Evaluation: “Clarifications concerning the restoration of fraudulently obtained agricultural help and the notion of ‘beneficiaries’” by Erriketi Tla da Silva – Cyber Tech

On 29 February 2024 the Courtroom of Justice rendered its judgement on Case C‑437/22. The case is a preliminary reference in search of clarifications concerning the interpretation of Article 7 of Council Regulation  2988/95 of 18 December 1995 on the safety of the European Communities monetary pursuits (‘Regulation 2988/95’), Articles 54(1) and 56 subparagraph 1 of Regulation (EU) 1306/2013 of 17 December 2013 on the financing, administration and monitoring of the widespread agricultural coverage and repealing Council Laws (EEC) 352/78, (EC)  165/94, (EC) 2799/98, (EC)  814/2000, (EC)  1290/2005 and (EC) 485/2008 (‘Regulation 1306/2013’), and Article 35(6) of Fee Delegated Regulation (EU)  640/2014 of 11 March 2014 supplementing Regulation (EU) 1306/2013 of the European Parliament and of the Council with regard to the built-in administration and management system and circumstances for refusal or withdrawal of funds and administrative penalties relevant to direct funds, rural improvement assist and cross compliance (‘Fee Delegated Regulation  640/2014’). The clarifications sought concern the restoration of illegally obtained agricultural help by the representatives of a authorized particular person, as nicely the interpretation of the time period ‘beneficiary’ of help.

Background of the case

The case issues firm X OÜ, which merged with firm Y OÜ and obtained agricultural help beneath Estonia’s rural improvement packages. The 2 successive representatives of firm X OÜ have been discovered responsible of subsidy fraud for intentionally offering false data to Estonian authorities to acquire the subsidies. Each on first occasion and on enchantment the respective Estonian courts ordered the representatives to repay the wrongfully obtained help. Nonetheless, the Estonian Supreme Courtroom, whereas upholding the convictions of the representatives for subsidy fraud, expressed doubts as to the potential of ordering the restoration of the help from the representatives of firm X and never from the corporate Y OÜ, which succeeded the corporate X OÜ in its rights and obligations.

The referring court docket inquired:

1) whether or not the related provisions of EU regulation make it potential to pursue the restoration of agricultural help which has been obtained fraudulently not solely from the beneficiary of that help, but in addition from individuals who, with out having the ability to be considered beneficiaries of that help, participated within the acts that resulted to its undue cost.

2) whether or not, the place a authorized particular person has fraudulently obtained agricultural help because of acts attributable to its representatives, these representatives could also be considered ‘beneficiaries’ of that help inside the that means of EU regulation.

The Courtroom’s judgement

The Courtroom adopted a scientific and theological interpretation in its evaluation of the related provisions of EU regulation with the intention to reply these questions.

Firstly, the Courtroom famous that recital 39 of Regulation 1306/2013 stresses the necessity for Member States to forestall, detect and deal successfully with any irregularities and that Regulation 2988/95 needs to be utilized. Moreover, Article 54(3)(b) of Regulation 1306/2013, which permits Member States to not pursue restoration of help unduly obtained the place this proves unattainable due to the insolvency of the debtor or the individuals who’re accountable for the irregularity, can be disadvantaged of its ‘effet utile’ if it weren’t potential to get better that from the latter individuals.

On this regard, the potential of pursuing restoration of unduly obtained help not solely from the beneficiary, but in addition from those that intentionally supplied false data with a view to acquiring it, contributes to the target of defending the Union’s monetary pursuits, notably the place the beneficiary is a authorized entity which now not exists or doesn’t have enough assets to repay the help.

Moreover, the Courtroom clarified that requiring such individuals to repay help unduly obtained doesn’t infringe the ideas of authorized certainty and of legality, insofar because the compensation is just not a sanction, however the consequence of non-compliance and the related laws is sufficiently clear on this regard.

The Courtroom acknowledged that even when Article 56 of Regulation 1306/2013 doesn’t explicitly present for an obligation to repay help for such individuals, it have to be learn within the mild of recital 39 of that Regulation. Moreover, Article 2(1)(g) of Regulation 1306/2013 explicitly refers to Regulation 2988/95 as regards the definition of the time period ‘irregularity’ and beneath Article 7 of Regulation 2988/95, individuals who’ve participated within the irregularity in query might also be required to repay the help.

Thus, the Courtroom, siding with the Opinion of AG Pitruzzella, concluded that, in response to Article 56 of Regulation 1306/2013, learn along side Article 54(1) of that Regulation and Article 35(6) of Fee Delegated Regulation  640/2014 and within the mild of Article 7 of Council Regulation 2988/95, the restoration of fraudulently obtained agricultural help might be pursued not solely in opposition to the beneficiary of the help, but in addition in opposition to individuals who’ve intentionally supplied false data with a view to acquiring it.

Concerning the second query, the Courtroom concluded that it can’t be deduced that the representatives of a authorized one who have dedicated fraudulent acts with the intention to allow the latter to acquire agricultural help might be thought-about as ‘beneficiaries’ of the help. Extra particularly, they can’t be thought-about as ‘beneficiaries’ since they don’t fall inside any of the three classes of individuals referred to in level (1) of Article 2(1) of Fee Delegated Regulation 640/2014.

Conclusion

In conclusion, the Courtroom supplied helpful clarifications concerning the restoration of unduly paid help and the time period ‘beneficiary’ of help by confirming {that a} Member State could demand compensation of agricultural help unduly paid to a beneficiary firm, straight from the pure individuals who’re its authorized representatives. Nonetheless, the latter can’t be considered beneficiaries of the help.

Erriketi Tla da Silva is a PhD candidate in Wageningen College and an Tutorial Assistant on the Faculty of Europe. She holds an LL.M. in European Authorized Research from the Faculty of Europe in addition to an LL.M. in Environmental Legislation from the Nationwide and Kapodistrian College of Athens. She is a certified lawyer, registered within the Athens Bar Affiliation.

SUGGESTED CITATION: Tla da Silva, E.; “Clarifications concerning the restoration of fraudulently obtained agricultural help and the notion of ‘beneficiaries’”, EU Legislation Stay, 14/03/2024,