Important legal notice

61998C0010

European Court reports 1999 Page I-06831

Opinion of the Advocate-General

I - Introduction

In this case the Court of Justice is called upon to deliver judgment on an appeal by Azienda Agricola `Le Canne' Srl brought against a judgment of the Third Chamber of the Court of First Instance of 7 November 1997 (1) (hereinafter `the judgment appealed against').

The Court of First Instance dismissed an application for annulment challenging the reduction in Community financial aid applied by the Commission and also rejected a claim for compensation for the loss which the applicant alleged it had suffered as a result of that reduction.

II - Legal background to the dispute

Under Article 1(1)(b) of Council Regulation (EEC) No 4028/86 of 18 December 1986 on Community measures to improve and adapt structures in the fisheries and aquaculture sector (2) the Commission may grant Community financial aid for measures adopted for the development of aquaculture and the establishment of protected marine areas with a view to improved management of inshore fishing grounds. (3)

Under Article 12, which refers to Annex III to Regulation No 4028/86, Community financial assistance to aquaculture amounts to 40% of eligible expenditure for the region of Veneto, Italy's contribution representing between 10 and 30%.

Article 44 of Regulation No 4028/86 provides:

- if the project is not carried out as specified, or

- certain conditions imposed are not satisfied, or

- if the beneficiary, contrary to the particulars given in his application and incorporated in the decision granting aid, has not begun the work within one year from the date of notification of the decision, or has not, before the end of this period, supplied satisfactory assurances that the project will be carried out, or

- if the beneficiary does not complete the work within a period of two years from the start of the project, except in cases of force majeure.

Decisions shall be notified to the Member State concerned and to the beneficiary.

The Commission shall take steps to recover any sums unduly paid.

Article 47 provides:

3. The Commission shall adopt the measures which shall apply immediately. However, if these measures are not in accordance with the opinion of the Committee, the Commission shall forthwith communicate them to the Council. In that event the Commission may defer their application for not more than one month from the date of such communication. The Council, acting by a qualified majority, may adopt different measures within one month.

By Commission Regulation (EEC) No 1116/88 of 20 April 1988, (5) (hereinafter `Regulation No 1116/88'), the Commission adopted detailed rules for the application of decisions granting aid for projects concerning Community measures to improve and adapt structures in the fisheries and aquaculture sector and in structural works in coastal waters.

Article 3 of that regulation provides:

On completion of a project, or while it is being carried out if the Commission decision provides for payment in instalments in accordance with Article 43 (1) of Regulation (EEC) No 4028/86, the authority or agency shall forward to the Commission an application for payment showing that the conditions for payment have been fulfilled.

Applications for payment shall consist of a certificate and a list of the supporting documents. They shall be submitted in duplicate in the form shown in the Annex.

Article 4 of Regulation No 1116/88 lays down the following requirements:

(a) ...

(b) Aquaculture, development of coastal waters

The aid shall be payable as a rule in not more than three instalments.

An (A first) application for partial payment shall be made only:

- if the rate of implementation has reached at least 30% of the eligible costs, and

- if the interim implementation report has been drawn up (only for aquaculture).

(c) Modernisation

The aid shall be payable as a rule in not more than four instalments.

An (A first) application for partial payments shall be made only:

- if 20% of the number of projects have been implemented in full, and

- if confirmation is presented of the grant of the national financial contribution.

According to the sixth recital in the preamble to Regulation No 1116/88 `the procedure for suspending, reducing or terminating aid should not be initiated without the Member State concerned first having been asked for its views and the beneficiaries having been given the opportunity to submit their comments'.

Article 7 of Regulation No 1116/88 provides:

Before initiating a procedure for suspending, reducing or terminating aid in accordance with Article 44(1) of Regulation (EEC) No 4028/86, the Commission shall:

- inform the Member State on whose territory the project was to be carried out, so that it may express its views on the matter,

- consult the competent authority responsible for forwarding supporting documents,

- ask the beneficiary to provide, through the authority or agency, an explanation for the failure to comply with the conditions laid down.

III - Facts

According to the judgment appealed against (paragraphs 8 to 20), the facts of the dispute may be summarised as set out below.

By Decision C(90) 1923/99 of 30 October 1990 the Commission granted the applicant financial aid of ITL 1 103 646 181, that is to say 40% of the eligible expenditure of ITL 2 759 115 453, in respect of modernisation works and the establishment of fish-farming installations (project I/16/90). Financial aid of 30% of the eligible expenditure, namely ITL 827 734 635, was to be borne by the Italian State.

That decision stated that `the amount of aid that the Commission will actually apply to a completed project depends on the nature of the works carried out in relation to those provided for in the project'. The decision also stipulated that `in conformity with the statement appearing in Part B of the application for assistance submitted by the recipient, the works provided for may not be altered or changed without the prior agreement of the national administration and of the Commission. Important changes made without the Commission's agreement may lead to a reduction or withdrawal of the assistance if they are deemed unacceptable by the national administration or the Commission. If appropriate, the national administration shall indicate to each beneficiary the procedure to be followed.'

On 23 June 1993 the Commission paid to the applicant a first instalment of ITL 343 117 600.

Following an on-the-spot verification of the project as finally completed, the Public Works Department, in a letter dated 7 April 1994, advised the applicant that, subject to certain modifications to the project in the extent of masonry work and similar items, as well as excavation works, it was of the opinion that the works completed could be regarded as being in conformity with the approved project from a technical and financial point of view.

By Decision C(94) 1531/99 of 27 July 1994 the Commission acceded to a second request by the applicant for the grant of aid in connection with the completion of modernisation works and installations (project I/100/94).

In a letter dated 12 December 1994 addressed to the Italian Ministry of Agriculture (hereinafter `the Ministry') and to the Commission, the applicant pointed out that, owing to circumstances beyond its control which had arisen since the project was sent to the Ministry, certain modifications to the works provided for in the context of project I/16/90 had become essential, although that did not mean that project I/16/90 had undergone any substantial changes overall. (6) The applicant stated that its belief that it had complied with the proposed objectives and chosen the correct options, together with its desire speedily to achieve the results envisaged, had unfortunately led it to overlook the obligation to give prior notification to the Ministry of the modifications made, and this presented a major obstacle to finalising the matter. Thus, whilst stating that it had become aware, but only since completion of the works, that it had not observed the formality of prior notification of the modifications, the applicant requested the Ministry and, if appropriate, the Commission itself, to conduct a technical examination of the changes made in order to establish that they were well founded, and that the choices made were necessary and opportune. In that connection the applicant pointed out that all the modifications referred to had been disclosed and approved in the course of approval of the supplementary structural works project (I/100/94) accepted for Community financial aid by Decision C(94) 1531/99.

After verification of the completed works the Ministry forwarded to the applicant on 3 June 1995 the certificate of verification of completion of works (hereinafter `the certificate') drawn up on 24 May 1995. In the Ministry's view, the applicant had made changes additional to those already noted by the Public Works Department: (7)

The Ministry concluded that the applicant should have requested prior authorisation under the applicable Community provisions to carry out those modifications. The Ministry reduced to ITL 1 049 556 101 the amount of eligible expenditure on the final stage of the project. The Ministry concluded that, regard being had to the expenditure already recognised as eligible at the stage of the first phase of the works in the amount of ITL 857 794 000, the total amount of expenditure deemed eligible was ITL 1 907 350 101, about 69.13% of the eligible expenditure of the project originally approved by the Commission.

By final payment order issued on 5 July 1995, the Commission paid the applicant a balance of ITL 419 822 440, thus reducing from ITL 1 103 646 181 to ITL 762 940 040 the total amount of Community aid payable in respect of the works deemed by the Commission, on the basis of the certificate, to be in conformity with the project originally approved.

On 28 July and 3 August 1995 respectively, the Ministry and the Commission received a series of written observations from the applicant claiming that there was no basis for the certificate and asking for it to be re-examined.

In reply to a request by the national authorities, the Commission sent them its observations by telex No 12 497 of 27 October 1995. The Commission considered that on the information available it was not necessary to review the procedure followed by the Ministry in finalising project I/16/90 on the grounds that: (1) major changes had been made to the project without prior notification to the national administration; the grant of assistance in connection with the subsequent project (I/100/94) did not imply acceptance by the Commission of the previous changes; (2) works provided for under the following project (I/100/94) had been carried out under project I/16/90 and were thus not eligible for assistance granted under project I/16/90; (3) Article 7 of Regulation No 1116/88, to which counsel for the applicant referred, was not applicable to the situation adumbrated by him; (4) from information provided by the Ministry the observations formulated at page 18 of the statement submitted by counsel for the applicant appeared to be erroneous, in so far as they referred to deductions of expenditure occurring on account of their being imputed to heads of expenditure not provided for.

By letter of 14 November 1995 the Ministry rejected the request for re-examination made by the applicant on the same grounds as those set out in telex No 12 497 of 27 October 1995 from the Commission.

It was in those circumstances that, by application lodged at the Registry of the Court of First Instance on 1 December 1995, the applicant brought, on the one hand, an action for the annulment of telex No 12 497 of 27 October 1995 from the Commission and, on the other, a claim for compensation for the loss which it alleged it had suffered as a result of the adoption of that measure.

For its part the Commission requested the Court of First Instance to dismiss the action under Article 173 of the EC Treaty as inadmissible and, in the alternative, as unfounded. It further contended that the action under Articles 178 and 215 of the Treaty should be dismissed and that, in any event, the applicant should be ordered to pay the costs.

Before the Court of First Instance the applicant relied in support of its action for annulment on five pleas, namely (a) failure to notify the contested decision, (b) infringement of the principle of collegiality governing the Commission's activities, (c) infringement of the rules of procedure to be observed in the event of reduction by the Commission of the financial assistance granted, (d) infringement of the duty to provide a statement of reasons and, finally, (e) misuse of power.

The Court of First Instance dismissed the action and ordered the applicant to pay the costs.

IV - Forms of order sought by the parties to the appeal

The `Le Canne' undertaking (hereinafter `the appellant') appealed against the judgment of the Court of First Instance by notice lodged at the Court Registry on 16 January 1998 in which it claimed that the Court should: (a) annul the judgment of the Court of First Instance appealed against and allow the claim in the terms as submitted before the lower court; (b) declare Commission document No 12 497 of 27 October 1995 null and void; (c) order the Commission to afford restitution of the loss suffered, to the extent specified in the action; (d) order the Commission to pay the costs of both proceedings.

The Commission contends that the Court should: (1) dismiss the appeal and (2) order the appellant to pay the costs.

V - Pleas on appeal

The appellant submits that the judgment appealed against should be annulled on the basis of the following four pleas: (a) infringement of the principle of collegiality governing the Commission's activities, (b) infringement of the principle of the right to be heard, (c) infringement and misapplication by the Court of First Instance of Articles 44(1) and 47 of Regulation No 4028/86 and Article 7 of Regulation No 1116/88, and (d) failure by the Commission to provide a statement of the reasons on which its decision was based, contrary to Article 190 of the EC Treaty and, consequently, incorrect and contradictory reasoning by the Court of First Instance on this point.

For methodological reasons, examination of the first plea will be followed by examination of the third plea, after which comes an analysis of the second plea; I shall conclude with an analysis of the fourth plea.

A - Infringement of the principle of collegiality

32 The first plea may be divided into three parts. First of all, the appellant maintains that the Court of First Instance was wrong to hold (at paragraph 37), in reference to the Commission's rules of procedure, that the institution's officials may be empowered to take, in the name of the Commission and subject to its control, clearly defined measures of management or administration, such as the contested decision. According to the appellant, delegation of power, as a matter of principle, may be regarded as contrary to the principle of collegiality which should govern the Commission's actions. Then, it considers that the Court of First Instance was wrong to concede that delegations of signature are the normal means by which the Commission exercises its competencies. Finally, it submits that, if conversely the view were to be taken that the Court of First Instance accepted that there had been a mere delegation of signature, it wrongly distributed the burden of proof in holding (at paragraph 38) that it was for the appellant to show that the Community administration had failed to comply with the relevant rules applicable in this sector. Citing the Court's case-law, the appellant considers that only the Commission is in a position to adduce such evidence when the question is in doubt.

33 At the outset, the question arises whether the Court of First Instance erred in forming the view that it was possible for an official with delegated power to draw up the telex at issue, in non-conformity therefore with the principle of collegiality which is a fundamental principle guiding the action of the Commission as a collegiate body.

34 As regards delegation, it is necessary to distinguish delegation of power or competence which involves the transfer of competence to another body, from delegation of signature. In actual fact, the competence conferred on an administrative body cannot legitimately be exercised by another body, unless expressly provided for. Consequently, a body cannot lawfully alter the rules governing its competence unless such alteration is expressly authorised or imposed by those rules which are to be strictly interpreted.

35 Delegation involving the transfer of competence to another body is to be distinguished from delegation of signature. In the latter case, a body adopts a measure by which it confers on another body, which is normally at a lower level in the hierarchy, the right to sign certain documents in its stead and at its direction. Although they bear the signature of the delegate of the power, such acts are deemed to be acts of the delegating body. Delegation of signature must also be authorised by the provisions determining the powers of the delegating body.

36 The Court has repeatedly emphasised that the functioning of the Commission is governed by the principle of collegiality stemming from Article 163 of the EC Treaty. It has stated that the principle of collegiality thus established is founded on equality between the members of the Commission in involvement in the decision-making process and specifically requires decisions to be deliberated on collectively and for all members of the college to be collectively responsible at a political level for all the decisions adopted.

37 None the less, it is also settled case-law that recourse to the habilitation procedure for the adoption of measures of management or administration remains in conformity with the principle of collegiality. As the Court has emphasised, limited to specific categories of measures of management or administration, and thus excluding by definition decisions of principle, such a system of delegations of authority appears necessary, having regard to the considerable increase in the number of decisions which the Commission is required to adopt, to enable it to perform its duties.

38 Under Article 11(1) of the Commission's Rules of Procedure the Commission may authorise, provided the principle of collegiate responsibility is fully observed, one or more of its members to adopt in its name and under its control clearly defined measures of management or administration. Under Article 11(4) thereof the provisions of paragraph 1 are to apply without prejudice to the rules on delegation in financial matters. Under Article 18(1) to (3) of the Commission's Financial Regulation the Commission is to implement the budget and may delegate its powers in accordance with the conditions laid down in its rules of procedure and within the limits which it itself lays down in the act of delegation. Those so delegated may act only within the limits of the powers expressly conferred upon them.

39 Thus, in light of the Court's case-law, the provisions governing the Commission's action allow the Commission to delegate in regard to certain categories of acts of administration or management or in implementation of the budget. That being so, it may delegate to its officials responsibility for adopting such acts in furtherance of its administrative functions without prejudice to the principle of collegiality governing its actions. Nor, similarly, may such delegations be regarded as an infringement of the rule laid down in Article 173 of the Treaty concerning the possibility of acts adopted in that way being submitted for review by the Community judicature.

40 Consequently, the Court of First Instance was right to point out at paragraph 37 of its judgment that, as is apparent from the Commission's rules of procedure (Article 11), the institution's officials may be empowered to take, in the name of the Commission and subject to its control, clearly defined measures of management or administration, such as the contested decision. Those are therefore delegations of power which do not have the effect of transferring to an authorised official a self-standing power divested from the Commission. Similarly, the Court has stated that delegations of signature are the normal means by which the Commission exercises its competencies, which the Court has repeatedly acknowledged.

41 Consequently, the Court of First Instance was right to declare that the contested measure was properly adopted under the rules of delegation of power without there being any infringement of the principle of collegiality.

42 It should be noted that the acting Head of Unit who signed the contested decision belongs to DG XIV responsible for fisheries which is the economic sector in receipt of the Community assistance granted under Regulation No 4028/86, as the Commission states. Moreover, as the Commission observes, the contested measure was adopted under the European Agricultural Guidance and Guarantee Fund (EAGGF), Guidance Section, which comes under the responsibility of the Commission's Directorate General for Fisheries (DG XIV).

43 Moreover, I consider that the Court of First Instance correctly allocated the burden of proof in taking the view (at paragraph 38) that the applicant had adduced no evidence to show that the Community administration had in this case departed from the applicable rules. It was for the applicant to produce material in support of its allegations. Accordingly, its arguments to the contrary must be rejected as unfounded.

44 Accordingly, the first appeal plea must be dismissed as ill founded.

B - Infringement and misapplication of Articles 44(1) and 47 of Regulation No 4028/86 and Article 7 of Regulation No 1116/88

45 In its third plea the appellant claims that the Court of First Instance misapplied Articles 44(1) and 47 of Regulation No 4028/86, and Article 7 of Regulation No 1116/88 in adjudging that the procedure followed by the Commission in this case, in which it did not consult the Standing Committee on the Fishing Industry, was in conformity with those articles. More specifically, the Court of First Instance, it is alleged, was wrong to hold (at paragraph 56) that Articles 44 and 47 of Regulation No 4028/86 apply only on a re-evaluation of the project as a whole and not where `a part of the expenditure for which the applicant claims payment does not relate to the project as originally accepted'. In fact, Article 44 mentions, amongst other situations in which it is to apply, the case where `the project is not carried out as specified'. As the appellant stressed at the hearing, it considers there to be no warrant under the terms of the rules for distinguishing between eligible expenditure and notifiable alterations to the grant-aided project. It maintains, finally, that only an alteration of the agreed project found on subsequent examination to be unacceptable after the procedure under Article 47 has been followed can justify reduction or discontinuance of aid, and not any significant change on the sole ground that it was not approved.

46 According to the Commission, that specific procedure is to be applied only where there is a re-evaluation of the proportion of Community aid, in the context of re-evaluation of the project as a whole, and not merely in the case of a re-evaluation of amounts actually paid for work completed constituting eligible expenditure. For in the latter case the percentage of Community financing remains constant. It stresses that the fluctuation in eligible expenditure, which affects nearly all projects presented, is the result of purely technical evaluations.

47 Article 44, interpreted in conjunction with Article 47 of Regulation No 4028/86 and with Article 7 of Regulation No 1116/88, lays down an essential formal requirement whose infringement entails the invalidity of the decision adopted. Under the terms of Article 44, that procedure must be applied in all cases where Community aid is suspended, reduced or discontinued on one of the grounds set out in that provision.

48 In light of the foregoing, it is first of all necessary to determine the meaning of `aid' and `reduce', as used in Article 44 of Regulation No 4028/86, and then to clarify what powers are conferred on the Commission under that article.

49 In the aquaculture sector the term `aid', interpreted in the light of the other provisions of Regulation No 4028/86 and Annex III thereof, is to be understood as meaning the percentage of the total amount needed for the investment which is approved as Community financing for the implementation of projects relating to physical investments in the construction, equipment or modernisation or extension of aquaculture installations. That percentage, which relates to the amount of the investment and is set when the project is approved, constitutes the Community financial aid.

50 On its wording Article 44 gives the Commission a margin of discretion (`may') decide to `suspend' or `reduce' or even `discontinue' aid, that is to say the percentage of financing initially provided for on approval of the project. The Commission may take one of these measures in certain cases as laid down, provided the Article 47 procedure is observed.

51 More specifically, Article 44 provides that aid may be suspended, reduced or discontinued in four cases: (a) if the project is not carried out as specified; (b) if certain conditions imposed are not satisfied; (c) if the beneficiary, contrary to the particulars given in his application and incorporated in the decision granting aid, has not begun the work within one year from the date of notification of the decision, or has not, before the end of this period, supplied satisfactory assurances that the project will be carried out; or (d) if the beneficiary does not complete the work within a period of two years from the start of the project, except in cases of force majeure.

52 I believe it to be theoretically possible to argue that the term `reduction' may refer to the payment, on whatever ground, to the recipient of a smaller amount of aid than that originally decided. For example, there is clearly a reduction where the Commission decides, for one reason or another, on an overall re-evaluation of the project, whilst it is being implemented, and decides that there should be a reduction in the initially approved amount of Community financial aid, which will certainly correspond to a specific amount. That may be the case where, for example, it is clear from the stage reached by the project that, in all likelihood, the purpose for which the aid was granted will not be achieved.

53 Nonetheless, I consider that, under the terms of Article 44(1) of Regulation No 4028/86, reduction, suspension or discontinuance refers, first, to the percentage originally laid down as constituting Community financial aid at the time when the grant-aided project was approved. Secondly, a decision to reduce, suspend or discontinue aid refers to the future course of the project. In other words, there can be a reduction, within the meaning of the applicable provisions, only where the project is a current one.

54 Likewise, in my view it may be inferred from Article 44(1) aforesaid, interpreted, as will be shown below, in conjunction with other provisions of Regulations Nos 4028/86 and 1116/88, that reduction refers to the amount of assistance initially provided for the project funded and not the amount actually paid in respect of a completed project. The Commission's refusal to pay a certain amount in respect of work completed is not, in my view, a reduction under the terms of the regulation because it does not alter the percentage contribution initially provided for, but rather the amount actually paid in the light of works completed and the corresponding expenditure, in so far as it is eligible.

55 Consequently, as the Commission correctly maintains, there can be no question of a reduction within the meaning of Regulation No 4028/86 when the project is completed and, following a determination as to the final state of the project by the competent national authorities, there is merely an adjustment in the amounts paid in respect of work completed as per the approved and completed project. In fact, even though, in that situation, the amount received by the recipient by way of aid is less than the amount initially approved, the refusal by the Commission to pay the remainder of the balance does not constitute a reduction under the terms of the legislation.

56 Moreover, I would also observe that in the text of Article 44 the legislature in the first indent uses the present tense and refers to a project which `is not carried out' as specified. This wording appears to indicate that the legislature sought to preclude projects which had already been completed. The choice of tense by the legislature is also in my view a clear manifestation of its desire not to include amongst the cases requiring observance of the special procedure under Article 47 the situation where the project has been completed and it is simply a question of adjusting the amounts due in line with the works carried out. Consequently, the wording `if the project is not carried out as specified' cannot be interpreted so liberally as to include projects already completed.

57 In any event, provision for a special procedure is in my view justified by the fact that `the decision reducing the amount of assistance originally approved entails more serious consequences' for the realisation of the project financed because it substantially alters the conditions on which the aid was approved at the same time, moreover, as recognising its major importance for the beneficiary of the aid.

58 Accordingly, it must be acknowledged that there can be no requirement to observe that procedure where, notwithstanding an express provision in the Commission decision concerning the grant of financial assistance, the person concerned did not seek prior approval of the alterations to the project and has completed the work without implementing in whole or in part the project initially approved or has incurred non-eligible expenditure. Consequently, in so far as the Commission confines itself essentially to a finding that, on the basis of the material provided to it by the national authorities, only part of the expenditure in respect of which the person concerned seeks payment relates to the completed project, as initially approved, it may pay a lesser sum depending on the work completed.

59 Yet, in my view, other provisions, too, permit the inference that there is a distinction to be drawn between the rate of Community financing provided for and the amount actually paid on the basis of eligible expenditure and work completed, on the one hand, and the possibility, on the other, of an adjustment, based on a series of technical calculations and appraisals, in the amounts actually paid in respect of the work carried out in connection with the completed project.

60 That distinction is, I believe, to be inferred from an analysis of Article 4 of Regulation No 1116/88. Under that provision, payments in instalments may not exceed, in respect of any one investment, the rate of implementation of the work relating to that investment. That rate consists of the ratio between the total amount of the invoices or other documents which have been duly paid and relate to eligible expenditure and the total amount of the eligible costs laid down at the time the grant decision was taken.

61 As regards more specifically the aquaculture installations which concern us in the present case, Article 4(1)(b) of Regulation No 1116/88 provides that the aid is to be payable as a rule in not more than three instalments. A (first) application for partial payment is to be made only if the rate of implementation has reached at least 30% of the eligible costs, and if the interim implementation report has been drawn up (only for aquaculture).

62 It should be recalled that, under Article 4(2) thereof, final payments for all types of project are subject to the conditions set out in the decision granting aid, in particular as regards the financial contribution of the Member State and the presentation of the official documents required.

63 Moreover, it follows, in my view, from Commission Regulation No 970/87, and in particular the annex relating to projects in the aquaculture sector, that the reduction occurs after re-evaluation of the project financed. It is specifically laid down therein that the application for assistance submitted by the applicant is to be in two parts (A and B). Part B begins with explanatory notes describing the project and including a warning to beneficiaries to the effect that any subsequent variation to the Commission's decision granting the aid will entail a fresh examination of the project which may lead to the aid being discontinued if those variations are deemed unacceptable (emphasis added). Part B of the application form for assistance then contains a table recapitulating the work envisaged. According to one of the explanatory notes accompanying that table, the recapitulation is intended to group together the different headings of expenditure. In any event the project must be accompanied by a detailed estimate of the construction work, estimates from specialised firms for the supply of the various machines and equipment and plans of the works. In other words, the beneficiary knows both what expenditure is deemed eligible at the time when the aid is approved and that the carrying out of works other than those provided for may lead to the aid being discontinued following a fresh evaluation of the project.

64 Moreover, it is only in the case of work in progress that it may be demonstrated, under the procedure provided for in Articles 44 and 47 of Regulation No 4028/86 and Article 7 of Regulation No 1116/88, that, the purpose for which the Community aid was granted is being attained or can be attained, in spite of modifications, with the result that the amount of Community aid does not need to be reduced. That appraisal requires a very full legal and financial evaluation of the progress of the works as a whole and of whether it is expedient for them to be completed, which is to be carried out after the procedure under the abovementioned provisions has been followed.

65Therefore I do not see why the Commission should observe that specific procedure even where it is clear from the matters communicated to the Commission by the national authorities that the items of eligible expenditure are not as provided for in the decision granting the aid. Thus, that does not, in my view, constitute an issue on which, under Article 44, the special committee established by Article 47 is required to express a view.

66That conclusion is supported not only by a literal interpretation of the provisions of Regulation No 4028/86, but also by a purposive and systemic interpretation thereof.

67According to the 16th recital in the preamble to Regulation No 4028/86 `measures must be taken to prevent and to prosecute any irregularities and to recover the sums lost as a result of any such irregularity or of negligence; ... provision should also be made so that Community financing can be suspended, reduced or discontinued'. In other words the legislature is seeking the adoption of measures to prevent and prosecute irregularities noted in the course of a project, owing to which the purpose of the financing has not been achieved. For example, that is what is sought to be achieved, on the one hand, by a refusal to pay the balance where there is a discrepancy concerning eligible expenditure and, on the other, by the procedure for suspension, reduction or discontinuance of the Community financing provided for in Article 44. I am further of the view that the word `also' used in that recital makes it plain that reduction, suspension or discontinuance of the Community financing are not the only means of action at the Commission's disposal in the event of irregularities. In other words, it may be inferred from the second sentence of that recital that the procedure at issue is intended to ensure that the project goes ahead without any irregularities occurring.

68Where the beneficiary has completed the works and completion is attested by the national authorities (or where he has not started or completed the works within the periods provided for), there can no longer be any question of preventing irregularities in the context of the subsequent course of the project or of suspension, reduction or discontinuance of the aid since the works were either carried out as specified or they were not, and the purpose for which the amount of aid was granted is achieved or it is not. At this stage, prior to final payment, the question is simply one of ascertaining to what extent the expenditure was or was not eligible on the basis of supporting documents communicated to the Commission by the competent national authorities, and not whether the course taken by the works in connection with the possibility of attaining their purpose justifies observance of the special procedure prior to reduction, suspension or discontinuance of the aid. In other words there is no re-evaluation of a project which, since it has been completed, is no longer in progress, but merely an ex post readjustment of the amount of assistance to the works actually completed.

69Moreover, the above conclusions are corroborated by an analysis of the tasks conferred by the Community legislature on the Standing Committee on the Fishing Industry set up under Article 47. As the Commission rightly contends (at paragraph 25 of the reply), under the logic of Article 44, the Standing Committee on the Fishing Industry cannot be asked to intervene in respect of simple variations of a technical nature in eligible expenditure. In fact not only would that be totally disproportionate in relation to the objective pursued, namely completion of the project, but there would also be no sense to it since the variation in eligible expenditure which affects nearly all projects submitted, is the result of purely technical evaluations.

70Furthermore, the Commission contends, the Standing Committee, which is made up of representatives of the Member States, is not a technical body but a legal and economic body not capable of assessing the eligibility of certain expenditure. It concludes that, if it were necessary to have recourse to the Article 47 procedure whenever, even where there is no difference as to the amount, eligible expenditure differed from initial forecasts, that would result in the immediate blockage of all the programmes governed by the regulation.

71I consider intervention by the Standing Committee to be necessary whenever there is a margin of discretion as regards the progress of a current project and a possibility, on that ground, of taking a decision to reduce, suspend or discontinue aid. Where a project has still to be fully implemented, and the period for completing the works has not yet expired, the Standing Committee must intervene in order to determine to what extent it is possible to achieve the purpose for which the project was financed, given that, if it is not possible, the possibility of reducing, suspending or discontinuing the aid could be envisaged.

72Support for that point of view is also to be found in other provisions of Regulation No 1116/88. That instrument precisely defines the procedural steps to be followed in the event of reduction, suspension or discontinuance of the aid. Under the sixth recital of the preamble to that regulation `the procedure for suspending, reducing or terminating aid should not be initiated without the Member State concerned first having been asked for its views and the beneficiaries having been given the opportunity to submit their comments'. In other words, the Community legislature seeks to exclude arbitrary action by the Commission taken without the knowledge of the Member States concerned and of the beneficiaries of the aid, and without having sought their opinion first.

73Specifically, Article 7 of Regulation No 1116/88 provides that, before initiating a procedure for suspending, reducing or terminating aid, the Commission is to take certain steps, which are set out exhaustively: namely it is (a) to inform the Member State on whose territory the project is to be carried out, so that it may express its views on the matter, (b) to consult the competent authority responsible for forwarding supporting documents, and (c) to ask the beneficiary to provide, through the authority or agency, an explanation for the failure to comply with the conditions laid down.

74An analysis of those preconditions under Article 7 of Regulation No 1116/88 shows that that provision refers not to a completed but to a current project and that the Commission decision to reduce aid refers to the whole of the project, as specified.

75I consider that a completed project for which the national authorities have already issued a certificate of the final state of completion of the works, thereby reducing the amount of eligible expenditure at the final stage of the project, may neither be deemed to be a project in course of completion nor justifies the Commission in consulting the competent national authority since essentially it acted on the basis of the findings and followed the advice of that authority in refusing to pay certain amounts in the light of eligible expenditure.

76Moreover, other provisions of Regulation No 4028/86, in particular Article 39 thereof, show that whenever the Community legislature sought, in regard to projects under Title IV on the development of aquaculture, (27) such as the appellant's project, to give the Commission the opportunity to re-examine in whole or in part its decision to grant aid in the context of a review of the results of the project, and chiefly of its financial results, it has expressly stated that the re-examination must be carried out in compliance with the procedure under Article 47. In Article 39(2) the legislature does not refer to a reduction in the aid, since it has already been paid, but to reversal in whole or in part of the decision to grant aid some time after (two years after the works in the case of aquaculture development) `the last payment of aid'. Since this involves a re-evaluation of the results of the whole project, the legislature expressly provides that the Commission is to recover in whole or in part the sums paid, acting in accordance with the procedure laid down in Article 47.

77In other words, it may also be deduced from that provision in Article 39 that the purpose of the special procedure, whose observance is also provided for in Article 44 of Regulation No 4028/86, is to review, under the Article 47 procedure before the Standing Committee, whether, following completion of the project, a review of the results shows that the purpose for which the aid was granted may be deemed, on an overall assessment, to have been attained.

78Support for the Commission's point of view may be found, in my view, in the judgment in Cipeke v Commission. (28) That case concerned the validity of a Commission decision reducing aid granted by the European Social Fund (ESF) for a professional training programme. However, the legislation governing the grant of the aid did not provide for a specific procedure to be followed analogous to that under Article 44 of Regulation No 4028/86 but allowed the Commission to suspend, reduce or discontinue that aid after having given the relevant Member State an opportunity to comment. (29)

79In that case, which raised a particular issue as to payment of the balance, after completion of the professional training programme, the Commission had indeed noted that a given amount related to non-eligible expenditure but had not itemised the reductions on the basis of the precise amount of the irregular expenditure. The Court held (30) that: `approval was given for a global amount and the final payment claim was submitted globally for the whole of the programme, no detailed and specific decision of approval having been notified to each of the undertakings concerned.' The Court continued: (31) `Moreover, it appears that the Commission allocated the reductions between the members of the group of undertakings, including the applicant, in proportion to the size of the share of each of them under the items considered and not in accordance with the precise amount of the irregular expenditure.' The Court therefore quashed the Commission's refusal on the ground that, since the applicant had not been informed of the manner in which the Fund assistance was reduced, the Commission decision was insufficiently reasoned for the purposes of Article 190 of the Treaty. By dint of a contrario reasoning the Commission could have itemised the reductions on the basis of the exact amount of irregular expenditure on examination of the application for payment of the balance, after completion of the professional training programme, and then the decision to reduce the aid would have presented no problem on that ground.

80In conclusion, it is clear from the entirety of those provisions that the Community legislature intended the special procedure under Articles 44 and 47 to be applied whenever it is necessary to determine whether, in the case of an uncompleted current project, the purpose for which the aid was granted is capable of being achieved. In other words, it sought application of the safeguard provision in Article 47 in order to ensure that the purpose for which the aid was granted is being served, and only if that purpose is not being served or rather risks not being served, did it intend the Commission to reduce, suspend or discontinue the aid, (32) its decision affecting only the future progress of the project. Conversely, in the case of a refusal to pay, the Commission decision concerns situations and implementation of the project until such refusal; in other words, it refers to the past, to that part of the project which has already been implemented. That constitutes a stable criterion for distinguishing cases of reduction, suspension or discontinuance of aid for a project in course of completion from a refusal to pay a portion of an amount of aid in the case of a completed project.

81Consequently, the amount of the aid provided for is not altered, that is to say not reduced, within the meaning of Article 44 of Regulation No 4028/86, where the Commission, on the basis of information supplied by the national authorities, decides that, since only certain works have been carried out, and the corresponding expenditure is eligible the amounts provided for are to be paid proportionately, without prejudice to the obligation to observe the beneficiary's rights of defence.

82Moreover, according to the Commission (point 24 of the reply), the alteration of the initial project without prior notification of the national and Community authorities significantly impedes appraisal of the works carried out by the beneficiary of the financing. That is why it is expressly stated in the decisions granting aid that the works provided for cannot be modified or altered without the prior agreement of the national authority and possibly the Commission.

83To require, in addition to observance of the rights of the defence, as will be seen, application of the procedure provided for in Article 44 even in cases such as the present case, by imposing on the Commission the formal condition of mandatory consultation, whereas, on a proper interpretation of the applicable Community provisions, there is no such obligation on that Community institution, would entail the application by analogy of those provisions to a case not provided for by Article 44(1).

84Furthermore, to require the application of the procedure provided for in Article 44 even in cases such as this would be tantamount to imposing on the Commission excessively formalist constraints. This would result in unduly protracted procedures (33) in breach of the letter and spirit of the provisions in force. In other words, it would be excessive to require the Commission, before paying the balance of the aid provided for in the case of a completed project, to follow the procedure under Articles 44 and 47 of Regulation No 4028/86 and Article 7 of Regulation No 1116/88 on the basis of the information and appraisals of a technical nature made available to it by the national authorities. Nor, moreover, would that prejudice the objective for which that essential formal requirement was laid down whose observance is essential in the context of projects financed by the Commission in order to ensure the greatest possible degree of transparency in that major sector of Community activity.

85In light of the foregoing, the Court of First Instance was right to adjudge that the decision before it did not constitute a decision reducing, within the meaning of Article 44(1) of Regulation No 4028/86, the aid initially granted to the applicant but rather merely established that a part of the expenditure in respect of which the applicant sought payment did not relate to the project as initially accepted.

86Consequently, the third plea on appeal must be rejected as unfounded.

C -Infringement of the right to be heard

87The second plea raised by the appellant may be divided into two parts. First, it maintains that the Court of First Instance was wrong to find (paragraphs 49 to 51) that, by means of the request addressed by the appellant to the Ministry on 28 July 1995 and to the Commission on 3 August 1995, that is to say before the Commission definitively adopted its decision of 27 October 1995, (34) the appellant was in a position to explain the reasons for the failure to comply with the conditions laid down in the decision granting the aid. In other words, it is alleging an infringement of the duty to consult the person concerned before adopting a decision adversely affecting it, as required by the general principle of the right to be heard.

88Secondly, the appellant is maintaining that the Court of First Instance was wrong to find (paragraph 51) that the Commission essentially observed the requirements stipulated in that regard by Article 7 of Regulation No 1116/88. Contrary to those findings, the Commission, it is contended, expressly rejected the appellant's request that the procedure under Article 7 of Regulation No 1116/88 be initiated.

89I concluded above that there was no requirement to observe the special procedure laid down in Articles 44 in conjunction with Article 47 of Regulation No 4028/86 and Article 7 of Regulation No 1116/88, which the Commission, moreover, did not follow. Apart from the fact that a special procedure constituting an essential formal requirement cannot be observed in substance without also being formally observed, that is to say without going through all the stages laid down by the legislature itself, the Court of First Instance was wrong to find that the Commission essentially observed that procedure by requesting the person concerned to explain, prior to adoption of the contested measure, the reasons for failure to comply with the conditions laid down.

90However, as regards infringement of the principle of the right to be heard, I would first point out that, under the Court's settled case-law, (35) observance of the rights of the defence in any proceedings initiated against a person and capable of resulting in a decision adversely affecting that person is a fundamental principle of Community law which is to be observed even in the absence of any procedural rules. Under that principle addressees of decisions which significantly affect their interests must be enabled effectively to make their views known.

91Since the refusal on 27 October 1995 to pay the balance constituted for the appellant an unfavourable decision, the rights of the defence conferred on him by Community law had to be observed.

92Consequently, the Court of First Instance correctly found that, since the appellant had called in question the certificate of verification of completion of the works issued on 24 May 1995 by the competent ministry and had asked for it to be reviewed (36) before the Commission definitively adopted its decision by telex No 12 497 of 27 October 1995, the requirements attendant on observance of the rights of the defence and the general principle of the right to be heard were satisfied, even if the special procedures under Articles 44 and 47 of Regulation No 4028/86 and Article 7 of Regulation No 1116/88 was not followed.

93In the light of the foregoing, in considering that the contested measure did not constitute a decision to reduce, for the purposes of Article 44(1) of Regulation No 4028/86, the aid originally granted to the applicant, the Court of First Instance correctly applied those provisions (paragraph 56), irrespective of the reasoning relied on in the judgment appealed against. Consequently, the allegations submitted against that judgment are without foundation and must be rejected, as well as the entirety of the plea relating thereto.

D -Lack of a statement of reasons for the Commission decision and misinterpretation of Article 190 of the Treaty

94 In the fourth plea on appeal the appellant maintains that the Court of First Instance was wrong to reject its plea for annulment of the Commission decision on the ground that the statement of reasons was not adequate for the purposes of Article 190 of the Treaty. More specifically, it concentrates its criticism on paragraph 70 of the judgment appealed against according to which the reasoning of the Commission decision, which referred to explanations given in the certificate of verification of completion of the works issued by the competent ministry, gave the applicant `sufficient indication of the principal points of fact and law on which the reasoning was based.' In fact, the written observations sent by the appellant to the national and Community authorities (on 28 July and 3 August 1995 respectively) essentially rejected the conclusions of the certificate issued by the national authorities and asked for them to be re-examined by the Standing Committee under Article 47 of Regulation No 4028/86, the procedure under Article 7 of Regulation No 1116/88 having been observed. According to the appellant, the Commission was not entitled to limit the statement of reasons for its decision to a reference to the certificate issued by the national authorities but ought to have verified the technical details. To that end, it was strictly bound to observe the procedure under Article 7 so as to determine, following a comparative and adversarial appraisal of the initial project and the final state of the works (the project on termination of the works) the reason why the project was not completed as specified and to afford the appellant the opportunity of providing justification for that failure.

95 Without prejudice to the foregoing analysis of the question whether or not the special procedure under Articles 44 and 47 of Regulation No 4028/86 and Article 7 of Regulation No 1116/88 was to be observed, I consider that, in regard to the errors attributed to the statement of reasons, it is sufficient to stress that the Court of First Instance did not err in holding (at paragraph 70) that the reasoning was fully adequate.

96 The Court has consistently held that the statement of reasons required by Article 190 of the Treaty must be appropriate to the nature of the measure in question. The reasoning of the institution which adopted the measure must be stated clearly and unequivocally, so as to inform persons concerned of the justification for the measure adopted and to enable the Court to exercise its powers of review. It also follows from that case-law that the statement of reasons for a measure is not required to detail every relevant point of fact and law, as the question whether the statement of reasons satisfies the requirements of Article 190 of the Treaty must be considered with reference not only to its wording but also to its context and the whole body of legal rules governing the matter in question. (37)

97 The Court is particularly rigorous in regard to the statement of reasons in the case of decisions reducing financial aid initially granted by the Community. In Cipeke v Commission (38) the Court observed, first, that `where the initial application has been approved, the decision reducing the amount of assistance originally approved entails more serious consequences for the applicant, (39) before concluding (40) that `a decision reducing assistance must clearly state the grounds justifying the reduction in the assistance in relation to the amount originally approved'. On the basis of those considerations the Court held (41) that the requirements of Article 190 of the Treaty were not met by a decision founded on the fact that certain items of expenditure were not approved at the time when the aid was granted, where no detailed and specific decision of approval was notified and the contested decision gave no indication of the criteria for calculating the reduced amount notified to the beneficiary.

98 The Court of First Instance acknowledged in the judgment appealed against (paragraph 66) that it was apparent from the background to the case, from the correspondence exchanged by the applicant with the national administration and the Commission, as well as from the contested decision, that the grounds relied on by the Commission in support of that decision appear with sufficient clarity to enable the applicant to assert its rights before the Community judicature and for the latter to review the lawfulness of that decision.

99 It added that the adequacy of the statement of reasons was borne out by three specific points.

100 First (paragraph 67), in the letter of 12 December 1994 which it addressed to the Ministry and the Commission, the appellant acknowledged, on the one hand, that after submission of the project, certain conditions underwent substantial modifications which necessitated adjustments and, on the other, stated that it was aware that it had not complied with the requirement of prior notification of the modifications which, on the applicant's own admission, constituted a major obstacle to finalising the matter (see also paragraph 13 of the judgment a quo).

101 Secondly, according to the judgment of the Court of First Instance (paragraph 68), the detailed explanations given in the certificate in support of the declaration of ineligibility of expenditure under the various items in question disclose with sufficient clarity the grounds justifying the contested decision, as required by the relevant case-law. (42)

102 Thirdly, as the Court of First Instance found (paragraph 69), the contested decision sets out, succinctly but clearly, the grounds relied on by the Commission, on the one hand, in replying to certain of the arguments put forward by the applicant in its observations which reached the Commission on 3 August 1995 and, on the other, in referring to the explanations given by the Ministry in its certificate.

103 Accordingly, the Court of First Instance did not err in law in judging that, in view of the system of close cooperation between the Commission and the Member States on which the grant of financial aid rests, the contested decision rightly referred to those explanations.

104 I concluded previously that the Commission decision did not constitute a decision to reduce aid within the meaning of Article 44 of Regulation No 4028/86. I am therefore of the view that the Court of First Instance correctly concluded (paragraph 70) that the Commission decision was underpinned by an adequate statement of reasons (43) for the purposes of Article 190 of the Treaty because it gave the applicant sufficient indication of the principal points of fact and law on which the Commission's reasoning was based.

105 Consequently, the fourth plea on appeal must likewise be rejected as unfounded.

VI - The claim for compensation

106 As I am proposing that all the pleas on appeal be rejected, there is no need to examine the claim for compensation. Conversely, that is to say if the appeal were upheld and the judgment appealed against were set aside, the case would have to be referred to the Court of First Instance for further clarification of the facts under Article 54 of the EC Statute of the Court of Justice.

VII - Conclusion

107 In light of the foregoing analysis I propose that the Court should:

-dismiss the appeal;

-order the appellant to pay the costs.

(1) - Case T-218/95 Le Canne v Commission [1997] ECR II-2055.

(2) - OJ 1986 L 376, p. 7.

(3) - Commission Regulation (EEC) No 970/87 of 26 March 1987 laying down transitional measures and detailed rules for the application of Council Regulation (EEC) No 4028/86 with regard to the renewal and restructuring of the fishing fleet, the development of aquaculture and structural works in coastal waters (OJ 1987 L 96, p. 1) laid down the data and information which applications for financial assistance addressed to the community are to contain.

(4) - Article 45(1) provides:

`Member States shall take the necessary measures, in accordance with national laws, regulations and administrative provisions, in order to:

- ensure that the operations financed under this Regulation are in fact carried out and that they are properly carried out,

- prevent or take action against irregularities,

- recover sums lost as a result of irregularities or negligence.

(5) - OJ 1988 L 112, p. 1.

(6) - Apart from a difference in the location and configuration of the intensive rearing ponds.

(7) - These changes were specifically as follows: (a) failure to build 16 ponds, a hydraulic installation and a heating station, all replaced by projected rearing ponds to be built in the context of the completion project approved by the Commission in Decision C(94) 1531/99; (b) failure to acquire a series of machines; (c) failure to build new store and rearing ponds external to the hangar.

(8) - In its application the applicant refers to Article 27 of the Commission's rules of procedure, clearly incorrectly since the issues of the collegiate responsibility of the members of the Commission and delegation of power are governed by Article 11 thereof (Regulation 93/492/Euratom, ECSC, EEC of 17 February 1993 - OJ 1993 L 230, p. 15). Article 27 of the rules of procedure currently in force provides for publication of the rules of procedure in the Official Journal of the European Communities. The appellant is obviously referring to Article 27 of the Commission's provisional rules of procedure, in the version amended by Decision 75/461/Euratom, ECSC, EEC adopted by the Commission on 23 July 1975 (OJ 1975 L 199, p. 43).

(9) - Judgment in Case C-137/92 P Commission v BASF and Others [1994] ECR I-2555; that case concerned a decision adopted by the Commission against undertakings in the context of a procedure for establishing an infringement of Article 85 of the Treaty.

(10) - We do not need to dwell on the Commission's submission that the telex of 27 October 1995 constitutes a `mere expression of opinion' in respect of which observance of the principle of collegiality was not required. I would simply point out that in this connection the Court of First Instance held (at paragraph 28) that: `telex No 12 497 of 27 October 1995, read in conjunction with the order for payment of the balance of the Community financial aid issued by the Commission on 5 July 1995, had the effect of reducing the amount of Community financial aid originally granted by Commission Decision C (90) 1923/99.' And it went on to say (at paragraph 29): `Inasmuch as the contested telex thus deprives the applicant of the full amount of the assistance originally granted to it, without the Member State concerned having any margin of discretion of its own in the matter, the contested telex constitutes, in regard to the applicant, an individual decision which produces binding legal effects such as to affect its interests by bringing about a distinct change in its legal position' (Case 60/81 IBM v Commission [1981] ECR 2639, paragraph 9, Case C-291/89 Interhotel v Commission [1991] ECR I-2257, paragraphs 12 and 13, Case C-304/89 Oliveira v Commission [1991] ECR I-2283, paragraphs 12 and 13, and Case C-189/90 Cipeke v Commission [1992] ECR I-3573, paragraphs 11 and 12).

(11) - With regard to the specific content of the delegation of power and its demarcation in relation to delegation of signature, see in particular J-C. Grohens: `La délégation administrative de compétence', in Recueil Dalloz, 1958 (pp. 197 to 204); A. de Laubadère, J-C. Vénézia and Y. Gaudemet: `Traité de droit administratif', Paris, LEDJ, 1988, 10th Ed., paragraphs 925 and 926, also R. Joliet: Le droit institutionnel des Communautés européennes, Vol. 2, entitled Les institutions, les sources, les rapports entre ordres juridiques, Liège, Faculté de Droit d'Economie et des Sciences sociales de l'Université de Liège, 1983, p. 33, and J. Dembour: Droit administratif, 3rd Edition, Liège, Faculté de Droit d'Economie et des Sciences sociales de l'Université de Liège, 1983, p. 277. Delegation of power seeks to enable an authority to transfer certain of its competencies in order to lighten its administrative burden or, whilst retaining control, to allow the competence to be exercised by bodies which are better placed to take the decisions. The justification for this is that administrative life could not carry on if the heads of administrative services had to do absolutely everything themselves.

(12) - See judgments in Case 5/85 AKZO Chemie v Commission [1986] ECR 2585, paragraph 30, and Commission v BASF and Others, (cited at footnote 9) paragraph 62.

(13) - In actual fact, that principle derives from Article 17 of the Treaty of 8 April 1965 establishing a single Council and a single Commission of the European Communities, but that provision is now superseded by Article 163 of the EC Treaty.

(14) - AKZO Chemie v Commission cited at footnote 12, paragraph 37.

(15) - Financial Regulation of 21 December 1977 applicable to the general budget of the European Communities (OJ 1977 L 356, p.1).

(16) - The Commission stresses that such delegations are specified in detail for each budget line by an annual decision which it takes under Article 205 of the EC Treaty and the Financial Regulation.

(17) - See paragraph 36 of the judgment in AKZO Chemie v Commission (cited at footnote 12).

(18) - See for example judgment in Case C-200/89 FUNOC V Commission [1990] ECR I-3669, paragraphs 13 and 14, involving Directorate General V of the Commission responsible for management of the European Social Fund. See also judgments in Case 48/69 ICI v Commission [1972] ECR 619, paragraphs 12 to 14 and in Case 8/72 Cementhandelaren v Commission [1972] ECR 977, paragraphs 11 to 14, delivered at a time when Article 27 of the Commission's provisional rules of procedure were applicable.

(19) - As the Commission points out, that follows from the internal rules on implementation of the general budget of the European Communities (Title B2-1, Chapter B2-11, Article B2-110).

(20) - FUNOC v Commission cited at footnote 18, paragraph 14.

(21) - See, in particular, Case 51/65 ILFO v High Authority [1966] ECR 87.

(22) - As the Commission stressed at the hearing, that means that if a recipient requests the Commission for payment of expenditure not provided for in the project approved, and thus in the Commission decision, there is no reduction in assistance since such expenditure is not covered under the terms of the assistance. In other words, in such a case there is no reduction in the rate of financing.

(23) - That is to say Article 1(1)(b) and the provisions of Title IV (Articles 11 and 12) on the development of acquaculature and of coastal areas, and Article 44 of Regulation No 4028/86.4

(24) - Article 11 of Regulation No 4028/86 refers to public, semi-public or private projects.

(25) - It should be recalled that, under Article 1(1)(b) of Regulation No 4028/86 Community financial aid may be granted for measures to develop aquaculture and establish protected marine areas with a view to improved management of inshore fishing grounds.

(26) - See judgment in Case C-189/90 Cipeke v Commission (cited at footnote 10), paragraph 16.

(27) - Title IV also concerns structural works in coastal waters.

(28) - That judgment has already been cited at footnote 10. See also analogous judgments in Case C-157/90 Infortec v Commission [1992] ECR I-3525, and Case C-181/90 Consorgan v Commission [1992] ECR I-3557. See also Opinion delivered by Advocate General Darmon in those cases.

(29) - Article 6(1) of Council Regulation (EEC) No 2950/83 of 17 October 1983 on the implementation of Decision 83/516/EEC on the tasks of the European Social Fund (the regulation was published in OJ 1983 L 289, p. 1 and the decision in OJ 1983 L 289, p. 38) provides that when Fund assistance is not used in conformity with the conditions set out in the decision of approval, the Commission may suspend, reduce or withdraw the aid after having given the relevant Member State an opportunity to comment.

(30) - Paragraph 19 of the judgment in Cipeke v Commission, cited at footnote 10.

(31) - Paragraph 20.

(32) - That purpose also extends to the realisation of certain aquaculture works under the finance agreement entered into with each of the undertakings concerned.

(33) - See Case 71/74 Frubo v Commission [1975] ECR 563.

(34) - The Court of First instance observed (at paragraph 50) that the applicant itself stated in its application that the Commission had decided, by telegram dated 7 August 1995, to initiate the procedure for payment of the Community aid, determined on the basis of the estimates given in the certificate.

(35) - See, in particular, Case C-32/95 P Commission v Lisrestal and Others [1996] ECR I-5373, paragraph 21.

(36) - According to the Court of First Instance, the appellant did so in the written observations which reached the Ministry on 28 July 1995 and the Commission on 3 August 1995.

(37) - See, for example, judgment in Case C-466/93 Atlanta Fruchthandelsgesellschaft and Others [1995] ECR I-3799, paragraph 16.

(38)- Judgment cited at footnote 10. This case, it will be recalled, concerned the validity of a Commission decision to reduce aid granted by the ESF for a professional training programme.

(39)- Paragraph 16.

(40)- Paragraph 18.

(41)- Paragraphs 19 to 22.

(42)- Cipeke v Commission (cited at footnote 10), paragraphs 18 to 22.

(43)- See, for example, Case 2/56 Geitling v High Authority [1957-1958] ECR 3 and Case 8/65 Acciaierie e Ferriere Pugliesi v High Authority [1966] ECR 1.