RASK successfully represents client in Supreme Court dispute with ARIB over financial aid.

RASK consulted Rannakalad MTÜ, a non-profit organisation, in a dispute with the Estonian Agricultural Registers and Information Board (ARIB) over the repayment of aid from ARIB for the construction of new facilities for the primary intake and cooling of fish, and the acquisition and installation of new refrigerators in a port in Pärnumaa County. ARIB sought to reclaim the aid due to inappropriate use.

The Supreme Court granted the cassation appeal brought by RASK’s client, dismissing a Tartu Circuit Court decision, which required the client to repay the 429,734 euros of aid received from ARIB for the development of port facilities in Liu.

The Supreme Court ruled that previous courts had misapplied the law by ignoring the fact that ARIB should have evaluated the fulfilment of durability requirements within a different time limit. The Supreme Court also noted that the courts had failed to establish the fact that ARIB’s decision to recover the aid constituted an abuse of discretion.

More specifically, the Supreme Court pointed out that changing the user of the facility constructed and the equipment acquired with financial aid is not sufficient basis for establishing a violation of durability requirements. The courts should also have analysed whether the activities of a third party in the facility constituted a significant change in activities considering the aim of the measure. The Supreme Court also noted that the establishment of a non-profit organisation in order to apply for aid does not indicate fraud or abuse, unless connections between the applicants exclude the grant of aid under applicable legislation. Such connections were not established in ARIB’s final decision.

The Supreme Court explained that ARIB and the courts had focused too narrowly on the complainant’s aid application, and particularly the business plan described in the application, failing to consider the aim of the measure “Sustainable development of fishing areas” provided for in Council Regulation No 1198/2006 and the European Fisheries Fund operational programme for 2007–2013. Therefore, ARIB was mistaken in its assessment that the complainant had committed a violation.

Even if all the activities described in the business plan are not carried out, the general nature of the activities can still be in accordance with the aim of the measure under which the aid is granted or contribute to the achievement of the objectives set.

The wider implications of the Supreme Court judgment include the fact that the court found that, when assessing the fulfilment of the durability requirement, ARIB should have taken into account the time limit (5 years) and conditions provided in the Council Regulation. The Supreme Court also clarified that it is the time of the financing decision, rather than the payment, that is relevant here. Therefore, the time limit for the appropriate use of financial aid is 5 years from the date of the financing decision.