ORDER OF THE GENERAL COURT (Sixth Chamber)

18 September 2018 (*)

(Action for annulment — Subsidies — Finding of irregularities — Commission decision imposing an administrative penalty — Exclusion from procurement procedures and from the award of grants financed by the general budget of the European Union for a period of two years — Registration in the early detection and exclusion system database — Challenge — Article 76(d) of the Rules of Procedure — Disregard of the procedural requirements — Inadmissibility)

In Case T‑664/17,

eSlovensko, established in Lučenec (Slovakia), represented by B. Fridrich, lawyer,

applicant,

v

European Commission, represented by F. Dintilhac and L. Flynn, acting as Agents,

defendant,

APPLICATION pursuant to Article 263 TFEU seeking the annulment of the decision of the Commission of 21 June 2017, imposing the administrative penalty of exclusion of the applicant from procurement and grant award procedures financed from the general budget of the European Union for a period of 24 months and consequently registering it in the early detection and exclusion system database provided for in Article 108(1) of Regulation (EU, Euratom) No 966/2012 of the European Parliament and of the Council of 25 October 2012 on the financial rules applicable to the general budget of the Union and repealing Council Regulation (EC, Euratom) No 1605/2002 (OJ 2012 L 298, p. 1),

THE GENERAL COURT (Sixth Chamber),

composed of G. Berardis, President, D. Spielmann (Rapporteur) and Z. Csehi, Judges,

Registrar: E. Coulon,

makes the following

Order

 Background to the dispute

1        The applicant, eSlovensko, concluded three grant agreements with the European Union, represented by the European Commission, to carry out the projects ‘Awareness Node Slovakia (ANSR)’, concluded on 27 July 2007, ‘Slovak Combined Node (Slovcon)’, concluded on 6 April 2009 and ‘Slovak Safer Internet Centre (SK SIC)’, concluded on 12 September 2011. Under the choice of law and jurisdiction clause contained in Article 10 in each of those agreements the applicable law is, apart from the contractual provisions, the Financial Regulation applicable to the general budget of the European Union and, on a subsidiary basis, the law of Luxembourg. The court with jurisdiction to settle disputes on the application of those agreements is the General Court and, in the event of appeal, the Court of Justice.

2        From 1 May 2011 to 30 April 2012 and from 23 to 27 July 2012, the Commission carried out audits concerning the applicant’s participation in the three projects referred to by those agreements. On 10 April 2014, the applicant submitted comments on the initial findings of the audit.

3        The audit was finalised and the applicant was informed of the fact that the audit had been closed and of the findings of the audit by letter of 26 June 2014. The final audit report found irregularities relating to costs for staff and subcontracting, as well as travel and subsistence expenses. The audit found that the financial management of the projects had not been dealt with properly and did not comply with the requirements of grant agreements. In particular, the audit found that all the staff costs declared for the three projects audited were ineligible, that the subcontracting costs were partially ineligible in two of the projects, and it set out adjustments to the travel and subsistence costs and other specific costs in each of the projects. The sums to be recovered were estimated in the amount of EUR 131 342. 55, EUR 232 640.99 and EUR 128 615.95 respectively.

4        On 18 August 2014, the Commission sent a letter to the applicant informing it of the recovery and indicating the amount to be recovered with respect to each grant agreement.

5        On 7 October 2014, the applicant submitted its observations, expressing its disagreement with the findings and the financial corrections indicated in the final audit report. In a letter of 22 October 2014, the Commission replied that no new cogent or relevant evidence had been adduced and confirmed the decision to issue the debit notes demanding repayment of the sum due under each grant agreement. It calculated the amounts to be recovered and, on 12 December 2014, sent the debit notes corresponding to each grant agreement. Some debts were recovered by way of offsetting.

6        On 24 March 2017, the Commission (i) informed the applicant that it intended to exclude the applicant from participation in procurement procedures and from the award of grants financed by the general budget of the European Union for a period of two years and, (ii) it invited the applicant to submit observations on the proposed exclusion and the length thereof, and the registration of its president, as a person of interest connected to the applicant, in the early detection and exclusion system database.

7        The applicant submitted its observations on 10 and 11 April 2017. In substance, it claims that (i) it had properly implemented the projects, (ii) the payments made by the Commission confirmed that the applicant had fulfilled its obligations, (iii) the costs declared ineligible for the third project concerned only part of the 20-month implementation period, (iv) it had received no response from the Commission on its observations on the findings in the audit, (v) the conditions to treat the findings as serious breaches of the contracts had not been satisfied, (vi) there had been no action or omission in the implementation of the projects for the personal gain of the president and that his registration in the early detection and exclusion system database and exclusion would limit his participation in the projects and would totally prevent his access to the labour market.

8        By decision of 21 June 2017 (‘the contested decision’), following the recommendation of the body referred to by Article 108 of Regulation (EU, Euratom) No 966/2012 of the European Parliament and of the Council of 25 October 2012 on the financial rules applicable to the general budget of the Union and repealing Council Regulation (EC, Euratom) No 1605/2002 (OJ 2012 L 298, p. 1), the Commission excluded the applicant from participation in procurement procedures and from the award of grants financed by the general budget of the European Union and from the allocation of resources from the European Funds for two years. The applicant’s president was regarded as a person having the power of representation, decision or control over the applicant at the material time which led to the exclusion. In the contested decision, after having summarised the three agreements at issue and the results of the audit, the Commission dismissed the applicant’s arguments and considered that serious breaches of contract had been committed. It took the view that the two-year exclusion was proportional particularly in view of the seriousness of the irregularities, their recurrence in the three agreements and the financial impact of the amount at issue. It also highlighted the personal involvement of the applicant’s president.

9        As the service of the contested decision at the applicant’s address in Lučenec (Slovakia) by registered letter was unsuccessful, service was effected a second time at the address of the applicant’s lawyer in Bratislava (Slovakia) on 17 July 2017 and was received on 24 July 2017.

10      The information relating to the contested decision was registered on 13 October 2017 in the database referred to in Article 105a and Article 108(1) of Regulation No 966/2012. On that date all the certifying officers of the Commission were notified of the applicant’s exclusion.

 Procedure and forms of order sought

11      By application lodged at the Registry of the General Court on 27 September 2017, the applicant brought this action.

12      In its application, the applicant claims in substance that the Court should:

–        annul the contested decision;

–        order the suspension of operation of the contested decision;

–        refer the case back to the Commission in order for it to give a ruling on the financial implications and eligibility of the disputed costs;

–        order the Commission to pay the costs.

13      By separate document lodged at the Registry of the General Court on 1 February 2018, the Commission raised an objection of inadmissibility under Article 130 of the Rules of Procedure of the General Court. It claims that the Court should:

–        dismiss the action as inadmissible;

–        order the applicant to pay the costs.

14      The applicant lodged its observations on the objection of inadmissibility on 15 March 2018. In those observations it claimed, in essence, that the Court should:

–        dismiss the objection of inadmissibility;

–        open the oral phase of the proceedings, focusing on the substance of the case.

 Law

15      Pursuant to Article 130(1) and (7) of the Rules of Procedure, the Court may, if the defendant so requests, rule on the question of inadmissibility without considering the merits of the case.

16      In the present case, as the Commission has requested a ruling on inadmissibility, the Court, taking the view that it has sufficient information from the documents in the case file, has decided to rule on that application without taking further steps in the proceedings.

17      In the first place, in the originating application, the applicant requests the suspension of operation of the contested decision on the ground that the fact that the amount claimed by the Commission is recoverable immediately could jeopardise the continued existence of the organisation. The applicant states, in its observations on the objection of inadmissibility, that that application seeks the annulment of the contested decision and that its request for suspension of operation of the contested decision is complementary to its substantive claim.

18      The Commission submits that that request is inadmissible on the ground that it has not been made by separate document.

19      It must be observed that, under Article 156(5) of the Rules of Procedure, an application for suspension of operation must be made by a separate document.

20      In the present case, the application was made in the originating application.

21      It follows that it is inadmissible.

22      In the second place, the applicant requests the referral of the case back to the Commission in order for it to give a ruling on the financial consequences and eligibility of the disputed costs. In that connection, it challenges the ineligibility found by the audit.

23      The Commission submits that that application is inadmissible.

24      It must be held that, by that application, in substance, the applicant requests the General Court to issue directions to the Commission.

25      However, according to settled case-law, in an action for annulment, the jurisdiction of the EU judicature is limited to reviewing the legality of the contested measure and the Court may not, in the exercise of its jurisdiction, issue directions to EU institutions (see order of 26 October 1995, Pevasa and Inpesca v Commission, C‑199/94 P and C‑200/94 P, EU:C:1995:360, paragraph 24 and the case-law cited, and judgment of 17 June 2010, CEVA v Commission, T‑428/07 and T‑455/07, EU:T:2010:240, paragraph 56 and the case-law cited). It is for the institution concerned to adopt, under Article 266 TFEU, the measures necessary to give effect to any judgment ordering annulment (see order of 12 March 2014, PAN Europe v Commission, T‑192/12, not published, EU:T:2014:152, paragraph 15 and the case-law cited).

26      Therefore, that application is inadmissible.

27      In the third place, in support of the application for the annulment of the contested decision, the applicant raises essentially three pleas. First, it submits that the contested decision must be annulled for misuse of powers and error of assessment of the facts. Second, it relies on the failure to state reasons and the arbitrary nature of the contested decision. Third, it cites the case-law of the General Court concerning the power of review conferred on the Commission and its limits. Furthermore, it puts forward arguments concerned with proving the erroneous nature of the findings of the audit and submits that the Commission has not taken its submissions into account.

28      The Commission takes the view that the application is inadmissible due to a lack of clarity and precision.

29      In that connection, it must be recalled that, under Article 21, first paragraph, of the Statute of the Court of Justice of the European Union, applicable to the procedure before the General Court pursuant to Article 53, first paragraph thereof, and Article 76(d) of the Rules of Procedure, the application must contain, inter alia, the subject matter of the dispute and a brief statement of the pleas in law on which the application is based. It is clear from the case-law that that summary must be sufficiently clear and precise to enable the defendant to prepare his defence and for the General Court to exercise its power of review. It follows that the essential elements of fact and law on which an action is based must be indicated coherently and intelligibly in the application itself. The application must, therefore, specify the nature of the plea in law on which the action is based, so that a mere abstract reference to that plea does not satisfy the requirements of the Rules of Procedure (see judgment of 14 February 2012, Italy v Commission, T‑267/06, not published, EU:T:2012:69, paragraph 35 and the case-law cited).

30      In the present case, as the Commission submits, it must be stated that the application does not set out any legal pleas in a manner which is sufficiently clear, intelligible and coherent in support of its form of order seeking the annulment of the contested decision.

31      For each one of the sections which it calls ‘pleas’, the applicant merely cites passages of certain judgments delivered by the Court of Justice and the General Court concerning in particular the powers of review conferred on the Commission and its limits, which are, moreover, in areas unrelated to those at issue in the present case. Those citations of the case-law bear no relation to the facts at issue or to the contested decision. The applicant therefore relies in a very abstract manner on abuse of powers, incorrect assessment of the facts and the failure to state reasons when the decision was adopted.

32      Those references to alleged violations, made without any justification related to the contested decision, are insufficient to satisfy the requirements of clarity and precision of the pleas relied on, as laid down by Article 76(d) of the Rules of Procedure.

33      In addition, in so far as the applicant challenges the findings of the audit sent to it on 26 June 2014, it must be observed that it is clear from the application that the General Court is dealing with a request for annulment of the contested decision under Article 263 TFEU. The audit criticised by the applicant took place during inspections on the use of the grants made to the applicant under the three agreements concluded with the Commission. Since the applicant’s arguments concern the error of assessment allegedly committed in the course of the audit, they can only be admitted in an action in contract, laid down in Article 272 TFEU, brought on the basis of the choice of law and jurisdiction clause in those contracts (see paragraph 1 above). In the context of the present action, the General Court, as the arbiter of the legality of the contested decision, does not have jurisdiction to rule on such arguments.

34      Therefore, the objection of inadmissibility must be upheld.

35      It follows from all the foregoing that the action must be dismissed as inadmissible.

 Costs

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

On those grounds,

THE GENERAL COURT (Sixth Chamber)

hereby orders:

1.      The action is dismissed as inadmissible.

2.      eSlovensko shall bear its own costs and those incurred by the European Commission.

Luxembourg, 18 September 2018.

*      Language of the case: English.