Recently, the civil law firm Costaș, Negru & Asociații managed to obtain a favorable result even from the stage prior to the filing of an action for the annulment of a harmful administrative act.
Thus, in the procedure for challenging a decision regarding the partial recovery of state aid, issued within the aid scheme established by GEO no. 61/2022, the Decision was amended by 90%.
By accepting the appeal, the authority ordered the amendment of the decision and officially confirmed that the beneficiary had fully complied with the provisions of the Procedure for the implementation of the measure “Working capital grants granted to entities in the agri-food sector”.
First of all, the provisions of art. 4.3.1 paragraph 2 of M.A.T. Order no. 963/2022 states the following:
(1) Beneficiaries may use working capital grants, in the form of a lump sum, allocated from non-reimbursable external funds, co-financed from the state budget, based on a state aid contract concluded in electronic format, to support the following expenses incurred after February 1, 2020:
a) expenses related to stocks of raw materials, materials, goods, as well as other categories of stocks necessary for the current/operational activity carried out by the beneficiaries;
b) current and outstanding debts to current suppliers, including utility suppliers, according to the concluded contracts;
c) expenses related to rent based on a concluded contract and/or expenses related to the lease or royalty based on a lease contract or concession contract related to agricultural land;
d) expenses related to the acquisition of services necessary for the current/operational activity, except for consulting services;
e) expenses related to the acquisition of inventory items, including inventory items of the nature of fixed assets necessary to resume current/operational activity;
f) expenses related to the acquisition of equipment, machinery, installations, technologies necessary to resume current/operational activity;
g) expenses related to the payment of debts to the state budget and local budgets.
(2) Expenses incurred from working capital grants according to paragraph (1) must be related to the activities/sub-activities of the CAEN code for which financing was requested and must be incurred no earlier than February 1, 2020 and related to a period not exceeding 180 days from the date of receipt of the grant.
We note that the financial support was requested and obtained by the company we represented, but the suppliers delivered the purchased goods to the company’s registered office and not to the work point intended for the activity for which the support was granted.
We have shown that the suppliers’/carriers’ IT system automatically took over the address of the registered office instead of the authorized work point, where, in reality, the purchased goods were used.
Moreover, we have emphasized that for logistical and efficiency reasons, the suppliers delivered the materials necessary for the implementation of the project to another location, namely to the registered office address, where reception could be ensured in safe and compliant conditions, and the two locations are located a few meters apart, an aspect that confirms that the delivery to the registered office was determined exclusively by logistical and efficiency considerations.
At the same time, the rationale of the provisions provided for in the procedure for implementing the measure “Working capital grants granted to entities in the agri-food sector” within the state aid scheme established by Government Emergency Ordinance no. 61/2022 consists in ensuring the continuity of the beneficiaries’ economic activity and their ability to maintain a normal operational flow.
Therefore, the eligibility criterion is not limited to administrative formalities (such as logistical delivery details), but concerns the nature and actual destination of the expenses incurred. What should be essential is that the financial resources are used to support the declared activities and are not diverted to other purposes, a condition fulfilled in the present case.
We have proven through the evidence submitted with the prior complaint that the delivery of the goods one street away had no negative impact on the implementation of the project or on the achievement of the assumed objectives.
This solution was of a technical and logistical nature, without negative impact on the development of the project. All the materials delivered were used strictly within the project, at the declared work point, in the end, which can be proven by invoices, receipt notes, transport declarations and photos.
Based on the principle of proportionality and good faith, I emphasized that I acted in good faith and took all reasonable measures to comply with the contractual provisions and the commitments assumed. There was no attempt to distort the purpose of the financing or to create an undue advantage.
These principles enshrine loyalty, but also fairness in the conduct of legal relations. The beneficiary who acts in good faith assumes compliance with contractual obligations, but also responsibility for the general interest.
As for the beneficiaries of funds granted by the state, they must use the resources for the purposes for which they were allocated and comply with the contractual obligations.
In this regard, I have proven that the company I represented acted with diligence and transparency, without the intention of distorting the purpose of the financing or obtaining an undue advantage. The situation presented does not constitute a deviation or irregularity within the meaning of European and national legislation on non-reimbursable funds, but a simple technical, organizational particularity, devoid of consequences on the project budget or on the destination of the funds.
Also, by referring to the principle of good faith, I mentioned that it is necessary for the authorities to take into account the conduct of the beneficiary, so that it is not sanctioned for simple formal irregularities, when it can be observed that it has substantially complied with the project objectives, as is the case of the undersigned.
Applying a corrective measure or sanction in this case would be disproportionate and unjustified, given that the purpose of the project has been fully achieved, and the goods are used according to the approved destination.
Therefore, the existence of a minor procedural non-compliance does not justify sanctioning in the absence of a real negative impact on the project.
Considering the above, the Agency for Small and Medium-sized Enterprises and Tourism ordered the modification of the Recovery Decision, taking over our arguments in full.
The response to the preliminary complaint finally stated: the expenses incurred and settled from the granted grant are eligible expenses according to the provisions contained in the applicable legal framework and must be real, legal and correctly justified/paid by appropriate supporting documents, in accordance with the provisions of the program, as regulated in the Applicant Guide.
This case represents a clear example that exercising the right to challenge harmful administrative acts can correct excesses of authority and guarantee a fair trial for all parties involved.
This article was prepared for the blog of the law firm Costaș, Negru & Asociații by atty. Diana Fărcaș-Badiu, from the Cluj Bar Association.
Costaș, Negru & Asociații is a law firm with offices in Cluj-Napoca, Bucharest and Arad, which provides assistance, legal representation and advice in several practice areas through a team of 16 lawyers and consultants. Details of the legal services and the composition of the team can be found at https://www.costas-negru.ro. All rights for materials published on the company’s website and via social media belong to Costaș, Negru & Asociații, reproduction is permitted for information purposes only and with full and correct citation of the source.
