United Kingdom of Great Britain and Northern Ireland v Commission of the European Communities. (Applications for interim measures) [1996] EUECJ C-239/96R (24 September 1996)

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This electronic version is not authentic and is subject to amendment. 61996O0239 Order of the President of the Court of 24 September 1996. United Kingdom of Great Britain and Northern Ireland v Commission of the European Communities. Application for interim measures - Social policy - Community measures to assist the elderly - Community measures to combat poverty and social exclusion. Joined cases C-239/96 R and C-240/96 R. European Court reports 1996 Page I-04475 ++++ 1. Applications for interim measures ° Criteria for admissibility ° Admissibility of the main application ° Irrelevancy ° Limits (EC Treaty, Arts 185 and 186; Rules of Procedure of the Court of Justice, Art. 83(1)) 2. Applications for interim measures ° Suspension of operation of a measure ° Interim measures ° Conditions for granting ° Serious and irreparable damage ° Damage which may be relied on by a Member State ° Damage arising out of expenditure incurred in breach of the rules governing the allocation of powers between the various Community institutions (EC Treaty, Arts 185 and 186; Rules of Procedure of the Court of Justice, Art. 83(2)) 3. Applications for interim measures ° Interim measures ° Conditions for granting ° Balancing of all the interests involved ° Interests to be taken into account (EC Treaty, Art. 186; Rules of Procedure of the Court of Justice, Art. 83(2)) 1. In principle, the issue of the admissibility of the main application should not be examined in proceedings relating to an application for interim measures, so as not to prejudge the substance of the case. However, where the contention is that the main application is manifestly inadmissible, the judge hearing the application for interim measures must establish whether there is a prima facie case for finding that there is a certain probability that the main application is admissible. 2. In view both of the essential place which the institutional rules governing the allocation of powers between the various Community institutions must be recognized as occupying in the Community legal order and of the role which the Member States play therein, involving participation in the exercise of legislative and budgetary powers and contribution to the Community budget, the use by the Commission of Community funds for measures which lack a proper legal basis because they have not been authorized by the Council would be such as to cause a Member State serious and irreparable damage justifying the granting of interim measures. 3. When the judge hearing an application for interim measures balances the applicant' s interest in preventing the procedures initiated by the decisions whose annulment it seeks from being carried through against the defendant' s interest in expediting those procedures, he must examine whether the possible annulment of the contested decisions by the Court hearing the main action would make it possible to reverse the situation and conversely to what extent each of the various possible interim measures would be such as to prevent the aims of the contested decisions from being achieved in the event of the main application being dismissed. In Joined Cases C-239/96 R and C-240/96 R, United Kingdom of Great Britain and Northern Ireland, represented by John Collins, of the Treasury Solicitor' s Department, acting as Agent, and Derrick Wyatt QC, with an address for service in Luxembourg at the British Embassy, 14 Boulevard Roosevelt, applicant, supported by Federal Republic of Germany, represented by Ernst Roeder, Ministerialrat in the Federal Ministry of the Economy, and Bernd Kloke, Oberregierungsrat in the same ministry, acting as Agents, D-53107 Bonn, intervener, v Commission of the European Communities, represented by Peter Oliver and Maria Patakia, of its Legal Service, acting as Agents, with an address for service in Luxembourg at the office of Carlos Gómez de la Cruz, of the same service, Wagner Centre, Kirchberg, defendant, APPLICATIONS for suspension of operation of the decisions or acts comprised or referred to in ° the Commission circular of 2 May 1996 inviting applications for Commission funding of measures to assist the elderly and in ° the Commission circular received by the United Kingdom authorities on 15 May 1996 inviting applications for Commission funding of measures to combat poverty and social exclusion or for interim measures, THE PRESIDENT OF THE COURT makes the following Order 1 By two applications lodged at the Court Registry on 10 July 1996, the United Kingdom brought actions under Article 173 of the EC Treaty for annulment of the decisions comprised or referred to in the Commission circular of 2 May 1996 inviting applications for Commission funding of measures to assist the elderly and in the Commission circular received by the United Kingdom authorities on 15 May 1996 inviting applications for Commission funding of measures to combat poverty and social exclusion. 2 By separate documents lodged at the Court Registry on the same day, the United Kingdom made application under Articles 185 and 186 of the EC Treaty and Article 83 of the Rules of Procedure for suspension of operation of the said decisions and for an order that the Commission withdraw the invitations contained in the contested circulars and draw such withdrawal to the attention of third parties without delay, or an order allowing the Commission to complete the assessment of applications for funding and make commitments to third parties provided that it is made clear that payment of the grants will be subject to the Court' s upholding in the main proceedings the legality of the payments, or for such further or other relief as the Court thinks fit. 3 In reply to a question from the Court, the Commission confirmed, by letter lodged at the Registry on 17 July 1996, that it would make no further commitment or payment under the contested procedures before 30 September 1996. 4 The Commission submitted its written observations on the applications for interim measures on 5 August 1996. 5 By applications lodged at the Court Registry on 19 August 1996, the Federal Republic of Germany applied to intervene in both the annulment and the interlocutory proceedings in support of the forms of order sought by the United Kingdom. Pursuant to the first and fourth paragraphs of Article 37 of the EC Statute of the Court of Justice and Article 93(1) and (2) of its Rules of Procedure, the application to intervene in the interlocutory proceedings is granted. 6 The Federal Republic of Germany submitted its statements in intervention on 28 August 1996. 7 The parties presented oral argument on 9 September 1996. 8 Since the two cases are connected, they are joined, in accordance with Article 43 of the Rules of Procedure, for the purposes of the order. Facts 9 It appears from the documents before the Court that measures to assist the elderly and measures to combat poverty and social exclusion have in the past been promoted or given funding by the Commission on the basis of multiannual programmes set up under Council Decisions based on Article 235 of the Treaty. 10 Funding of measures to assist the elderly commenced in 1991. 11 A three-year programme was set up by Council Decision 91/49/EEC of 26 November 1990 on Community actions for the elderly (OJ 1991 L 28, p. 29). That programme covered the years 1991 to 1993 and sought to encourage the transfer of knowledge, ideas and experience on ageing between Member States. 12 Council Decision 92/440/EEC of 24 June 1992 on the organization of the European Year of the Elderly and of Solidarity between Generations (1993) (OJ 1992 L 245, p. 43) further provided, inter alia, for Community funding for a network of pilot projects by public or private bodies aimed at encouraging new approaches both to using the potential represented by the elderly and to promoting the contribution which they can make, and for care of those elderly who cannot manage alone (Article 1(2)(c)(iv)). 13 With a view to extending those activities, a proposal for a Council Decision on Community support for actions in favour of older people was submitted by the Commission on 3 March 1995 (OJ 1995 C 115, p. 14). That proposal, which was also based on Article 235 of the Treaty, provided for a programme to be established for the period from 1 September 1995 to 31 December 1999. It was to include funding for three types of measure ° specific projects; comparative studies and transnational initiatives for the exchange of information; and the establishment of a European "observatory" (Article 3). The activities to be considered were to be innovative or experimental, to seek to promote best practice, to involve organizations and individuals recognized as leaders, to include arrangements for informing non-participating interests of their outcome and to be transnational in scope (Annex, Section III). The proposal did not specify what the duration of those activities was to be. It has not yet been adopted by the Council. 14 Community measures to combat poverty and social exclusion date back to 1975. 15 On 22 July 1975, the Council adopted Decision 75/458/EEC concerning a programme of pilot schemes and studies to combat poverty (OJ 1975 L 199, p. 34), based on Article 235 of the Treaty and last amended by Council Decision 80/1270/EEC of 22 December 1980 (OJ 1980 L 375, p. 68). That programme covered the period from December 1975 to November 1981. 16 Then, on 19 December 1984, the Council adopted Decision 85/8/EEC on specific Community action to combat poverty (OJ 1985 L 2, p. 24). It too was based on Article 235 of the Treaty, and covered the period from January 1985 to 31 December 1988. 17 Finally, a third programme was set up by Council Decision 89/457/EEC of 18 July 1989 establishing a medium-term Community action programme concerning the economic and social integration of the economically and socially less privileged groups in society (OJ 1989 L 224, p. 10), for the period from 1 July 1989 to 30 June 1994 ("the 'Poverty 3' programme"). 18 With a view to continuing that action, the Commission submitted a proposal for a Council Decision establishing a medium-term action programme to combat exclusion and promote solidarity: a new programme to support and stimulate innovation (1994-1999) (in COM(93) 435 final of 22 September 1993, not published in the Official Journal of the European Communities, "the 'Poverty 4' proposal"). That proposal was based on Article 235 of the Treaty and concerned a programme to be implemented from 1 July 1994 to 31 December 1999. The purpose of the programme was to contribute to the effective participation of the least-privileged people in economic and social life (Article 1). The measures envisaged included the carrying-out of model actions at local, regional and national levels in partnership between the public and private sectors, and assistance for the creation and development of transnational networks of projects (Article 4). The model actions to be funded were, inter alia, to be multi-dimensional, to improve participation of the population and to be innovatory and experimental in nature (Annex 1). That proposal was not adopted by the Council. 19 The Community measures provided for under the Council decisions cited above on assistance for the elderly thus came to an end on 1 January 1994 and those on combatting poverty and social exclusion came to an end on 1 July 1994. 20 After those dates, expenditure was committed on the Commission' s initiative under budget lines B3-4103 (measures to combat poverty and social exclusion) and B3-4104 (measures to assist the elderly). 21 According to the Commission, measures to assist the elderly were funded in that way throughout 1994 and 1995. 22 Similarly, in 1995, the Commission committed expenditure for 86 projects to combat poverty. An action seeking the annulment of that decision has been brought by the United Kingdom in Case C-106/96. 23 In May 1996, the Commission drew up the two contested circulars, inviting interested organizations to apply for funding for projects to assist the elderly and projects to combat poverty and social exclusion, and circulated them, in particular, in the Member States. 24 As regards measures to assist the elderly, the circular of 2 May 1996 refers to funding for actions having as their objective the promotion of best practice, seeking to improve the situation of the elderly in an innovative way; they must be developed at European level and should be transnational in scope, they must include arrangements for informing non-participating interests and they are to be managed wherever possible by older people themselves. 25 The circular concerning measures to combat poverty and social exclusion refers to the funding of projects which have a clear European value added, which are multidimensional, which seek in an innovative way to improve the situation of excluded people and which develop innovative methodologies that could be identified as innovatory models of good practice and excellence within the field. 26 The commitment appropriations authorized for 1996 under budget lines B3-4103 (measures against poverty and exclusion) and B3-4104 (measures to assist the elderly) are ECU 9 million and 6.5 million respectively (OJ 1996 L 22, p. 968). 27 The Commission has stated that no expenditure has yet been committed under the procedures initiated by those circulars. Findings 28 The United Kingdom seeks suspension of operation of the contested measures or an order for interim measures pending the judgment of the Court in the main proceedings. 29 Under Articles 185 and 186 of the Treaty, the Court may, if it considers that circumstances so require, order that application of the contested act be suspended or prescribe any necessary interim measures in any cases before it. 30 Article 83(2) of the Rules of Procedure requires any application for such measures to 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 measures applied for. 31 It has consistently been held that the judge hearing an application for interim relief may order suspension of the operation of an act, or other interim measures, if it is established that such an order is justified, prima facie, in fact and in law (fumus boni juris) and that it is urgent in the sense that, in order to avoid serious and irreparable damage to the applicant' s interests, it must be made and take effect before a decision is given in the main action. He must also, where appropriate, weigh up the competing interests involved. Admissibility 32 As a preliminary issue, the Commission contends that the applications for interim measures should be dismissed on the ground that the main actions are manifestly inadmissible. 33 The Commission claims that the circulars whose annulment is sought in the main actions are merely preliminary or preparatory steps taken as part of administrative procedures and thus cannot be subject to an action for annulment under Article 173 of the Treaty. 34 In support of that contention, the Commission submits that nothing in the contested circulars requires it to grant any funding and that they are thus not irrevocable decisions to incur expenditure. Only the final decisions could be challenged in an action for annulment. The Commission refers in particular to Case 60/81 IBM v Commission [1981] ECR 2639 , in which the Court dismissed as inadmissible an action brought under Article 173 of the Treaty against a decision to initiate a procedure on a competition matter and against a statement of objections. 35 The United Kingdom, however, submits that the contested circulars, which contain invitations to apply for funding and guidelines for submission of such applications, have legal consequences in the same way as the Council decisions which had previously provided the basis for the funding granted by the Commission. It refers in that regard to Case 92/78 Simmenthal v Commission [1979] ECR 777, especially paragraphs 38 and 40, concerning a notice of invitation to tender, and to Case 294/83 Les Verts v Parliament [1986] ECR 1339 , especially paragraphs 28 and 36, concerning a decision on the allocation of credits. 36 At the hearing, the Federal Republic of Germany also submitted that the actions were admissible, referring to the broad interpretation of the concept of an actionable measure in the Court' s case-law, in particular in Case 54/65 Forges de Châtillon v High Authority [1966] ECR 185. 37 It has consistently been held that, in principle, the issue of the admissibility of the main application should not be examined in proceedings relating to an application for interim measures, so as not to prejudge the substance of the case. However, where the contention is that the main application is manifestly inadmissible, the judge hearing the application for interim measures must establish whether there is a prima facie case for finding that there is a certain probability that the main application is admissible (see, in particular, the orders in Case 160/88 R Fedesa v Council [1988] ECR 4121, paragraph 22, and Case C-117/91 R Bosman v Commission [1991] ECR I-3353, paragraph 7). 38 In the present case, it is not apparent at this stage that the applications for annulment are manifestly inadmissible as contended by the Commission. Suffice it to note that the Commission itself in its written observations has acknowledged that the contested circulars, being equivalent to invitations to tender, determine the scope of the whole selection procedure and as such have legal consequences. 39 The application for interim measures thus cannot be dismissed on that ground. 40 It must therefore be determined whether the conditions for the grant of interim measures are met. Prima facie case 41 The parties agree that, under Article 22 of the Financial Regulation of 21 December 1977 applicable to the general budget of the European Communities (OJ 1977 L 356, p. 1), last amended by Council Regulation (EC, Euratom, ECSC) No 2335/95 of 18 September 1995 (OJ 1995 L 240, p. 12), no significant new action can be funded out of the Community budget unless provision is made both for the principle of the expenditure and for detailed arrangements for its payment in an act of secondary legislation (a basic act). 42 They disagree, however, as to the application of that provision to the actions covered by the two contested circulars. 43 The United Kingdom considers that in the absence of a Council Decision, the Commission had no power to adopt the contested decisions. 44 First, it points out that significant new actions cannot be carried out by the Commission under its powers of implementation of the Community budget; they require a basic act, in accordance with the various Treaty provisions concerning the allocation of powers, the second subparagraph of Article 22(1) of the Financial Regulation and Section IV(3)(c) of the Joint Declaration by the European Parliament, the Council and the Commission of 30 June 1982 on various measures to improve the budgetary procedure (OJ 1982 C 194, p. 1). 45 The United Kingdom submits that the projects envisaged in the two contested circulars constitute such significant new actions, as is clear in particular from the similarity between the actions covered by the contested invitations to apply for funding and those either already funded under the previous Council Decisions referred to in paragraphs 11, 12, 15, 16 and 17 above or envisaged in the proposals for Council Decisions of September 1993 and March 1995 referred to in paragraphs 18 and 13 above, which were to have been in force in 1996. 46 The United Kingdom further contends that the two decisions do not contain an adequate statement of reasons, in particular in that, contrary to point II(A)(1)(a) of the Communication from the Commission to the budgetary authority concerning legal bases and maximum amounts (SEC(94) 1106 final, not published in the Official Journal of the European Communities, "the communication of 6 July 1994"), the Commission did not clearly demonstrate that the planned measures were pilot projects or preparatory operations, and not significant actions. 47 The Commission submits that the projects referred to are preparatory actions within the meaning of the communication of 6 July 1994. They are innovatory activities lasting up to one year, which should have a multiplier effect. 48 According to the Commission, the projects to assist the elderly referred to in the circular of 2 May 1996 are part of the preparations for the programme covered by the proposal for a Council Decision submitted by the Commission in March 1995. They also fall within the period of two years within which the Commission considers that it is entitled to carry out preparatory action in the absence of a basic act, where it has made a proposal for such a basic act before the end of the second year from the commencement of the preparatory action (point II(A)(1)(b) of the communication of 6 July 1994). 49 The projects to combat poverty and social exclusion are likewise, in the Commission' s submission, preparatory actions which, if successful, could in future be financed from other Community funds. 50 According to the Commission, those projects differ both from the projects funded under the "Poverty 3" programme and from those envisaged in the "Poverty 4" proposal of September 1993. The contested circular concerns short-term projects without any particular coordination apart from Commission monitoring, receiving small amounts, whereas the projects envisaged in the "Poverty 4" proposal were to be multiannual, with a sophisticated coordination infrastructure and involving funding on a larger scale. 51 It is not for the judge hearing applications for interim measures, when assessing whether there is a prima facie case for those applications, to make any final ruling either on the interpretation of Article 22 of the Financial Regulation or on the nature of the projects referred to in each of the contested circulars. 52 Subject to that proviso, however, the arguments put forward by the United Kingdom in support of its submission that, in the absence of a Council Decision, the Commission could not carry through the procedures initiated by the adoption of the two contested circulars appear to have some weight. 53 The Commission has not at the present stage been able to dispel the doubts raised in that regard by the content of the two circulars, reinforced by the context of their adoption. 54 There are, for example, undeniable similarities between the measures to assist the elderly described in the circular of 2 May 1996 and those which were either funded on the basis of Council Decision 91/49 or envisaged in the proposal for a decision submitted by the Commission on 3 March 1995. In particular, as the United Kingdom has pointed out, the aims and beneficiaries of the projects appear to be similar. 55 Furthermore, the circular of 2 May 1996 does not state that the measures are of a preparatory nature but simply announces that the Commission will "continue" to promote actions at a European level to benefit the elderly and promote solidarity between generations. 56 The situation is very similar with regard to the circular concerning measures to combat poverty and social exclusion, point 1 of which states that projects must have three basic characteristics (they should be multidimensional; they should be innovative and involve other relevant actors as partners; and they should apply innovative methodologies capable of serving as innovatory models of good practice and excellence) which correspond closely both to the Commission' s description of the "Poverty 3" programme in its "Poverty 4" proposal (p. 9) and to the three "basic principles" of the "Poverty 4" proposal itself (pp. 11 and 12). 57 Furthermore, the contested circular does not state that the measures are of a preparatory nature but simply announces that, as in the previous year a budget is available for the co-funding of pilot projects which combat social exclusion and promote solidarity. 58 The Commission' s arguments to the effect that the projects covered by the contested circulars differ by reason of their short duration and their innovative and demonstrational nature do not appear entirely convincing at this stage. 59 Innovation and demonstration are features to be found in the programmes previously adopted or proposed. 60 Nor is it obvious that the projects referred to in the two contested circulars are in reality inherently of short duration. On the contrary, the circular relating to projects to combat poverty and social exclusion states that preference will be given to proposals which are likely to be sustainable in the longer term (point 3(b)). Admittedly, the same document states that the Commission can fund activities only for a period of approximately 12 months but that appears, on a first analysis, to derive more from the purely budgetary basis for the circular than from the nature of the projects in question. 61 In conclusion, in the light of those factors, it is not possible at the present stage to dismiss the applicant' s contention that the purpose of the contested circulars was not to fund preparatory actions with a view to subsequently launching more ambitious programmes but rather to make up for the fact that the Council had not adopted the proposals for decisions submitted to it by the Commission and thus to continue the activities undertaken in implementation of the previous Council Decisions. Urgency and balance of interests 62 In assessing the urgency of the measures sought, it must be determined whether they are necessary in order to avoid serious damage which could not be made good even if the main action were successful. 63 It appears that to carry the contested selection procedures through to their conclusion would create an irreversible de facto situation which could no longer be remedied by the judgment in the main action, since the funds in question would have been awarded, and in some cases used by the beneficiaries. 64 The United Kingdom submits that such unlawful expenditure would involve an irreparable breach of the rules governing the allocation of powers between the Community institutions and irreparable damage to the Community and the Member States, both on a financial and on an institutional level. 65 The Commission argues that the applicant cannot act as guardian of the public interest, nor has it adequately shown any damage to itself. 66 It is clear, however, that by virtue of its position as a Member State of the Community, which involves both participation in the exercise of legislative and budgetary powers and contribution to the Community budget, the United Kingdom cannot be denied the right to rely on the damage which would arise from expenditure being incurred contrary to the rules governing the powers of the Community and its institutions. 67 In order to determine whether the applicant has demonstrated the need to order the interim measures sought, it is necessary to analyse the alleged damage in the light of all the interests involved (order of 29 June 1993 in Case C-280/93 R Germany v Council [1993] ECR I-3667, paragraph 29). 68 As regards the applicant' s conduct, it must first be noted that the United Kingdom has made active efforts to prevent the occurrence of the alleged damage. As the Commission itself indicates in its written observations, the "Poverty 4" proposal was not adopted because it was opposed in the Council by the United Kingdom and the Federal Republic of Germany. The United Kingdom has also brought an action for the annulment of the financial commitments made by the Commission in 1995 for actions to combat poverty. Finally, it stated at the hearing that it had objected as early as January 1996 to the expenditure incurred by the Commission for actions to assist the elderly. 69 It must further be recognized that the institutional rules governing the allocation of powers between the various Community institutions occupy an essential place in the Community legal order (see Case C-70/88 Parliament v Council [1990] ECR I-2041) and that a manifest breach of such essential rules could in itself give rise to application of Article 186 of the Treaty (order of 21 May 1977 in Joined Cases 31/77 R and 53/77 R Commission v United Kingdom [1977] ECR 921, paragraphs 17 and 20). 70 While no such manifest breach has been established at the present stage in the proceedings, the strength of the applicant' s submissions, taken together with the importance of the rules alleged to have been breached, cannot be ignored. 71 The United Kingdom has therefore sufficiently demonstrated the risk of irreparable damage if interim measures are not granted. 72 In order to decide whether such measures should be granted and, if so, to determine what they should be, the applicant' s interest in preventing the contested procedures from being carried through to a stage which is irreversible must be weighed against the defendant' s interest in expediting those procedures. In doing so, it is necessary to examine whether the possible annulment of the contested decisions by the Court hearing the main action would make it possible to reverse the situation and conversely to what extent each of the various possible interim measures would be such as to prevent the aims of the contested decisions from being achieved in the event of the main application being dismissed (orders of 19 July 1995 in Case C-149/95 P(R) Commission v Atlantic Container Line and Others [1995] ECR I-2165 , paragraph 50, and of 12 July 1996 in Case C-180/96 R United Kingdom v Commission [1996] ECR I-0000, paragraph 89). 73 Whilst it is true that circumvention by the Commission of the intentions of the Community legislature would constitute a serious breach of the rule of law in the Community, which could no longer be made good by the judgment in the main proceedings, an irreversible situation, with possibly serious consequences, would be created by simply suspending the contested procedures, since the amounts provided for in the budget could no longer be used for the social purposes for which they were allocated, even if the main application were to be dismissed. 74 The urgency put forward by the United Kingdom therefore cannot justify such a measure, which is, moreover, not necessary to prevent the alleged damage. 75 In view of all the foregoing, the Commission should be authorized to commit the expenditure provided for under the contested procedures but ordered to make it clear that such commitments are conditional upon the outcome of the judgment in the main proceedings and to make no payment until that judgment is delivered. On those grounds, THE PRESIDENT OF THE COURT hereby orders: 1. When committing expenditure in implementation of its circular of 2 May 1996 inviting applications for Commission funding of measures to assist the elderly and of its circular received by the United Kingdom authorities on 15 May 1996 inviting applications for Commission funding of measures to combat poverty and social exclusion, the Commission shall clearly state that such commitments are conditional upon the judgment of the Court in the main proceedings and shall make no payment until that judgment is delivered. 2. Costs are reserved. Luxembourg, 24 September 1996. © European Communities, 2001 All rights reserved BAILII: Copyright Policy | Disclaimers | Privacy Policy | Feedback | Donate to BAILII URL: https://www.bailii.org/eu/cases/EUECJ/1996/C23996.html