Case C-158/06, Stichting ROM-projecten

>> The Court today held that the principle of legal certainty can preclude repayment by beneficiary of financial assistance wrongly paid, provided that it is possible to establish the beneficiary’s good faith.

>> In such a case, the Member State concerned may be held financially liable for the amounts not recovered.

The main question in Case C-158/06 was whether Community law precluded a Member State from refraining from recovering financial aid, and relying for that purpose on the principle of legal certainty, when the material irregularity on the part of the beneficiary of the aid was based on a Community provision which was neither communicated to the beneficiary nor published.

The reference was made in the context of proceedings between a foundation established under Netherlands law, Stichting ROM-projecten and the Staatssecretaris van Economische Zaken (Secretary of State for Economic Affairs), concerning the cancellation and request for repayment of financial assistance granted within the framework of the Community initiative in favour of small and medium‑sized enterprises.

The Court held that, in the absence of provisions of Community law, disputes concerning the recovery of amounts wrongly paid under Community law must be decided by national courts in application of their own domestic law, subject to the limits imposed by Community law, on the basis that the rules and procedures laid down by domestic law must not have the effect of making it practically impossible or excessively difficult to recover the aid not due and that the national legislation must be applied in a manner which was not discriminatory as compared to procedures for deciding similar national disputes (see e.g.
Joined Cases 205/82 to 215/82 Deutsche Milchkontor and Others [1983], Case C‑366/95 Steff-Houlberg Export and Others [1998], and Case C‑336/00 Huber [2002]).
Accordingly, it could not be regarded as contrary to Community law for national law, as far as the cancellation of administrative measures and the recovery of sums wrongly paid by public authorities were concerned, to take into account, in addition to the principle of legality, the principles of the protection of legitimate expectations and legal certainty, since those principles form part of the legal order of the Community.

The Court also reiterated that the principle of legal certainly required that Community rules enabled those concerned to know precisely the extent of the obligations which were imposed on them (see e.g.
Case C‑255/02 Halifax and Others [2006]).

It held that individuals must be able to ascertain unequivocally what their rights and obligations were and take steps accordingly.

That imperative of legal certainty must be observed all the more strictly in the case of rules liable to have financial consequences (see
Case C‑94/05 Emsland-Stärke [2006]).

The Court stated that in the present case, it was clear that the ultimate beneficiary of Community financial assistance was not in a position to ascertain unequivocally what its rights and obligations were.

In such a situation, characterised by the ultimate beneficiary’s lack of knowledge of the conditions laid down in the grant decision, the principle of legal certainly precluded reliance on those conditions against that beneficiary.

That beneficiary was, however, in a position to challenge the cancellation and request for repayment only if he acted in good faith as regards the regularity of the use to which the financial assistance was put. It was for the national court to consider whether that condition had been fulfilled (see, to that effect
Case C‑298/96 Oelmühle and Schmidt Söhne [1998]).

The Court concluded that in a situation such as that in the case in the main proceedings, where non‑repayment of the assistance by the beneficiary was due to the negligence of the national authorities, it followed from the principle of cooperation laid down in Article 10 EC that the Member State concerned might be held financially liable for the amounts not recovered in order to give effect to the Community’s right to obtain repayment of the amount of the assistance.

Text of Judgment