Judgment;Abstract — ECLI:EU:C:2024:176
Date: 2024-02-29
Language of the case: Estonian
Court formation: First Chamber
Subject matter: Agriculture and Fisheries;Financial provisions;Own resources
Procedure: Reference for a preliminary ruling
Origin: Estonia

Summary of the request for a preliminary ruling pursuant to Article 98(1) of 
the Rules of Procedure of the Court of Justice 
Date lodged: 
4 July 2022 
Referring court: 
Riigikohus (Estonia) 
Date of the decision to refer: 
1 July 2022 
Appellants on a point of law: 
R.M. 
E.M. 
Other parties and injured parties: 
Eesti Vabariik (represented by the Põllumajanduse Registrite ja 
Informatsiooni Amet) 
      
Subject matter of the main proceedings 
Appeal on a point of law against the judgment of the Tartu Ringkonnakohus 
(Court of Appeal, Tartu, Estonia) of 15 September 2021 concerning the decision 
on the ‘civil action within criminal proceedings’ under public law brought by the 
Republic of Estonia (represented by the Põllumajanduse Registrite ja 
Informatsiooni Amet (Agricultural Registers and Information Board)) as the 
injured party in the criminal proceedings brought against R.M. and E.M. 
Subject matter and legal basis of the request for a preliminary ruling 
The subject matter of the request for a preliminary ruling made pursuant to 
Article 267 TFEU concerns the interpretation, first, of Article 7 of Council 
Regulation No 2988/95, read in conjunction with Article 56(1) and Article 54(1) 
of Regulation No 1306/2013 of the European Parliament and of the Council and 
with Article 35(6) of Commission Delegated Regulation No 640/2014, on the 
EN 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-437/22 
 
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question of the existence of a direct legal effect and, secondly, of the concept of 
‘beneficiary’ within the meaning of Article 54(1) of Regulation No 1306/2013 and 
Article 35(6) of Regulation No 640/2014 in respect of a claim for repayment of 
fraudulently obtained agricultural aid to be financed by the European Union. 
Questions referred for a preliminary ruling 
1. In circumstances such as those in the main proceedings, does a basis with a 
direct legal effect flow from Article 7 of Council Regulation (EC, Euratom) 
No 2988/95 of 18 December 1995, read in conjunction with Article 56(1) and 
Article 54(1) of Regulation (EU) No 1306/2013 of the European Parliament and 
of the Council of 17 December 2013 and with Article 35(6) of Commission 
Delegated Regulation (EU) No 640/2014 of 11 March 2014, for the recovery of 
fraudulently obtained aid financed by the European Agricultural Fund for Rural 
Development (EAFRD) from the representatives of a beneficiary legal person who 
intentionally made false declarations with a view to fraudulently obtaining the 
aid? 
2. In circumstances such as those of the main proceedings, in which aid to be 
financed by the EAFRD was, as a result of fraud, set and paid to a limited liability 
company (Osaühing), can the representatives of the beneficiary company who 
carried out the fraud and who, at the time when the aid was fraudulently obtained, 
were simultaneously the beneficial owners of that company, also be regarded as 
beneficiaries within the meaning of Article 54(1) of Regulation (EU) 
No 1306/2013 of the European Parliament and of the Council of 17 December 
2013 and Article 35(6) of Commission Delegated Regulation (EU) No 640/2014 
of 11 March 2014? 
Provisions of EU law cited 
Council Regulation (EC, Euratom) No 2988/95 of 18 December 1995 on the 
protection of the European Communities’ financial interests (OJ 1995 L 312, 
p. 1), Articles 1, 2, 4, 5 and 7 
Regulation (EU) No 1306/2013 of the European Parliament and of the Council of 
17 December 2013 on the financing, management and monitoring of the common 
agricultural policy and repealing Council Regulations (EEC) No 352/78, (EC) 
No 165/94, (EC) No 2799/98, (EC) No 814/2000, (EC) No 1290/2005 and (EC) 
No 485/2008 (OJ 2013 L 347, p. 549), Article 54(1), Article 56(1) and Article 58 
Commission Delegated Regulation (EU) No 640/2014 of 11 March 2014 
supplementing Regulation (EU) No 1306/2013 of the European Parliament and of 
the Council with regard to the integrated administration and control system and 
conditions for refusal or withdrawal of payments and administrative penalties 
applicable to direct payments, rural development support and cross compliance 
(OJ 2014 L 181, p. 48), Article 2(1)(1) and Article 35(6) 
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Provisions of national law cited 
Kriminaalmenetluse seadustik (Code of Criminal Procedure), Paragraph 381(2) 
and Paragraph 310(1), (3) and (4) 
Euroopa Liidu ühise põllumajanduspoliitika rakendamise seadus (Law transposing 
the common agricultural policy of the European Union), which entered into force 
on 1 January 2010, Paragraph 57(1); Paragraph 58(1) and (5); Paragraph 59(1) 
and (5); and Paragraph 62(2), point 4, and (5) 
Euroopa Liidu ühise põllumajanduspoliitika rakendamise seadus (Law transposing 
the common agricultural policy of the European Union), which entered into force 
on 1 January 2015, Paragraph 65(1) and (2), Paragraph 67(1) and (2), 
Paragraph 79(4)(3), Paragraph 81(1) to (3), Paragraph 111(1) and (4), and 
Paragraph 131 
Regulation No 89 of the Minister for Agriculture of 8 September 2010 
‘Mikropõllumajandusettevõtte arendamise investeeringutoetuse saamise nõuded, 
toetuse taotlemise ja taotluse menetlemise täpsem kord’ (‘Conditions for receiving 
investment aid for the development of agricultural microenterprises, more detailed 
provisions on the application for aid and the application procedure’) in the version 
resulting from Regulation No 65 of 17 July 2012, Paragraph 1; Paragraph 10(4), 
points 1 and 2; Paragraph 16(1); and Paragraph 17(1) to (3) 
Regulation No 15 of the Minister for Agriculture of 9 February 2015 
‘Põllumajandusettevõtete tulemuslikkuse parandamise investeeringutoetuse 
andmise ja kasutamise tingimused ning kord’ (‘Conditions and procedures for 
granting and using investment aid to improve the future of agricultural 
undertakings’), Paragraph 1; Paragraph 12(1), points 6 to 9; Paragraph 17(1) and 
(2), points 2 and 4; Paragraph 18(1), points 1 to 3, (2), points 2 to 4, and (3) 
Äriseadustik (Commercial Code), Paragraph 135 
Summary of the facts and procedure in the main proceedings 
1 By judgment of the Viru Maakohus (Court of First Instance, Viru, Estonia) of 
15 March 2021, R.M. was convicted on three counts of subsidy fraud. In 
particular, he, as the representative of X OÜ (‘X’), had intentionally made false 
statements to the Põllumajanduse Registrite ja Informatsiooni Amet (Agricultural 
Registers and Information Board; ‘PRIA’). As a result, in the years 2013 to 2017, 
PRIA unduly paid X agricultural aid in the total amount of EUR 143 737.38, 
which was to be financed by the European Union. In two of the three counts of 
subsidy fraud, in addition to R.M., E.M. was convicted as an accomplice. 
2 At the same time, the court of first instance upheld the ‘civil action within 
criminal proceedings’ under public law brought by the injured party, the Republic 
of Estonia (represented by PRIA), and ordered the accused persons to repay to the 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-437/22 
 
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State the amounts of aid unduly paid to X as a result of the fraud as follows: R.M. 
to pay the amount of EUR 87 340 and R.M. and E.M. to pay jointly and severally 
the remaining amount of EUR 56 397.38. 
3 The Viru Maakohus (Court of First Instance, Viru) stated that where, following 
the payment of aid, it transpires that the subsidy has been unduly paid as a result 
of irregularities or negligence, the subsidy is, pursuant to Article 111(1) of the 
Law transposing the common agricultural policy of the European Union, to be 
recovered from the beneficiary, in whole or in part, in accordance with the 
conditions and time limits laid down in Regulation No 1303/2013 and Regulation 
No 1306/2013 and in any other relevant EU regulations. Article 54(1) of 
Regulation No 1306/2013 provides that, for any undue payment following the 
occurrence of irregularity or negligence, Member States are to request recovery 
from the beneficiary. Article 35(6) of Regulation No 640/2014 provides that, 
where it is established that the beneficiary provided false evidence for the purpose 
of receiving the support or failed to provide the necessary information due to 
negligence, the support is to be refused or withdrawn in full. Under Article 4(1) of 
Regulation No 2988/95, as a general rule, any irregularity is to involve withdrawal 
of the wrongly obtained advantage by an obligation to pay or repay the amounts 
due or wrongly received. Article 4(3) of that regulation provides that acts which 
are established to have as their purpose the obtaining of an advantage contrary to 
the objectives of the EU law applicable in the case by artificially creating the 
conditions required for obtaining that advantage are to result, as the case shall be, 
either in failure to obtain the advantage or in its withdrawal. In accordance with 
Article 7 of Regulation No 2988/95, EU administrative measures may be applied 
to persons who participated in the commission of an irregularity or who were 
under a duty to take responsibility for the irregularity or to ensure that it was not 
committed. The injured party is therefore entitled to request repayment of the aid 
unduly paid to X also from R.M. and E.M. 
4 R.M. and E.M.’s defence lawyers lodged an appeal against the judgment of the 
court of first instance, contesting both the criminal conviction of the accused 
persons and the upholding of the ‘civil action within criminal proceedings’ under 
public law. By judgment of the Tartu Ringkonnakohus (Court of Appeal, Tartu) of 
15 September 2021, the judgment of the court of first instance was upheld. The 
court of appeal followed the view of the court of first instance that X had 
fraudulently obtained the aid by failing to comply with its obligation to pay its 
own contribution and by submitting falsified documents. The court of appeal also 
concurred with the view of the court of first instance that, under Article 7 of 
Regulation No 2988/95, the injured party is entitled to recover the aid unduly paid 
to X from R.M. and E.M. 
5 The defence lawyers acting for R.M. and E.M. brought an appeal on a point of law 
against the judgment of the court of appeal, contesting both the criminal 
conviction of the accused persons and the upholding of the ‘civil action within 
criminal proceedings’ under public law. 
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6 In the present criminal case, the Criminal Chamber of the Riigikohus (Supreme 
Court, Estonia) delivered, on 20 May 2022, a partial judgment upholding the 
judgments of the court of appeal and the court of first instance, inter alia, in so far 
as R.M. and E.M. had been found guilty and sentenced on several counts of the 
abovementioned subsidy fraud. The accused persons’ guilty verdicts and 
sentences thus became final. At the same time, the Riigikohus (Supreme Court) 
decided to proceed with the appeal on a point of law and to give a subsequent 
ruling by a separate judgment in so far as the courts had ordered R.M. to pay to 
the State EUR 87 340 and R. M. and E.M. jointly and severally to pay to the State 
EUR 56 397.38 by way of a settlement for the aid unduly paid to X. 
Principal arguments of the parties in the main proceedings 
7 The appellants on a point of law claim that the ‘civil action within criminal 
proceedings’ under public law brought by the injured party is inadmissible. 
Article 54(1) of Regulation No 1306/2013 provides that Member States are to 
request recovery from the beneficiary. In the present case, X, the beneficiary of 
the aid, although removed from the commercial register, was succeeded, after a 
merger, by Y OÜ, to which X’s obligations were transferred. The injured party did 
not request recovery of the aid from Y OÜ. Recovery cannot be claimed solely 
from the natural person who committed the offence. It is not clear from the 
wording of Article 7 of Regulation No 2988/95 whether administrative measures 
and penalties may always be imposed on persons who are under a duty to assume 
responsibility for an irregularity, or whether that is possible only where recovery 
of the aid from the beneficiary himself has not been successful. To assert the 
claim for recovery against natural persons alone would lead to unjust enrichment 
of the beneficiary. 
8 In response to the appeal on a point of law, the injured party contends that the 
basis for the recovery of aid unduly paid from a beneficiary’s representative 
follows from Article 7 of Regulation No 2988/95, read in conjunction with 
Article 188(1) of the Commercial Code. Under those provisions, R.M. and E.M. 
are liable for the irregularity committed on behalf of X and for the repayment of 
the aid unduly obtained. Article 7 of Regulation No 2988/95 cannot be interpreted 
as meaning that administrative measures and penalties may be imposed on persons 
who participated in an irregularity only jointly with the beneficiary or its legal 
successor. 
Summary of the grounds for the request for a preliminary ruling 
9 By partial judgment of the Riigikohus (Supreme Court) of 20 May 2022, it 
became final that R.M. and E.M., as representatives of X, had intentionally 
provided false information to PRIA and that, as a result of that fraud, X had 
unduly received, in the years 2013 to 2017, agricultural aid amounting to 
EUR 143 737.38 to be financed by the European Union. 
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10 The courts of first and second instance ordered R.M. and, in part, E.M. and others 
to repay to the State the sum in the amount of which X had unduly received the 
aid, notwithstanding the fact that neither R.M. nor E.M., as natural persons, had 
benefited from the aid themselves. They were representatives of X who, on behalf 
and in the interests of X, provided false information on the basis of which the aid 
was unduly paid to X. 
11 X no longer exists as a legal person, since, on 20 June 2019, following the merger 
with Y OÜ, it was removed from the commercial register. Y OÜ, to which X’s 
rights and obligations were transferred, remains registered in the commercial 
register and therefore has legal capacity, even though the last economic report for 
that company was submitted to the registration authority for 2019. It is stated 
therein that there was no activity on the part of the company. According to that 
economic report, only the share capital of EUR 2 500 appears on the company’s 
balance sheet. According to the information in the commercial register database, 
Y OÜ is not subject to VAT and has an outstanding property tax debt of 
EUR 164.47. 
12 Thus, in the present case, aid paid as a result of fraud is being recovered from 
R.M. and E.M., while the beneficiary of the aid itself no longer exists and the 
information available from public sources concerning its legal successor indicates, 
prima facie, a financial situation which is insufficient for repayment the aid. 
13 The decision on the ‘civil action within criminal proceedings’ under public law 
depends on whether there is a substantive legal basis for claiming repayment of 
the amount of the aid unduly paid not from X, or Y OÜ as its successor, but from 
R.M. and E.M. 
The first question referred for a preliminary ruling 
14 X unduly received aid once under Decree No 89 of the Minister for Agriculture of 
8 September 2010 and twice further under the Decree of the Minister for 
Agriculture of 9 February 2015. The European Union’s share in those rural 
development programmes was financed by the EAFRD. 
Until the end of 2021, the financing, management and monitoring of the common 
agricultural policy of the European Union were governed by Regulation 
No 1306/2013. Regulation No 1306/2013 forms the basis for recovery also in 
cases where the aid has been set and paid before the entry into force of that 
regulation (judgment of the Court of Justice of the European Union of 8 May 
2019, Järvelaev, C-580/17, EU:C:2019:391, paragraphs 39 to 42, and judgment of 
the Administrative Chamber of the Riigikohus (Supreme Court) of 3 October 
2019, No 3-15-1188/30, paragraph 19). Regulation No 1306/2013 was 
supplemented by Regulation No 640/2014. 
15 As the referring Chamber understands it, the legal basis for the recovery of aid 
granted as a result of irregularities follows from Article 56 of Regulation 
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No 1306/2013 (‘Provisions specific to the EAFRD’), paragraph 1, read in 
conjunction with Article 54 of that regulation (‘Common Provisions’), 
paragraph 1, and the first sentence of Article 35(6) of Regulation No 640/2014. 
However, the reference made by the injured party to Article 58 of Regulation 
No 1306/2013 is unsuccessful, since that provision is addressed to the Member 
States and is therefore not directly applicable. 
16 Under Article 56(1) of Regulation No 1306/2013, where irregularities or 
negligence are detected in rural development operations or programmes, Member 
States are required to make financial adjustments by totally or partially cancelling 
the EU financing concerned. Member States are to take into consideration the 
nature and gravity of the irregularities detected and the level of the financial loss 
to the EAFRD. Under Article 54(1) of that regulation, recovery of undue 
payments is to be requested from the beneficiary. The first sentence of 
Article 35(6) of Regulation No 640/2014 specifies that the support is to be refused 
or withdrawn in full where it is established that the beneficiary provided false 
evidence for the purpose of receiving the support or failed to provide the 
necessary information due to negligence. The concept of ‘beneficiary’ is defined 
in Article 2(1)(1) of Regulation No 640/2014. In the present case, there is no 
doubt that X may be regarded as the beneficiary. 
17 The abovementioned provisions do not expressly lay down a basis for recovering 
the subsidy from a person other than the beneficiary, or from the representatives 
of the beneficiary who committed the fraud on behalf and in the interests of the 
beneficiary. 
18 At the same time, Article 7 of Regulation No 2988/95 provides that EU 
administrative measures and penalties may also be applied to persons who have 
participated in the commission of an irregularity, or who are under a duty to take 
responsibility for the irregularity or to ensure that it is not committed. The concept 
of ‘irregularity’ (Article 1(2)) also covers the provision of false information with a 
view to obtaining the subsidy. As an EU administrative measure, Article 4(1) 
envisages, inter alia, the withdrawal of the wrongly obtained advantage, that is to 
say, the obligation to repay the amounts wrongly received. 
19 Thus, the answer to the question of whether the repayment of the aid unduly paid 
to X may also be required of R.M. and E.M. depends above all on whether 
Article 56(1) and Article 54(1) of Regulation No 1306/2013 and the first sentence 
of Article 6(1) of Regulation No 640/2014 may be applied, in accordance with 
Article 7 of Regulation No 2988/95, in such a way that the administrative measure 
provided for by those provisions of Regulation No 1306/2013 and Regulation 
No 640/2014, namely the obligation to repay aid unduly received, may, in the 
circumstances of the present case, also be applied to persons who are not 
themselves to be regarded as beneficiaries but who participated in the irregularity 
which led to the undue payment. That depends, in turn, on whether Article 7 of 
Regulation No 2988/95 has a direct legal effect in this regard. 
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20 Neither the wording of the relevant provisions nor the earlier case-law of the 
Court of Justice of the European Union on the interpretation of Article 7 of 
Regulation No 2988/95 allows unequivocal conclusions to be drawn for the 
present case. Likewise, no requests for a preliminary ruling concerning similar 
situations are pending before the Court of Justice of the European Union. It is not 
therefore a case of an acte clair or an acte éclairé. 
21 Under Article 2(3) of Regulation No 2988/95, the nature and scope of the 
administrative measures and penalties necessary for the correct application of the 
rules in question are to be determined having regard to the nature and seriousness 
of the irregularity, the advantage granted or received and the degree of 
responsibility. According to the preamble to Regulation No 2988/95, irregular 
conduct, and the administrative measures and penalties relating thereto, are 
provided for in sectoral rules in accordance with that regulation. 
22 The EU legislature has, by adopting Regulation No 2988/95, laid down a series of 
general principles and has required that, as a general rule, all sectoral regulations 
must comply with those principles (judgment of 11 March 2008, Jager, C-420/06, 
EU:C:2008:152, paragraph 61). 
23 The Court of Justice of the European Union ruled out the direct effect of 
Regulation No 2988/95 as regards the administrative penalties provided for in 
Article 5 thereof, stating as follows: ‘Indeed, Article 5 of that regulation merely 
provides that intentional irregularities or those caused by negligence “may” lead 
to certain administrative penalties listed in that provision whilst, as regards the 
categories of operators who may be liable to incur such penalties, Article 7 of the 
regulation provides that those penalties “may” be applied not only to the economic 
operators who have committed the irregularity but also to persons who have taken 
part in the irregularity and to those who are under a duty to take responsibility for 
the irregularity or to ensure that it is not committed’ (judgment of 28 October 
2010, SGS Belgium and Others, C-367/09, EU:C:2010:648, paragraph 35). Those 
provisions do not specify which of the penalties listed in Article 5 of Regulation 
No 2988/95 should be applied in the case of an irregularity detrimental to the 
European Union’s financial interests nor the category of operators on whom such 
penalties are to be imposed in such cases (ibid., paragraph 36). 
24 For that reason, the Court of Justice of the European Union took the view that 
Articles 5 and 7 of Regulation No 2988/95 do not apply in such a way that an 
administrative penalty may be imposed on the basis of those provisions alone, 
since, if, in connection with the protection of the European Union’s financial 
interests, an administrative penalty is to be applied to a category of persons, a 
necessary precondition is that, prior to commission of the irregularity in question, 
either the EU legislature has adopted sectoral rules laying down such a penalty 
and the conditions for its application to that category of persons or, where such 
rules have not yet been adopted at EU level, the law of the Member State in which 
the irregularity was committed has provided for the imposition of an 
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administrative penalty on that category of persons (see judgment in C-367/09, 
cited above, paragraph 43). 
25 Moreover, it is apparent from paragraphs 44 to 62 of the judgment of the Court of 
Justice of the European Union in Case C-367/09 that penalties cannot be imposed 
on the persons referred to in Article 7 of Regulation No 2988/95 for adversely 
affecting the financial interests of the European Union unless they rest on a clear 
and unambiguous legal basis at EU level or at that of the law of a Member State. 
The imposition of such penalties presupposes that EU sectoral rules or, failing 
that, national legislation provides for the imposition of an administrative penalty 
for that category of operators. 
26 The position set out above is in line with the case-law of the Court of Justice, 
according to which a penalty, even of a non-criminal nature, cannot be imposed 
unless it rests on a clear and unambiguous legal basis (judgment of 13 December 
2012, FranceAgriMer, C-670/11, EU:C:2012:807, paragraph 50). 
27 Consequently, it is unambiguously clear from the case-law of the Court of Justice 
of the European Union that Article 7 of the Regulation does not have a direct legal 
effect as regards the imposition of (administrative) penalties. 
28 However, there is no comparable level of clarity as to whether a direct legal effect 
of Article 7 of Regulation No 2988/95 is also excluded in the case of the recovery 
of aid unduly paid as a result of an irregularity. 
29 It must be borne in mind that the obligation to repay an amount unduly received 
constitutes an administrative measure within the meaning of Article 4 of 
Regulation No 2988/95 but does not constitute an administrative penalty within 
the meaning of Article 5 of that regulation. Article 4(4) of Regulation No 2988/95 
expressly provides that the measures provided for in that article are not to be 
regarded as penalties. Thus, neither the principle of the legality of criminal 
offences and penalties, laid down in Article 2(2) of Regulation No 2988/95, nor 
the requirement for a clear legal basis for a penalty which is not of a criminal law 
nature, to which the Court of Justice of the European Union attached essential 
importance in the evolution of its position in Case C-367/09, extends to those 
measures (see the judgment, cited above, paragraphs 39 and 61). 
30 The Court of Justice of the European Union has held that, where the relevant 
sectoral provisions do not provide for a penalty for irregularities, Article 5 of 
Regulation No 2988/95 does not constitute a sufficient legal basis for the 
imposition of an administrative penalty, but that, in such a case too, the 
administrative measure referred to in the first indent of Article 4(1) of that 
regulation, consisting of the recovery of aid unduly paid, must be imposed. That is 
because the obligation to give back an advantage improperly received by means of 
an irregularity is not a penalty, but merely the consequence of a finding that the 
conditions required to obtain the advantage derived from EU law have not been 
complied with and that the advantage received was wrongly granted. In any event, 
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the finding that the conditions required to obtain the advantage derived from EU 
law were created artificially makes the advantage received a payment that was not 
due and thus justifies the obligation to repay it. Consequently, the obligation to 
give back an advantage improperly received by means of an irregular practice 
does not breach the principle of legality (see judgment in Case C-670/11, cited 
above. paragraphs 60 to 67 and 72, and judgment of 26 May 2016, Județul Neamț, 
C-260/14 and C-261/14, EU:C:2016:360, paragraph 50). 
31 At the same time, the Court of Justice of the European Union expressly recognised 
the direct legal effect of some of the provisions of Regulation No 2988/95 (see 
judgments of 24 June 2004, Handlbauer, C-278/02, EU:C:2004:388, 
paragraphs 24 to 35, and of 7 April 2022, IFAP, C-447/20 and C-448/20, 
EU:C:2022:265, paragraphs 87 to 93). 
32 Nevertheless, the Court of Justice has also held that, since Regulation No 2988/95 
merely lays down general rules for supervision and penalties for the purpose of 
safeguarding the European Union’s financial interests, the recovery of misused 
funds must be carried out on the basis of other provisions, namely, where 
appropriate, on the basis of sector-specific provisions (judgment of 18 December 
2014, Somvao, C-599/13, EU:C:2014:2462, paragraph 37). 
33 The referring Chamber takes the view that a number of arguments support the 
interpretation that Article 7 of Regulation No 2988/95, read in conjunction with 
the sectoral provisions governing the recovery of aid, constitutes, in the 
circumstances of the present case, a basis for recovering aid paid as a result of an 
irregularity from the person who participated in that irregularity, rather than from 
the beneficiary. The present case is one in which the irregularity which led to the 
aid being obtained consisted in the intentional submission of false information 
(fraud), for which purpose the persons who were the subject of the request for 
repayment of the aid deliberately cooperated, and the aid cannot be recovered 
from the beneficiary because it no longer exists, with the prospect of recovering 
the aid from the beneficiary’s successor in law being, prima facie, uncertain. 
34 In that regard, it should be noted that, unlike the question as to whether a person is 
responsible for an irregularity (committed by another person) or is to ensure that 
an irregularity is not committed (by another person), a finding of participation in 
the commission of an irregularity is not, as a general rule, subject to the existence 
of an additional legal basis (extending liability). The question as to whether a 
person participated in the commission of an irregularity is a question of fact (the 
situation may be different where the irregularity was committed by omission, 
since, in addition, a legal obligation to act on the part of the person concerned 
must be established). The charge of participation in an irregularity is, in cases 
where the irregularity consists of an act, in general, limited by the provisions 
which have been infringed. It may also be inferred indirectly from paragraph 45 of 
the judgment in Case C-367/09 that it does not always appear necessary 
additionally to rely on a rule of EU law or of the law of a Member State in order 
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for somebody to be regarded as a person referred to in Article 7 of Regulation 
No 2988/95. 
35 In the referring Chamber’s view, in the circumstances of the present case, R.M. 
and E.M. must be regarded as the persons referred to in Article 7 of Regulation 
No 2988/95 who participated in the irregularity committed by X. 
36 The EU legislature appears to have assumed that, in certain cases, the repayment 
of aid paid as a result of an irregularity from programmes (co-)financed by the 
EAFRD may also be required of persons who are not themselves beneficiaries. 
That is shown by Article 54(3)(b) of Regulation No 1306/2013, which allows 
Member States not to pursue recovery where recovery proves impossible owing to 
the insolvency, recorded and recognised under national law, of the debtor or the 
persons legally responsible for the irregularity. The second alternative of that 
provision makes sense only if it is possible to recover the subsidy obtained by 
means of an irregularity not only from the debtor (beneficiary) himself, but also 
from other persons who are legally responsible for the irregularity. The referring 
Chamber takes the view that the source of the legal responsibility referred to in 
that provision could also be the alternative in Article 7 of Regulation No 2988/95, 
which refers to persons who participated in the irregularity. 
37 If it were always essentially impossible, on account of the extinction or insolvency 
of the beneficiary legal person, to recover aid unduly paid as a result of an 
intentional irregularity, that would open the way to a significant abuse and would 
seriously harm the financial interests of the European Union. In cases such as the 
present one, where the bases for the recovery of aid paid as a result of an 
irregularity are primarily to be governed by EU law, reliance on the Member 
States filling, in compliance with Article 58 of Regulation No 1306/2013, all the 
lacunae in EU law by national provisions is unlikely to be the most effective 
solution for protecting the financial interests of the European Union. On the 
contrary, so far as possible, preference should be given to an interpretation of EU 
provisions which allows, directly on the basis of those provisions, the recovery of 
amounts of aid unduly paid as a result of irregularities, in particular fraud, from 
persons who committed the irregularity but who are not themselves beneficiaries. 
38 At the same time, in the referring Chamber’s view, it is not clear without further 
clarification from the Court of Justice of the European Union whether Article 7 of 
Regulation No 2988/95, read in conjunction with the sectoral provisions, in this 
case Articles 56(1) and 54(1) of Regulation No 1306/2013 and Article 35(6) of 
Regulation No 640/2014, constitutes a legal basis with a direct legal effect for 
recovering aid unduly paid from a person who participated in the irregularity 
rather than from the beneficiary. 
39 For the reasons set out above, the referring Chamber requests the Court of Justice 
of the European Union to deliver a preliminary ruling on whether, in 
circumstances such as those of the present case, Article 7 of Regulation 
No 2988/95, read in conjunction with Article 56(1) and Article 54(1) of 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-437/22 
 
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Regulation No 1306/2013 and Article 35(6) of Regulation No 640/2014, forms a 
legal basis with a direct legal effect for claiming repayment of aid obtained 
fraudulently and financed by the European Agricultural Fund for Rural 
Development (EAFRD) from the representatives of the beneficiary legal person 
who intentionally made false statements in order to obtain the aid fraudulently. 
The second question 
40 Irrespective of the foregoing considerations, it cannot be totally ruled out, in the 
circumstances of the present case, that, although X applied for and received aid as 
a legal person, R.M. and E.M. may also be regarded as beneficiaries within the 
meaning of Article 54(1) of Regulation No 1306/2013 and Article 35(6) of 
Regulation No 640/2014. 
41 R.M. and E.M. were not only representatives of X, who fraudulently obtained the 
subsidy, but, moreover, at the time when the subsidy was fraudulent obtained, 
were also alternately the sole shareholders of X. R.M. was the sole shareholder 
and sole managing director of X from 10 November 2005 to 18 December 2015. 
On the latter date, E.M. became the sole shareholder and sole managing director 
of X and retained that role until the company was removed from the commercial 
register. R.M. continued to act on behalf of the company as an agent of E.M, 
however, even after the transfer of his shares in X and stepping down from the 
management. During the same period, R.M. and E.M. were married to each other. 
Those facts suggest that, during the period in which X fraudulently received aid, 
R.M. and E.M. were both beneficial owners of that company, with X operating 
under their management and control. That is true irrespective of precisely which 
of them was X’s shareholder and managing director. 
42 In the event that those circumstances are considered sufficient to regard R.M. and 
E.M. as beneficiaries in addition to X, recovery of the aid unduly paid to X could 
be envisaged from R.M. and E.M. solely on the basis of the abovementioned 
provisions of Regulation No 1306/2013 and Regulation No 640/2014. In that case, 
it would not be necessary to rely additionally on Article 7 of Regulation 
No 2988/95 for the recovery of the aid amount. 
43 However, it should be borne in mind that the Osaühing (limited liability company) 
X is a separate legal entity from R.M. and E.M.. Under Estonian law, a 
shareholder is not personally liable for the debts of such a company. To regard 
R.M. and E.M. as the beneficiaries of the aid paid to X does not, therefore, appear 
to be fully consistent with the principle of legal clarity and legal certainty. The 
Court of Justice of the European Union has clarified that the recovery of amounts 
unduly paid cannot be carried out except in accordance with the principles of legal 
certainty and the protection of legitimate expectations and that EU rules must, 
under the principle of legal certainty, enable those concerned to know precisely 
the extent of the obligations which are imposed on them (see Case C-599/13, cited 
above, paragraphs 50 and 51). 
EESTI VABARIIK (PÕLLUMAJANDUSE REGISTRITE JA INFORMATSIOONI AMET) 
 
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44 That said, it could be argued that, in the circumstances of the present case, R.M. 
and E.M. could reasonably have foreseen the obligation to repay themselves the 
aid fraudulently obtained for X. They did not commit the irregularity through 
negligence, but repeatedly and intentionally committed abusive acts aimed at 
fraudulently obtaining the aid. 
45 For the reasons set out above, the referring Chamber also requests the Court of 
Justice of the European Union to deliver a preliminary ruling on whether, in 
circumstances such as those of the present case, in which aid financed by the 
EAFRD was set and paid to a limited liability company (Osaühing) as a result of 
fraud, the representatives of the beneficiary company who jointly committed the 
fraud and who, at the time when the aid was fraudulently obtained, were 
simultaneously the beneficial owners of that company may also be regarded as 
beneficiaries within the meaning of Article 54(1) of Regulation No 1306/2013 and 
Article 35(6) of Regulation No 640/2014.