Between the devil and the deep blue sea. The CJEU case-law on financial corrections imposed by the Commission on the Member States

Abstract

Under EU law, Member States manage almost 80 per cent of funds coming from the EU budget (EU funds). To further protect these funds, the European Commission verifies if national authorities respect spending rules. If they do not, the Commission may impose financial corrections on the Member States in the areas of the Common Agricultural Policy (CAP) and cohesion policy. The Commission has imposed such corrections since 1976, and from the very beginning they served as a law enforcement mechanism in the area of EU funds. It goes without saying that the present model of financial corrections is significantly influenced by an affirmative approach of the European Court of Justice (CJEU). The functioning of financial corrections is an arena of competing interests. The Commission, acting on behalf of the European Union’s interests and protecting its funds, is usually inclined to develop rules obliging the Member States to cover illegal expenditures from their national budgets. Another perspective is taken by the Member States, who are at times inclined to disregard their responsibility for cases of improper spending, and charge them to the EU funds in order to protect their own national interests (and budgets). The CJEU is often an arbiter in this arena, acting between the devil and the deep blue sea, as it tries to protect the EU funds, but also to safeguard the interests of the Member States. This article presents and examines the role the CJEU has played, and is still playing, in relation to the adoption of financial corrections. The article discusses whether rules developed by the CJEU concerning financial corrections favour the interests of any of the parties involved.