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

JUDGMENT OF THE GENERAL COURT (First Chamber)

26 October 2022 (*)

(Grant agreement concluded in the framework of the Seventh Framework Programme for research, technological development and demonstration activities (2007-2013) – Debit notes issued by the Commission for the recovery of grants awarded by contract – Enforceable decision – Article 299 TFEU)

In Case T‑475/20,

LE, represented by M. Straus, lawyer,

applicant,

v

European Commission, represented by L. André, J. Estrada de Solà and S. Romoli, acting as Agents,

defendant,

THE GENERAL COURT (First Chamber),

composed, at the time of the deliberations, of H. Kanninen, President, O. Porchia and M. Stancu (Rapporteur), Judges,

Registrar: P. Cullen, Administrator,

having regard to the written part of the procedure,

having regard to the order of 27 November 2020, LE v Commission (T‑475/20 R, not published, EU:T:2020:574),

further to the hearing on 31 May 2022,

gives the following

Judgment

1        By its action under Article 263 TFEU, the applicant, LE, seeks annulment of Commission Decision C(2020) 3988 final of 9 June 2020 relating to the recovery of a principal amount of EUR 275 915.12 from it (‘the contested decision’).

I.      Background to the dispute

2        The framework programme adopted by Decision No 1982/2006/EC of the European Parliament and of the Council of 18 December 2006 concerning the Seventh Framework Programme for research, technological development and demonstration activities (2007-2013) (OJ 2006 L 412, p. 1) was the principal instrument of the European Union for the financing of research covering the period from 1 January 2007 to 31 December 2013.

3        On 28 June 2011, the European Commission and the coordinator of a consortium of seven entities (ʻthe coordinatorʼ), which included the applicant, signed Grant Agreement ENER/FP7/268208/ALL-GAS (ʻthe grant agreementʼ). That agreement concerned the financing of the ʻIndustrial scale demonstration of sustainable algae cultures for biofuel production (ALL-GAS)ʼ project (ʻthe projectʼ) from the funds of the Seventh Framework Programme for research, technological development and demonstration activities (2007-2013) (‘the Seventh Framework Programme’). The implementation period for that project was from 1 May 2011 to 30 April 2016.

4        The grant agreement established a financial contribution from the Commission of a maximum amount of EUR 7 106 680. Pre-financing of EUR 2 487 338 was paid to the coordinator on 27 July 2011. Of that amount, the applicant received EUR 514 552.91 by way of pre-financing, paid in two instalments on 8 September 2011 and 28 June 2012, and EUR 270 187.90 by way of interim payment, paid on 12 February 2013.

5        Article 7.1 of the grant agreement refers to two of the applicant’s subsidiaries as third parties linked to it (‘linked third parties’), to whom, in accordance with the principles established in Articles II.14 and II.15 of Annex II to that agreement, relating to the ‘General Conditions’, the applicant had the option of subcontracting certain tasks necessary for the implementation of the project. Under Article 7.2 of the grant agreement, the applicant was authorised to charge the costs incurred by the linked third parties for carrying out those tasks. However, under Article 7.4 of that agreement, the applicant, as beneficiary, retained sole responsibility in respect of the European Union and the other beneficiaries for the third parties linked to it and was required to ensure that those third parties abided by the provisions of the grant agreement.

6        Having found a ʻsignificant level of distrust amongst the consortium partners which [had an impact] upon the implementation of the projectʼ, by letter of 8 August 2013 sent to the coordinator, the Commission suspended execution of the grant agreement. That letter stated that ʻthe work under the project [could not] be reinstated until the parties to the grant agreement [had] resolved all internal problems and [that] the consortium [was] ready to recommence a well-coordinated implementation of the projectʼ.

7        On 14 August 2013, the entities in the consortium, including the applicant, were informed of the Commission’s decision to suspend execution of the grant agreement.

8        On the same day, the Commission received a letter from the coordinator setting out a series of wrongdoings committed by the applicant several days previously, which undermined the results of the project.

9        By letter of 26 September 2013, with which the letter of 14 August 2013 referred to in paragraph 8 above was enclosed, stating the seriousness of the applicant’s conduct, the other entities in the consortium notified the applicant of their intention to terminate its participation and that of the linked third parties in the grant agreement. By email of 21 December 2013 sent to the Commission, the applicant confirmed that it had been informed of the latter’s intention to approve the request of the other entities in the consortium to terminate its participation in the grant agreement and that it accepted that termination.

10      By letter of 20 June 2014, the Commission accepted the proposal to terminate the applicant’s participation in the grant agreement from 26 July 2013 and to amend that agreement accordingly.

11      By the same letter, the suspension of execution of the grant agreement was lifted from 1 November 2013.

12      On 5 November 2014, the Commission sent to the coordinator the payment letter for the second interim period of the project, in which it stated that an amount of EUR 487 669.65 should be recovered from the applicant.

13      By letter of 18 November 2014, signed by the representatives of all the entities in the consortium except the applicant, the applicant was requested to reimburse the amount of EUR 487 669.65. That letter was received by the applicant on 19 December 2014.

14      From February 2015, a series of exchanges between the applicant and the Commission ensued as regards clarifications as to the calculation of the costs incurred by the applicant and the linked third parties for carrying out the project, and a meeting took place on 8 January 2016. The Commission, in an email dated 26 May 2016, mentioned the possibility of a consolidated reply in the coming weeks. However, since one of the linked third parties (‘the linked third party concernedʼ) had been the subject of an audit in the interim period, the Commission waited for the results of the audit in order to take the findings made in that audit into account before deciding on the next steps in the file.

15      The audit of the linked third party concerned took place between 11 and 15 April 2016, and related to the costs claimed for the period between 1 May 2011 and 26 July 2013.

16      On 14 October 2016, the draft audit report was sent by the auditor to the linked third party concerned, which was invited to submit its observations.

17      On 11 November 2016, the linked third party concerned sent its observations on that draft.

18      On 16 December 2016, the Commission sent to the linked third party concerned the letter of its findings with the final audit report.

19      The auditors’ findings related mainly to a miscalculation of the actual social security charges and the calculation of personnel costs based on standard production hours instead of hours actually spent on production tasks.

20      The ineligible costs of the linked third party concerned, reported by the auditors, relating to an undue EU contribution, amounted to EUR 10 910.01. The liquidated damages claimed amounted to EUR 963.80.

21      By a first pre-information letter of 26 October 2017, the applicant, in its capacity as beneficiary with sole responsibility in respect of the European Union for the linked third party concerned, was notified of the Commission’s intention to recover those amounts of EUR 10 910.01 and EUR 963.80.

22      By a second pre-information letter also dated 26 October 2017, the applicant was informed of the Commission’s intention to recover from it the amount of EUR 346 627.56, that is to say, the difference between the pre-financing sum and the interim payment made to it, amounting to EUR 784 740.81, and the EU contribution actually accepted, amounting to EUR 438 113.25.

23      The two pre-information letters of 26 October 2017 (‘the pre-information letters’) informed the applicant of the possibility of submitting observations within 30 days of their receipt.

24      On 23 November 2017, the Commission received an email from the applicant in response to the pre-information letter referred to in paragraph 22 above.

25      By letter dated 19 February 2018, the Commission communicated to the applicant its findings, in which it accepted an additional eligible EU contribution in an amount of EUR 82 586.25.

26      By debit notes No 3241801992, 3241803362 and 3241803343, sent on 21 March 2018, the applicant was requested to pay, by 7 May 2018, the following sums:

–        EUR 264 041.31, corresponding to the costs borne by the applicant which had been pre-financed but were not accepted;

–        EUR 10 910.01, corresponding to the costs unduly paid to the linked third party concerned;

–        EUR 963.80 corresponding to the liquidated damages imposed on the linked third party concerned.

27      On 22 May 2018, since the applicant had not complied with those requests for payment, the Commission sent a reminder with a form for acknowledgement of receipt. The applicant confirmed receipt of the reminder by email of 9 July 2018.

28      By three letters of formal notice sent to the applicant on 27 June 2018, the Commission, in the interim, demanded payment of the principal plus default interest from the due date stated in the debit notes. The letters stated that, should the corresponding sums not be repaid within 15 days, the Commission would take legal action against the applicant to enforce recovery of both the principal and the interest.

29      On 9 June 2020, the Commission adopted the contested decision, relating to the recovery of the amount of EUR 275 915.12 plus interest of EUR 19 464.83.

II.    Forms of order sought

30      The applicant claims that the Court should:

–        annul the contested decision, and the decision and the debit notes relating thereto, and its execution and implementation by the Commission and any authorised bodies, in accordance with Article 299 TFEU;

–        in the alternative, give a ruling or take any other measures as the General Court shall deem just and appropriate;

–        order the Commission to pay the costs.

31      The Commission contends that the Court should:

–        dismiss the action as unfounded;

–        order the applicant to pay the costs.

III. Law

A.      Admissibility of the reply

32      In the rejoinder, the Commission maintains that the reply does not satisfy the requirements of Articles 76 and 83 of the Rules of Procedure of the General Court and paragraph 130 of the Practice Rules for the Implementation of the Rules of Procedure. According to the Commission, the applicant first does not set out any pleas or arguments in a sufficiently clear, intelligible and coherent manner and, secondly, adds facts, opinions and new documents, which are wholly unconnected with the pleas relied on in the application.

33      In that regard, it should be noted that, under Article 83 of the Rules of Procedure, the application may be supplemented by a reply. It is moreover apparent from paragraph 130 of the Practice Rules for the Implementation of the Rules of Procedure that, ‘the framework and the pleas in law or complaints at the heart of the dispute having been set out … in depth in the application …, the purpose of the reply … shall be to allow the applicant … to make clear [its] position or to refine [its] arguments on an important issue and to respond to new matters raised in the defence’.

34      In this case, it is true that the reply does not follow the structure of the application. The reply is drafted in the form of comments on the observations made by the Commission in the defence and on the documents annexed thereto, identifying the paragraphs of the defence and the documents attached to it, to which each comment relates. Such a presentation, even if it does not facilitate the overall understanding of the reply, nevertheless enabled the Commission effectively to supplement its defence, as is apparent from the rejoinder, and enables the Court to exercise its power of review.

35      The plea of inadmissibility based on the incoherent and insufficiently clear nature of the reply must therefore be rejected.

B.      The claim for annulment

1.      The first head of claim

36      By its first head of claim, relying on the provisions of Article 263 TFEU, the applicant seeks annulment of both the contested decision and the decision and debit notes relating thereto.

37      The applicant does not specify what it means by ‘the decision in relation’ to the contested decision. However, it is apparent from the general scheme of its written submissions that it refers to the pre-information letters.

(a)    The claim for annulment of the pre-information letters and the debit notes

38      It must be borne in mind that an action for annulment for the purposes of Article 263 TFEU must be generally available in the case of all measures adopted by the EU institutions, whatever their nature or form, which are intended to have binding legal effects capable of affecting the interests of the applicant by bringing about a distinct change in the legal position of that applicant (see judgment of 16 July 2020, Inclusion Alliance for Europe v Commission, C‑378/16 P, EU:C:2020:575, paragraph 71 and the case-law cited).

39      However, the EU judicature does not have jurisdiction to hear an action for annulment where the applicant’s legal position falls within contractual relationships whose legal status is governed by the national law agreed to by the contracting parties (see, to that effect, judgments of 9 September 2015, Lito Maieftiko Gynaikologiko kai Cheirourgiko Kentro v Commission, C‑506/13 P, EU:C:2015:562, paragraph 18, of 16 July 2020, ADR Center v Commission, C‑584/17 P, EU:C:2020:576, paragraph 63).

40      Were the EU judicature to hold that it had jurisdiction to adjudicate on the annulment of acts falling within purely contractual relationships, not only would it risk rendering Article 272 TFEU – which grants the Courts of the European Union jurisdiction pursuant to an arbitration clause – meaningless, but would also risk, where the contract does not contain such a clause, extending its jurisdiction beyond the limits laid down by Article 274 TFEU, which specifically gives national courts or tribunals ordinary jurisdiction over disputes to which the European Union is a party (see judgments of 9 September 2015, Lito Maieftiko Gynaikologiko kai Cheirourgiko Kentro v Commission, C‑506/13 P, EU:C:2015:562, paragraph 19, of 16 July 2020, ADR Center v Commission, C‑584/17 P, EU:C:2020:576, paragraph 64).

41      It follows from that case-law that, where there is a contract between the applicant and one of the EU institutions, an action may be brought before the EU judicature on the basis of Article 263 TFEU only where the contested measure aims to produce binding legal effects falling outside of the contractual relationship between the parties and which involve the exercise of the prerogatives of a public authority conferred on the contracting institution acting in its capacity as an administrative authority (judgments of 9 September 2015, Lito Maieftiko Gynaikologiko kai Cheirourgiko Kentro v Commission, C‑506/13 P, EU:C:2015:562, paragraph 20; of 28 February 2019, Alfamicro v Commission, C‑14/18 P, EU:C:2019:159, paragraph 50; of 16 July 2020, ADR Center v Commission, C‑584/17 P, EU:C:2020:576, paragraph 65).

42      A decision enforceable within the meaning of Article 299 TFEU constitutes a challengeable act pursuant to Article 263 TFEU when that decision, in the absence of any contrary indication in the TFEU, is among those referred to in Article 288 TFEU. The merits of such an enforceable decision can only be disputed before the court hearing the proceedings for annulment, on the basis of Article 263 TFEU (see order of 4 July 2017, Systema Teknolotzis v Commission, T‑234/15, EU:T:2017:461, paragraph 90 and the case-law cited).

43      On the other hand, as stated by the Court, a debit note or a formal notice, the purpose of which is to recover a debt on the basis of a grant agreement, and which states the amount of the debt or a due date and also the payment terms of the debt established, cannot be equated to an enforcement order as such, even though they refer to enforcement pursuant to Article 299 TFEU as a possible option among others open to the Commission where the debtor fails to perform an obligation by the due date laid down (see, to that effect, judgments of 9 September 2015, Lito Maieftiko Gynaikologiko kai Cheirourgiko Kentro v Commission, C‑506/13 P, EU:C:2015:562, paragraph 23, and of 28 February 2019, Alfamicro v Commission, C‑14/18 P, EU:C:2019:159, paragraph 52). That applies a fortiori to a pre-information letter such as those sent, in this case, by the Commission.

44      In this case, both the pre-information letters and the debit notes relating to the contested decision are measures forming part of the context of the grant agreement which linked the Commission to the applicant and whose purpose is the recovery of a debt which is based on the provisions of that agreement.

45      Consequently, the first head of claim of the action, in so far as it seeks annulment of the pre-information letters and the debit notes relating to the contested decision, must be rejected as inadmissible.

(b)    The claim for annulment of the contested decision

46      As a preliminary point, it should be borne in mind that, in accordance with the case-law referred to in paragraph 42 above, a decision which is enforceable within the meaning of Article 299 TFEU, like the contested decision, constitutes a challengeable act under Article 263 TFEU.

47      In support of its claim for annulment of the contested decision, the applicant relies on five pleas in law, alleging, first, breach of the principle that action must be taken within a reasonable time and of the principle of equal treatment, secondly, failure to state reasons, thirdly, infringement of the right to be heard and breach of the principle of equal treatment, fourthly, breach of the principle of the protection of legitimate expectations and, fifthly, breach of the principle of good administration.

48      It is appropriate to examine, first of all, the second plea, then the third plea, before examining the first plea, the fourth plea and, lastly, the fifth plea.

(1)    The second plea, alleging failure to state reasons

49      By its second plea in law, the applicant claims, in essence, that the contested decision does not contain an adequate statement of reasons.

50      In the first place, it maintains that the Commission breached the agreement, which was reached at the meeting of 8 January 2016, under which the applicant was to submit new calculations to the Commission. However, the latter did not take those calculations into account.

51      In the second place, the applicant was not informed of the reasons and grounds on account of which it was excluded from the project. The applicant takes the view that that is essential because it seems to have led to the review and investigation of the expenses that it incurred and of its contribution to the implementation of the project.

52      In the third place, the Commission agreed to base its review on the coordinator’s reports while failing to send the applicant the information provided by that coordinator. Such a procedure is not consistent with the principles of openness and transparency and therefore does not guarantee good administration.

53      In the fourth place, the Commission did not give sufficient and specific reasons for its decision to reject the applicant’s summary statements and written and oral explanations relating to its contribution to the implementation of the project.

54      In the fifth place, the Commission also did not state the reasons why the coordinator did not add another subsidiary as a linked third party, despite the fact that the grant agreement provided for that possibility. The applicant further states that the request submitted to the project partners and the coordinator to approve the addition of another party linked to it was not contrary to the principle of non-retroactivity.

55      In the sixth and last place, the applicant maintains that, on the basis of Article 34 of Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council of 18 July 2018 on the financial rules applicable to the general budget of the Union, amending Regulations (EU) No 1296/2013, (EU) No 1301/2013, (EU) No 1303/2013, (EU) No 1304/2013, (EU) No 1309/2013, (EU) No 1316/2013, (EU) No 223/2014, (EU) No 283/2014, and Decision No 541/2014/EU and repealing Regulation (EU, Euratom) No 966/2012 (OJ 2018 L 193, p. 1), the effects in relation not only to its performance but also that of the other project partners and of the coordinator should have been reviewed. In that regard, it was agreed that the checks and controls would not be carried out by the members of the Commission’s staff who were responsible for the project’s grant and its implementation.

56      The Commission disputes those arguments.

57      Under Article 41(2)(c) of the Charter of Fundamental Rights of the European Union (‘the Charter’), the administration has an obligation to give reasons for its decisions. That duty to state reasons requires, according to settled case-law, that, in accordance with Article 296 TFEU, the reasoning followed by the authority which adopted the measure must be disclosed in a clear and unequivocal fashion so as, on the one hand, to inform the persons concerned of the justification for the measure adopted and thus enable them to defend their rights and, on the other, to enable the court to exercise its power of review (see judgment of 4 July 2017, Systema Teknolotzis v Commission, T‑234/15, EU:T:2017:461, paragraph 126 (not published) and the case-law cited).

58      In that regard, the statement of reasons need not give details of all relevant factual or legal aspects, and the question whether it meets the requirements to state reasons must be assessed in the light not only of the wording of the measure but also of its context and all the legal rules governing the matter in question. In addition, it should be pointed out that the institutions are not obliged to adopt a position on all the arguments relied on by the persons concerned. It is sufficient for the authority which adopted the measure to set out the facts and the legal considerations having decisive importance in the scheme of the contested measure (see judgment of 4 July 2017, Systema Teknolotzis v Commission, T‑234/15, EU:T:2017:461, paragraph 128 (not published) and the case-law cited).

59      As regards the applicant’s second complaint, to the effect that the Commission failed to inform it of the grounds on which it had been excluded from the project, it should be noted that, in accordance with Article II.36 of Annex II to the grant agreement, requests for termination of a beneficiary’s participation in that agreement, submitted to the Commission, had to provide, in particular, the justification for the proposed termination. It follows that the Commission was not required to state reasons with regard to the applicant for the wish of the other members of the consortium to exclude it from the grant agreement, but was only required, under the provisions of that article, to ensure that that justification existed and that the entity concerned was aware of that justification. The applicant does not claim that the Commission failed to fulfil that obligation. Furthermore, and in any event, it should be noted that it is apparent from the documents in the file (see paragraph 9 above) that the applicant had been informed by the other entities in the consortium both of their intention to exclude it from the grant agreement and of the reasons justifying that measure.

60      As regards the applicant’s fourth complaint, by which it alleges that the Commission did not give sufficient reasons for the decision to reject the applicant’s summary statements and its written and oral explanations relating to its contribution to the implementation of the project, it should be borne in mind that compliance with the obligation to state reasons must be assessed by taking into account the circumstances of each case and, in particular the content of the measure, the nature of the reasons relied on and the interest which the addressees of the measure, or other parties to whom it is of direct and individual concern, may have in obtaining explanations (see judgment of 4 July 2017, Systema Teknolotzis v Commission, T‑234/15, not published, EU:T:2017:461, paragraph 127 and the case-law cited). Furthermore, in accordance with the case-law referred to in paragraph 58 above, the institutions are not obliged to adopt a position on all the arguments relied on by the persons concerned. It is sufficient for the authority which adopted the measure to set out the facts and the legal considerations having decisive importance in the scheme of the contested measure.

61      It must be held that recital 16 of the contested decision states that, after examining the comments submitted by the applicant, an additional eligible EU contribution of EUR 82 586.25 had been accepted.

62      As regards the applicant’s fifth complaint, that the Commission did not state the grounds on which the coordinator did not add another subsidiary of the applicant as a third party linked to it, despite the fact that the grant agreement provided for that possibility and that that did not breach the principle of non-retroactivity, it must be found that that complaint relates to conduct attributable not to the Commission but to the coordinator. Accordingly, that complaint is ineffective.

63      As regards the first, third and sixth complaints, it must be found that those complaints do not relate to the statement of reasons for the contested decision, but seek to call into question the merits of that decision. By those complaints, the applicant maintains that (i) the Commission breached the agreement which they reached at the meeting of 8 January 2016, under which the applicant was to submit new calculations to the Commission, since the latter did not take those calculations into account (first complaint), (ii) the Commission agreed to base its review on the coordinator’s reports while failing to send to the applicant the information provided by that coordinator (third complaint), and (iii)  the Commission should have examined the effects in relation not only to the applicant’s performance but also to that of the other project partners and of the coordinator (sixth complaint).

64      According to settled case-law, the duty to state reasons established by Article 296 TFEU is an essential procedural requirement which must be distinguished from the question whether the reasoning is well founded, which is concerned with the substantive legality of the measure at issue. The reasoning of a decision consists in a formal statement of the grounds on which that decision is based. If those grounds are vitiated by errors, those errors will vitiate the substantive legality of the decision, but not the statement of reasons in that decision, which may be adequate even though it sets out reasons which are incorrect (judgments of 18 June 2015, Ipatau v Council, C‑535/14 P, EU:C:2015:407, paragraph 37, and of 3 May 2017, Gfi PSF v Commission, T‑200/16, not published, EU:T:2017:294, paragraph 34).

65      It follows that those three complaints, which seek to call into question the merits of the contested decision, are irrelevant in the context of a plea alleging infringement of Article 296 TFEU.

66      Accordingly, for all those reasons, the second plea must be rejected.

(2)    The third plea, alleging infringement of the right to be heard and breach of the principle of equal treatment

67      The applicant claims that it proposed having a meeting with the Commission but, in April 2018, the latter refused, stating that it had allowed all parties to express their own views and defend their positions separately. However, according to the applicant, that statement does not reflect what happened nor how the entire process was managed, given that the applicant never had the opportunity to properly and sufficiently defend its rights and position.

68      The applicant concludes from this that the Commission, first, denied it an adversarial hearing and, secondly, did not act in compliance with the administrative principles applicable. In view, in particular, of the sums of money involved in the present dispute, which are considerable for the applicant, and the extent of the potential consequences of that dispute for its position, its request was justified and reasonable and was based, moreover, on one of the essential principles to comply with when a party is the subject of an investigation.

69      Furthermore, the applicant submits that it had good reason to believe that the Scientific Advisory Board, which was an internal body set up by the consortium as part of its internal ‘quality plan’, was not independent, especially the two members of that board responsible for advising on and reviewing the applicant’s tasks. The company, which those members were working for and which was owned by one of them, was regularly hired by the coordinator to perform work outside the project. There is therefore a conflict of interest. According to the applicant, those two individuals also sought payment in the context of the project. Furthermore, there appears to be another relationship between the coordinator and that board, since the members of the latter depended on the coordinator to obtain new contracts. Accordingly, the information provided by the Scientific Advisory Board was not objective and that board did not act independently.

70      The Commission disputes those arguments.

71      It must be recalled that the right to be heard in all proceedings is affirmed not only in Articles 47 and 48 of the Charter, which ensure observance of both the rights of the defence and the right to fair legal process in all judicial proceedings, but also in Article 41 of the Charter, which guarantees the right to good administration. Article 41(2) of the Charter provides that the right to good administration includes, inter alia, the right of every person to be heard before any individual measure which would affect him or her adversely is taken (see judgment of 22 May 2019, Ertico – ITS Europe v Commission, T‑604/15, EU:T:2019:348, paragraph 47 and the case-law cited).

72      According to settled case-law, observance of the rights of the defence is, in all proceedings initiated against a person which are liable to culminate in an act adversely affecting that person, a fundamental principle of EU law which must be guaranteed, even in the absence of any rules governing the proceedings in question. That principle requires that the addressees of decisions, which significantly affect their interests, should be placed in a position in which they may effectively make known their views. Nevertheless, that obligation does not apply to a mere restatement, redrafting or development of a point already made in respect of which the addressee of the decision at issue previously had the opportunity effectively to make known his or her views (see judgment of 22 May 2019, Ertico – ITS Europe v Commission, T‑604/15, EU:T:2019:348, paragraph 46 and the case-law cited).

73      Indeed, the right to be heard does not include the right to an inter partes hearing involving the authority which has adopted the contested acts and their addressee, but guarantees every person the opportunity to make known his or her views effectively during an administrative procedure and before the adoption of any decision liable to affect his or her interests adversely (judgment of 3 July 2018, Transtec v Commission, T‑616/15, EU:T:2018:399, paragraph 145).

74      In order for an infringement of the rights of the defence to be capable of resulting in annulment of the contested decision, it must be established that, had it not been for such an irregularity, the outcome of the procedure might have been different. The burden of proof in that regard falls upon the applicant, since any infringement of the rights of the defence constitutes a procedural defect, which means that the party concerned must demonstrate the specific prejudice to its individual rights caused by the breach (see judgment of 22 May 2019, Ertico – ITS Europe v Commission, T‑604/15, EU:T:2019:348, paragraph 48 and the case-law cited; see also, to that effect, judgment of 14 May 2020, NKT Verwaltung and NKT v Commission, C‑607/18 P, not published, EU:C:2020:385, paragraph 56 and the case-law cited).

75      In this case, in the first place, it must be found that the contested decision was taken by the Commission after a long series of exchanges and contacts with the applicant, which included, in particular, the meeting of 8 January 2016, the audit of the linked third party concerned, the pre-information letters (see paragraphs 21 and 22 above), the letter of 19 February 2018 (see paragraph 25 above), the debit notes, the reminder and the formal notices (see paragraphs 26 to 28 above). In the second place, it should be borne in mind that the applicant was constantly involved in those exchanges and contacts and was invited to submit its observations on the facts established by the Commission (see paragraph 23 above). In the third place, following the applicant’s observations sent by email on 23 November 2017 (see paragraph 24 above), the Commission accepted an additional EU contribution in an amount of EUR 82 586.25. In the fourth place, it should be noted that the contested decision is not based on any new fact on which the applicant could not have submitted observations beforehand.

76      In any event, it is apparent from the case-law referred to in paragraph 74 above that, in order for an infringement of the rights of the defence to be capable of resulting in annulment of the contested decision, it must be established that, had it not been for such an irregularity, the outcome of the procedure might have been different, which is for the applicant to prove. However, the applicant does not put forward any argument to that effect.

77      Accordingly, the applicant’s claims concerning the infringement of its right to be heard cannot succeed.

78      As regards the applicant’s complaints on the functioning of the Scientific Advisory Board, it must be found that, as rightly stated by the Commission, that advisory board was an internal body set up by the consortium in the context of its internal ‘quality plan’. Since such a body is not subject to any review by the Commission, the latter cannot be criticised for any irregularity in its operation amounting to an alleged breach of the principle of equal treatment.

79      Accordingly, the third plea must be rejected.

(3)    The first plea, alleging breach of the principle that action must be taken within a reasonable time and of the principle of equal treatment

80      In the context of the first plea, in the first place, the applicant states that more than five years elapsed before the Commission adopted the contested decision, without the assessments and reports on the Commission’s findings having been fully transparent. The fact that the Commission sent several debit notes and the time associated with that means and implies that years passed without the merits of the case being considered and taken into consideration.

81      Moreover, during that period, the Commission did not sufficiently examine the issues raised by the applicant and the legal merits. Thus, the Commission should have examined the termination of the applicant’s participation in the grant agreement made by the other entities in the consortium in light of the fact that that agreement did not provide for such a possibility. Furthermore, since such a review would have implications for the other entities in the consortium, its consequences for the project, and how it would relate to the role played by the applicant and its activities, should have been made clear.

82      Article 7 of Decision No 1982/2006 expressly refers to monitoring of the implementation of the Seventh Framework Programme and its specific programmes, which must be done continually and systematically. It also provides that the Commission is to carry out an evidence-based interim evaluation of the framework programme. The applicant submits that it wonders whether that evaluation has been carried out and what the results were.

83      In the second place, the applicant maintains that, in view of all the facts, the Commission did not act in accordance with the principle of equal treatment. Thus, in its review, the Commission merely reviewed the applicant’s position as a beneficiary of the project, although the latter had performed its obligations and managed to satisfy the requirements under the grant agreement. The contributions of the other entities in the consortium were not reviewed although they had agreed to transfer budgetary resources to the applicant on the ground that that applicant had fulfilled and would fulfil the majority of the tasks and obligations relating to the grant agreement.

84      The Commission disputes those arguments.

85      As a preliminary point, it must be borne in mind that infringement of the reasonable time requirement can constitute a ground for annulment only if that infringement has adversely affected the exercise of the rights of defence by its addressee. Exceeding a reasonable time limit can constitute a ground for annulment of a decision only provided that it has been established that it has undermined the guarantees required for the person concerned to put forward his or her point of view. Other than in that specific case, failure to observe the duty to deal with the matter within a reasonable time has no effect on the validity of the administrative procedure (see, to that effect and by analogy, judgment of 11 June 2009, Hellenic Republic v Commission, T‑33/07, not published, EU:T:2009:195, paragraph 240).

86      In this case, the applicant does not state how a breach, if any, of the principle that action must be taken within a reasonable time, would have prevented it from exercising its rights of defence and from putting forward its point of view during the administrative procedure conducted by the Commission for the calculation of costs. On the contrary, as found in paragraph 75 above, it was constantly involved in that procedure and actively participated in it. In the light of the case-law referred to in paragraph 85 above, it must be held that, even if the irregularities alleged by the applicant, summarised in paragraphs 80 and 81 above, were established, the applicant has not shown how they might affect the lawfulness of the contested decision.

87      As to the applicant’s claim that the principle of equal treatment has been breached, it must be borne in mind that that principle is breached where comparable situations are treated differently or different situations are treated in the same way, unless such difference of treatment is objectively justified. It follows that, where the beneficiaries of a grant or financial aid are in comparable situations, the European Union or the institution representing it, cannot treat them differently when they exercise their contractual rights, a fortiori when the essential conditions for the award of the grant or financial aid concerned are at issue (judgment of 8 September 2015, Amitié v Commission, T‑234/12, not published, EU:T:2015:601, paragraph 156 and the case-law cited).

88      However, in this case, the applicant cannot allege that the Commission acted contrary to the principle of equal treatment. It must be stated that it was not in a situation comparable to that of the other members of the consortium. First, its participation in the grant agreement had been terminated, which led to the need to calculate its costs in the performance of that agreement during the period between the date of the start of the project’s implementation and the date of that termination. Secondly, the need for further calculations and the audit procedures resulted from the alleged conduct of the linked third party concerned and the need to determine the exact amounts to be recovered.

89      Therefore, it must be held that the complaints put forward by the applicant in the context of the present plea cannot succeed.

90      That finding cannot be called into question by the applicant’s observation relating to Article 7 of Decision No 1982/2006.

91      Under that article, the Commission is to continually and systematically monitor the implementation of the Seventh Framework Programme and its specific programmes and to regularly report and disseminate the results of that monitoring to the European Parliament, the Council of the European Union, the European Economic and Social Committee and the Committee of the Regions.

92      It is apparent from the provisions of that article that, even though it imposes on the Commission certain monitoring and reporting obligations vis-à-vis the institutions, those obligations relate to the implementation of the Seventh Framework Programme and its specific programmes as such, and not to the implementation of individual grant agreements. Consequently, those obligations do not apply in the present case.

93      Therefore, that observation on the part of the applicant is, in any event, irrelevant.

94      Accordingly, the first plea in law must be rejected in its entirety.

(4)    The fourth plea, alleging breach of the principle of the protection of legitimate expectations

95      In the context of that plea, the applicant states that, in May 2012, the consortium’s general assembly had identified the failures of one of its entities. Consequently, in the context of the consortium, it was decided that the applicant’s budget would be increased by two-thirds of that entity’s budget. The applicant subsequently took over some of the tasks of that entity. That decision was, however, not incorporated in an amendment to the grant agreement. That was because the coordinator had not submitted any request to that effect to the Commission. That omission also constitutes a manifest error by the coordinator and clearly shows its negligence. Furthermore, the applicant had asked the Commission several times to take into account the budget allocation decided at that consortium’s general assembly in May 2012.

96      According to the applicant, that fact is relevant for the purposes of assessing the merits of this case because the coordinator should have informed the Commission of the allocation of the budget which was fixed.

97      The Commission ignored, without reason and without providing an adequate statement of reasons, that obvious error on the part of the coordinator and the fact that the applicant had asked for a request to amend the grant agreement to be submitted. It is usually for the coordinator to submit such a request, but, as the coordinator did not discharge its obligations, the Commission should have given the applicant the opportunity to submit such a request for that alleged change, as was done in respect of the addition of a third party. It should have been done, a fortiori, since the grounds for termination relied on against the applicant are unclear.

98      The Commission disputes those arguments.

99      It should be recalled that the right to rely on the principle of the protection of legitimate expectations presupposes that precise, unconditional and consistent assurances originating from authorised, reliable sources have been given to the person concerned by the competent authorities of the European Union. By contrast, a person may not plead breach of that principle unless he or she has been given those assurances (see judgment of 16 July 2020, ADR Center v Commission, C‑584/17 P, EU:C:2020:576, paragraph 75 and the case-law cited).

100    In the present case, none of the evidence relied on by the applicant makes it possible to infer that it had received an assurance that the Commission was not going to rely on claims for reimbursement in respect of sums unduly paid under the grant agreement. The applicant does not put forward any specific argument concerning the possible fulfilment of the conditions for the existence of legitimate expectations, which must be protected, in accordance with the case-law referred to in paragraph 99 above.

101    That finding cannot be called into question by the applicant’s claim that the Commission should have taken into account the wrongful conduct of the coordinator, in so far as it did not request, on behalf of the consortium, that an amendment to the grant agreement be drawn up. In that regard, it is sufficient to find that the Commission cannot be held responsible for the coordinator’s conduct. In addition, it could not take account of amendments to the grant agreement which had not been agreed

102    Accordingly, the fourth plea in law must be rejected.

(5)    The fifth plea, alleging breach of the principle of good administration

103    In the fifth plea, the applicant submits, in essence, that the Commission did not act in accordance with a general principle of good governance and Article 41 of the Charter.

104    In the first place, it claims that the Commission took five years to reach the contested decision.

105    In the second place, the applicant submits that the case-law confirms that, where the institutions enjoy broad discretion, respect for the rights guaranteed by the EU legal order in administrative proceedings is of even more fundamental importance. Those guarantees include, in particular, the duty of the competent institution to examine carefully and impartially all the relevant elements of the individual case and the right of the person concerned to make known his or her views and to have an adequately reasoned decision.

106    In the third and last place, the applicant states that, by not giving it a hearing, by not taking its requests into consideration and by not giving reasons for their reviews and their decisions during the evaluation procedure of the grant due, the EU institutions failed entirely to fulfil the duty of care and proper administration which they owed to an independent party. In that regard, good administration is part of good governance. In general, good governance is perceived as a normative principle of administrative law, which requires the administrative authority to perform its functions in a manner that promotes the values of efficiency and responsiveness to the participants of civil society. Good governance is participatory, consensus-orientated, accountable, transparent, responsive, effective and efficient, equitable and inclusive, and follows the rule of law.

107    The Commission disputes those arguments.

108    In the first place, it should be observed that the applicant’s claims relating to the length of the procedure conducted by the Commission, the lack of hearing of the applicant and the lack of an adequate statement of reasons for the contested decision are repetitions of the complaints made in the context of the first, second and third pleas, which were rejected in the context of the examination of those pleas.

109    In the second place, it should be borne in mind that the principle of good administration, which is binding on the Commission by virtue in particular of Article 41 of the Charter, entails in particular the obligation for the latter to examine carefully and impartially all the relevant elements of the individual case (see, to that effect, judgment of 4 July 2017, Systema Teknolotzis v Commission, T‑234/15, EU:T:2017:461, paragraph 121 (not published) and the case-law cited).

110    By the arguments referred to in paragraph 105 above, the applicant does not demonstrate that the Commission failed to fulfil its obligation to examine carefully and impartially all the relevant aspects of the individual case. It does not state how, specifically, the Commission failed to fulfil that obligation by adopting the contested decision.

111    Accordingly, the fifth plea in law must be rejected and, therefore, the applicant’s first head of claim must be rejected in its entirety.

2.      The second head of claim

112    By its second head of claim, the applicant asks the Court to give a ruling or to take such other measures as it deems just and appropriate, without, however, explaining the nature and scope of the measures whose adoption it requests.

113    It must be pointed out, in that respect, that under Article 76(e) of the Rules of Procedure, the application is to contain the form of order sought by the applicant, which must be provided in a clear and accurate manner (order of 19 July 2016, Trajektna luka Split v Commission, T‑169/16, not published, EU:T:2016:441, paragraph 16 and the case-law cited). That is not the case with regard to that head of claim, which, consequently, must also be rejected as inadmissible.

114    Accordingly, the action must be dismissed in its entirety, without it being necessary to rule on the admissibility of the annexes to the reply in the light of Article 85 of the Rules of Procedure.

 Costs

115    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.

116    In the present case, since the applicant has been unsuccessful, it must be ordered to pay the costs, including those relating to the interim proceedings, in accordance with the form of order sought by the Commission.

On those grounds,

THE GENERAL COURT (First Chamber)

hereby:

1.      Dismisses the action;

2.      Order LE to pay the costs, including those relating to the proceedings for interim measures.

Delivered in open court in Luxembourg on 26 October 2022.

*      Language of the case: English.

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