![]() EU Regulations Imposing Financial Corrections by Bulgarian Public Authorities (EU)'s main investment policy established with the goal of maintaining sustainable and diverse development and economic growth stimulation in all EU states. Targeting all regions and cities in the EU, it is delivered during different programming periods through funding operations or operational programs adopted by the European Commission and financed under the European Funds. Financial corrections are measures taken by European Member states in connection with irregularities that result in financial loss, unjustified expenditures or non-target spending of the funds of or part of the public contribution, or in other words, cancelling payments to the contractors initially granted by the state. The implementation of EU regulations in the field of imposing financial corrections requires that the Bulgarian public authorities lay down procedures governing these issues so that any unjust cancelation of such payments is avoided. Nonetheless, the contemporary state rules and regulations are not comprehensive enough, which of course raises many legal issues. Until recently only a few legal acts that concern the nature of financial corrections have been in force. This is the reason why the Supreme Court has been struggling to fill that gap in the Bulgarian national legislation through its practice. The main legal issue is whether the financial correction is considered an individual administrative act imposed by a public authority OR if they are penalty payments as a result of a breach of contract between a public authority and the respective beneficiary of the funds. The answer to that question directly influences the beneficiaries' access to justice and effective legal protection upon unilateral cancelation of the payments agreed under a contract with a public authority. If the imposition of financial corrections is considered a contractual right of a public body, then the legal claim of the other party is to be filed in a civil court. If, however, as an administrative act, the case shall be under the jurisdiction of the administrative courts. Such a difference in court competence defines the amount of court taxes the claimants shall pay. The civil courts' fee is 4 percent of the claim amount while the fee of an administrative court amounts to BGN 50 (approx. 30 USD). Considering the aforementioned lack of specific regulations, the Supreme Administrative Court (SAC) has issued many awards encompassing legal analyses and interpretations on that matter. For many years it has asserted that the financial corrections are indeed a contractual right, a penalty payment as a result of breach of contract, of public bodies. It was not long before that made a radical change of SAC's opinion in several awards: on administrative case No 8672/2014 by SAC provides that "the Supreme Administrative Court has abandoned its understanding of the civil nature of these actions and understood that they are individual administrative acts." administrative case No 13877/2014 by SAC: "Considering the nature of a sanction, the act inevitably affects the interests of a party. The Managing Authority is a third non-contractual party that is empowered to impose sanctions unilaterally, thus the relationship between them is not of law, European Union law and administrative law. corporate law, commercial law and labor law. 7, Pozitano Str. Sofia, Bulgaria 1000 kyosev@lexlocus.com lexlocus.com |