30 April 2020 (*1)

(Appeal — European Agricultural Guarantee Fund (EAGF) and the European Agricultural Fund for Rural Development (EAFRD) — Expenditure excluded from EU financing — Expenditure incurred by the Hellenic Republic — Regulation (EC) No 1782/2003 — Regulation (EC) No 796/2004 — Regulation (EC) No 1120/2009 — Regulation (EU) No 1306/2013 — Area-related aid scheme — Concept of ‘permanent pasture’ — Flat-rate financial corrections — Regulation (EC) No 1698/2005 — Assessment of the eligibility of expenditure — Managing authority — Regulation (EC) No 1290/2005 — Expenses covered by the 24-month period — Regulation (EC) No 817/2004 — System of effective, proportionate and dissuasive penalties — Method of calculating the correction)

In Case C‑797/18 P,

APPEAL under Article 56 of the Statute of the Court of Justice of the European Union, brought on 17 December 2018,

Hellenic Republic, represented by G. Kanellopoulos and E. Leftheriotou and A. Vasilopoulou, acting as Agents,

applicant,

the other parties to the proceedings being:

European Commission, represented by M. Konstantinidis, D. Triantafyllou and J. Aquilina, acting as Agents,

defendant at first instance,

THE COURT (Ninth Chamber),

composed of S. Rodin, President of the Chamber, D. Šváby (Rapporteur) and K. Jürimäe, Judges,

Advocate General: J. Kokott,

Registrar: A. Calot Escobar,

having regard to the written procedure,

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

gives the following

1By its appeal, the Hellenic Republic asks the Court to set aside the judgment of the General Court of the European Union of 4 October 2018, Greece v Commission (T‑272/16, not published, ‘the judgment under appeal’, EU:T:2018:651), by which the General Court dismissed its action challenging Commission Implementing Decision (EU) 2016/417 of 17 March 2016 on excluding from European Union financing certain expenditure incurred by the Member States under the European Agricultural Guarantee Fund (EAGF) and under the European Agricultural Fund for Rural Development (EAFRD) (OJ 2016 L 75, p. 16; ‘the contested decision’).

Legal context

Regulation (EC) 2988/95

2Council Regulation (EC, Euratom) No 2988/95 of 18 December 1995 on the protection of the European Communities financial interests (OJ 1995 L 312, p. 1), (‘Regulation No 2988/95’), contains a Title II entitled ‘Administrative measures and penalties’, which includes Article 5 of that regulation. Paragraph 1 of that article provides:

Intentional irregularities or those caused by negligence may lead to the following administrative penalties:

…

(c)total or partial removal of an advantage granted by Community rules, even if the operator wrongly benefited from only a part of that advantage;

(d)exclusion from, or withdrawal of, the advantage for a period subsequent to that of the irregularity;

…

Regulation (EC) 1782/2003

3Council Regulation (EC) No 1782/2003 of 29 September 2003 establishing common rules for direct support schemes under the common agricultural policy and establishing certain support schemes for farmers and amending Regulations (EEC) No 2019/93, (EC) No 1452/2001, (EC) No 1453/2001, (EC) No 1454/2001, (EC) No 1868/94, (EC) No 1251/1999, (EC) No 1254/1999, (EC) No 1673/2000, (EEC) No 2358/71 and (EC) No 2529/2001 (OJ 2003 L 270, p. 1), (‘Regulation No 1782/2003’), contained a Title III, entitled ‘Single Payment Scheme’, which contained a Chapter 3 on ‘Payment Entitlements’. Section 1 of that chapter, relating to ‘payment entitlements based on areas’, included Article 43 of that regulation, on the ‘determination of the payment entitlements’. That article provided:

Without prejudice to Article 48, a farmer shall receive a payment entitlement per hectare which is calculated by dividing the reference amount by the three-year average number of all hectares which in the reference period gave right to direct payments listed in Annex VI.

The total number of payment entitlements shall be equal to the abovementioned average number of hectares.

…

The number of hectares referred to in paragraph 1 shall further include:

…

all forage area in the reference period.

4Article 44 of Regulation No 1782/2003, relating to the ‘use of payment entitlements’, stated, in paragraph 2:

“Eligible hectare” shall mean any agricultural area of the holding taken up by arable land and permanent pasture except areas under permanent crops, forests or used for non-agricultural activities.’

Regulation (EC) 796/2004

5The first paragraph of Article 2 of Commission Regulation (EC) No 796/2004 of 21 April 2004 laying down detailed rules for the implementation of cross-compliance, modulation and the integrated administration and control system provided for in Council Regulations No 1782/2003 and (EC) No 73/2009, as well as for the implementation of cross-compliance provided for in Council Regulation (EC) No 479/2008 (OJ 2004 L 141, p. 18), as amended by Commission Regulation (EC) No 380/2009 of 8 May 2009 (OJ 2009 L 116, p. 9) (‘Regulation No 796/2004’) was worded as follows:

For the purposes of this Regulation, the following definitions shall apply:

…

(1a)“agricultural parcel”: shall mean a continuous area of land on which a single crop group is cultivated by a single farmer; however, where a separate declaration of the use of an area within a crop group is required in the context of this Regulation, that specific use shall further limit the agricultural parcel;

…

“Permanent pasture”: shall mean land used to grow grasses or other herbaceous forage naturally (self-seeded) or through cultivation (sown) and that has not been included in the crop rotation of the holding for five years or longer, excluding land under set aside schemes pursuant to Article 107(6) of Regulation [No 1782/2003], areas set aside in accordance with Council Regulation (EEC) No 2078/92 [of 30 June 1992 on agricultural production methods compatible with the requirements of the protection of the environment and the maintenance of the countryside (OJ 1992 L 215, p. 85)]

Article 44 of Regulation No 1782/2003, relating to the ‘use of payment entitlements’, stated, in paragraph 2:

“Eligible hectare” shall mean any agricultural area of the holding taken up by arable land and permanent pasture except areas under permanent crops, forests or used for non-agricultural activities.’

Article 44 of Regulation No 1782/2003, relating to the ‘use of payment entitlements’, stated, in paragraph 2:

“Eligible hectare” shall mean any agricultural area of the holding taken up by arable land and permanent pasture except areas under permanent crops, forests or used for non-agricultural activities.’

(Reference for a preliminary ruling – Environment – Directive 2011/92/EU – Assessment of the effects of certain public and private projects on the environment – Article 2(1) and Article 4(2) – Projects covered by Annex II – Urban development projects – Article 4(4) and (5) – Obligations of the developer and the competent authority when the Member State concerned decides to require the determination provided for in those paragraphs 4 and 5 for those projects – Account taken of observations submitted by a third party, indicating a potential impact of the project concerned on an animal species covered by the strict protection provided for in Article 12 of Directive 92/43/EEC)

In Case C-41/24,

REQUEST for a preliminary ruling under Article 267 TFEU from the High Court (Ireland), made by decision of 1 December 2023, received at the Court on 22 January 2024, in the proceedings

Waltham Abbey Residents Association

An Bord Pleanála,

Ireland,

The Attorney General,

notice party:

O’Flynn Construction Co. Unlimited Company,

THE COURT (Tenth Chamber),

composed of D. Gratsias, President of the Chamber, J. Passer (Rapporteur) and B. Smulders, Judges,

Advocate General: J. Kokott,

Registrar: A. Calot Escobar,

having regard to the written procedure,

* Language of the case: English.

EN ECLI:EU:C:2025:140

JUDGMENT OF 6. 3. 2025 – CASE C-41/24 WALTHAM ABBEY RESIDENTS ASSOCIATION

after considering the observations submitted on behalf of:

– Waltham Abbey Residents Association, by J. Devlin, Senior Counsel, J. Kenny, Barrister-at-Law, and D. Healy, Solicitor,

– An Bord Pleanála, by. B. Foley, Senior Counsel, A. Carroll, Barrister-at-Law, and P. Reilly, Solicitor,

– Ireland, by M. Browne, Chief State Solicitor, S. Finnegan, K. Hoare and A. Joyce, acting as Agents, and by D. McGrath, Senior Counsel, F. Valentine, Senior Counsel, and E. O’Callaghan, Barrister-at-Law,

– the European Commission, by M. Noll-Ehlers and N. Ruiz García, acting as Agents,

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

gives the following

This request for a preliminary ruling concerns the interpretation of Directive 2011/92/EU of the European Parliament and of the Council of 13 December 2011 on the assessment of the effects of certain public and private projects on the environment (OJ 2012 L 26, p. 1), as amended by Directive 2014/52/EU of the European Parliament and of the Council of 16 April 2014 (OJ 2014 L 124, p. 1) (‘Directive 2011/92’).

The request has been made in proceedings between, on the one hand, Waltham Abbey Residents Association and, on the other hand, An Bord Pleanála (Planning Board, Ireland; ‘the Board’), Ireland and the Attorney General (Ireland), concerning authorisation granted by the Board for a strategic residential housing development.

Legal context

European Union law

Directive 2011/92

Recitals 7 to 9 of Directive 2011/92 state:

‘(7) Development consent for public and private projects which are likely to have significant effects on the environment should be granted only after an assessment of the likely significant environmental effects of those projects has been carried out. …

(8) Projects belonging to certain types have significant effects on the environment and those projects should, as a rule, be subject to a systematic assessment.

ECLI:EU:C:2025:140

(9) Projects of other types may not have significant effects on the environment in every case and those projects should be assessed where the Member States consider that they are likely to have significant effects on the environment.’

Article 2(1) of that directive provides:

‘Member States shall adopt all measures necessary to ensure that, before development consent is given, projects likely to have significant effects on the environment by virtue, inter alia, of their nature, size or location are made subject to a requirement for development consent and an assessment with regard to their effects on the environment. Those projects are defined in Article 4.’

Under Article 3(1) of that directive:

‘The environmental impact assessment shall identify, describe and assess in an appropriate manner, in the light of each individual case, the direct and indirect significant effects of a project on the following factors:

…

(b) biodiversity, with particular attention to species and habitats protected under [Council Directive 92/43/EEC of 21 May 1992 on the conservation of natural habitats and of wild fauna and flora (OJ 1992 L 206, p. 7), as amended by Council Directive 2013/17/EU of 13 May 2013 (OJ 2013 L 158, p. 193) (“Directive 92/43”)] and Directive 2009/147/EC [of the European Parliament and of the Council of 30 November 2009 on the conservation of wild birds (OJ 2010 L 20, p. 7)];

…’

Article 4 of Directive 2011/92 provides:

‘1. Subject to Article 2(4), projects listed in Annex I shall be made subject to an assessment in accordance with Articles 5 to 10.

(a) a case-by-case examination;

(b) thresholds or criteria set by the Member State.

Member States may decide to apply both procedures referred to in points (a) and (b).

Where a case-by-case examination is carried out or thresholds or criteria are set for the purpose of paragraph 2, the relevant selection criteria set out in Annex III shall be taken into account. Member States may set thresholds or criteria to determine when projects need not undergo either the determination under paragraphs 4 and 5 or an environmental impact assessment, and/or thresholds or criteria to determine when projects shall in any case be made subject to an environmental impact assessment without undergoing a determination set out under paragraphs 4 and 5.

Where Member States decide to require a determination for projects listed in Annex II, the developer shall provide information on the characteristics of the project and its likely significant effects on the environment. The detailed list of information to be provided is specified in Annex IIA. The developer shall take into account, where relevant, the available results of other relevant assessments of the effects on the environment carried out pursuant to Union legislation other than this Directive. The developer may also provide a description of any features of the project and/or measures envisaged to avoid or prevent what might otherwise have been significant adverse effects on the environment.

The competent authority shall make its determination, on the basis of the information provided by the developer in accordance with paragraph 4 taking into account, where relevant, the results of preliminary verifications or assessments of the effects on the environment carried out pursuant to Union legislation other than this Directive. The determination shall made available to the public and:

(a) where it is decided that an environmental impact assessment is required, state the main reasons for requiring such assessment with reference to the relevant criteria listed in Annex III; or

(b) where it is decided that an environmental impact assessment is not required, state the main reasons for not requiring such assessment with reference to the relevant criteria listed in Annex III, and, where proposed by the developer, state any features of the project and/or measures envisaged to avoid or prevent what might otherwise have been significant adverse effects on the environment.

Member States shall ensure that the competent authority makes its determination as soon as possible and within a period of time not exceeding 90 days from the date on which the developer has submitted all the information required pursuant to paragraph 4. In exceptional cases, for instance relating to the nature, complexity, location or size of the project, the competent authority may extend that deadline to make its determination; in that event, the competent authority shall inform the developer in writing of the reasons justifying the extension and of the date when its determination is expected.’

Annex II.A of that directive contains the list of ‘information to be provided by the developer on the projects listed in Annex II’. That list reads as follows:

‘1. A description of the project, including in particular:

(a) a description of the physical characteristics of the whole project and, where relevant, of demolition works;

(b) a description of the location of the project, with particular regard to the environmental sensitivity of geographical areas likely to be affected.

(a) the expected residues and emissions and the production of waste, where relevant;

(b) the use of natural resources, in particular soil, land, water and biodiversity.

Annex III to that directive sets out the ‘criteria to determine whether the projects listed in Annex II should be subject to an environmental impact assessment’.

Directive 2014/52

Recitals 11 and 29 of Directive 2014/52 state:

‘(11) The measures taken to avoid, prevent, reduce and, if possible, offset significant adverse effects on the environment, in particular on species and habitats protected under [Directive 92/43] and Directive 2009/147 …, should contribute to avoiding any deterioration in the quality of the environment and any net loss of biodiversity, in accordance with the [European] Union’s commitments in the context of the [United Nations Convention on Biological Diversity, signed in Rio de Janeiro on 5 June 1992,] and the objectives and actions of the Union Biodiversity Strategy up to 2020 laid down in the [Communication from the Commission to the European Parliament, the Council, the Economic and Social Committee and the Committee of the Regions] of 3 May 2011 entitled ‘Our life insurance, our natural capital: an EU biodiversity strategy to 2020’ [(COM(2011) 244 final)]

…

(29) When determining whether significant effects on the environment are likely to be caused by a project, the competent authorities should identify the most relevant criteria to be considered and should take into account information that could be available following other assessments required by Union legislation in order to apply the screening procedure effectively and transparently. In this regard, it is appropriate to specify the content of the screening determination, in particular where no environmental impact assessment is required. Moreover, taking into account unsolicited comments that might have been received from other sources, such as members of the public or public authorities, even though no formal consultation is required at the screening stage, constitutes good administrative practice.’

Directive 92/43

Article 6(3) of Directive 92/43 provides:

‘Any plan or project not directly connected with or necessary to the management of the site but likely to have a significant effect thereon, either individually or in combination with other plans or projects, shall be subject to appropriate assessment of its implications for the site in view of the site’s conservation objectives. In the light of the conclusions of the assessment of the implications for the site and subject to the provisions of paragraph 4, the competent national authorities shall agree to the plan or project only after having ascertained that it will not adversely affect the integrity of the site concerned and, if appropriate, after having obtained the opinion of the general public.’

Article 12(1) of that directive provides:

‘Member States shall take the requisite measures to establish a system of strict protection for the animal species listed in Annex IV(a) in their natural range, prohibiting:

(a) all forms of deliberate capture or killing of specimens of these species in the wild;

(b) deliberate disturbance of these species, particularly during the period of breeding, rearing, hibernation and migration;

(c) deliberate destruction or taking of eggs from the wild;

(d) deterioration or destruction of breeding sites or resting places.’

Point (a) of Annex IV to that directive mentions ‘all species’ of bats belonging to the suborder of ‘microchiroptera’.

Irish law

14Under the heading ‘Verifiability and controllability of measures and eligibility rules’, Section 1 of Chapter IV of that regulation, entitled ‘Eligibility and administrative provisions’, contained Article 48 thereof, which provides:

Regulation No 73/2009

15Chapter 1, concerning ‘general implementation’, of Title III, entitled ‘Single payment scheme’, of Regulation No 73/2009 included an Article 34 relating to ‘activation of payment entitlements per eligible hectare’. Paragraph 34(1) provides:

Support under the single payment scheme shall be granted to farmers upon activation of a payment entitlement per eligible hectare. Activated payment entitlements give a right to the payment of the amounts fixed therein.

16Article 36 of that regulation, entitled ‘Modification of payment entitlements’, also appeared in that chapter and provided:

The payment entitlements per hectare shall not be modified, save as otherwise provided for in this Regulation.

The Commission, in accordance with the procedure referred to in Article 141(2), shall lay down detailed rules for the modification, from 2010, of payment entitlements, in particular in the case of fractions of entitlements.

17Article 137 of that regulation, entitled ‘Confirmation of payment entitlements’, appeared in Title VII thereof, relating to ‘implementing, transitional and final provisions’. Article 137(1) was worded as follows:

Payment entitlements allocated to farmers before 1 January 2009 shall be deemed legal and regular as from 1 January 2010.

Regulation (EC) 1120/2009

18Under Article 2 of Commission Regulation (EC) No 1120/2009 of 29 October 2009 laying down detailed rules for the implementation of the single payment scheme provided for in Title III of Regulation No 73/2009 (OJ 2009 L 316, p. 1) (‘Regulation No 1120/2009’):

For the purposes of Title III of Regulation [No 73/2009] and of this Regulation, the following definitions shall apply:

…

“permanent pasture” means land used to grow grasses or other herbaceous forage naturally (self-seeded) or through cultivation (sown) and that has not been included in the crop rotation of the holding for five years or longer, excluding areas set aside in accordance with Council Regulation (EEC) No 2078/92 [of 30 June 1992 on agricultural production methods compatible with the requirements of the protection of the environment and the maintenance of the countryside (OJ 1992 L 215, p. 85)], areas set aside in accordance with Articles 22, 23 and 24 of Regulation [No 1257/1999] and areas set aside in accordance with Article 39 of Regulation [No 1698/2005]; and to this end, “grasses or other herbaceous forage” means all herbaceous plants traditionally found in natural pastures or normally included in mixtures of seeds for pastures or meadows in the Member State (whether or not used for grazing animals). Member States may include arable crops listed in Annex I;

…

Regulation (EC) No 1122/2009

19Commission Regulation (EC) No 1122/2009 of 30 November 2009 laying down detailed rules for the implementation of Regulation No 73/2009 as regards cross-compliance, modulation and the integrated administration and control system, under the direct support schemes for farmers provided for that regulation, as well as for the implementation of Council Regulation (EC) No 1234/2007 as regards cross-compliance under the support scheme provided for the wine sector (OJ 2009 L 316, p. 65) (‘Regulation No 1122/2009’), contained an Article 34, relating to ‘determination of areas’. That article, which appeared in Title III of that regulation, entitled ‘Controls’, provided in paragraphs 2 and 4:

The total area of an agricultural parcel may be taken into account provided that it is fully utilised in accordance with the customary standards of the Member State or region concerned. In other cases the area actually utilised shall be taken into account.

In respect of the regions where certain features, in particular hedges, ditches and walls, are traditionally part of good agriculture cropping or utilisation practices, the Member States may decide that the corresponding area is to be considered part of the fully utilised area on condition that it does not exceed a total width to be determined by the Member States. That width must correspond to a traditional width in the region in question and shall not exceed 2 metres.

However, where Member States notified to the Commission, in conformity with third subparagraph of Article 30(2) of Regulation [No 796/2004], prior to the entry into force of this Regulation, a width greater than 2 metres, this width may still be applied.

…

Without prejudice to Article 34(2) of Regulation [No 73/2009], an agricultural parcel that contains trees shall be considered as eligible area for the purposes of the area-related aid schemes provided that agricultural activities or, where applicable, the production envisaged can be carried out in a similar way as on parcels without trees in the same area.

20Article 52, relating to ‘conformity clearance’, of Regulation (EU) No 1306/2013 of the European Parliament and of the Council of 17 December 2013 on the financing, management and monitoring of the common agricultural policy and repealing Council Regulations (EEC) No 352/78, (EC) No 165/94, (EC) No 2799/98, (EC) No 814/2000, No 1290/2005, and (EC) No 485/2008 (OJ 2013 L 347, p. 549, and corrigendum OJ 2016 L 130, p. 13), is set out in Section II, entitled ‘Clearance’, of Chapter IV, itself entitled ‘Clearance of accounts’. Paragraphs 2 and 3 of that article provide:

The Commission shall assess the amounts to be excluded on the basis of the gravity of the non-conformity recorded. It shall take due account of the nature of the infringement and of the financial damage caused to the Union. It shall base the exclusion on the identification of amounts unduly spent and, where these cannot be identified with proportionate effort, may apply extrapolated or flat-rate corrections. Flat-rate corrections shall only be applied where, due to the nature of the case or because the Member State has not provided the Commission with the necessary information, it is not possible with proportionate effort to identify more precisely the financial damage caused to the Union.

Before the adoption of any decision to refuse financing, the findings from the Commission’s inspection and the Member State’s replies shall be notified in writing, following which the two parties shall attempt to reach agreement on the action to be taken. At that point in the procedure the Member States shall be given the opportunity to demonstrate that the actual extent of the non-compliance is less than in the Commission’s assessment.

If agreement is not reached, the Member State may request the opening of a procedure aimed at reconciling, within a period of four months, each party’s position. A report of the outcome of the procedure shall be submitted to the Commission. The Commission shall take into account the recommendations in the report before deciding on any refusal of financing and shall give reasons if it decides not to follow those recommendations.

Regulation (EU) No 1307/2013

21Article 4(1)(h) of Regulation (EU) No 1307/2013 of the European Parliament and of the Council of 17 December 2013 establishing rules for direct payments to farmers under support schemes within the framework of the common agricultural policy and repealing Council Regulation (EC) No 637/2008 and Regulation No 73/2009 (OJ 2013 L 347, p. 608), in its initial version (‘Regulation No 1307/2013’), set out the following definition:

“permanent grassland and permanent pasture” (together referred to as “permanent grassland”) means land used to grow grasses or other herbaceous forage naturally (self-seeded) or through cultivation (sown) and that has not been included in the crop rotation of the holding for five years or more; it may include other species such as shrubs and/or trees which can be grazed provided that the grasses and other herbaceous forage remain predominant as well as, where Member States so decide, land which can be grazed and which forms part of established local practices where grasses and other herbaceous forage are traditionally not predominant in grazing areas.

22That provision, as amended by Regulation (EU) 2017/2393 of the European Parliament and of the Council of 13 December 2017 (OJ 2017 L 350, p. 15), is worded as follows:

“permanent grassland and permanent pasture” (together referred to as “permanent grassland”) means land used to grow grasses or other herbaceous forage naturally (self-seeded) or through cultivation (sown) and that has not been included in the crop rotation of the holding for five years or more, as well as, where Member States so decide, that has not been ploughed up for five years or more; it may include other species such as shrubs and/or trees which can be grazed and, where Member States so decide, other species such as shrubs and/or trees which produce animal feed, provided that the grasses and other herbaceous forage remain predominant. Member States may also decide to consider as permanent grassland:

land which can be grazed and which forms part of established local practices where grasses and other herbaceous forage are traditionally not predominant in grazing areas; and/or

land which can be grazed where grasses and other herbaceous forage are not predominant or are absent in grazing areas.’

Implementing Regulation (EU) No 809/2014

Under the heading ‘Partial or full withdrawal of the support and administrative penalties’, Article 63 of Commission Implementing Regulation (EU) No 809/2014 of 17 July 2014 laying down rules for the application of Regulation No 1306/2013 with regard to the integrated administration and control system, rural development measures and cross compliance (OJ 2014 L 227, p. 69) (‘Regulation No 809/2014’) provides:

The competent authority shall examine the payment claim received from the beneficiary, and establish the amounts that are eligible for support. It shall establish:

(a)the amount that is payable to the beneficiary based on the payment claim and the grant decision;

(b)the amount that is payable to the beneficiary after an examination of the eligibility of the expenditure in the payment claim.

If the amount established pursuant to point (a) of the second subparagraph exceeds the amount established pursuant to point (b) of that subparagraph by more than 10%, an administrative penalty shall be applied to the amount established pursuant to that point (b). The amount of the penalty shall be the difference between those two amounts but shall not go beyond full withdrawal of the support.

However, no penalties shall be applied if the beneficiary can demonstrate to the satisfaction of the competent authority that he is not at fault for the inclusion of the ineligible amount or if the competent authority is otherwise satisfied that the beneficiary concerned is not at fault.

Implementing Regulation (EU) No 908/2014

Article 34(2) and (3) of Commission Implementing Regulation (EU) No 908/2014 of 6 August 2014 laying down detailed rules for the application of Regulation No 1306/2013 as regards paying agencies and other bodies, financial management, clearance of accounts, rules on checks, securities and transparency (OJ 2014 L 255, p. 59) (‘Regulation No 908/2014’) provides:

The Member State shall reply within two months of receipt of the communication. In its reply the Member State shall have the opportunity, in particular, to:

(a)demonstrate to the Commission that the actual extent of the non-compliance or the risk for [EAFRD or the European Agricultural Guarantee Fund (EAGF)] is less than what was indicated by the Commission;

(b)inform the Commission of the corrective measures it has undertaken to ensure compliance with Union rules and the effective date of their implementation.

In justified cases, the Commission may, upon reasoned request of the Member State, authorise an extension of the two-month period by a maximum of two months. The request shall be addressed to the Commission before the expiry of that period.

If the Member State considers that a bilateral meeting is not required, it shall inform the Commission accordingly in its reply to the communication mentioned above.

…’

Document No VI/5330/97

The guidelines for the application of flat-rate corrections had been laid down in Commission Document No VI/5330/97 of 23 December 1997, entitled ‘Guidelines for the calculation of financial consequences when preparing the decision regarding the clearance of the accounts of the EAGGF Guarantee’ (‘Document No VI/5330/97’). Where the information provided by the inquiry did not permit assessment of the losses suffered by the Community on the basis of an extrapolation of those losses, by statistical means or by reference to other verifiable data, a flat-rate correction could be considered. The level of correction applied depended on the seriousness of the deficiencies identified in the performance of the controls. That document stated:

‘When one or more key controls are not applied or applied so poorly or so infrequently that they are completely ineffective in determining the eligibility of the claim or preventing irregularity, then a correction of 10% is justified, as it can reasonably be concluded that there was a high risk of wide-spread loss to the [European Agricultural Guidance and Guarantee Fund (EAGGF)].

…

However, where implementation of the checking system by a Member State has been non-existent or seriously inadequate and there are indications of very frequent irregularities and negligence in combating irregular or fraudulent practices, an adjustment of 25% is justified in so far as it may reasonably be considered that the freedom to submit claims with impunity where there is no entitlement will result in extremely high losses for the EAGGF.’

…

[Correction flat rates] are to be applied to the remaining expenditure after deduction of excluded amounts in respect of individual files or pursuant to Regulation No 296/96 …’

Background to the dispute

The background to the dispute was set out by the General Court in paragraphs 1 to 22 of the judgment under appeal and may be summarised as follows.

In September 2012, the Commission carried out an investigation concerning the expenditure incurred by the Hellenic Republic by way of EAFRD rural development measures (2007 to 2013) in respect of the financial years 2010 to 2013. In November 2013, the Commission then carried out an inquiry into the expenditure incurred by the Hellenic Republic by way of area payments in respect of claim years 2012 and 2013.

As regards area payments, following a letter of 15 January 2014, the Commission submitted its observations to the Hellenic Republic. The Hellenic Republic replied on 17 March 2014 and the Commission then once again forwarded its observations to the Hellenic Republic on 28 May 2014.

A bilateral meeting took place on 23 June 2014 and the Hellenic Republic responded to it by sending a letter on 18 September 2014.

Subsequently, the Commission proposed that a total, flat-rate and one-off amount of EUR 167399 260.04 be charged to the Hellenic Republic on account of the fact that, according to that institution, the application of the system for granting direct area payments in Greece did not comply with EU rules for claim years 2012 and 2013.

A conciliation procedure was initiated and an opinion of the Conciliation Body was delivered on 13 July 2015.

On 23 November 2015, the Commission adopted its final position, maintaining its initial position and proposing to exclude from financing the gross final amount of the correction imposed on the Hellenic Republic in the sector of direct aid, which amounted to EUR 167399 260.04.

As regards the rural development measures, following a letter of 9 January 2013, the Commission submitted its observations to the Hellenic Republic. The Hellenic Republic replied to it on 6 March 2013.

STARTSTART

A bilateral meeting was held on 5 September 2013, following which the Hellenic Republic submitted its observations on 27 December 2013.

35On 27 May 2014, the Commission notified the Hellenic Republic of its intention to exclude an amount of EUR 4106 349.91 from EU financing. The Commission took the view that weaknesses had been detected in the application, in Greece, of the scheme of measures under the EAFRD Rural Development programme (2007-2013) in the financial years 2010 to 2013.

36Following a request for conciliation made by the Hellenic Republic on 1 July 2014, the Conciliation Body issued its opinion in a final report of 28 January 2015.

37On 29 September 2015, the Commission set out its final position by limiting the proposed correction to EUR 3880 460.50, that is to say, EUR 3107 504.18 in respect of Measure 125 forming part of the EAFRD Rural Development programme referred to in paragraph 35 of the present judgment (‘Measure 125’), to which was added EUR 772 956.32 in respect of Measure 121 of that programme (‘Measure 121’).

38On 17 March 2016, the Commission adopted the contested decision, by which it indicated the amounts of the expenditure incurred by the Member States under the EAGF and the EAFRD which were excluded from EU financing. As regards the Hellenic Republic, the Commission applied flat-rate and one-off corrections in respect of the financial years 2010 to 2013 in the areas relevant to the present case, namely decoupled direct aid and EAFRD rural development. As regards direct aid, the Commission imposed a correction of a total net amount of EUR 167399 260.04 of which the net amount of EUR 166797 866.22 related in particular to weaknesses in the definition of eligible permanent pasture, manifest errors and weaknesses in on-the-spot checks by remote sensing. As regards rural development, the Commission imposed a correction in the net amount of EUR 3880 460.50.

39In the summary report annexed to the contested decision, referred to in paragraphs 16 to 22 of the judgment under appeal (‘the summary report’), the Commission justified the imposition of the flat-rate and one-off corrections at issue on the following grounds.

40As regards decoupled direct aid, the Commission found that, in claim years 2012 and 2013, the Hellenic Republic had considered as eligible for payment permanent pasture which did not satisfy the criteria of Article 34 of Regulation No 73/2009 and Article 2(c) of Regulation No 1120/2009, because vegetation on those areas could not be regarded as ‘grasses or herbaceous forage’ within the meaning of those provisions. That incorrect classification on the part of the Greek authorities was also used for cross-checks under Regulation No 1122/2009.

41In respect of the 2012 claim year, the Greek authorities had assessed the consequences of the error at EUR 40113 184.84. The Commission considered, however, that that amount had been obtained by applying the eligibility rates defined in October 2013, which did not take account of the finalisation of the revised Action Plan in April 2014. It also found that the amount calculated by the Greek authorities had not taken into account the penalties which should have been imposed for cases of over-declaration. With regard to claim year 2013, the Commission found that the amount calculated by the Greek authorities had not taken into account the penalties which had to be imposed for cases of over-declaration concerning amounts which had not been paid. In addition, as regards those two claim years, the Commission also considered that those amounts had been obtained without taking account of the financial impact of the amendments to the pro rata factors concerning permanent pasture, as completed on 30 April 2014.

42Moreover, the Commission also found that there were shortcomings in the on-the-spot checks, the conclusions of which were, in some cases, fundamentally different to those of remote sensing, which had led to a re-examination of 9470 agricultural parcels in claim year 2013 (but not in respect of claim year 2012). Finally, the Commission took the view that, in certain cases and by a broad application of the relevant practice, the Greek authorities had considered that there was a ‘manifest error’, in order to correct the amount of the payments without, however, applying the penalties provided for.

43On 4 December 2014, the information provided by the Greek authorities to the Commission indicated that they proposed a correction of EUR 52225 465.79 in respect of claim year 2012 and of EUR 37133 161.78 in respect of claim year 2013. However, the Commission considered those corrections to be inadequate because of the high level of errors found during the checks, which showed widespread irregularities that were not yet adequately combated.

44As regards claim year 2012, the Commission therefore applied a correction of 25% for the population at risk. Taking account of the improvement in the situation, it reduced the correction to 10% in respect of claim year 2013, on a base which was itself reduced by the amount of EUR 37163 161.78, which the Greek authorities had declared as an known error.

45As regards rural development, and more particularly Measure 125, mainly relating to irrigation infrastructure, the Commission took the view that the selection of eligible projects did not meet the requirements of Article 71 of Regulation No 1698/2005. The inquiry had revealed that that selection involved a problematic second stage of preselection by the Technical Research and Construction Directorate of the Greek Ministry of Rural Development (‘the DTEC’). During that pre-selection phase, not only was the maturity of the projects checked, but also their suitability in terms of priorities, on the basis of criteria known only to that directorate. Selection criteria which were not those laid down by the competent management authority (OPEKEPE) were thus introduced. Consequently, the Commission decided to apply a flat-rate correction of 5%, corresponding to an amount of EUR 3107 504.18.

46As regards Measure 121, essentially designed to modernise undertakings, the inquiry revealed that, in certain cases of declaring ineligible expenditure, the beneficiaries’ claims had been reduced without any penalty being imposed on them. According to the Commission, impunity could encourage beneficiaries to declare ineligible expenditure since, in the worst case, they would simply be refused payment of the corresponding amount. It therefore considered that that practice created a risk for the fund concerned and decided to apply, on the basis of an application by analogy of Article 63 of Implementing Regulation No 809/2014, a correction corresponding to an amount of EUR 772 956.32.

The proceedings before the General Court and the judgment under appeal

47By application lodged at the Registry of the General Court on 25 May 2016, the Hellenic Republic brought an action for annulment of the contested decision, relying, in essence, upon eight pleas in law in support thereof.

48The first plea concerned the flat-rate correction of 25% in respect of the claim year 2012, the flat-rate correction of 10% in respect of claim year 2013 and the one-off correction of EUR 37163 161.78, applied due to the weaknesses found in the definition of eligible permanent pasture. That plea alleged erroneous interpretation and application of point 2 of the first paragraph of Article 2 of Regulation No 796/2004 and Article 2(c) of Regulation No 1120/2009.

49The second plea alleged erroneous interpretation and application of Document No VI/5330/97 as regards fulfilment of the conditions for the imposition of a flat-rate correction of 25% in respect of claim year 2012.

50The third plea concerned the flat-rate correction of 10% and the one-off correction applied for weaknesses and errors in the definition and checking of eligible permanent pasture in respect of claim year 2013 and alleged that they were unlawful, abusive, based on contradictory reasons and on erroneous interpretation and application of Document No VI/5330/97 as regards fulfilment of the conditions for the imposition of a flat-rate correction of 10%, and infringement of the principles of sound administration, proportionality, ne bis in idem and of the rights of defence.

51The fourth and fifth pleas concerned the contested decision, in so far as it provides for a flat-rate correction of 5% for weaknesses in the application of the selection criteria for Measure 125 projects. The fourth plea alleged that there was no legal basis and no statement of reasons for the contested decision and an error of fact as regards that flat-rate correction applied in respect of the financial years 2010 to 2013, while the fifth plea alleged infringement of Article 31 of Regulation No 1290/2005.

52The sixth and seventh pleas related to a one-off correction applied in respect of the financial years 2011 to 2013 on account of weaknesses found in the application of the policy on penalties in respect of Measure 121. The sixth plea alleged that the method for calculating the correction was unlawful, leading to disproportionate results with regard to the weaknesses found, while the seventh plea alleged that there was no legal basis and no statement of reasons for the contested decision and infringement of Document No VI/5330/97.

53The Hellenic Republic withdrew the eighth plea in the course of the proceedings before the General Court.

54By the contested judgment, the General Court dismissed the action.

Forms of order sought by the parties before the Court of Justice

The Hellenic Republic claims that the Court should:

–set aside the judgment under appeal;

–annul the contested decision; and

–order the Commission to pay the costs.

56The Commission contends that the appeal should be dismissed as unfounded. It also claims that the Hellenic Republic should be ordered to pay the costs.

The appeal

57The Hellenic Republic puts forward six grounds of appeal. The first ground of appeal concerns the contested decision in so far as it applies flat-rate corrections of 25% and 10% to the area payments for pasture in respect of claim years 2012 and 2013 and a one-off correction of EUR 37163 161.78 in respect of claim year 2013. That ground of appeal alleges that the General Court erroneously interpreted the concept of ‘permanent pasture’ within the meaning of point 2 of the first paragraph of Article 2 of Regulation No 796/2004 and Article 2(c) of Regulation No 1120/2009. The second ground of appeal alleges erroneous interpretation and application by the General Court of Document No VI/5330/97 as regards the fulfilment of the conditions justifying a flat-rate financial correction of 25% applied to area payments for pasture in respect of claim year 2012. The third ground of appeal alleges erroneous interpretation and application by the General Court of Article 31(2) of Regulation No 1290/2005, Article 52(2) of Regulation No 1306/2013 and Article 34 of Implementing Regulation No 908/2014, as referred to in Document No VI/5330/97, infringement of the principle ne bis in idem and of the principle of proportionality on account of the combination of the flat-rate financial correction of 10% applied to area payments for pasture in respect of claim year 2013 with a one-off correction. The fourth and fifth grounds of appeal concern the General Court’s assessment of the flat-rate financial correction of 5% applied to the Hellenic Republic for weaknesses in the application of the selection criteria for Measure 125 projects in respect of financial years 2010 to 2013. While the fourth ground of appeal alleges erroneous interpretation and application of Article 71(2) and (3) of Regulation No 1698/2005 and an inadequate statement of reasons for the judgment under appeal, the fifth ground of appeal alleges infringement of Article 31(4)(c) of Regulation No 1290/2005 and insufficient and contradictory reasoning in that judgment. The sixth ground of appeal concerns the General Court’s assessment of the one-off correction applied to the Hellenic Republic in respect of financial years 2011 to 2013 on account of deficiencies found in the application of the policy on penalties in respect of Measure 121. This ground of appeal is based on an infringement of Article 73 of Regulation No 817/2004 and of Article 63 of Implementing Regulation No 809/2014.

The first ground of appeal

Arguments of the parties

58By its first ground of appeal, the Hellenic Republic complains, in essence, that the General Court erroneously interpreted and applied, in paragraphs 35 to 66 of the judgment under appeal, point 2 of the first paragraph of Article 2 of Regulation No 796/2004 and Article 2(c) of Regulation No 1120/2009, which set out the definition of ‘permanent pasture’.

59The Hellenic Republic criticises the General Court for having used, in paragraphs 39, 40, 49 and 56 of the judgment under appeal, an incorrect criterion relating to the type of vegetation covering the areas taken into consideration by the Commission in order to determine whether those areas were indeed ‘permanent pasture’ within the meaning of EU law. The General Court limited the classification of ‘permanent pasture’ solely to areas covered with grasses or other herbaceous forage, to the exclusion of areas covered with ligneous scrub and vegetation, which characterise so-called ‘Mediterranean type’ pasture. According to the Hellenic Republic, the General Court should have adopted another criterion under which areas falling within established local practices, which are traditionally used for grazing and on which grass and herbaceous forage are not predominant, constitute ‘permanent pasture’. Accordingly, the predominance of ligneous vegetation over the areas at issue cannot serve as an indicator of the abandonment of agricultural activities.

60According to the Hellenic Republic, that interpretation is permitted by the wording of Article 2 of Regulation No 796/2004 and Article 2 of Regulation No 1120/2009, as well as by the context and objectives pursued by those regulations. It thus points out that that broad interpretation of the concept of ‘permanent pasture’ is apparent from the guide intended to provide Member States with guidance on how best to comply with the legal provisions in force relating to the common agricultural policy (CAP), published by the Joint Research Centre (JRC) of the Commission on 2 April 2008, and from the action plan drawn up in October 2012 by the Greek authorities together with the Commission, including the assessment of pasture eligibility by photo-interpretation of satellite images at the level of the reference parcel (unit) and the application of a proportional (pro-rata) calculation system in cases where there are diffuse shrubs (‘the 2012 Action Plan’). In addition, that broad definition of the concept of ‘permanent pasture’ is also confirmed by the wording of both Article 4(1)(h) of Regulation No 1307/2013, in its initial version, and that resulting from the amendment of that provision by Article 3 of Regulation 2017/2393.

61The Commission proposes that that ground of appeal be dismissed as being unfounded. That institution is of the opinion that the General Court correctly interpreted and applied the concept of ‘permanent pasture’ in point 2 of the first paragraph of Article 2 of Regulation No 796/2004 and in Article 2(c) of Regulation No 1120/2009. It is clear from that definition that the criterion relating to the nature of the vegetation covering the agricultural area concerned is decisive. Furthermore, the guidance referred to in paragraph 60 of the present judgment, the 2012 Action Plan and Regulation No 1307/2013, which is applicable from 1 January 2015 and contains an extended definition of the concept of ‘permanent pasture’, are not relevant for the purpose of interpreting the law applicable at the material time and assessing the financial correction decided upon by the Commission.

Findings of the Court

62By its first ground of appeal, the Hellenic Republic complains, in essence, that the General Court erred in law in the interpretation of the concept of ‘permanent pasture’, within the meaning of point 2 of the first paragraph of Article 2 of Regulation No 796/2004, and Article 2(c) of Regulation No 1120/2009, in finding, in paragraph 40 of the judgment under appeal, that only areas covered with grasses and herbaceous forage, and not including the areas covered with ligneous plants or shrubs, which characterise so-called ‘Mediterranean type’ pasture, are included in that concept. According to the Hellenic Republic, the criterion relating to the nature of the vegetation covering the agricultural area concerned is not decisive as regards the classification of ‘permanent pasture’.

63In that regard, it should be noted, first, that Article 2(c) of Regulation No 1120/2009 contains a definition of the concept of ‘permanent pasture’ in terms very similar to those used in point 2 of the first paragraph of Article 2 of Regulation No 796/2004. Second, it is apparent from the case-law of the Court that the decisive criterion for the definition of ‘permanent pasture’ is not the type of vegetation covering the agricultural area, but the actual use of that area for a typical agricultural activity of ‘permanent pasture’. Consequently, the presence of ligneous plants or shrubs cannot, in itself, prevent the classification of an area as ‘permanent pasture’, as long as that presence does not compromise the actual use of that area for an agricultural activity (judgments of 15 May 2019, Greece v Commission, C‑341/17 P, EU:C:2019:409, paragraph 54, and of 13 February 2020, Greece v Commission, C‑252/18 P, EU:C:2020:95, paragraph 50).

Accordingly, by holding, in paragraph 40 of the judgment under appeal, that the relevant criterion was the type of vegetation present in the area in question and by then conducting its examination in the light of that criterion, the General Court erred in law in the interpretation and application of the concept of ‘permanent pasture’ as follows from point 2 of the first paragraph of Article 2 of Regulation No 796/2004 and Article 2(c) of Regulation No 1120/2009. It follows that the finding of the General Court, in paragraph 46 of the judgment under appeal, that the Hellenic Republic had failed to demonstrate that the Commission’s assessments were incorrect, is erroneous.

Consequently, the Hellenic Republic’s first ground of appeal must be upheld. It follows that point 1 of the operative part of the judgment under appeal must be set aside, in so far as the General Court dismissed the Hellenic Republic’s action relating to the flat-rate corrections of 25% and 10% applied to the area payments for pasture in respect of claim years 2012 and 2013 and the one-off correction of EUR 37163 161.78 in respect of claim year 2013, imposed due to weaknesses in the definition and checking of eligible permanent pasture for claim years 2012 and 2013.

The second ground of appeal

Arguments of the parties

By its second ground of appeal, the Hellenic Republic claims, in essence, that the General Court erroneously interpreted and applied Document No VI/5330/97, in paragraphs 78, 93, 96, 101, 104, 106 and 107 of the judgment under appeal, as regards the fulfilment of the conditions necessary for the application of a correction rate of 25% in respect of claim year 2012. That ground of appeal consists of nine parts.

1.By the first part of its second ground of appeal, the Hellenic Republic claims that, in paragraph 85 of the judgment under appeal, the General Court considered that the final payments for claim year 2012 were made on 30 June 2013 after a review of the claims on the basis of the 2012 Action Plan, as implemented on that date. Therefore, that review excludes the risk of particularly high losses justifying a flat-rate correction of 25% and contradicts the existence of a recurrent weakness, negligence or repeated infringement committed by the Hellenic Republic. Accordingly, paragraphs 78, 93, 96, 101, 104, 106 and 107 of the judgment under appeal have no basis in law.

2.The second part of the second ground of appeal alleges distortion by the General Court of the content of the summary report and a change in the subject matter of the proceedings, in that it held, in paragraph 79 of the judgment under appeal, that the limits of the reference parcels and their maximum eligible area for aid had to be precisely defined. However, the subject matter of the proceedings is not the precise delimitation of the parcels, but concerns their eligibility in the light of the definition of ‘permanent pasture’.

3.The third part of the Hellenic Republic’s second ground of appeal alleges contradictory reasoning, in that the General Court held, in paragraph 88 of the judgment under appeal, that, despite the gradual implementation of the 2012 Action Plan, the risk for the EAGF had increased and that extremely high losses were probable, which justified the rate of 25%.

4.By the fourth part in support of its second ground of appeal, the Hellenic Republic claims that the General Court infringed Document No VI/5330/97 by requiring, in paragraph 88 of the judgment under appeal, that, in order to reduce the rate of financial correction, the Member State concerned must have eliminated all risk to the EAGF.

5.By the fifth part of that ground of appeal, the Hellenic Republic claims that, in paragraph 89 of the judgment under appeal, the General Court infringed Articles 34 and 36 of Regulation No 73/2009 and Articles 43 and 44 of Regulation No 1782/2003 by finding that the error of which that Member State is accused concerning the eligibility of pasture had affected the calculation of the farmers’ payment entitlements and, therefore, the number of those entitlements, which gave rise to a very high risk for the EAGF. Moreover, such an assessment is unlawful because it retroactively applies Article 2 of Regulations No 796/2004 and No 73/2009 to the reference period for the calculation of payment entitlements (2000-2002).

6.By the sixth part of its second ground of appeal, the Hellenic Republic submits that the General Court distorted the content of the final report of the Conciliation Body referred to in paragraph 36 of the present judgment by holding, in paragraph 92 of the judgment under appeal, that some of the areas for which aid was granted were not eligible for that aid. It is apparent from that report that, following the 2012 Action Plan, an area of 1.6 million hectares of pasture remained eligible for aid.

7.By the seventh part of this ground of appeal, the Hellenic Republic claims that, in paragraph 100 of the judgment under appeal, the General Court infringed the second subparagraph of Article 52(3) of Regulation No 1306/2013 by simply finding that the Commission is not bound by the reports of the Conciliation Body without verifying whether the Commission had stated reasons for its decision to depart from the conclusions of those reports.

8.The eighth part of the second ground of appeal alleges a contradiction between the grounds set out, respectively, in paragraphs 85 and 104 of the judgment under appeal, in so far as the conditions establishing the existence of an ‘exceptional circumstance’ within the meaning of Document No VI/5330/97 are not satisfied.

9.By the ninth part in support of its second ground of appeal, the Hellenic Republic claims that, in paragraphs 114 to 116 of the judgment under appeal, the General Court erred in its interpretation and application of the guidelines in Document No VI/5330/97 by failing to take account of the retroactive implementation of the 2012 Action Plan. That would have addressed the weaknesses arising from the incorrect identification of the pasture areas in the Land Parcel Identification System (‘the LPIS’), so that, even if a flat-rate correction could be applied, the correction rate of 25% would not be justified.

The Commission contends that this ground of appeal should be rejected as unfounded, since none of the complaints put forward by the Hellenic Republic in support of it is capable of calling into question the General Court’s assessment concerning the legality of the application of a flat-rate correction of 25%.

Accordingly, in response to the first part of the second ground of appeal, the Commission replies that, in its appeal, the Hellenic Republic isolates the element of the re-examination of the claims on the basis of the 2012 Action Plan but makes no reference to the numerous other serious irregularities and deficiencies in the control system which the General Court recalled in paragraph 77 of the judgment under appeal and which, taken together, justified the existence of a risk of extremely high losses for the EAGF.

In response to the second part of that ground of appeal, the Commission submits that, in paragraph 77 of the judgment under appeal, the General Court drew attention to numerous serious deficiencies in the control system which justify the flat-rate correction of 25%. The question of the delimitation of parcels, addressed in paragraph 79 of the judgment under appeal, is merely a general statement of reasons in addition to the grounds stated by the General Court and is intended to emphasise the importance of an effective control system.

As regards the third part of that ground of appeal, alleging contradictory reasoning, the Commission replies that, in paragraph 85 of the judgment under appeal, the General Court merely found that the gradual implementation of the 2012 Action Plan contained measures which were not all intended to produce immediate effects, so that the gradual implementation of that action plan proved insufficient to eliminate the risk for claim year 2012.

In response to the fourth part of that ground of appeal, the Commission contends that, in paragraph 88 of the judgment under appeal, the General Court did not make the reduction of the flat-rate correction subject to proof that there was no risk, but merely found that the implementation of the 2012 Action Plan had had no specific impact on the risk incurred by the EAGF in 2012.

The Commission contends that the fifth part of the second ground of appeal, directed against paragraph 89 of the judgment under appeal, is ineffective in so far as that part of the ground of appeal relates to secondary reasoning. In any event, the Hellenic Republic does not effectively challenge the finding made by the General Court, in that paragraph of the judgment under appeal, that the calculation error relating to available hectares gave rise to a very high risk for the EAGF.

In response to the sixth part of that ground of appeal, which refers to paragraph 92 of the judgment under appeal, the Commission claims that the Hellenic Republic does not call into question the fact that numerous areas to which the aid had been granted were not, in general, eligible for that aid because they did not meet the conditions required to be regarded as permanent pasture.

83As regards the seventh part of that ground of appeal, relating to paragraph 100 of the judgment under appeal, the Commission contends that the Hellenic Republic did not raise before the General Court any plea alleging failure to state reasons for the contested decision on the ground that, by that decision, the Commission departed from the recommendations of the Conciliation Body. Therefore, the General Court responded to the Hellenic Republic’s claims to the requisite legal standard.

84In response to the eighth part of that ground of appeal, directed against paragraph 104 of the judgment under appeal, the Commission replies that, for the sake of completeness, the General Court considered that, even if it were necessary to establish an ‘exceptional circumstance’ in order to justify the application of a flat-rate correction of 25%, such a circumstance is established in the present case.

85Finally, as regards the ninth part of the second ground of appeal, alleging failure to take account of the 2012 Action Plan and referring to paragraphs 114 to 116 of the judgment under appeal, the Commission reiterates its position that that action plan is irrelevant to the question whether the financial extent of the irregularity can be established accurately or whether a financial correction must be imposed.

Findings of the Court

86It is apparent from Document No VI/5330/97 that a flat-rate correction of 25% is justified where the cumulative conditions which it lays down are met, namely where the implementation of the checking system by a Member State is completely absent or seriously inadequate and there are indications of very frequent irregularities and negligence in combating irregular or fraudulent practices, in so far as it may reasonably be considered that the freedom to submit claims with impunity where there is no entitlement will result in extremely high losses for the EAGF.

87In paragraphs 78 to 82 of the judgment under appeal, the General Court held that the Commission was entitled to consider that, in the present case, the Hellenic Republic could be criticised for seriously inadequate implementation of the checking system in the light of the combination of recurrent irregularities, including, as stated in paragraph 77 of the judgment under appeal, the weaknesses relating to the definition of eligible permanent pasture which had led to that Member State incorrectly applying cross-checks and on-the-spot checks.

88Since, first, the General Court’s assessment of the weaknesses in the definition and control of permanent pasture is, by definition, based on the interpretation of the concept of ‘permanent pasture’ and, second, as has been found in paragraph 65 of the present judgment, the General Court erroneously interpreted that concept, that error necessarily affects its assessment, carried out in paragraph 78 of the judgment under appeal, of the condition relating to the seriously inadequate implementation of the checking system in the light of combined irregularities.

89Consequently, in the light of the fact that the complaints raised by the Hellenic Republic in respect of the checking of eligible permanent pasture all relate to the erroneous interpretation of the concept of ‘permanent pasture’ adopted by the General Court, the second ground of appeal must be upheld in its entirety.

The third ground of appeal

Arguments of the parties

90By its third ground of appeal, the Hellenic Republic claims, in essence, that, in paragraphs 138 to 141 of the judgment under appeal, the General Court erroneously interpreted and applied Article 31(2) of Regulation No 1290/2005, Article 52(2) of Regulation No 1306/2013, Article 34 of Implementing Regulation No 908/2014 and Document No VI/5330/97 as regards the method for calculating the flat-rate correction in respect of claim year 2013, with the result that it regarded as lawful, in accordance with the principle ne bis in idem and the principle of proportionality, the combination of a flat-rate correction of 10% with a one-off correction for the same irregularities. According to the Hellenic Republic, it is clear from the case-law of the Court that the combination of a flat-rate correction with a one-off correction is possible only in the event of multiple findings.

91The Commission contends that the third ground of appeal should be rejected as unfounded.

Findings of the Court

92It should be borne in mind, first, that Article 31(2) of Regulation No 1290/2005 and Article 52(2) of Regulation No 1306/2013 do not prohibit the Commission from combining a one-off correction and a flat-rate correction.

93Accordingly, the Court has already accepted the possibility of combining flat-rate financial corrections with other corrections. If it appears that the risk incurred by the EAGF cannot be covered by one-off corrections alone, other flat-rate corrections must also be possible. It would be contrary to the system of EAGF financing if, in the event of there being grounds to apply a one-off correction, other less clearly determinable damage or risk were chargeable to the EAGF. There is therefore no reason in principle why a one-off correction should not be applied concurrently with a flat-rate correction (see, to that effect, judgments of 28 October 1999, Italy v Commission, C‑253/97, EU:C:1999:527, paragraphs 72 to 74, and of 15 June 2017, Spain v Commission, C‑279/16 P, not published, EU:C:2017:461, paragraph 72).

94Second, it is apparent from Document No VI/5330/97 that it is possible to combine a one-off correction and a flat-rate correction, as the General Court pointed out in paragraph 136 of the judgment under appeal, in so far as that document provides for flat rates to be applied to what remains of the expenditure after deduction of the amounts excluded in respect of individual files.

95In the present case, it should be noted that, in support of its third ground of appeal, the Hellenic Republic merely complains that the General Court, in paragraphs 138 to 141 of the judgment under appeal, infringed Article 31(2) of Regulation No 1290/2005, Article 52(2) of Regulation No 1306/2013 and Document No VI/5330/97 by rejecting its arguments alleging double correction for the same irregularities and for the same claim year 2013.

96In that ground of appeal, the Hellenic Republic does not dispute the General Court’s assessments in paragraphs 120 to 125 and 131 of the judgment under appeal, in which it clearly identifies the grounds which led the Commission to impose the flat-rate correction of 10% and the one-off correction.

97Accordingly, it is apparent from paragraph 123 of the judgment under appeal that the flat-rate correction of 10% imposed for claim year 2013 was justified in the light, first, of an accumulation of errors found by the Commission concerning the elements relating to the eligibility of pasture areas and the system of checks established by the Hellenic Republic and, secondly, of the improvement in the situation as compared to claim year 2012. In paragraph 124 of the judgment under appeal, the General Court noted that the calculation of the risk for the EAGF of EUR 37163 161.78, made by the Greek authorities on the basis of new data resulting from the updating of the LPIS, did not make it possible to determine the total amount of the risk to which that fund had been exposed due in particular to the failure to take into account the penalties which should have been applied and the fact that an inspection visit carried out in November 2014 had revealed that errors concerning the LPIS were continuing. The General Court inferred from this, in paragraph 125 of the judgment under appeal, that, in view of those shortcomings, the Commission had been unable to determine precisely the total amount of the risk incurred by that fund, so that, first, the imposition of a flat-rate correction was justified and, second, the calculations made by the Greek authorities relating to areas which had been checked did not make it possible to determine the total amount of the risk to which that fund had been exposed.

It follows that it was by means of a correct application of Article 31(2) of Regulation No 1290/2005, Article 52(2) of Regulation No 1306/2013 and Document No VI/5330/97 that the General Court held that, by deducting the amount calculated by the Greek authorities from the amount on the basis of which the Commission calculated the flat-rate correction of 10%, the Commission had satisfied itself that it did not impose double corrections on individual beneficiaries who had already been taken into consideration in the amount calculated by the Greek authorities. The flat-rate correction of 10% did not cover the areas which had been checked by the Greek authorities and on the basis of which those authorities had calculated the amount of EUR 37163 161.78.

99Thus, the General Court did not err in law in holding, in paragraphs 138 and 141 of the judgment under appeal, that the calculation method adopted by the Commission did not lead to a double correction for the same irregularities and for the same claim year.

100In view of the foregoing, the third ground of appeal must be rejected as unfounded.

The fourth ground of appeal

Arguments of the parties

101The fourth ground of appeal raised by the Hellenic Republic alleges erroneous interpretation and application of Article 71(2) and (3) of Regulation No 1698/2005 and several breaches by the General Court of its obligation to state reasons.

By the first part of its fourth ground of appeal, directed against paragraphs 158 to 160 of the judgment under appeal, the Hellenic Republic claims that the General Court erroneously interpreted and applied Article 71(2) and (3) of Regulation No 1698/2005 when criticising the Hellenic Republic for the fact that, prior to the selection made by the managing authority, the DTEC carried out a pre-selection of projects on the basis of criteria specific to that national body, thus entailing not just a simple formal assessment of the projects, but a genuine substantive control, even though, under those articles, the managing authority alone was authorised to assess the eligibility of projects that could be covered by Measure 125. According to the Hellenic Republic, Article 71(3) of Regulation No 1698/2005 confers on the Member States the power in principle to lay down the rules on eligibility of expenditure in order to ensure a more efficient allocation of EAFRD resources and, therefore, does not preclude them from providing for the assistance of a national body such as the DTEC which applies the eligibility criteria for projects likely to be covered by Measure 125, within the limits of the objectives in the rural development programme validated by the Commission.

103The second part of the Hellenic Republic’s ground of appeal alleges a failure to state reasons, in so far as, in paragraph 158 of the judgment under appeal, the General Court held that the DTEC carried out a genuine substantive assessment of the projects submitted to it on the basis of three criteria specific to it. However, the General Court did not specify what those criteria were.

104By the third part of that ground of appeal, that Member State claims that, in paragraph 160 of the judgment under appeal, the General Court supplemented the content of the summary report and, therefore, the statement of reasons for the contested decision by holding that, following the preliminary check carried out by the DTEC, a number of projects were not sent to the managing authority.

105The fourth part of that ground of appeal alleges infringement of the obligation to state reasons, in that the General Court failed to respond to the Hellenic Republic’s argument that the preliminary check carried out by the DTEC had been institutionalised for decades without the Commission ever having commented on the subject or that such intervention could have given rise to any irregularity.

106By the fifth part of its fourth ground of appeal, the Hellenic Republic claims that the General Court also failed to respond to the argument that all the operations under Measure 125 concerned major public infrastructure works and that, in that context, the DTEC intervened only in the course of preparatory operations having no bearing on the selection itself.

107The Commission contends that this ground of appeal should be rejected as partly inadmissible and partly unfounded.

Findings of the Court

108As regards the first part, alleging infringement of Article 71 of Regulation No 1698/2005, referring to paragraphs 158 to 160 of the judgment under appeal, it should be noted that it is apparent from the wording of paragraph 3 of that article, read in the light of recital 61 of that regulation, that, within the framework of the principle of subsidiarity, the rules on eligibility of expenditure are as a rule laid down at national level (see, to that effect, judgment of 7 July 2016, Občina Gorje (C‑111/15, EU:C:2016:532, paragraphs 37 and 47).

109However, the fact that the Member States lay down those rules on eligibility of expenditure does not mean that the Member States may entrust the power to select projects to a body distinct from the managing authority of the programme or to a body which is not under the latter’s responsibility.

110Article 71(3) of that regulation, read in the light of recital 64 thereof, confers that decision-making power solely on the managing authority or on a body operating under its responsibility, which exercises that power in the light of the selection criteria laid down by the competent body.

111Accordingly, the General Court did not err in law in holding, in paragraphs 158 to 160 of the judgment under appeal, that the DTEC pre-selection check of projects that may fall within the scope of Measure 125 infringed Article 71 of that regulation in so far as it constituted a substantive control of the eligibility of projects in the light of its own criteria which were not determined by the competent body.

112It follows that this part of the Hellenic Republic’s fourth ground of appeal must be rejected as unfounded.

113As regards the second part of that ground of appeal, alleging a failure to state reasons for the judgment under appeal, in that the General Court did not specify, in paragraph 158 of that judgment, the criteria which the DTEC assessed in the context of its substantive examination of the projects, it suffices to note that that part of the ground of appeal is based on a misreading of that judgment, in so far as, in that paragraph, the General Court refers to three criteria and weighting coefficients which were specific to the DTEC and which differed from those applied by the managing authority.

114It follows that, in its second part, the Hellenic Republic’s fourth ground of appeal is unfounded.

115As regards the third part of that ground of appeal, alleging infringement of the obligation to state reasons by the General Court, in that it supplemented the reasoning of the summary report by holding, in paragraph 160 of the judgment under appeal, that the application of those criteria had led to the non-transmission of a certain number of projects to the managing authority, although it is true that such an assessment is not expressly included in the summary report, it is merely a logical inference from the application of pre-selection criteria. Therefore, it cannot be held that the General Court failed in its obligation to state reasons.

116It follows that the third part of the Hellenic Republic’s fourth ground of appeal is unfounded.

117As regards the fourth part of that ground of appeal, alleging infringement of the obligation to state reasons, in that the General Court failed to respond to the Hellenic Republic’s argument that the preliminary check carried out by the DTEC had been institutionalised for decades without the Commission ever having commented on the subject or that such intervention could have given rise to any irregularity.