Keywords
Summary

Keywords

1. Economic and social cohesion – Structural assistance – Community financing – Withdrawal of financial assistance because of irregularities – Duty to recover – Legal basis

(Council Regulations No 2052/88, Art. 7(1), and No 4253/88, Art. 23(1), third indent; Council Directive 92/50)

2. Own resources of the European Union – Regulation on the protection of the Union’s financial interests – Irregularity – Meaning

(Council Regulation No 2988/95, Art. 1; Council Directive 92/50)

3. Own resources of the European Union – Regulation on the protection of the Union’s financial interests – Continuous irregularity – Limitation period – Interrupting act

(Council Regulation No 2988/95, Art. 3(1), second and third paras; Council Directive 92/50)

4. Own resources of the European Union – Regulation on the protection of the Union’s financial interests – Proceedings relating to irregularities – Limitation period

(Council Regulation No 2988/95, Art. 3(3))

Summary

1. The third indent of Article 23(1) of Regulation No 4253/88 laying down provisions for implementing Regulation No 2052/88 as regards coordination of the activities of the different Structural Funds between themselves and with the operations of the European Investment Bank and the other existing financial instruments, as amended by Regulation No 2082/93, read in conjunction with Article 7(1) of Regulation No 2052/88 on the tasks of the Structural Funds and their effectiveness and on coordination of their activities between themselves and with the operations of the European Investment Bank and the other existing financial instruments, as amended by Regulation No 2081/93, constitutes a legal basis enabling national authorities to recover from the recipient – without there being any need for authority to do so under national law – the full amount of a subsidy granted from the European Regional Development Fund on the ground that, in its capacity as contracting authority, within the meaning of Directive 92/50 relating to the coordination of procedures for the award of public service contracts, as amended by Directive 93/36, the recipient has not satisfied the requirements of that directive so far as concerns the award of a public service contract whose purpose was the performance of the operation for which the recipient was granted the subsidy.

(see para. 41, operative part 1)

2. The failure, by a contracting authority receiving a subsidy granted from the European Regional Development Fund, to comply with the public procurement rules laid down by Directive 92/50 relating to the coordination of procedures for the award of public service contracts, as amended by Directive 93/36, when awarding the contract whose purpose is to perform the subsidised operation constitutes an irregularity, within the meaning of Article 1 of Regulation No 2988/95 on the protection of the European Communities’ financial interests, even if the competent national authority could not have been unaware, when the subsidy was granted, that the recipient had already decided which provider it would entrust with the performance of the subsidised operation.

(see para. 49, operative part 2)

3. In so far as, in its capacity as contracting authority, the recipient of an subsidy granted from the European Regional Development Fund has not complied with the public procurement rules of Directive 92/50 relating to the coordination of procedures for the award of public service contracts, as amended by Directive 93/36, when awarding the contract whose purpose is to perform the subsidised operation:

– the irregularity must be considered to be a continuous irregularity, within the meaning of the second subparagraph of Article 3(1) of Regulation No 2988/95 on the protection of the European Communities’ financial interests, and, consequently, the limitation period of four years laid down by that provision to recover the subsidy wrongly paid to the recipient begins to run from the day on which the performance of the unlawfully awarded public contract is completed;

– the transmission to the recipient of the subsidy of an audit report finding there to have been a failure to comply with the public procurement rules and recommending, as a result, that the national authority demand repayment of the sums paid constitutes a sufficiently specific act relating to investigation or legal proceedings concerning the ‘irregularity’, within the meaning of the third subparagraph of Article 3(1) of Regulation No 2988/95.

(see para. 62, operative part 3)

4. When Member States exercise the right afforded them by Article 3(3) of Regulation No 2988/95 on the protection of the European Communities’ financial interests, the principle of proportionality precludes application of a 30-year limitation period to the recovery of an advantage wrongly obtained from the European Union budget.

In light of the objective of protecting the Union’s financial interests, an objective for which the Union legislature considered that a limitation period of four, or indeed even three, years was already in itself sufficient to enable the national authorities to bring proceedings in respect of an irregularity detrimental to those financial interests and capable of leading to the adoption of a measure such as recovery of a wrongly obtained advantage, it is apparent that to grant those authorities a period of 30 years goes beyond what is necessary for a diligent public service.

(see paras 65-66, operative part 4)