Joined Cases C‑260/14 and C‑261/14

Județul Neamț

and

Județul Bacău

v

Ministerul Dezvoltării Regionale și Administrației Publice

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

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

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

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

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

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

See the text of the decision. (see paras 35)

Article 1(2) of Regulation No 2988/95 on the protection of the European Communities’ financial interests and Article 2(7) of Regulation No 1083/2006 laying down general provisions on the European Regional Development Fund, the European Social Fund and the Cohesion Fund must be interpreted as meaning that failure to comply with national provisions by a contracting authority, the beneficiary of Structural Funds, in connection with the award of a public contract of an estimated value below the threshold laid down in Article 7(a) of Directive 2004/18 on the coordination of procedures for the award of public works contracts, public supply contracts and public service contracts, as amended by Regulation No 1422/2007, may constitute, at the time the contract is awarded, an ‘irregularity’ within the meaning of Article 1(2) of Regulation No 2988/95 or Article 2(7) of Regulation No 1083/2006, if that breach has, or would have, the effect of prejudicing the general budget of the European Union by charging an unjustified item of expenditure. In so far as the operations concerned benefit from EU funding, they are subject to the application of EU law. It follows that the term ‘irregularity’ within the meaning of Article 1(2) of Regulation No 2988/95 and Article 2(7) of Regulation No 1083/2006 must be interpreted as covering not only any breach of EU law but also any breach of the provisions of national law which contribute to ensuring that EU law relating to the management of projects financed by EU funds is properly applied. The same applies as regards breaches of provisions of national law applicable to operations funded under the Structural Funds. (see paras 37, 43, 46, operative part 1)

The second sentence of the first subparagraph of Article 98(2) of Regulation No 1083/2006 laying down general provisions on the European Regional Development Fund, the European Social Fund and the Cohesion Fund is to be interpreted as meaning that financial corrections by Member States, if applied to co-financed expenditure under Structural Funds for failure to comply with rules concerning the award of public contract, are administrative measures within the meaning of Article 4 of Regulation No 2988/95 on the protection of the European Communities’ financial interests. It is clear from the very wording of Article 98(2) of Regulation No 1083/2006, read in conjunction with the first indent of Article 4(1) of Regulation No 2988/95, that the purpose of the financial corrections which Member States are required to make if they detect irregularities in operations or operational programmes is to secure the withdrawal of an advantage improperly received by the economic operator concerned, inter alia by obliging the operator to repay the sums wrongly paid. The obligation to give back an advantage improperly received by means of an irregularity is not a penalty, but simply the consequence of a finding that the conditions required to obtain the advantage derived from EU rules have not been observed, so that that advantage becomes an advantage wrongly received. The fact that the full amount to be repaid may, in any individual case, not coincide exactly with the loss actually incurred by the Structural Funds cannot alter that conclusion. (see paras 49-51, operative part 2)