Case C-715/26, Szabadszentkirály Község Önkormányzata – when does the clock start on an EU grant?
Recovering misspent EU money is subject to a limitation period of four years. For grant beneficiaries, the question that decides most cases is when those four years begin.
Facts
Nine village municipalities, Szabadszentkirály, Bicsérd, Királyegyháza, Szentdénes, Sumony, Pécsbagota, Zók, Velény and Gerde, are in proceedings against the Nemzeti Fejlesztési Központ (National Development Centre) before the Pécsi Törvényszék (Regional Court, Pécs). They received a grant for a project co-financed by EU and national funds in the 2014–2020 programming period, under a private-law contract with the national managing authority. In awarding the public contract to carry out the project, they failed, according to the first question, to comply with their obligation to take measures ensuring fair competition and the absence of conflicts of interest, although the contract itself did not in practice infringe the public procurement rules. The court asks how the limitation period in Article 3(1) of Regulation (EC, Euratom) No 2988/95 applies to that irregularity.
Questions Referred
1. Must the second subparagraph of Article 3(1) of Council Regulation (EC, Euratom) No 2988/95 of 18 December 1995 on the protection of the European Communities financial interests be interpreted as meaning that, where the beneficiary of a grant co-financed with EU and national funds has, during the award of the public contract to deliver the project in receipt of the grant funding, failed to comply with its obligation to take measures to ensure the fairness of competition and the absence of conflicts of interest, without that, in practice, having resulted in the public contract concluded infringing the applicable public procurement rules, the limitation period of four years established for that irregularity begins to run on the day on which the tender procedure carried out by the beneficiary concluded?
2. Must the second subparagraph of Article 3(1) of Council Regulation (EC, Euratom) No 2988/95 of 18 December 1995 on the protection of the European Communities financial interests be interpreted as meaning that the concept of ‘multiannual programme’ appearing therein refers, for the purposes of the use of aid from the different EU funds during the 2014-2020 programming period, to a specific multiannual project co-financed with EU and national funds and supported by the national managing authority acting in accordance with Regulation (EU) No 1303/2013?
3. If the answer given by the Court of Justice to the second question referred is in the affirmative, must the second subparagraph of Article 3(1) of Council Regulation (EC, Euratom) No 2988/95 of 18 December 1995 on the protection of the European Communities financial interests be interpreted as meaning that, as regards the use of aid from the different EU funds during the 2014-2020 programming period, a multiannual programme supported on the basis of a decision of a national managing authority acting in accordance with Regulation (EU) No 1303/2013 is considered to be ‘definitively terminated’, for the purposes of the limitation period, when the final deadline for payment of the eligible costs provided for in the private law contract for the support granted, concluded between the national managing authority and the beneficiary, has passed?
Sources
OJ notice C/2026/5477 (EUR‑Lex) · Case file on CURIA · Regulation (EC, Euratom) No 2988/95 · Alytaus regiono atliekų tvarkymo centras, C‑436/15 (ECLI:EU:C:2017:468) · Wrocław, C‑406/14 (ECLI:EU:C:2016:562)
Comment
Article 3(1) contains three rules on when the period runs. The basic one: four years “as from the time when the irregularity … was committed”. For “continuous or repeated irregularities”, the period runs “from the day on which the irregularity ceases”. And “in the case of multiannual programmes, the limitation period shall in any case run until the programme is definitively terminated”. The first question is about the first two rules. If the irregularity is a failure to take precautions while running the tender, it was committed, and at the latest ceased, when the tender closed. If, however, the obligation to prevent conflicts of interest is treated as lasting through the performance of the contract, the irregularity may be continuous and the clock starts later. The facts raise a further point that the question does not ask. In Wrocław (C‑406/14), under the structural funds regulation then in force, the Court held that a procurement infringement is an “irregularity” in so far as it “cannot be excluded that that infringement had an impact on the budget”. Here the contract broke no procurement rule at all.
The second and third questions have a precedent. In Alytaus regiono atliekų tvarkymo centras (C‑436/15) the Court held that a project to create a regional waste management system, implemented over several years with EU money, is a “multiannual programme”. It also held that such a programme is “definitively terminated” on the end date provided for by the rules that govern it, in that case the date set in the Commission decision approving the project for completing the work and paying the eligible expenditure. That was a Cohesion Fund project of the 2000–2006 period, approved by the Commission itself. In the 2014–2020 period, projects like the Hungarian villages’ are selected by a national managing authority and financed under a private-law grant contract. The Pécs court asks whether the same reasoning carries over, so that the payment deadline in that contract marks the end of the programme.
For beneficiaries the difference is substantial. If the project counts as a multiannual programme, the authority can recover for an irregularity at the tender stage for as long as the project lasts, however early the irregularity occurred. If it does not, the four years may have run out before anyone looked.