Civil disobedience under threat of having state aid withdrawn?

In the deluge of different types of support measures, one feature of the prepared programmes stands out – gaps in the regulations or provisions of the support programmes, which often make the documentation and the support conditions themselves not so much illegible as even fluid. In doing so, the bodies and institutions providing support adopt different tactics to mask these shortcomings. Some institutions openly admit to inaccuracies and correct the documentation (by far the rarest of cases), others take it in their stride and pretend that this is the way it should be, quietly updating documentation in the form of „guides” or „communications” or re-verifying covidien applications, and finally some decide to repeat competitions.

If the institutions themselves are not able to prepare the criteria and conditions of the competitions properly (regional competitions, in which the „victory” and obtaining financial support is determined by the autobots – see my entry Competition of WARP applications), how are entrepreneurs supposed to find themselves in this maze of contradictory and unclear provisions? Of course, not everyone is able to „guess” the intention of programme authors, so there is no shortage of mistakes made by applicants.

But is it really the applicant for public funds who is guilty every time? Of course not – in terms of EU funding there is a well-established body of court rulings (cf. my earlier post Negative project assessment – how to appeal effectively, part 2), according to which it is the competition organiser who should take responsibility for imprecisely prepared competition documentation, unclear criteria and conditions for granting aid.

So what should an entity, which has not obtained such aid – precisely as a result of erroneous criteria, or having obtained such aid, has received a creative interpretation of the provisions of the documentation denying it the right to such aid, and this with retroactive effect?

Of course, it should appeal. How to do it?

First of all, it is worth remembering that the right to appeal against a negative assessment of an aid application stems directly from the Constitution of the Republic of Poland (art. 78), and is also provided for in the Charter of Fundamental Rights (art. 47), and even if the organiser of a given programme has not provided for such a right, we will still be entitled to it. This is because the law cannot close the way to claiming infringed freedoms or rights (art. 77 par. 2 of the Constitution of the Republic of Poland). The form in which support is provided (administrative or civil) determines which specific legal remedy to choose. I wrote more about this in this post: Subsidies in the Financial Shield and the KPA.

Wherever public aid is refused, an appeal may be lodged – however, it will not always take the form of a traditional appeal under the KPA, as not everywhere the granting of public aid is governed by the principles of administrative law.

Thus, entrepreneurs who have not received EU funds may lodge a protest on the basis of the Implementation Act.
On the other hand, entrepreneurs who have not received e.g. a subsidy may challenge such a refusal directly in a common court by filing a claim for determination or payment.

Entrepreneurs who were informed of a refusal of aid in another form are also not deprived of the possibility to challenge such decisions, however, they may complain about it as another act or action of the administration or complain about the inactivity of the authority when such a decision was not made.

When appealing against refusals to grant support or to grant it in a smaller amount, it is worth remembering the following arguments:

Sanctions should be proportionate and adapted to actual needs – aid cannot be taken away at will or on a whim.

The Supreme Court, among others, has spoken in detail on this subject, pointing out that in determining the obligation to repay funds, both the degree of breach of obligations and the reasons for the failure to achieve the objectives of the project should be taken into account.

Repayment of funds – common sense or rigour? The Supreme Court answers – EU funds – Krzysztof Brysiewicz Blog (kbrysiewicz.pl)

An institution cannot shift the responsibility for its mistakes and negligence onto the beneficiary.

In those situations in which it is the state that contributes to the failure to achieve the objectives of the project, as well as prevents the implementation of tasks or the fulfilment of obligations under the support agreement, the beneficiary of support cannot be punished with the return of funds either.

Objective liability not so objective – EU measures – Krzysztof Brysiewicz Blog (kbrysiewicz.pl)

Similarly, as in the case of a refusal to grant aid, also in the case of its repayment, entrepreneurs should not listen to the announcements of institutions as if they were oracles, but it is worth considering whether such a demand for repayment is really justified, or whether we do not have any points of contention in the prepared documentation? Very often it may turn out that the demand for reimbursement is post factum intended to cover up an ineptly prepared competition – in such a situation, there are no grounds for the consequences of bad law to be borne by the beneficiary. Particularly since, as a rule, we are already dealing with a situation in which allegedly wrongly obtained funds have been spent.

Even if, at first glance, the documentation of a given programme does not provide for any avenue of appeal (a very frequent practice of an institution preparing documentation which is silent on the subject of appeal), the beneficiary will always have the right to appeal or to present a case in court, only in a different form. Sometimes it will be a complaint against a so-called other act or action of the administration, sometimes a complaint against inaction, and sometimes it will be necessary to use the instruments of civil law by filing, for example, a lawsuit for payment or for determination.

One of the legislative 'monsters’ that has been introduced into support schemes (not only covid) is the now famous mechanism of refusal of aid for lack of a mask, i.e. the possibility of depriving an entrepreneur of aid (of various kinds) in the event of non-compliance with the sanitary regime introduced on account of covid.

This sanction included in Article 23 of the Law on the Amendment of the Anti-covid Law has a special dimension in the situation of the civil disobedience announced in recent days and the announcement of the opening of more businesses in violation of the lockdown regulations. In these cases, are these entrepreneurs really threatened with repayment?

The threat is very real, but will it be effectively enforced by the state? In my opinion, it may be very difficult to do so. Making the granting of aid or its reimbursement dependent on entrepreneurs meeting sanitary standards in the way it is drafted is, in my opinion, too far-reaching and means that such a sanction, as it is clearly disproportionate and inadequate to the objective of the aid, should not be effectively applied.

It is also impossible not to notice that the sanction of repayment is to be triggered already at the moment of the imposition of the sanction on the entrepreneur and not at the moment of the final adjudication of the case. Therefore, if the entrepreneur succeeded in having the sanction lifted, the aid would still be recoverable. This takes on a special dimension, if only in the context of the current situation, in which administrative courts have already, in dozens of judgments, annulled sanitary authorities’ decisions imposing sanctions for non-compliance with restrictions(more here).

The flood of aid measures aimed at ensuring the survival of entrepreneurs also brings out, as if through a lens, the mistakes associated with the operation of public support in Poland.

Among such mistakes one can safely distinguish:

• vague aid criteria (e.g. the Cultural Support Fund),
• sometimes even completely inadequate sanctions for torts committed (famous in recent days, the seizure of grants for non-compliance with Covidian prohibitions),
• the failure to switch to de-bureaucratised forms of support (e.g. support from WARP, which was handed out in milliseconds),
• a lack of explicitly stated appeal procedures,
• far-reaching discretion, bordering on discretion of institutions in granting and withdrawing support (e.g. refusal of support due to being on the CBA or KAS black list).

All these shortcomings of support during the pandemic became perfectly visible. All these pathologies of the public support systems could have been avoided if the control of its granting carried out also so far by the courts had been fully critical and not reduced to tolerating obvious legislative deficiencies. The current deflation of legislation is the result of years of tolerance – largely by the administrative courts – of obvious legislative errors or omissions that have built up over many years. Situations such as, for example, the incomplete implementation of the CT judgment P 1/11 almost 10 years ago and the toleration of this fact for the same period by the administrative courts have led us to what we have today. Systemic errors, of which there are many in both covidien aid and EU funds, should be condemned by the courts every time and not let pass under the guise of „systemic interpretation” as, for example, in the case of exhaustion of allocations or violation of „other applicable procedures”. The law will never be better if the courts tolerate obvious errors or legislative omissions in the name of maintaining the 'support system’. Here I see one of the main reasons for the current state of flawed support schemes.

The public is already aware of judgments in which the courts are increasingly taking a firm stance on the subject of manifest legislative errors. It is to be hoped that this courageous jurisprudence, which breaks away from the hitherto conformist approach, does not result merely from the need of the moment, but that it finds expression in an already permanent trend. It is the judicial review that consistently stigmatises systemic flaws that should eliminate the flaws in the support systems I wrote about above.