62022CC0701
OPINION OF ADVOCATE GENERAL
RANTOS
delivered on 7 March 2024 (
1
)
Case C‑701/22
SC AA SRL
v
MFE
(Request for a preliminary ruling from the Curtea de Apel Cluj (Court of Appeal, Cluj, Romania))
(Reference for a preliminary ruling – Economic, social and territorial cohesion – Structural funds – European Regional Development Fund (ERDF) – Regulation (EC) No 1083/2006 – Article 60 – Function of the managing authority – Principle of sound financial management – Obligation to reimburse eligible expenditure – Termination of a financing contract under the ERDF on account of irregularities in its performance – Annulment of termination – Late payment – Default interest – Principles of equivalence and effectiveness – Irregularities in the performance of the financing contract – Consequences)
Introduction
1.
The request for a preliminary ruling has been made in a dispute between SC AA SRL, a limited liability company governed by Romanian law (‘AA’), and the Ministerul Fondurilor Europene (Ministry of European Funds, Romania; ‘MFE’) relating to payment of default interest in relation to the late reimbursement by the MFE of eligible expenditure under a financing contract which it concluded with AA to implement a programme co-financed by the European Regional Development Fund (ERDF).
2.
This Opinion focuses, in essence, on two questions. The first is the question whether the principle of sound financial management, which is referred to in Article 60 of Regulation (EC) No 1083/2006, (
2
) read in conjunction with the principle of equivalence, requires or precludes a legal person from being able to obtain from the competent national authority default interest in relation to the late payment of eligible expenditure in respect of European funds for the period in which an administrative act was in force which terminated the financing contract and which was subsequently annulled by the national court having jurisdiction. If the possibility of obtaining such interest is accepted, this raises the second question of whether the amount of such interest may be limited by that court on account of irregularities committed by the beneficiary in the performance of the financing contract, in the absence of financial corrections applied by the competent national authority.
Legal framework
European Union law
Regulation (EC) No 1080/2006
3.
Article 7 of Regulation No 1080/2006, (
3
) entitled ‘Eligibility of expenditure’, is worded as follows in paragraph 1(a):
‘The following expenditure shall not be eligible for a contribution from the ERDF:
(a)
interest on debt’.
Regulation No 1083/2006
4.
Article 14 of Regulation No 1083/2006, entitled ‘Shared management’, provides in paragraph 1:
‘The budget of the European Union allocated to the Funds shall be implemented within the framework of shared management between the Member States and the Commission, in accordance with point (b) of Article 53 of [Regulation (EC, Euratom) No 1605/2002 (
4
)], with the exception of the instrument referred to in Article 36a of this Regulation and of the technical assistance referred to in Article 45 of this Regulation.
The principle of sound financial management shall be applied in accordance with Article 48(2) of [Regulation No 1605/2002].’
5.
Article 60 of that regulation, entitled ‘Functions of the managing authority’, provides:
‘The managing authority shall be responsible for managing and implementing the operational programme in accordance with the principle of sound financial management and in particular for:
(a)
ensuring that operations are selected for funding in accordance with the criteria applicable to the operational programme and that they comply with applicable Community and national rules for the whole of their implementation period;
(b)
verifying that the co-financed products and services are delivered and that the expenditure declared by the beneficiaries for operations has actually been incurred and complies with Community and national rules; verifications on-the-spot of individual operations may be carried out on a sample basis in accordance with the detailed rules to be adopted by the Commission in accordance with the procedure referred to in Article 103(3);
…’
6.
Article 70 of the regulation, entitled ‘Management and control’, stipulates:
‘1.   Member States shall be responsible for the management and control of operational programmes, in particular through the following measures:
(a)
ensuring that management and control systems for operational programmes are set up in accordance with Articles 58 to 62 and function effectively;
(b)
preventing, detecting and correcting irregularities and recovering amounts unduly paid together with interest on late payments where appropriate. They shall notify these to the Commission and keep the Commission informed of the progress of administrative and legal proceedings.
2.   When amounts unduly paid to a beneficiary cannot be recovered, the Member State shall be responsible for reimbursing the amounts lost to the general budget of the European Union, when it is established that the loss has been incurred as a result of fault or negligence on its part.
3.   The implementing rules for paragraphs 1 and 2 shall be adopted by the Commission in accordance with the procedure referred to in Article 103(3).’
7.
Article 80 of the regulation, entitled ‘Wholeness of payment to beneficiaries’, is worded as follows:
‘Member States shall satisfy themselves that the bodies responsible for making the payments ensure that the beneficiaries receive the total amount of the public contribution as quickly as possible and in full. No amount shall be deducted or withheld and no specific charge or other charge with equivalent effect shall be levied that would reduce these amounts for the beneficiaries.’
8.
Article 98 of Regulation No 1083/2006, entitled ‘Financial corrections by Member States’, provides in paragraphs 1 and 2:
‘1.   The Member States shall in the first instance bear the responsibility for investigating irregularities, acting upon evidence of any major change affecting the nature or the conditions for the implementation or control of operations or operational programmes and making the financial corrections required.
2.   The Member State shall make the financial corrections required in connection with the individual or systemic irregularities detected in operations or operational programmes. The corrections made by a Member State shall consist of cancelling all or part of the public contribution to the operational programme. The Member State shall take into account the nature and gravity of the irregularities and the financial loss to the Funds.
…’
Romanian law
Law No 554/2004
9.
Article 28(1) of Legea nr. 554/2004 (
5
) provides:
‘The provisions of the present law shall be supplemented by the provisions of the Code of Civil Procedure, in so far as they are not incompatible with the specific nature of the authority relationships between public authorities, on the one hand, and persons whose legitimate rights or interests have been prejudiced, on the other, and with the procedure governed by the present law. The compatibility of the application of the rules of the Code of Civil Procedure shall be determined by the court when it rules on the pleas.’
The Civil Code
10.
Article 1535 of the Civil Code, (
6
) entitled ‘Default interest in the case of pecuniary obligations’, provides:
‘(1)
Where a sum of money is not paid by the due date, the creditor shall be entitled to default interest from the due date until the date of payment, at the rate agreed by the parties or, failing that, at the statutory rate, without having to prove any damage. In this case, the debtor shall not be entitled to prove that the damage suffered by the creditor by reason of late payment would be less.
(2)
If, before the due date, the debtor owed interest at a rate higher than the statutory rate, default interest shall be due at the rate applicable before the due date.
(3)
If the rate of default interest due is not higher than the statutory rate, the creditor shall be entitled, in addition to interest at the statutory rate, to damages for reparation in full of the damage suffered’.
OG No 13/2011
11.
Article 1 of OG No 13/2011 (
7
) is worded as follows:
‘(1)
The parties shall be free to set, by agreement, an interest rate both for repayment of a loan of a sum of money and for late payment of a pecuniary obligation.
(2)
Interest owed by the debtor of the obligation to pay a sum of money by a certain date, calculated for the period prior to the due date of the obligation, shall be called remunerative interest.
(3)
Interest owed by the debtor of the pecuniary obligation for failure to comply with the obligation in question at the due date shall be called penalty interest.
…’
12.
Article 3 of that order, as amended, reads as follows:
‘(1)   The statutory remunerative interest rate shall be set at the level of the reference interest rate of the National Bank of Romania, which is the policy rate established by decision of the board of directors of the National Bank of Romania.
(2)   The statutory penalty interest rate shall be set at the reference interest rate plus four percentage points.
(2a)   In relations between professionals and between professionals and contracting authorities, the statutory penalty interest rate shall be set at the reference interest rate plus eight percentage points.
(3)   In legal relations which do not arise from the operation of a profit-making undertaking within the meaning of Article 3(3) [of the Civil Code] … the statutory interest rate shall be determined in accordance with the provisions of paragraph 1 and paragraph 2 respectively, reduced by 20%.
…’
13.
Under Article 10 of that order, ‘the provisions of Article 1535 and Articles 1538 to 1543 [of the Civil Code] … shall be applicable to penalty interest’.
OUG No 66/2011
14.
Article 42(1) and (2) of OUG No 66/2011, (
8
) in the version applicable to the dispute in the main proceedings, provided:
‘(1)   Budgetary debts arising from irregularities shall be due upon expiry of the payment deadline set in the credit instrument or within 30 days from the date of notification of that instrument.
(2)   Where the debtor does not comply with the obligations provided for in the credit instrument within the prescribed period, it shall owe interest calculated by applying the rate of interest due on the outstanding balance of the amount expressed in [Romanian lei (RON)] of the budgetary debt, from the first day following the expiry of the payment deadline set in accordance with paragraph 1 until the date of extinction of the debt, unless the rules of the European Union or the international public donor provide otherwise.’
The dispute in the main proceedings, the questions referred for a preliminary ruling and the procedure before the Court
15.
On 22 April 2015, the MFE, the managing authority for the ERDF Sectoral Operational Programme ‘Increase of Economic Competitiveness 2007-2013’, and AA, a limited liability company governed by Romanian law, concluded a financing contract (‘the financing contract’) within the framework of that programme for the implementation of the project entitled ‘Purchase of equipment to increase the production capacity of AA’ (‘the project at issue’). Under that contract, the MFE undertook to grant AA non-repayable financing in a maximum amount of RON 3 334 257.20 (approximately EUR 753000) for the implementation of the project at issue. (
9
)
16.
In order to begin the process of purchasing equipment under that project, AA took out a loan equivalent to the amount of financing with a bank to cover the expenditure eligible for reimbursement.
17.
Two actions have been brought in respect of the performance of the financing contract, the first of which resulted in the reference for a preliminary ruling which is the subject of the present case.
18.
The first action arose because, after the project at issue had been completed, AA submitted a claim for reimbursement of eligible expenditure, on which no action was taken, (
10
) resulting in additional expenditure related to the extension of the loan. (
11
) Consequently, on 18 April 2016, AA brought an action before the Curtea de Apel Cluj (Court of Appeal, Cluj, Romania), the referring court, seeking an order that the MFE (i) adopt a decision accepting the claim for reimbursement; (ii) reimburse the eligible expenditure in an amount equivalent to the non-repayable financial support under the financing contract; (iii) pay statutory interest on that amount from the date on which the action was brought; and (iv) in the alternative, pay damages for material loss suffered.
19.
The second action arose because in the interim, on 29 August 2016, the MFE terminated the financing contract on account of certain irregularities. (
12
) Consequently, on 27 April 2017, AA brought an action against the MFE before the Curtea de Apel Cluj (Court of Appeal, Cluj), this time seeking annulment of the termination of the financing contract. By a judgment which became final on 10 March 2021, (
13
) that court upheld the action on the ground that, despite certain irregularities committed by AA in the performance of the financing contract, the termination of the contract was disproportionate given the negligible importance of the irregularities. That court considers that the MFE could have applied less onerous measures, namely financial corrections. (
14
)
20.
Following that judgment and the subsequent payment, by the MFE, of the amount of eligible expenditure, (
15
) the referring court is still required to determine, in the context of the first action, solely the heads of claim relating, first, to payment of default interest on the amount paid by the MFE pursuant to that judgment and, second, to payment of damages for material loss. (
16
)
21.
In this regard, that court asks more specifically whether EU law and, in particular, the principles of sound financial management and the protection of the financial interests of the European Union preclude national law from providing for payment, to the beneficiary of a financing contract, of default interest on eligible expenditure borne by the ERDF, which was reimbursed belatedly by the managing authority following the annulment of the termination of the financing contract at issue for the period in which that termination, subsequently annulled by a court, was in force.
22.
In the absence of specific provisions in EU law or national law and given the contradictory national case-law on the subject, the referring court held that it is for national law to determine the terms and conditions applicable to interest in accordance with the principle of procedural autonomy. (
17
) However, it asks whether, in that situation, payment of default interest pursuant to the national rules, in accordance with the principle of equivalence, is compatible with the protection of the financial interests of the European Union, and in particular the principle of sound financial management, or whether, on the contrary, that principle requires it to apply, by analogy, the provisions of national law governing the withdrawal of the financial advantage in case of irregularities, which do not provide for payment of interest. (
18
) In addition, that court asks whether a national court may limit the amount of default interest potentially due in order to take account of irregularities committed by the beneficiary in the performance of the financing contract, where, as in this case, that authority did not apply any financial correction in this regard.
23.
Against this background, the Curtea de Apel Cluj (Court of Appeal, Cluj) decided to stay the proceedings and to refer four questions to the Court of Justice for a preliminary ruling, the following three being considered in this targeted Opinion:
‘(1)
Must the principle of sound financial management be interpreted, in conjunction with the principle of equivalence, as precluding a legal person, which operates a profit-making undertaking and is the recipient of non-repayable financing from the ERDF, from obtaining from the public authority of a Member State default interest (penalty interest) in relation to the late payment of eligible expenditure for a period in which an administrative act was in force that excluded reimbursement and which was subsequently annulled by a judicial decision?
(2)
If the answer to the first question is in the negative, is the fault of the recipient of the financing established by that decision relevant to the quantification of the amount of default interest, having regard to the fact that the same public authority responsible for the management of the European funds declared, ultimately, after the adoption of that decision, all the expenditure eligible?
(3)
In interpreting the principle of equivalence with regard to the point in time at which default interest is awarded to the recipient of the non-repayable financing from the ERDF, is it relevant that a rule of national law provides that, in the event of a finding of irregularity, the only consequence is that the financial benefit concerned is not granted or, as the case may be, is withdrawn (repayment of the undue amounts), to the extent to which it was granted, without receipt of interest, notwithstanding that the recipient of those amounts has enjoyed the advantage of their use up to the time of repayment, and that it is only where that repayment does not take place within the statutory time limit, that is, 30 days from the notification of the credit instrument, that the provisions of Article 42(1) and (2) of [OUG No 66/2011] permit the receipt of interest after the expiry of that time limit?’ (
19
)
24.
Written observations have been submitted to the Court by the MFE, the Romanian and Portuguese Governments and the European Commission.
Analysis
25.
By its first to third questions, which will be considered in this targeted Opinion, the referring court asks, in essence, whether AA is entitled to payment of default interest in the present case (first and third questions) and whether the amount of such interest may be limited on account of irregularities committed by that company (second question).
26.
I will therefore begin by examining the first and third questions referred together and then consider the second question.
The first and third questions
27.
By the first and third questions, the referring court asks, in essence, whether, in accordance with the principles of the European Union, in particular the principles of sound financial management and of equivalence, a legal person is entitled to payment of default interest in relation to the late payment of eligible expenditure in respect of EU funds for the period in which an act was in force which withdrew that advantage and which was subsequently annulled by the national court having jurisdiction.
28.
In the absence of express provisions in EU law and national law, that court envisages two possible solutions:
–
on the one hand (first question), payment of default interest could be justified under rules of ordinary law, (
20
) provided they are compatible with the principles of the protection of the financial interests of the European Union and sound financial management;
–
on the other hand (third question), payment of default interest could be precluded by the application, by analogy, of specific provisions of national law governing the withdrawal of the financial advantage in case of irregularities, (
21
) and which provide for payment of default interest only from the expiry of the time limit for repaying amounts unduly paid. (
22
)
29.
The MFE states in that regard that the principle of equivalence cannot justify the obligation to pay default interest in the present case, in essence on account of the situation characterised by an unequal position of the parties, (
23
) especially since AA had failed to fulfil its obligations, (
24
) and that the principle of sound financial management also cannot justify that obligation, which would cause significant damage to the budget of the Member State concerned to the benefit of the beneficiaries of the funds, without any contractual or legal basis. The MFE therefore argues in favour of the application of the provision of national law governing the withdrawal of the financial advantage in case of irregularities. (
25
) Similarly, the Romanian and Portuguese Governments rule out the grant of default interest, in this case, pursuant to the principle of sound financial management (
26
) and the principle of equivalence, in the absence of national provisions governing similar situations, (
27
) and maintain that the Member States enjoy broad discretion in such a situation.
30.
The Commission takes the view that, in the absence of specific provisions, (
28
) it is for the legal order of the Member State concerned to settle the issue in accordance with the principle of procedural autonomy, having regard to the principles of equivalence and effectiveness, it being understood that payment of default interest does not breach the principle of sound financial management. (
29
) With regard, more specifically, to the application of the principle of equivalence, the Commission states that it is for the referring court to identify comparable procedures in national law, while stating that the provision of national law governing the withdrawal of the financial advantage in case of irregularities (
30
) is not relevant in this respect for a category of action which is also based on EU law.
31.
I note, as a preliminary point, that the implementation of the budget of the European Union under Regulation No 1083/2006 (
31
) is subject to shared management within the framework of which, on the one hand, the Commission is responsible, inter alia, for planning and approving programmes and, on the other, the Member States, through their managing authorities, are responsible for managing and implementing operational programmes, (
32
) in particular in respect of the beneficiaries, who are entitled to receive the total amount of the public contribution as quickly as possible and in full. (
33
) The Member State concerned is therefore responsible for the management and control of the operational programme, in particular, preventing, detecting and correcting irregularities and recovering amounts unduly paid, together with interest on late payments where appropriate. (
34
)
32.
More particularly, the managing authority is responsible for managing and implementing the operational programme in accordance with the principle of sound financial management. (
35
) Under that principle, the budget must be implemented in accordance with the principles of economy, efficiency and effectiveness, (
36
) which means that European structural and investment funds must be used by the Member State in line with the principles and legal requirements that underlie the EU sectoral regulations. (
37
)
33.
However, the EU sectoral regulations, interpreted in the light of the principle of sound financial management, do not include any principle under which default interest on late reimbursement or recovery involving Member States and beneficiaries is or is not to be paid in addition to the reimbursement or recovery of the undue amount. (
38
) Those regulations and the principle of sound financial management simply give Member States the option to claim interest on amounts recovered in accordance with national law, without defining the nature of that interest or the procedures for obtaining it. (
39
)
34.
In these circumstances, it is for the national legal order of each Member State to establish procedural rules for actions intended to safeguard the rights of individuals, in accordance with the principle of procedural autonomy, on condition, however, that those rules are not less favourable than those governing similar domestic situations (principle of equivalence) and that they do not make it excessively difficult or impossible in practice to exercise the rights conferred by EU law (principle of effectiveness). (
40
)
35.
In the present case, as regards the principle of equivalence, in the first place, there is nothing in EU law, in my view, to prevent the referring court from adopting either of the two solutions envisaged in point 28 of this Opinion, it being understood that it is for that court to determine what provision would be applicable, under national law, to a similar situation. In particular, it is in this context that the referring court must assess the relevance of the rule of national law raised by it in its third question, (
41
) under which it is only where the repayment of an undue financial advantage does not take place within the statutory time limit that interest is due.
36.
Having said that, and without prejudice to the verifications that are to be carried out by the referring court, I note that in the law of the Member States default interest is normally intended to remedy the late fulfilment of an obligation, without having a strictly ‘compensatory’ function, (
42
) and normally follows a letter of formal notice to the debtor from the creditor. (
43
) There are, however, situations in which default interest applies even in the absence of actual late payment and is essentially intended to compensate for the mere loss of enjoyment of the unlawfully paid amount. (
44
)
37.
As regards the principle of effectiveness, in the second place, in the absence of a common approach in EU legislation or in the case-law of the European Union and the Member States, I take the view that, in principle, payment of default interest by the managing authority in the case of late reimbursement of eligible expenditure in respect of EU funds, although not explicitly provided for by EU legislation, would not impair the objectives of the applicable legislation and would not run counter to the principles and legal requirements that underlie the EU sectoral regulations, in particular the principle of sound financial management. (
45
)
38.
Furthermore, the grant of default interest in this case could not affect the financial interests of the European Union, given that such expenditure is not eligible for reimbursement to the Member State by the Commission. (
46
)
39.
In the light of the foregoing, I propose that the first and third questions referred for a preliminary ruling be answered to the effect that the principle of sound financial management, read in conjunction with the principle of equivalence, must be interpreted as not precluding national legislation under which the beneficiary of non-repayable financing from the ERDF may obtain from the managing authority of a Member State default interest in relation to the late payment of eligible expenditure for a period in which an administrative act was in force which excluded reimbursement of that expenditure and which was subsequently annulled by a judicial decision and that, in this respect, it is for the referring court to assess, in accordance with the principle of equivalence, the relevance of a rule of national law like that under which it is only where the repayment of an undue financial advantage does not take place within the statutory time limit that interest is due.
The second question
40.
By the second question, the referring court asks, in essence, whether the amount of default interest may be limited on account of irregularities committed by the beneficiary in the performance of the financing contract, when the competent authority did not apply any financial correction in this regard.
41.
The MFE and the Romanian Government claim, essentially, that since the judicial decision which annulled the termination of the financing contract also found irregularities on the part of AA in the performance of the financing contract, those irregularities would preclude payment of default interest, at least in part. According to the Commission, it is for the national court to determine whether those irregularities may be taken into consideration in the calculation of the amount of default interest under national law applicable to similar domestic disputes, having regard to the general principles of EU law, in particular the principle of proportionality.
42.
In my view, in the absence of applicable rules of EU law in the present case, it is again for the national legal order of each Member State to establish procedural rules for actions intended to safeguard the rights conferred on individuals, in accordance with the principle of procedural autonomy, having regard to the principles of equivalence and effectiveness. (
47
) In addition, in so far as the procedure at issue in the main proceedings for the grant of funding from the budget of the European Union is a measure implementing EU law, it is subject to the general principles of EU law, which include, in particular, the principle of proportionality. (
48
)
43.
Accordingly, first of all, it is for the referring court, in accordance with the principle of equivalence, to assess whether irregularities committed by the beneficiary must be taken into consideration in similar domestic disputes and whether the rules laid down by national law are consistent with EU law.
44.
In this regard, without wishing to encroach on the assessments to be made by the referring court, I consider that a distinction should be made between the question of the possible imposition of financial corrections for breaches of contractual obligations on the part of the beneficiary, which is assessed in the light of the EU and national rules on the grant of EU funds, and the question of payment of default interest for the late allocation of funds, which is assessed in the light of the national provisions governing payment of default interest in similar situations. The referring court will therefore be required to ascertain the extent to which national law permits it to take account of irregularities committed in the implementation of the project in order to justify a refusal or reduction of default interest alone. (
49
)
45.
As regards, second, the principle of effectiveness, it falls within the responsibility of the Member State concerned to take account of compliance with EU rules and therefore to detect and correct any irregularities by cancelling all or part of the public contribution to the operational programme, taking into account the nature and gravity of the irregularities and the financial loss to the Funds. (
50
)
46.
In the present case, the MFE made reimbursement in full of the eligible expenditure, without making any corrections. (
51
) In those particular circumstances, it is for the referring court to ascertain whether and to what extent national law permits it, in the case in the main proceedings concerning the claim for default interest, to take into account, potentially of its own motion, (
52
) irregularities identified in the judgment delivered in the second action, also bearing in mind that the reimbursement was made by the MFE in order to comply with the final judgment delivered in the second action. (
53
) It is not clear whether, and to what extent, the national authority had the option of imposing financial corrections in respect of the reimbursement of the amount of eligible expenditure, given that originally it had unsuccessfully imposed a stricter measure, namely the termination of the financing contract. (
54
) Consequently, EU law does not preclude the referring court, in so far as it is permitted by national legislation, from reopening the question of the amount of default interest possibly due on account of irregularities identified. Otherwise, those irregularities would have no implications, to the benefit of the beneficiary.
47.
As regards, lastly, the principle of proportionality, in the absence of material in the file before the Court regarding irregularities in the performance of the financing contract which might be imputable to AA, it must be stated that it is for the referring court, once its jurisdiction has been recognised in the light of the above considerations, to assess whether, should such irregularities exist in this case, they justify the cancellation or reduction of any interest due, bearing in mind that when there is a choice between several equally appropriate measures, recourse must be had, in accordance with the proportionality principle, to the least onerous. (
55
)
48.
In these circumstances, I propose that the second question be answered to the effect that, where the beneficiary of non-repayable financing from the ERDF must obtain from the public authority of a Member State default interest in relation to the late payment of eligible expenditure for a period in which an administrative act was in force which excluded reimbursement and which was subsequently annulled by a judicial decision, it is for the national court to determine, in accordance with the principle of procedural autonomy, whether irregularities committed by the beneficiary of the financing may be taken into account in the calculation of the amount of default interest under national law applicable to similar domestic disputes, subject to compliance with the principles of equivalence and effectiveness, and the general principles of EU law, in particular the principle of proportionality.
Conclusion
49.
In the light of the foregoing considerations, I propose that the Court answer the first to third questions referred for a preliminary ruling by the Curtea de Apel Cluj (Court of Appeal, Cluj, Romania) as follows:
(1)
The principle of sound financial management, read in conjunction with the principle of equivalence,
must be interpreted as not precluding national legislation under which the beneficiary of non-repayable financing from the European Regional Development Fund (ERDF) may obtain from the managing authority of a Member State default interest in relation to the late payment of eligible expenditure for a period in which an administrative act was in force which excluded reimbursement of that expenditure and which was subsequently annulled by a judicial decision and that, in this respect, it is for the referring court to assess, in accordance with the principle of equivalence, the relevance of a rule of national law like that under which it is only where the repayment of an undue financial advantage does not take place within the statutory time limit that interest is due.
(2)
Where the beneficiary of non-repayable financing from the ERDF must obtain from the public authority of a Member State default interest in relation to the late payment of eligible expenditure for a period in which an administrative act was in force which excluded reimbursement and which was subsequently annulled by a judicial decision, it is for the national court to determine, in accordance with the principle of procedural autonomy, whether irregularities committed by the beneficiary of the financing may be taken into account in the calculation of the amount of default interest under national law applied to similar domestic disputes, subject to compliance with the principles of equivalence and effectiveness, and the general principles of EU law, in particular the principle of proportionality.
(
1
)	Original language: French.
(
2
)	Council Regulation of 11 July 2006 laying down general provisions on the European Regional Development Fund, the European Social Fund and the Cohesion Fund and repealing Regulation (EC) No 1260/1999 (OJ 2006 L 210, p. 25), as amended by Regulation (EU) No 423/2012 of the European Parliament and of the Council of 22 May 2012 (OJ 2012 L 133, p. 1) (‘Regulation No 1083/2006’).
(
3
)	Regulation of the European Parliament and of the Council of 5 July 2006 on the European Regional Development Fund and repealing Regulation (EC) No 1783/1999 (OJ 2006 L 210, p. 1).
(
4
)	Council Regulation of 25 June 2002 on the Financial Regulation applicable to the general budget of the European Communities (OJ 2002 L 248, p. 1).
(
5
)	Legea nr. 554/2004 a contenciosului administrativ (Law No 554/2004 on administrative disputes) of 2 December 2004 (Monitorul Oficial al României, No 1154 of 7 December 2004; ‘Law No 554/2004’).
(
6
)	Legea nr. 287/2009 privind Codul civil al României (Law No 287/2009 on the Romanian Civil Code) of 17 July 2009 (republished in Monitorul Oficial al României, Part I, No 505 of 15 July 2011; ‘the Civil Code’).
(
7
)	Ordonanța Guvernului nr. 13 privind dobânda legală remuneratorie și penalizatoare pentru obligații bănești, precum și pentru reglementarea unor măsuri financiar fiscale în domeniul bancar (Government Order No 13 on statutory remunerative and penalty interest in respect of pecuniary obligations and on the regulation of certain financial and tax measures in the banking sector) of 24 August 2011 (Monitorul Oficial al României, Part I, No 607 of 29 August 2011; ‘OG No 13/2011’).
(
8
)	Ordonanța de urgență a Guvernului nr. 66/2011 privind prevenirea, constatarea și sancționarea neregulilor apărute în obținerea și utilizarea fondurilor europene și/sau a fondurilor publice naționale aferente acestora (Government Emergency Order No 66/2011 on the prevention, detection and sanctioning of irregularities in the grant and use of European funds and/or related national public funds) of 29 June 2011 (Monitorul Oficial al României, Part I, No 461 of 30 June 2011; ‘OUG No 66/2011’).
(
9
)	In addition, AA undertook to co-finance that project by way of a contribution to the eligible expenditure and by non-eligible expenditure.
(
10
)	On the basis of the applicable contractual and legal provisions, the reimbursement obligation incumbent on the MFE became due 20 days after the date on which the claim for reimbursement was submitted. By letter of 22 September 2015, AA requested reimbursement of the eligible expenditure. That claim for reimbursement was supplemented by letters of 2 and 22 October 2015, in the light of the fact that, at the time of that claim, payment had not been made in full for certain equipment purchases.
(
11
)	That loan should have been reimbursed through the financing granted by the MFE.
(
12
)	In particular on account of AA’s failure to comply with the obligation to publish the call for tenders or the contract notice and other irregularities in the implementation of the financing contract.
(
13
)	To be precise, this is the date on which the appeal was dismissed by the Înalta Curte de Casație și Justiție (High Court of Cassation and Justice, Romania).
(
14
)	The national court noted in particular that, even though AA had not complied with the provisions of the financing contract relating to the publication of the call for tenders or the contract notice for the equipment, the purchases had nevertheless been made in accordance with the procedure stipulated by a decree adopted by the MFE, notes had been drawn up on how the estimated amounts were determined and the criteria determining the choice of procedure had been defined.
(
15
)	In this context, the MFE made payment in full without any financial correction being applied, despite the irregularities identified by the judgment of the Curtea de Apel Cluj (Court of Appeal, Cluj).
(
16
)	In this case, the loss would consist in the additional costs of RON 28 983.65 (approximately EUR 6500) in interest and commission resulting from the extension of the credit contract.
(
17
)	The referring court also states that the Member States enjoy discretion in regulating control measures aimed at ensuring the protection of the financial interests of the European Union.
(
18
)	The relevant provision in this case would be Article 42 of OUG No 66/2011, under which, where the debtor does not comply, within the statutory time limit of 30 days, with the obligation to repay the amounts which were unduly paid to it, it must pay default interest only from the first day following the expiry of that time limit.
(
19
)	The referring court also asks, in a fourth question, whether a financing contract like that at issue in the main proceedings falls within the scope of Directive 2011/7/EU of the European Parliament and of the Council of 16 February 2011 on combating late payment in commercial transactions (OJ 2011 L 48, p. 1) for the purposes of setting the interest rate applicable for late payment.
(
20
)	These are, according to the referring court, Article 1535 of the Civil Code and Articles 1 and 3 of OG No 13/2011, given that Article 28 of Law No 554/2004 permits the provisions of that law to be supplemented by the provisions of ordinary law laid down in the Civil Code. I note, however, that the latter provision, as reproduced in the order for reference, refers to the Code of Civil Procedure.
(
21
)	These are, according to the referring court, laid down in Article 42 of OUG No 66/2011.
(
22
)	The referring court also points out that national case-law is divided on this point. Some courts have awarded default interest pursuant to the principles of legal certainty, of protection of legitimate expectations and of equivalence, while others have refused to grant such interest on the ground that it is not expressly provided for in national legislation.
(
23
)	According to the MFE, the recipient of the funds would benefit from the free allocation of amounts from the EU budget without any reimbursement obligation, only an obligation to implement the project in accordance with the financing contract, while the managing authority would not derive any financial advantage from the support granted.
(
24
)	On the other hand, the MFE contends that it acted in good faith by claiming that it did respond to the claim for reimbursement immediately after the final judicial decision which annulled the termination of the financing contract had been delivered.
(
25
)	Namely Article 42 of OUG No 66/2011. Specifically, according to the MFE, respect for the principle of equivalence could be ensured only by applying to the contracting authority the same rule on penalty interest as for penalty interest payable by the beneficiary of the financing.
(
26
)	The Romanian Government submits that this kind of situation does not fall within the scope of EU law, as any payment of interest is financed by the budget of the Member State.
(
27
)	The Romanian Government also refers to Article 42 of OUG No 66/2011, while the Portuguese Government emphasises the negative impact of the possible application of default interest on the difficult task of verification entrusted to the national authorities.
(
28
)	It states in particular that Article 70(1)(b) of Regulation No 1083/2006 simply gives Member States the option to claim interest on amounts recovered in accordance with national law, without defining the nature of that interest or the procedures for obtaining it.
(
29
)	The Commission maintains that, in such a case, the financial interests of the European Union would not be affected, because, under Article 7 of Regulation No 1080/2006 and the first subparagraph of Article 56(3) of Regulation No 1083/2006, such expenditure is not eligible for reimbursement to the Member State by the Commission.
(
30
)	Namely Article 42 of OUG No 66/2011.
(
31
)	I would point out for the sake of clarity that, although Regulation No 1083/2006 was repealed, with effect from 1 January 2014, by Article 153 of 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 Regulation No 1083/2006 (OJ 2013 L 347, p. 320), under Article 152 of Regulation No 1303/2013, that regulation does not affect the continuance or alteration of assistance approved by the Commission on the basis of Regulation No 1083/2006.
(
32
)	See Article 14 of Regulation No 1083/2006.
(
33
)	See Article 80 of Regulation No 1083/2006.
(
34
)	See Article 70(1)(b) of Regulation No 1083/2006.
(
35
)	See Article 60 of Regulation No 1083/2006. This principle is also mentioned more broadly in Article 317 TFEU, which provides that, in respect of the implementation of the EU budget, ‘Member States shall cooperate with the Commission to ensure that the appropriations are used in accordance with the principles of sound financial management’.
(
36
)	See, in particular, the definition in Article 30 of Regulation (EU, Euratom) No 966/2012 of the European Parliament and of the Council of 25 October 2012 on the financial rules applicable to the general budget of the Union and repealing Council Regulation (EC, Euratom) No 1605/2002 (OJ 2012 L 298, p. 1) and in Article 2(59) of 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 (OJ 2018 L 193, p. 1).
(
37
)	Judgment of 14 April 2021, Romania v Commission (T‑543/19, EU:T:2021:193, paragraph 50), upheld on appeal by judgment of 14 July 2022, Romania v Commission (C‑401/21 P, EU:C:2022:564).
(
38
)	This is not the case in other areas of EU law. For example, Article 232(1)(b) of Council Regulation (EEC) No 2913/92 of 12 October 1992 establishing the Community Customs Code (OJ 1992 L 302, p. 1), as amended by Council Regulation (EC) No 1791/2006 of 20 November 2006 (OJ 2006 L 363, p. 1), provides for interest on arrears in respect of customs debts, which is intended to offset the consequences arising as a result of the payment not having been made by the deadline set and, in particular, to prevent the person who owes the customs debt from taking unfair advantage of the fact that the amounts owing by way of customs debt remain available to him or her beyond the deadline set for its settlement (see judgment of 31 March 2011, Aurubis Balgaria, C‑546/09, EU:C:2011:199, paragraph 29). In addition, the Court has ruled with regard to value added tax (VAT) that, when the refund to the taxable person of the excess VAT is not made within a reasonable period, the principle of fiscal neutrality of the VAT system requires that the financial losses incurred by the taxable person owing to the unavailability of the sums of money at issue are compensated through the payment of default interest (see judgment of 24 October 2013, Rafinăria Steaua Română, C‑431/12, EU:C:2013:686, paragraph 23). It could be concluded from these considerations that, where the EU legislature has wished to require the grant of interest, it has done so explicitly, whereas it seems to have allowed Member States full freedom in the present case.
(
39
)	See, in particular, Article 70(1)(b) of Regulation No 1083/2006. In a similar context, relating to the European Agricultural Guarantee Fund (EAGF), the Court ruled that, in a situation where EU law does not provide for the collection of interest in a Member State, it is compatible with EU law, when recovering an advantage wrongly received from the EU budget, for a Member State to collect interest, in accordance with national law, even where that interest accrued to the budget of the Member State (see judgment of 29 March 2012, Pfeifer & Langen, C‑564/10, EU:C:2012:190, paragraph 46 and the case-law cited). The same holds where the interest, the collection of which is not required by EU law, is, in the context of measures financed by the EAGF, returned to the EU budget (see judgment of 29 March 2012, Pfeifer & Langen, C‑564/10, EU:C:2012:190, paragraph 47).
(
40
)	See, to that effect, judgment of 15 March 2017, Aquino (C‑3/16, EU:C:2017:209, paragraph 48 and the case-law cited).
(
41
)	Namely Article 42 of OUG No 66/2011.
(
42
)	I note, moreover, that in the case at issue it should still be possible for AA to demonstrate, in accordance with the applicable national procedural rules, the existence of economic loss caused by the late reimbursement, which would, among other things, require proof of such loss (probably in the part of the action in the main proceedings relating to damages).
(
43
)	See, for example, in Greek law, Articles 340 and 355 of the αστικός κώδικας/astikós kódikas (Civil Code), in French law, Article 1344-1 of the code civil (Civil Code) and in Italian law, Article 1224 of the codice civile (Civil Code). Furthermore, in a similar vein, Article 99 of Regulation 2018/1046, entitled ‘Default interest’, provides in essence that, without prejudice to any specific provisions deriving from the application of specific regulations, any amount receivable not repaid on the deadline referred to in the debit note bears default interest (this provision, which is mentioned for illustrative purposes, is not, however, applicable ratione temporis to the dispute in the main proceedings).
(
44
)	This occurs, for example, in cases of reimbursement of an unlawful penalty. See, inter alia, in Greek law, Article 21 of the διάταγμα της 26.6/10.7.1944‘περί κώδικος των νόμων περί δικών του Δημοσίου’ (Decree of 26 June/10 July 1944 codifying the laws on State trials (FEK A’ 139)) and, in Italian law, Article 44(1) of decreto del Presidente della Repubblica n. 602 del 1973 (Presidential Decree No 602 of 29 September 1973 on rules on the collection of income tax (GURI No 268 of 16 October 1973)). A similar approach seems to be taken in French law by Article L. 208 of the livre des procédures fiscales (Code of Tax Procedures).
(
45
)	On the contrary, the obligation to pay default interest in that situation could potentially make it easier for beneficiaries to exercise their right to receive the public contribution ‘as quickly as possible’ and in full, provided the eligibility criteria are fulfilled (see Article 80 of Regulation No 1083/2006).
(
46
)	Under Article 7 of Regulation No 1080/2006 and the first subparagraph of Article 56(3) of Regulation No 1083/2006, interest is not eligible for a contribution from the ERDF and is not considered to be expenditure incurred for operations decided on by the managing authority. In addition, the interest in the present case would not even fall within the scope ratione temporis for eligibility under Article 56(1) of Regulation No 1083/2006, which provides that such expenditure is eligible only if it has actually been paid before 31 December 2015.
(
47
)	See point 34 of this Opinion.
(
48
)	See, to that effect, judgment of 27 January 2022, Zinātnes parks (C‑347/20, EU:C:2022:59, paragraph 61 and the case-law cited).
(
49
)	The referring court stated, in the order for reference, that, following the judgment delivered in the second action and the subsequent reimbursement in full of the eligible expenditure, the application for reimbursement of the eligible expenditure in the case in the main proceedings became devoid of purpose.
(
50
)	See, in particular, Article 98(1) and (2) of Regulation No 1083/2006.
(
51
)	See footnote 15 to this Opinion.
(
52
)	It is not clear from the order for reference whether the referring court envisages raising of its own motion the matter of ‘compensation’ between any default interest and the financial corrections or whether the MFE has raised that plea. In these preliminary ruling proceedings, the MFE has asserted that if it declared all the expenditure at issue to be eligible, that would not mean recognising AA’s claims with retroactive effect, but would simply confirm the company’s good faith.
(
53
)	That is to say, the judgment which annulled the termination of the financing contract (see points 19 and 20 of this Opinion). Consequently, the application of any financial corrections cannot reopen the question of the reimbursement of the entirety of the eligible expenditure made by the MFE, at risk of raising the further difficult question of a possible infringement of the principle of res judicata. Although this point is not addressed in the questions referred for a preliminary ruling by the national court, I note that given the importance, both in the legal order of the European Union and in national legal systems, of the principle of res judicata, EU law does not require a national court to disapply domestic rules of procedure conferring the authority of res judicata on a judgment, even if to do so would make it possible to remedy a domestic situation which is incompatible with EU law, unless the applicable domestic rules of procedure provide for the possibility, under certain conditions, for a national court to go back on a decision having the force of res judicata in order to render the situation compatible with national law, in which case that possibility must prevail if those conditions are satisfied, in accordance with the principles of equivalence and effectiveness, so that the situation at issue in the main proceedings is brought back into line with EU law (see, to that effect, judgment of 23 November 2023, Right to Know, C‑84/22, EU:C:2023:910, paragraphs 62, 63 and 78 and the case-law cited).
(
54
)	By taking this approach, it did not have an opportunity to exercise its jurisdiction in respect of the possible reduction of the principal amount on account of the irregularities identified.
(
55
)	See, to that effect, judgment of 24 February 2022, Agenzia delle dogane e dei monopoli and Ministero dell’Economia e delle Finanze (C‑452/20, EU:C:2022:111, paragraph 38 and the case-law cited).