Joined Cases C‑260/14 and C‑261/14

Județul Neamț

and

Județul Bacău

v

Ministerul Dezvoltării Regionale și Administrației Publice

(Requests for a preliminary ruling from the Curtea de Apel Bacău)

‛Reference for a preliminary ruling — Protection of the financial interests of the European Union — Regulation (EC, Euratom) No 2988/95 — European Regional Development Fund (ERDF) — Regulation (EC) No 1083/2006 — Award of a contract by the beneficiary of funds acting as contracting authority for the performance of the action eligible for funding — Definition of ‘irregularity’ — Criterion relating to ‘breach of EU law’ — Tendering procedures contrary to national law — Nature of financial corrections adopted by Member States — Administrative measures or penalties’

Summary — Judgment of the Court (Fifth Chamber), 26 May 2016

1. EU law — Interpretation — Methods — Literal, systematic and teleological interpretation

2. Own resources of the European Union — Regulation on protection of the financial interests of the Union — Irregularity — Concept — Infringement, by a contracting authority in connection with the award of a public contract for the performance of an action eligible for grants under the European Structural Funds, of national public procurement law — Included — Conditions

   (Council Regulations No 2988/95, Art. 1(2), and No 1083/2006, Art. 2(7); European Parliament and Council Regulation No 2004/18, as amended by Regulation Noo1422/2007, Art. 7(a))

3. Own resources of the European Union — Regulation on protection of the financial interests of the Union — Administrative measures — Concept — Financial correction made by a Member State following the ascertaining of an irregularity in a tendering procedure for the award of a public contract for the performance of an action eligible for grants under the European Structural Funds — Included

   (Council Regulations No 2988/95, Art. 4(1), first indent, and No 1083/2006, Art. 98(2))

4. EU law — Principles — Protection of legitimate expectations — Legal certainty — Limits — Application of new rules to the future effects of situations arising during the period of application of previous rules — Financial correction made by a Member State for infringements of national law committed before the entry into force of the domestic measure governing the correction — Infringement — None

1.  See the text of the decision.

   (see paras 35)

2.  Article 1(2) of Regulation No 2988/95 on the protection of the European Communities’ financial interests and Article 2(7) of Regulation No 1083/2006 laying down general provisions on the European Regional Development Fund, the European Social Fund and the Cohesion Fund must be interpreted as meaning that failure to comply with national provisions by a contracting authority, the beneficiary of Structural Funds, in connection with the award of a public contract of an estimated value below the threshold laid down in Article 7(a) of Directive 2004/18 on the coordination of procedures for the award of public works contracts, public supply contracts and public service contracts, as amended by Regulation No 1422/2007, may constitute, at the time the contract is awarded, an ‘irregularity’ within the meaning of Article 1(2) of Regulation No 2988/95 or Article 2(7) of Regulation No 1083/2006, if that breach has, or would have, the effect of prejudicing the general budget of the European Union by charging an unjustified item of expenditure.

   In so far as the operations concerned benefit from EU funding, they are subject to the application of EU law. It follows that the term ‘irregularity’ within the meaning of Article 1(2) of Regulation No 2988/95 and Article 2(7) of Regulation No 1083/2006 must be interpreted as covering not only any breach of EU law but also any breach of the provisions of national law which contribute to ensuring that EU law relating to the management of projects financed by EU funds is properly applied. The same applies as regards breaches of provisions of national law applicable to operations funded under the Structural Funds.

   (see paras 37, 43, 46, operative part 1)

3.  The second sentence of the first subparagraph of Article 98(2) of Regulation No 1083/2006 laying down general provisions on the European Regional Development Fund, the European Social Fund and the Cohesion Fund is to be interpreted as meaning that financial corrections by Member States, if applied to co-financed expenditure under Structural Funds for failure to comply with rules concerning the award of public contract, are administrative measures within the meaning of Article 4 of Regulation No 2988/95 on the protection of the European Communities’ financial interests.

   It is clear from the very wording of Article 98(2) of Regulation No 1083/2006, read in conjunction with the first indent of Article 4(1) of Regulation No 2988/95, that the purpose of the financial corrections which Member States are required to make if they detect irregularities in operations or operational programmes is to secure the withdrawal of an advantage improperly received by the economic operator concerned, inter alia by obliging the operator to repay the sums wrongly paid. The obligation to give back an advantage improperly received by means of an irregularity is not a penalty, but simply the consequence of a finding that the conditions required to obtain the advantage derived from EU rules have not been observed, so that that advantage becomes an advantage wrongly received. The fact that the full amount to be repaid may, in any individual case, not coincide exactly with the loss actually incurred by the Structural Funds cannot alter that conclusion.

   (see paras 49-51, operative part 2)

4.  The principles of legal certainty and protection of legitimate expectations must be interpreted as not precluding a Member State from applying financial corrections governed by an internal legislative measure which entered into force after an alleged breach of the rules governing public contracts occurred, provided that it is a question of the application of new rules to the future effects of situations which arose under the earlier rules, which is a matter to be determined by the national court, taking into account all the relevant circumstances of the proceedings before it.

   Whilst the principle of legal certainty precludes a regulation from being applied retroactively, namely to a situation which arose prior to the entry into force of that regulation, and irrespective of whether such application might produce favourable or unfavourable effects for the person concerned, the same principle requires that any factual situation should normally, in the absence of any express contrary provision, be examined in the light of the legal rules existing at the time when the situation obtained. However, if the new law is thus valid only for the future, it also applies, save for derogation, to the future effects of situations which came about during the period of validity of the old law. Similarly, the scope of the principle of protection of legitimate expectations cannot be extended to the point of generally preventing new rules from applying to the future effects of situations which arose under the earlier rules.

   (see paras 55-57, operative part 3)