Action brought on 9 June 2011 — Hellenic Republic v Commission

(Case T-294/11)

2011/C 238/44

Language of the case: Greek

Parties

Applicant: Hellenic Republic (represented by: I. Khalkias and S. Papaioannou)

Defendant: European Commission

Form of order sought

The applicant claims that the General Court should:

Pleas in law and main arguments

By its action the Hellenic Republic seeks the annulment of the Commission decision of 15 April 2011 excluding from European Union financing certain expenditure incurred by the Member States under the Guarantee Section of the European Agricultural Guidance and Guarantee Fund (EAGGF), under the European Agricultural Guarantee Fund (EAGF) and under the European Agricultural Fund for Rural Development (EAFRD), notified as C(2011) 2517, published in the official Journal of the European Union (OJ 2011 L 102, p. 33) and numbered 2011/244/EU, in so far as the decision concerns financial corrections to the detriment of the Hellenic Republic, in the areas of (a) olive oil production aid, (b) expenditure on setting up the olive cultivation-GIS, and (c) direct aid (arable crops).

As regards the correction in the area of olive oil production aid, the applicant maintains, first, that the Commission made an erroneous assessment of the facts since the weaknesses in the way the basic checks to the system are generally carried out are minimal and do not justify a corresponding correction of 10 % and 15 %, particularly when since 1/11/2003 there has been established a fully functioning and reliable olive cultivation geographical information system (Olive cultivation-GIS) in Greece, as the main control tool of the entire system of olive oil production aid, and the cultivation information is checked in detail, and checks are also made on the olive grove production and the entire operation of oil mills.

The applicant claims, secondly, that: (a) the Commission’s decision has no valid and sufficient legal basis for the increase in the correction because of repeat offending, and the meaning which the Commission gives to that term is incorrect, given that it is clear that there are no recurrent weaknesses, and repeat offending, as assumed by the Commission, is based on a mistaken premise, because an incorrect meaning is given by the Commission to that term, and the consequence is a manifestly erroneous assessment of the allegedly recurrent weaknesses, since, moreover, the main control tool of the system, the Olive cultivation-GIS has been established and (b) the Commission made an erroneous assessment of the facts, since in any event there is no legal basis and no justification for the increase of the correction from 10 % for the period 2003-2004 to 15 % for the period 2004-2005, given that there were numerous improvements and continuous updating of the Olive cultivation-GIS in that period and indeed the control system not only did not deteriorate but substantially improved.

As regards the corrections in the area of expenditure in establishing the Olive cultivation-GIS, the applicant maintains, first, that there is no valid legal basis for the financial correction to the expenditure which relates to procedures for establishing the Olive cultivation-GIS, since the money which was made available for its development was deducted from aid to which the Greek producers were entitled, and the failure to recognise that expenditure invites an argument of unjustified enrichment of EAGGF and double financial penalty, since, in any event, all the expenditure which took place is ineligible, if it did not exceed the budget as determined by the Commission and the total amount which was deducted from Greek producers, since the critical time for the decision whether particular expenditure is or is not lawful is the time of acceptance of a legal commitment or the time when the expenditure is effected and not the time when the expenditure is declared.

The applicant secondly claims: (a) breach of the principle of proportionality as regards the expenditure amounting to 2 920 191,03 which ensued from the additional contracts and (b) the erroneous assessment of the facts as regards the expenditure which ensued from the contract 5190/ES/2003.

In connection with the corrections in the area of direct aid (arable crops), the applicant maintains, first, that: (a) there was no valid legal basis for applying the old guidelines, which laid down fixed percentages for the application of corrections to the new common agricultural policy (CAP), to the new single payment scheme and (b) their application seriously infringes the principle of proportionality.

The applicant maintains, secondly, that the Commission made an erroneous assessment of the facts: (a) in relation to the alleged weakness of the LPIS-GIS, (b) in relation to the fact that if a comparison is made of information from the LPIS-GIS which was used for the claim year 2007 with the information from the complete and reliable 2009 LPIS-GIS, which the Commission checked by an on-the-spot inspection, it is clear that the differences and deficiencies are minimal and do not exceed 2 % and, accordingly, any correction should not exceed that percentage and (c) in relation to the alleged weaknesses in management checks, cross-checks and on-the-spot checks and their quality and in particular the alleged failure to measure grazing land and the alleged lateness in carrying out on-the-spot checks, since the multiplicity of improvements made in the 2007 claim year should lead the Commission to the conclusion that no correction is necessary.

Lastly, the applicant claims that there was an erroneous interpretation and application of Article 33 of Regulation 1290/05 (1) in relation to the correction to expenditure on rural development measures.

(1)  Council Regulation (EC) No 1290/2005 of 21 June 2005 on the financing of the common agricultural policy