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

JUDGMENT OF THE COURT (Third Chamber)

18 December 2014 (*)

(Reference for a preliminary ruling — Protection of the European Union’s financial interests — Regulation (EC, Euratom) No 2988/95 — Article 4 — General budget of the European Union — Regulation (EC, Euratom) No 1605/2002 — Article 53b(2) — Decision 2004/904/EC — European Refugee Fund for the period 2005-2010 — Article 25(2) — Legal basis of the obligation to recover funds in the event of an irregularity)

In Case C‑599/13,

REQUEST for a preliminary ruling under Article 267 TFEU, from the Raad van State (Netherlands), made by decision of 20 November 2013, received at the Court on 22 November 2013, in the proceedings

Somalische Vereniging Amsterdam en Omgeving (Somvao)

v

Staatssecretaris van Veiligheid en Justitie,

THE COURT (Third Chamber),

composed of M. Ilešič, President of the Chamber, A. Ó Caoimh, C. Toader (Rapporteur), E. Jarašiūnas and C.G. Fernlund, Judges,

Advocate General: J. Kokott,

Registrar: A. Calot Escobar,

having regard to the written procedure,

after considering the observations submitted on behalf of:

–        the Netherlands Government, by M. Bulterman, M. Noort and J. Langer, acting as Agents,

–        the Estonian Government, by N. Grünberg, acting as Agent,

–        the European Commission, by D. Maidani, B.-R. Killmann and G. Wils, 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 4 of Council Regulation (EC, Euratom) No 2988/95 of 18 December 1995 on the protection of the European Communities financial interests (OJ 1995 L 312, p.1), of Article 53b(2)(c) of Council Regulation (EC, Eurotom) No 1605/2002 of 25 June 2002 on the Financial Regulation applicable to the general budget of the European Communities (OJ 2002 L 248, p. 1), as amended by Council Regulation (EC, Euratom) No 1995/2006 of 13 December 2006 (OJ 2006 L 390, p.1, ‘Regulation No 1605/2002’), and of Article 25(2) of Council Decision 2004/904/EC of 2 December 2004 establishing the European Refugee Fund for the period 2005 to 2010 (OJ 2004 L 381, p. 52).

2        The request has been made in proceedings between the Somalische Vereniging Amsterdam en Omgeving (Somalian Association of Amsterdam and surrounding areas, ‘the Somvao’), an association established in Amsterdam (the Netherlands), and the Staatsecretaris van Veiligheid en Justitie (Secretary of State for Security and Justice, ‘Staatsecretaris’) concerning the Staatsecretaris’ decision to reduce and recover part of the amount of the grant awarded to that association from the European Refugee Fund.

 Legal context

 EU law

 Regulation (EEC) No 4253/88

3        Article 23(1) of Council Regulation (EEC) No 4253/88 of 19 December 1988 laying down provisions for implementing Regulation (EEC) No 2052/88 as regards coordination of the activities of the different Structural Funds between themselves and with the operations of the European Investment Bank and the other existing financial instruments (OJ 1988 L 374, p. 1), as amended by Council Regulation (EEC) No 2082/93 of 20 July 1993 (OJ 1993 L 193, p.20, ‘Regulation No 4253/88’), is worded as follows:

‘1.       In order to guarantee completion of operations carried out by public or private promoters, Member States shall take the necessary measures in implementing the operations:

–        to verify on a regular basis that operations financed by the Community have been properly carried out,

–        to prevent and to take action against irregularities,

–        to recover any amounts lost as a result of an irregularity or negligence. Except where the Member State and/or the intermediary and/or the promoter provide proof that they were not responsible for the irregularity or negligence, the Member States shall be liable in the alternative for reimbursement of any sums unduly paid. For global loans, the intermediary may, with the agreement of the Member State and the Commission, take up a bank guarantee or other insurance covering this risk.

…’

 Regulation No 2988/95

4        The third to the fifth recitals in the preamble to Regulation No 2988/95 read as follows:

‘Whereas detailed rules governing [the] decentralized [financial] administration and the monitoring of their use are the subject of differing detailed provisions according to the Community policies concerned; whereas acts detrimental to the Communities’ financial interests must, however, be countered in all areas;

Whereas the effectiveness of the combating of fraud against the Communities’ financial interests calls for a common set of legal rules to be enacted for all areas covered by Community policies;

Whereas irregular conduct, and the administrative measures and penalties relating thereto, are provided for in sectoral rules in accordance with this Regulation.’

5        Article 1 of the regulation provides:

‘1.       For the purposes of protecting the European Communities’ financial interests, general rules are hereby adopted relating to homogenous checks and to administrative measures and penalties concerning irregularities with regard to Community law.

2.      “Irregularity” shall mean any infringement of a provision of Community law resulting from an act or omission by an economic operator, which has, or would have, the effect of prejudicing the general budget of the Communities or budgets managed by them, either by reducing or losing revenue accruing from own resources collected directly on behalf of the Communities, or by an unjustified item of expenditure.’

6        Article 4 of Regulation No 2988/95, which is in Title II of the regulation entitled ‘Administrative measures and penalties’, provides:

‘1.      As a general rule, any irregularity shall involve withdrawal of the wrongly obtained advantage:

–        by an obligation to pay or repay the amounts due or wrongly received,

…

2.      Application of the measures referred to in paragraph 1 shall be limited to the withdrawal of the advantage obtained plus, where so provided for, interest which may be determined on a flat-rate basis.

…

4.      The measures provided for in this Article shall not be regarded as penalties.’

 Regulation No 1605/2002

7        Title IV of Regulation No 1605/2002, which is in Part One thereof, is entitled ‘Implementation of the budget’. Chapter 2 of Title IV concerns the methods of implementation. It comprises Articles 53 to 57 of the regulation. Article 53 thereof provides:

‘The Commission shall implement the budget in accordance with the provisions set out in Articles 53a to 53d in any of the following ways:

(a)      on a centralised basis;

(b)      by shared or decentralised management;

(c)      by joint management with international organisations.’

8        Article 53b of that regulation provides:

‘1.      Where the Commission implements the budget by shared management, implementation tasks shall be delegated to Member States. That method shall apply in particular to the actions referred to in Titles I and II of Part Two.

2.      Without prejudice to complementary provisions included in relevant sector-specific regulations, and in order to ensure in shared management that the funds are used in accordance with the applicable rules and principles, the Member States shall take all the legislative, regulatory and administrative or other measures necessary for protecting the Communities’ financial interests. To this effect they shall in particular:

…

(c)      recover funds wrongly paid or incorrectly used or funds lost as a result of irregularities or errors;

…

To that effect, the Member States shall conduct checks and shall put in place an effective and efficient internal control system …. They shall bring legal proceedings as necessary and appropriate.

…’

9        Article 53b of Regulation No 1605/2002 was repealed with effect from 31 December 2013 by Article 212 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).

 Council Decision 2004/904

10      Under the heading ‘Audit of accounts and financial corrections by the Member States’, Article 25 of Decision 2004/904 provides:

‘1.      Without prejudice to the Commission’s responsibilities for implementing the general budget of the European Union, the Member States shall take responsibility in the first instance for financial control of actions. To that end, the measures they take shall include:

…

(b)      preventing, detecting and correcting irregularities, notifying the Commission of them in accordance with the rules and keeping the Commission informed of the progress of administrative and judicial proceedings;

…

2.      Member States shall make the financial corrections required where an irregularity is ascertained, having regard to whether it is an individual or a systemic case. The corrections made by the Member State shall consist in cancelling all or part of the Community contribution, and, where the amount is not repaid in the time allowed by the relevant Member State, default interest shall be due at the rate provided for by Article 26(4).

…’

11      Article 32 of Decision 2004/904, entitled ‘Addressees’ states:

‘This Decision is addressed to the Member States in accordance with the Treaty establishing the European Community.’

 Commission Decision 2006/399/EC

12      By Commission Decision 2006/399/EC of 20 January 2006 laying down detailed rules for the implementation of Council Decision 2004/904/EC as regards the eligibility of expenditure within the framework of actions co-financed by the European Refugee Fund implemented in the Member States (OJ 2006 L 162, p. 1), the Commission laid down the conditions for the eligibility of that expenditure.

13      More specifically, according to Rule No 6 of the Annex to Decision 2006/399, the costs must have actually been incurred, correspond to payments made by the recipient, be recorded in the accounts or tax documents of the recipient, and be identifiable and verifiable. As a rule, payments by recipients shall be supported by receipted invoices. Where this cannot be done, payments are to be supported by accounting documents or supporting documents of equivalent probative value.

 Netherlands law

14      Article 4:49(1) of the Algemene Wet Bestuursrecht (General Law on administrative law, the ‘Awb’) provides:

‘1.      The authority may withdraw the determination of the grant, or alter it to the detriment of the beneficiary, if:

(a)      there are facts or circumstances of which it could not reasonably have been aware at the time the grant was determined and which would have resulted in a lower grant being determined than that in the order on the awarding of the grant;

(b)      the determination of the grant was made in error and the beneficiary knew this or ought to have known it, or

(c)      after the determination of the grant, the beneficiary has not fulfilled the obligations attached thereto.’

15      Article 4:57 of the Awb is worded as follows:

‘The administrative authorities may recover the amounts of grant wrongly paid.’

16      The Framework for the implementation of the European Refugee Fund Netherlands, Multiannual Programme 2005-2007 (Uitvoeringskader Europees Vluchtelingenfonds Nederland, Meerjarenprogramma 2005-2007, ‘the National Implementation Framework’), which was adopted on the basis of Commission Decision 2006/399, provides at paragraph 2.1 that the beneficiary is to be responsible for the recording of the data and (arranging for) the implementation of transparent and verifiable project administration.

17      Paragraph 2.2 of the National Implementation Framework, entitled ‘Financial Administration’ refers to Decision 2006/399 for the detailed rules relating to eligible costs.

 The facts of the case in the main proceedings and the questions referred for a preliminary ruling

18      The Somvao is an association that works for the benefit of the Somali community residing in Amsterdam and areas surrounding that city. On 18 August 2005, Somvao submitted an application for a grant for a project to assist refugees, called ‘Tesfa Himilio II’ (‘the project’), which was to be implemented in the period from 1 May 2005 to 30 May 2008. In putting the project into effect, the Somvao cooperated with Stichting Dir, an Ethiopian organisation, also established in Amsterdam. The project was intended to promote the integration and participation of Ethiopians and Somalis in Dutch society by, inter alia, developing and offering specific programmes for integration into society and the labour-market directed at young people, women and older people.

19      By decision of 27 April 2006, the Staatssecretaris awarded a grant for the first phase of the project to Somvao, in the amount of EUR 199 761, which corresponded to 45% of the eligible costs, to be granted from the European Refugee Fund.

20      As regards the conditions for the award of a grant, the Staatssecretaris’ decision of 27 April 2006 referred to the Framework for implementation of the European Refugee Fund Netherlands.

21      After the final statement of account was submitted, the grant was fixed in the amount referred to above by a decision of 27 July 2007. The referring court states that, in setting the amount, the Staatssecretaris, on the one hand, was satisfied with the data that had been provided together with the application for the determination of the grant for the first phase of the project and, on the other hand, did not verify all the documents relating to the project.

22      In February 2009, acting on the Commission’s instructions, an accountancy firm carried out an audit of the use of the grants, during which the detailed accounts submitted by the Somvao relating to the costs of the project were examined. After considering the Somvao’s observations, that firm concluded, on 6 October 2009, that a large proportion of cost items and detailed accounts declared by the Somvao, in particular as regards staffing costs, were not substantiated clearly and acceptably, with the result that an amount of EUR 188 675.87 had been wrongly paid by way of a grant.

23      On the basis of the final audit report, the Staatssecretaris, by decision of 12 November 2009, amended the decision of 27 July 2007 determining the grant by reducing the amount of the grant to EUR 11 085.13 and by ordering the recovery of the overpayment, namely, EUR 188 675.87.

24      The Staatssecretaris having, on 31 May 2010 and following an objection by the Somvao, upheld its decision of 12 November 2009, that association appealed against the Staatssecretaris’ decision of 12 November 2009 before the Rechtbank Amsterdam. That court, by judgment of 22 September 2011, declared the appeal unfounded. More specifically, it held that, while the Staatssecretaris could not derive from national law the power to alter, to the detriment of the Somvao, the amount of the grant that had been awarded, it was, nevertheless, obliged, on the basis of Article 25(2) of Decision 2004/904, to alter the amount.

25      The Somvao appealed against that judgment before the Afdeling Bestuursrechtspraak (Administrative Law Division) of the Raad van State.

26      The Raad van State considers that the breach, found as a fact by the Staatssecretaris, of the obligation to keep proper project records constitutes an irregularity within the meaning of Article 1(2) of Regulation No 2988/95. In common with the Rechtbank Amsterdam, the referring court considers that the fact that the Somvao did not keep transparent accounts cannot be regarded as constituting one of the circumstances listed in Article 4:49(1)(a) to (c) of the Awb that allow the administrative authority to withdraw or alter the decision determining a grant to the detriment of the recipient, because the lack of proper project records is a matter that the Staatssecretaris would already have known about at the time when the grant at issue was paid. The Raad van Staate concludes that the decision altering the grant and ordering its recovery does not have any legal basis in national law.

27      Consequently, that court wonders whether EU law provides a legal basis for a decision reducing the amount of a grant already awarded and ordering the recovery of amounts unduly received, in the event that irregularities, such as those found in the present case, are found. More specifically, that court is uncertain whether Article 4 of Regulation No 2988/95, Article 53b(2)(c) of Regulation No 1605/2002 or yet Article 25(2) of Decision 2004/904 can constitute the legal basis of the decision to reduce the grant awarded out of the European Refugee Fund and to recover a large part of that grant.

28      Referring to the judgments in Vereniging Nationaal Overlegorgaan Sociale Werkvoorziening and Others (C‑383/06 to C‑385/06, EU:C:2008:165) and Chambre de commerce and d’industrie de l’Indre, (C‑465/10, EU:C:2011:867), concerning Regulation No 4253/88, the referring court states that it seems that it can be inferred from these judgments that a general rule on the protection of the financial interests of the European Union cannot constitute the legal basis for a decision to reduce and recover a grant. Only a specific rule could provide the legal basis for such a decision. That would mean, according to the referring court, that neither Regulation No 2988/95 nor Regulation No 1605/2002 could provide the legal basis for the decision to reduce and order the recovery of the grant.

29      In addition, the referring court doubts that Article 25(2) of Decision 2004/904 could provide the legal basis for the decision to reduce the grant that has been awarded, given that that decision, which is addressed exclusively to the Member States, cannot, by itself, create obligations for an individual.

30      In those circumstances, the Raad van Staate decided to stay proceedings and to refer the following questions to the Court for a preliminary ruling:

‘1.      Does Article 4 of Regulation No 2988/95 or Article 53b(2)(c) of Regulation No 1605/2002 as amended by Regulation No 1995/2006, provide national authorities with a legal basis for a decision to alter, to the detriment of the beneficiary of a grant, and to recover from that beneficiary a grant provided from the European Refugee Fund?

2.      Does Article 25(2) of Council Decision 2004/904 constitute a legal basis for a decision by which national authorities may alter, to the detriment of the beneficiary and recover from that beneficiary a grant already determined and provided from the European Refugee Fund, without there being any need for authority to do so under national law?’

 Consideration of the questions referred

 The first question

31      By its first question, the referring court asks, in essence, whether Article 4 of Regulation No 2988/95 or Article 53b(2)(c) of Regulation 1605/2002 must be interpreted as meaning that, for want of a legal basis in national law, one or other of those provisions provides a basis in law for a decision of the national authorities to alter, to the detriment of the beneficiary, the amount of grant awarded from the European Refugee Fund, where management is shared between the Commission and the Member States, and to order the recovery from the beneficiary of part of that amount.

32      As regards Regulation No 2988/95, it should be borne in mind that, according to Article 1(1), that regulation introduces general rules relating to homogenous checks and to administrative measures and penalties concerning irregularities with regard to EU law in order, as is clear from the third recital in the preamble to the regulation, to combat fraud against the European Union’s financial interests for all areas (judgments in FranceAgriMer, C‑670/11, EU:C:2012:807, paragraph 41 and case-law cited, and in Cruz & Companhia, C‑341/13, EU:C:2014:2230, paragraph 43).

33      It is apparent from the fourth recital in the preamble to Regulation No 2988/95 that the effectiveness of the combating of fraud against the European Union’s financial interests calls for a common set of legal rules to be enacted for all areas covered by European Union policies. Furthermore, according to the fifth recital in the preamble to that regulation, what constitutes irregular conduct and the administrative measures and penalties relating thereto are provided for in sector-specific rules in accordance with Regulation No 2988/95. In the area of checks and penalties for irregularities committed under EU law, the EU legislature has, by adopting Regulation No 2988/95, laid down a series of general principles and has required that, as a general rule, all sector-specific regulations to observe those principles (judgment in FranceAgriMer, EU:C:2012:807, paragraphs 42 and 43 and the case law cited).

34      Thus Regulation No 2988/95 is intended to regulate any situation involving an ‘irregularity’ within the meaning of Article 1 of that regulation, namely, a breach of a provision of EU law as a result of an act or omission by an economic operator which has, or would have, the effect of prejudicing the general budget of the European Union or budgets managed by the Union, either by reducing or losing revenue accruing from own resources collected directly on behalf of the European Union, or by an unjustified item of expenditure (judgment in FranceAgriMer, EU:C:2012:807, paragraph 44).

35      As the first indent of Article 4(1) of Regulation No 2988/95 provides, any irregularity is to involve, as a general rule, the withdrawal of the advantage wrongly obtained, in particular by an obligation to pay the amounts due or repay the amounts wrongly received (judgment in FranceAgriMer, EU:C:2012:807, paragraph 46 and the case-law cited).

36      As regards the obligation to make restitution for advantage improperly received by means of an irregular practice, the Court has already held that that obligation is not a penalty, but simply the consequence of a finding that the conditions required to obtain the advantage derived from the EU rules had not been observed, so that that advantage becomes an advantage wrongly received (see to that effect, judgments in Pometon, C‑158/08, EU:C:2009:349, paragraph 28 and the case-law cited and in Cruz & Companhia, EU:C:2014:2230, paragraph 45).

37      However, the Court has also pointed out that Regulation No 2988/95 merely lays down general rules for supervision and penalties for the purpose of safeguarding the European Union’s financial interests. It is therefore on the basis of other provisions, namely, where appropriate, on the basis of sector-specific provisions, that the recovery of misused funds must be carried out (see, to that effect, judgment in Chambre de commerce and d’industrie de l’Indre, EU:C:2011:867, paragraph 33 and the case-law cited).

38      Therefore, it is to be ascertained whether a measure such as that at issue in the main proceedings may be taken on the basis of Article 53b(2)(c) of Regulation No 1605/2002.

39      It should be noted at the outset that Article 53b of Regulation No 1605/2002 was introduced into EU law by Regulation No 1995/2006. Although that provision has been repealed in the meantime, it was in force on the date of the facts in the main proceedings.

40      Having been adopted on the basis of Article 279 EC, now Article 322 TFEU, which permitted the adoption of financial rules that determine in particular the procedure to be adopted for establishing and implementing the general budget of the European Union, Regulation No 1605/2002 provides in Article 53(a) to (c) that the Commission is to implement the budget either on a centralised basis, or on the basis of shared or decentralised management, or yet, on the basis of joint management with international organisations.

41      As is clear from the heading to Chapter 2 of Title IV of Regulation No 1605/2002, Article 53b thereof enacts a method of implementation of the general budget of the European Union where management is shared. According to Article 53b(1), where the Commission co-operates with the Member States in order to implement the budget by shared management within the meaning of Article 53(1)(b) of that regulation, the implementation tasks of the budget are delegated to the Member States.

42      Article 53b(2)(c) of Regulation No 1605/2002 provides that the Member States are to take all the legislative, regulatory and administrative or other measures necessary for protecting the financial interests of the European Union, in particular by recovering funds wrongly paid or incorrectly used or funds lost as a result of irregularities or errors.

43      It should be observed that the terms of that provision are drafted in a similar way to the wording of the third indent of Article 23(1) of Regulation No 4253/88, which, unlike Regulation No 1605/2002, is a sector-specific regulation.

44      The Court has already held, as regards the third indent of Article 23(1) of Regulation No 4253/88, that such provision creates an obligation for the Member States to recover any amounts lost as a result of an irregularity or negligence, without any need for authority to do so under national law. Any exercise of discretion, by the Member State in question, to decide whether or not it would be expedient to demand repayment of European Union funds unduly or irregularly granted would be inconsistent with the abovementioned obligation to recover any such amounts (see, to that effect, judgment in Chambre de commerce and d’industrie de l’Indre, EU:C:2011:867, paragraphs 34 and 35 and the case-law cited).

45      Nor can the unequivocal, unconditional terms of Article 53b(2)(c) of Regulation No 1605/2002 be interpreted as leaving to the Member States discretion as to whether or not it would be expedient or not to make financial corrections in relation to the irregularities found.

46      Thus, having chosen, after the entry into force of Article 4 of Regulation No 2988/95 and Article 23 of Regulation No 4253/88, to adopt Article 53b of Regulation No 1605/2002, the EU legislature intended to create, in the general rules, an obligation for the Member States, to carry out, when they implement the budget by shared management, financial corrections, in particular recovering the amounts lost as a result of irregularity or negligence, not only without a basis provided for in national law being necessary, but also without a sector-specific regulation being indispensable.

47      That interpretation is supported by the fact that, according to its introductory sentence, Article 53b(2) applies ‘without prejudice to complementary provisions included in relevant sector-specific regulations’. The words ‘without prejudice to’ indicate precisely that Article 53b is sufficient in itself. Similarly, the adjective ‘complementary’, which relates to the sector-specific regulation, indicates that, if one does exist, it does not replace Article 53b of Regulation No 1605/2002, but merely complements it.

48      A different reading of that article would have the effect of depriving Regulation No 1605/2002 of its practical effect and would damage the protection of the financial interests of the European Union.

49      It follows that the introductory sentence of Article 53b(2) of Regulation 1605/2002 constitutes a legal basis for the alteration of a grant to the detriment of the beneficiary, where that alteration is made in order to protect the financial interests of the European Union. Similarly, point (c) under Article 53b(2) constitutes a legal basis for the adoption of measures in connection with the recovery of funds wrongly paid or incorrectly used as a result of irregularities or errors.

50      Furthermore, the Court has already stated that the recovery of amounts unduly paid cannot be carried out except in accordance with the principles of legal certainty and the protection of legitimate expectations (see, to that effect, judgment in Vereniging Nationaal Overlegorgaan Sociale Werkvoorziening and Others, EU:C:2008:165, paragraph 53).

51      The principle of legal certainty requires EU rules to enable those concerned to know precisely the extent of the obligations which are imposed on them (judgment in ROM-projecten, C‑158/06, EU:C:2007:370, paragraph 25 and case-law cited).

52      As regards the principle of the protection of legitimate expectations, the Court has already held that the beneficiary of a subsidy cannot rely on such protection if it has not complied with one of the conditions to which the grant of the subsidy was subject (see, to that effect, judgment in Vereniging Nationaal Overlegorgaan Sociale Werkvoorziening and Others, EU:C:2008:165, paragraph 56 and the case-law cited).

53      In the case at issue in the main proceedings, it is apparent from the information submitted to the Court that the grant decision of 27 April 2006 was subject to compliance, by the Somvao, with the rules laid down by Decision 2006/399 and, in particular, performance of the obligation to supply data and to keep transparent, verifiable project documentation.

54      On the basis of that information, it is for the national court to determine whether, taking into account the conduct of both the beneficiary of the funds and of the national administrative authorities, the principles of legal certainty and legitimate expectations, as understood in EU law, have been observed as regards the requests for reimbursement.

55      In the light of the above considerations, the answer to the first question is that Article 53(2)(c) of Regulation No 1605/2002 must be interpreted as meaning that, failing a legal basis in national law, that provision provides a legal basis for a decision of the national authorities to alter, to the detriment of the beneficiary, the amount of the grant paid out of the European Refugee Fund, where management is shared between the Commission and the Member States, and to order the recovery from the beneficiary of part of that amount. It is for the national court to determine whether, taking into account the conduct of both the beneficiary of the funds and of the national administrative authorities, the principles of legal certainty and legitimate expectations, as understood in EU law, have been observed as regards the demand for repayment.

 The second question

56      Given the answer to the first question, there is no need to answer the second question.

 Costs

57      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 (Third Chamber) hereby rules:

Article 53(2)(c) of Council Regulation (EC, Eurotom) No 1605/2002 of 25 June 2002 on the Financial Regulation applicable to the general budget of the European Communities, as amended by Council Regulation (EC, Euratom) No 1995/2006 of 13 December 2006, must be interpreted as meaning that, failing a legal basis in national law, that provision provides a legal basis for a decision of the national authorities to alter, to the detriment of the beneficiary, the amount of the grant paid out of the European Refugee Fund, where management is shared between the Commission and the Member States, and to order the recovery from the beneficiary of part of that amount. It is for the national court to determine whether, taking into account the conduct of both the beneficiary of the funds and of the national administrative authorities, the principles of legal certainty and legitimate expectations, as understood in EU law, have been observed as regards the demand for repayment.

[Signatures]

* Language of the case: Dutch.

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