Judgment;Summary — ECLI:EU:C:2025:160
Date: 2025-03-06
Language of the case: Bulgarian
Court formation: Eighth Chamber
Subject matter: External relations;Fundamental rights;Economic, financial and technical cooperation with third countries;Charter of Fundamental Rights
Procedure: Reference for a preliminary ruling
Origin: Bulgaria

Summary C-620/23 – 1 
Case C-620/23 
Summary of the request for a preliminary ruling under Article 98(1) of the 
Rules of Procedure of the Court of Justice 
Date lodged:  
6 October 2023 
Referring court:  
Administrativen sad Sofia-oblast (Administrative Court of the Sofia 
Region, Bulgaria) 
Date of the decision to refer:  
21 September 2023 
Applicant:  
NOV ZHIVOT 1919 NCh 
Defendant:  
Rakovoditel na Upravlyavashtia organ na programata za 
transgranichno satrudnichestvo INTERREG-IPP Bulgaria-Serbia 
2014-2020 i direktor na direktsia ‘Upravlenie na teritorialnoto 
satrudnichestvo’ v Ministerstvo na regionalnoto razvitie i 
blagoustroystvoto 
  
Subject matter of the main proceedings 
The proceedings originated in an action brought by Narodno chitalishte ‘NOV 
ZHIVOT 1919’ (New Life 1919 community centre) against the decision of the 
Rakovoditel na Upravlyavashtia organ na programata za transgranichno 
satrudnichestvo INTERREG-IPP Bulgaria-Serbia 2014-2020 (head of the 
managing authority for the Interreg-IPA Cross-border Cooperation Bulgaria-
Serbia Programme, 2014-2020) imposing a financial correction. 
Subject matter and legal basis of the request 
Interpretation of EU law: first paragraph, point (b) of Article 267 TFEU 
EN 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-620/23 
 
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Questions referred for a preliminary ruling 
1. Does Article 40 of Commission Implementing Regulation (EU) 
No 447/2014 of 2 May 2014 on the specific rules for implementing 
Regulation (EU) No 231/2014 of the European Parliament and of the 
Council establishing an Instrument for Pre-accession Assistance (IPA II) 
not, in situations of cross-border cooperation between a Member State and a 
beneficiary of the Instrument for Pre-accession Assistance (IPA-II) for the 
2014-2020 period, preclude the imposition of a financial correction on an 
economic operator which is alleged to have engaged in unlawful conduct 
constituting an irregularity but which is not the lead beneficiary and 
therefore not the party which has assumed responsibility for the 
implementation of the entire project? 
2. If the first question is answered in the affirmative, do Articles 41 and 47 of 
the Charter of Fundamental Rights of the European Union, in such situations 
of cross-border cooperation, guarantee the right of the lead beneficiary to 
participate in the procedure to decide on the imposition of a financial 
correction and in the judicial proceedings challenging that administrative 
act, irrespective of its location in relation to the authority responsible under 
the relevant cross-border cooperation programme for imposing the financial 
correction, and do the provisions cited permit limitations such as those 
provided for by the case-law of the national courts in the main proceedings, 
which curtail those options for participation? 
Provisions of EU law cited 
Charter of Fundamental Rights of the European Union (‘the Charter’) – 
Articles 41, 47 and 51(1) 
Regulation (EU) No 231/2014 of the European Parliament and of the Council of 
11 March 2014 establishing an Instrument for Pre-accession Assistance (IPA II) 
Commission Implementing Regulation (EU) No 447/2014 of 2 May 2014 on the 
specific rules for implementing Regulation (EU) No 231/2014 of the European 
Parliament and of the Council establishing an Instrument for Pre-accession 
Assistance (IPA II) – Articles 2(a) and (h), 26, 33 and 40 
Regulation (EU) No 1303/2013 of the European Parliament and of the Council of 
17 December 2013 laying down common provisions on the European Regional 
Development Fund, the European Social Fund, the Cohesion Fund, the European 
Agricultural Fund for Rural Development and the European Maritime and 
Fisheries Fund and laying down general provisions on the European Regional 
Development Fund, the European Social Fund, the Cohesion Fund and the 
European Maritime and Fisheries Fund and repealing Council Regulation (EC) 
No 1083/2006 – Article 2(10), (36) and (37) 
NOV ZHIVOT 1919 
 
3 
Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the 
Council of 18 July 2018 on the financial rules applicable to the general budget of 
the Union, amending Regulations (EU) No 1296/2013, (EU) No 1301/2013, (EU) 
No 1303/2013, (EU) No 1304/2013, (EU) No 1309/2013, (EU) No 1316/2013, 
(EU) No 223/2014, (EU) No 283/2014, and Decision No 541/2014/EU and 
repealing Regulation (EU, Euratom) No 966/2012 – Article 61 
Provisions of national legislation and the case-law cited 
Zakon za upravlenie na sredstvata ot Evropeyskite fondove pri spodeleno 
upravlenie (Law on the management of resources from European Funds with 
shared management; ‘the ZUSEFSU’), in force since 1 July 2022, and its previous 
version entitled Zakon za upravlenie na sredstvata ot Evropeyskite strukturni i 
investitsionni fondove (Law on the management of resources from the European 
Structural and Investment Funds; ‘the ZUSESIF’) – Articles 70(1)(1) and 73(1) 
Naredba za posochvane na nerednosti, predstavlyavashti osnovania za izvarshvane 
na finansovi korektsii, i protsentnite pokazateli za opredelyane razticna 
finansovite korektsii po reda na Zakona za upravlenie na sredstvata ot 
Evropeyskite strukturni i investitsion fondniove (Regulation on the determination 
of irregularities which constitute grounds for making financial corrections and on 
the percentage indicators for determining the amount of financial corrections 
under the Law on the management of resources from the European Structural and 
Investment Funds – ‘the Regulation on the determination of irregularities’) – 
Article 2(3) and point 1 of Annex 2 to Article 2(3) 
Memorandum between the Governments of the Republic of Bulgaria and the 
Republic of Serbia on the implementation of the Interreg-IPA Cross-border 
Cooperation Bulgaria-Serbia Programme CCI 2014TC16I5CB007, ratified by the 
Law of 7 September 2017 (which entered into force on 19 December 2017) – 
Articles 3(2) to (6), 4, 20 and 25 
Judgments of the Varhoven administrativen sad na Republika Bulgaria (Supreme 
Administrative Court of the Republic of Bulgaria) in administrative cases 
No 11552/2021, No 11446/2021 and No 9806/2019 
Succinct presentation of the facts and procedure 
1 The Interreg-IPA Cross-border Cooperation Bulgaria-Serbia Programme (‘the 
Programme’) was adopted by the European Commission in Decision C(2015) 
5444 of 30 July 2015, most recently amended by Decisions C(2016) 2853 of 
4 May 2016, C(2016) 8643 of 13 December 2016, C(2017) 5681 of 14 August 
2017 and C(2018) 7410 of 7 November 2018. 
2 The managing authority for the Programme and Opština Babušnica (municipality 
of Babušnica, Serbia) concluded Agreement No RD-02-29-188 of 4 November 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-620/23 
 
4 
2020 on the award of a grant for the implementation of the Cross-border Cultural 
Network for a Shared Future project; that project constitutes an ‘operation’ within 
the meaning of the decision of the Joint Monitoring Committee. 
3 Under that grant agreement, the municipality of Babušnica is the lead project 
partner which receives the funding and assumes responsibility for implementing 
the operation, while the applicant is merely a project partner. The lead project 
partner is responsible to the managing authority for all irregularities, even if they 
are committed by project partners. The managing authority is authorised to impose 
financial corrections where the lead project partner and/or other project partners 
have not complied with the relevant public procurement provisions. 
4 On 27 April 2021, the applicant concluded a service contract with Tsentar za 
profesionalno obuchenie i orientirane EOOD (Centre for Vocational Training and 
Career Guidance one-person limited liability company) for the implementation of 
the project. 
5 The managing authority received notice that an irregularity was suspected in 
connection with that service contract. After examining the contract documents and 
taking into account the objections raised by the applicant, the managing authority 
found that a conflict of interest within the meaning of Article 61 of Regulation 
2018/1046 existed in connection with the contract, between the person named by 
the applicant as the project coordinator and a person associated with the contractor 
Tsentar za profesionalno obuchenie i orientirane EOOD. 
6 Since the managing authority classified the conflict of interest found as an 
irregularity within the meaning of Article 2(36) of Regulation No 1303/2013, the 
head of the managing authority for the Programme, by Decision No RD-02-14-02-
489 of 20 April 2023, imposed a financial correction amounting to 100% of the 
eligible contract expenditure financed from the European Structural and 
Investment Funds. 
7 The present case arises from an action brought by the applicant against that 
decision by the head of the managing authority. 
The essential arguments of the parties in the main proceedings 
8 In its application, the applicant alleges that there is in fact no conflict of interests. 
9 At the hearing, the adjudicating chamber, which is required under the national 
rules of administrative procedure to examine of its own motion whether the 
contested act was issued without procedural irregularities, informed the parties of 
its intention to refer in that context to the Court of Justice of the European Union 
for a preliminary ruling concerning the provisions of EU law governing the 
authorisation of the managing authority to impose financial corrections on the lead 
beneficiary and the project partners of grant agreements within the framework of 
the Instrument for Pre-accession Assistance. 
NOV ZHIVOT 1919 
 
5 
10 The head of the managing authority considers that no request for a preliminary 
ruling is necessary, since the managing authority is authorised to find irregularities 
and consequently to impose financial corrections on the beneficiaries and/or 
project partners, its competence in this regard being subject exclusively to 
territorial limitations. He submits that, since all the organisations participating in 
the Instrument for Pre-accession Assistance are actually beneficiaries, the 
managing authority was authorised to impose financial corrections on those 
organisations located in the territory of the Republic of Bulgaria. 
Succinct presentation of the reasoning in the request for a preliminary ruling 
11 The referring court found that the signed grant agreement stipulates that the lead 
project partner receives the contractually agreed funding and is responsible for the 
implementation of the operation, representing all other project partners involved 
in the operation and ensuring that it and all its project partners fulfil the legal 
requirements for the implementation of the project. 
12 Moreover, the lead project partner is answerable to the managing authority for all 
irregularities, even if they were committed by the project partners. 
13 In the event of an irregularity, the managing authority may take all necessary 
measures vis-à-vis the lead project partner to remedy or mitigate the consequences 
of the irregularity, and it has been expressly agreed that the lead project partner is 
liable for repayment of the total amount involved, even if the irregularity was 
committed by one of the project partners. 
14 Under Article 70(1)(1) of the ZUSEFSU, a financial correction may cancel all or 
part of the financial support from the European Structural and Investment Funds 
in the event of a conflict of interest in connection with the beneficiary within the 
meaning of Article 61 of Regulation 2018/1046. 
15 Where there are two or more beneficiaries and one of them has been designated as 
the main or lead beneficiary, it is not legally specified to which the act 
establishing a financial correction should be addressed: the lead beneficiary, 
which is responsible for the implementation of the entire operation, or its partner 
which committed the irregularity. 
16 In the context of disputes concerning the lawfulness of expenditure in situations of 
cross-border cooperation between a Member State and a beneficiary of an 
Instrument for Pre-accession Assistance and concerning the lawfulness of 
financial corrections for irregularities within the meaning of Article 2(36) of 
Regulation No 1303/2013, the national courts apply the terms ‘beneficiary’ within 
the meaning of Article 26(1)(b) of Implementing Regulation No 447/2014 and 
‘lead beneficiary’ within the meaning of Article 40 of the same regulation. 
17 It is clear from the national case-law analysed that the courts have ruled in similar 
cases (see judgments of the Varhoven administrativen sad [Supreme 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-620/23 
 
6 
Administrative Court] of the Republic of Bulgaria in administrative cases 
No 11552/2021, No 11446/2021 and No 9806/2019) that the head of the 
managing authority is authorised to find an irregularity committed by beneficiaries 
in the territory of the Republic of Bulgaria and is consequently authorised to 
impose a financial correction, as was done in the present case. That authorisation 
applies both in cases where a lead beneficiary/project partner committed the 
irregularity and in cases where another beneficiary/project partner committed the 
irregularity. The competence of the head of the managing authority to impose the 
correction is subject to territorial limitations: it is necessary that the person who 
committed the irregularity be located in the territory of the Republic of Bulgaria. 
18 In alignment with the aforementioned national case-law on similar cases, the lead 
beneficiary in the present case was involved neither in the administrative 
procedure nor in the judicial proceedings, as it is located in the Republic of Serbia. 
19 The referring court was unable to identify any preliminary ruling by the Court of 
Justice of the European Union on the interpretation of the terms ‘beneficiary’ and 
‘lead beneficiary’ within the meaning of Implementing Regulation No 447/2014 
in the case-law examined. However, the referring court noted that the Varhoven 
administrativen sad (Supreme Administrative Court, Bulgaria) had submitted a 
request for a preliminary ruling to the Court of Justice in Case C-477/23 in a 
similar context. 
20 The right to good administration is a fundamental right conferred on individuals 
by Article 41 of the Charter. The right to good administration comprises 1. the 
right of every person to be heard, before any individual measure which would 
affect him or her adversely is taken; 2. the right of every person to have access to 
his or her file; 3. the obligation of the administration to give reasons for its 
decisions. Under its Article 51, the Charter applies to the Member States when 
they are implementing Union law. The award of a grant is made in direct 
application of Union law; this circumstance obliges the national authorities within 
whose competence the application of the law falls to comply with Article 41 of the 
Charter. 
21 Since the lead beneficiary has assumed responsibility for the implementation of 
the entire operation, including responsibility for the irregularities committed by 
the project partners, it is directly concerned by the act with which the managing 
authority imposed a financial correction. For the present dispute to be resolved 
correctly, it is therefore necessary to clarify whether the lead beneficiary should 
have been the addressee of the act with which the managing authority imposed the 
financial correction and, if so, whether the lead beneficiary should have been 
granted the right to participate in the administrative procedure which led to the 
issuing of that act.