2The background to the dispute is set out as follows in paragraphs 1 to 19 of the judgment under appeal:1 In accordance with Regulation (EC) No 2321/2002 of the European Parliament and of the Council of 16 December 2002 concerning the rules for the participation of undertakings, research centres and universities in, and for the dissemination of research results for, the implementation of the European Community Sixth Framework Programme (2002-2006) (OJ 2002 L 335, p. 23), and within the framework provided for by Decision No 1513/2002/EC of the European Parliament and of the Council of 27 June 2002 concerning the Sixth Framework Programme of the European Community for research, technological development and demonstration activities, contributing to the creation of the European Research Area and to innovation (2002-2006) (OJ 2002 L 232, p. 1), the Commission of the European Communities concluded three grant agreements with, amongst other parties, the appellant, [Ludwig-Bölkow-Systemtechnik], a technology and strategy consulting company, active principally in the fields of energy, mobility and sustainability.2 For the first agreement, corresponding to the project entitled ‘Development of a harmonised “European Hydrogen Energy Roadmap” by a balanced group of partners from industry, European regions and technical and socio-economic scenario and modelling experts’ (‘the HyWays project’), as well as the second agreement, corresponding to the project entitled ‘Handbook for Approval of Hydrogen Refuelling Stations’ (‘the HyApproval project’), the appellant acted as coordinator. As regards the third agreement, corresponding to the project ‘Harmonisation of Standards and Regulations for a sustainable Hydrogen and Fuel Cell Technology’ (‘the HarmonHy project’), it was only one of the contractors of the consortium.3 Article 12 of each agreement states that the agreement is governed by Belgian law.4 Article 13 of those agreements stipulates a jurisdiction clause, under which the General Court is to have sole jurisdiction to hear any disputes between the Commission and the contractors concerning their validity, their application or their interpretation.5 The general conditions, which, pursuant to Article 14 of each agreement, form an integral part of the agreement, include Part A, concerning, in particular, the performance of the projects at issue, termination of the agreements and responsibility (Articles II.2 to II.18), Part B, on financial provisions and controls, audits, recoveries and sanctions (Articles II.19 to II.31) and Part C, concerning intellectual property rights (Articles II.32 to II.36).6 Article II.19(1) of the general conditions defines the costs eligible for EU financing and states the following:‘Eligible costs incurred for the implementation of the project must fulfil all of the following conditions:(a) they must be actual, economic and necessary for the implementation of the project;(b) they must be determined in accordance with the usual accounting principles of the contractor;(c) they must be incurred during the duration of the project as identified in Article 4.2 …;(d) they must be recorded in the accounts of the contractor that incurred them, no later than at the date of the establishment of the audit certificate referred to in Article II.26. The accounting procedures used in the recording of costs and receipts shall respect the accounting rules of the State in which the contractor is established as well as permit the direct reconciliation between the costs and receipts incurred for the implementation of the project and the overall statement of accounts relating to the overall business activity of the contractor…’7 Article II.19(2)(a) to (h) of the general conditions mentions eight categories of non-eligible costs. Article II.19(2)(i) further states that all the costs which do not meet the conditions established in paragraph 1 are non-eligible.8 Articles II.20 and II.21 of the general conditions define two types of costs which are eligible under the conditions in Article II.19, namely, first, direct costs, which are directly attributable to the projects, and, second, indirect costs, which are not directly attributable to the projects but can be identified and justified by the contractor’s accounting system as being incurred in direct relationship with the direct costs.9 Article II.22(1) of the general conditions sets out three cost reporting models, including the full cost model used for the attribution by the contractors of direct and indirect eligible costs and the full cost/flat-rate model used by the contractors for the attribution of direct eligible costs and a flat-rate for indirect costs. That flat-rate is equal to 20% of all direct costs less the cost of subcontracts, which is deemed to cover any indirect costs incurred by the contractor under the project.10 The second subparagraph of Article II.24(2) of the general conditions provides that the Union’s financial contribution cannot give rise to any profit for the contractors.11 In accordance with Article II.29(1) of the general conditions, the Commission may carry out audits at any time during the agreement and up to five years after the end of the project. Those audits may concern scientific, financial, technological and other aspects, such as accounting and management principles, relating to the proper execution of the project and the agreement.12 Article II.30 of the general conditions is drafted as follows:‘Without prejudice to any other measures provided for in this [agreement], the contractors agree that the [Union], with the aim of protecting its financial interests, is entitled to claim liquidated damages from a contractor who is found to have overstated expenditure and who has consequently received an unjustified financial contribution from the [Union]. Liquidated damages are due in addition to the recovery of the unjustified financial contribution from the contractor.1. Any amount of liquidated damages shall be proportionate to the overstated expenditure and unjustified portion of the [Union] contribution. The following formula shall be used to calculate any possible liquidated damages:Liquidated damages = unjustified financial contribution × (overstated expenditure/total claimed)The calculation of any liquidated damages shall only take into consideration the period relating to the contractor’s claim for the [Union] contribution for that period. It shall not be calculated in relation to the entire [Union] contribution.2. The Commission shall inform the contractor which it considers liable to pay liquidated damages in writing of its claim by way of a registered letter with acknowledgement of receipt. The contractor shall have a period of 30 days to answer the [Union’s] claim.3. The procedure for repayment of unjustified financial contribution and for payment of liquidated damages will be determined in accordance with the provisions of Article II.31.4. The Commission shall be entitled to compensation in respect of any overstated expenditure which comes to light after the agreement has been completed, in accordance with the provisions of paragraphs 1 to 6.5. These provisions shall be without prejudice to any administrative or financial sanctions that the Commission may impose on any defaulting contractor in accordance with the Financial Regulation or to any other civil remedy to which the [Union] or any other contractor may be entitled. Furthermore, these provisions shall not preclude any criminal proceedings which may be initiated by the Member States’ authorities.6. Further, as established by the Financial Regulation, any contractor declared to be in grave breach of its contractual obligations shall be liable to financial penalties of between 2% and 10% of the value of the [Union’s] financial contribution received by that contractor. The rate may be increased to between 4% and 20% in the event of a repeated breach in the five years following the first breach.’13 In February 2008, the Commission carried out, in accordance with Article II.29 of the general conditions, an audit regarding the proper performance of the agreements at issue.14 On 17 March 2011, the Commission sent the appellant a draft audit report. By letters of 21 and 22 April 2011, the appellant expressed a view on that draft.15 On 25 July 2011, the Commission sent the appellant the final version of the audit report. The report found that the appellant had set its eligible personnel costs too high. Furthermore, according to that report, costs relating to research were wrongly treated as management costs. Finally, interest on advances in the total sum of EUR 1 707.40 was not declared.16 The Commission informed the appellant that it would send debit notes for the three agreements, which at that date, had been completed and for which the amount of the Union’s financial contribution had been paid in full.17 From 10 August 2011 to 11 November 2013, correspondence between the appellant and the Commission continued, in the course of which the parties disagreed on the findings of the final audit report.18 On 9 December 2013, the Commission sent several debit notes to the appellant. It is apparent from those notes that the amount to be recovered by the Commission amounted to EUR 218 539.62 in respect of the HyWays project, EUR 75 407.06 in respect of the HyApproval project and EUR 47 128.39 in respect of the HarmonHy project. Moreover, the Commission claimed liquidated damages from the appellant in accordance with Article II.30 of the general conditions, namely EUR 60 402.30 in respect of the HyWays project, EUR 11 019.61 in respect of the HyApproval project, and EUR 10 002.17 in respect of the HarmonHy project.19 After the action was brought, the Commission issued to the appellant credit notes No 3233150004, 3233150005 and 3233150006, in the sum of EUR 108 753.52, EUR 10 875.35 and EUR 23 404.88 respectively.’
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