Court of Justice of the European Communities (including Court of First Instance Decisions)

(European Social Fund Community financial assistance in the field of innovative measures under Article 6 of Regulation (EC) No 1784/1999 Call for proposals Rejection of the proposal)

In Case T-351/05,

Provincia di Imperia (Italy), represented by S. Rostagno and K. Platteau, lawyers,

applicant,

Commission of the European Communities, represented by D. Martin and A. Weimar, acting as Agents,

defendant,

APPLICATION for annulment of the Commission's decision of 30 June 2005 not to accept the proposal 2005/VP021/20293 submitted by the Provincia di Imperia in response to the call for proposals VP/2003/021 concerning 'Innovative measures under Article 6 of the European Social Fund Regulation: 'Innovative Approaches to the Management of Change' and any measure related to that decision,

composed of M. Vilaras, President, E. Martins Ribeiro and K. Jürimäe, Judges,

Registrar: K. Pocheć, Administrator,

having regard to the written procedure and further to the hearing on 6 March 2007,

gives the following

Legal context

1. Article 22 of Council Regulation (EC) No 1260/1999 of 21 June 1999 laying down general provisions on the Structural Funds (OJ 1999 L 161, p. 1) states:

'1. At the initiative of the Commission and following consultation of the committees referred to in Articles 48 to 51 on the guidelines for the various types of innovative actions, subject to a ceiling of 0.40% of their respective annual funding, the Funds may finance innovative actions at Community level. These shall include studies, pilot projects and exchanges of experience.

Such innovative actions shall contribute to the preparation of innovative methods and practices designed to improve the quality of assistance under Objectives 1, 2 and 3. They shall be implemented in a simple, transparent fashion and in accordance with the principles of sound financial management.

2. Each field of action for pilot projects shall be financed by one fund only. The decision on the contribution of a fund may amplify the scope of each fund as defined in the Regulations specific to each fund, but without broadening it, to include all measures required to implement the pilot project concerned.'

2. Article 24 of Regulation No 1260/1999 provides:

'1. Making use of information on innovative actions from the Member States concerned, the Commission shall appraise applications for a contribution from the Funds pursuant to Articles 22 and 23 on the basis of the following details:

(a) a description of the proposed assistance, its scope, including geographical coverage, and specific aims;

(b) the bodies to be responsible for implementing the assistance and the beneficiaries;

(c) the timetable and financing plan, including contributions from any other source of Community finance;

(d) provisions to ensure efficient and correct implementation;

(e) any other information necessary to verify compatibility with Community policies and with the guidelines referred to in Article 10(3).

The Commission shall approve the contribution of the Funds when this information enables it to appraise the application.

2. The Member States concerned shall be immediately notified by the Commission following approval of an application.

3. The financial liability of the Member States within the meaning of this Regulation shall not be engaged for the innovative actions referred to in Article 22 or the technical assistance measures referred to in Article 23, without prejudice to their obligations arising out of the institutional arrangements specific to each Member State.'

3. Regulation (EC) No 1784/1999 of the European Parliament and of the Council of 12 July 1999 on the European Social Fund (OJ 1999 L 213, p. 5) has the aim of supporting measures to prevent and combat unemployment and to develop human resources and social integration into the labour market in order to promote a high level of employment, equality between men and women, sustainable development, and economic and social cohesion.
4. Article 6 of Regulation No 1784/1999 authorises the Commission to finance preparatory, monitoring and evaluation operations which are necessary for the implementation of the operations referred to in the regulation.
5. On 12 January 2001, the Commission adopted a communication (COM (2000) 894 final) on the implementation of Innovative Measures under Article 6 of Regulation No 1784/1999 for the programming period 2000-2006.
6. Point 6 of that communication states that innovative measures include the following types of innovation:

process-oriented innovations. These cover the development of new methods, tools or approaches as well as the improvement of existing methods;

goal-oriented innovations. These centre around the formulation of new objectives including approaches to identifying new and promising qualifications and the opening up of new areas of employment in the labour market;

context-oriented innovations. These relate to political and institutional structures and are concerned with system development in connection with the labour market.

7. Point 43 of that communication furthermore states: 'In order to ensure the transparency of the support provided through innovative measures, the Commission will use open calls for proposals, publicising these in the Official Journal as well as on the Europa website. The eligibility of the potential projects will be determined by the scope and theme of the published call for proposals.'
8. In addition, paragraph 44 of the communication stipulates that 'the promoter's guide accompanying each call for proposals will enable project promoters to submit their grant applications in line with the criteria and requirements set out in Regulation ... No 1784/1999.'
9. On that basis a call for proposals bearing reference number VP/2003/021 and entitled 'Budget heading B2-1630 ” Innovative measures under Article 6 of the European Social Fund Regulation: 'Innovative Approaches to the Management of Change'' was published in the Official Journal of the European Union on 31 October 2003 (OJ 2003 C 262, p. 22).
10. Under the heading 'Thematic focus', the call for proposals states that 'for the period 2004 to 2006, Article 6 [of Regulation No 1784/1999] will support the development and testing of innovative measures to anticipate and manage change under the overarching theme of 'Innovative approaches to the management of change''.
11. Under the same heading, it is provided that, within that overarching theme, innovative measures will focus on two more specific sub-themes, namely the management of demographic change and the management of restructuring.
12. Under the heading 'Timetable', it is stated:

'There are three deadlines for making an application under this call for proposals, as follows:

...

The deadline for the second round of applications is 26 January 2005. Grant agreements will be signed, in principle, in September 2005. Projects may start between 1 October 2005 and 30 November 2005, but not before the grant agreement has been signed. The maximum duration of projects will be 24 months and projects must finish between 30 September 2007 and 29 November 2007.

The deadline for the third round of applications is 25 January 2006. Grant agreements will be signed, in principle, in September 2006. Projects may start between 1 October 2006 and 30 November 2006, but not before the grant agreement has been signed. The maximum duration of projects will be 24 months and projects must finish between 30 September 2008 and 29 November 2008.'

13. On 15 October 2004, in the context of the second round of applications, a reminder of the call for proposals VP/2003/021, entitled 'Budget heading 04.021000.00.11 ” Innovative measures under Article 6 of the European Social Fund Regulation: 'Innovative Approaches to the Management of Change'', was published in the Official Journal (OJ 2004 C 255, p. 11). The reminder states, inter alia, that the next deadline for making an application under that call for proposals is 26 January 2005 and that more detailed information on the application procedure, the financing available, and the eligibility, selection and award criteria, including the Applicant's Guide can be downloaded from the website mentioned.
14. The Applicant's Guide contains a number of Annexes, among them Annex 2, 'Technical and Financial Annex'; Annex 6, 'Grant Application Description of the Project'; and Annex 7, 'Budget Estimate'.
15. Paragraph 34 of Annex 2 states:

'Every application that passes the above checks [set out in paragraphs 27, 29 and 31] will be evaluated to assess the quality and feasibility of the proposed actions, against the following criteria:

...

innovative aspects of the proposal, in particular as regards the objectives and implementation of the project, including how the proposal differs from or builds on the normal activities of the organisations involved;

...

extent to which there is a match between the cost of items detailed in the budget estimate and the activities in the project description and work programme in the Grant Application.'

Background to the dispute

16. On 21 January 2005, the applicant, the Provincia di Imperia, sent to the Commission, in the context of the second round of applications, a grant application in respect of its proposal 2005/VP021/20293, 'Flores', to intervene in the floricultural sector in Italy, France and Spain to combat the negative effects of restructuring processes and to promote development.
17. By email dated 29 June 2005, the Commission informed the applicant of its decision to reject the grant application.
18. That decision was confirmed by letter dated 30 June 2005 ('the contested decision').
19. In its decision the Commission informed the applicant of the following:

'As regards your proposal, it has been decided that it does not satisfy the evaluation criteria in the call for proposals. That is due, in particular, to the following reasons: the proposal does not succeed in explaining the way in which it elaborates and takes into consideration the experience previously acquired in that sector in Liguria. There are serious inconsistencies between the budget information provided in Annex 6 and that provided in Annex 7.'

20. By email of 1 July 2005, the applicant disputed both grounds by which the contested decision had rejected its application and asked the Commission to re-examine its proposal and take it into account for Community financing. In particular, as regards the ground based on the argument that the proposal does not take into consideration the experience previously acquired in Liguria, the applicant states that 'in Annex 6, pages 57 to 89, [it] scrupulously set out the situation, the experience and the policies in respect of the sector, from economic, social and territorial points of view, at the international, regional and provincial levels'.
21. By email of 4 July 2005, the Commission explained its previous response by expanding the arguments on which the rejection of the applicant's grant application was based. It states inter alia:

'1. As regards the first point, it is correct that 32 pages describe the floricultural 'cluster', but that mere description does not succeed in explaining to us how you will manage to build and develop your new project on the basis of your previous experience and does not in end effect succeed [in] proposing an innovation.

2. The documents which you have sent by the deadlines specified (the only documents taken into account in the selection procedure) contain inconsistencies in the financial data. Although Annex 6 contains a total amount of EUR 2 029 599.[9]9, Annex 7 contains a total amount of EUR 2 109 599.99 (a significant difference of EUR 80 000).'

22. By email of 11 July 2005, the applicant disputed those additional explanations.
23. By email of 15 July 2005, the Commission informed the applicant that it reiterated the content of its previous communications and suggested that the applicant reflect on the fact that the significant difference of EUR 80 000 could easily have been mentioned in the administration costs'.

Procedure and forms of order sought

24. By application lodged at the Registry of the Court of First Instance on 7 September 2005, the applicant brought the present action.
25. Upon hearing the report of the Judge-Rapporteur, the Court decided to open the oral procedure. By way of measures of organisation of procedure, the applicant was asked to produce a document and reply to a written question by the Court. The applicant complied with those requests.
26. The parties presented oral argument and answered the oral questions put by the Court at the hearing on 6 March 2007.
27. The applicant claims that the Court should:

annul the contested decision and any related measure;

order the Commission to pay the costs.

28. The Commission contends that the Court should:

dismiss the action as unfounded;

make an appropriate order as to costs.

The admissibility of the action

Arguments of the parties

29. The applicant submits that the action is admissible since it was brought within the prescribed time-limits and seeks the annulment of a Commission decision which was addressed to it and affects it financially having regard to the human and financial resources implemented in preparing its application for the grant.
30. The Commission observes that the applicant cannot claim to have a financial interest consisting of a 'right to a grant', in view of the fact that the Commission does not have any obligation to subsidise the proposals and projects which are submitted to it. Furthermore, it states that the submission of a proposal is made on a voluntary basis, that all the applicants had to go to the same lengths and that it had offered each one the certain prospect of fair and transparent treatment.
31. In the rejoinder, the Commission raises the question of the applicant's legal interest in bringing proceedings. In that regard, the Commission observes that that interest is evaluated as at the date on which the action was brought, namely, in the present case, 7 September 2005. According to the Commission, at that point in time, the applicant still had until 25 January 2006 to submit a new, corrected file in the context of the second round of applications. The applicant is not entitled to bring an action for annulment of the contested decision without establishing an interest in seeing that decision annulled. The Commission submits that the plea of inadmissibility alleging the applicant's lack of a legal interest in bringing proceedings is a ground involving a question of public policy which the Community judicature must examine of its own motion and which may be put forward by the defendant at any time in the proceedings.

Findings of the Court

32. As regards, the applicant's legal interest in bringing proceedings, it must be borne in mind that, according to settled case-law, an action for annulment brought by a natural or legal person is admissible only in so far as that person has an interest in the contested measure being annulled (Joined Cases T-480/93 and T-483/93 Antillean Rice Mills and Others v Commission [1995] ECR II-2305, paragraph 59; Case T-102/96 Gencor v Commission [1999] ECR II-753, paragraph 40; and Case T-212/00 Nuove Industrie Molisane v Commission [2002] ECR II-347, paragraph 33). That interest must be vested and present (Case T-138/89 NBV and NVB v Commission [1992] ECR II-2181, paragraph 33) and is evaluated as at the date on which the action is brought (Case 14/63 Forges de Clabecq v High Authority [1963] ECR 357, 371, and Case T-159/98 Torre and Others v Commission [2001] ECR-SC I-A-83 and II-395, paragraph 28). Such an interest exists only if the action, if successful, is likely to procure an advantage for the party who has brought it (see Case T-310/00 MCI v Commission [2004] ECR II-3253, paragraph 44 and the case-law cited).
33. In the present case, in order to evaluate the applicant's legal interest in bringing proceedings, regard must be had to the advantage which it could derive from the annulment of the contested decision. In this respect, although the annulment of that decision could not in any case result in a situation where the applicant would be entitled, by virtue of the application for financial assistance from the European Social Fund which it made in the context of the second round of applications, to the award of a grant by the Commission, the fact remains that such an annulment would give the applicant an additional opportunity to be able to obtain such a grant. In the event of an annulment, the Commission would be required to reconsider the applicant's proposal, as submitted on 21 January 2005, taking into account the assessment made by the Court. Thus, the applicant would not have to make amendments to its proposal or bring it up to date, which would not be the case if it had to submit its application again in the context of the third round of applications.
34. In view of the foregoing considerations, it must be held that the applicant has a legal interest in bringing proceedings and thus this action must be declared to be admissible.

Substance

35. In support of its action, the applicant relies on two pleas in law. The first plea is directed against the view, in the contested decision, that there are 'serious inconsistencies' in the budget information supplied by the applicant in Annex 6 to its proposal and that supplied in Annex 7 to its proposal. The second plea opposes the view, in the contested decision, that the applicant's proposal does not succeed in explaining the way in which it elaborates and takes into consideration the experience previously acquired in the floricultural sector in Liguria.
36. In the context of the first plea in law, the applicant puts forward several heads of claim, alleging infringement of Article 253 EC, Article 6 of Regulation No 1784/1999, Articles 22 and 24 of Regulation No 1260/1999, the rules established in the call for proposals VP/2003/021 and in the Applicant's Guide, including Annexes 2, 6 and 7 thereto, and also alleges a manifest error of assessment of the facts, a misuse of powers and infringement of the principle of legal certainty. In the context of the second plea in law, the applicant puts forward the same heads of claim, apart from that alleging infringement of Annex 7 to the Applicant's Guide.
37. Before beginning the proper analysis of the two pleas, it must be pointed out that each of the two grounds given in the contested decision is on its own sufficient as a basis for the decision not to accept the applicant's proposal for Community co-financing. Accordingly, that decision must be annulled, in principle, only if both of those grounds are unlawful. In those circumstances, an error or other illegality which affects only one of the pillars of reasoning cannot suffice to justify the annulment of the contested decision as that error or illegality could not have had a decisive influence as regards the refusal of Community co-financing. In this case, the applicant has contested each of the two grounds by means of two separate pleas. Consequently, in order to decide on a possible annulment in the present case, it is necessary to examine each of those two pleas.

The first plea in law

Arguments of the parties

Admissibility of the plea

38. The Commission observes that, according to the Statute of the Court of Justice and the Rules of Procedure of the Court of First Instance, the application must, inter alia, state the subject-matter of the proceedings and contain the form of order sought and a summary of the pleas in law on which the application is based; the latter must be sufficiently clear and specific to allow the defendant to prepare his defence. That is not the case here. The Commission submits that the applicant only makes comments under the heading 'Heads of claim' without establishing which head of claim is being expanded and in which connection. The applicant does not expound the slightest legal argument in support of the form of order which it seeks. In particular, as regards the heads of claim concerning manifest error of assessment, misuse of powers and infringement of the principle of legal certainty, the statement remains totally abstract and the summary is not in any way sufficiently clear and comprehensible to allow the Commission to properly prepare its defence. The Commission thus takes the view that those heads of claim are inadmissible.
39. In answer to the Commission's arguments, the applicant states, first, that this plea in law forms a whole which cannot be broken up in relation to the legal base relied on. Secondly, it submits that it has explained how the Commission, in the contested decision, made a manifest error of assessment and misused its powers. Lastly, it stresses that the decision's infringement of the call for proposals VP/2003/021 and of the Applicant's Guide results in the infringement of the higher-ranking rules under which they were adopted.

Substance

40. The applicant disputes the existence of 'serious inconsistencies' concerning the budget information in Annexes 6 and 7 of its proposal. While it does not deny that there is a difference between the information provided in each of the two Annexes concerned, it states that that difference stems from the structure of those Annexes, which it was required to follow, and from the difference in the information requested. Annex 6 ('Grant Application') includes only direct eligible costs, which are indicated by the use of the capital letter 'D' ('Staff, Travel, Services/Activities and Administration Costs') while Annex 7 ('Budget Estimate') includes in addition to direct eligible costs, such as those mentioned in Annex 6, the indirect eligible costs, which are indicated by the use of the capital letter 'I'. That distinction serves to explain the difference of EUR 80 000 between the two Annexes observed by the Commission.
41. The applicant thus submits that there can be no inconsistency between Annexes 6 and 7 of its proposal as it complied in every respect with the binding model set out by the Commission in the Applicant's Guide. Therefore, to include the EUR 80 000 as overheads in the administration costs, under the heading 'D.4' of Annex 6, as the Commission suggested in its email of 15 July 2005, would have been absurd and would have had the result that the grant application would have been filled out incorrectly and that heading 'I' in Annex 7(b) to the Applicant's Guide would have been rendered pointless. That interpretation by the Commission is due to both a manifest error of assessment, as the Commission confuses the total expenditure for the project with the total for the direct eligible costs only, and a misuse of power, as the Commission adjusts, to suit its purposes, the models for proposals which it has itself drawn up. The applicant therefore submits that the contested decision infringes the rules previously established, such as the Applicant's Guide and Annexes 6 and 7 thereto. Furthermore, the contested decision infringes the prior decision deriving from the communication of 12 January 2001, Article 6 of Regulation No 1784/1999, Articles 22 and 24 of Regulation No 1260/1999, and also the principle of legal certainty.
42. Furthermore, in reply to the Commission's argument that the applicant did not send it an additional request for information, the applicant submits that such a request was pointless given that there was not the slightest doubt regarding the scope of the financial information required. It is obvious that the different entries in the budget would be mathematically identical, if it were not for the fact that Annex 7(b) to the Applicant's Guide requires a statement of the indirect costs, as well as the entries set out in Annex 6.
43. In addition, the statement of reasons for the Commission's claim referring to 'serious inconsistencies' is, according to the applicant, insufficient, as the difference of EUR 80 000 was made clear only belatedly in the email of 4 July 2005, which does not specify the existence of other inconsistencies allowing the Commission to reject the proposal. Furthermore, the case-law relating to Article 253 EC requires that a clear and unequivocal statement of reasons must be indicated in a decision adversely affecting an applicant.
44. Lastly, the applicant refers to the Commission's argument that the case-law has affirmed 'that the purpose of that statement of reasons is to inform the addressee of the decision of the grounds of fact and law on which it is based, so as to enable the party concerned to determine, in particular, whether it is appropriate to submit it for review by the competent court.' That is not the case here, as the Commission's claim, which refers to 'serious inconsistencies between the budget information supplied in Annex 6 and that supplied in Annex 7', does not make it possible for the applicant to understand the grounds for the rejection of its proposal. In addition, the additional information provided subsequently by the Commission cannot substantially alter the contested decision, as the required statement of reasons should have been in the decision itself or been communicated at the same time as the decision.
45. The Commission, observing that the applicant does not call in question the difference between the information provided in Annex 6 and that provided in 7 to its proposal, at the same time disputes the applicant's assessment that the difference stems from the structure of those annexes. According to the Commission, there must be complete consistency between, on the one hand, Annex 6, which describes the 'activities in the budget description' and, on the other hand, Annex 7, setting out the 'budget estimate'. In accordance with paragraph 34 of the Technical and Financial Annex to the Applicant's Guide (Annex 2), that consistency is a necessary condition for a grant application to be taken into consideration. According to the Commission, it is also apparent from point C8 of Annex 6 that the Annex has to include all the costs relating to the budget section. The Commission states that, if Annex 6 differs from Annex 7, it is duty bound to point that out and take it into consideration in evaluating the project. As regards the structure of Annex 6, the Commission takes the view that it is for each applicant to demonstrate its ability to organise the financial and human resources in a consistent and functional way, clarifying the nature and the value of the activities planned and the tasks entrusted to the participants concerned.
46. As regards the applicant's argument relating to the use of the letter 'D' in Annex 6, the Commission observes that there is nothing to prove that that use, which serves to facilitate understanding on the part of the applicants, excludes overheads from the costs in Annex 6. According to the the Commission, the overheads are as a matter of course entered under 'D.4', the 'Project management and co-ordination' phase. The Commission states that it also allows them to be entered during another specific phase or in a separate note, but that it cannot under any circumstances, having regard to their importance, accept that they are missing. The Commission states that that need for clarity, irrespective of mathematical accuracy, was set out in Chapter 3.4 of the Technical and Financial Annex to the Applicant's Guide.
47. The Commission also maintains that, in case of doubt concerning the inclusion of overheads in the amount of EUR 80 000 in Annex 6, the applicant was required to send a request for additional information to the Commission. In that regard, the Commission observes that it had also envisaged the possibility of differences in interpretation by providing for a rapid and easy means of communication in order to reply to possible questions. Thus, the possibility of requesting additional information via an Internet site, by email or by telephone was provided for both in the Technical and Financial Annex to the Applicant's Guide and in the call for proposals VP/2003/021, which was published in the Official Journal on 31 October 2003.
48. As regards the alleged infringement of Article 253 EC, the Commission takes the view that it replied very quickly to the applicant's requests for information (within three days) and sets out the case-law according to which a brief statement of reasons is sufficient and meets the requirements of Article 253 EC in that context. In this respect, it states that the summary nature of the statement of reasons is the inevitable consequence of a large number of applications. Furthermore, the purpose of the obligation to state reasons is above all to enable the party concerned to determine whether it is appropriate to bring an action before the competent court. The Commission is of the opinion that such a statement of reasons was provided in the present case.
49. Lastly, the Commission takes the view that the obligation to state reasons must be distinguished from the issue of whether or not the reasons are correct. Even if a brief statement of reasons for the contested decision were shown to be insufficient in the present case, settled case-law in any event allows the Commission to provide additional reasons, provided that the additional information is supplied before an action is brought. That is the case here. The Commission did provide additional explanations in reply to the requests made by the applicant and cannot be criticised for having provided such explanations.

Findings of the Court

50. The first plea is directed against the ground, put forward by the Commission in support of the contested decision, that the proposal contains 'serious inconsistencies between the budget information provided in Annex 6 and that provided in Annex 7'. That ground was explained by the Commission in its email of 4 July 2005, in which it stated that '[t]he documents [submitted by the applicant] contain inconsistencies in the financial data' and that '[a]lthough Annex 6 contains a total amount of EUR 2 029 599.[9]9, Annex 7 contains a total amount of EUR 2 109 599.99 (a significant difference of EUR 80 000)'.
51. As a preliminary point, it must be noted that, in the context of this plea, the applicant puts forward several heads of claim, which are listed in paragraph 36 above. Even if some of those heads of claim were to be inadmissible on account of their non-specific nature, as claimed by the Commission, that is certainly not true of the heads of claim alleging infringement of the obligation to state reasons and the infringement of the Applicant's Guide, which were expressed in a sufficiently clear and specific manner to allow the Commission to prepare its defence and to allow the Court to decide on the action.
52. As to the substance of, first, the applicant's head of claim alleging infringement of the obligation to state reasons, it must be borne in mind that, according to settled case-law, the statement of reasons required by Article 253 EC must disclose in a clear and unequivocal fashion the reasoning followed by the institution which adopted the measure in such a way as to enable the persons concerned to ascertain the reasons for the measure and the Court to exercise its supervisory jurisdiction (Case C-350/88 Delacre and Others v Commission [1990] ECR I-395, paragraph 15; Case C-56/93 Belgium v Commission [1996] ECR I-723, paragraph 86; Case C-367/95 P Commission v Sytraval and Brink's France [1998] ECR I-1719, paragraph 63; and Case C-159/01 Netherlands v Commission [2004] ECR I-4461, paragraph 65).
53. It is not necessary, however, for details of all relevant factual and legal aspects to be given. The question whether the statement of the reasons for a decision meets the requirements of Article 253 EC must be assessed with regard not only to its wording but also to its context and to all the legal rules governing the matter in question (see Delacre and Others v Commission, paragraph 52 above, paragraph 16, and the case-law cited).
54. It must also be pointed out that the conciseness of the statement of reasons for a decision by which the Commission refuses a grant application is an unavoidable consequence of the processing by computer of several hundred grant applications upon which the Commission must adjudicate within a short period. A more detailed statement of reasons in support of each individual decision would therefore be likely to compromise the rational and efficient allocation of the financial assistance from the European Social Fund (Case C-213/87 Gemeente Amsterdam and VIA v Commission [1990], judgment not published in the ECR, paragraph 28; summary published at ECR I-221).
55. In the present case, contrary to what the applicant claims, the duty to state reasons must be assessed in the light of the additional information contained in the Commission's email of 4 July 2005, which was available to the applicant at the time when the action was brought. If, as in the present case, the applicant, before bringing an action, asks the institution concerned for additional explanations about a decision and receives those explanations, he cannot ask the Court not to take them into consideration when determining whether the statement of reasons is adequate. The institution is, of course, not permitted to substitute an entirely new statement of reasons for the original statement of reasons, but that is not the position in this case (Case T-183/00 Strabag Benelux v Council [2003] ECR II-135, paragraph 58).
56. It follows that the ground being disputed in the context of this plea, in particular in the light of the additional information contained in the email of 4 July 2005, is of such a kind as to allow the applicant to understand clearly that one of the two reasons for the refusal of its grant application was based on the fact that, according to the Commission, it did not meet the final evaluation criterion for assessing the quality and feasibility of the actions proposed in the application, as set out in paragraph 34 of the Technical and Financial Annex to the Applicant's Guide.
57. Having regard to the circumstances in the present case, it has therefore not been proved that the contested decision, in so far as it concerns the ground being disputed in the context of this plea, is insufficiently reasoned.
58. Secondly, as regards the applicant's head of claim alleging infringement of the Applicant's Guide by the ground disputed in the context of this plea, namely that 'there are serious inconsistencies between the budget information provided in Annex 6 and that provided in Annex 7' of the proposal, it must be found, as is shown by the two tables below, that, in both of those annexes, the headings D.1 to D.4, set out exactly the same totals and correspond perfectly:

Table 1 (setting out the cost of the activities in the grant application drawn up according to the model in Annex 6 to the Applicant's Guide)

Phase	D 1 Staff (in euro)		D 2 Travel (in euro)		D 3 Activities/ services (in euro)		D 4 Administration (in euro)		D 1+D 2+D 3+D 4 Totals (in euro)
1	395 012,46		22 160,00		34 200,00				451 372,46
2	185 856,75		12 540,00		51 840,00				250 236,75
3	161 292,86		15 820,00		73 840,00				250 952,86
4	255 457,85		12 560,00		116 000,00				384 017,85
5	226 150,62		25 600,00				50 356,00		302 106,62
6	67 474,05		15 420,00		32 000,00				114 894,05
7	64 574,40		19 950,00		191 495,00				276 019,40
Total	1 355 818,99		124 050,00		499 375,00		50 356,00		2 029 599,99




Table 2 (setting out the cost of the entries mentioned in the budget estimate compiled according to the model in Annex 7 to the Applicant's Guide)

D 1 Staff (in euro)	1 355 818,99
D 2 Travel (in euro)	124 050,00
D 3 Activities/services (in euro)	499 375,00
D 4 Administration (in euro)	50 356,00
Total Direct costs (D 1 à D 4)	2 029 599,99
Total Indirect costs (I.1)	80 000,00
Total expenditure Project total - (D+I)	2 109 599,99




59. It is apparent from those two tables, contrary to the Commission's submission, that the applicant did show consistency by adding an amount of EUR 80 000 in respect of overheads to the budget estimate (Annex 7) under the heading 'Indirect eligible costs'. The transfer of various amounts corresponding to all the direct eligible costs in the grant application (Annex 6) to the heading 'Direct eligible costs D1 to D4' in the budget estimate ensures consistency between those two Annexes. In this respect, it must be pointed out that that consistency complies perfectly with the requirement for correspondence in paragraph 34 of the Technical and Financial Annex to the Applicant's Guide as the final evaluation criterion for assessing the quality and feasibility of the actions proposed in the application. It follows that the claim in the contested decision that there are 'serious inconsistencies' between the budget information provided in Annex 6 and that provided in Annex 7 to the applicant's proposal is incorrect.
60. That finding is not called in question by the Commission's suggestion that the overheads in the amount of EUR 80 000 mentioned under the heading I in the budget estimate should be included under the heading D.4 in the grant application. Such an inclusion would mean that the correspondence between the heading D.4 in the grant application and the heading D.4 in the budget estimate would disappear.
61. In that regard, it must also be pointed out that the Commission's suggestion is not compatible with the information contained in the pre-established model budget estimate in Annex 7 to the Applicant's Guide. First, that model states that the overheads are part of the 'Indirect eligible costs I', a category of costs which is separate and distinct from the category 'Direct Eligible Costs D1 to D4'. Secondly, that model sets out the rule that the overheads must not exceed 7% of the total amount of the 'Direct Eligible Costs D1 to D4', which necessarily implies that the overheads cannot be included under the heading D.4 in the budget estimate.
62. As regards the obligation in paragraph C8 of Annex 6 to the Applicant's Guide to which the Commission refers and according to which 'all administration activities and costs, budget heading D.4, should be included' in the grant application for the purpose of the management and co-ordination of the project, it must be stated that that obligation can apply only to the direct eligible costs. The reference to 'budget heading D.4' makes it clear that what are involved are direct eligible costs relating to administrative costs. In this respect, it must be pointed out that the overheads are not part of those costs, given that it is expressly stated in the model budget estimate, as has been stated in the previous paragraph, that they are to be regarded as indirect eligible costs.
63. It follows that the applicant completed the grant application and the budget estimate in accordance with the model documents annexed to the Applicant's Guide. By contrast, the Commission's view that there must be a match between those two annexes is not compatible with those models.
64. Having regard to the foregoing, the Commission did not correctly apply either the rules in the models in Annexes 6 and 7 to the Applicant's Guide or the final criterion in paragraph 34 of the Technical and Financial Annex to the Applicant's Guide.
65. Consequently, the first plea must be declared well founded in respect of infringement of Annexes 2, 6 and 7 to the Applicant's Guide and there is no need to examine the other arguments raised by the applicant in the context of that plea.

The second plea

Arguments of the parties

Admissibility of the plea

66. The Commission submits that, for the same reasons as those mentioned in the context of the first plea, the heads of claim submitted in the context of this plea and regarding infringement of Regulation No 1784/1999, of Regulation No 1260/1999 and of the principle of legal certainty and an alleged misuse of power are inadmissible.
67. Referring to its arguments regarding the admissibility of the first plea, the applicant submits that the Commission is wrong to plead that those heads of claim are inadmissible.

Substance

68. First, as regards the Commission's claim that the applicant did not sufficiently make clear the innovative nature of its project, the applicant observes that that emerges only from the email of 4 July 2005. In view of the fact that what is in issue is a new factor in relation to the contested decision, that claim cannot be taken into consideration by the Court.
69. In those circumstances, it is only in the alternative that the applicant seeks to show the innovative nature of its proposal. That is apparent from a reading of paragraph C3 in conjunction with paragraphs C2, C4 and C8 of its proposal. In order to show the co-ordination between the statements made in paragraph C3 and the specific and innovative objectives set out in points C2 and C4, the applicant mentions the different phases of the project, described in C8, namely 'assistance in the area of production', 'assistance in the area of co-operation and dialogue within the territory', 'land restoration for the purpose of setting it aside for housing and tourism' and 'assistance in the area of commercialisation and marketing'. In that regard, first, the applicant submits that, by searching for the submission of innovations only in paragraph C3, the Commission intentionally failed to have regard to the structure imposed on applicants in respect of the submission of their applications. Secondly, it states that the Commission's criteria, in paragraph 34 of the Technical and Financial Annex to the Applicant's Guide, for evaluating the proposals are rather widely defined, without reference to the pre-established structure of the proposal.
70. Secondly, as regards the Commission's claim that the mere description of the floricultural 'cluster' does not serve to explain how the applicant will manage, on the basis of its previous experience, to build and develop its new project, the applicant admits the descriptive nature of the presentation of the background (paragraph C3) to its grant application. However, it submits that it merely followed the model imposed by the Commission in Annex 6 to the Applicant's Guide. In any event, part C3 refers to the experience in respect of the region of Liguria, both in a positive way, by noting its strongpoints, and in a negative way, by showing the gaps to be filled and the defects to be corrected.
71. Thirdly, the Technical and Financial Annex to the Applicant's Guide, which presents the system for evaluation of applications in four steps, was not complied with. In that regard, the applicant observes that its application was examined by the Commission until the final step, which means that it had successfully cleared the three previous steps, namely the check of the eligibility of the applicant (first step), check of the eligibility of the application (second step) and the assessment of the capacity of the applicant to complete the proposed actions, on the basis of, inter alia, proven competence and experience in the field of the proposed actions (third step). In stating reasons for the contested decision, in the context of the check of the quality of the application (fourth step), on the basis of a criterion which is covered by the third step, the Commission infringed the Technical and Financial Annex to the Applicant's Guide and the principle of legal certainty.
72. Fourthly, the applicant submits that there was failure to comply with the alternative criterion in paragraph 34 of the Technical and Financial Annex to the Applicant's Guide. According to the applicant, the innovations may be regarded as the 'result of a departure from the normal activities or of a continuation thereof'. The Commission assessed the innovative nature of the applicant's project only from the perspective of the continuation of the normal activities, without taking into consideration the innovative nature of that project from the perspective of its difference from the normal activities. Thus, it infringed the provisions of the Technical and Financial Annex to the Applicant's Guide and the principle of legal certainty.
73. Fifthly, the Commission's claim referring to the absence of a link with the experience previously acquired in the relevant sector in Liguria infringes Article 253 EC. The applicant takes the view that the additional statement of reasons provided by the Commission in its email of 4 July 2005 cannot be accepted in the context of this action because it is not in the body of the contested decision. In any event, the Commission made a manifestly incorrect assessment of the facts, and, by not stating the reasons for the contested decision in an appropriate way, it infringed Article 253 EC.
74. Sixthly, the applicant observes that the Commission's explanation in respect of the fact that the applicant's project was not accepted in the context of a comparative examination aimed at accepting only the best projects is a new factor. The Commission rejected the applicant's proposal on the basis of a lack of understanding stemming from its structure and not from its inherent value and it does not explain, on any view, the mistakes made by the applicant in such a way as to allow the applicant to understand that refusal. The wide discretion which the Commission has in the matter does not preclude the Community judicature from exercising its power of judicial review.
75. The Commission states that, faced with a large number of applications and given the limited budgetary resources, it had to be very rigorous in eliminating certain projects which might be very good, but were nevertheless of a lower quality than the projects accepted. In that regard, although a refusal does not constitute an assessment of the quality of the work provided, the slightest error, inconsistency or lack of precision can influence the final choice in the context of a comparative examination. It is apparent from settled case-law that a brief statement of reasons is sufficient in the matter and that it is possible to provide any additional information before the action is brought. The Commission cannot accept that the additional information concerning the innovative nature of the project be regarded as a new factor, as it stems from the wording of the Technical and Financial Annex to the Applicant's Guide. Furthermore, it submits that settled case-law has given a wide discretion to the Community authorities where they must, in connection their tasks, make complex evaluations, as is the case in respect of the structural funds. Thus, the Community judicature confines itself to examining the correctness and the legal characterisation of the facts. In particular, it is necessary to ascertain whether the action by those authorities is vitiated by a manifest error or a misuse of powers or whether they clearly exceeded the bounds of their discretion.
76. Secondly, as regards the applicant's head of claim alleging a misuse of powers, the Commission submits that, in so far as that argument is admissible, the applicant has not proved that in adopting the contested decision the Commission pursued an objective other than that covered by the rules in question or that, on the basis of objective, relevant and consistent indicia, that decision was taken in order to achieve ends other than those stated.
77. As regards the allegation of a manifest error of assessment, the Commission refers to the descriptive nature of the presentation of the project, which the applicant has itself admitted. By a mere description, without giving details of aspects which enhance the innovation in comparison with previous experience, the applicant did not succeed in convincing the evaluation committee and the competent authorising officer of the added value of that project in the course of a comparative evaluation where all the applicants were on an equal footing.
78. Lastly, as regards the head of claim alleging infringement of Article 253 EC, the Commission takes the view that the applicant incorrectly interprets the obligation to state reasons. It submits that, for the same reasons as those put forward in the contest of the first plea in law, it met the requirements to state reasons by providing additional information.

Findings of the Court

79. This plea in law is directed against the ground, relied on by the Commission in support of the contested decision, that 'the proposal does not succeed in explaining the way in which it elaborates and takes into consideration the experience previously acquired in that sector in Liguria'. That ground was explained by the Commission in its email of 4 July 2005 stating that '[the mere description over 32 pages of the floricultural cluster] does not succeed in explaining ... how [the applicant] will manage to build and develop [its] new project on the basis of [its] previous experience and does not in end effect succeed [in] proposing an innovation'.
80. First, as regards the applicant's head of claim alleging infringement of the obligation to state reasons, it must be found, for the same reasons as those stated in paragraphs 52 to 55 above, that the contested decision, in so far as it concerns the ground disputed in the context of this plea, is sufficiently reasoned, given the circumstances of the present case.
81. The information in the contested decision, as supplemented by the information contained in the email of 4 July 2005, is of such a kind as to allow the applicant to understand clearly that one of the two reasons for the refusal of its grant application was based on the third criterion of paragraph 34 of the Technical and Financial Annex to the Applicant's Guide for assessing the quality and feasibility of the actions proposed in the application.
82. In that regard, and contrary to what the applicant submits, the explanation in the Commission's email of 4 July 2005 that the proposal does not explain how the applicant will succeed in proposing an innovation is not an entirely new statement of reasons, since it merely makes explicit the third criterion in paragraph 34 of the Technical and Financial Annex to the Applicant's Guide.
83. Secondly, the argument that the Commission failed to have regard to the structure imposed on applicants by searching for the display of innovation only in paragraph C3 of the grant application is not relevant. The applicant cannot complain that the Commission concentrated in its email of 4 July 2005 on the 32 pages of the grant application corresponding to paragraph C3, because that email merely answers the applicant's email of 1 July 2005 in which it referred only to those pages. Furthermore, contrary to what the applicant submits, it must be pointed out that the model in Annex 6 of the Applicant's Guide in no way prevents the applicant for a grant from clarifying the way in which his proposal builds on his normal activities and, in particular, on his previous experience. In other words, the structure of the grant application, as imposed by Annex 6 to the Applicant's Guide, does not prevent the applicant for a grant from acting in such a way that his application satisfies the third criterion in paragraph 34 of the Technical and Financial Annex to the Applicant's Guide. This argument must therefore be rejected as unfounded.
84. Thirdly, as regards the applicant's argument that the reasons for the contested decision were based on a criterion associated with a step which it had already successfully completed, it must be pointed out that the experience previously acquired, which was relied on in support of that decision, must be understood as corresponding to normal activities, such as covered by the third criterion in paragraph 34 of the Technical and Financial Annex to the Applicant's Guide. By taking the view that the proposal does not explain how the applicant will manage to build and develop its new project on the basis of its previous experience, the Commission is merely examining whether the proposal satisfies the third criterion in paragraph 34 of the Technical and Financial Annex to the Applicant's Guide. In doing so, the Commission does not call in question the findings it made in the context of the third step of the examination of the proposal, according to which the applicant has the financial and operational capacity to carry out and complete its proposal on the basis of its proven competence and experience in the field of the proposed actions and the proven professional competencies and experience of the Head of Project. Consequently, by referring in the contested decision to previously acquired experience, the Commission does not infringe the principle of legal certainty. It follows that this argument of the applicant's must be rejected as unfounded.
85. Fourthly, the applicant's argument that the Commission did not respect the alternative nature of the criterion in paragraph 34 of the Technical and Financial Annex to the Applicant's Guide because it did not examine the proposal from the perspective of its difference from the normal activities, must be rejected as irrelevant. It must be stated in that regard that the applicant has neither established nor even maintained that its proposal differs from its normal activities. In those circumstances, even if the Commission has not examined the project from the perspective of its difference from the normal activities, the lack of such an examination cannot affect the contested decision.
86. Fifthly, as regards the argument that the Commission made a manifestly incorrect assessment of the facts, it must be borne in mind that, in the context of the grant of Community financial assistance, the Commission enjoys a wide discretion as to whether the conditions for the grant of such aid are fulfilled (Joined Cases C-258/90 and C-259/90 Pesquerias De Bermeo and Naviera Laida v Commission [1992] ECR I-2901, paragraph 25, and Case T-465/93 Consorzio gruppo di azione locale 'Murgia Messapica' v Commission [1994] ECR II-361, paragraph 46). The applicant has not put forward facts capable of establishing that the assessment that there was no link between the proposal and the experience which it had previously acquired was vitiated by a manifest error. Accordingly, this argument must be rejected as unfounded.
87. Sixthly, as regards the heads of claim submitted in the context of this plea alleging, respectively, a misuse of powers and the infringement of Article 6 of Regulation No 1784/1999, Articles 22 and 24 of Regulation No 1260/1999, the rules set out in the communication of 12 January 2001, the rules set out in the call for proposals VP/2003/021 and in the Applicant's Guide, including Annexes 2 and 6 thereto, it must be pointed out that the applicant merely lists the infringement of those provisions as an abstract proposition in the heading of this plea. Under the first paragraph of Article 21 of the Statute of the Court of Justice, which is applicable to the procedure before the Court of First Instance in accordance with the first paragraph of Article 53 of the Statute, and Article 44(1)(c) of the Rules of Procedure of the Court of First Instance, the application must, inter alia, contain a brief statement of the grounds on which the application is based. It must accordingly specify the nature of the grounds on which the action is based, so that a mere abstract statement of the grounds does not satisfy the requirements of the Statute of the Court of Justice or the Rules of Procedure (Case T-102/92 Viho v Commission [1995] ECR II-17, paragraph 68). It follows that those heads of claim must be rejected as inadmissible.
88. Consequently, the second plea in law must be rejected as in part irrelevant, in part unfounded and in part inadmissible and, for the reasons set out in paragraph 37 above, the action must be dismissed in its entirety.

Costs

89. Under Article 87(2) 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 COURT OF FIRST INSTANCE (Fifth Chamber)

Hereby:

1. Dismisses the action;

2. Orders the Provincia di Imperia to bear its own costs and to pay those of the Commission.




Vilaras

Martins Ribeiro

Jürimäe

Delivered in open court in Luxembourg on 14 February 2008.




E. Coulon

M. Vilaras

Registrar

President

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* Language of the case: French.