For many companies implementing projects financed from EU funds, the most feared moment is not the submission of the funding application, but the subsequent audit. A report ascertaining irregularities and establishing budgetary claims can surface years after a project is completed, and can require the beneficiary — practically overnight — to repay considerable sums, sometimes enough to put the company’s ongoing operations at risk.
What can a company do when faced with this situation? A concrete answer comes from a case recently decided by the Constanța Tribunal, in which the court granted a EU-funds beneficiary company’s request to suspend enforcement of such a report, pending final resolution of the challenge on the merits. Below we present the background, the reasoning relied on by the court and, more importantly, the steps any EU-funds beneficiary in a similar situation can take.
Background of the dispute. Subject matter of the case
The dispute originates in the financing contract under which the beneficiary obtained non-reimbursable financing in the amount of RON 1,734,000, under the Competitiveness Operational Programme 2014-2020, for the implementation of project code RUE 1700, titled “Purchase of Backhoe Loaders.” Following an audit of how the funds were used, the Ministry of Investments and European Projects — Directorate-General for Economic Competitiveness, acting as managing authority (AM-POC), issued the report ascertaining irregularities and establishing budgetary claims, through which it established a budgetary claim for repayment against the beneficiary in the amount of RON 929,691, based on Article 4 of the financing contract and Article 1(1) and (2) of Instruction No. 67/2023 issued by AM-POC.
What the alleged “irregularity” actually consisted of
Important for readers in a similar situation: the irregularity found did not concern the nature or eligibility of the expenditure as such, but rather the timing of the payment to the supplier, which the authority deemed to fall outside the eligibility period set by the contract (no later than 31 December 2023). The facts, as they emerge from the ruling, were as follows:
- the beneficiary submitted a payment request for an eligible amount of RON 1,239,588 (of which RON 778,764.04 was ERDF-EU contribution, RON 150,926.96 was state budget contribution, and RON 309,897 was the beneficiary’s own contribution), authorized by AM-POC on 21 December 2023;
- the amount was transferred by AM-POC into the beneficiary’s treasury account only on 29 December 2023, at 3:45 PM — a Friday, after the Constanța Municipal Treasury’s working hours had ended;
- 30-31 December 2023 fell on a Saturday and Sunday, and 1-2 January 2024 were statutory public holidays, so the Treasury had no working hours throughout that entire period;
- the first working day on which the beneficiary was actually able to make the payment to the supplier was 3 January 2024, the date on which the payment orders were issued;
- the audit team considered that these payments, having been made after 31 December 2023, fell outside the eligibility period — hence the establishment of the RON 929,691 budgetary claim.
In other words, a delay of a few days — which triggered a claim of nearly one million lei — was not the result of any act or omission by the beneficiary, but of the fact that the funds were transferred to it by the authority itself only a few hours before the weekend, followed by the New Year holidays, during a period in which payment to the supplier was, objectively, impossible to make.
What a report ascertaining irregularities and establishing budgetary claims actually is
This type of administrative act is governed by the legislation on the prevention, ascertainment and sanctioning of irregularities arising in the receipt and use of European funds and related national public funds. It has a particular feature that makes it especially harsh for the beneficiary: from the moment it is communicated, the act becomes, in principle, enforceable — the authority can proceed to recover the amounts (including through enforcement measures) even if the beneficiary has, in parallel, challenged the merits of the finding. In practice, a company can find its bank accounts frozen over a claim it is disputing and may eventually win in court — but too late, after the damage has already occurred.
It is precisely this risk that often makes the request to suspend enforcement of the act more urgent than the action on the merits seeking to have the report annulled.
Facts as established by the court
Dissatisfied with the audit’s conclusions, the project beneficiary filed a request with the Constanța Tribunal — Administrative and Fiscal Litigation Section — to suspend enforcement of the report ascertaining irregularities and establishing budgetary claims. The Ministry, as defendant, filed a statement of defense, arguing that its findings were lawful and well-founded and opposing the suspension request.
Applicable legal framework
Requests to suspend enforcement of administrative acts are generally assessed by reference to two complementary legal layers:
- Administrative Litigation Law No. 554/2004, which conditions the suspension of enforcement of an administrative act on the existence of a well-justified case and the need to prevent imminent damage to the person affected by the act;
- the special legislation on irregularities in the use of EU funds, which sets out the legal regime of reports ascertaining irregularities and establishing budgetary claims, including their enforceable nature and the remedies available to the beneficiary.
The administrative litigation court does not rule, at this stage, on the substantive lawfulness of the act (i.e., whether the irregularity existed or not) — that analysis falls to the judge hearing the main annulment action. At the suspension stage, the court merely verifies whether the beneficiary’s arguments are sufficiently serious to justify, provisionally, blocking enforcement, and whether immediate enforcement would cause damage that is difficult or impossible to remedy.
Reasons why the court granted the suspension request
The well-justified nature of the request
The court recalled, with reference to the case law of the High Court of Cassation and Justice, the limits of the analysis specific to this stage: when ruling on a suspension request, the court does not examine the substantive lawfulness of the administrative act (that remains the task of the annulment action), but confines itself to a summary, prima facie analysis, by reference to the factual and legal grounds invoked by the claimant and to minimal evidence — checking only whether there are obvious circumstances, of fact or of law, that raise a serious doubt as to the presumption of lawfulness of the act.
Applying this standard, the Tribunal found, in summary, that the irregularity found in the report could not, on its face, be attributed to the beneficiary. The central argument: according to information communicated by the Constanța County Public Finance Administration — Treasury and Public Accounting Activity, the amount of RON 929,691 was transferred into the claimant’s treasury account only on Friday, 29 December 2023, at 3:45 PM, after the Constanța Municipal Treasury’s working hours had ended. Being followed by the weekend (30-31 December 2023) and the statutory holidays of 1-2 January 2024, the first working day on which the beneficiary could actually make the payment to the supplier was 3 January 2024. The court found that, on a summary analysis, the beneficiary did not have the “objective possibility of fulfilling” the obligation to incur the expenditure by 31 December 2023, as required by the financing contract — which was sufficient, at this stage, to consider the condition of a well-justified case met, without the need for a final ruling on the merits of the finding.
Imminent damage
As to the second condition, the court took into account that the contested report constitutes an enforceable title for a budgetary claim of RON 929,691, and that its enforcement (including through enforcement measures) would seriously disrupt the beneficiary’s activity — including the risk of being unable to pay the salaries and social security contributions of the company’s 5 employees. The court considered that such damage, once caused by enforcement, would be extremely difficult, if not impossible, to remedy afterwards — even if the beneficiary were ultimately to obtain annulment of the report in the main action on the merits.
On the basis of these considerations, the court granted the request to suspend enforcement of the administrative act, ordering the suspension of enforcement of the report ascertaining irregularities and establishing budgetary claims until the case is finally resolved on the merits.
Why this ruling matters for other EU-funds beneficiaries
The case illustrates an essential principle, applicable to any company facing an audit on EU funds: challenging a report ascertaining irregularities on the merits, without a parallel request to suspend enforcement, may not be enough. Even where the substantive arguments are strong, the procedure to annul an administrative act can take many months, and throughout that time the act remains enforceable, absent a suspension.
What you can do if you receive a report ascertaining irregularities
For EU-funds beneficiaries facing a similar situation, a few practical pointers:
- Check the challenge deadline immediately. Reports ascertaining irregularities can be challenged within a short time limit, calculated from the date of communication — not from the date you actually became aware of the content.
- Assess, in parallel with the action on the merits, whether to file a request to suspend enforcement. As this case shows, a suspension can be obtained separately and more quickly than a ruling on the merits, and its practical effects — blocking the recovery of the amounts — are immediate.
- Thoroughly document the arguments on the lawfulness of the finding, including any procedural defects in the audit, incorrect classification of expenditure, or inconsistencies between the findings and the clauses of the financing contract.
- Argue and quantify the imminent damage — the court must be convinced that immediate enforcement would cause you real harm, not merely a financial inconvenience.
- Do not ignore the act and do not rely solely on administrative negotiation — statutory deadlines continue to run regardless of any discussions with the managing authority.
Conclusion
This case confirms that, in EU-funds matters, speed of reaction and procedural strategy matter just as much as the strength of the substantive arguments. A well-founded request to suspend enforcement, supported by concrete arguments on imminent damage, can protect a company from the immediate effects of a report ascertaining irregularities, giving it the time needed to make its case on the merits in court.
If your company has received a report ascertaining irregularities and establishing budgetary claims on a project financed from EU funds, response deadlines are generally short, and the consequences of delay can be irreversible.
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Is your EU-funded project currently under audit, or have you already received a report ascertaining irregularities? We can help you quickly assess the chances of a challenge and, if warranted, of a request to suspend enforcement.
Contact: Phone +40 744 475 971 | Str. Dorobanților no. 14-16, Cluj City Center, 2nd floor, room 210, 400121, Cluj-Napoca | Email horatiu@brisc.ro