The March morning of 2018 in Lodz was chilly, the weather was not spoiling, but the trip to the Court of Appeal in Lodz nevertheless turned out to be one of my best trips, and certainly the best for my client, who, after eight years of struggle, finally closed a long-standing dispute with a certain institution set up to transfer EU funds. However, the end of the fight for the subsidy, because this is what it was all about, was extremely satisfying, because here, after eight years of dispute, we managed to win the subsidy owed to the client and a second amount of interest. The almost two-million-dollar claim, which is one of the largest amounts awarded to a beneficiary by an institution in recent years, was snatched up after a fierce battle in which we had to go through the courts of all instances and even the Supreme Court to finally reach our goal.
Na ring!
The dispute itself was extremely interesting. Suffice it to say that during the course of it, the institution raised one after another all possible charges and motives connected with the implementation of EU projects – starting with the lack of innovativeness of the purchased machines, through irregularities in the procurement, to the failure to achieve the indicators or connections between enterprises. As it turned out, all these arguments were not recognised by the courts. However, none of this would have happened if it had not been for a determined client who was prepared to fight for his interests to the very end.
When the final phase of the dispute before the first instance was approaching, the client decided to contact me and, interestingly enough, just after reading my blog, and I, of course, picked up the gauntlet.
Litigation is, of course, a very interesting occupation for lawyers, but what is most important not only in this but also in other disputes is precisely the faith of the client and the conviction that he is right. In this case, my client was an entrepreneur for whom the grant itself and the project associated with it was the most important undertaking in his career, all the more praise for him that through the years of litigation he did not give in and did not stop believing in winning.
Single case stud
In a single dispute over a grant, a whole lot of legally questionable decisions by the authorities, unnecessary obstinacy and stubbornness and, finally, a lack of concern for the public interest came together like a lens, even when the spectre of failure was in fact not so much peeping through the window as sitting at the table. The dispute itself concerned the amount of the grant that had not been paid to the client in accordance with the grant agreement, in this particular case the grant was to be paid as a one-off final payment on completion of the project. The project, which consisted of increasing the innovativeness of the company through, among other things, the purchase of innovative machinery, was completed by the beneficiary. However, when it came to the implementation of the grant, it turned out that the office did not intend to pay out the subsidy. And here begins an interesting story, in which many beneficiaries can probably also see a piece of their experience. The Authority, in refusing to pay the grant, alleged in the first instance that the machines purchased were not innovative, as one of them was not a new machine. The second allegation concerned irregularities in their purchase
Lawsuit on the tabl
The beneficiary disagreed with these allegations, but could not in any way force the authority to pay the grant. Therefore, after an unsuccessful discussion, he decided to sue the authority for the payment of the grant due. In the course of the trial before the regional court, after a number of pieces of evidence, including three (!) expert opinions, when it turned out that the original allegations of the office could not be accepted, the office started to look for other allegations justifying the refusal to pay the grant. The Office claimed, for example, that the entrepreneur additionally failed to achieve the result indicators (this allegation was interesting in that the entrepreneur was supposed to achieve these indicators already after the payment of the subsidy in the so-called durability period, and inevitably the non-payment of the subsidy made it impossible for him to do so), was most likely an associated entrepreneur, and in general should never have received any subsidy, as it did not meet the criteria for project selection.
All sorts of absurdities occurred during the process – for example, after five years of the process, the office presented new project evaluation sheets, in which new experts awarded the beneficiary’s project a lower number of points. The problem, however, was that the assessment of these 'new’ experts was copied almost verbatim from the assessment of the previous ones – including spelling mistakes. Another interesting phenomenon was the appointment of a private opinion just before the end of the trial (coming from one of the universities quite generously benefiting from funding from the authority), which was supposed to challenge the theses arising from three other expert opinions carried out earlier in the trial.
Linking public and private purpose - shared responsibility of the authorit
After a five-year trial, the court of first instance dismissed the beneficiary’s claim (focusing on one of the allegations made by the office at the final stage of the trial, i.e. failure to meet project selection criteria), but the beneficiary did not give up and, with the help of the undersigned in an appeal, reversed the unfavourable decision. The Court of Appeal in Łódź, first once and then a second time (after the first verdict was overturned by the Supreme Court), confirmed that the entrepreneur was right and that all allegations made by the office were unjustified.
What is important in this whole situation is that the Court of Appeal rightly pointed out that the office, when granting a subsidy, takes joint responsibility for the implemented project and cannot arbitrarily subsequently undermine its own assessments or information. Therefore, for example, the court held that the positive assessment of the project was also binding on the office itself and the latter cannot undermine it at the contract implementation stage
The court also emphasised that the office should take full responsibility for its actions and omissions such as failure to provide relevant information on how the project was implemented including purchases, contributing to the failure to achieve project indicators, or mutually contradictory and inconsistent information on how funds were disbursed.
Fight for the grant until the very en
The Court of Appeal also confirmed that the view of the Supreme Court, which I have written about several times before, that when assessing the implementation of funding agreements, it is impossible to lose sight of the purpose of EU projects (common to both the public and private sides) and to overlook the properly implemented part of the project, is fully applicable in this type of case.
The officials eventually raised the white flag and paid (after a little adventure) the full amount. As this case shows, it is not worth giving up until the very end. The more determined beneficiaries may pursue the funds owed for years and, at the end of the process, the public sector body may be obliged not only to repay the funds, but also to pay back interest or even lost benefits. These additional financial burdens generated for the public sector may then ricochet back to the decision-maker who signed the decision or statement in question in the form of initiation of proceedings for violation of public finance discipline or even suspicion of committing a crime. Thus, the conviction that the signatories of laconic statements and decisions, whose only justification is the need to protect public funds, are safe may turn out to be illusory.
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KRZYSZTOF BRYSIEWICZ
Managing Partner / Legal Counsel
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