The Floow v Commission (Grant agreement entered into as part of the Horizon 2020 Framework Programme for Research and Innovation - Recovery of sums paid - Order) [2021] EUECJ T-765/20

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(Application for interim relief – Grant agreement entered into as part of the Horizon 2020 Framework Programme for Research and Innovation (2014-2020) – Recovery of sums paid – Application for interim measures – No urgency)

The Floow Ltd, established in London (United Kingdom), represented by A. Howard, Barrister, and J. Berry, Solicitor,

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

application under Articles 278 and 279 TFEU seeking the grant of interim measures, first, suspending the operation of Commission Decision C(2020) 8138 final of 17 November 2020 on the recovery of EUR 161 990.80 plus interest due from the applicant and, second, prohibiting the Commission from enforcing the contested decision or recovering money, or extending and extrapolating its findings to the non-audited period of the project or to other projects,

1 The applicant, The Floow Ltd, is a company established in the United Kingdom in 2012, which provides telematic services.

2 On 10 November 2015, the European Union, represented by the European Commission, signed with the coordinator of a consortium, the University of Sheffield (Sheffield, United Kingdom), the grant agreement concerning the 688082 SETA project as part of the Horizon 2020 Framework Programme for Research and Innovation (2014-2020) (‘the grant agreement’).

3 On 7 December 2015, the applicant signed the grant agreement for that project as a beneficiary.

5 On 21 and 22 August 2018, the financial audit with reference BAEA 355023 was carried out in order to assess the applicant’s participation during the first reporting period of the SETA project, namely the period from 1 February 2016 to 31 July 2017.

6 That financial audit revealed systemic or recurrent errors relating to the calculation of costs and the use of a digital time-recording system which did not meet the minimum requirements of reliability set out in the grant agreement.

7 On 16 January 2020, on the basis of the findings set out in the financial audit report, the Commission sent a pre-information letter to the applicant announcing its intention to recover a total amount of EUR 161 990.80 and invited the applicant to submit its observations.

8 The applicant submitted its observations on the pre-information letter and challenged the audit findings. However, the financial audit findings were not altered as a result of its arguments or the evidence provided.

9 On 10 June 2020, the Commission sent to the applicant the debit note No 3242006477 for the sum of EUR 161 990.80.

10 On 17 November 2020, the Commission adopted Decision C(2020) 8138 final ordering the recovery of EUR 161 990.80 plus interest due from the applicant (‘the contested decision’).

11 By application lodged at the Registry of the General Court on 31 December 2020, the applicant brought an action for, inter alia, annulment of the contested decision.

12 By a separate document, lodged at the Court Registry on the same date, the applicant brought the present application for interim relief, in which it claims, in essence, that the President of the General Court should:

– prohibit the Commission from enforcing the contested decision or recovering the grant monies under Article 299 TFEU;

– prohibit the Commission from extending and extrapolating its findings relating to the rejection of the costs which it declared to the non-audited period of the project or to any other project carried out as part of the Horizon 2020 Framework Programme for Research and Innovation (2014-2020);

13 In its observations on the application for interim relief, which were lodged at the Court Registry on 19 February 2021, the Commission contends that the President of the General Court should:

– declare inadmissible the applicant’s application in which it asks the Court to prohibit the Commission from extending and extrapolating its findings concerning the rejection of the costs declared by the applicant to the non-audited period of the project or to any other project carried out as part of the Horizon 2020 Framework Programme for Research and Innovation (2014-2020);

14 It is apparent from reading Articles 278 and 279 TFEU together with Article 256(1) TFEU that the judge hearing an application for interim measures may, if he or she considers that the circumstances so require, order that the operation of a measure challenged before the General Court be suspended or prescribe any necessary interim measures, in accordance with Article 156 of the Rules of Procedure of the General Court. Nevertheless, Article 278 TFEU establishes the principle that actions do not have suspensory effect, since acts adopted by the institutions of the European Union are presumed to be lawful. It is therefore only exceptionally that the judge hearing an application for interim measures may order the suspension of operation of an act challenged before the General Court or prescribe any interim measures (order of 19 July 2016, Belgium v Commission, T‑131/16 R, EU:T:2016:427, paragraph 12).

15 The first sentence of Article 156(4) of those Rules of Procedure provides that applications for interim measures must ‘state the subject matter of the proceedings, the circumstances giving rise to urgency and the pleas of fact and law establishing a prima facie case for the interim measure applied for’.

16 The judge hearing an application for interim measures may order suspension of operation of an act and other interim measures, if it is established that such an order is justified, prima facie, in fact and in law, and that it is urgent in so far as, in order to avoid serious and irreparable damage to the applicant’s interests, it must be made and produce its effects before a decision is reached in the main action. Those conditions are cumulative, and consequently an application for interim measures must be dismissed if any one of them is not satisfied. The judge hearing an application for interim measures is also to undertake, when necessary, a weighing of the competing interests (see order of 2 March 2016, Evonik Degussa v Commission, C‑162/15 P‑R, EU:C:2016:142, paragraph 21 and the case-law cited).

17 In the context of that overall examination, the judge hearing the application for interim measures enjoys a broad discretion and is free to determine, having regard to the particular circumstances of the case, the manner and order in which those various conditions are to be examined, there being no rule of law imposing a pre‑established scheme of analysis within which the need to order interim measures must be assessed (see order of 19 July 2012, Akhras v Council, C‑110/12 P(R), not published, EU:C:2012:507, paragraph 23 and the case-law cited).

18 Having regard to the material in the case file, the President of the General Court considers that he has all the information needed to rule on the present application for interim measures without there being any need first to hear oral argument from the parties.

19 In the circumstances of the present case, and without there being any need to rule on the admissibility of the applicant’s third head of claim, by which it asks the Court to prohibit the Commission from extending and extrapolating its findings concerning the rejection of the costs declared to the non-audited period of the project or to any other project carried out as part of the Horizon 2020 Framework Programme for Research and Innovation (2014-2020), it is appropriate to examine first of all whether the condition relating to urgency is satisfied.

20 In order to determine whether the interim measures sought are urgent, it should be noted that the purpose of the procedure for interim relief is to guarantee the full effectiveness of the future final decision, in order to prevent a lacuna in the legal protection afforded by the EU judicature (order of 14 January 2016, AGC Glass Europe and Others v Commission, C‑517/15 P‑R, EU:C:2016:21, paragraph 27).

21 To attain that objective, urgency must generally be assessed in the light of the need of an interlocutory order to avoid serious and irreparable damage to the party requesting the interim measure. That party must demonstrate that it cannot await the outcome of the main proceedings without suffering serious and irreparable damage (see order of 14 January 2016, AGC Glass Europe and Others v Commission, C‑517/15 P‑R, EU:C:2016:21, paragraph 27 and the case-law cited).

22 Lastly, according to well-established case-law, there is urgency only if the serious and irreparable damage feared by the party seeking the interim measures is so imminent that its occurrence can be foreseen with a sufficient degree of probability. That party remains, in any event, required to prove the facts that form the basis of its claim that such damage is likely, it being clear that purely hypothetical damage, based on future and uncertain events, cannot justify the granting of interim measures (see order of 22 June 2018, Arysta LifeScience Netherlands v Commission, T‑476/17 R, EU:T:2018:407, paragraph 24 and the case-law cited).

23 The question whether the applicant has succeeded in demonstrating urgency must be examined in the light of those criteria.

24 The applicant submits that enforcement of the contested decision risks causing serious and irreparable damage to its financial position, reputation and competitive position. First of all, the applicant claims that the repayment of the sum of EUR 161 990.80, plus interest, equates to nearly [confidential] (1) of the rest of its cash reserves, after ringfencing the minimum cash balance of [confidential] which it must retain in order to meet its ongoing monthly expenses, including payment of staff salaries, when they fall due. That repayment would threaten [confidential]. In addition, the repayment would prevent it from being able to hire or retain talented staff or invest in the latest technology, which are its main ways of innovating and maintaining its competitive position at the cutting edge of innovation. Next, the applicant claims that the clawback also has a negative impact on its reputation. It would need to declare the Commission’s findings in the contested decision to lenders, investors, other consortia partners and funding authorities, and that could affect its ability to raise funds and participate in future projects. Lastly, it states that it will be impossible for it to recover the opportunities which it lost or to make up for the lost ground ceded to its competitors.

25 In addition, the applicant adds that the Commission has already expressed its intention to extend and extrapolate its findings in the contested decision to the non-audited period and to any other project for which it received funding under the Horizon 2020 Framework Programme for Research and Innovation (2014-2020). If the Commission were to extrapolate the adjustment to the non-audited period and thus were to recover a total combined sum of approximately [confidential], that would account for around [confidential] of the remainder of its cash reserves.

26 According to the Commission, on the other hand, the applicant has not shown that the condition of urgency was satisfied in the present case.

27 In the first place, as regards the damage alleged by the applicant concerning the threat [confidential], it should be noted that the nature of the alleged damage is purely financial.

28 In accordance with settled case-law, damage of a pecuniary nature cannot, otherwise than in exceptional circumstances, be regarded as irreparable since, as a general rule, pecuniary compensation is capable of restoring the aggrieved person to the situation that obtained before he or she suffered the damage (see order of 23 April 2015, Commission v Vanbreda Risk & Benefits, C‑35/15 P(R), EU:C:2015:275, paragraph 24 and the case-law cited).

29 However, where the damage referred to is of a financial nature, the interim measures sought are justified where, in the absence of those measures, the party seeking them would be in a position that would imperil its financial viability before final judgment is given in the main action, or where its market share would be affected substantially in the light, inter alia, of the size and turnover of its undertaking and, where appropriate, of the characteristics of the group to which it belongs (see order of 12 June 2014, Commission v Rusal Armenal, C‑21/14 P‑R, EU:C:2014:1749, paragraph 46 and the case-law cited).

30 The assessment of that damage must be carried out in the light, inter alia, of the size and turnover of the undertaking and the characteristics of the group to which it belongs (see order of 11 March 2020, Aceto Agricultural Chemicals v Commission, T‑612/19 R, not published, EU:T:2020:102, paragraph 38 and the case-law cited).

31 In that regard, it must be stated that the applicant has sufficient cash reserves to meet the repayment imposed by the contested decision.

32 As the applicant itself states, the repayment in question corresponds to almost [confidential] of its cash flow reserves, after ringfencing the minimum cash reserve of [confidential] which it must keep in order to meet its ongoing monthly expenses.

33 Furthermore, as regards the applicant’s argument that repayment of the amount in question would prevent it from being able to hire or retain talented staff or invest in the latest technology, it must be held, first, that its claims are vague and are in no way substantiated by evidence and, second, that it has a current cash reserve of [confidential]. Consequently, the repayment of the debt at issue should not prevent the applicant from being able to retain and hire talented staff or invest in the latest technology.

34 In the second place, with regard to the argument concerning the allegedly irreparable nature of the damage caused to the applicant’s reputation, it must be stated that, in accordance with settled case-law, on the assumption that it is proven, that damage would already have been caused by the contested decision, with the result that the damage has already occurred. The purpose of proceedings for interim relief is not to ensure compensation for damage already suffered. In addition, the applicant cannot reasonably claim, in order to establish that it has suffered serious and irreparable damage, that only suspension of the operation of the contested decision would allow damage to its reputation to be avoided. Annulment of the contested decision on conclusion of the main proceedings would provide sufficient reparation for the alleged non-material damage (see, to that effect, order of 15 July 2019, 3V Sigma v ECHA, T‑176/19 R, not published, EU:T:2019:547, paragraph 33 and the case-law cited).

35 In the third place, as regards the applicant’s argument that it will be impossible for it to recover the opportunities which it loses or to make up for the lost ground ceded to its competitors, it must be held that the applicant has not established the seriousness of the damage invoked in that respect. The applicant confines itself to mere assertions, which are in no way substantiated by evidence, and its allegations relate only to purely hypothetical damage, which could, moreover, be assessed only in the context of weighing up the various interests involved (see, to that effect, order of 17 February 2011, Comunidad Autónoma de Galicia v Commission, T‑520/10 R, not published, EU:T:2011:56, paragraph 77).

36 In the fourth place, as regards the claim that the Commission may intend to extend and extrapolate its findings in the contested decision to the non-audited period and to any other project for which the applicant received funding as part of the Horizon 2020 Framework Programme for Research and Innovation (2014-2020), it should be noted that, as is apparent from the case file, the cost analysis is still ongoing and the adversarial process has not yet been completed. Consequently, any damage in so far as it is based on the occurrence of future and uncertain events within the meaning of the case-law cited in paragraph 22 above cannot justify the grant of provisional measures.

37 It follows from all of the foregoing that the application for interim relief must be dismissed, as the applicant has failed to establish urgency, without it being necessary to rule on the prima facie case or to weigh up the interests.

38 In accordance with Article 158(5) of the Rules of Procedure, it is appropriate to reserve the costs.

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You are here: BAILII >> Databases >> Court of Justice of the European Communities (including Court of First Instance Decisions) >> The Floow v Commission (Grant agreement entered into as part of the Horizon 2020 Framework Programme for Research and Innovation - Recovery of sums paid - Order) [2021] EUECJ T-765/20_CO (24 March 2021) URL: http://www.bailii.org/eu/cases/EUECJ/2021/T76520_CO.html Cite as: [2021] EUECJ T-765/20_CO, ECLI:EU:T:2021:167, EU:T:2021:167

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