Communicated on 26 November 2015

FOURTH SECTION

Application no. 36419/13 S.C. PAULUS S.R.L . against Romania lodged on 8 May 2013

STATEMENT OF FACTS

The applicant, S.C. Paulus S.R.L., is a Romanian company, which was set up in 1993 and has its headquarters in Ploie È™ ti . He is represented before the Court by Ms C.M. Vieru , a lawyer practising in Bucharest.

A. The circumstances of the case

The facts of the case, as submitted by the applicant company, may be summarised as follows.

On 17 September 2009 the applicant company submitted to the Ministry of Economy and Commerce (“the Ministry”) a proposal for an investment project concerning the construction of a factory to be financed by the State from European funds.

By a letter dated 21 July 2010 the Ministry informed the applicant company that the financing of their project had been rejected.

The applicant company challenged the rejection. By a dec ision delivered on 9 August 2010 the Ministry confirmed the rejection of its project.

A new challenge lodged by the applicant company was allowed. By a decision of 1 September 2010 the Ministry had quashed its prior decision and approved the financing of the applicant company ’ s project. It noted that due to a minor error the applicant company did not print and transmit all the documents (its business plan for the fifth year- it had the obligation to present it for seven years) although such documents were duly executed at the time the applicant company submitted the documen ts in 2009.

On 26 November 2010 the applicant company and the Ministry signed a financing contract by which the former became the beneficiary of non ‑ reimbursable funds for the implementation of its project concerning the construction of a factory. The total value of the project was 26,750,088.86 lei.

According to Article 4 §§ 6 and 7 of the financing contract the expenses incurred in connection with the acquisition of lands and buildings and the elaboration of the business plan, directly linked to the financed project and necessary for its preparation or implementation were eligible for reimbursement.

On 9 February 2011 the applicant company was informed by the Ministry that there was a suspicion about the way in which its investment project had been assessed and selected and therefore the financing contract was suspended. According to a subsequent explanatory letter sent to the applicant company on 4 May 2011, the suspension of the financing contract was the result of non-compliance by the Ministry with the procedure for the review of the challenges lodged by the applicants for non ‑ reimbursable financing against the decisions delivered in the assessment of projects ’ proposals.

On 18 October 2011 the applicant company brought administrative proceedings against the Ministry seeking to obtain the financing of its project according to the signed contract. The applicant company made an alternative request for the reimbursement of 941,929.32 Romanian lei (“RON”) representing the expenses it had already incurred in completing the project in the event that its main claim would be dismissed by the court. The applicant company submitted that the expenses it had already incurred concerned the acquisition of a land, obtaining all the authorisations and permits necessary for the operation of the factory and the payment of the consultancy services for the development of its project and the elaboration of business plans, management, as well as the architects ‘ fees.

The applicant company contended that such expenses were eligible for reimbursement according to the applicable legal provisions and Article 4 of the financing contract and were supported by invoices, copies of contracts and accounting documents.

On 12 March 2011 the court appointed an expert to establish the expenses eligible for reimbursement already made by the applicant company. According to the expert report submitted to the court on 17 April 2012 the applicant company had already incurred eligible expenses amounting to RON 941,929.32 (147,422.46 representing VAT) in the execution of the financing contract.

By a jud gment of 25 June 2012 the Ploieș ti Court of Appeal allowed the applicant company ’ s action and ordered the Ministry to continue the financing of the project. The court noted that according to the procedure for the examination of challenges against the decisions concerning the assessment and evaluation of financing projects, the commission for the examination of challenges was not allowed to cancel its own decision by which it had rejected a proposal; such a decision should have been cancelled by an administrative court. However, the court noted that the annulment of the first decision of rejection of 9 August 2010 followed by the adoption of a new decision to provide financing to the applicant company were attributable to the Ministry. The court held that the financing contract should remain in force and produce all its legal effects as its annulment of would not serve any public interest.

The court also noted that the applicant had incurred expenses in connection with the execution of its project, as proved by the supporting evidence submitted. However, the court considered that it was not necessary to examine the alternative request made by the applicant company for the reimbursement of eligible expenses as long as it allowed its main claim.

The Ministry appealed claiming that the suspension of the financing contract was justified according to the applicable regulation of the European Commission which stipulates that any irregularity committed by an economic operator causing a prejudice to the European Union ’ s budget affected the lawfulness of the financing contract.

By a final decision of 28 November 2012 the High Court of Cassation and Justice allowed the Ministry ’ s appeal on points of law and dismissed the applicant company ’ s action as unfounded. It held that the financing contract was unlawful on account of the irregularity in the procedure for the assessment and selection of the project irrespective of the liability of the contracting parties. However, without providing any reason, the court did not examine the claim lodged by the applicant company in the alternative for the reimbursement of the expenses it had already incurred.

B. Relevant domestic law

The legal framework concerning the financing of projects from European Structural Funds is set out in the Commission Regulation (EC) no. 1828/2006.

Government Decision No. 759/2007 regulates the eligibility rules applicable to expenses incurred in operations funded from European structural funds.

COMPLAINTS

1. The applicant company complains under Article 6 § 1 of the Convention that the High Court of Cassation and Justice did not rule on its claim made in the alternative to be compensated by the Ministry for the expenses it had already incurred in connection with the financing contract they had entered into.

2. The applicant company also complains that the suspension of the financing contract followed by the non-reimbursement of the expenditures it had already incurred in connection with the execution of the contract violated its rights as guaranteed by Article 1 of Protocol No. 1 to the Convention.

QUESTIONS TO THE PARTIES

1. Did the applicant company have a fair hearing in the determination of its civil rights and obligati ons, in accordance with Article 6 § 1 of the Convention, in so far as the domestic court of last resort dismissed its action without examining its claim made in the alternative for the reimbursement of the eligible expenses it had already incurred in connection with the financing contract?

2. Has there been an interference with the applicant company ’ s peaceful enjoyment of possessions, within the m eaning of Article 1 of Protocol No. 1, resulting from the suspension of the financing contract and/or from the non-examination of the applicant company ’ s claim for reimbursement of the eligible expenses by the courts of last resort? If so, was that interference justified and proportionate?