ERDF–ESF+: the authority must provide reasons for its decision to recover funds

Within the framework of the management of the European Structural and Investment Funds, national and regional authorities, in cooperation with the European Commission, are responsible for the allocation, monitoring and control of the aid granted.

However, the strict nature of the European legal framework requires that any decision relating to the eligibility of financed expenditure be duly reasoned and comply with the fundamental rights of beneficiaries, in particular the right to adversarial proceedings.

The following case illustrates the potential shortcomings that may arise when an administrative decision ordering repayment is neither sufficiently reasoned nor properly notified.

Granting and challenging European aid

A company specialising in the rental of catamarans benefited, under the ERDF–ESF Operational Programme 2014–2020, from financial aid intended for the acquisition of a catamaran for tourist transport purposes. This aid formed part of the European objectives to support the local economy and tourism development.

However, by letter from the managing authority, represented by the Prefect, the company was informed of an alleged irregularity affecting the eligibility of the expenditure incurred.

This unspecified irregularity led to the withdrawal of the aid and to a request for repayment of the funds already received.

Insufficient reasoning: a manifest procedural defect

The decision withdrawing the European aid did not mention any specific circumstances leading to the identification of the alleged irregularity. It did not specify either the nature of the checks carried out or the elements supporting the alleged ineligibility.

In doing so, it contravened the general principles of French and European administrative law, which require clear and sufficient reasoning for adverse administrative decisions, pursuant to Article L. 211-2 of the Code of Relations between the Public and the Administration (CRPA).

The lack of precision in the reasoning deprived the company of the ability to understand the grounds of the decision and, consequently, to organise its defence.

Such a lack of reasoning constitutes a substantial irregularity likely to affect the legality of the decision.

The administrative appeal and the silence of the administration

In response to this decision, the company lodged an administrative appeal requesting the withdrawal of the repayment order. This appeal remained unanswered: the administration neither acknowledged receipt of the letter nor provided any additional information in support of its initial decision.

In accordance with Article L. 231-4 of the CRPA, such silence constitutes an implicit decision of rejection.

As a result, the company brought an action for annulment before the competent administrative court, challenging both the merits of the decision and the procedure followed.

Moreover, pursuant to Article L. 121-1 of the CRPA, the prefecture failed to comply with its obligation to respect the adversarial principle.

Indeed, prior to adopting its decision, no prior discussion or adversarial procedure was initiated with the company.

Ensuring legal certainty in the management of European funds

This case highlights the importance of rigorous reasoning and strict compliance with procedural rules in the management of European funding.

The law firm ELEAVOCAT places its expertise in administrative law and European law at the service of all stakeholders, assisting them in the prevention of legal risks, the securing of procedures and, where appropriate, the resolution of disputes.