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

JUDGMENT OF THE COURT (Ninth Chamber)

2 October 2014 (*)

(Reference for a preliminary ruling - Common agricultural policy - Regulation (EC) No 2419/2001 - Integrated administration and control system for certain aid schemes - Area aid application - Article 33 - Penalties - Irregularities committed intentionally)

In Case C-525/13,

REQUEST for a preliminary ruling under Article 267 TFEU from the Hof van Cassatie (Belgium), made by decision of 26 September 2013, received at the Court on 26 September 2013, in the proceedings

Vlaams Gewest

v

Heidi Van Den Broeck,

THE COURT (Ninth Chamber),

composed of M. Safjan, President of the Chamber, J. Malenovský and K. Jürimäe (Rapporteur), Judges,

Advocate General: N. Wahl,

Registrar: A. Calot Escobar,

having regard to the written procedure,

after considering the observations submitted on behalf of:

-        the Vlaams Gewest, by J. Fransen, advocaat,

-        Ms Van Den Broeck, by K. Van Wynsberge, advocaat,

-        the European Commission, by H. Kranenborg and G. von Rintelen, acting as Agents,

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

gives the following

Judgment

1        This request for a preliminary ruling concerns the interpretation of Article 33 of Commission Regulation (EC) No 2419/2001 of 11 December 2001 laying down detailed rules for applying the integrated administration and control system for certain Community aid schemes established by Council Regulation (EEC) No 3508/92 (OJ 2001 L 327, p. 11), as amended by Commission Regulation (EC) No 118/2004 of 23 January 2004 (OJ 2004 L 17, p. 7) (‘Regulation No 2419/2001’), read in conjunction with Article 31(2) of that regulation.

2        The request has been made in proceedings between the Vlaams Gewest (Flemish Region) and Ms Van Den Broeck concerning the recovery by that authority of all of the aid for arable crops received by Ms Van Den Broeck for the 2003 harvest on the ground that the aid application contained irregularities committed intentionally.

 Legal context

 Regulation (EEC) No 3508/92

3        Article 1(1) of Council Regulation (EEC) No 3508/92 of 27 November 1992 establishing an integrated administration and control system for certain Community aid schemes (OJ 1992 L 355, p. 1), as amended by Council Regulation (EC) No 1593/2000 of 17 July 2000 (OJ 2000 L 182, p. 4) (‘Regulation No 3508/92’), provides:

‘Each Member State shall set up an integrated administration and control system [“the integrated system”], applying:

(a)      in the crop sector:

(i)      to the support system for producers of certain arable crops established by [Council Regulation (EC) No 1251/1999 of 17 May 1999 establishing a support system for producers of certain arable crops (OJ 1999 L 160, p. 1), as amended by Council Regulation (EC) No 2704/1999 of 14 December 1999 (OJ 1999 L 327, p. 12)];

(ii)      to the aid scheme for rice producers established by Article 6 of [Council Regulation (EC) No 3072/95 of 22 December 1995 on the common organisation of the market in rice (OJ 1995 L 329, p. 18), as amended by Council Regulation (EC) No 2072/98 of 28 September 1998 (OJ 1998 L 265, p. 4)];

(iii)      to the specific measure in respect of certain grain legumes introduced by [Council Regulation (EC) No 1577/96 of 30 July 1996 introducing a specific measure in respect of certain grain legumes (OJ 1996 L 206, p. 4), as amended by Commission Regulation (EC) No 1826/97 of 22 September 1997 (OJ 1997 L 260, p. 11)];

(b)      in the livestock sector:

…

(iii) to direct payments under Article 19 of Council Regulation (EC) No 1255/1999 of 17 May 1999 on the common organisation of the market in milk and milk products [(OJ 1999 L 160, p. 48)],

...’

4        Article 6(1) and (6) of that regulation provides:

‘1.      In order to be eligible under one or more Community schemes governed by this Regulation, each farmer shall submit, for each year, an “area” aid application indicating:

-        agricultural parcels, including areas under forage crops, and agricultural parcels covered by a set-aside measure for arable land and those laid fallow,

-        where applicable, any other necessary information provided for either by the Regulations relating to the Community schemes, or by the Member State concerned.

...

6.      For each of the agricultural parcels declared, farmers shall indicate the area and its location, which information must enable the parcel to be identified in the identification system for agricultural parcels.’

 Regulation No 2419/2001

5        Regulation No 2419/2001 lays down the detailed rules for the application of the integrated system.

6        Recitals 32 to 34 in the preamble to that regulation state:

‘(32) To protect the Community’s financial interests effectively adequate measures should be adopted to combat irregularities and fraud. Separate provisions should be made for the area aid schemes on the one hand and the livestock aid schemes on the other, due to the different natures of these aid schemes.

(33)      Reductions and exclusions should be established having regard to the principle of proportionality and the special problems linked to cases of force majeure as well as exceptional and natural circumstances. Such reductions and exclusions should be graded according to the gravity of the irregularity committed and should go as far as the total exclusion from one or several aid schemes for a specified period.

(34)      Provision for reductions and exclusions should take into account the particularities of the various aid schemes subject to the integrated system. In relation to area aid applications, irregularities normally affect parts of areas, and overdeclarations in respect of one parcel may be off-set against underdeclarations of other parcels of the same crop-group. … In respect of area aid applications, where irregularities are found, it should be foreseen that within a certain margin of tolerance aid applications should only be adjusted and reductions only start to apply once this margin has been exceeded. …’

7        Under Article 2(i) of that regulation, ‘area aid application’ is to be construed as:

‘[an] application for the payment of aids under aid schemes as referred to in Article 1(1)(a) and (b)(iii) of [Regulation No 3508/92] and including the declaration of any other uses of area, in particular the declaration of forage area for the purposes of livestock aid applications’.

8        Chapter I of Title IV of Regulation No 2419/2001, entitled ‘Findings in relation to area aid applications’, comprises Articles 30 to 35. Article 30 of that regulation, entitled ‘General principles’, is worded as follows:

‘For the purpose of this chapter the following crop-groups shall be distinguished:

(a)      forage areas declared for the purposes of Article 12 of [Council Regulation (EC) No 1254/1999 of 17 May 1999 on the common organisation of the market in beef and veal (OJ 1999 L 160, p. 21)];

(b)      forage areas other than pasture-land and other than areas used for the production of arable-crops within the meaning of Article 13(3)(b) of [Regulation No 1254/1999] declared for the purposes of Article 13 of that [r]egulation;

(c)      pasture land within the meaning of Article 13(3)(c) of [Regulation No 1254/1999] declared for the purposes of Article 13 of that [r]egulation;

(d)      permanent pasture land declared for the purposes of Article 19 of [Council Regulation (EC) No 1255/1999 of 17 May 1999 on the common organisation of the market in milk and milk products (OJ 1999 L 160, p. 48)];

(e)      crop areas for which a different aid rate is applicable;

(f)      set-aside areas and, where applicable, set-aside areas for which a different aid-rate is applicable.’

9        According to Article 31(1) and (2) of Regulation No 2419/2001, entitled ‘Basis of calculation’:

‘1.       If the area of a crop group determined is found to be greater than that declared in the aid application, the area declared shall be used for calculation of the aid.

2.       Without prejudice to reductions and exclusions in accordance with Articles 32 to 35, if the area declared in an area aid application exceeds the area determined for that crop group as a result of administrative or on-the-spot checks the aid shall be calculated on the basis of the area determined for that crop group.’

10      Article 32 of that regulation, entitled ‘Reductions and exclusions in cases of overdeclaration’, provides:

‘1.      If, in respect of a crop-group, the area declared exceeds the area determined in accordance with Article 31(2) the aid shall be calculated on the basis of the area determined reduced by twice the difference found if that difference is more than either 3% or two hectares but no more than 20% of the area determined.

If the difference is more than 20% of the area determined, no area-linked aid shall be granted for the crop-group concerned.

2.      If, in respect of the overall area determined covered by an application for aid under the aid schemes referred to in Article 1(1)(a) of [Regulation No 3508/92], the area declared exceeds the area determined in accordance with Article 31(2) by more than 30%, the aid to which the farmer would have been entitled pursuant to Article 31(2) shall be refused for the calendar year in question under those aid schemes.

If the difference is more than 50 % the farmer shall be excluded once again from receiving aid up to an amount equal to the amount which corresponds to the difference between the area declared and the area determined in accordance with Article 31(2). This amount shall be off-set against aid payments under any of the aid schemes referred to in Article 1(1) of [Regulation No 3508/92] to which the farmer is entitled in the context of applications he lodges in the course of the three calendar years following the calendar year of the finding. If the amount cannot be fully off-set against those aid payments, the outstanding balance shall be cancelled.’

11      Article 33 of that regulation, entitled ‘Intentional non-compliance’, provides:

‘Where differences between the area declared and the area determined in accordance with Article 31(2) result from irregularities committed intentionally, the aid to which the farmer would have been entitled pursuant to Article 31(2) shall not be granted for the calendar year in question under the aid scheme concerned.

Moreover, where that difference is more than 20 % of the area determined, the farmer shall be excluded once again from receiving aid up to an amount equal to the amount which corresponds to the difference between the area declared and the area determined in accordance with Article 31(2). This amount shall be off-set against aid payments under any of the aid schemes referred to in Article 1(1) of [Regulation No 3508/92] to which the farmer is entitled in the context of applications he lodges in the course of the three calendar years following the calendar year of the finding. If the amount cannot be fully off-set against those aid payments, the outstanding balance shall be cancelled.’

 The dispute in the main proceedings and the question referred

12      Ms Van Den Broeck is a farmer. On 9 May 2003 she submitted to the Vlaams Gewest an area aid application within the meaning of Article 2(i) of Regulation No 2419/2001 in respect of the 2003 harvest. That application covered a number of arable crops: maize (78.34 hectares), peas harvested as dry seeds (8.2 hectares), and fallow areas (10.08 hectares).

13      On 30 January 2004, she received a total amount of EUR 21 072.42 in aid. No aid was granted, however, in respect of the parcel set aside for peas harvested as dry seeds, since the Vlaams Gewest found that those peas had not demonstrably been harvested as dry seeds. Unlike dry peas, fresh peas are not considered an arable crop eligible for that aid.

14      On 30 June 2005, the Vlaams Gewest made a claim pursuant to Article 33 of Regulation No 2419/2001 for reimbursement of the aid paid out to Ms Van Den Broeck in respect of all crops apart from the peas, on the ground that the aid application submitted by her in 2003 contained irregularities which had been committed intentionally.

15      As Ms Van Den Broeck did not repay the amount claimed, the Vlaams Gewest withheld the advance on the single payment per holding for the 2005 harvest. Ms Van Den Broeck brought an action against that decision of the Vlaams Gewest before the Rechtbank van eerste aanleg te Brussel (Court of First Instance, Brussels) claiming, inter alia, that aid was payable for the pea harvest and that the aid paid out to her for the 2003 harvest should remain definitively in her hands.

16      On 22 January 2008, the Rechtbank van eerste aanleg te Brussel held that no aid was payable for the land parcel on which the peas had been harvested, but that for the rest, the Vlaams Gewest had wrongfully claimed for recovery of all the aid granted. That judgment was upheld by the Hof van beroep te Brussel (Court of Appeal, Brussels), which also held that the irregularity in the aid application submitted by Ms Van Den Broeck was intentional in nature. The Vlaams Gewest appealed against that judgment of the Hof van beroep te Brussel.

17      The Hof van Cassatie (Court of Cassation) takes the view that a question arises as to the interpretation of the first paragraph of Article 33 of Regulation No 2419/2001 with regard to whether ‘the aid to which the farmer would have been entitled’ which is not to be granted to the farmer by way of penalty refers to the aid to which that farmer would have been entitled under Article 31(2) of that regulation, that is to say, an amount calculated on the basis of the area determined for the crop group concerned, or whether it is the aid granted under the aid scheme concerned as referred to in Article 1(1) of Regulation No 3508/92. In the latter scenario, the amount of the aid refused then corresponds to the entire amount of aid granted under the aid scheme of which the aid for the crop group concerned by the irregularity forms a part.

18      In those circumstances, the Hof van Cassatie decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:

‘Must the first paragraph of Article 33 of [Regulation No 2419/2001] be interpreted as meaning that the refusal, for the calendar year in question, to grant “the aid to which the farmer would have been entitled pursuant to Article 31(2) [of that regulation] under the aid scheme concerned”, refers to the aid payable in implementation of “the aid scheme concerned”, as referred to in Article 1(1) of [that regulation], so that it is not only the aid for the “crop group concerned” which must be refused, but the entire aid payable in implementation of one of the aid schemes referred to in that provision, of which the crop group concerned forms part?’

 The question referred for a preliminary ruling

19      By its question, the referring court asks, in essence, whether the first paragraph of Article 33 of Regulation No 2419/2001 must be interpreted as meaning that, in the event of intentional irregularity found in the area aid application, the farmer is to be refused all of the aid to which that farmer would have been entitled under the aid scheme concerned by the application and for which the crop group concerned by that irregularity was eligible or whether that penalty must be restricted to aid relating to that crop group.

20      It follows from the first paragraph of Article 33 of that regulation that the scope of the penalty provided for by that provision depends on the meaning attached to the expressions ‘aid scheme concerned’ and ‘crop group’ contained in that article and Article 31(2) respectively of that regulation.

21      As regards the expression ‘aid scheme concerned’ employed in the first paragraph of Article 33 of Regulation No 2419/2001, it should be noted that, under Article 2(i) of that regulation, the schemes under which it is possible to make an area aid application are those aid schemes referred to in Article 1(1)(a) and (b)(iii) of Regulation No 3508/92. Those various schemes include, in Article 1(1)(a)(i) of the latter regulation, the support system for producers of certain arable crops established by Regulation No 1251/1999.

22      In the dispute in the main proceedings, the parcels declared in the area aid application in question were for the purpose of obtaining aid under the support system for producers of certain arable crops provided for by Regulation No 1251/1999. Accordingly, that specific scheme must be regarded as being the ‘aid scheme concerned’ within the meaning of the first paragraph of Article 33 of Regulation No 2419/2001.

23      As regards the concept of ‘crop group’ referred to in Article 31(2) of Regulation No 2419/2001, it should be noted that it is used inter alia for the purpose of determining the basis for calculating the aid to which the farmer is liable still to be entitled in the event of irregularity found in an area aid application submitted under one or more specific schemes.

24      It must be borne in mind that that provision does not provide for any penalty; it does no more than lay down, without prejudice to reductions and exclusions in accordance with Articles 32 to 35 of Regulation No 2419/2001, the rules for determining the eligible area under the scheme(s) concerned by the area aid application when it appears that the area declared in that application is greater than the area actually determined following checks by the competent authorities (see, to that effect, judgment in Haug, C-286/05, EU:C:2006:296, paragraph 24).

25      It is apparent from the wording of Article 31(2) of that regulation that, in such a scenario, only the area belonging to ‘that crop group’, determined following checks by the competent authorities, is to be taken into account for the calculation of the aid. Consequently, in the application of that provision a distinction must be drawn between the different areas declared in the area aid application according to which specific crop group they belong from among those referred to in Article 30 of that regulation.

26      Under both Article 30 and Article 32 of Regulation No 2419/2001 the concept of ‘crop group’ carries a specific meaning and cannot be understood as comprising also all areas used for the same type of individual crop, a point confirmed inter alia by the use of the term ‘crop groups’. Article 30 of that regulation shows that a crop group refers more broadly to all areas declared in an area aid application where those areas are intended to be used for forage crops, pasture land or permanent pasture land, other crops ‘for which a different aid rate is applicable’ or areas laid fallow, respectively.

27      Thus, the crop group referred to in point (e) of the first paragraph of Article 30 of that regulation refers to all crop areas declared in an area aid application, even where a different aid rate is applicable to each type of crop.

28      It follows that the areas intended for use for arable crops which, in the context of the dispute in the main proceedings, were declared under the aid scheme established by Regulation No 1251/1999, as a whole constitute a distinct crop group area, since they are intended for use for ‘crop areas for which a different aid rate is applicable’ within the meaning of point (e) of the first paragraph of Article 30 of Regulation No 2419/2001.

29      It follows from the foregoing considerations that, for the purposes of determining the aid to which a farmer could claim to be entitled and which is referred to in the first paragraph of Article 33 Regulation No 2419/2001, regard must be had to all of the areas intended for use for arable crops as declared in the area aid application under the scheme introduced by Regulation No 1251/1999, as a distinct crop group area for the purposes of Article 30 of Regulation No 2419/2001.

30      It follows that the first paragraph of Article 33 of Regulation No 2419/2001 must be interpreted as meaning that an intentional irregularity in such an application must result in the farmer’s being refused all the aid to which that farmer would have been entitled under that scheme on the basis of the different arable crop areas declared by that farmer.

31      That finding is confirmed by the objectives pursued by Regulation No 2419/2001. As evidenced by recital 32 in the preamble thereto, it is aimed at adopting the measures necessary to combat irregularities and fraud in the implementation of the different aid schemes coming within the integrated system in order to protect the European Union’s financial interests effectively. In order to attain that objective, that regulation provides, as evidenced by recital 33 in the preamble thereto, for reductions and exclusions according to the gravity of the irregularity committed in the aid application, up to total exclusion from one or more aid schemes for a determined period (see, by analogy, judgment in Agrargenossenschaft Pretzsch, C-417/00, EU:C:2002:715, paragraphs 35 to 39).

32      In those circumstances, an interpretation of Article 33 of Regulation No 2419/2001 which amounts to penalising irregularities which have been committed intentionally as the most serious irregularities is in keeping with the purpose of a system of penalties which is sufficiently dissuasive and effective to combat irregularities and fraud committed in area aid applications (see, by analogy, judgment in National Farmers’ Union and Others, C-354/95, EU:C:1997:379, paragraph 51).

33      A penalty which consists in excluding a farmer from an aid scheme is particularly dissuasive and is thus suitable to combat the numerous irregularities which are committed in the context of agricultural aid and, because they weigh heavily on the European Union budget, are of such a nature as to compromise the action undertaken by the institutions in that field (see, to that effect, judgment in Käserei Champignon Hofmeister, C-210/00, EU:C:2002:440, paragraph 38, and Bonda, C-489/10, EU:C:2012:319, paragraph 29).

34      In the light of all the foregoing considerations, the answer to the question referred is that the first paragraph of Article 33 of Regulation No 2419/2001 must be interpreted as meaning that, in the event of intentional irregularity found in an area aid application, the farmer is to be refused all of the aid to which that farmer would have been entitled under the aid scheme concerned by the application and for which the crop group concerned by that irregularity was eligible.

 Costs

35      Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.

On those grounds, the Court (Ninth Chamber) hereby rules:

The first paragraph of Article 33 of Commission Regulation (EC) No 2419/2001 of 11 December 2001 laying down detailed rules for applying the integrated administration and control system for certain Community aid schemes established by Council Regulation (EEC) No 3508/92, as amended by Commission Regulation (EC) No 118/2004 of 23 January 2004, must be interpreted as meaning that, in the event of intentional irregularity found in an area aid application, the farmer is to be refused all of the aid to which that farmer would have been entitled under the aid scheme concerned by the application and for which the crop group concerned by that irregularity was eligible.

[Signatures]

* Language of the case: Dutch.