Rose Vision v Commission (Judgment) [2016] EUECJ C-224/15 (26 May 2016)

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(Appeal — Projects funded by the European Union in the field of research — Audits finding irregularities in the implementation of certain projects — Commission decisions suspending payment of the amounts payable under certain projects — Action for compensation — Rejection — Statement of reasons)

APPEAL under Article 56 of the Statute of the Court of Justice of the European Union, brought on 15 May 2015,

Rose Vision SL, established in Pozuelo de Alarcón (Spain), represented by J.J. Marín López, abogado,

European Commission, represented by R. Lyal and M. Siekierzyńska, acting as Agents,

composed of L. Bay Larsen (Rapporteur), President of the Chamber, D. Šváby, J. Malenovský, M. Safjan and M. Vilaras, Judges,

having decided, after hearing the Advocate General, to proceed to judgment without an Opinion,

1 By its appeal, Rose Vision SL asks the Court to set aside the judgment of the General Court of the European Union of 5 March 2015 in Rose Vision and Seseña v Commission (T‑45/13, not published, EU:T:2015:138) (‘the judgment under appeal’) in so far as in that judgment the General Court dismissed its action for annulment and compensation.

2 Rose Vision, a company in liquidation, concluded with the European Commission, acting on behalf of the European Union, five project grant agreements (‘the agreements’) under the Seventh Framework Programme for research, technological development and demonstration activities (2007-2013), including Agreement No 246910 relating to the ‘FutureNEM’ project.

3 In accordance with the provisions of the general conditions ‘FP7’ applicable to those agreements (‘the applicable general conditions’), the Commission entrusted, inter alia, to its internal audit services the task of carrying out a financial audit, in particular, of the management, by the appellant, of the ‘FutureNEM’ project.

4 The draft audit report prepared by the Commission’s internal audit services, identified by the reference 11-INFS-025, was sent to the appellant on 2 February 2012.

5 In that draft audit report it was apparent that the appellant’s accounts did not reflect the eligible costs, the invoices and the interest and that therefore it had to be concluded that the appellant had managed the financial aspect of the project in a way which was unacceptable and without respect for the obligations set out in the agreement relating to the ‘FutureNEM’ project.

6 After two informal meetings the appellant submitted its observations concerning the draft and sent the Commission additional documentation on 30 March 2012, that being the day on which the time-limit which it had been granted for doing so expired.

7 On 21 May 2012, the Commission sent a letter to the appellant in which it communicated its decision to suspend the payments relating to the second phase of the ‘FutureNEM’ project, in accordance with the applicable general conditions.

8 On 31 July 2012, the Commission informed the appellant that neither the additional documentation nor the observations which it had presented on the draft audit report in question could invalidate the conclusions in that report that certain costs were not eligible because they were not actual, economic and necessary. Furthermore, the Commission gave the appellant the opportunity to present new observations, which it did on 30 August 2012.

9 On 9 October 2012, the Commission’s internal audit services finalised the audit report bearing the reference 11-INFS-025 in which they concluded that certain staff costs were not eligible, in particular, because they failed to comply with several sections of the applicable general conditions.

10 During the following months numerous exchanges took place concerning the consequences of those conclusions both in relation to the ‘FutureNEM’ project and other projects in which the appellant had participated. In particular, the appellant was sent a debit note for the amount to be reimbursed in respect of the ‘FutureNEM’ project.

11 The agreements all contain an arbitration clause in accordance with which the General Court or, in the case of an appeal, the Court of Justice have sole jurisdiction to hear any dispute between the parties concerning the validity, the implementation or the interpretation of those contracts and also concerning the validity of the Commission’s decisions imposing pecuniary obligations.

12 By an application lodged at the General Court Registry on 29 January 2013, Rose Vision and its administrator brought an action, inter alia, for compensation for the damage allegedly suffered as a consequence of the Commission’s conduct, up to a maximum of EUR 5 854 264.

13 The Commission having pleaded, as a preliminary point, the inadmissibility of the action of Rose Vision and its administrator for lack of purpose, the General Court, at paragraph 38 of the judgment under appeal, defined the purpose of the action stating that it was on the basis of the audit report bearing the reference 11-INFS-025, and the Commission’s letter of 21 May 2012 deciding to suspend the payments relating to the ‘FutureNEM’ project based on that report, that it was necessary to examine the claims presented by the applicants before the General Court.

14 Having thus defined the purpose of the proceedings, the General Court considered the other pleas of inadmissibility raised by the Commission in relation to the various heads of claim and rejected them.

15 Concerning the various breaches of the agreements pleaded by the appellants before the General Court, that court noted, at paragraph 87 of the judgment under appeal, that the Commission was alleged, in essence, to have breached the contractual terms of the agreement concerning the ‘FutureNEM’ project in relation, in the first place, to the audit procedure, in the second place, to the suspension of payments and, in the third place, to the confidentiality of the audits.

16 With regard, in particular, to the argument alleging breach of the contractual terms concerning the suspension of payment, it is stated at paragraphs 99 and 101 of the judgment under appeal that it follows from the examination of the conclusions of the draft audit report bearing reference 11-INFS-025 that those conclusions were sufficient to justify that suspension. Those conclusions had already showed the existence of certain staff costs which were not eligible and the failure to comply with certain contractual terms, which had been confirmed in the definitive version of that audit report, in respect of which the appellant did not put forward any evidence before the General Court allowing the conclusions appearing there to be questioned.

17 Consequently, the General Court rejected that argument as unfounded. Having also rejected the other arguments presented before it, the General Court dismissed the action.

18 Rose Vision requests the Court, inter alia, to set aside the judgment under appeal.

19 The Commission contends that the Court should dismiss the appeal and order Rose Vision to pay the costs.

21 It is appropriate, in the present case, to begin by considering the second plea in law alleging a failure to state reasons in the judgment under appeal.

22 By its second plea in law, the appellant argues that in holding, in paragraph 99 of the judgment under appeal, that the draft audit report bearing the reference 11-INFS-025 of 2 February 2012 already set out the existence of certain staff costs which were not eligible and the non-compliance with certain contractual terms, which was confirmed in the definitive version of that audit report, the General Court erred in law by failing to give adequate reasons.

23 The Commission contends that that second plea in law must be considered to be unfounded. The judgment under appeal clearly presented the arguments of the two parties and made apparent the reasoning of the General Court.

24 It should be noted in that regard that, according to settled case-law, the statement of the reasons on which the judgment is based must clearly and unequivocally disclose the General Court’s thinking, so that the persons concerned can be apprised of the justification for the decision taken and the Court of Justice can exercise its power of review (see, inter alia, the judgment of 11 June 2015 in EMA v Commission, C‑100/14P, not published, EU:C:2015:382, paragraph 67 and the case-law cited).

25 However, the obligation to state reasons does not require the General Court to provide an account which follows exhaustively and one by one all the arguments put forward by the parties to the case and the reasoning may therefore be implicit, on condition that it enables the persons concerned to know why the General Court has not upheld their arguments and provides the Court of Justice with sufficient material for it to exercise its power of review (judgments of 22 October 2014 in British Telecommunications v Commission, C‑620/13 P, not published, EU:C:2014:2309, paragraph 56 and of 11 June 2015 in EMA v Commission, C‑100/14 P, not published, EU:C:2015:382, paragraph 75).

26 The question whether the grounds of a judgment of the General Court are contradictory or inadequate is a question of law which is amenable, as such, to judicial review on appeal (see, inter alia, judgment of 19 December 2012 in Planet v Commission, C‑314/11 P, EU:C:2012:823, paragraph 63).

27 As regards, in the first place, the staff costs, the General Court noted in paragraph 99 of the judgment under appeal that the conclusions of the draft audit report bearing reference 11-INFS-025 already showed the existence of certain staff costs which were not eligible.

28 In the second place, concerning non-compliance with certain contractual terms observed by the General Court in paragraph 99 of the judgment under appeal, no details of those terms are given in that paragraph.

29 It is apparent, in particular from paragraph 101 of the judgment under appeal, that the appellant disputed the audit report on which the suspension of payments under the ‘FutureNEM’ project was based, relying in that regard on numerous errors and inaccuracies. It is apparent, moreover, from paragraph 32 of the judgment under appeal that the appellant argued, inter alia, that the content of the audit report was contrary to the rules concerning audits, in particular the Financial Guide.

30 Nevertheless, the General Court, in the present case, merely declared that the appellant had not put forward any evidence enabling the conclusions of the audit report to be called into question.

31 Therefore, it must be concluded that the statement of reasons in the judgment under appeal does not make apparent in a clear and comprehensible manner the reasoning of the General Court (see, in that regard, judgment of 19 December 2012 in Commission v Planet, C‑314/11 P, EU:C:2012:823, paragraph 66), which did not at any point explain why the appellant’s complaints challenging the conclusions of the audit report at issue did not permit those conclusions to be called into question. In those circumstances, the grounds of the judgment under appeal do not enable the interested parties to ascertain the reasons for that judgment nor the Court to exercise its power of review. In particular, such a statement of reasons, drafted in an apodictical manner, prevents the Court from reviewing whether the reasoning underlying the decision taken by the General Court is vitiated by contradiction.

32 It follows that the General Court erred in law in that it failed to fulfil its obligation to state reasons.

33 Consequently, the second ground of appeal should be upheld and it is not necessary to examine the other grounds put forward by the appellant in support of its appeal (see, to that effect, judgment of 17 October 2013 in Isdin v Bial-Portela, C‑597/12 P, EU:C:2013:672, paragraph 30) in order to declare that appeal well-founded.

34 It follows that the judgment under appeal must be set aside in so far as it concerns Rose Vision.

35 According to the first paragraph of Article 61 of the Statute of the Court of Justice of the European Union, the latter may, where the decision of the General Court has been annulled, either itself give final judgment in the matter, where the state of the proceedings so permits, or refer the case back to the General Court for judgment. In the present case, the state of the proceedings does not permit the Court to give final judgment.

36 The case should therefore be referred back to the General Court and the costs reserved.

1. Sets aside the judgment of the General Court of the European Union of 5 March 2015 in Rose Vision and Seseña v Commission (T‑45/13, not published, EU:T:2015:138), in so far as it concerns Rose Vision SL;

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You are here: BAILII >> Databases >> Court of Justice of the European Communities (including Court of First Instance Decisions) >> Rose Vision v Commission (Judgment) [2016] EUECJ C-224/15 (26 May 2016) URL: http://www.bailii.org/eu/cases/EUECJ/2016/C22415.html Cite as: ECLI:EU:C:2016:358, [2016] EUECJ C-224/15, EU:C:2016:358

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