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

JUDGMENT OF THE COURT (Eighth Chamber)

26 May 2016 (*)

(Reference for a preliminary ruling — Agriculture — European Agricultural Guidance and Guarantee Fund — Regulations (EC) Nos 1257/1999 and 817/2004 — Support for rural development — Recovery of undue payments — Increase of the area declared during the five-year commitment period above the threshold provided for — Replacement of the original commitment by a new commitment — Non-compliance by the beneficiary with the obligation to submit an annual application for payment of aid — National legislation requiring the repayment of all aid paid over several years — Principle of proportionality — Articles 17 and 52 of the Charter of Fundamental Rights of the European Union)

In Case C‑273/15,

REQUEST for a preliminary ruling under Article 267 TFEU from the Augstākās tiesas Administratīvo lietu departaments (Supreme Court, Administrative Chamber, Latvia), made by decision of 3 June 2015, received at the Court on 8 June 2015, in the proceedings

ZS ‘Ezernieki’

v

Lauku atbalsta dienests,

THE COURT (Eighth Chamber),

composed of D. Šváby, President of the Chamber, J. Malenovský and M. Vilaras (Rapporteur), Judges,

Advocate General: M. Campos Sánchez-Bordona,

Registrar: A. Calot Escobar,

having regard to the written procedure,

after considering the observations submitted on behalf of:

–        ZS ‘Ezernieki’, by A. Martuzāns,

–        the Latvian Government, by I. Kalniņš and G. Bambāne, acting as Agents,

–        the European Commission, by A. Sauka and J. Aquilina, 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 Council Regulation (EC) No 1257/1999 of 17 May 1999 on support for rural development from the European Agricultural Guidance and Guarantee Fund (EAGGF) and amending and repealing certain Regulations (OJ 1999 L 160, p. 80), as amended by Council Regulation (EC) No 1783/2003 of 29 September 2003 (OJ 2003 L 270, p. 70) (‘Regulation No 1257/1999’), of Commission Regulation (EC) No 817/2004 of 29 April 2004 laying down detailed rules for the application of Regulation No 1257/1999 (OJ 2004 L 153, p. 30, corrigendum OJ 2004 L 231, p. 24), of Commission Regulation (EC) No 796/2004 of 21 April 2004 laying down detailed rules for the implementation of cross-compliance, modulation and the integrated administration and control system provided for in Council Regulation (EC) No 1782/2003 of 29 September 2003 establishing common rules for direct support schemes under the common agricultural policy and establishing certain support schemes for farmers (OJ 2004 L 141, p. 18), and of Articles 17 and 52 of the Charter of Fundamental Rights of the European Union (‘the Charter’).

2        The reference has been made in proceedings between ZS ‘Ezernieki’ (‘Ezernieki’), an agricultural holding, and Lauku atbalsta dienests (rural support service, Latvia) concerning the reimbursement of all of the agri-environmental aid which was granted to it by the Latvian authorities over the course of the five-year commitment period, as a result of a failure to satisfy all the conditions for the grant of that aid.

 Legal context

 EU law

 Regulation No 1257/1999

3        Regulation No 1257/1999 establishes, in accordance with Article 1 thereof, the framework for Community support for sustainable rural development. In Chapter VI of Title II of that regulation, entitled ‘Agri-environment and animal welfare’, Article 22 thereof provides:

‘Support for agricultural methods designed to protect the environment, maintain the countryside (agri-environment) or improve animal welfare shall contribute to achieving the Community’s policy objectives regarding agriculture, the environment and the welfare of farm animals.

…’

4        Article 23 of Regulation No 1257/1999 provides:

‘1.      Support shall be granted to farmers who give agri-environmental or animal welfare commitments for at least five years. Where necessary, a longer period shall be determined for particular types of commitments in view of their effects on the environment or animal welfare.

2.      Agri-environmental and animal welfare commitments shall involve more than the application of usual good farming practice including good animal husbandry practice.

They shall provide for services which are not provided for by other support measures, such as market support or compensatory allowances.’

5        Article 24 of that regulation is worded as follows:

‘1.      Support in respect of an agri-environmental or animal welfare commitment shall be granted annually and be calculated on the basis of:

(a)      income foregone,

(b)      additional costs resulting from the commitment given, and

(c)      the need to provide an incentive.

Costs related to investments shall not be taken into account when calculating the level of annual support. Costs for non-remunerative investments which are necessary to comply with a commitment may be taken into account in calculating the level of annual support.

2.      Maximum amounts per year eligible for Community support are laid down in the Annex. When support is calculated on an area basis, these amounts shall be based on that area of the holding to which agri-environmental commitments apply.’

6        Article 37(4) of Regulation No 1257/1999 provides:

‘Member States may lay down further or more restrictive conditions for granting Community support for rural development provided that such conditions are consistent with the objectives and requirements laid down in this Regulation.’

7        Under Article 93(1) of Council Regulation (EC) No 1698/2005 of 20 September 2005 on support for rural development by the European Agricultural Fund for Rural Development (EAFRD) (OJ 2005 L 277, p. 1), Regulation No 1257/1999 is to be repealed with effect from 1 January 2007, but will continue to apply to actions approved by the European Commission under that regulation before that date.

 Regulation No 817/2004

8        In Section 11 of Chapter I of Regulation No 817/2004, entitled ‘Rural development measures’, Article 37 thereof states:

‘1.      When a beneficiary increases the area of the holding during the period for which a commitment given as a condition for the grant of assistance runs, Member States may provide for the commitment to be extended to cover the additional area for the remainder of the period of the commitment in accordance with paragraph 2, or for the original commitment to be replaced by a new one in accordance with paragraph 3.

Provision may also be made for such replacement in cases where the area covered by a commitment within a holding is extended.

2.      The extension referred to in paragraph 1 may be granted only under the following conditions:

(a)      it is of unquestionable benefit to the measure concerned;

(b)      it is justified in terms of the nature of the commitment, the length of the remaining period and the size of the additional area;

(c)      it does not impede the effectiveness of checks to ensure compliance with the conditions for the grant of assistance.

The size of the additional area referred to in (b) must be significantly less than the original area or not more than two hectares.

3.      The new commitment referred to in paragraph 1 shall cover the whole area concerned under terms at least as strict as those of the original commitment.’

9        In Section 6 of Chapter II of Regulation No 817/2004, entitled ‘Applications, checks and penalties’, Article 66 of that regulation provides:

‘1.      Applications for rural development support for areas or animals which are lodged separately from aid applications under Article 6 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)] shall indicate all the areas and animals on the holding which are relevant for checking the applications under the measure in question, including those for which no support is requested.

2.      Where a rural development support measure relates to areas, parcels shall be identified individually. During the period covered by a commitment, parcels receiving support may not be exchanged except in cases specifically provided for in the programming document.

3.      Where an application for payment is included with an application for an area payment in the context of the integrated administration and control system, the Member State shall ensure that parcels covered by applications for rural development support are declared separately.

4.      Animals and plots of land shall be identified in accordance with Articles 18 and 20 of Regulation (EEC) No 1782/2003.

5.      Where support is multiannual, payments subsequent to that made in the year an application was submitted shall be made in response to an annual application for payment, except where the Member State has introduced an effective annual verification procedure as referred to in Article 66(1).’

10      Article 67 of Regulation No 817/2004 provides:

‘1.      Initial applications to join a scheme and subsequent applications for payment shall be checked in a manner which ensures effective verification of compliance with the conditions for granting support.

The Member States shall define suitable methods and means for verifying each support measure as well as the persons who shall be subject to checks.

Wherever appropriate, Member States shall make use of the integrated administration and control system introduced by Regulation (EC) No 1782/2003.

2.      Verification shall be by administrative and on-the-spot checks.’

11      Article 71(2) of Regulation No 817/2004 states:

‘In the event of undue payment, the beneficiary under a rural development measure shall be under an obligation to repay the amount concerned in accordance with Article 49 of Regulation (EC) No 2419/2001.’

12      Under Article 64 of Commission Regulation (EC) No 1974/2006 of 15 December 2006 laying down detailed rules for the application of Council Regulation (EC) No 1698/2005 on support for rural development by the European Agricultural Fund for Rural Development (EAFRD) (OJ 2006 L 368, p. 15), Regulation No 817/2004 is repealed as from 1 January 2007, but it is to continue to apply to measures approved before that date under Regulation No 1257/1999.

 Regulation No 796/2004

13      Regulation No 796/2004 repealed Regulation No 2419/2001. Regulation No 796/2004 provides that it is to apply to aid applications relating to marketing years or premium periods commencing as of 1 January 2005 and that references to Regulation No 2419/2001 are to be construed as references to Regulation No 796/2004.

14      In so far as, according to the correlation table that appears in Annex III to Regulation No 796/2004, Article 49 of Regulation No 2419/2001 corresponds to Article 73 of Regulation No 796/2004, the reference made to Article 71(2) of Regulation No 817/2004 now refers to Article 73 of Regulation No 796/2004.

15      Article 73 of Regulation No 796/2004 is worded as follows:

‘1.      If undue payment is made, the farmer shall repay the amount in question plus interest calculated in accordance with paragraph 3.

…

3.      Interest shall be calculated for the period elapsing between the notification of the repayment obligation to the farmer and either repayment or deduction.

The rate of interest applicable shall be calculated in accordance with national law but shall not be lower than the interest rate applicable for the recovery of amounts under national provisions.

4.      The repayment obligation referred to in paragraph 1 shall not apply if the payment was made by error of the competent authority or of another authority and if the error could not reasonably have been detected by the farmer.

However, where the error relates to factual elements relevant for the calculation of the payment concerned, the first subparagraph shall only apply if the decision to recover was not communicated within 12 months of the payment.

5.      The repayment obligation referred to in paragraph 1 shall not apply if the period which elapsed between the date of the payment of the aid and that of the first notification to the beneficiary by the competent authority concerning the undue nature of the payment concerned is more than 10 years.

However, the period referred to in the first subparagraph shall be limited to four years if the beneficiary acted in good faith.

…’

 Latvian law

16      Article 53 of the Ministru kabineta noteikumi Nr. 221 ‘Kārtība, kādā tiek piešķirts valsts un Eiropas Savienibas atbalsts lauksaimniecībai un lauku attīstibai’ (Decree No 221 of the Council of Ministers relating to the proceeding according to which State and European Union aid is granted to agriculture and rural development), of 21 March 2006, in force until 28 April 2007 (‘Decree No 221’), provides that, when a farmer applies for the payments provided for in that decree for agri-environmental aid, the commitments enter into force on the day on which that farmer submits the application with the rural support service. Article 24 of Decree No 221 provides that farmers are to submit the application relating to the payments for agri-environmental aid, together with the map of agricultural holdings issued by the rural support service and indicating the farming area of the agricultural parcel exploited by 9 June of the current year, with the rural support service.

17      Article 55 of Decree No 221 provides that where, in the context of an application for agri-environmental aid, the commitments are extended, new commitments are to be created for five years. If, during the entire commitment period, the commitments are increased by up to 20% but not by more than two hectares vis-a-vis the original commitment, the existing commitments are to be extended.

18      Article 58 of Decree No 221 provides that, by applying for payment of agri-environmental aid, farmers undertake throughout the five-year commitment period, to submit annually to the rural support service an application for aid relating to the measures declared, and not to reduce the area declared or modify the location.

19      The Ministru kabineta noteikumi Nr. 295 ‘Noteikumi par valsts un Eiropas Savienības lauku attīstības atbalsta piešķiršanu, administrēšanu un uzraudzību vides un lauku ainavas uzlabošanai’ (Decree No 295 of the Council of Ministers relating to the grant, administration and supervision of State and European Union aid to rural development for the purposes of improving the environment and the countryside) of 23 March 2010, in force until 20 April 2015 (‘Decree No 295’) entered into force on 31 March 2010. That decree, and Decree No 221, applies to the ‘agri-environmental’ measure implemented in accordance with Regulation No 1257/1999. In accordance with Article 74 of Decree No 295, ‘as regards the measure referred to in Article 3, commitments relating to the area or the animals are to continue until the commitment period ends, in accordance with Decree of the Council of Ministers No 1002 of 30 November 2004, on detailed rules for the implementation of the programme document “agricultural development plan of Latvia for implementation of the rural development programme in the years 2004 to 2006”‘.

20      Article 76 of Decree No 295 provides that where he applies for agri-environmental aid, the applicant is to submit an application every year throughout the five-year commitment period to the rural support service. The applicant does not have the right to change the location of the area covered by the commitments or to reduce that area or the number of animals.

21      Article 84 of Decree No 295 provides that where the commitments cease because the annual application for support has not been submitted, the location of the area covered by the commitment has been changed, the area covered by the commitment has been reduced or the area covered by the commitment has not been declared for the purposes of the aid, the beneficiary of the aid is to repay the amount received in respect of the area at issue. Where the area covered by the commitments has been reduced in the sub-measures referred to in that decree, the average rate of aid payments for the year at issue is to be applied to the reduced area subject to the commitment by dividing the amount of aid received in the sub-activity at issue by the area subject to commitments.

 The dispute in the main proceedings and the questions referred for a preliminary ruling

22      In 2005, Ezernieki notified 10.20 hectares of agricultural land in order to obtain aid for the development of organic farming in the context of the agri-environmental measure provided for by Regulation No 1257/1999. In 2006, it notified, in order to obtain the same aid, an additional area of 2.30 hectares, that is to say 12.50 hectares. That increase had the effect of initiating a new five-year commitment period. In 2010, it presented an application for an area payment. By contrast, it did not submit an application for a grant of agri-environmental aid, since it considered that the five-year commitment period had come to an end.

23      On 9 August 2011, the rural support service adopted a decision requiring Ezernieki to repay all of the agri-environmental aid paid in the sum of LVL (Latvian Lats) 3 390.04 (approximately EUR 4 800). That decision was based on the fact that, by notifying an increased area in 2006 in order to receive agri-environmental aid, the original commitment had to be considered to have been replaced by a new commitment running from 2006 to 2010. By failing to apply for payment of that aid in 2010, it terminated the commitment period, so that it had to repay the aid received previously.

24      Ezernieki brought an action for annulment of that decision before the administratīvā rajona tiesa (District Administrative Court, Latvia), which upheld the action.

25      Ruling on an appeal brought by the rural support service, the Administratīvā apgabaltiesa (Regional Administrative Court, Latvia) dismissed the action brought by the applicant in the main proceedings. That court considered, first, that the increase in 2006 by 2.30 hectares in the area notified in order to obtain aid had given rise to new commitments for Ezernieki with regard to the entire area over a period of five years, in accordance with Article 55 of Decree No 221. It held, secondly, that the failure to present the annual application for the grant of aid in 2010 had caused the termination of the commitments which resulted in the obligation to repay the aid paid in respect of the area at issue.

26      Ezernieki brought an appeal in cassation before the referring court against the judgment delivered by the Administratīvā apgabaltiesa (Regional Administrative Court).

27      The referring court has doubts regarding the compatibility with EU law of the obligation to repay the aid paid, as imposed in the main proceedings by the national legislation. It considers, in essence, that the obligation for the beneficiary to repay all of the aid paid could be disproportionate, in so far as that beneficiary complied with the commitments undertaken with respect to the largest part of the area and merely inadvertently failed to declare the modified area. It notes that the case brought before it presents the following particularities, namely the area was increased from the second year of the original commitments, the increase exceeds only by 0.3 hectares the authorised limit of 2 hectares and the commitments were complied with over the five-year period as regards the area of 10.20 hectares originally declared.

28      Since it considers that the resolution of the main proceedings depends on the interpretation of Regulations Nos 1257/1999, 817/2004 and 796/2004 and Articles 17 and 52 of the Charter, the Augstākās tiesas Administratīvo lietu departaments (Supreme Court, Administrative Chamber, Latvia) decided to stay the proceedings and to refer the following questions to the Court for a preliminary ruling:

‘(1)      Is the application of the legal effects provided for in Article 71(2) of Regulation No 817/2004 to agri-environmental aid granted for the originally declared part of an area, in respect of which the prior conditions for grant of that aid were complied with for five years, compatible with the objective of Regulations Nos 1257/1999 and 817/2004 and with the principle of proportionality?

(2)      Must Article 17, in conjunction with Article 52, of the Charter be interpreted as meaning that the application of the legal effects provided for in Article 71(2) of Regulation No 817/2004 to agri-environmental aid granted for part of an area, in respect of which the prior conditions for grant of that aid were complied with for five years, is compatible with those articles?

(3)      Must Article 52 of the Charter be interpreted as meaning that it is permitted to refrain from applying the legal effects which a regulation and the provisions adopted by a Member State in accordance with that regulation regard as obligatory, if, in a specific case, there are special circumstances in the context of which the limitation concerned may be considered to be disproportionate?

(4)      In the light of the objective of Regulations Nos 1257/1999 and 817/2004 and the limits laid down therein on the discretion allowed to the Member States, is it acceptable for the court examining the substance of the case not to apply in its full scope Article 84 of Decree No 295, a provision which concerns the repayment of aid, where the application of that provision in the specific circumstances could lead to infringement of the principle of proportionality, as that principle is interpreted in the legal system of the Member State?’

 Consideration of the questions referred

29      By its four questions, which it is appropriate to consider together, the referring court asks, in essence, whether, in the light of the objective of Regulations Nos 1257/1999 and 817/2004, the principle of proportionality and Articles 17 and 52 of the Charter, Article 71(2) of Regulation No 817/2004 must be interpreted as meaning that it precludes national legislation, such as that at issue in the main proceedings, in accordance with which the beneficiary of aid granted in return for agri-environmental commitments covering several years is required to repay all of the aid already paid, on the ground that he did not submit an annual application for payment of that aid for the last year of the five-year period of his commitments, where, first, that five-year period replaced an earlier period as a result of an increase in the area of his holding and, secondly, that beneficiary did not cease to fulfil his obligations relating to the use of the area declared prior to that increase.

30      First of all, it should be noted that Articles 22 to 24 of Regulation No 1257/1999 set out the general conditions for the grant of support for farming practices designed, in particular, to maintain the countryside. It follows from those provisions that agri-environmental aid is characterised by the five-year commitment given by the farmers concerned to practise a form of agriculture which respects the environment. In return for the agri-environmental commitments for a minimum of five years, financial support is allocated annually by the States according to the loss of revenue incurred or the resulting additional costs (judgments of 4 June 2009 in JK Otsa Talu, C‑241/07, EU:C:2009:337, paragraph 36; 24 May 2012 in Hehenberger, C‑188/11, EU:C:2012:312, paragraph 30; and 7 February 2013 in Pusts, C‑454/11, EU:C:2013:64, paragraph 30).

31      Article 66(5) of Regulation No 817/2004 provides in addition that, where support is multiannual, payments subsequent to that made in the year in which an application was submitted must be made in response to an annual application for payment, except where the Member State has introduced an effective annual verification procedure as referred to in Article 67(1). It is apparent from that Article 66(5) that, apart from the existence of such a national procedure, no payment is made to farmers if they do not submit an annual application for payment. Submission of that annual application thus constitutes a condition governing eligibility for receiving agri-environmental aid on the basis of Articles 22 to 24 (judgment of 7 February 2013 in Pusts, C‑454/11, EU:C:2013:64, paragraph 32).

32      The importance of submitting an annual application for payment of agri-environmental aid is also made clear in Article 67(1) of Regulation No 817/2004, which provides, as regards the system for checking the multiannual support for agri-environmental production methods, that initial applications to join a scheme and subsequent applications for payment must be checked in a manner which ensures effective verification of compliance with the conditions for granting support. Accordingly, the submission of such an annual application makes it possible to verify compliance with the agri-environmental commitments which have been given. In basing itself on that annual application, the organisation which makes the payments is in a position to verify effectively each year whether there continues to be compliance with those commitments covering several years and, where appropriate, to pay that aid (judgment of 7 February 2013 in Pusts, C‑454/11, EU:C:2013:64, paragraph 33).

33      Moreover, Article 37(1) and (2) of Regulation No 817/2004 provides that, when during the period of operation of a commitment given as a condition for the grant of support, a beneficiary of agri-environmental aid increases the area of his holding by more than two hectares in excess of the original area, that beneficiary’s original commitment is to be replaced with a new five-year commitment. Article 37(3) of that regulation provides that that new commitment relates to the whole area concerned and that it is at least as strict as the original commitment.

34      It follows that in so far as the national legislation at issue in the main proceedings requires, first, as one of the conditions governing eligibility for the grant of agri-environmental aid, that the applicant for that aid undertake, for the entire five-year commitment period, to submit an annual application for payment and which provides, secondly, that a new five-year commitment period is to commence where there is a substantial increase in the area of the holding which exceeds by two hectares the original commitment, it is compatible with the provisions of EU law referred to above.

35      In the main proceedings, it is not disputed that the beneficiary did not submit an application for aid with respect to the last year of the five-year commitment period which started with the increase of the area which exceeded the original area of two hectares. Admittedly, the beneficiary satisfied all the conditions for the grant of aid as regards the area of 10.20 hectares originally declared.

36      However, it is necessary to note that, so far as concerns the agri-environmental aid characterised by a multi-annual commitment, the conditions for the grant of support must be observed throughout the commitment period in respect of which that aid was granted (judgments of 24 May 2012 in Hehenberger, C‑188/11, EU:C:2012:312, paragraph 34, and 7 February 2013 in Pusts, C‑454/11, EU:C:2013:64, paragraph 35).

37      Therefore, if one of the conditions for the grant of agri-environmental aid, such as the submission of an annual application for payment of support required by the national rules at issue in the main proceedings, is not complied with, even if only once, throughout the duration of the agri-environmental project in respect of which the beneficiary of that same aid has given a commitment, that aid cannot be granted (judgment of 7 February 2013 in Pusts, C‑454/11, EU:C:2013:64, paragraph 35).

38      As follows from Article 37(3) of Regulation No 817/2004, as a result of the substantial increase of the area of the holding concerned and of the beginning of a new five-year commitment period, the beneficiary is required, throughout that period, to respect all of the obligations resulting therefrom and that for the whole increased area over a period of five years.

39      Moreover, it should be noted that compliance with the conditions for the grant of agri-environmental aid remains the sole responsibility of the applicant for the aid. In contrast to the claims made by the applicant in the main proceedings, Regulations Nos 1257/1999 and 817/2004 do not impose an information obligation on the competent authorities concerning that applicant’s obligation to present an application for aid for the last year of its commitments.

40      In those circumstances, the only partial compliance, by the beneficiary of aid granted in return for his commitments, with conditions for the grant of the aid at issue cannot justify the continued payment of that aid.

41      As is apparent from Article 71(2) of Regulation No 817/2004, which relates back to Article 49 of Regulation No 2419/2001, which was replaced by Article 73 of Regulation No 796/2004, in the event of exclusion from the benefit of agri-environmental aid by reason of failure to comply with the conditions governing the grant of that aid, the beneficiary of that aid is required to repay all the amounts already paid in respect of the support to which entitlement has been excluded (judgments of 24 May 2012 in Hehenberger, C‑188/11, EU:C:2012:312, paragraph 36, and 7 February 2013 in Pusts, C‑454/11, EU:C:2013:64, paragraph 37).

42      The objective of Regulations Nos 1257/1999 and 817/2004, the principle of proportionality and Articles 17 and 52 of the Charter are not such as to call into question that interpretation of Article 71(2) of Regulation No 817/2004.

43      First of all, as is apparent from paragraphs 30 to 33 of the present judgment, the objective of Regulations Nos 1257/1999 and 817/2004 is environmental protection. The general scheme of the system established by those regulations is based on the effective verification of compliance with commitments entered into for the grant of agri-environmental aid and on the sustained implementation of agri-environmental measures to the whole area declared and that throughout the five-year commitment period.

44      The obligation to repay aid received by a beneficiary, such as the applicant in the main proceedings, who does not satisfy all the conditions for the grant of that aid, serves that objective.

45      It is necessary, next, to point out that the annual payments of aid cannot be considered to be definitive, since the aid thereby received may be repaid by the beneficiary where he fails to fully satisfy the conditions for payment thereof throughout the five-year period and that for the whole area declared (see, to that effect, judgments of 24 May 2012 in Hehenberger, C‑188/11, EU:C:2012:312, paragraph 34, and 7 February 2013 in Pusts, C‑454/11, EU:C:2013:64, paragraphs 36 and 37).

46      It cannot therefore be objected that the obligation to repay all of the aid received in the event of a failure to comply with all of the conditions for the grant of the aid at issue is disproportionate in relation to the objective pursued on the ground that the beneficiary complied with the commitments undertaken in relation to the area originally declared. As is apparent from paragraph 41 of the present judgment, a failure to comply with those conditions results in the grant and maintenance of the benefit of aid being unjustified and devoid of legal basis, and that in its entirety.

47      Finally, it should be noted that the obligation to repay aid unduly paid as a result of the failure to satisfy an eligibility condition for that aid cannot be regarded as an infringement of the right to property, recognised in Article 17 of the Charter.

48      It follows from the wording of Article 71(2) of Regulation No 817/2004, according to which the contested aid was paid to the applicant in the main proceedings, that the latter is required to repay that aid where the conditions governing the payment thereof are not satisfied (see, to that effect, judgments of 24 May 2012 in Hehenberger, C‑188/11, EU:C:2012:312, paragraph 34, and 7 February 2013 in Pusts, C‑454/11, EU:C:2013:64, paragraphs 36 and 37).

49      In those circumstances, a beneficiary who is obliged to repay aid obtained unduly, simply as a consequence of a failure to satisfy the conditions of their payment at issue, cannot rely on the protection afforded by Article 17 of the Charter.

50      To the extent that, in this case, there is no question of a limitation on the exercise of the right to property recognised by the Charter, there is no need to examine the obligation to repay the abovementioned aid in the light of Article 52 of the Charter.

51      In that context, in the light of the objective of Regulations Nos 1257/1999 and 817/2004, of the principle of proportionality and the right to property enshrined by the Charter, Article 71(2) of Regulation No 817/2004 must be interpreted as not precluding the provisions of Latvian law at issue in the main proceedings, which oblige the beneficiary in the main proceedings to repay all of the agri-environmental aid unduly paid to it.

52      Nevertheless, the referring court questions, in the context of its fourth question, whether it is possible to exclude the application of the national legislation at issue in the main proceedings, which was adopted in accordance with EU law, if its application is contrary to the principle of proportionality, as interpreted in its own domestic legal order.

53      In that regard, it must be held that, in accordance with the principle of the primacy of EU law, rules of national law, even of a constitutional order, cannot be allowed to undermine the unity and effectiveness of European Union law (judgments of 17 December 1970 in Internationale Handelsgesellschaft, 11/70, EU:C:1970:114, paragraph 3; 13 December 1979 in Hauer, 44/79, EU:C:1979:290, paragraph 14; and 15 January 2013 in Križan and Others, C‑416/10, EU:C:2013:8, paragraph 70).

54      In the light of the interpretation set out in paragraph 46 of the present judgment concerning the compatibility of the obligation to repay all of the agri-environmental aid by the applicant in the main proceedings with EU law and, more particularly, with the principle of proportionality, the national court cannot exclude the application of the legal effects provided for by the national legislation at issue in the main proceedings, which was adopted in accordance with EU law.

55      A derogation from the application of provisions which comply with EU law can also not be accepted on the basis of the concept of ‘fairness’ also referred to by the referring court.

56      In that regard, it should be noted that it is settled case-law that, without prejudice to the special cases expressly provided for by the Union legislature, there is no general legal principle in EU law that an EU provision which is in force may be disapplied by a national authority if it causes the person concerned hardship which the Union legislature would clearly have sought to avoid if it had envisaged that eventuality when enacting the provision (judgment of 26 October 2006 in Koninklijke Coöperatie Cosun, C‑248/04, EU:C:2006:666, paragraph 63 and the case-law cited). Equity cannot be regarded as allowing any derogation from the application of provisions of EU law, save as provided for by the legislation or where the legislation is itself declared invalid (judgment of 26 October 2006 in Koninklijke Coöperatie Cosun, C‑248/04, EU:C:2006:666, paragraph 64 and the case-law cited).

57      It follows from all of the foregoing considerations that the answer to the questions referred is that, in the light of the objective of Regulations Nos 1257/1999 and 817/2004, the principle of proportionality and Articles 17 and 52 of the Charter, Article 71(2) of Regulation No 817/2004 must be interpreted as meaning that it does not preclude national legislation, such as that at issue in the main proceedings, in accordance with which the beneficiary of aid granted in return for agri-environmental commitments covering several years is required to repay all of the aid already received, on the ground that he did not submit an annual application for payment of that aid for the last year of the five-year period of his commitments, where, first, that five-year period replaced an earlier period as a result of an increase in the area of his holding and, secondly, that beneficiary did not cease to fulfil his obligations relating to the use of the area declared prior to that increase.

 Costs

58      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 (Eighth Chamber) hereby rules:

Article 71(2) of Commission Regulation (EC) No 817/2004 of 29 April 2004 laying down detailed rules for the application of Council Regulation (EC) No 1257/1999 on support for rural development from the European Agricultural Guidance and Guarantee Fund (EAGGF), must, in the light of the objective of Council Regulation (EC) No 1257/1999 of 17 May 1999 on support for rural development from the European Agricultural Guidance and Guarantee Fund (EAGGF) and amending and repealing certain Regulations, as amended by Council Regulation (EC) No 1783/2003 of 29 September 2003, and of Regulation No 817/2004, in the light of the principle of proportionality and Articles 17 and 52 of the Charter of Fundamental Rights of the European Union, be interpreted as meaning that it does not preclude national legislation, such as that at issue in the main proceedings, in accordance with which the beneficiary of aid granted in return for agri-environmental commitments covering several years is required to repay all of the aid already received, on the ground that he did not submit an annual application for payment of that aid for the last year of the five-year period of his commitments, where, first, that five-year period replaced an earlier period as a result of an increase in the area of his holding and, secondly, that beneficiary did not cease to fulfil his obligations relating to the use of the area declared prior to that increase.

[Signatures]

* Language of the case: Latvian.

© European Union
The source of this judgment is the Europa web site. The information on this site is subject to a information found here: Important legal notice. This electronic version is not authentic and is subject to amendment.