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

ORDER OF THE GENERAL COURT (Eighth Chamber)

24 October 2019 (*)

(Action for annulment — Research and technological development and space — Seventh framework programme of the Union — Audit — Failure to fill out work timesheets — Personnel costs declared ineligible — Decision of the Commission to adopt the audit report as final — Inadmissibility)

In Case T‑188/19,

United Kingdom of Great Britain and Northern Ireland, represented by S. Brandon and Z. Lavery, acting as Agents, and by T. Johnston and J. Scott, Barristers,

applicant,

v

European Commission, represented by R. Lyal, A. Kyratsou and M. Siekierzyńska, acting as Agents,

defendant,

APPLICATION pursuant to Article 272 TFEU seeking a declaration that, in adopting as final the Final Audit Report, bearing reference number 14‑BA 226‑013 concerning the implementation of the Combine, EUFAR and THOR grant agreements the beneficiary of which is the Met Office, the national meteorological service attached, within the United Kingdom Government, to the Department for Business, Energy and Industrial Strategy, the Commission failed correctly to interpret and apply the contractual provisions relating to those projects,

THE GENERAL COURT (Eighth Chamber),

composed, at the time of deliberation, of A.M. Collins, President, R. Barents (Rapporteur) and J. Passer, Judges,

Registrar: E. Coulon,

makes the following

Order

 Background to the dispute

1        The European Commission has concluded with the Met Office, the national meteorological service of the United Kingdom of Great Britain and Northern Ireland, three sets of grant agreements (226520‑Combine, 227159‑EUFAR and 212643‑THOR) in order to finance part of the costs of research projects under the seventh framework programme of the European Union for research, technological development and demonstration activities (2007-2013) (‘the grant agreements’).

2        By letter of 28 January 2015, the Commission informed the Met Office that a firm of chartered accountants had been appointed to carry out an audit of the three research projects, pursuant to Article II.22 of Annex 2 to the grant agreements.

3        On 19 February 2016, the appointed accounting firm notified the Met Office of a preliminary audit report, which found all personnel and indirect costs to be ineligible.

4        On 16 March 2016, the Met Office took formal note of all the points on which the appointed firm of chartered accountants had made an error of law or of interpretation, providing evidence. That firm provided its observations in the final audit report.

5        By a registered letter of 20 December 2018, notified to the United Kingdom on 21 January 2019, the Commission adopted as final the Final Audit Report, bearing reference number 14‑BA 262‑013 (‘the contested letter’).

 Procedure and forms of order sought

6        By application lodged at the Court Registry on 1 April 2019, the United Kingdom brought the present action.

7        By separate document, lodged at the Court Registry on 14 May 2019, the Commission raised a plea of inadmissibility under Article 130(1) of the Rules of Procedure of the General Court.

8        By document lodged at the Court Registry on 3 July 2019, the United Kingdom submitted its observations concerning the plea of inadmissibility.

9        In the application, the United Kingdom claims that the Court should:

–        annul the contested letter;

–        order the Commission to pay the costs.

10      In the plea of inadmissibility, the Commission contends that the Court should:

–        dismiss the action as manifestly inadmissible;

–        order the United Kingdom to pay the costs.

11      In its observations on the plea of inadmissibility, the United Kingdom claims that the Court should:

–        declare the application admissible and proceed under Article 263 TFEU;

–        order the Commission to bear the costs relating to the plea of inadmissibility.

 Law

12      Under Article 130(1) and (7) of the Rules of Procedure, if the defendant so requests, the Court may give a ruling on inadmissibility or lack of competence without going to the substance of the case.

13      In the present case, as the Commission has applied for a decision on inadmissibility, the Court, finding that it has sufficient information from the documents in the case file, has decided to rule on that application without taking further steps in the proceedings.

14      In support of the plea of inadmissibility, the Commission puts forward three pleas in law, the first alleging an error in the choice of legal basis, the second alleging that there is a lack of standing and the third alleging the absence of a challengeable act.

15      In its first plea, the Commission pleads the inadmissibility of the action on the ground that the subject matter of the dispute is of a contractual nature and that the contested letter cannot therefore be the subject of an action for annulment under Article 263 TFEU, whether that action is brought by the contracting party or by a Member State.

16      As a preliminary point, it must pointed out that it is for the applicant to choose the legal basis of its action and not for the EU Courts themselves to choose the most appropriate legal basis (judgment of 15 March 2005, Spain v Eurojust, C‑160/03, EU:C:2005:168, paragraph 35, and order of 12 October 2011, Lito Maieftiko Gynaikologiko kai Cheirourgiko Kentro v Commission, T‑353/10, EU:T:2011:589, paragraph 18).

17      In the case at hand, the United Kingdom expressly brought its claim for annulment on the basis of Article 263 TFEU. First, it explicitly requests the annulment of the Commission decision contained in the contested letter. Second, Article 263 TFEU is referred to on several occasions both in the application commencing the action and in the observations on the plea of inadmissibility.

18      The United Kingdom added, however, in its observations on the objection of inadmissibility, that, if the Court were to take the view that the action for annulment was inadmissible, it could be reclassified as an action for contractual remedies under Article 272 TFEU.

19      In those circumstances, it is necessary to consider, first, whether the present action is admissible under Article 263 TFEU before going on to examine, if necessary, in the event that the action for annulment is inadmissible, whether it may nevertheless be reclassified as an action for contractual remedies brought under Article 272 TFEU.

 Admissibility of the action having regard to the provisions of Article 263 TFEU

20      According to settled case-law, measures adopted by the institutions in a purely contractual context from which they are inseparable are, by their very nature, not among the measures referred to in Article 288 TFEU, the annulment of which may be sought pursuant to Article 263 TFEU (see order of 14 June 2012, Technion and Technion Research & Development Foundation v Commission, T‑546/11, not published, EU:T:2012:303, paragraph 34 and the case-law cited).

21      It is therefore necessary to examine whether the decision allegedly contained in the contested letter is among the measures which may be annulled by the Courts of the European Union under Article 263 TFEU, or whether, on the contrary, they are contractual in nature (see order of 14 June 2012, Technion and Technion Research & Development Foundation v Commission, T‑546/11, not published, EU:T:2012:303, point 35 and the case-law cited).

22      It should be stated that, by the contested letter, the Commission informed the United Kingdom that the additional explanations provided did not make it possible to revise all the conclusions and adjustments proposed in the audit report and, in particular, to justify the eligibility of all personnel costs claimed for projects due to the absence of adequate alternative evidence supporting the working hours claimed.

23      It must be noted that the contested letter forms part of the implementation of grant agreements concluded between the European Union and the Met Office from which it is inseparable. By that letter, the Commission confirmed the conclusions and adjustments proposed in the audit report, which followed the financial audit carried out by the audit firm instructed by the Commission to verify whether the costs incurred by the Met Office in the performance of the three research projects were eligible.

24      In response to the United Kingdom’s claim that the Commission has taken a decision in the exercise of its capacity as an administrative authority and has not acted as a party to the grant agreements, it must be observed that there is nothing in the contested letter that could lead to the conclusion that the Commission made use, in the present case, of its prerogatives as a public authority. The Commission, in essence, merely informed the United Kingdom that it was confirming the conclusions and adjustments of the audit report and that the additional explanations provided by the Met Office did not allow it to revise those conclusions.

25      It follows that the contested letter, which is inseparable from the grant agreements concluded between the European Union and the Met Office and is not a challengeable act, cannot be the subject of an action for annulment under Article 263 TFEU.

26      It follows that the application for annulment, to the extent that it is directed against the Commission decision contained in the contested letter, is inadmissible under Article 263 TFEU.

 Reclassification of the present action as an action brought on the basis of Article 272 TFEU

27      The United Kingdom alleges that, were the Court to deem the action inadmissible under Article 263 TFEU, it could be reclassified as an action based on Article 272 TFEU.

28      In the first place, as regards the possibility of reclassifying the present action as an action brought on the basis of Article 272 TFEU, it must be recalled that, according to settled case-law, when an action for annulment or an action for damages is brought before the Court, although the dispute is, in fact, contractual in nature, the Court may, in the interest of procedural economy, reclassify the action if the conditions for such reclassification are met (see judgment of 17 June 2010, CEVA v Commission, T‑428/07 and T‑455/07, EU:T:2010:240, paragraph 57 and the case-law cited).

29      On the other hand, where the dispute is contractual in nature, the Court considers itself unable to reclassify an action for annulment either where the applicant’s express intention not to base its application on Article 272 TFEU precludes such a reclassification or where the action is not based on any plea alleging infringement of the rules governing the contractual relationship in question, whether they be contractual clauses or provisions of the national law designated in the contract (see judgment of 17 June 2010, CEVA v Commission, T‑428/07 and T‑455/07, EU:T:2010:240, paragraph 59 and the case-law cited).

30      It follows that the reclassification of the action is possible as long as the express intention of the applicant does not preclude it and at least one plea alleging infringement of the rules governing the contractual relationship in question is put forward in the application. Those two conditions are cumulative (order of 15 February 2016, InAccess Networks Integrated Systems v Commission, T‑82/15, not published, EU:T:2016:90, paragraph 54).

31      In the present case, in its observations on the plea of inadmissibility raised by the Commission, the United Kingdom expressly requests that the present action be reclassified as an action brought under Article 272 TFEU. The first condition is therefore satisfied.

32      Moreover, it is apparent from the United Kingdom’s submissions that the arguments it raises in support of the action allege, first, misinterpretation of the grant agreements and, second, violation of the principle of the protection of legitimate expectations. In its observations on the plea of inadmissibility, the United Kingdom states that it maintains its conclusions on the basis of Article 272 TFEU. It also argues that, were the Court to find that only one of the pleas could be reclassified, it would be appropriate to reclassify that plea and declare the other plea inadmissible.

33      The application contains several references that are relevant to the terms of the grant agreements. Those elements may be deemed sufficient to consider that a plea in law characteristic of an action based on Article 272 TFEU has been invoked in the application in accordance with the conditions laid down in Article 76(d) of the Rules of Procedure.

34      Moreover, in so far as, according to the case-law, the action may be reclassified as an action based on Article 272 TFEU only if there is an arbitration clause conferring on the Court jurisdiction to hear an action brought on that basis (order of 6 January 2015, St’art and Others v Commission, T‑36/14, unpublished, EU:T:2015:13, paragraph 36), it should be pointed out that such a clause is indeed present in Article 9 of each grant agreement.

35      Consequently, it is necessary to reclassify the present action as an action brought on the basis of Article 272 TFEU.

36      It is still appropriate, however, to consider whether the United Kingdom had an interest in bringing proceedings.

 Interest in bringing proceedings

37      It should be recalled that, in order to ensure the proper administration of justice, any person bringing legal proceedings must, irrespective of the legal remedy chosen, have a vested and current interest in doing so. An interest in bringing proceedings is an essential prerequisite for any legal proceeding, and must, in the light of the purpose of the action, exist at the time at which the action is brought, failing which it will be inadmissible. That purpose must continue to exist, like the interest in bringing proceedings, until the final decision, otherwise there will be no need to adjudicate (see order of 4 December 2014, Talanton v Commission, T‑165/13, not published, EU:T:2014:1027, paragraph 34 and the case-law cited).

38      An interest in bringing proceedings presupposes that the action is likely, if successful, to procure an advantage to the party bringing it (see order of 4 December 2014, Talanton v Commission, T‑165/13, not published, EU:T:2014:1027, paragraph 35 and the case-law cited).

39      According to the case-law, if the interest pleaded by an applicant concerns a future legal situation, it must demonstrate that the prejudice to that situation is already certain (see order of 4 December 2014, Talanton v Commission, T‑165/13, not published, EU:T:2014:1027, paragraph 36 and the case-law cited).

40      Moreover, in case there are doubts or objections, it is for the applicant to justify its interest in bringing proceedings (see order of 4 December 2014, Talanton v Commission, T‑165/13, not published, EU:T:2014:1027, paragraph 37 and the case-law cited).

41      As regards the United Kingdom’s interest in bringing these proceedings, the Commission submits that it has not at this stage taken any step reflecting an intention to interpret or apply the grant agreements in a manner adverse to the Met Office. It has done nothing to implement the audit report and in particular has not established any amount that it considers should be recovered in the light of the audit report. In the absence of the adoption of any act by which it definitively declares its intention to pursue the recovery of any amount, the United Kingdom does not have a vested or current interest in bringing the present action, which must therefore be dismissed as inadmissible.

42      The United Kingdom replies that the audit report is final and that the Commission will now determine the sums to be recovered, with the direct consequence that the Met Office will have to change its accounting system in order to conform to the Commission's interpretation.

43      In the light of the case-law set out in paragraph 40 above, it must be pointed out that it is for the United Kingdom to justify its interest in bringing proceedings, by demonstrating the existence of concrete claims. That vested and current interest must be examined in the light of the circumstances of the case.

44      It should be stated that, if there is no specific evidence that establishes by way of exception the existence of a vested and current interest, or even a prior interest, the applicant has a vested and current interest, in the context of an action pursuant to Article 272 TFEU, only once the Commission has informed it unconditionally that it considers a concrete claim to exist under a grant agreement, that is, an amount owed by the applicant that is determined or can be sufficiently determined, in both principle and quantum, and that the Commission intends to recover that amount (see order of 4 December 2014, Talanton v Commission, T‑165/13, not published, EU:T:2014:1027, paragraph 41 and the case-law cited).

45      In the case at hand, the Commission appointed an accounting firm to carry out an audit of the three research projects, pursuant to Article II.22 of Annex 2 to the grant agreements. It disclosed the audit findings to the United Kingdom, expressing its agreement with them.

46      More specifically, by the contested letter, so far as concerns the three grant agreements in question, the Commission, first of all, confirmed the audit findings to the Met Office. It provided it with a copy of that final audit report and indicated that the report would be sent to its services responsible for implementing the report’s conclusions.

47      It is true that, in that letter, the Commission stated that it considered the conclusions of the audit report to be appropriate and that the audit was closed. However, it simultaneously requested the United Kingdom not to take any action to implement the adjustments for the audited periods, adding that its services will be able to do so, possibly by adopting a recovery order or by adjusting future payments.

48      In that context, it must be borne in mind that the findings of an audit report do not, as such, support the inference that the Commission will confirm the claims in a given instance, or the extent to which it will do so. Accordingly, an audit procedure is merely a preliminary and preparatory procedure, separate from the procedure that might potentially result in recovery, the latter being carried out by the operational services of the Commission.

49      While it is true that the adoption of a recovery order or the communication of a debit note is not a precondition for the admissibility of an action under Article 272 TFEU, it should be noted that the Courts of the European Union have deemed such actions admissible in so far as the Commission had formally established its claims by adopting a debit note. The existence of a debt to the Commission, its reality, amount and conditions of payment are formally determined, within the meaning of the Financial Regulation, only by the establishment of an amount receivable. That amount is thus formally noted by a recovery order and is communicated in a definitive and certain manner to the debtor by a debit note (see order of 4 December 2014, Talanton v Commission, T‑165/13, not published, EU:T:2014:1027, paragraph 53 and the case-law cited).

50      In that regard, it is important to note that, on the day on which the present action was brought, no recovery order was adopted nor was a debit note communicated to the United Kingdom, which the parties do not dispute.

51      The offer of evidence made on 9 September 2019 by the United Kingdom concerning the establishment of an appropriate accounting system by the Met Office in another project subsidised by the Commission is, in this context, irrelevant.

52      Consequently, since the United Kingdom did not demonstrate any vested and current interest in bringing proceedings when the present action was brought, it must be dismissed as inadmissible.

 Costs

53      Under Article 134(1) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. Since the United Kingdom has been unsuccessful, it must be ordered to pay the costs, in accordance with the form of order sought by the Commission.

On those grounds,

THE GENERAL COURT (Eighth Chamber)

Hereby orders:

1.      The action is dismissed as inadmissible.

2.      The United Kingdom of Great Britain and Northern Ireland is ordered to bear its own costs and to pay those incurred by the European Commission.

Luxembourg, 24 October 2019.

*      Language of the case: English.

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