Case C‑188/11, Hehenberger v. Österreich

Exclusion as a result of failure to comply with conditions governing eligibility for grant of aid is not a penalty, but merely the consequence of failure to fulfil the conditions
  
>> This case concerned the question whether Regulation 1257/1999, read in conjunction with Regulation 817/2004, precluded national legislation which provided that, where a farmer who was the beneficiary of financial supported prevented an on-the-spot check of the land concerned, all the aid already granted during the commitment period to that farmer in relation to an agrienvironmental measure must be repaid, even where it had already been paid in respect of a number of years.

 In accordance with Regulation No 1257/1999, the competent Austrian ministry adopted the Special Directive on the Austrian aid programme for extensive agriculture. Mr Hehenberger applied in 2000, for the first time, to the Austrian paying body acting on behalf of the Republik Österreich, for agri-environmental support under ÖPUL 2000. Mr Hehenberger made a statement by which he undertook for a period of 5 years from 1 January 2001, certain agri-environmental measures referred to in ÖPUL 2000. On the basis of that commitment and the aid applications made each year by Mr Hehenberger, the Austrian paying body paid the agri-environmental support concerned for the years from 2001 to 2005.

In 2007, the Austrian paying body claimed that Mr Hehenberger had made it impossible to carry out the on-the-spot check on 12 September 2005. Mr Hehenberger denied access to that land, thus preventing the check from being carried out. As a consequence, that body required repayment of all the aid which had been paid to Mr Hehenberger under ÖPUL 2000 for the years 2001 to 2005.  Mr Hehenberger has accordingly challenged the repayment claim before the referring Court.

 The Court of Justice pointed out that Arts 22 to 24 of Regulation 1257/1999 set out the general conditions for the grant of supported for farming practices designed, in particular, to maintain the countryside. The Court held that it followed from those provisions that agri-environmental measures were characterised by the five-year commitment given by the farmers concerned to practise a form of agriculture which respect to the environment. In return for the agri-environmental commitments for a minimum of five years, financial supported was allocated annually by the States according to the loss of revenue incurred or the resulting additional costs (Case C241/07 JK Otsa Talu [2009]).

The Court held that as regards the agri-environmental supported characterised by a multiannual commitment, those conditions for the grant of supported were not required simply for the year during which an on-the-spot check had been made, but throughout the entire commitment period in respect of which the supported was granted, which means that the onthe-spot checks connected with that supported related to all the commitments entered into. Accordingly, conduct on the part of the farmer which made it impossible to carry out those checks prevented verification that those conditions had been complied with throughout the commitment period.

The Court thus held that as regards agri-environmental measures relating to a number of years, where the beneficiary of the agri-environmental supported had prevented an on-the-spot check from being carried out, making it impossible to ascertain whether the conditions for eligibility of the aid had been complied with throughout the commitment period, the applications for agri-environmental aid concerned must be rejected in accordance with Arts 17(3) of Regulation 2419/2001 and 23(2) of Regulation 796/2004. For the purposes of those provisions, the applications concerned accordingly cover all the applications with respect to the conditions of eligibility, which must be complied with throughout the duration of the agri-environmental project in respect of which the beneficiary had pledged an undertaking and to which the on-the-spot checks related.

In consequence, as was clear from Art. 71(2) of Regulation 817/2004, the beneficiary was under an obligation to repay all the agri-environmental aid already paid in respect of the applications which had been rejected.

The Court held that that, where the European Union legislature laid down the conditions governing eligibility for the grant of aid, exclusion as a result of failure to comply with those conditions was not a penalty, but merely the consequence of failure to fulfil the conditions laid down by law (see, to that effect, Case C171/03 Toeters and Verberk [2004]; and Case C45/05 Maatschap Schonewoulde-Prins [2007]). By the same token, the rejection of an aid application on the grounds that it was impossible to verify the eligibility conditions because dof the conduct of the farmer, who had prevented an on-the-spot check from being carried out, could not be regarded as a penalty and, accordingly, could not be subject to the application of Art. 73 of Regulation 817/2004.

The Court thus concluded that Regulation 1257/1999, read in conjunction with Regulation 817/2004, did not preclude national rules which provided that, where a farmer who was the beneficiary of financial supported prevented an on-the-spot check of the land concerned, all the supported already granted during the commitment period to that farmer in relation to an agri-environmental measure must be repaid, even where it had already been paid in respect of a number of years.