Proposal for a COUNCIL DECISION on the conclusion of the Agreement for scientific and technological cooperation between the European Union and the Faroe Islands associating the Faroe Islands to Horizon 2020 - the Framework Programme for Research and Innovation (2014-2020).
Date: 2014-07-29
Institutions: European Commission
Subjects: Faroes, Framework Programme for Research and Development, cooperation agreement (EU), innovation, scientific cooperation













EUR-Lex - 52014PC0496 - EN











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52014PC0496

Proposal for a COUNCIL DECISION on the conclusion of the Agreement for scientific and technological cooperation between the European Union and the Faroe Islands associating the Faroe Islands to Horizon 2020 - the Framework Programme for Research and Innovation (2014-2020). /* COM/2014/0496 final - 2014/0228 (NLE) */









EXPLANATORY MEMORANDUM
1.           CONTEXT OF THE PROPOSAL
On 18 March 2014 the Council authorised the
Commission to open negotiations, on behalf of the European Union, with the Faroe
Islands on an Agreement between the European Union and the Faroe Islands associating
the Faroe Islands to Horizon 2020 - the Framework Programme for Research and
Innovation (2014-2020).
Negotiations were concluded and resulted in
the attached draft agreement text. The Commission proposes that, following
authorisation for the signing and provisional application of the Agreement, the
Council concludes the Agreement on behalf of the European Union. 
The attached proposal is for a Council
decision on the conclusion of the Agreement. The Commission proposes that the
Council:
–                        
concludes the Agreement on behalf of the
European Union.
2.           LEGAL ELEMENTS OF THE
PROPOSAL
The proposal for a Council decision is
based on Article 186 and 218(6)(a) and 218(8) of the Treaty on the Functioning
of the European Union.
2014/0228 (NLE)
Proposal for a
COUNCIL DECISION
on the conclusion of the Agreement for
scientific and technological cooperation between the European Union and the
Faroe Islands associating the Faroe Islands to Horizon 2020 - the Framework
Programme for Research and Innovation (2014-2020).
THE COUNCIL OF THE EUROPEAN UNION,
Having regard to the Treaty on the
Functioning of the European Union, and in particular Article 186 in conjunction
with Article 218(6)(a) and the first subparagraph of Article 218(8) thereof,
Having regard to the proposal from the
European Commission[1],
Having regard to the consent of the
European Parliament[2]
Whereas:
(1)       The Agreement for
scientific and technological cooperation between the European Union and the Faroe
Islands associating the Faroe Islands to Horizon 2020 - the Framework Programme
for Research and Innovation (2014-2020) was signed on behalf of the European Union
on XX, 20XX in accordance with Council Decision No XX/XX/EU, subject to its
conclusion at a later date.
(2)       The Agreement should be approved
on behalf of the European Union,
HAS DECIDED AS FOLLOWS: 
Article 1
The Agreement
for scientific and technological cooperation between the European Union and the
Faroe Islands associating the Faroe Islands to Horizon 2020 - the Framework
Programme for Research and Innovation is hereby approved
on behalf of the Union.
Article 2
The President of the Council shall designate the person empowered to make,
on behalf of the European Union, the notification of the completion of the procedure for the
purpose of the entry into force of the Agreement provided for in Article
5(2) thereof.
The
text of the Agreement is attached to this Decision.
Done at Brussels,
                                                                       For
the Council
                                                                       The
President
[1]               OJ L , , p. .
[2]               OJ L , , p. .
ANNEX
AGREEMENT
FOR SCIENTIFIC AND TECHNOLOGICAL COOPERATION 
BETWEEN

THE
EUROPEAN UNION AND THE FAROE ISLANDS 
ASSOCIATING
THE FAROE ISLANDS TO HORIZON 2020 – THE FRAMEWORK PROGRAMME FOR RESEARCH AND
INNOVATION (2014-2020)
THE EUROPEAN UNION,
hereinafter referred to as "the Union",
of the one part,
and
THE GOVERNMENT OF THE FAROES,
hereinafter referred to as "the
Faroes",
of the other part,
hereinafter jointly referred to as the
"Parties",
WHEREAS the Union programme for research and innovation “Horizon
2020 - the Framework Programme (2014-2020)” (hereinafter referred to as
‘Horizon 2020’) was established by Regulation (EU) No 1291/2013 of the European
Parliament and of the Council[1]. The Specific Programme implementing Horizon 2020 was adopted by
Council Decision No 2013/743/EU[2].
WHEREAS Article 7 of Horizon 2020 stipulates that specific terms and
conditions regarding the participation of associated countries in Horizon 2020,
including the financial contribution, based on the gross domestic product of the
associated country shall be determined by an international agreement between
the Union and the associated country.
CONSIDERING the successful participation of the Faroese researchers
in projects funded by the Union and the importance of current scientific and
technological cooperation between the Faroes and the Union and their mutual
interest in strengthening Research and Innovation in the context of the
establishment of the European Research Area.
CONSIDERING the interest of both Parties in encouraging the mutual
access of their research entities to research and development activities in the
Faroes, on the one hand, and to the Union's framework programmes for research
and technological development, on the other.
RECOGNISING the special situation of the Faroe Islands with their
small territorial size and population and close proximity to the EU as a
northern European neighbour.
WHEREAS the
Government of the Faroes concludes this Agreement on behalf of the Kingdom of
Denmark pursuant to the Act on the Conclusion of Agreements under International
Law by the Government of the Faroes.
WHEREAS without prejudice to the
relevant provisions of the Treaty on the Functioning of the European Union
(hereinafter referred to as "TFEU"), this Agreement and any
activities entered into under it will in no way affect the powers vested in the
Member States to undertake bilateral activities with the Faroes in the fields
of science, technology, research and development, and to conclude, where
appropriate, agreements to that end,
HAVE AGREED AS
FOLLOWS:
ARTICLE 1
Scope
1.           The Faroes shall
participate as associated country, under the terms and conditions established
by, or referred to, in this Agreement and its Annexes, to Horizon 2020 as
established by Regulation (EU) No 1291/2013[3]
of the European Parliament and of the Council of 11 December 2013 establishing
Horizon 2020 – the Framework Programme for Research and Innovation (2014-2020),
and by Regulation (EU) No 1290/2013[4]
laying down the rules for the participation and dissemination in Horizon 2020,
and by Council Decision 2013/743/EU[5],
establishing the Specific Programme Implementing Horizon 2020.
1 bis.      The Regulation (EC) No
294/2008 of the European Parliament and of the Council as amended by the
Regulation (EU) No 1292/2013 of the European Parliament and of the Council
shall apply to participation of Faroese legal entities in Knowledge and
Innovation Communities[6].
2.           All acts deriving from the
acts referred to in paragraph 1, including acts setting up the structures
needed for the implementation of Horizon 2020 through research activities under
Articles 185 and 187 of the TFEU shall be applicable in the Faroes.
3.           In addition to the
association referred to in paragraph 1, cooperation may include:
(a)     regular discussions on the orientations
and priorities for research policies and planning in the Faroes and the Union,
(b)     discussions on cooperation prospects
and development,
(c)     timely provision of information
concerning the implementation of programmes and research projects of the Faroes
and of the Union, and concerning the results of work undertaken within the
framework of this Agreement,
(d)     joint meetings,
(e)     visits and exchanges of research
workers, engineers and technicians,
(f)     regular and sustained contacts between
programme managers or project managers of the Faroes and the Union,
(g)     participation of experts in seminars,
symposia and workshops.
ARTICLE 2
Terms and conditions with respect to the
association of the Faroes
to Horizon 2020
1.                      
Legal entities of the Faroes may participate in
indirect actions and in the activities of the Joint Research Centre of the European
Commission under the same conditions as those applicable to legal entities of
Member States of the Union, subject to the terms and conditions established by,
or referred to, in Annexes I and II. For the Faroes research entities, the
terms and conditions applicable for the submission and evaluation of proposals
and those for the granting and conclusion of grant agreements and/or contracts
under Union programmes shall be the same as those applicable for grant
agreements and/or contracts concluded under the same programmes with research
entities established in the Union, taking into account the mutual interests of
the Union and the Faroes.
              Legal entities
established in the Union and
the Joint Research Centre of the European Commission, may participate in the
Faroes' research programmes and projects in themes equivalent to those of Horizon 2020 under the same conditions as
those applicable to legal entities of the Faroes, subject to the terms and
conditions established by, or referred to, in Annexes I and II. A legal entity
established in another country associated to Horizon
2020 shall enjoy the same rights and obligations under
this Agreement as legal entities that are established in a Member State, provided that the said associated country in which the entity is established has
agreed to award legal entities from the Faroes the same rights and obligations.
2.                      
From the date of the application of this
Agreement the Faroes shall pay for every year of the duration of Horizon 2020 a financial contribution to the
annual budget of the Union. The financial contribution of the Faroes shall be
added to the amount earmarked each year in the annual budget of the Union for commitment appropriations to meet the financial obligations arising out of
different forms of measures necessary for the execution, management and
operation of Horizon 2020. The
rules governing the calculation and the payment of the financial contribution
of the Faroes are set out in Annex III.
3.                      
Representatives of the Faroes shall participate
as observers in the committees established within Horizon
2020. These committees shall meet without the presence
of representatives of the Faroes at the time of voting. The Faroes will be
informed of the result. Participation as referred to in this paragraph shall
take the same form, including procedures for receipt of information and
documentation, as that applicable to representatives from Member States. 
4.                      
Representatives of the Faroes shall participate
in the Board of Governors of the Joint Research Centre according
to the Rules of Procedure for the Board of Governors of the Joint Research
Centre. 
5.                      
Travel costs and subsistence costs incurred by
representatives of the Faroes participating in meetings of the committees and
bodies referred to in this Article, or in meetings related to the
implementation of Horizon 2020 organised by the Union shall be reimbursed by
the Union on the same basis as, and in accordance with the procedures currently
in force for, representatives of the Member States.
ARTICLE 3
Enhancement of cooperation
1.           The Parties will make
every effort, within the framework of their applicable legislation, to
facilitate the free movement and residence of research workers participating in
the activities covered by this Agreement and to facilitate cross-border
movement of goods intended for use in such activities.
2.           The Parties will ensure
that no fiscal charge or levy shall be imposed upon the transferring of funds
between the Union and the Faroes, when said funds are needed for the operation
of activities covered by this Agreement.
ARTICLE 4
EU-Faroes Research and
Innovation Committee
1.           A joint committee called
the "EU-Faroes Research and Innovation Committee" shall be
established, whose functions shall include:
(a)     ensuring, evaluating and reviewing the
implementation of this Agreement,
(b)     examining any measure of a nature to
improve and develop cooperation,
(c)     regularly discussing the future
orientations and priorities of research policies and research planning in the
Faroes and the Union and the prospects for future cooperation,
(d)     making, subject to each Party's
domestic approval processes, technical amendments to this Agreement as may be
required.
2.           The EU-Faroes Research and
Innovation Committee, which shall be composed of representatives of the
Commission and of the Faroes, shall adopt its Rules of Procedure.
3.           The EU-Faroes Research and
Innovation Committee shall meet upon the request of one of the Parties. The Committee will work on an on-going basis through exchange of
documents, e-mails and other means of communication.
ARTICLE 5
Final provisions
1.           Annexes I, II, III and IV
shall form an integral part of this Agreement.
2.           This Agreement is hereby
concluded for the duration of Horizon 2020. It shall enter into force on the
date on which both Parties have notified each other of the completion of their
procedures for that purpose. It shall be provisionally applied as of 1 January
2014.
              This Agreement may only
be amended in writing by common consent of the Parties. The entry into force of
the amendments will follow the same procedure as those applicable for the
Agreement itself through diplomatic channels. Either of the Parties may
terminate this Agreement at any time upon six months’ written notice through
diplomatic channels. Projects and activities in progress at the time of
termination and/or expiry of this Agreement shall continue until their
completion under the conditions laid down in this Agreement. The Parties shall
settle by common consent any other consequences of termination.
3.           Should a Party notify the
other that it shall not conclude this Agreement, it is hereby mutually agreed
that:
–              
 the Union shall reimburse to the Faroes its
contribution to the annual budget of the European Union referred to in Article
2(2),
–              
however, funds committed by the Union in
relation to the participation of the Faroese legal entities in indirect
actions, including reimbursements referred to in Article 2(5), shall be deducted
by the Union from that reimbursement,
–              
projects and activities launched under this
provisional application and that are still in progress at the time of the
notification referred to in paragraph 2 shall continue until their completion
under the conditions laid down in this Agreement.
4.           Should the Union decide to
revise Horizon 2020, it shall notify the Faroes of the exact content of these
revisions within one week of their adoption by the Union. In case of such
revision or extension of the research programmes, the Faroes may terminate this
Agreement by giving six months' notice. The Parties shall give notice of any
intention to terminate or to extend this Agreement within three months of the
adoption of the Union's decision.
5.           When the Union adopts a new
multi-annual framework programme for research, technological development and
demonstration activities, a new agreement may be renegotiated or renewed under
mutually agreed conditions, at the request of either of the Parties.
6.           This Agreement shall apply,
on the one hand, to the territories in which the TFEU is applied and under the
conditions laid down in that Treaty and, on the other hand, to the territory of
the Faroes.
7.           This Agreement shall be
drawn up in duplicate in the Bulgarian, Croatian, Czech, Danish, Dutch, English, Estonian, Finnish, French, German,
Greek, Hungarian, Italian, Latvian, Lithuanian, Maltese, Polish, Portuguese,
Romanian, Slovak, Slovene, Spanish, Swedish and Faroese languages, each text
being equally authentic.
ANNEX I
TERMS AND CONDITIONS FOR THE
PARTICIPATION OF LEGAL ENTITIES OF MEMBER STATES OF THE UNION AND OF THE FAROES
For the purpose of this Agreement, a "legal entity" means
any natural person, or any legal person created and recognised as such under
national law, Union law or international law, which has legal personality and
which may, acting in its own name, exercise rights and be subject to
obligations. 
I.          Terms and conditions for the participation of legal
entities of the Faroes in indirect actions of Horizon 2020 
1.           Participation and funding
of legal entities established in the Faroes in indirect actions of Horizon 2020
shall follow the conditions laid down for associated countries in Regulation
(EU) No 1290/2013 laying down the Rules for Participation and dissemination in
H2020 and the terms and conditions established by, or referred to in this
Agreement and the annexes thereto. 
              In case the Union makes provisions for the implementation of Articles 185 and 187 of the TFEU, the
Faroes shall be allowed to participate in the legal structures created under
these provisions, in conformity with the decisions and regulations that have
been or will be adopted for the establishment of these legal structures.
              Legal entities
established in the Faroes shall be eligible, under the same conditions as legal
entities established in the Member States, for financial instruments
established under Horizon 2020.
2.           Legal entities of the
Faroes shall be taken into consideration, alongside those of the European
Union, for the selection of independent experts for the tasks, and under the
conditions foreseen in Regulation (EU) No 1290/2013 laying down the rules for
participation in H2020. 
3.           In conformity with
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 European Communities (hereinafter referred to as "Financial
Regulation"), and the Commission Delegated
Regulation (EU) 1268/2012 of 29 October 2012 on the rules of application of the
Financial Regulation, a grant
agreement and/or contract concluded by the Union with any legal entity of the
Faroes in order to perform an indirect action shall provide for controls and
audits to be carried out by, or under the authority of, the Commission or the
Court of Auditors of the European Union. In a spirit of cooperation and mutual
interest, the relevant authorities of the Faroes shall provide any reasonable
and feasible assistance as may be necessary or helpful under the circumstances
to perform such controls and audits.
II.        Terms and conditions for the
participation of legal entities of Member States in the Faroese research
programmes and projects
1.           The participation of legal
entities established in the Union, created under the national law of one of the
Member States of the Union or under the Union law, in projects of the Faroese
research and development programmes may require the joint participation of at
least one Faroese legal entity. Proposals for such participation shall be submitted
jointly, where required, with the Faroese legal entity/ies.
2.           Subject to paragraph 1 and
to Annex II, the rights and obligations of legal entities established in the
Union participating in the Faroese research projects within research and
development programmes, the terms and conditions applicable for the submission
and evaluation of proposals and for the granting and conclusion of grant
agreements and/or contracts in such projects shall be subject to the Faroese
laws, regulations and government directives governing the operation of research
and development programmes, as well as national security constraints where
applicable, as applicable to Faroese legal entities and assuring equitable
treatment, taking into account the nature of the cooperation between the Faroes
and the Union in this field.
              Funding of legal entities
established in the Union participating in Faroese research projects within
research and development programmes shall be subject to Faroese laws,
regulations and government directives governing the operation of research and
development programmes, as well as national security constraints where
applicable, as applicable to non-Faroese legal entities participating in the
Faroese research projects within research and development programmes. In the
case where funding is not provided to the non-Faroese legal entities, Union
legal entities shall cover their own costs, including their relative share of
the project's general management and administrative costs.
3.           Proposals for research in
all fields are to be submitted to the Faroese Research Council
(Granskingarráðið). 
4.           The Faroes shall regularly
inform the Union of current Faroese programmes and participation opportunities
for legal entities established in the Union.
ANNEX
II
PRINCIPLES
ON THE ALLOCATION OF INTELLECTUAL PROPERTY RIGHTS
I.            Application
For the purposes
of this Agreement: 
1.           "intellectual
property" shall have the meaning given in Article 2 of the Convention
establishing the World Intellectual Property Organisation, signed in Stockholm on 14 July 1967, 
2.           "knowledge"
shall mean the results, including information, whether or not these results can
be protected, as well as copyrights or rights pertaining to such information
following applications for, or the issue of, patents, designs, plant varieties,
supplementary protection certificates or similar forms of protection.
II.          Intellectual property rights of legal entities of the
Parties
1.           Each Party shall ensure
that the intellectual property rights of legal entities of the other Party
participating in activities carried out pursuant to this Agreement, and the
related rights and obligations arising from such a participation, shall be
consistent with the relevant international conventions that are applicable to
the Parties, including the TRIPS Agreement (Agreement on trade-related aspects
of intellectual property rights administered by the World Trade Organisation)
as well as the Berne Convention (Paris Act 1971) and the Paris Convention
(Stockholm Act 1967).
2.           Legal entities established
in the Faroes participating in indirect actions of Horizon
2020 shall have intellectual property rights and
obligations in accordance with Regulation (EU) 1290/2013 of the European
Parliament and of the Council laying down the rules for participation and
dissemination in Horizon 2020 and in the grant agreements and/or contracts
concluded with the Union accordingly, and that shall comply with paragraph 1. 
3.           Where
legal entities of the Faroes participate in an indirect action under Horizon 2020, implemented pursuant to
Articles 185 and 187 of the TFEU, the legal entities established in the Faroes
shall have intellectual property rights and obligations in accordance with
Regulation (EU) No 1290/2013 of the European Parliament and of the Council
laying down the rules for participation and dissemination in Horizon 2020 and
provisions of the relevant grant agreements. 
4.           Legal
entities established in the European Union Member States participating in
Faroese research programmes or projects shall have the same intellectual
property rights and obligations as those of legal entities established in the
Faroes participating in such research programmes or projects in accordance with
paragraph 1.
III.       Intellectual property rights
of the Parties
1.           Except if otherwise
specifically agreed by the Parties, the following rules shall apply to the
intellectual property rights generated by the Parties in the course of
activities carried out within Article 1(3) of this Agreement: 
(a)     the Party generating the intellectual
property shall have the ownership thereof. Where their respective shares of the
work cannot be determined, the Parties shall co-own the intellectual property;
(b)     the Party holding ownership shall
grant the other Party rights of access to and the use of the intellectual
property with a view to the activities referred to in Article 1(3) of this
Agreement. Such access rights shall be granted on a royalty-free basis.
2.           Except if otherwise
specifically agreed by the Parties, the following rules shall apply to scientific
publication from the Parties:
(a)     where a Party publishes scientific and
technical data, information and results, journals, articles, reports, books,
including audiovisual, works and software, arising and relating to activities undertaken
under this Agreement, a worldwide, non-exclusive, irrevocable, royalty-free
licence shall be granted to the other Party to translate, reproduce, adapt,
transmit and publicly distribute such works, unless precluded by existing
intellectual property rights of third parties;
(b)     all copies of data and information,
protected by copyright, that have to be publicly distributed and prepared under
this section, shall indicate the names of the author or authors of the work,
unless an author explicitly declines to be named. They shall also bear a
clearly visible acknowledgement of the cooperative support of the Parties.
3.           Except if otherwise
specifically agreed by the Parties, the following rules shall apply to
undisclosed information of the Parties:
(a)     when communicating to the other Party
information relating to activities carried out pursuant to this Agreement, each
Party shall identify that information which it wishes to remain undisclosed;
(b)     for the specific purposes of
implementing this agreement, the receiving Party may under its own
responsibility, communicate such undisclosed information as classified
information to bodies or persons under its authority and under obligation to
keep the information confidential;
(c)     with the prior written consent of the
Party providing undisclosed information, the receiving Party may disseminate
such undisclosed information more widely than otherwise permitted by
subparagraph (b). The Parties shall cooperate in developing procedures for
requesting and obtaining prior written consent for such wider dissemination,
and each Party shall provide such approval to the extent permitted by its
domestic policies, regulations and laws; 
(d)     non-documentary undisclosed or other
confidential or privileged information provided in seminars and other meetings
between representatives of the Parties arranged under this Agreement, or
information arising from the attachment of staff, use of facilities or indirect
actions, shall remain confidential when the recipient of such undisclosed or
other confidential or privileged information was made aware of the confidential
character of the information before it was, in accordance with subparagraph
(a);
(e)     each Party shall endeavour to ensure
that undisclosed information received in accordance with subparagraphs (a) and
(c) is controlled as provided for in this Agreement. If one of the Parties
becomes aware that it will be, or may be reasonably expected to become, unable
to meet the non-dissemination provisions laid down in subparagraphs (a) and
(c), it shall immediately inform the other Party. The Parties shall thereafter
consult to define an appropriate course of action.
ANNEX
III
RULES
GOVERNING THE FINANCIAL CONTRIBUTION OF THE FAROES TO HORIZON 2020
I.            Calculation of the financial
contribution of the Faroes
1.           The financial contribution
of the Faroes to Horizon 2020 shall
be established on a yearly basis in proportion to, and in addition to, the
amount available each year in the general budget of the European Union for
commitment appropriations needed for the implementation, management and
operation of the Horizon 2020
Programme. 
2.           The proportionality factor
governing the contribution of the Faroes shall be obtained by establishing the
ratio between the gross domestic product of the Faroes, at market prices, and
the sum of gross domestic products, at market prices, of the Member States of
the Union. These ratios shall be calculated, for the Member States, on the
basis of the latest statistical data from the Commission (Eurostat) available
at the time of publication of the draft budget of the European Union for the
same year and for the Faroes on the basis of the latest statistical data
pertaining to the same year from the National Statistical Authority of the
Faroes (Hagstova Føroya) available at the time of publication of the draft
budget of the Union.
3.           The Commission shall
communicate to the Faroes, as soon as possible, and at the latest on 1
September of the year before each financial year, the following information
together with relevant background material:
–              
the amounts in commitment appropriations, in the
statement of expenditure of the draft budget of the European Union
corresponding to Horizon 2020. 
–              
the estimated amount of the contributions
derived from the draft budget of the Union, corresponding to the participation
of the Faroes in Horizon 2020
in accordance with paragraphs 1, 2 and 3.
Once the general budget of the Union has been finally adopted, the
Commission shall communicate to the Faroes, in the statement of expenditure
corresponding to the Faroese participation, the final amounts referred to in
paragraph 1.
In the fourth year after this Agreement becomes applicable, the
Parties shall review the proportionality factor governing the financial
contribution of the Faroes, on the basis of the data concerning participation
of Faroese legal entities in indirect and direct actions under Horizon 2020 in
the years 2014-2016.
II.          Payment of the financial contribution of
the Faroes
1.           The Commission shall
issue, at the latest in January and June of each financial year, a call for
funds to the Faroes corresponding to its contribution under this Agreement. 
              These calls for funds
shall provide, respectively, for the payment:
              of six-twelfths of the
Faroese contribution 30 days after receipt of the calls for funds. However, the
six-twelfths to be paid 30 days after receipt of the call issued in January
shall be calculated on the basis of the amount set out in the statement of
revenue of the draft budget: the regularisation of the amount thus paid shall
occur with the payment of the six-twelfths 30 days after receipt of the call
for funds issued at the latest in June.
              For the first year of
implementation of this Agreement, the Commission shall issue a first call for
funds within 30 days of its provisional application. Should this call be issued
after 15 June, it shall provide for the payment of twelve/twelfths of the
Faroese contribution within 30 days, calculated on the basis of the amount set
out in the statement of revenue of the budget.
2.           The contribution of the
Faroes shall be expressed and paid in euro. Payment by the Faroes shall be
credited to the Union programmes as budgetary revenue allocated to the
appropriate budget heading in the statement of revenue of the annual budget of
the Union. The Financial Regulation shall apply to the management of the
appropriations.
3.           The Faroes shall pay its
contribution under this Agreement in accordance with the schedule in paragraph
1. Any delay in the payment of the contribution shall give rise to the payment
of default interest by the Faroes on the outstanding amount from the due date.
The interest rate for amounts receivable not repaid on the due date shall be
the rate applied by the European Central Bank to its principal refinancing
operations, as published in the C series of the Official Journal of the
European Union, in force on the first calendar day of the month in which the
due date falls, increased by one and a half percentage points.
              In case the delay in the
payment of the contribution is such that it may significantly jeopardise the
implementation and management of the programme, participation in the programme
of the Faroes for the concerned financial year will be suspended by the
Commission following the absence of payment 20 working days after a formal letter
of reminder sent to the Faroes, without prejudice to the Union's obligations in
accordance with grant agreements and/or contracts already concluded pertaining
to the implementation of selected indirect actions.
4.           At the latest on 31 May of
the year following a financial year, the statement of appropriations for Horizon 2020 for that financial year shall be prepared and transmitted to the
Faroes for information, in accordance with the format of the Commission's
revenue and expenditure account.
5.           The Commission, at the time of the closure of the accounts relating to
each financial year, within the framework of the establishment of the revenue
and expenditure account, shall proceed to the regularisation of the accounts
with respect to the participation of the Faroes. This regularisation shall take
into consideration modifications which have taken place, either by transfer, cancellations, carryovers,
de-commitments, or by supplementary and amending budgets during the financial
year. This regularisation shall occur at the time of the second payment for the
next financial year, and for the last financial year in July 2021. Further regularisation shall
occur every year until July 2023.
annex iv
Financial control of FAROESE participants in
the Programmes covered by this Agreement 
I.          Direct
Communication
The Commission shall communicate directly with the participants in
the Programme established in
the Faroes and with their subcontractors. They may submit directly to the
Commission all relevant information and documentation which they are required
to submit on the basis of the instruments referred to in this Agreement and of
the grant agreements and/or contracts concluded to implement them.
II.        Audits
1.           In accordance with
European Parliament and Council Regulation (EU, Euratom) No 966/2012[7] and to Commission Delegated Regulation (EU) No 1268/2012[8] (hereinafter referred to as the 'Rules of Application') and with
the other rules referred to in this Agreement, the grant agreements and/or
contracts concluded with participants in the Programme established in the
Faroes shall provide for scientific, financial, technological or other audits
to be conducted at any time on the premises of the participants and of their
subcontractors by Commission agents or by other persons mandated by the
Commission.
2.           Commission agents, the European Court of Auditors and other persons mandated by the Commission
shall have appropriate access to sites, works and documents (both electronic and paper versions) and to
all the information required in order to carry out such audits on- the-spot subject to the inclusion of this right of access that shall be stated explicitly in the grant
agreements and/or contracts concluded to implement the instruments referred to
in this Agreement with participants from the Faroes.
The non-provision of such rights would be regarded as a failure to substantiate
costs and, consequently, as a potential breach of the grant agreements. 
3.           The audits may be
conducted after the Programme or this Agreement expire, on the terms laid down
in the grant agreements and/or contracts in question. 
III.         On-The-Spot
Checks 
1.           Within the framework of
this Agreement, the Commission (OLAF) shall be authorised to carry out
on-the-spot checks and inspections in the premises of participants and their
subcontractors from the Faroes, in accordance with the terms and conditions
laid down in Council Regulation (Euratom, EC) No 2185/96[9].
2.           On-the-spot checks and
inspections shall be prepared and conducted by the Commission in close collaboration
with the National Audit Office (Landsgrannskoðanin). The latter shall be
notified a reasonable time in advance of the object, purpose and legal basis of
the checks and inspections, so that they can provide assistance. To that end,
the officials of the competent Faroese authorities may participate in the
on-the-spot checks and inspections.
3.           If the Faroese authorities
concerned so wish, the on-the-spot checks and inspections may be carried out
jointly by the Commission and them.
4.           Where the participants in
the Programme resist an on-the-spot check or inspection, the Faroese
authorities, acting in accordance with national rules and regulations, shall
assist the Commission inspectors, to a reasonable extent as needed to allow
them to fulfil their duty in carrying out an on-the-spot check or inspection.
5.           The Commission shall
report as soon as possible to the competent Faroese authority any fact or
suspicion relating to an irregularity which has come to its notice in the
course of the on-the-spot check or inspection. In any case the Commission shall
be required to inform the abovementioned authority of the result of such checks
and inspections.
IV.         Information and Consultation
1.           For the purposes of proper
implementation of this Annex, the competent Faroese and Union authorities shall
regularly exchange information, unless forbidden or unauthorised by national
rules and regulations and, at the request of one of the Parties, shall conduct
consultations.
2.           The competent Faroese
authorities shall inform the Commission within reasonable time of any fact or
suspicion which has come to their notice relating to an irregularity in
connection with the conclusion and implementation of the grant agreements
and/or contracts concluded in application of the instruments referred to in
this Agreement.
V.          Confidentiality
Information communicated or acquired in any form under this Annex
shall be covered by professional secrecy and protected in the same way as
similar information is protected by Faroese law and by the corresponding
provisions applicable to the Union's institutions. Such information may not be
communicated to persons other than those within the Union’s institutions or in the Member States or the Faroes whose functions
legally require them to know it, nor may it be used for purposes other than to
ensure effective protection of the Parties' financial interests.
VI.         Administrative Measures and Penalties
Without prejudice to application of Faroese criminal law,
administrative measures and penalties may be imposed by the Commission in
accordance with Regulations (EU, Euratom) No 966/2012, (EU) No 1268/2012 and
(EC, Euratom) No 2988/95[10].
VII.       Recovery and Enforcement
Decisions taken by the Commission under Horizon 2020 covered by this Agreement which impose a
pecuniary obligation on persons other than States shall be enforceable in the Faroes. If so
requested by the Commission,
the authority designated by the Government of the Faroes shall commence proceedings for the enforcement of the decision on behalf of the
Commission. In this case, the decision of the Commission shall be submitted to the Faroese Court, without other formality than verification of the
authenticity of the decision,
by the authority designated for this purpose by the Government of the
Faroes, which shall inform the Commission thereof. Enforcement shall take place
in accordance with the Faroese law and rules of procedure. The relevant enforcement provisions shall be incorporated in the grant
agreements and/or contracts with participants from the Faroes. The Court of Justice of the European
Union shall have jurisdiction to review the legality of
the decision of the Commission and suspend its enforcement. Moreover, the Faroese Court shall have jurisdiction
over complaints that enforcement is being carried out in an irregular manner.
[1]               Regulation of the
European Parliament and of the Council establishing Horizon 2020 (OJ L347,
20.12.2013, p.104).
[2]               Council Decision
establishing the Specific Programme implementing Horizon 2020 (OJ L347,
20.12.2013, p.965).
[3]               OJ L347, 20.12.2013, p.104.
[4]               OJ L347, 20.12.2013, p.81.
[5]               OJ L347, 20.12.2013, p.965.
[6]                      Regulation
(EU)No 1292/2013 of the European Parliament and of the Council of 11 December
2013 amending Regulation (EC) No 294/2008 establishing the European Institute of
Innovation and Technology (OJ L347, 20.12.2013, p.174). 
[7]               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 (OJ L298,
26.10.2012). 
[8]               Commission Delegated
Regulation (EU) No 1268/2012 of 29 October 2012 on the rules of application of
Regulation (EU, Euratom) No 966/2012 of the European Parliament and of the
Council on the financial rules applicable to the general budget of the Union (OJ L362, 31.12.2012).
[9]               0J L292, 15.11.1996, p. 2.
[10]             Council Regulation (EC, Euratom) No 2988/95 of 18
December 1995 on the protection of the European Communities' financial
interests (OJ L312, 23.12.1995).