Cancellation of European Community funding for regional development — Whether applicant local authority having standing to challenge that decision — Criteria for determining whether applicant directly concerned with decision — Application dismissed
The Commission acceded to a request by Italy for a grant of European Regional Development Fund (ERDF) assistance, under Council Regulation 1787/84, towards infrastructure development relating to the construction of a dam in the applicant local authority’s region. Several years later, the dam was still not operational, and the Commission initiated the examination procedure provided for by Article 24 of Council Regulation 4253/88 to determine whether there were irregularities justifying a possible decision to cancel the assistance. It concluded that irregularities had arisen, including the fact that the works had not been completed, that it was impossible to say, even approximately, when the dam would be operational, and that the purpose of the project had been substantially changed. It accordingly determined to cancel the assistance and seek repayment of the sums already advanced. That decision was addressed to the relevant member state, namely Italy.
The applicants brought an action to challenge the Commission’s decision, alleging infringement of Article 24 and a manifest error of assessment in the application of that provision. The Commission argued that the applicants had no standing to bring proceedings because they were not directly concerned by the contested decision, and therefore did not fulfil the conditions for the institution of proceedings by a person to whom a decision was not addressed. It pointed out that there was no direct legal relationship between itself and the applicants, and argued that the separation of legal relations between the Commission and the member states, on the one hand, and the member states and the beneficiaries of the assistance, on the other, made it impossible for the applicants to be directly concerned in any way.
Held: The action was dismissed.
For an applicant, to which a decision had not been addressed, to be directly concerned by the contested decision, the measure at issue had to: (i) directly affect the legal situation of that applicant; and (ii) leave no discretion to the addressees entrusted with the task of implementing it, such implementation being purely automatic and resulting from Community rules without the application of other intermediate rules. In the instant case, the rescission of the Commission’s obligation to pay the balance of the assistance, and its demand for repayment of the advances, directly affected the applicant’s legal situation in several ways, and it left the Italian authorities no discretion. The applicant therefore had standing to bring the action. However, that action was unfounded on the merits.
Sally Dobson, barrister
