Summary
Parties
Grounds
Operative part
Keywords
Applications for interim measures - Suspension of operation - Interim measures - Conditions of granting - Urgency - Serious and irreparable damage - Burden of proof - Commission decision reducing Community financial aid - Recipient's rights adversely affected - Account taken of the situation of the group to which the undertaking belongs
(Arts 242 EC and 243 EC; Rules of Procedure of the Court of First Instance, Art. 104(2))
Summary
$$The urgent nature of an application for interim relief must be assessed in relation to the need to make an interim order in order to prevent serious and irreparable damage being caused to the party seeking that relief. It falls to that party to prove that it cannot await the outcome of the main proceedings without suffering damage of that kind.
As regards the consequences of delaying payment of the balance of Community financial aid, it should be pointed out that prejudice to the rights of persons regarded as being recipients of aid is inherent in any decision by the Commission requiring its reduction and cannot in itself be considered to constitute serious and irreparable damage, independently of a concrete assessment of the gravity and the irreparable nature of the alleged damage in each case considered. While it is true that, in order to establish the existence of serious and irreparable damage, it is not necessary to require that the occurrence of the damage should be established with absolute certainty and that it is sufficient for that damage to be predictable with a sufficient degree of probability, the party seeking the measure is still required to prove the facts alleged to form the basis of the likelihood of such serious and irreparable damage.
In considering the financial viability of a limited liability company managed on a family basis, an assessment of its financial situation may be made, in particular, by taking into consideration characteristics of the group to which its shareholders belong.
( see paras 32-34, 39 )
Parties
In Case T-241/00 R,
Azienda Agricola Le Canne Srl, established in Porto Viro (Italy), represented by G. Carraro, F. Mazzonetto and G. Arendt, lawyers, with an address for service in Luxembourg,
applicant,
v
Commission of the European Communities, represented by E. de March and L. Visaggio, acting as Agents, assisted by A. Dal Ferro, lawyer, with an address for service in Luxembourg,
defendant,
APPLICATION for, first, suspension of Commission Decision C (2000) 1754 of 11 July 2000 reducing the contribution granted to Azienda Agricola Le Canne Srl by Commission Decision C (90) 1923/99 of 30 October 1990 and, second, the adoption, if necessary, of any interim measure in order to prevent delays in the payment of the financial aid in question from having irreversible consequences,
THE PRESIDENT OF THE COURT OF FIRST INSTANCE
OF THE EUROPEAN COMMUNITIES
makes the following
Order
Grounds
Facts and procedure
1 By Decision C (90) 1923/99 of 30 October 1990 the Commission granted the applicant financial aid of ITL 1 103 646 181, that is to say 40% of the eligible expenditure of ITL 2 759 115 453, in respect of works for the modernisation and adaptation of fish-farming facilites (project I/16/90). Proportional aid of 30% of the eligible expenditure, namely ITL 827 734 635, was to be borne by the Italian State.
2 That decision stated that the amount of aid that the Commission will actually apply to a completed project depends on the nature of the works carried out in relation to those provided for in the project. The decision also stipulated that in conformity with the statement appearing in Part B of the application for assistance submitted by the recipient, the works provided for may not be altered or changed without the prior agreement of the national administration and of the Commission. Major changes made without the Commission's agreement may lead to a reduction or withdrawal of the assistance if they are deemed unacceptable by the national administration or the Commission. If appropriate, the national administration shall indicate to each beneficiary the procedure to be followed.
3 By letter dated 12 December 1994 addressed to the Italian Ministry of Agriculture (hereinafter the Ministry) and to the Commission, the applicant pointed out that, owing to circumstances beyond its control which had arisen since the project was sent to the Ministry, certain modifications to the works provided for in the context of project I/16/90 had become essential. The applicant stated that its belief that it had complied with the proposed objectives and chosen the correct options, together with its desire speedily to achieve the results envisaged, had unfortunately led it to overlook the obligation to give prior notification to the Ministry of the modifications made, and this presented a major obstacle to finalising the matter. However, the applicant did not consider that project I/16/90 had, overall, undergone any substantial changes, apart from a difference in the location and configuration of the intensive rearing ponds.
4 Thus, whilst stating that it had become aware, but only since completion of the works, that it had not observed the formality of prior notification of the modifications, the applicant requested the Ministry and, as the case might be, the Commission itself, to conduct a technical examination of the changes made in order to establish that they were well founded, and that the choices made were necessary and opportune. In that connection the applicant pointed out that all the modifications referred to had been disclosed and approved in the course of approval of the supplementary structural works project (I/100/94) accepted for Community financial aid by Decision C (94) 1531/99.
5 After verification of the completed works the Ministry forwarded to the applicant on 3 June 1995 the certificate of verification of completion of works drawn up on 24 May 1995. In the Ministry's view, the applicant had made changes additional to those already noted by the Public Works Department. The Ministry concluded that the applicant should have requested prior authorisation under the applicable Community provisions to carry out those modifications.
6 The Ministry reduced to ITL 1 049 556 101 the amount of eligible expenditure on the final stage of the project. The Ministry concluded that, regard being had to the expenditure already recognised as eligible at the stage of the first phase of the works in the amount of ITL 857 794 000, the total amount of expenditure deemed eligible was ITL 1 907 350 101, about 69.13% of the eligible expenditure of the project originally approved by the Commission.
7 By final payment order issued on 5 July 1995, the Commission paid the applicant a balance of ITL 419 822 440, thus reducing from ITL 1 103 646 181 to ITL 762 940 000 the total amount of Community aid payable in respect of the works deemed by the Commission, on the basis of the certificate of verification of completion of works, to be in conformity with the project originally approved.
8 In reply to a request by the national authorities, the Commission sent them its observations by Telex No 12 497 of 27 October 1995. The Commission considered that on the information available it was not necessary to review the procedure followed by the Ministry in finalising project I/16/90.
9 By application lodged at the Registry of the Court of First Instance on 1 December 1995, the applicant brought an action - firstly, for annulment of Telex No 12 497 cited above, and secondly, for compensation for loss incurred by reason of the adoption of that measure - giving rise to the judgment of the Court of First Instance of 7 November 1997 in Case T-218/95 Le Canne v Commission [1997] ECR II-2055.
10 In its judgment of 5 October 1999 in Case C-10/98 P Le Canne v Commission [1999] ECR I-6831, the Court of Justice set aside the judgment of the Court of First Instance in Le Canne v Commission cited above, and found that the Commission's telex of 27 October 1995 was null and void for failure to comply with the procedure laid down in Articles 44(1) and 47 of Council Regulation (EEC) No 4028/86 of 18 December 1986 on Community measures to improve and adapt structures in the fisheries and aquaculture sector (OJ 1986 L 376, p. 7) and in Article 7 of Commission Regulation (EEC) No 1116/88 of 20 April 1988 laying down detailed rules for the application of decisions granting aid for projects concerning Community measures to improve and adapt structures in the fisheries and aquaculture sector and in structural works in coastal waters (OJ 1988 L 112, p. 1).
11 In complying with the judgment of the Court of Justice in Le Canne v Commission, cited above, the Commission adopted a new Decision C (2000) 1754 on 11 July 2000 (hereinafter the contested decision) by which it reduced by ITL 340 706 141 the maximum aid of ITL 1 103 646 181 provided for under Decision C (90) 1923/99 of 30 October 1990, cited above.
12 By application lodged at the Registry of the Court of First Instance on 14 September 2000, the applicant brought an action before the Court of First Instance under Article 230(4) EC for annulment of the contested decision.
13 By separate document lodged at the Registry of the Court of First Instance on the same day, the applicant made the present application for, first, suspension of the operation of the contested decision and, second, if necessary, the adoption of any interim measure to prevent delays in the payment of the aid in question from having irreversible consequences. At the same time the applicant stated that it was prepared to provide a security, by means of a bank guarantee, as provided for in Article 107(2) of the Rules of Procedure of the Court of First Instance, for the sum at issue, in accordance with the methods considered appropriate in the circumstances by the Court of First Instance.
14 On 27 September the Commission submitted its observations on that application for interim relief.
15 The parties' oral submissions were heard on 24 October 2000. At the end of the hearing, the judge hearing the application for interim relief decided to allow the applicant two weeks to lodge further documents, in particular its certified balance sheets for the previous five years.
16 On 6 November 2000 the applicant lodged its balance sheets for the years 1995 to 1999, bank account extracts and a note listing the documents lodged.
17 On 23 November 2000 the Commission submitted its observations on the documents lodged by the applicant.
Law
18 Pursuant to the combined provisions of Articles 242 EC and 243 EC and Article 4 of Council Decision 88/591/ECSC, EEC, Euratom of 24 October 1988 establishing a Court of First Instance of the European Communities (OJ 1988 L 319, p. 1) as amended by Council Decision 93/350/Euratom, ECSC, EEC of 8 June 1993 (OJ 1993 L 144, p. 21), the Court of First Instance may, if it considers that circumstances so require, order the suspension of operation of the contested measure or grant other necessary interim relief.
19 Article 104(2) of the Rules of Procedure of the Court of First Instance states that applications for interim measures must specify the circumstances giving rise to urgency and the pleas of fact and of law establishing a prima facie case for the interim measure applied for. Those conditions are cumulative, so that an application to suspend the operation of a measure must be dismissed where one of them is absent (order of the President of the Court of First Instance in Case T-211/98 R Willeme v Commission [1999] ECR-SC I-A-15 and II-57, paragraph 18).
20 In this case it is appropriate to examine the condition relating to urgency.
Arguments of the parties
21 The applicant claims, referring to the judgment of the Court of Justice in Case C-47/91 Italy v Commission [1992] ECR I-4145, that delays in the payment of an aid or a subsidy always have irreversible consequences for the recipient undertaking.
22 Furthermore, in the present case, the applicant claims the fact that for over five years the balance of the aid granted has not been paid risks having serious and irreparable repercussions on its interests and financial capacity; as the applicant was sure it would receive the aid granted, it had finalised its financial plans and is now in a vulnerable position.
23 At the hearing, the applicant emphasised that it had suffered losses of around ITL 2 000 000 000 in the course of the last two fiscal years and that, consequently, it had been obliged, in accordance with the Italian Civil Code, to reduce its share capital from ITL 2 963 000 000 to ITL 961 000 000. The applicant claims it is equally likely that it will incur a loss of ITL 1 000 000 000 for the current year which implies that it runs the risk of being declared bankrupt.
24 According to the documents produced by the applicant, it is in a highly precarious financial position. Since the fiscal year following that of 1995, during which the aid at issue was to have been paid, its short-term indebtedness increased by an amount approximately equal to the last instalment of the European aid and national aid, and has not subsequently been reduced. In short, the applicant has been deprived of its own financial resources. It has a long-term debt of ITL 4 556 002 880 owed to the undertaking Giradello SpA, which is carrying out the works which are the subject of the aid in issue, and therefore, from the point of view of its financial survival, the applicant depends mainly on national and Community aid. Any further delay in payment of the aid would lead to unsustainable bank charges.
25 The applicant stresses that, since 1996, it has constantly operated to the limit of its bank credit because of the unpaid aid at issue and that any debt or unexpected costs might render it immediately and irreversibly insolvent. There is no doubt, according to the applicant, that payment of the last instalment - ITL 596 000 000, or around EUR 308 000, of Community and national aid taken together - would almost entirely eliminate its bank overdraft, allowing it to function once again.
26 Moreover, according to the applicant, there can be no reason to object to the interim measure sought being granted since the applicant or its shareholders, on its behalf, stated that they can provide a security despite the large debts of the undertaking. In the light of Article 107(2) of the Rules of Procedure, which allows the enforcement of an order for interim measures to be made conditional on the lodging of a security by the applicant, the condition regarding the seriousness and the irreparable nature of the damage does not necessarily imply - contrary to the most recent case-law of the Court of First Instance - that the amount of the debt owed by the undertaking must be such as to lead it into bankruptcy, but that that amount must enable the undertaking still to be in a position to provide a security, if not in cash, at least by means of a bank loan.
27 In that respect, the applicant has stated that its offer to lodge a security, in the form of a bank guarantee, implies that a bank counter-guarantee is to be provided by its members.
28 The applicant therefore concludes that the condition of urgency is fulfilled in the present case.
29 As a preliminary point, the Commission observes that the sums paid by the Italian State are the direct result of a decision of the Italian State and not a decision of the Commission and that, consequently, the only sum at issue is the portion of the aid that the Commission could pay the applicant on the basis of the maximum amount provided for by the decision to grant aid, that is ITL 340 706 141.
30 The Commission submits that any suspension of the operation of the contested decision would not entail an obligation on its part to pay the applicant the full amount of the maximum aid under that decision, given that, in substance, the contested decision constitutes a negative decision. The application for suspension of operation is therefore not capable of ensuring the results which the applicant hopes to achieve.
31 As to the documentation produced by the applicant, the Commission submits that it does not prove that the fact that the balance of the Community aid initially envisaged was not paid will lead to insolvency of the applicant. On this matter, it stresses that the applicant has produced no accounting document certified by an independent auditor establishing that such a state of affairs is imminent.
Findings of the President of the Court of First Instance
32 It is settled case-law that the urgent nature of an application for interim relief must be assessed in relation to the need to make an interim order in order to prevent serious and irreparable damage being caused to the party seeking that relief. It falls to that party to prove that it cannot await the outcome of the main proceedings without suffering damage of that kind (orders of the President of the Court of First Instance in Case T-73/98 R Prayon-Rupel v Commission [1998] ECR II-2769, paragraph 36, and Case T-169/00 R Esedra v Commission [2000] ECR II-2951, paragraph 43, and of the President of the Court of Justice in Case C-278/00 R Greece v Commission [2000] ECR II-8787, paragraph 14).
33 As regards the consequences of delaying payment of the balance of aid, it should be pointed out that prejudice to the rights of persons regarded as being recipients of aid is inherent in any decision by the Commission requiring its reduction and cannot in itself be considered to constitute serious and irreparable damage, independently of a concrete assessment of the gravity and the irreparable nature of the alleged damage in each case considered (see, to that effect, order in Greece v Commission, cited above, paragraph 21).
34 While it is true that, in order to establish the existence of serious and irreparable damage, it is not necessary to require that the occurrence of the damage should be established with absolute certainty and that it is sufficient for that damage to be predictable with a sufficient degree of probability, the applicant is still required to prove the facts alleged to form the basis of the likelihood of such serious and irreparable damage (orders of the President of the Court of Justice in Case C-335/99 P (R) HFB and Others v Commission [1999] ECR I-8705, paragraph 67, and Greece v Commission cited above, paragraph 15).
35 In that regard, it should be noted, as the Commission has also pointed out, that the applicant has not submitted any document drawn up by an independent expert concluding that it is in a situation such as to threaten its existence. As regards the content of the documents produced by the applicant, it must be pointed out that those documents do not constitute the evidence of the likelihood of serious and irreparable damage. From the balance sheets of the applicant it may be seen that on 31 December 1998 and 31 December 1999 its total debts stood respectively at ITL 5 149 440 982 and ITL 5 446 735 091. A considerable proportion of those debts, namely ITL 4 624 282 800 on 31 December 1999, or 85% thereof, is made up of debts vis-à-vis the applicant's shareholders. That percentage has not changed in relation to the figures of 31 December 1998. To that there should be added the fact that the most recent figure concerning the net assets of the applicant, ITL 980 914 052, dating from 31 December 1999, shows that the assets are considerably higher both than the debts owing to the creditors who are not shareholders of the applicant, amounting to ITL 822 452 291, and than the short-term debts, even taking into consideration the figure given by the applicant, ITL 890 732 211, rather than the figure in the balance sheet of 31 December 1999, ITL 256 483 981.
36 Furthermore, the applicant confines itself to stating that any unexpected expenditure may irreversibly lead to its insolvency. At the hearing, the applicant pointed out that if the results for the year 2000 were the same as those of the two previous years, during which it incurred losses of ITL 1 000 000 000 per year, it would be put into bankruptcy.
37 It must accordingly be found that the applicant has not succeeded in establishing the existence of the risk of serious and irreparable damage which the reduction of aid at issue might cause to it. The risk which it pleads is of a purely hypothetical nature in that it is based on the occurrence of future, uncertain events (orders of the President of the Court of First Instance in Case T-239/94 R EISA v Commission [1994] ECR II-703, paragraph 20, and Case T-322/94 R Union Carbide v Commission [1994] ECR II-1159, paragraph 31).
38 Next, the information provided by the applicant concerning its shareholders, in particular the information provided by it during the hearing, must be borne in mind. It emerges from that information that the applicant is a limited liability company managed on a family basis. Its shareholders are Mr Gino Giradello, who holds 50% of the share capital, and the construction firm Società Giradello SpA which holds the remaining 50% of the share capital and of which Mr Franco Giradello is the sole director. Società Giradello SpA belongs to the same family. Therefore, the applicant is owned wholly by the Giradello family, which is also its biggest creditor, as is to be seen in paragraph 35.
39 It should be recalled that in considering the financial viability of an applicant, an assessment of its financial situation may be made, in particular, by taking into consideration characteristics of the group to which its shareholders belong (order of the President of the Court of Justice in Case C-12/95 P Transacciones Marítimas and Others v Commission [1995] ECR I-467, paragraph 12; orders of the President of the Court of First Instance in Case T-18/96 R SCK and FNK v Commission [1997] ECR II-407, paragraph 35, Case T-260/97 R Camar v Commission and Council [1997] ECR II-2357, paragraph 50; order of the President of the Court of Justice in Case C-43/98 P (R) Camar v Commission and Council [1998] ECR I-1815, paragraph 36, and order of the President of the Court of First Instance in Case T-13/99 R Pfizer Animal Health v Council [1999] ECR II-1961, paragraph 155, confirmed by the order of the President of the Court of Justice in Case C-329/99 P Pfizer Animal Health and Others v Commission and Others [1999] ECR I-8343, paragraph 67).
40 That approach is based on the idea that the objective interests of the undertaking concerned are not distinct from the interests of the natural or legal persons who control it, and that the serious and irreparable nature of the alleged damage must therefore be assessed at the level of the group composed by those persons. That coincidence of interests constitutes a ground for, in particular, not assessing the interests of the undertaking concerned in surviving independently of the interests which the persons who control it have in its survival.
41 Accordingly, just as the loss suffered by an association of undertakings may be assessed by taking into account the financial situation of its members where the objective interests of that association are not distinct from those of the member undertakings (see order of the President of the Court in Case C-268/96 P (R) SCK and FNK v Commission [1996] ECR I-4971, paragraphs 35 to 38), so it is appropriate in this case to take into account the financial position of the applicant's shareholders.
42 The fact that, as in this case, the person holding 50% of the share capital of the applicant is a natural person who does not constitute an undertaking therefore appears to be without relevance (see order of the President of the Court of Justice in HFB and Others v Commission, cited above, paragraph 64).
43 In the present case it must be found that the applicant has not provided the slightest evidence concerning the financial position of its shareholders which would enable a concrete assessment to be made of whether they possess sufficient resources to safeguard its interests. On the other hand, it is clear from the information contained in the application for interim relief and from the information provided by the applicant at the hearing (see above, paragraphs 13 and 27) that the owners of the applicant undertaking are in a position to provide a bank counter-guarantee if required.
44 It follows that the applicant has not succeeded in establishing that, if the interim relief sought were not granted, it would suffer serious and irreparable damage.
45 Consequently the application for interim relief must be dismissed without its being necessary to consider whether the other conditions for granting suspension of the operation of the contested decision are satisfied.
Operative part
On those grounds,
THE PRESIDENT OF THE COURT OF FIRST INSTANCE
hereby orders:
1. The application for interim relief is dismissed.
2. Costs are reserved.
Full & Egal Universal Law Academy