ENIL Brussels Office and Others v Commission (Action for annulment - ERDF - Operational programme 'Regions in Growth' - Order) [2020] EUECJ T-613/19

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(Action for annulment – ERDF – Operational programme ‘Regions in Growth’ – Priority Axis 5 (Regional social infrastructure) – Grant intended to support the deinstitutionalisation of services for elderly people and people with disabilities – Refusal to suspend the call for proposals at the request of organisations for the defence and representation of people with disabilities – Act not open to challenge – Inadmissibility)

European Network on Independent Living Brussels Office (ENIL Brussels Office), established in Brussels, Belgium,

Validity Foundation-Mental Disability Advocacy Centre, established in Budapest, Hungary,

European Commission, represented by S. Pardo Quintillán and J. Hradil, acting as Agents,

APPLICATION under Article 263 TFEU seeking annulment of the Commission’s letter of 24 May 2019 by which that institution took a position on the applicants’ request to act addressed to the Commission, under Article 265 TFEU, by letter of 26 April 2019 and which was intended, in essence, to require the Commission to suspend the call for proposals for the award of grants under the procedure ‘Support for the deinstitutionalisation of social services for elderly people and people with disabilities’ (BG16RFOP0001-5.002) and all related payments,

composed of R. da Silva Passos, President, I. Reine and M. Sampol Pucurull (Rapporteur), Judges,

1 Operational programme ‘Regions in Growth 2014-2020’ is a programme adopted by the European Commission for the Republic of Bulgaria. It is co-financed by the European Regional Development Fund (ERDF).

2 The ERDF is governed, first, by Regulation (EU) No 1303/2013 of the European Parliament and of the Council of 17 December 2013 laying down common provisions on the European Regional Development Fund, the European Social Fund, the Cohesion Fund, the European Agricultural Fund for Rural Development and the European Maritime and Fisheries Fund and laying down general provisions on the European Regional Development Fund, the European Social Fund, the Cohesion Fund and the European Maritime and Fisheries Fund and repealing Council Regulation (EC) No 1083/2006 (OJ 2013 L 347, p. 320), as amended, and, secondly, by Regulation (EU) No 1301/2013 of the European Parliament and of the Council of 17 December 2013 on the European Regional Development Fund and on specific provisions concerning the Investment for growth and jobs goal and repealing Regulation (EC) No 1080/2006 (OJ 2013 L 347, p. 289), as amended.

3 Under Operational programme ‘Growing Regions 2014-2020’, the Managing Authority designated by the Bulgarian authorities for the implementation of that operational programme (‘the Managing Authority’) published on 30 March 2018 a call for proposals for the award of grants under the procedure ‘Support for the deinstitutionalisation of social services for elderly people and people with disabilities’ (BG16RFOP0001-5.002), under Priority Axis 5 ‘Regional social infrastructure’ of the operational programme, for which the deadline was 1 October 2018 (‘the Call for Proposals’).

4 The applicants, European Network on Independent Living Brussels Office (ENIL Brussels Office; ‘ENIL’), Validity Foundation-Mental Disability Advocacy Centre and Center for Independent Living Association, are non-governmental organisations that defend and represent people with disabilities.

5 By letter of 11 February 2019, the applicants sent to the Managing Authority a request to have, in essence, the Call for Proposals suspended immediately. In that regard, the applicants submitted that the housing structure to be developed in Bulgaria, under the projects awarded under the Call for Proposals, perpetuated the segregation and isolation of people with disabilities in breach of the prohibition of discrimination on grounds of disability, as laid down in the United Nations Convention on the Rights of Persons with Disabilities, adopted on 13 December 2006 and ratified by the European Union on 23 December 2010 (‘the Convention on the Rights of Persons with Disabilities’).

6 By letter of 5 March 2019, the Managing Authority replied to the applicants that, in essence, in the Call for Proposals all measures had been taken and implemented in compliance with national and international regulations.

7 On 26 March 2019, a meeting was held in Brussels (Belgium) between one of the applicants, ENIL, and the Commission’s Directorate-General for Regional and Urban Policy, concerning the applicants’ request for suspension of the Call for Proposals addressed to the Managing Authority.

8 By letter of 23 April 2019, the applicants replied to the letter of the Managing Authority of 5 March 2019, expressing their disappointment at the authority’s position and reiterating their request to have the Call for Proposals suspended immediately.

9 By letter of 26 April 2019 addressed to the Commission’s Directorate-General for Regional and Urban Policy, ENIL invited the Commission to act in accordance with Article 265 TFEU in order to take the necessary measures to suspend the Call for Proposals and all related payments and encourage the Managing Authority to ensure that any future call for proposals under the ‘Growing Regions 2014-2020’ Operational programme would comply with Article 19 of the Convention on the Rights of Persons with Disabilities.

10 By letter of 24 May 2019 addressed to ENIL, with a copy to the other two applicants, and notified on 1 July 2019, the Commission’s Directorate-General for Regional and Urban Policy stated that, since the Call for Proposals complied with the Partnership Agreement concluded in that respect with the Republic of Bulgaria and the Operational programme ‘Growing Regions 2014-2020’, there was no need to take any action. In addition, the Commission recalled that, under shared management between the Commission and the Member States, it did not have the competence to suspend the Call for Proposals launched by the Managing Authority (‘the letter of 24 May 2019’).

11 By application lodged at the Court Registry on 10 September 2019, the applicants brought the present action.

12 By separate document lodged at the Court Registry on 15 January 2020, the Commission raised an objection of inadmissibility under Article 130(1) of the Rules of Procedure of the General Court.

13 The applicants submitted their observations on the objection of inadmissibility on 5 March 2020.

15 In its objection of inadmissibility, the Commission contends that the Court should:

16 In their observations on the objection of inadmissibility, the applicants contend that the Court should:

– in the alternative, pursuant to Article 130(7) of the Rules of Procedure, stay the proceedings on admissibility pending the decision closing the proceedings;

17 Under Article 130(1) and (7) of the Rules of Procedure, if the defendant so requests, the Court may decide on inadmissibility or lack of competence without going to the substance of the case. In the present case, as the Commission has applied for a decision on inadmissibility, the Court, finding that it has sufficient information available to it from the documents before it, has decided to rule on that application without taking further steps in the proceedings.

18 In support of its objection of inadmissibility, the Commission submits that (i) the letter of 24 May 2019 does not constitute a challengeable act, since it does not produce any binding legal effects; (ii) the applicants have no interest in bringing proceedings against that letter; and (iii) in the first place, two of the applicants, namely Validity Foundation-Mental Disability Advocacy Centre and Center for Independent Living Association, to which the letter of 24 May 2019 was not addressed, are not directly and individually concerned by that letter, and, in the second place, there is nothing in the application to show that the applicants brought the action on behalf of a defined and identifiable group of persons, but that, in any event, since those persons are neither the applicants nor persons the applicants would be acting on behalf of, it is immaterial whether or not they are directly and individually concerned by the letter of 24 May 2019.

19 The Court considers it necessary to assess, in the first place, whether the letter of 24 May 2019 is a challengeable act for the purposes of Article 263 TFEU.

20 In that regard, the Commission submits that the letter of 24 May 2019 does not constitute a challengeable act since it does not produce any binding legal effects. The Commission points out that, in accordance with settled case-law, only measures that produce binding legal effects capable of affecting the interests of the applicant constitute challengeable acts. According to the Commission, the letter of 24 May 2019 does not produce such effects in so far as any effect which may stem from an act of the Commission concerning an operational programme or an operation would concern solely the Member State concerned.

21 Moreover, the Commission submits that, in any event, the statements contained in the letter of 24 May 2019 cannot definitively determine its position and produce legal effects capable of affecting the applicants’ interests, because those statements were made outside any pending procedure and in no way prejudge a possible course of action by the Commission taken in accordance with the applicable legal framework vis-à-vis the Member State concerned. The Commission therefore considers that the letter of 24 May 2019 constitutes merely a written expression of opinion.

22 The applicants submit that the letter of 24 May 2019 is an act that may be the subject of an action for annulment since it produces legal effects. In that regard, the applicants deny that the letter constitutes merely a written expression of opinion of the Commission. They claim that they made use of the complaint procedure provided for in Article 74(3) of Regulation No 1303/2013 to report the improper use of the European Structural and Investment Funds (‘the ESI Funds’) and that, by letter of 24 May 2019, the Commission closed that procedure. The applicants are of the view that they are therefore entitled to seek annulment of the letter of 24 May 2019, in so far as it concerns a final decision of the Commission refusing to adopt a binding act, aimed at interrupting deadlines or suspending the payments associated with the Call for Proposals and hence giving rise to legal effects. In addition, the applicants submit that a parallel can be drawn between the complaint procedure they used and that provided for under the State aid scheme. According to the applicants, a decision which the Commission takes in response to a complaint, regarding allegedly unlawful aid and by which it decides whether or not to initiate an investigation, produces legal effects and constitutes a challengeable act in accordance with the case-law established by the Courts of the European Union.

23 Furthermore, the applicants submit that they represent the interests of a defined and identifiable group of persons with disabilities and that the letter of 24 May 2019 has effects on the legal position of those persons currently in institutions in Bulgaria, in so far as they will be deprived of their right to independent living and inclusion in society, as recognised by the Convention on the Rights of Persons with Disabilities.

24 It is settled case-law that only measures the legal effects of which are binding on, and capable of affecting the interests of, the applicant by bringing about a distinct change in its legal position are acts or decisions which may be the subject of an action for annulment under Article 263 TFEU (see judgment of 12 September 2006, Reynolds Tobacco and Others v Commission, C‑131/03 P, EU:C:2006:541, paragraph 54 and the case-law cited).

25 In order to ascertain whether measures are acts which may be the subject of an action for annulment, it is necessary to look to their substance and the form in which they are cast is, in principle, immaterial (see, to that effect, judgment of 11 November 1981, IBM v Commission, 60/81, EU:C:1981:264, paragraph 9).

26 In that regard, it should be noted that, by letter of 24 May 2019, the Commission took a position on the invitation to act which the applicants had submitted to it, under Article 265 TFEU, by letter of 26 April 2019 requesting the Commission to take the necessary measures to suspend the Call for Proposals and all related payments. By its letter of 24 May 2019, the Commission concluded that there was no need to take any action as the Call for Proposals complied with the Partnership Agreement concluded in that respect with the Republic of Bulgaria and the Operational programme ‘Growing Regions 2014-2020’. It follows that the letter of 24 May 2019 constitutes a refusal to act.

27 In that regard, it is established case-law that an act of an institution which amounts to a rejection must be appraised in the light of the nature of the request to which it constitutes a reply (see order of 13 March 2007, Arizona Chemical and Others v Commission, C‑150/06 P, not published, EU:C:2007:164, paragraph 22 and the case-law cited). In particular, a refusal constitutes an act which may be the subject of an action for annulment under Article 263 TFEU provided that the act which the institution refuses to adopt could itself have been contested under that provision (see judgment of 22 October 1996, Salt Union v Commission, T‑330/94, EU:T:1996:154, paragraph 32 and the case-law cited; see also, to that effect, orders of 13 March 2007, Arizona Chemical and Others v Commission, C‑150/06 P, not published, EU:C:2007:164, paragraph 23, and of 22 January 2010, Makhteshim-Agan Holding and Others v Commission, C‑69/09 P, not published, EU:C:2010:37, paragraph 46).

28 In the present case, the applicants submitted to the Commission a request to take the necessary measures to suspend the Call for Proposals and all related payments.

29 In that respect, the applicants submit that (i) under Regulation No 1303/2013, the Commission must ensure that the implementation and use of the ESI Funds comply with EU law and, specifically, do not give rise to a situation of discrimination, and (ii) failure to respect fundamental rights may constitute an irregularity which must be remedied. According to the applicants, in the case that the Member State does not fulfil its own obligations to do so, it is for the Commission to examine the irregularity and to intervene if needed by any means at its disposal, including interrupting payment deadlines, suspending payments or making financial corrections by cancelling all or part of the European Union’s contribution to an operational programme in accordance with Article 85 of Regulation No 1303/2013.

30 Consequently, it is appropriate to examine whether an act of the Commission aimed at interrupting payment deadlines, suspending payments associated with a call for proposals or cancelling all or part of the European Union’s contribution to an operational programme can produce binding legal effects capable of affecting the applicants’ interests by bringing about a distinct change in their legal position.

31 In order to determine whether such acts could have produced binding legal effects and were thus capable of being open to challenge, it is necessary to examine the relevant context in which they are found and, specifically, the legal framework governing projects financed by Structural or Cohesion Funds.

32 In that regard, under Article 83(1) of Regulation No 1303/2013, the period for making an interim payment may be interrupted. Article 83(2) specifies that the Commission must immediately inform the Member State concerned and the managing authority of the reason for the interruption and request them to remedy the situation. In addition, it follows from Article 142(1) of that regulation that all or part of the interim payments at the level of operational programmes may be suspended by the Commission where one or more conditions are met and, in particular, where there is a serious deficiency in the proper functioning of the management and control system of the operational programme, which has jeopardised the European Union’s participation in that programme and for which corrective measures have not been taken. Under Article 142(2), the Commission may decide, by means of implementing acts, to suspend all or part of the interim payments, after having given the Member State the opportunity to present its observations.

33 In addition, under Article 85(1) of Regulation No 1303/2013, the Commission makes financial corrections by cancelling all or part of the European Union’s contribution to a programme and by recovering those contributions from the Member State in order to exclude from EU financing expenditure contrary to the applicable law. Article 144 of that regulation sets out the applicable criteria for financial corrections and states that the Commission is to make financial corrections by means of implementing acts after having carried out the necessary verifications.

34 Furthermore, it is clear from the case-law that it is the Member State, as the addressee of the decision granting financial assistance from the ERDF, which must be regarded as entitled to that assistance (see, to that effect, judgment of 10 September 2009, Commission v Ente per le Ville Vesuviane and Ente per le Ville Vesuviane v Commission, C‑445/07 P and C‑455/07 P, EU:C:2009:529, paragraphs 47 to 54 and the case-law cited, and order of 14 September 2011, Regione Puglia v Commission, T‑84/10, not published, EU:T:2011:468, paragraph 30 and the case-law cited).

35 It must therefore be stated, first, that it is solely in the context of relations between the Member State and the Commission that operations to interrupt deadlines, suspend deadlines associated with a call for proposals or cancel all or part of the European Union’s contribution to an operational programme will take place. Secondly, it is also the Member State concerned and deprived of a financial contribution from the ERDF that must rectify any expenditure already submitted to the Commission. Thus, the Member State concerned is the sole recipient of decisions sent by the Commission, whether they concern the granting of financial aid or the claim for credit recovery.

36 In addition, nothing prevents the Member State concerned by a Commission decision interrupting payment deadlines, suspending payments associated with a call for proposals or cancelling all or part of the European Union’s contribution to an operational programme – in the present case, the Republic of Bulgaria – from deciding to defray out of its own funds the withdrawn portion of the European Union’s financing so as to finance the projects awarded under the Call for Proposals. In that regard, it must be noted that, under Article 4(1) of Regulation No 1303/2013, the ESI Funds are designed to complement or contribute to corresponding national, regional or local actions, while recital 87 of that regulation also states that support from the ESI Funds should not replace public or equivalent structural expenditure incurred by Member States (see, to that effect, order of 11 December 2007, Regione Siciliana v Commission, T‑156/06, not published, EU:T:2007:372, paragraph 46 and the case-law cited).

37 It follows from the foregoing that a decision to interrupt payment deadlines, to suspend payments associated with the call for proposals or to cancel all or part of the European Union’s contribution to an operational programme, such as that which the applicants requested the Commission to adopt, produced, above all, binding legal effects vis-à-vis the Member State to which the ERDF contribution was addressed.

38 In those circumstances, it is not apparent that such a decision could directly entail binding legal effects on the applicants’ legal position.

39 In that regard, it should be noted that, contrary to the applicants’ claims, the circumstances of the present case are not analogous to those at issue in the case which gave rise to the judgment of 9 July 2003, Vlaams Fonds voor de Sociale Integratie van Personen met een Handicap v Commission (Case T‑102/00, EU:T:2003:192). In that judgment, it was held that a Commission decision reducing or withdrawing financial assistance granted by the European Social Fund was capable of directly and individually affecting the beneficiaries of such assistance and of adversely affecting them, despite the fact that the Member State concerned was the sole interlocutor of that fund in the administrative procedure, since it was the beneficiaries of the aid who are adversely affected by the economic consequences of the decision to reduce or withdraw it, inasmuch as they have primary liability for the repayment of the sums overpaid. In the present case, first, neither the applicants nor the group of persons whom they claim to represent can be regarded as being the beneficiaries of the financial assistance. Secondly, the applicants are not be liable for the sums which would have to be recovered in the event of a decision by the Commission to interrupt the deadlines or suspend the payments associated with the call for proposals.

40 Similarly, the applicants’ argument that their legal standing stems from the fact that they represent a defined and identifiable group of persons with disabilities who are not in a position to defend themselves should, in any event, be rejected. In that regard, it is clear from the case-law that the defence of the general and collective interests of a category of persons is not sufficient to establish the admissibility of an action for annulment brought by an association or organisation and in the absence of special circumstances, such as the role which it could have played in a procedure leading to the adoption of the measure in question, such an association or organisation is not entitled to bring an action for annulment on behalf of its members where the latter cannot do so individually (see, to that effect, judgment of 23 April 2009, Sahlstedt and Others v Commission, C‑362/06 P, EU:C:2009:243, paragraph 35 and the case-law cited).

41 The applicants do not rely on any special circumstances, nor do they show that they would be acting on behalf of certain persons with disabilities entitled to bring an action for annulment individually. It must be stated that the action was not brought on behalf of a defined and identifiable group of persons with disabilities currently in institutions in Bulgaria, who the applicants represent, since, first, the names of those persons are not mentioned in the application and, secondly, it does not follow from the application that the applicants would be acting on their behalf.

42 In addition, the applicants cannot validly rely on the right to effective judicial protection of persons with disabilities since, as is clear from paragraph 41 above, they have not shown that they would be acting on behalf of certain persons with disabilities whose right to effective judicial protection is concerned.

43 Furthermore, it should be pointed out that it is true that the requirement as to the binding legal effects that an act must produce must be interpreted in the light of the right to effective judicial protection as guaranteed under the first paragraph of Article 47 of the Charter of Fundamental Rights of the European Union. However, this right is not intended to change the system of judicial review laid down by the Treaties, particularly the rules relating to the admissibility of direct actions brought before the Courts of the European Union, as is apparent also from the Explanation relating to the abovementioned Article 47, which must, in accordance with the third subparagraph of Article 6(1) TEU and Article 52(7) of the Charter of Fundamental Rights, be taken into consideration for the interpretation thereof. Thus, the interpretation of the concept of ‘challengeable act’ in the light of Article 47 cannot result in that condition being disregarded without exceeding the powers conferred by the Treaty on the Courts of the European Union (see judgment of 25 October 2017, Slovakia v Commission, C‑593/15 P and C‑594/15 P, EU:C:2017:800, paragraph 66 and the case-law cited).

44 In those circumstances, in accordance with the case-law cited in paragraph 27 above, the letter of 24 May 2019 is not capable of producing binding legal effects with regard to the applicants, so that it does not constitute an act which may be the object of an action for annulment.

45 That conclusion is not called into question by the argument that the applicants made use of the complaint procedure under Article 74(3) of Regulation No 1303/2013 and that the Commission closed that procedure by the letter of 24 May 2019, which should thus be recognised as a challengeable act, since the Commission decision taken in response to a complaint under the State aid scheme is recognised as such.

46 First, the complaint procedure for the implementation of the ESI Funds is different from that established for State aid. In particular, it should be noted that, while the Commission has exclusive jurisdiction to review State aid as regards the assessment of the compatibility of an aid with the internal market, with the result that, as soon as it becomes aware of the introduction of aid, it has the obligation to decide whether that aid is compatible, under the ESI Funds scheme, Member States, and not the Commission, are in charge of examining complaints. Thus, it is apparent from recital 67 and Article 74(3) of Regulation No 1303/2013 that Member States must ensure that an effective mechanism is in place for the examination of complaints and that, in accordance with the principle of subsidiarity, Member States must examine complaints submitted to them directly or at the request of the Commission and inform the latter of the results of such examinations.

47 Secondly, it cannot be inferred from the Commission’s right to require Member States to examine complaints concerning ESI Funds that the Commission is required to adopt a decision closing such complaints.

48 Consequently, the applicants are wrong to submit that, by letter of 24 May 2019, the Commission closed the complaint procedure provided for by Article 74(3) of Regulation No 1303/2013 and that that letter constitutes a challengeable act in accordance with the case-law established by the Courts of the European Union.

49 Furthermore, in any event, it should be recalled that the letter of 24 May 2019 cannot prevent the Commission, if it considers that the circumstances so require, from initiating, on its own initiative or in response to a complaint for failure to comply with EU law, a procedure under Article 258 TFEU against the Republic of Bulgaria.

50 In the light of all of the foregoing, the objection of inadmissibility raised by the Commission must be accepted and the action must be dismissed as inadmissible, without it being necessary to analyse the other pleas of non-admissibility raised by the Commission.

51 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 applicants have been unsuccessful, they must be ordered to pay the costs, in accordance with the form of order sought by the Commission.

2. European Network on Independent Living Brussels Office (ENIL Brussels Office), Validity Foundation-Mental Disability Advocacy Centre and Center for Independent Living Association shall pay the costs.

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You are here: BAILII >> Databases >> Court of Justice of the European Communities (including Court of First Instance Decisions) >> ENIL Brussels Office and Others v Commission (Action for annulment - ERDF - Operational programme 'Regions in Growth' - Order) [2020] EUECJ T-613/19_CO (02 September 2020) URL: http://www.bailii.org/eu/cases/EUECJ/2020/T61319_CO.html Cite as: ECLI:EU:T:2020:382, EU:T:2020:382, [2020] EUECJ T-613/19_CO

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