What’s happening in the neighbouring field?

In this blog post, I would like to draw attention to an interesting judgment of the Court of Justice of the European Union C-562/12 relating this time not to the Polish legal system for the implementation of funds, but to the Latvian and Estonian legal systems, which gave rise to an interesting case and an interesting line of interpretation of the provisions of Regulation 1083/2006 and the Charter of Fundamental Rights. Since, as the saying goes, it is best to learn from the mistakes of others rather than your own, I think it is worth bearing in mind this judgment in the context of our national regulations.

The judgment came as a result of a preliminary question from an Estonian court before which a dispute was pending between Liivimaa Lihaveis MTÜ – a cooperative of cattle breeders – and the monitoring committee of the European territorial cooperation programme between Latvia and Estonia common to both countries – Seirekomitee. The company intended to implement a project on 'creating a new product with a new brand, produced from high quality cattle reared in the most diverse meadows of Estonia and Latvia’, and to this end applied for funding. During the proceedings before the committee, the company passed the technical stage of the application assessment, but failed the qualitative assessment, of which it was informed by letter. In response to this letter, it requested that the administrative decision rejecting its application be forwarded.

The key problem in the case was that, according to the programme guide for the operational programme, decisions of the monitoring committee to refuse support are not subject to appeal and those responsible for unapproved projects receive a letter from the Joint Technical Secretariat setting out the reasons for the rejection. The company appealed to the Estonian Administrative Court, challenging the decision in its case – and the court raised doubts as to whether the procedure adopted (the programme guide) complied with Regulation 1083/2006 as well as with the Charter of Fundamental Rights by formulating, inter alia, the following question: Are the rules of procedure of a monitoring committee established jointly by two Member States, such as the programme guide adopted by the [Seirekomitee], which provides that the decisions of the monitoring committee are not subject to judicial review, compatible with Article 63(2) [of Regulation No 1083/2006] in conjunction with Article 47 [of the Charter]? For the sake of completeness, it should be added that the respective national regulations of both Latvia and Estonia provided, in principle, for a very broad definition of an administrative act and, of course, the possibility to challenge such an act. For the sake of order, the key provisions should also be cited, namely: Article 47 of the Charter of Fundamental Rights: „Everyone whose rights and freedoms guaranteed by the law of the Union are violated shall have the right to an effective remedy before a tribunal in compliance with the conditions laid down in this Article.” and Article 53(2) of Regulation 1083/2006: „Each monitoring committee shall draw up its rules of procedure within the institutional, legal and financial framework of the Member State concerned and adopt them in agreement with the managing authority in order to perform its tasks in accordance with this Regulation.„

In the text of the explanatory memorandum itself, in addition to the Court’s interesting considerations concerning the status of the monitoring committee (a topic which was inter alia mentioned in the context of the recent judgment of the Constitutional Court concerning the implementation law – SK 50/13), the Court of Justice took the view that, firstly, the Charter of Fundamental Rights would also be directly applicable to acts and provisions of a national body – such as the Seirekomitee on the grounds that this body applies European Union law (Article 51 of the CFR). Secondly, the Court noted that the Charter of Fundamental Rights allows restrictions to be placed on rights and freedoms only by law (Article 52 of the CFR) – yet the guide excluding the possibility of an appeal did not have this form. Thirdly, and finally, the Court held that a regulation such as the one in the Guide excluding the possibility of filing an appeal against a refusal of a funding decision violated Article 47 of the CFR.

Finally, and noteworthy, the Court did not take into account the Member States’ argumentation to limit the effects of the judgment in time (i.e. only for the future), considering that it is impossible to determine solely on the basis of the interpretation of the EU rules what budgetary consequences the judgment will ultimately have for the Member States, given that each case will only be decided by the national courts. Thus, the right to challenge funding decisions was also granted for decisions made prior to this judgment.

Attentive readers may already notice that certain threads of the Court of Justice’s judgment clearly refer to the issues I have already mentioned several times on the blog. In the last post I drew attention to the issue of compliance with the Polish Constitution of the Republic of Poland of the exclusion of the possibility to lodge an effective appeal in the case of the so-called exhaustion of the allocation – in this context it seems that the regulation contained in the Implementation Act, which allows applicants to obtain, in the end, only the statement of the illegality of the appealed decision (Article 66, paragraph 2, point 2 of the Implementation Act) can also be assessed as contradictory to Article 47 of the CPC. This is because there is no doubt that a settlement of this kind does not contain any added value for the applicant and, consequently, the judicial protection in this case is of an illusory nature.
Furthermore, which raises my doubts, the new Implementation Act provides for the possibility of selecting projects of strategic importance outside the call for proposals, while the non-competition procedure may be applied to select projects, the applicants of which, due to the nature or purpose of the project, may only be entities that have been explicitly identified before submitting the application for project financing (Article 38 of the Implementation Act). Additionally, there is a clear reservation in the Implementation Act that in relation to this type of projects the appeal procedure is excluded (Article 53 of the Implementation Act). Taking into account the content of the analysed judgment, it cannot be ruled out that such a solution may also turn out to be incompatible with Article 47 of the CFR, the more so that in the previous perspective it happened that also the evaluation of non-competition projects was successfully challenged by the applicants before the administrative courts.
Finally – and here I must again advocate the destruction of Cartagena – the Court rightly pointed out that the provisions of the Programme Guide excluding the possibility of appeal should be considered invalid for one reason already – namely because they were adopted in a non-statutory form – incompatible with Article 52 of the CFR. This position provides an additional argument in favour of the correctness of the view of the Constitutional Tribunal expressed in the judgment P 1/11 declaring it inadmissible to regulate the rights and obligations of participants in competitions in non-statutory acts, i.e. within the framework of the so-called implementation system. And as I pointed out in one of my previous posts, the new implementation law did not fully implement the directives of this judgment….