The strategy used by the European Commission to claim back the funds granted

by Oana Strătulă  (Partner)

Beneficiaries of EU funds have encountered unpleasant surprises from the European Commission. Many of them have been accused of creating artificial conditions to receive funding, paradoxically by the same authority who previously approved their projects and payments on the basis of a serious documentation and after many checks1.   

The accusation was accompanied by the issuance of the finding minutes of irregularities and establishing budgetary claims, through which the financing contracts were cancelled and the EU funds received became directly, from non-refundable, budgetary claims subjected to forced execution in case of nonpayment within the term of approximately 30 days, term given by the contracting authority.

People have found out from the minutes that only after the approval of the projects and after making the payments, the authority realized, for example, that two or more members of the same family can not receive funding for similar projects, as this is considered a fragmentation of the investment, or that some agricultural machinery, purchased by different beneficiaries, parked on the same land area is a sufficient reason to ask for money back, considering the same “artificial conditions”. In reality, what is happening lately is the consequence of the pressure put by the European Commission on the Romanian authorities to verify if, through the projects funded, artificial conditions were created for obtaining nonrefundable funds.

The way in which the Romanian authorities put into practice this request is an abusive one, given that issues of fact relating to the projects, such as the kinship between the beneficiaries and / or the similarity of their projects, which were known and accepted by the authority at the moment when the projects were approved, have suddenly became “artificial conditions” for which people must repay the money received, together with the interest rate.

 What is the legal significance of “artificial conditions”?

The term “artificial conditions” is regulated by paragraph 8 from Article 4 of the Commission Regulation 65/2011 from 27 January 2011 which establishes the norms for implementing the Regulation no. 1698/2005 of the Council regarding the implementation of control procedures as well as cross-compliance in the case of rural development support measures.

According to community rule mentioned above, “without any prejudice to the special provisions, no payment will be made to the beneficiaries in the case where it was established that they artificially created the conditions required for obtaining such payments in order to gain an advantage contrary to the objectives of the aid scheme“.

Therefore, as results from paragraph 8 from Article 4 of the Commission Regulation 65/2011, artificial conditions are not sufficient in itself for refusing the payments only to the extent that the purpose of their creation was solely to obtain an advantage contrary to the objectives of the aid scheme. This interpretation is confirmed by the recent decision of the Court of Justice of the European Union, which has, among other attributions, also the one of the uniform interpretation of European legislation, in order to ensure that it applies in the same way in all EU countries.

With respect to the way in which paragraph 8 from Article 4 of the Commission Regulation 65/2011 has to be interpreted, the Court of Justice showed that if an investment project meets the required criteria for eligibility for the aid, then the proof of an abusive practice performed by the potential beneficiary of such aid requires:

– on the one hand, a set of objective circumstances showing that, despite formal observance of the conditions stipulated by the relevant regulation, the aim pursued by this rule has not been achieved, because the conditions for obtaining the payments were artificially created;

– on the other hand, a subjective element which consists of the intention to obtain an advantage from EU rules by artificially creating the conditions necessary to obtain the payments.

Furthermore, the Court has stated that the task of determining the existence of these two elements, which must be proved in accordance with the standards of the national law, belongs to the national court.

Therefore, regarding the provisions of paragraph 8 from Article 4 of the Commission Regulation 65/2011, as interpreted by the Court of Justice of the European Union, in the case of refused payments or for the request of their refund, it is not enough that the authority invokes certain aspects that could be considered as “artificial conditions”, the authority having the obligation to prove that through the implementation of the projects affected by the artificial conditions, the objective pursued by the aid scheme can not be achieved and that the beneficiary has exclusively pursued to gain an advantage contrary to the objectives of the mentioned scheme.

What can be done?

Beneficiaries whose financing contracts were cancelled due to existence of “artificial conditions” for obtaining funds have the right to appeal against the finding minutes of irregularities and establishment of budgetary claims no later than 30 days from the date of its communication. In case the appeal is rejected, the rejection decision can be contested by the objector to the competent contentious administrative court.


1. This is a translation of the article published on October 09, 2013 in For the Romanian original text, please visit this link: