Opinion of Advocate General Wahl delivered on 4 October 2018

(a) Admissibility: new arguments may be put forward as long as the subject matter of the dispute remains the same

64. As regards the admissibility of the first part of the single ground of appeal, it should be recalled at the outset that new pleas are generally not permissible on appeal.⁽²²⁾

65. Before the General Court, the Kingdom of Belgium argued that it had exhausted all possible domestic remedies. Before that court, that Member State explained at length why, on the one hand, an appeal before the Cour de cassation could not be regarded as a third degree of (substantive) jurisdiction and, on the other hand, why it was practically impossible to bring a successful appeal before that court where the lawyer consulted had given a negative opinion on the chances of successfully bringing an appeal before the Cour de cassation. The Kingdom of Belgium did not, however, specifically argue that the General Court should have applied the case-law of the ECtHR for the purposes of establishing that it had exhausted all possible domestic remedies and that it had not been negligent in recovering the lost sums.

66. It is therefore true, as the Commission points out, that the relevance of the case-law of the ECtHR on interpreting Article 32(8)(a) of Regulation No 1290/2005 was not discussed at first instance.

67. However, the Court does not apply a strict standard as concerns the admissibility of new arguments. Rather, what matters is that the subject matter of the proceedings at first instance is not changed on appeal.

68. More specifically, as the Court has held, it follows from Article 58 of the Statute of the Court of Justice, read in conjunction with Article 113(2) of the Rules of Procedure of the Court of Justice, that, on appeal, an appellant may bring forward any relevant argument, provided only that the subject matter of the proceedings before the General Court is not changed in the appeal.⁽²³⁾

69. Contrary to what is implied by the Commission’s argument of inadmissibility, there is no requirement that each argument put forward on appeal must previously have been discussed at first instance. Instead, the Court has emphasised in that regard that such a restriction regarding the arguments that an appellant may put forward on appeal cannot be accepted. That is because the appeal procedure would otherwise be deprived of a significant part of its purpose.⁽²⁴⁾

70. The first part of the single ground of appeal does not change the subject matter of the proceedings before the General Court. Rather, the argument regarding the relevance of the case-law of the ECtHR seeks to contest the manner in which the General Court interpreted and applied Article 32(8)(a) of Regulation No 1290/2005.

71. Thus, the Commission’s argument concerning the inadmissibility of the first part of the single ground of appeal should be rejected.

(b) Substance: the case-law of the ECtHR regarding admissibility is not relevant in the context of the present case

72. The case-law of the ECtHR to which the Kingdom of Belgium refers concerns the admissibility of cases brought before the ECtHR. In accordance with Article 35(1) of the European Convention for the Protection of Human Rights and Fundamental Freedoms (‘the ECHR’), the ECtHR may only deal with a case provided that the applicant has exhausted all (ordinary) domestic remedies first.⁽²⁵⁾

73. It is of course true that, as pointed out by the Kingdom of Belgium, fundamental rights, as guaranteed by the ECHR, constitute general principles of EU law.⁽²⁶⁾ It is equally true that, in accordance with Article 52(3) of the Charter of Fundamental Rights of the European Union (‘the Charter’), rights contained in the Charter that correspond to rights guaranteed by the ECHR are to have the same meaning and scope as those laid down by that convention. Accordingly, where relevant, the case-law of the ECtHR must be taken into account in interpreting provisions of EU law, and in particular, the corresponding provisions of the Charter.

74. Nevertheless, as already indicated, the case-law mentioned by the Kingdom of Belgium does not relate to rights contained in the Charter, or, more broadly to the protection of the rights and freedoms laid down in the ECHR: it relates to the requirement that an applicant must have exhausted all domestic remedies before bringing the case to the ECtHR.

75. That requirement has nothing to do with the requirement set out in Article 9(1)(a) of Regulation No 1290/2005 that Member States are to take all necessary measures to ensure recovery of sums lost due to irregularities. Nor does that requirement have anything to do with how the concept of negligence ought to be construed for the purposes of interpreting Article 32(8)(a) of Regulation No 1290/2005.

76. The requirement that an applicant must have exhausted all domestic remedies aims to ensure that domestic jurisdiction can remedy any violation before the case is brought before the ECtHR.⁽²⁷⁾ By contrast, the requirement of taking all necessary measures to recover lost sums aims to ensure that EU funds are adequately protected and no undue payments are made.

77. Therefore, it is difficult to accept that the General Court could be taken to have erred in law by not having regard to the case-law of the ECtHR in interpreting Article 32(8)(a) of Regulation No 1290/2005, a provision essentially seeking to protect the financial interests of the European Union.

78. What is more, even assuming that Article 32(8)(a) of Regulation No 1290/2005 ought to be interpreted in the light of that case-law, the guidance that could be inferred therefrom is limited.

79. There is nothing in that case-law to suggest that applicants are not generally required to bring an appeal before the Cour de cassation on a point of law. That is so despite the fact that, in some particular factual circumstances, the ECtHR has not declared an application inadmissible despite the fact that no appeal had been brought before the Cour de cassation.⁽²⁸⁾ Rather, as the ECtHR has itself explained, the ‘rule of exhaustion’ must be applied with flexibility and without excessive formalism. What is important is that, in determining whether that rule has been observed, the particular circumstances of each individual case must be given due consideration.⁽²⁹⁾

80. In the light of those considerations the first part of the single ground of appeal ought to be dismissed as unfounded.

(a) Member States retain the freedom to choose the most appropriate measures to protect the financial interests of the European Union

89. As explained above, Member States have a far-reaching obligation, based on Regulation No 1290/2005, to safeguard the financial interests of the European Union. That can be seen in particular from Article 9(1)(a) of the regulation, a provision which sets out the requirement that Member States are to take any measures necessary to ensure the effective protection of the financial interests of the European Union. In its case-law, the Court has held that that requirement is a specific expression of the general duty of sincere cooperation incumbent on Member States on the basis of what is now Article 4(3) TFEU.⁽³⁴⁾

90. However, as the Court has emphasised, national authorities remain free, in recovering unduly paid sums, to choose among different measures the ones which they consider appropriate in order to safeguard the financial interests of the European Union.⁽³⁵⁾ That is not only in line with the autonomous role that Member States play in executing tasks under the EAGF. It is also in line with the wording of Article 9(1)(a) of Regulation No 1290/2005: indeed, taking ‘necessary’ measures implies that an element of judgment is required on the part of the Member State in choosing the most appropriate measures for the situation at hand.

91. The freedom that Member States thus enjoy in the context of recovery is explained, on the one hand, by the fact that the measures that must be taken to recover unduly paid sums may vary greatly. That is certainly why in Regulation No 1290/2005 no detailed rules are laid down regarding the recovery measures Member States are to undertake.

92. On the other hand, and perhaps more importantly, that freedom is explained by the central role that Member States play in the system set up by Regulation No 1290/2005. As alluded to above, in the framework of Regulation No 1290/2005, Member States operate at the frontline of the EU agricultural funding regime. First, accredited payment agencies in the Member States are responsible for making payments to beneficiaries and checking their eligibility. The expenditure thus incurred by the Member States is then subsequently reimbursed by the Commission from the EU budget.⁽³⁶⁾ Second, Member States are also to check that aid is correctly paid out, to prevent and pursue irregularities and to recover sums lost as a result of irregularities or negligence in their respective territories. In that sense, the supervision of the use of EU funding has been ‘down sourced’ from EU institutions to national authorities.⁽³⁷⁾

93. From the perspective of geographic proximity and sound use of public resources, national authorities are certainly best placed to carry out the necessary checks, pursue irregularities, and as the case may be, take measures to recover sums lost due to irregularities. In the particular context of the recovery of undue payments, those authorities are also arguably best placed to assess which measures are most likely to produce a successful outcome.

94. Nevertheless, it must be emphasised that the freedom retained by Member States is circumscribed by the duty of sincere cooperation which requires that Member States must act diligently throughout the recovery procedure.⁽³⁸⁾ As the General Court in my view correctly held in the judgment under appeal, that obligation implies that Member States are to make a full and timely attempt to recover the sums in question by having recourse to all available means to achieve the objective of protecting the financial interests of the European Union.⁽³⁹⁾ Otherwise, a Member State must be considered to have breached its general obligation of diligence.

95. But does it follow from that obligation that there is a general requirement that a Member State must exhaust all domestic remedies when it attempts to recover unduly paid export refunds?

96. That appears to be the General Court’s view. In the judgment under appeal, it found, in essence, that because it had decided not to bring an appeal before the Cour de cassation (even though it could have) and because by doing so it had made it impossible for the Cour de cassation to refer questions for a preliminary ruling to this Court, the Kingdom of Belgium had not made use of all the measures available to it in recovering the sums in question and that, as a consequence, the absence of recovery was a result of negligence attributable to that Member State.

97. As shall be seen, the General Court came to that conclusion without properly examining the circumstances of the case at hand. The absence of such an assessment amounts in my view to an error in law that should lead the Court to set aside the judgment under appeal.

(b) The determination of negligence attributable to a Member State must be based on an assessment of the particular circumstances of the case at hand

98. To begin with, it may be useful to draw a parallel between the approach adopted in the judgment under appeal and the approach of the Court regarding the obligation of a Member State to recover unlawful State aid: in that context too, Member States are required to take ‘all necessary measures’ to recover unlawful State aid from beneficiaries. A failure to recover unlawful State aid can only be justified where recovery was not possible due to ‘absolute impossibility’, a concept interpreted strictly by the Court.⁽⁴⁰⁾

99. In the context of State aid, the strict approach is explained not only by the fact that it is the Member State itself that has caused the unlawful situation by granting aid contrary to Article 107(1) TFEU. It is also explained by the need to eliminate any distortion to competition that may arise from unlawfully granted aid.

100. In the present context too, such a strict approach regarding the obligation to recover unduly paid sums may have certain advantages. In particular, systematically requiring Member States to exhaust all (ordinary) domestic remedies would certainly enhance foreseeability and thus reduce litigation between the Commission and the Member States.

101. However, as explained, the system set up by Regulation No 1290/2005 grants Member States considerable freedom in choosing the most appropriate measures to recover unduly paid sums. Indeed, the measures to be undertaken to protect the financial interests of the European Union may vary from case to case. In that regard and in particular given that Member States may be confronted with very different situations in the course of recovery proceedings, the disadvantages of a strict approach in my view outweigh the abovementioned advantages.

102. For example, a Member State may have been partly successful at a lower instance. In such circumstances a further appeal may, if it were systematically required, jeopardise (at least partial) recovery. Thus, exhausting all available remedies may not always constitute the most appropriate course of action from the perspective of the financial interests of the European Union.

103. In fact, the absence of recovery caused by negligence attributable to a Member State may arise in a wide variety of situations. That explains why the Commission specifically emphasised at the hearing that, in its view, Article 32(8)(a) of Regulation No 1290/2005 should not be construed as requiring, in general and without due consideration of the specific circumstances of the case, that Member State authorities must systematically exhaust all available domestic remedies. Rather, the Commission emphasised that it is in the very specific circumstances of this case that the decision by BIRB not to appeal the judgment of 3 May 2012 before the Cour de cassation amounts to negligence attributable to the Kingdom of Belgium within the meaning of that provision.

104. I agree with the Commission that it is not possible to determine in the abstract whether an omission amounting to a breach of the obligations of Member States in the context of the EAGF has occurred in the recovery of unduly paid sums under Regulation No 1290/2005. That is why an assessment of all relevant circumstances is in my view necessary to establish negligence within the meaning of Article 32(8)(a) of Regulation No 1290/2005.

105. Such circumstances may include the recovery measures available and those undertaken, the outcome of proceedings at different instances, the costs associated with recovery proceedings, the prospect of succeeding in those proceedings and the magnitude of the sums to be recovered in relation to the costs associated with a further appeal.

106. In that respect, I observe that, as far as can be understood from the case file, the decision at issue (the annulment of which the Kingdom of Belgium sought before the General Court) was based on the finding made by the Commission that BIRB had acted negligently because it had not brought an appeal before the Cour de cassation in the particular circumstances of this case.

107. Indeed, it seems to me that in circumstances where recovery action has been taken, determining whether a decision not to appeal further may be considered as an omission amounting to negligence is by no means an arithmetic exercise. It requires, instead, consideration of a number of relevant circumstances. That is so, in particular, because of the freedom that Member States retain in choosing the most appropriate measures to recover unduly paid sums under Regulation No 1290/2005, a regulation which does not lay down detailed rules about the recovery of unduly made payments. In other words, negligence cannot be simply assumed because no appeal before the Cour de cassation was brought. In my view, a decision not to appeal further after years of unsuccessful litigation is quite different from, for example, a decision not to take any recovery action at all or a failure to make the checks required by the relevant sectoral regulations as concerns the eligibility of applicants — omissions that would arguably breach the obligations of Member States in the context of the EAGF.

108. However, despite having acknowledged at the outset the need for an assessment of the circumstances of the case,⁽⁴¹⁾ the General Court did not consider several relevant issues.

109. In particular, it did not consider the following circumstances to establish negligence: (1) the fact that Saint-Louis Sucre had successfully contested the claim made by BIRB before two instances; (2) the prospect of BIRB succeeding on further appeal on a point of law, in particular in the light of the central role which the lawyer authorised to act before the Cour de cassation plays in proceedings before that court; (3) the relevance of the questions that BIRB asked the cour d’appel de Bruxelles to refer to the Court for a preliminary ruling, the reasons why that court did not make such a referral, and the subsequent analysis of the Court’s case-law by the lawyer authorised to act before the Cour de cassation,⁽⁴²⁾ and lastly (4) the magnitude of the sum to be recovered in relation to the costs associated with a further appeal, including the need to pay interest in case of a negative decision at last instance.

110. That brings me to the effectiveness of the preliminary ruling procedure laid down in Article 267 TFEU, an argument emphatically raised by the Commission and endorsed by the General Court in the judgment under appeal.⁽⁴³⁾

111. In the Commission’s view, by not bringing an appeal against the judgment of 3 May 2012 before the Cour de cassation, the Kingdom of Belgium made it effectively impossible for that court to request a preliminary ruling from this Court. The behaviour of BIRB thus compromised the effectiveness of the procedure laid down in Article 267 TFEU. I understand that it is the Commission’s view that that circumstance alone was sufficient to establish negligence in this case. That view seems to be shared by the General Court.⁽⁴⁴⁾

112. It is of course true that the Cour de cassation cannot request a preliminary ruling on the interpretation of relevant issues of EU law if no appeal is brought before it in the first place. Nonetheless, that circumstance does not in my view do away with the need to assess all relevant circumstances to determine whether the behaviour of the national authorities in question, and here specifically the decision of BIRB not to bring an appeal, following the negative opinion of the lawyer authorised to act before the Cour de cassation it had consulted, amounts to negligence.

113. On the basis of the information available to the Court, it is not evident, bearing in mind the particular circumstances of the case, that if BIRB had brought an appeal, the Cour de cassation would have referred questions to the Court. More significantly still, on the basis of that information, it is not possible to assess to what extent such a referral would have had any bearing on the outcome of the case.⁽⁴⁵⁾

114. It is true that the Member States, and, by extension, Member State authorities, undoubtedly have a special responsibility to ensure that their actions do not hamper the proper functioning of the system set up by Article 267 TFEU. Nevertheless, it should be emphasised that the Commission may exclude sums from financing of the European Union on the basis of Article 32(8)(a) of Regulation No 1290/2005 only if an irregularity or negligence attributable to the administrative authorities or another official body of the Member State has occurred.

115. Recourse to that provision thus requires establishing that the administrative authorities of the Member States have acted negligently (or that those authorities are the source of an irregularity). In my view, in spite of the special responsibility of Member States mentioned in the previous point and the fundamental role of Article 267 TFEU for the EU legal system, negligence cannot be established in the abstract, on the basis of an assumption that had an appeal been brought, the Cour de cassation, as the last instance court, would have made a referral to this Court. In other words: while the conclusion of the General Court may or may not be correct, the determination of whether Member State authorities have been negligent cannot be made without having due regard to the particular circumstances of the case. Those circumstances include the reasons that led BIRB, a party to the national proceedings, to decide not to appeal.

116. As already indicated, such an assessment is lacking in the judgment under appeal.

117. By way of conclusion, I wish to make a final observation on the interpretation of Article 32(8)(a) of Regulation No 1290/2005 adopted in the judgment under appeal. Although the point was not specifically raised in this appeal, I would observe that after having established that the Kingdom of Belgium had not acted with sufficient diligence, the General Court simply assumed that the absence of recovery had resulted from the negligence attributable to the Kingdom of Belgium.

118. It must be emphasised that Article 32(8)(a) of Regulation No 1290/2005 states that the absence of recovery must be the outcome of negligent behaviour. It seems to me therefore that the link between the absence of recovery and negligence cannot be assumed, but must instead be appropriately established on the basis of an assessment of the circumstances of the case, an assessment the General Court failed to make.

119. On that basis I conclude that because the assessment undertaken in the judgment under appeal regarding negligence is insufficient, the General Court’s finding that the absence of recovery of the sums in question was the outcome of negligence attributable to BIRB and thus to the Kingdom of Belgium within the meaning of Article 32(8) of Regulation No 1290/2005 is vitiated by an error in law. Accordingly, the second part of the single ground of appeal should be upheld.