to in Article II.14 of the grant agreement, have not been met since the costs declared are not ‘identifiable and verifiable’.

(ii) Costs of marketing, promotion and dissemination of materials related to the action

88 As a preliminary point, it should be noted that, in the final financial statement for the action, the applicant declared EUR 18 424.80 in costs for Ms B, who is a co-owner of the applicant. Specifically, the applicant declared 90 working days at a rate of EUR 204.72 per day, from 15 January 2011 to 15 January 2013, as a communication expert to organise conferences (see Annex A.12, line 8).

89 The applicant argues that the Commission erred in calculating eligible costs in respect of that activity for that action by claiming that the costs declared in the amount of EUR 7 896 were ineligible given that, according to the Commission, three events took place instead of the four initially forecast. According to the applicant and following the Commission’s statement of reasons, the accepted costs should be equivalent to three quarters of the amount of the costs, namely EUR 13 818.60, instead of the EUR 10 528 declared eligible by the Commission.

90 That complaint must be rejected, since it is not based on an accurate presentation of the facts. The Commission rightly stated that the applicant had forecast at least seven conferences. Accordingly, the error relied on by the applicant is in fact a mere clerical error made by the Commission and one which was easily identifiable by the applicant, since the justification that ‘as only [three] events took place instead of [four] foreseen, 3/7 of the cost was accepted’, was, in itself, contradictory. Accordingly, the applicant is not justified in claiming that the Commission should have accepted the sum of EUR 13 818.60 as eligible costs.

91 As a preliminary point, it should be noted that the applicant declared EUR 1 045.03 in expenses for Ms C, a Netherlands mediation specialist, by submitting two invoices dated 13 September 2011.

92 The first invoice (Annex B.6) for an amount of EUR 600 is worded as follows: ‘compensation for the preparation and teaching activities related to the course the role of the judge in mediation with reference to mediation referral, organised in the context of the [action funded by the Commission] “Judges in ADR: improving on-line Resources and training for Judicial Referral to Mediation in the EU”.’

93 The second invoice (Annex B.7), in the amount of EUR 445.03, related to Ms C’s travel and subsistence expenses for her participation, as a conference speaker, in a course. Ms C acknowledged the need to justify those costs by stating: ‘I declare that I will provide proofs of payment (hotel invoice and any other receipts such as flight/train tickets, boarding pass etc.) within one week from the day of the conference’.

94 The Commission rejected those costs, stating that the ‘invoice of [EUR 600] for “teaching activities” dated 13 [September 2011], although [first] training took place [on 13 October 2011]’, and ‘idem for invoice of [EUR 445.03] which moreover concerns travel costs and should be under heading B’ (Annex A.12, line 9 of the table).

95 The applicant complains that the Commission erred in its assessment of the eligible costs in respect of that activity of the action, given that it based its rejection of those costs on the fact that Ms C’s invoice was dated 13 September 2011, whereas the training took place on 13 October 2011. The activity was described as the creation of training programmes and of a schedule of training which was easy to attain and, consequently, did not correspond to actually conducting the training, which was a separate activity of the action. It follows that, by the very nature of the action objective, that activity, encompassing preparatory work for the actual training, had to take place prior to the actual training.

96 That objection must also be rejected, given that the Commission rightly argues that the invoices in respect of which reimbursement is sought by the applicant do not concern preparatory work unconnected with the training itself, but, on the contrary, relate to teaching activities and travel and subsistence expenses for the participation of Ms C as speaker in the course ‘The role of the judge in mediation with reference to mediation referral’. Furthermore, as regards travel and subsistence expenses, it should be noted that the applicant has not submitted any evidence in that regard either during the pre-litigation procedure or before the Court. As such evidence is lacking, the eligibility conditions, set out in Article II.14 of the grant agreement, are not met since the expenses declared are not ‘identifiable and verifiable’.

97 As a preliminary point, it should be noted that the applicant declared EUR 1 619.20 for this activity and submitted, inter alia, two invoices, one in the amount of EUR 909.20, dated 20 June 2011 (Annex B.9) and the other for EUR 710, dated 6 July 2011 (Annex B.10). The Commission rejected those costs, stating that they were incurred outside the eligibility period, that is to say outside the lifetime of the action (Annex A.12, line 19 of the table).

98 The applicant disputes the Commission’s conclusion that those costs are ineligible, arguing that the requirement that there be an eligibility period does not appear either in the grant agreement or in the correspondence at the end of which the recovery order was issued.

99 That objection must be rejected given that, contrary to what is claimed by the applicant, Article II.14.1 of the grant agreement provides that, in order to be regarded as eligible costs of the action, costs must be generated during the lifetime of the action. The invoices date from 20 July 2011 (Annex B.9) and 6 July 2011 (Annex B.10), whereas the action was scheduled to begin on 12 September 2011.

100 On the basis of the foregoing assessments, the present plea must be rejected.

2. The second plea in law, alleging misuse of powers and infringement of the principle of proportionality by the Commission

101 First, the applicant submits that the Commission wrongly refused to suspend the ‘Directions’ action in the light of the exceptional circumstances mentioned in its letter of 8 April 2013 and that the recovery order was issued as a result of that refusal. According to the applicant, the judgment of 6 December 2012 of the Corte costituzionale (Constitutional Court) resulted in a loss of more than 90% of its mediation business and staff. Although the action was up to 80% co-financed by EU subsidies, the applicant states that it was not in a position to bear costs corresponding to the remaining 20% until April 2013, after which its financial situation stabilised and began to improve. The applicant challenges the reasons given by the Commission in its letter of 25 April 2013 for refusing to suspend the action.

102 Second, the applicant claims that the Commission adopted an excessively restrictive interpretation of the period during which a suspension or extension could be requested given that the applicant complied with Articles II.7 and II.13 of the grant agreement, according to which a request for suspension, which constitutes a request to conclude a ‘supplementary written agreement’, may be submitted by the beneficiary one month before the closing date of the action.

103 Third, the applicant submits that the Commission was inconsistent in accepting the same circumstances as those submitted in the context of the request for suspension of the ‘Directions’ action in order to terminate the ‘Judges’ action, even though it did not accept those circumstances in order to suspend the ‘Directions’ action. In the applicant’s view, this was an ‘inconsistent and irrational’ approach, which could even be described as ‘schizophrenic’, especially since it was clearly faced with much greater difficulties in April 2013 than in August of that same year. The Commission specifically decided, in August 2013, that the financial difficulties encountered by the applicant in 2013 were so great that they made performance of the contract impossible or excessively difficult. Given that its financial difficulties were greater in April 2013 than in August 2013, according to the applicant, the Commission should logically have concluded that the criterion relating to ‘exceptional circumstances that make [the implementation of the action] impossible or very difficult’ was satisfied in April 2013 and should have granted the request for suspension and extension of the ‘Directions’ action.

104 Fourth, the applicant submits that, contrary to the Commission’s claim, that plea in law is not inadmissible. It is true that it refers to the question whether or not the Commission was under an obligation to grant a suspension and an extension of the action, a question which relates to the performance of the contract. However, the recovery order is the result of the Commission’s refusal to extend and suspend the duration of the ‘Directions’ action. When the Commission decides to accept or reject a request for the suspension and extension of a grant agreement, it must comply with its obligations under public law in addition to the obligations arising under the contract and with the general principles of EU law, such as the principle of proportionality and the prohibition of the misuse of powers. The Commission’s refusal to suspend and extend the duration of the ‘Directions’ action should be reviewed in light of those principles.

106 As regards the Commission’s argument that the present dispute concerns the legality of the contested decision, whereas the question whether the Commission was under an obligation to grant or not to grant a suspension or extension relates to the performance of the contract and is therefore inadmissible in the context of an action for annulment, the Court need only refer to paragraphs 59 to 61 above. According to previous rulings, in order to ensure effective judicial protection under Article 47 of the Charter, an EU Court hearing an action for annulment pursuant to Article 263 TFEU brought against an enforceable decision of the Commission formally establishing a contractual claim is called upon to hear not only pleas of annulment based on matters of fact and law arising from the actions of the Commission as an administrative authority, but also pleas of annulment based on matters of fact and law arising from the contractual relations between the Commission and the applicant.

107 Furthermore, contrary to what is claimed by the Commission, it cannot be ruled out that the refusal to suspend and extend the duration of the ‘Directions’ action has an effect on the recovery amount at least as regards unused pre-financing, given that the applicant could very well have started or continued to work on that action and, in that context, spent more funds.

109 At the outset, it should be noted that it is apparent from the first paragraph of Article I.8 of the grant agreements that the substantive law applicable to them is, primarily, EU law and, on a subsidiary basis, the law of Belgium relating to grants. Regarding the latter, it should be noted that, in so far as the grants under the grant agreements are grants financed by the European Union budget and awarded by the Commission, they fall outside the scope of the specific rules of Belgian law framing the grants awarded by Belgian administrative entities. The supplementary rules applicable in the present case can therefore only be those of the general law on Belgian contracts and obligations, which are intended to compensate for any absence of such rules at EU level (judgment of 20 July 2017, ADR Center v Commission, T‑644/14, EU:T:2017:533, paragraph 85). The general principles relating to the management of projects by the Commission therefore fall under EU law and the grant agreements (see, to that effect, judgment of 12 December 2013, Berliner Institut für Vergleichende Sozialforschung v Commission, T‑171/08, not published, EU:T:2013:639, paragraph 59).

110 In the first place, as regards the examination of the matters of fact and law arising from the contractual relationship between the Commission and the applicant, it should be noted that the applicant requested the suspension and extension of the ‘Directions’ action, relying on unforeseeable circumstances beyond its control which would jeopardise its business and, for the same reasons, requested that the ‘Judges’ action be terminated in accordance with Article II.8 of the ‘Judges’ grant agreement. The Commission refused those requests, in essence, on the ground that the applicant had not established that there were exceptional circumstances (force majeure).

111 In that regard, it should be noted that, under Article II.7.1 of the grant agreements, the applicant may suspend implementation of the action if exceptional circumstances make such implementation impossible or excessively difficult, notably in the event of force majeure. In addition, Article II.7.2 of the grant agreements provides that the duration of the action is to be extended by a period equivalent to the period of the suspension. It must be held that the applicant has not shown that it was faced with ‘exceptional circumstances’ within the meaning of Article II.7.1 of the grant agreements which made implementation of the actions impossible or excessively difficult, in particular in the case of force majeure within the meaning of Article II.8 of the grant agreements.

112 First, contrary to what is claimed by the applicant, the financial difficulties on which it relies to justify its claims referred to in paragraph 110 above, which arose following the judgment of 6 December 2012 of the Corte costituzionale (Constitutional Court) and which led to a situation in which it was unable, until April 2013, to bear the portion of the costs of the projects not financed by the European Union – namely 20% – were not beyond its control. The applicant’s financial difficulties in 2013 arose following its decision to expand its activities and cannot therefore be relied on to justify force majeure. They are the result of a financial decision by the applicant, ‘based on the provisions of [the new mandatory mediation law of 21 March 2011] and the prospective of [growth], [to start] to borrow money from banks and heavily invest in personnel and offices in order to take advantage of its leadership in a very fast growing market in order to consolidate its share of [a] 1 billion euro market’. It must therefore be held that the risk inherent in that business decision, which was based on ‘the prospective of [growth]’, which concerned only the applicant’s activities in the field of mandatory mediation in Italy and which had no immediate effect on the activities covered by the grant agreements – namely mediation in general, including voluntary mediation in Europe – materialised.

113 Since the applicant’s financial difficulties in 2013 were not beyond its control, they cannot be relied on to justify force majeure within the meaning of Article II.8 of the grant agreements; nor do they constitute exceptional circumstances within the meaning of Article II.7 of those agreements (which refers, by way of example, to the concept of ‘force majeure’).

114 Moreover, in that regard, it should be noted that Article II.8 of the grant agreements states that ‘financial difficulties cannot be invoked as force majeure by the defaulting party’. That contractual term, which corresponds to the principle of unlimited financial liability – according to which an inability to pay does not cause the obligation to pay to fall away – also precludes the applicant from relying on the financial difficulties which it encountered in 2013.

115 Second, as the Commission rightly points out, the circumstances put forward by the applicant were hardly unforeseeable for anyone working in the ADR sector, particularly in Italy, given that the judgment of the Corte costituzionale (Constitutional Court) of 6 December 2012 was the result of a referral by the Tribunale amministrativo regionale del Lazio (Regional Administrative Court, Lazio) on 12 April 2011, that is to say, well before the launch of the actions with the Commission. The applicant itself acknowledged that there had been discord and discussions in that regard in Italy since 2010. Those circumstances related, moreover, only to the applicant’s activities in the field of mandatory mediation in Italy and did not prevent the activities provided for by the grant agreements, that is to say, mediation in general, in particular voluntary mediation in Europe.

116 Third, since the applicant’s request is unfounded, there is no need to examine whether that request, which was based on events which took place four months previously and which was submitted one month before the closing date of the action, failed to fulfil the obligation to notify the other party without delay of force majeure (Article II.8 of the grant agreement) or whether it had complied with Articles II.7 and II.13 of the grant agreement, according to which a request for suspension, as a request to ‘conclude a supplementary written agreement’, may be made one month before the closing date of the action.

117 It follows that the Commission’s refusal to grant the applicant’s requests set out in paragraph 110 above complies with the contractual requirements in the grant agreements.

118 In the second place, as regards the examination of the matters of fact and law arising from the Commission’s actions as an administrative authority, it is not appropriate to uphold the applicant’s argument that the Commission was inconsistent in accepting the same circumstances as those presented in the request for suspension of the ‘Directions’ action in order to terminate the ‘Judges’ action, when it did not accept them as a basis for suspending the ‘Directions’ action. In order to terminate the ‘Judges’ action, the Commission did not accept the same circumstances as those which the applicant submitted in the request for suspension of the ‘Directions’ action. On the contrary, by its letter of 16 August 2013 (Annex A.7), it refused to terminate the action on the basis of ‘force majeure’ and accepted the termination of the action under Article II.11.1 of the grant agreement, which does not require exceptional or unforeseen circumstances, but only a substantiated request mentioning the reasons for the termination.

119 Furthermore, in so far as the applicant alleges misuse of powers by the Commission and infringement of the principle of proportionality, it must be pointed out that, in addition to the arguments examined in paragraphs 112 to 118 above, the applicant has not put forward any arguments in support of that claim. First, it should be noted that, according to settled case-law, the misuse of powers is the adoption by an institution of a measure with the exclusive or main purpose of achieving an end other than that stated or of evading a procedure specifically prescribed by the Treaty for dealing with the circumstances of the case (see, to that effect, judgment of 9 September 2015, Lito Maieftiko Gynaikologiko kai Cheirourgiko Kentro v Commission, C‑506/13 P, EU:C:2015:562, paragraphs 94 and the case-law cited). However, the examination carried out above does not allow any conclusion to be drawn that the Commission acted improperly in the context of the contractual relations between it and the applicant. Second, the principle of proportionality, which is one of the general principles of EU law, requires that measures adopted by EU institutions do not exceed the limits of what is appropriate and necessary in order to attain the legitimate objectives pursued by the measure in question; when there is a choice between several appropriate measures, recourse must be had to the least onerous, and the disadvantages caused must not be disproportionate to the aims pursued (see, to that effect, judgment of 12 January 2006, Agrarproduktion Staebelow, C‑504/04, EU:C:2006:30, paragraph 35 and the case-law cited). In so far as the rejection, by the Commission, of the applicant’s requests set out in paragraph 110 above complies with the contractual requirements in the grant agreements, it cannot be held that the Commission infringed the principle of proportionality. On the contrary, as is apparent from the case-law cited in paragraphs 71 to 73 above, the Commission is required, under Article 317 TFEU, to observe the principle of sound financial management and also to ensure that the European Union’s financial interests are protected in the implementation of its budget, which also entails compliance by the Commission with those contractual requirements. The applicant has not demonstrated that the Commission failed to comply with those requirements.

120 On the basis of the foregoing assessments, the present plea must be rejected.

3. The third plea in law, alleging infringement by the Commission of the obligation to state reasons

121 The applicant claims that, in spite of the importance of the contested decision in its regard, that decision is not sufficiently supported by a statement of reasons and that even the correspondence prior to that decision does not state the reasons for the recovery. On the contrary, that decision merely states that the level and quality of the action and its implementation are deficient, without, however, providing justification for that claim.

123 It has been consistently held that the statement of reasons must be appropriate to the measure concerned and the context in which the measure was adopted. It must disclose in a clear and unequivocal fashion the reasoning followed by the institution which adopted the measure, in such a way as to enable the EU Courts to carry out their review and to enable the persons concerned to ascertain the reasons for the measure so that they can defend their rights and ascertain whether the measure is well founded (see judgment of 6 October 2015, Technion and Technion Research & Development Foundation v Commission, T‑216/12, EU:T:2015:746, paragraph 96 and the case-law cited).

124 It is not necessary for the statement of reasons to specify all the relevant matters of fact and law, since the question whether the statement of reasons meets the requirements of Article 296 TFEU must be assessed with regard not only to its wording but also to its context and to all the legal rules governing the matter in question. In particular, the reasons given for a measure adversely affecting a person are sufficient if it was adopted in circumstances known to that person which enable him to understand the scope of the measure concerning him (see judgment of 6 October 2015, Technion and Technion Research & Development Foundation v Commission, T‑216/12, EU:T:2015:746, paragraph 97 and the case-law cited).

125 In the present case, it should be pointed out that the quality of the various activities and of the performance of the two actions and the fact that the applicant’s implementation of those actions was deficient are not disputed by the parties.

126 First, it should be noted that, in the light of those circumstances known to the applicant, an additional ‘illustration’ of the finding that the level and quality of the action and its implementation were insufficient was not necessary.

127 Second, as regards invoicing for the implementation in part of the actions, it must be stated that the contested decision refers to the two pre-information letters sent to the applicant with the annexed tables indicating, for each action and for each cost element, in short but sufficient terms, reasons for the rejection which enabled the applicant to challenge its validity. The applicant does not put forward any argument in support of its assertion that even the correspondence prior to the contested decision, which, moreover, gave it the opportunity to provide additional information if it disagreed with the Commission’s findings and which therefore gave it the opportunity to express any difficulties in terms of comprehension, does not indicate the reason for recovery. In addition, it should be pointed out that the applicant was in a position effectively to challenge the merits of the findings relating to the eligibility of the costs declared, which is demonstrated by its line of argument set out in support of the first plea in law, alleging errors of fact and assessment, in which it calls into question the merits of the reasons relied on by the Commission against it, including explanations from the tables annexed to the two pre-information letters.

128 Accordingly, it must be concluded that the contested decision was adopted in circumstances known to the applicant, which enabled it to understand the scope of that decision. The Court must therefore find that that decision contains a statement of reasons which meets the requisite legal standard and, accordingly, that the third plea in law must be rejected.

129 It follows from all of the foregoing that, since the pleas directed against the contested decision – including in so far as they seek to challenge the Commission’s finding that certain costs were ineligible and, therefore, that the applicant owed a debt under the contract, which formed the subject matter of the contested decision – have been rejected, the first and second heads of claim must be rejected and, accordingly, the action must be dismissed in its entirety.

130 Under Article 134(1) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. Since the applicant has been unsuccessful, it must be ordered to pay the costs, including those incurred by the parties in the proceedings for interim measures.

2. Orders ADR Center Srl to pay the costs in the main proceedings and in the proceedings for interim measures.

	[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback]
	Court of Justice of the European Communities (including Court of First Instance Decisions)
You are here: BAILII >> Databases >> Court of Justice of the European Communities (including Court of First Instance Decisions) >> ADR Center v Commission (Financial aid - 'Fundamental Rights and Justice' - Judgment) [2021] EUECJ T-364/15 (15 September 2021) URL: http://www.bailii.org/eu/cases/EUECJ/2021/T36415.html Cite as: [2021] EUECJ T-364/15, EU:T:2021:593, ECLI:EU:T:2021:593

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