12 October 2023 (*)

(Action for annulment – EAGF and EAFRD – Expenditure excluded from financing – Lack of direct concern – Inadmissibility)

In Case T‑507/22,

applicant,

European Commission, represented by J. Aquilina and M. Salyková, acting as Agents,

defendant,

THE GENERAL COURT (Tenth Chamber),

composed of O. Porchia, President, L. Madise (Rapporteur) and S. Verschuur, Judges,

Registrar: V. Di Bucci,

having regard to the written part of the procedure, in particular:

the plea of inadmissibility raised by the Commission by separate document lodged at the Court Registry on 10 November 2022;

the applicant’s observations on the plea of inadmissibility lodged at the Court Registry on 6 January 2023;

the measure of organisation of procedure of 30 March 2023 and the Commission’s reply lodged at the Court Registry on 24 April 2023;

the observations of the applicant on that reply lodged at the Court Registry on 22 May 2023,

makes the following

1By its action under Article 263 TFEU, the applicant, Schrom Farms spol. s r. o., seeks annulment of Commission Implementing Decision (EU) 2022/908 of 8 June 2022 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 2022 L 157, p. 15) in so far as it covers financing of EUR 30 606.96 comprising a grant from Czech authorities to the applicant awarded in the context of the Czech rural development programme for the modernisation of farms (‘the contested decision’).

Background to the dispute

2The applicant operates in the egg production sector. It is a subsidiary company within the Agrofert group, which controls 100% of its shares and is active, inter alia, in the agri-food sector.

3In October 2017, the applicant applied to the Czech State Agricultural Intervention Fund for a grant. That grant, totalling 1 599 600 Czech koruny (CZK) – 807 798 CZK (50.5%) of which was financed by national funds and 791 802 CZK (49.5%, approximately EUR 30 606) of which was financed by a contribution from the European Agricultural Fund for Rural Development (EAFRD) – was paid to the applicant in November 2018.

4In January 2019, the European Commission commenced an audit of the Czech rural development programme. At the end of that audit, it found that, because the head of Agrofert had taken up ministerial duties in 2014, a conflict of interest situation had arisen, in particular as regards the awarding of the grant at issue to the applicant, since that executive had not divested himself of his interests in the Agrofert group. It concluded that that situation was contrary to various provisions of EU law and Czech law (Law No 159/2006 on conflicts of interest), at least from 1 September 2017 and that, consequently, after that date, Agrofert entities were not eligible to be awarded grants from European Structural and Investment Funds under Article 65(1) of Regulation (EU) No 1303/2013 of the European Parliament and of the Council of 17 December 2013 laying down common provisions on the European Regional Development Fund, the European Social Fund, the Cohesion Fund, the European Agricultural Fund for Rural Development and the European Maritime and Fisheries Fund and laying down general provisions on the European Regional Development Fund, the European Social Fund, the Cohesion Fund and the European Maritime and Fisheries Fund and repealing Council Regulation (EC) No 1083/2006 (OJ 2013 L 347, p. 320).

5Following its audit, on 8 June 2022 the Commission adopted the contested decision on the basis of Article 52 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, (EC) No 1290/2005 and (EC) No 485/2008 (OJ 2013 L 347, p. 549), excluding from EU financing the portion of the grant awarded to the applicant which corresponds to the contribution of EAFRD, namely EUR 30 606.96.

6After the action was brought in the present case, on 8 November 2022, the Czech State Agricultural Intervention Fund, relying broadly on the Commission’s analysis carried out in the context of its audit (see paragraph 4 above) and on the contested decision, adopted a decision requiring the applicant to repay the entirety of the grant that had been awarded to it, namely CZK 1 599 600.

Forms of order sought

7The applicant claims that the Court should annul the contested decision and order the Commission to pay the costs.

8The Commission contends that the action should be dismissed as inadmissible and the applicant ordered to pay the costs.

Law

9Under Article 130 of the Rules of Procedure of the General Court, where the defendant submits, as in the present case, that the application is inadmissible and asks the General Court for a decision in that regard without going to the substance of the case, the General Court is to decide on the application as soon as possible or, where special circumstances so justify, reserve its decision until it rules on the substance of the case. In the present case, the Court takes the view that it has sufficient information from the pleadings exchanged to date and the other documents in the file to rule on the application, without opening the oral part of the procedure.

10The Commission claims that the applicant does not satisfy the conditions for having standing to bring proceedings under the fourth paragraph of Article 263 TFEU, according to which a natural or legal person may bring an action for annulment against an act of an EU institution which is addressed to that person or which is of direct and individual concern to them, and against a regulatory act which is of direct concern to them and does not entail implementing measures. In the present case, since it is not the addressee of the contested decision, which is addressed to the Czech Republic, and as that decision is not a regulatory act, that decision needs to be of direct and individual concern to the applicant for the latter’s action to be admissible. However, the applicant does not satisfy either of those two conditions.

11According to the Commission, the contested decision is not of direct concern to the applicant, as that decision does not directly affect the legal situation of the applicant, but rather that of the Czech Republic, which is denied EU financing, and since the Czech authorities have their own discretion as to the conclusions to be drawn from the contested decision vis-à-vis the applicant. Indeed, EU law does not require the Czech authorities to make any specific final decision concerning the grant at issue; in particular, the contested decision does not require them to come to any specific decision vis-à-vis the applicant. The final decision of the Czech authorities falls within an area where the Member State concerned has autonomy, and EU law, in itself, did not prevent that Member State from continuing to finance the entirety of the grant that had been awarded to the applicant, even if it meant it had to replace the contribution from EAFRD with national financing.

12According to the Commission, nor is the applicant individually concerned by the contested decision, since it relates to numerous projects in various Member States in respect of which EU financing had been sought. Thus, the applicant was not individually identified in the same way as the addressees of that type of decision – namely the Member States – were.

13The applicant, on the other hand, argues that the contested decision is of direct concern to it. It was inevitable that the contested decision would lead to a request that the grant awarded previously be repaid. After having maintained in the application that statements to that effect had been made by the Czech authorities, the applicant refers, in its observations on the plea of inadmissibility, first, to the follow-up decision from the Czech State Agricultural Intervention Fund to open a recovery procedure, which from the very outset involved the recovery of the entirety of the grant and, second, to the final decision of that fund, requesting that the applicant repay all of the grant, in which it states that the fund is bound by the contested decision. That final decision is, in essence, a copy of the conclusions reached in the Commission’s audit. The national authorities’ discretion was therefore purely theoretical, and that decision was merely a national implementing measure in respect of the contested decision which did not prevent the contested decision from being of direct concern to the applicant.

14Turning to the matter of whether the contested decision is of individual concern to the applicant, it claims that the EAFRD’s contribution to the applicant’s grant is referred to in that decision and that the audit which formed the basis for the withdrawal of that contribution also specifically identified the applicant.

15The Court notes that, as the applicant is not the addressee of the contested decision, which is a decision specific to the Czech Republic, the contested decision needs to be of direct and individual concern to the applicant, in accordance with the fourth paragraph of Article 263 TFEU, in order for an action brought by it against that decision to be admissible. As was noted in the judgment of 3 October 2013, Inuit Tapiriit Kanatami and Others v Parliament and Council (C‑583/11 P, EU:C:2013:625, paragraph 76), those two conditions are cumulative.

16Without it being necessary in the present case to rule on the issue of whether the contested decision is of individual concern to the applicant, the Court notes that it is settled case-law that, in order for an act to be of direct concern to an applicant which is not the addressee, that act must, first, directly affect the legal situation of that applicant and, second, leave no discretion to its addressees who are entrusted with the task of implementing it, such implementation being automatic and resulting from EU rules without the application of other intermediate rules (judgments of 13 May 1971, International Fruit Company and Others v Commission, 41/70 to 44/70, EU:C:1971:53, paragraphs 23 to 28; of 5 May 1998, Dreyfus v Commission, C‑386/96 P, EU:C:1998:193, paragraph 43; and of 17 September 2009, Commission v Koninklijke FrieslandCampina, C‑519/07 P, EU:C:2009:556, paragraph 48). Those two criteria are cumulative (see, to that effect, judgment of 10 September 2009, Commission v Ente per le Ville vesuviane and Ente per le Ville vesuviane v Commission, C‑445/07 P and C‑455/07 P, EU:C:2009:529, paragraph 45 and the case-law cited).

17In the present case, with regard to the EAFRD’s contribution to the applicant’s grant, the operative part of the contested decision simply states to the Czech authorities that that contribution is withdrawn because that project is ineligible for such a contribution. Moreover, that decision is based solely on Article 52 of Regulation No 1306/2013, which concerns only the conformity clearance checks carried out by the Commission, which may lead to amounts made available to Member States under the European Agricultural Guarantee Fund (EAGF) and the EAFRD being excluded from EU financing. In that regard, Article 5 of that regulation states that ‘[the EAFRD] shall finance the Union’s financial contribution to rural development programmes implemented in accordance with the Union law on support for rural development’.

18Such a decision does not prejudge what will happen with the grant that had been awarded beforehand by the Czech State Agricultural Intervention Fund, which was financed in part by a contribution from the EAFRD.

19In that respect, having particular regard to the second criterion for the act to be of direct concern to the applicant, as referred to in paragraph 16 above, there is no direct concern where the autonomous will of the addressee interposes itself between the decision and its effects on the applicant. Where the decision of the addressee is not legally required either by EU law or the specific Commission decision, but is based on an autonomous decision of the Member State, there is no direct connection between the Commission decision and the applicant (order of 6 March 2012, Northern Ireland Department of Agriculture and Rural Development v Commission, T‑453/10, not published, EU:T:2012:106, paragraph 54).

20Article 1 of the contested decision, which states that the amounts set out in the annex thereto are to be excluded from EU financing, has the effect of depriving the Czech Republic of the EAFRD’s contribution to the project. That article means only that the EAFRD will no longer contribute to the expenditure of the Czech State Agricultural Intervention Fund on that project. Thus, the contested decision has obligatory financial consequences only between the European Union and the Czech Republic.

21As the Commission correctly argues, such a decision does not necessarily mean that the Czech authorities had to withdraw an amount equal to the EAFRD’s contribution or the entirety of the grant made available to the applicant’s project. Indeed, those authorities are, in principle, required to take any measures necessary to ensure effective protection of the financial interests of the European Union, in particular to recover undue payments (see, to that effect, judgment of 17 November 2022, Avicarvil Farms, C‑443/21, EU:C:2022:899, paragraph 33), which they did by withdrawing the entirety of the grant, as set out in paragraph 6 above. However, at the time when the contested decision was adopted, it could not be ruled out that the Czech authorities might decide to maintain the financing in question, in particular by substituting the withdrawn EU financing with national financing.

22The Commission claims, in that regard, that Article 54(5) of Regulation No 1306/2013 lays down the consequences to which the Member State will be subject if it has decided not to pursue recovery in cases other than those permitted under Article 54(3) of that regulation. In those circumstances, the consequences are that the Commission can adopt a decision excluding from financing corresponding amounts, the burden of which will then be borne by the Member State. As the Commission correctly points out, that provision therefore does not prevent that Member State from deciding to finance the project from its own budget.

23Thus, the contested decision itself did not require the applicant to repay the sums it had previously received.

24All the consequences for the applicant must be put down to the decision of the Member State rather than to EU regulations (see, to that effect, order of 6 March 2012, Northern Ireland Department of Agriculture and Rural Development v Commission, T‑453/10, not published, EU:T:2012:106, paragraph 52).

25In those circumstances, there are no repercussions for the applicant flowing directly from the contested decision and, consequently, the second criterion for the act to be of direct concern to the applicant, as referred to in paragraph 16 above, is not met in the present case, which is a sufficient reason to find that the contested decision is not of direct concern to the applicant.

26It must be made clear that the circumstance, referred to by the applicant, that the Czech State Agricultural Intervention Fund considered itself to be bound by the contested decision, in the sense that that decision required it to withdraw the entirety of the grant awarded to the applicant, does not call into question the analysis above. Indeed, such a position is the result of an autonomous assessment by those authorities (see, in that regard, paragraph 19 above).

27It follows from the foregoing that the action is inadmissible.

28The Court notes that the applicant had national legal remedies available to it which it could have used both to challenge the implementation of the contested decision by the Czech State Agricultural Intervention Fund and, where appropriate, to plead the illegality of the contested decision before the court hearing the case that the applicant was able to bring before it. Indeed, persons who, as a result of the conditions for admissibility laid down in Article 263 TFEU, cannot directly contest EU acts before the EU Courts do have the option to bring a claim arguing, in a plea of illegality, that such an act is invalid before the national court by bringing before that court an action against the national measures implementing that act. In that situation, it is for the national court, if it takes the view that a decision on that issue is necessary for it to give a ruling and is uncertain as to the validity of that act, to make a reference for a preliminary ruling to the Court of Justice of the European Union under Article 267 TFEU (see, to that effect, judgment of 25 July 2002, Unión de Pequeños Agricultores v Council, C‑50/00 P, EU:C:2002:462, paragraph 40).

Costs

29Under Article 134(1) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. Since the applicant has been unsuccessful, it must be ordered to pay the costs, in accordance with the form of order sought by the Commission.

On those grounds,

hereby orders:

1.The action is dismissed as inadmissible.

Luxembourg, 12 October 2023.

Registrar

President

—

Language of the case: English.