Abstract
The definition of the national situations that are covered by the scope of EU law for the purpose of applying EU fundamental rights is not an easy task. Therefore, it will be sometimes difficult for Member States and individuals to understand to what extent national action is constrained by EU law. The difficulties in drawing the line between what is in or out of the scope of EU law are amplified by the diversification of EU law making by EU institutions, which brings new situations in the border area. This trend in particularly remarkable in the field of governance through funding, which is now entering a new phase of its evolution. The use of EU funds, where old and new forms of EU law and governance are combined, constitutes the perfect testing ground to analyse the current reach of EU fundamental rights to national situations and, consequently, the limitations imposed on national actors implementing EU law.
Keywords
Introduction
The definition of the scope of EU law for the purpose of applying EU fundamental rights is part of the endless effort to draw the constitutional balance between the Union and the Member States. 1 When a given national situation is considered as falling within the scope of EU law, the Member States will be bound by EU fundamental rights, protected by the Charter of Fundamental Rights of the EU (hereinafter ‘the Charter’) and the general principles of Union law. 2 By contrast, when a national situation is not sufficiently linked to the scope of EU law, the Member States will only apply national standards of protection and the Court of Justice will not have jurisdiction to control the respect of EU fundamental rights. The identification of the national situations that are covered by the scope of EU fundamental rights has never been an easy task, as demonstrated by the vast amount of case law on the matter. 3 In fact, a simple EU ‘presence’ may not be sufficient to trigger the application of EU fundamental rights’ standards. The Court of Justice has clarified that the application of the Charter to the Member States essentially depends on the quality of the link between an act of EU law and a national measure. This link must be sufficiently strong to activate fundamental rights protection at EU level.
The EU has always had a strong legal character and has driven policy change in the Member States mainly by law and rules. 4 The latter are traditionally identified as the ‘linking factor’ which allows to activate the application of EU fundamental rights. For example, every time the EU exercises a new competence and adopts new legislation, the scope of EU law also broadens and, consequently, new situations may come within the scope of the Charter and lead to case law before the Court of Justice. In recent years, however, the EU has developed a tendency ‘towards using financing rather than rulemaking to influence how European Member States work’. 5 EU Member States are currently making use of a large amount of EU funds combining the European Structural and Investment Funds (hereinafter ‘ESI funds’) and the newly created Recovery and Resilience Facility (hereinafter ‘RRF’), which is the main piece of Next Generation EU, the new programme adopted by EU institutions in reaction to the pandemic crisis. Both ESI and RRF funds cover a rather vast array of policies and are increasingly used as a tool to incentivize Member States’ reforms. The phenomenon whereby the EU uses funding to strengthen EU integration and advance EU objectives is here defined as ‘EU governance through funding’. 6 Despite the important role that EU funds may play in shaping national policies, the link between EU funds and national measures may not be always sufficient to trigger the application of EU fundamental rights and judicial review before the Cour of Justice. The special way in which EU funds are delivered and implemented makes it more difficult to connect national measures and reforms to the ‘original’ EU law source. Is it sufficient, for example, that a national measure is financed with EU money to oblige the Member States to respect EU fundamental rights?
The present paper aims to examine the consequences of the increasing use of EU funding for the scope of application of EU fundamental rights and the perspectives of judicial review of national measures implementing EU funds in light of EU fundamental rights. To this end, section 2 will summarize the state of the debate on the scope of application of EU fundamental rights in the literature and the case law of the Court of Justice. Sections 3 and 4 will describe the phenomenon of ‘EU governance through funding’ and deal respectively with the ESI funds and the RRF funds. Section 5 will analyse the role of EU funds in shaping the scope of EU law and the limits of judicial review in light of fundamental rights in the implementation of EU funds. Section 6 concludes. The paper demonstrates that the development of new forms of EU law making, such as the use of EU funds, creates a mismatch between the evolution of the EU legal order in certain fields and the criteria to apply EU fundamental rights. While the increasing use of EU funding to shape national policies redraws the lines defining the scope of application of EU fundamental rights, it does not always allow to activate judicial review before the Court of Justice.
EU fundamental rights as second-order sources and the quality of the link to EU law
Despite the abundant case law on the matter and the entry into force of the Charter more than 10 years ago, the definition of the scope of EU fundamental rights (intended as the Charter and the general principles of Union law) continues to be a highly debated issue. 7 Pursuant to Art. 51(1) of the Charter, EU fundamental rights apply to the EU institutions and bodies, and to the Member States only when they are implementing Union law or – according to the interpretation of the Court of Justice – ‘when they are acting within the scope of Union law’. 8 Despite the broad formula used by the Court, the applicability of the Charter will depend on the quality of the applicable EU law. In other words, Member States are bound by fundamental rights when ‘they fulfil their obligations under the Treaties as well as under secondary law (adopted pursuant to the Treaties)’. 9 More particularly, the obligation that triggers EU fundamental rights must be a ‘specific obligation imposed by EU law to the Member States’. 10 Therefore, a certain degree of intensity is needed for a national situation to be considered as sufficiently covered by EU law to trigger EU fundamental rights protection. In Siragusa, the Court established that ‘the concept of implementing Union law, as referred to in Article 51 of the Charter, requires a certain degree of connection above and beyond the matters covered being closely related or one of those matters having an indirect impact on the other’. 11 In other words, the link between EU law and the national measures must be sufficiently tight to justify the application of fundamental rights protected at the EU level. Another useful way to apprehend the scope of EU fundamental rights – besides the (specific) obligation criterion – is to look at the Charter and the general principles of Union law as ‘second-order sources’. 12 In the words of Dougan, ‘[the Charter and the general principles] only become even potentially applicable to a national measure once the situation at hand is brought within their scope of application by reference to some first-order provision of Union law (be it a Treaty provision, regulation or directive)’. 13 The first-order provision acts as a triggering rule that will allow the system of fundamental rights protection to shift from the national level to the EU level.
Considering the above, it can be argued that, to establish whether a fundamental right applies to a certain national measure, it is necessary to verify whether the Member State in question is bound by a specific obligation contained in a first-order source of EU law. But when is a situation sufficiently linked to the scope of EU law to trigger the application of fundamental rights? And what kind of source can be considered as imposing an obligation to the Member States? The answer to these questions might be easy to provide in those situations where it is clear and uncontested that a specific obligation is imposed to the Member States: this is the case, first, when the Member States implement a regulation or transpose a directive and, second – in line with settled case law of the Court of Justice – when the Member States derogate to one of the four fundamental freedoms within the internal market. 14 Besides those two situations, which constitute the ‘core’ of the scope of application of EU fundamental rights, 15 the identification of a specific obligation imposed by EU law is not so straightforward. The Court is continuing to shape more detailed rules in this respect. For example, the Court recognizes the exercise of discretionary power granted by an act of EU secondary law as a form of implementation of EU law for the purpose of the application of EU fundamental rights. 16 Nevertheless, when an EU directive merely recognizes to the Member States the possibility to apply more favourable provisions than the EU legislation which is constitutive of minimum harmonization, the Member States acting in this framework will be considered as acting outside the scope of EU law. 17
Looking at the scope of EU law from the perspective of fundamental rights’ justiciability allows one to better understand the different shades of constraint that EU law imposes on the Member States. They will depend on the quality of legal effects produced by the triggering rule or, in other words, by the quality of the link between the triggering rule and the action of the Member States. When the first-order source is particularly strong, Member States’ action will certainly be limited by the respect of EU fundamental rights. However, when EU law requirements are more diffuse, it will be more difficult to situate the boundaries of fundamental rights’ applicability under EU law. The delimitation of the scope of EU fundamental rights becomes more difficult when softer obligations induce very important legal consequences in the Member States, with the result that they act under the influence of EU law without the possibility of activating judicial review at the EU level, thus creating a mismatch between the evolution of the EU legal order in certain fields and the criteria to apply fundamental rights. It is not clear, for example, to what extent a soft law source constitutes a sufficient link to impose the respect of fundamental rights in the Member States. The measures enacted by the EU in the field of economic policy coordination are particularly well suited to explore such difficulties. The acts adopted in this framework are often not binding or have a hybrid hard/soft law nature, 18 raising questions as to whether their implementation may trigger the application of EU fundamental rights. That is why economic policy coordination and fundamental rights have been sometimes described as having an ‘antagonistic relationship’. 19 In some situations, it is not the nature of the EU source but the technique of EU law making used which makes it difficult to understand whether Member States are acting within the scope of EU law. In other words, even though the final act of EU law is a traditional binding act, the technique of EU law making according to which that act is adopted creates some uncertainties regarding the specific obligations imposed on the Member States. This is particularly evident, as will be shown in the following sections, in the framework of the implementation of EU funds.
The evolution of ESI funds towards a broader understanding of cohesion policy and an increasing use of conditionality
The evolution of cohesion policy: From a sectoral policy to a wider instrument to drive reforms in the Member States
The EU cohesion policy aims to achieve social, economic and territorial cohesion in the EU, as established in Art. 174 TFEU. At the outset, it has been introduced to support the process of economic integration and reduce disparities between the Member States. 20 The creation of the EU cohesion policy dates to the 1970s when the European Regional Development Fund was introduced next to the European Social Fund. 21 Those funds mainly served to finance infrastructure investments and foster job creation in less developed regions. 22 At present, the European Structural and Investment (ESI) funds constitute one of the two programmes absorbing most of the EU budget, together with the Common Agricultural Policy (CAP) funds. 23 In 1988, the legal framework of ESI funds has been reformed significantly. At that time, a ‘strategic approach’ was introduced, whereby spending priorities were established for multiannual periods to align the objectives of cohesion to more general European policy strategies. 24 Since then, the strategy for the spending of ESI funds has been set every seven years in interinstitutional agreements on financial perspectives and, since 2013, in the Multiannual Financial Framework (MFF) and the Common Provisions Regulation (CPR). 25 Furthermore, the principles of subsidiarity, proportionality and additionality have been explicitly considered as applicable to EU funds. According to these principles, ESI funds cannot replace national funding and should be used only when cohesion policy objectives cannot be achieved by the Member States – due to regional disproportions and lack of financial resources – and can be better achieved at the EU level. 26 In 2013, the system of ‘partnership agreements’ was introduced, whereby the spending priorities of each Member State are included in a strategic document laying the ground for investments from EU cohesion funds, which is prepared by the Member States and approved by the Commission through an implementing act. 27 The spending period 2013–2020 has also been characterized by a wider use of conditionality. Following the so-called ‘Barca report’, 28 a system of ex-ante conditionalities has been introduced to improve the performance of cohesion policy. 29 In the MFF for the period 2021–2027, ESI funds represent more than 30% of the EU budget. They are regulated by the Common Provisions Regulation and fund-specific regulations laying down specific rules related to each fund. Over time, new spending programmes have been introduced under the umbrella of cohesion and are currently regulated by the CPR. The latter currently sets common rules for eight funds: the European Regional Development Fund (ERDF), the European Social Fund Plus (ESF+), the Cohesion Fund (CF), the Just Transition Fund (JTF), the European Maritime, Fisheries and Aquaculture Fund (EMFAF), the Asylum and Migration Fund (AMIF), the Internal Security Fund (ISF) and the Border Management and Visa Instrument (BMVI). As one can grasp by looking at the names of the funds, the current composition of funds covered by the CPR includes spending programmes which go well beyond the strict understanding of ‘cohesion policy’. 30 In addition to the objective of reducing disparities between the Member States, ESI spending programmes aim at inducing structural reforms in a wide range of policy areas including employment, social policy and education; migration management; the fight against terrorism, radicalization, serious and organized crime and cybercrime; and support to the Member States most negatively impacted by the transition towards climate-neutrality. That might also be the reason why the ‘ESI’ acronym is not used anymore in the 2021 Regulation, which refers more generally to ‘EU funds’. The new spending period is also marked by the transformation of ex-ante conditionalities into enabling conditions. The main difference between enabling conditions and their predecessors is that the Commission will now have to verify the respect of the applicable prerequisites not only before delivering the reimbursements but throughout the whole process, from programming to implementation. As shown by this rapid overview, the history of cohesion policy is characterized by a shift from a sectoral policy aimed at reducing disparities between Member States to a wider instrument to drive reforms in the national legal orders. 31 This trend is further confirmed, as will be explained in section 4, by the adoption of the new Recovery and Resilience Facility.
The governance of ESI funds: A system of multilevel governance based on shared management and the partnership principle
The governance of ESI funds is based on two fundamental principles: the shared management principle and the partnership principle. 32 According to the shared management principle, ESI funds are implemented in a system of multilevel governance, involving EU and national actors, as well as regional and local authorities. The beneficiaries of the money can be public or private bodies, entities with or without legal personality and natural persons. 33 The Commission is competent to give general guidelines and directions to the Member States and it guides the programming phase, while the Member States take the lead in the proper implementation phase of EU funding. 34 Therefore, while the Member States enjoy a wide margin of discretion and will use their administrative structures and procedures, they will nevertheless be subject at all stages to the monitoring of the Commission and bound to the respect of EU law obligations. The partnership principle is complementary to the shared management principle and constitutes a practical implementation of multilevel governance and subsidiarity. It finds expression through the preparation of partnership agreements. 35 The partnership agreements are subject to an assessment by the Commission, which will evaluate not only the respect of its guidelines and the conditionalities, but also the country-specific recommendations addressed to the Member States in the framework of the European Semester. 36 The result of the Commission's evaluation is an implementing act endorsing the partnership agreement. 37 The partnership agreements are defined as strategic documents, and it is not clear whether they have binding nature. 38 The implementing acts endorsing them are certainly binding legal acts, but their content is determined through a hybrid process involving both EU and national actors. 39 After the programming phase, the Member States will oversee concrete implementation and establish monitoring committees, certifying authorities and audit authorities according to their national rules. 40 Also in this framework, while enjoying a margin of discretion, they will always be under the scrutiny of the Commission. 41 Therefore, whilst the proper implementation of projects and reforms is in the hands of the Member States, the latter develop a permanent dialogue with the Commission. The dialogue has been recently strengthened by the introduction of the new system of enabling conditions, which allows the Commission to intervene in any stage of the process and, if necessary, suspend EU funds.
The role of the new enabling condition related to the Charter
The new Common Provisions Regulation adopted in 2021 contains important developments about the protection of fundamental rights in the implementation of EU funds. Art. 9 CPR explicitly provides that Member States and the Commission shall comply with the Charter in the implementation of the Funds, ensure equality between men and women and gender mainstreaming and take appropriate steps to prevent any form of discrimination. It is the first time that a reference to the Charter is included in the legislation on ESI funds in such explicit terms, even though the inclusion of fundamental rights considerations in the framework of the implementation of EU funds is not entirely new. The Member States were already obliged to respect the Charter in the implementation of EU funds. In 2016, the European Commission published a Commission notice concerning guidelines on the Charter's applicability in the framework of the implementation of EU funds. 42 In its guidelines, the Commission made it clear that the Charter and the general principles of EU law bind Member States at all stages of the procedure: (1) in the programming phase, when Member States establish their intervention strategy and draw up the programmes; (2) in the setting-up phase, when the Member States designate the structures and procedures required under the Common Provisions Regulation for management, monitoring and control of ESI funds; and (3) in the implementation phase, when local authorities select the operations that will receive funding. Many fundamental rights may be affected during the process, including the right to non-discrimination in the selection of beneficiaries, the right of persons with disabilities, the right to equality between women and men and the right to an effective remedy. In the previous spending period, however, ex-ante conditionalities included only the respect of equality, non-discrimination and the protection of persons with disabilities. 43
The obligation of Member States to respect fundamental rights while implementing EU funds has been reinforced by the new system of horizontal enabling conditions which, as anticipated, are to be monitored throughout the whole programming and implementing process. The new CPR contains four horizontal enabling conditions which are related to: public procurement, state aid, the application of the Charter and the implementation of the United Nations Convention on Persons with Disabilities. In a nutshell, when preparing a spending programme or any programme amendments, Member States shall assess whether they comply with the horizontal enabling conditions and provide a justification for their assessment. 44 The Commission monitors the fulfilment of such conditions and, if it seems that criteria are not fulfilled, it does not authorize the reimbursement of funds. 45 Throughout the programming and implementation phase, the monitoring committees and managing authorities are tasked with verifying compliance. 46 The new enabling condition related to the Charter substantially enlarges the scope of funding conditionality since it refers to the Charter in its entirety. Moreover, the new system has removed the applicability threshold and the proportionality requirement which allowed excluding the application of previous ex-ante conditionalities in cases in which their fulfilment has a small impact on the achievement of specific spending objectives.45 Although is too soon to assess the concrete impact of this innovation, the new enabling condition undoubtedly constitutes a significant tool for ensuring compliance of EU funds implementation with fundamental rights, as also stressed by the Fundamental Rights Agency (FRA) in a recent report. 47 The agency pinpoints that such progress comes along with considerable challenges for the Member States due to the finding that national authorities still do not have the necessary expertise and resources to verify the correct application of the Charter. 48 Despite these challenges, the new enabling condition has already produced some important results. In almost all partnership agreements concluded with the Member States, there is at least a reference to the need to respect fundamental rights and measures taken in this direction. 49 Moreover, the Commission has already undertaken several actions of suspension of ESI funds for non-compliance with the horizontal enabling condition related to the Charter, mainly against Poland and Hungary. Around €76 billion of cohesion funds destined for Poland have been suspended after the Polish authorities themselves declared that they do not comply with the enabling condition related to the Charter. 50 The Commission has recently communicated that the immediate and recent steps taken by Polish authorities to address the issues related to judicial independence are laying the ground for the release of these funds. 51 Regarding Hungary, the Commission suspended €22 billion of funds in December 2022 due to several concerns regarding the child protection law, indirectly discriminating against LGBTIQ people, as well as serious risks to academic freedom and the right to asylum. 52 In December 2023, however, €10 billion was unlocked on the ground that the Hungarian judicial reforms addressed the issues of judicial independence. 53 This decision has been strongly criticized by the European Parliament, which has announced its intention to sue the Commission before the Court of Justice. 54
In sum, the variety of policy areas touched by EU funding programmes has increased over time. Moreover, funding conditionality is becoming a powerful instrument to promote and enforce EU fundamental rights. While the impact of the new enabling condition is not yet fully measurable, it has certainly made more visible the fact that the Charter plays an important role in the framework of the implementation of EU funds.
The creation of RRF funds and the blending between cohesion policy and economic governance
In this section, the RRF funds, which constitute another ‘block’ of EU funds currently implemented by the Member States, will be analysed. The RRF must be analysed separately because it is not part of the ‘ordinary EU budget’, being the NGEU programme an instrument adopted ‘off-budget’. Despite some differences, the RRF is related to the other spending programmes in several respects. After explaining the functioning of the RFF and its specific features, the link between this programme and EU fundamental rights will be discussed.
The RRF and its entanglement with the European Semester cycle
The RRF is the main piece of the Next Generation EU plan, adopted by the EU in reaction to the Covid-19 crisis. 55 NGEU is essentially a very large pot of money (around €750 billion), borrowed by the Commission on behalf of the EU on financial markets and disbursed via different EU spending programmes. The RRF is one of those programmes and represents 90% of the total NGEU envelope. 56 The legal basis used for its adoption is Article 175(3) TFEU, which allows the EU institutions to take action outside the framework of structural funds to support the cohesion policy. 57 Thus, while the RRF has been adopted in the framework of the reaction to a crisis, it is not based on a ‘crisis legal basis’. 58 Moreover, while being a cohesion instrument, it is also characterized by its imbrication with the European Semester cycle. 59 In fact, to receive funding from the RRF, national governments will have to submit national recovery plans at the same time as national reform programmes in the framework of the European Semester. 60 The European Semester is the main instrument through which the EU coordinates the economic policies of the Member States. The instrument of coordination of national policies started gaining popularity in the late 1990s with the development of the so-called Open Method of Coordination and has consolidated with the creation of the European Semester in 2011. The use of ‘new governance methods’ was considered an alternative to the paradigm of integration through law, meaning integration achieved via binding legal rules adopted according to the classical community method. The Semester process presents the same configuration as the one that applied to OMC processes: the Member States receive EU-level guidance, they submit their national plans, the national plans are evaluated and give rise to country-specific recommendations which will steer national change in a vast array of policy areas. 61 The RRF, while being a cohesion instrument, can be situated within the evolution of the economic policy coordination framework and the European Semester. It has been argued that Semester has been chosen as a framework for the RRF precisely because it is ‘not too hard and not too soft’, thus leaving ample margin of manoeuvre to national authorities in their policy choices. 62 However, the Semester has been ‘reinforced’ via the entanglement to the RRF, as the material scope of policy areas covered has broadened and the recommendations addressed to the Member States have become more specific and detailed. 63
The governance of RRF funds: Sui generis direct management and the Euro-national planning method
The money channelled via the RRF have been borrowed by the Commission on behalf of the EU on the financial markets owing to an operation of ‘legal engineering’. 64 These funds must serve a series of reforms and investments decided in agreement between the Commission and the Member States. The measures are contained in recovery plans which are approved by the Commission and endorsed by the Council via implementing decisions. 65 Moreover, the funds are implemented in direct management by the Commission. It has been observed, however, that the RRF is a sui generis version of direct management because the beneficiary is not a natural person or entity, but a Member State. 66 Therefore, the Commission relies on the Member States’ systems of audit and control almost as in shared management. 67 The payment of RRF funds is submitted to the achievement by each Member State of milestones and targets contained in the plans, with the former being qualitative achievements and the latter being quantitative achievements. 68 The governance method of the RRF has been defined as a ‘euro-national method of government’ 69 or as a ‘planning method’, 70 whose main feature is the co-construction of national policies between the supranational and the national level. The new system, however, marks a deviation from the top-down approach of previous programmes of conditionality adopted during the Eurozone crisis and represents a ‘new mode of policy making’ marked by increased national ownership. 71 Whilst the nature of the new method allows rejecting criticism of the ‘coercion’ of EU intervention, 72 it is also true that this system allows the EU to strongly steer national change by stimulating structural reforms and legislative change in a vast array of policy areas. The important role played by the Commission and the Council, as well as the large scope of measures implemented in the Member States according to the plans, raise important questions about the clear definition of obligations imposed to national authorities on the basis of this hybrid EU-national procedure. The same considerations made above for ESI funds also apply here: the recovery plans have an uncertain legal nature, but they are endorsed in a binding implementing decision adopted by the Council on a proposal of the Commission. 73 Their content – although generic – is established in a process of exchange between the EU and the Member States and will be crucial to guide national reforms.
The place of fundamental rights in the new RRF
Contrary to the Common Provisions Regulations, which regulates ESI funds examined in section 3, the Recovery and Resilience Facility does not mention the Charter of Fundamental Rights of the EU. However, fundamental rights find their way into the new RRF through other means.
First, the RRF contains several references to the European Pillar of Social Rights. The recovery plans prepared by the Member States should take into account the Pillar and contain specific measures aimed at contributing to the implementation of its principles.
74
Moreover, when undertaking its assessment of the plans, the Commission will have to carefully consider: whether the recovery and resilience plan is expected to effectively contribute to strengthening the growth potential, job creation, and economic, social and institutional resilience of the Member State, contributing to the implementation of the European Pillar of Social Rights, including through the promotion of policies for children and the youth, and to mitigating the economic and social impact of the Covid-19 crisis, thereby enhancing the economic, social and territorial cohesion and convergence within the Union.
75
Second, the new Regulation on a general regime of conditionality for the protection of the EU budget (hereinafter ‘the Conditionality Regulation’), adopted in 2021, applies to the RRF funds. This Regulation aims at protecting EU financial interests against breaches of the rule of law which affect or seriously risk affecting the financial management of the EU budget or the financial interest of the Union ‘in a sufficiently direct way’. 76 While the Regulation specifically concerns breaches to the rule of law, this concept also includes EU fundamental rights such as the principle of effective judicial protection. 77 The Conditionality Regulation is the result of a compromise reached during the legislative process between the original proposal of the Commission, which aimed to protect the rule of law tout court, and those who wanted an instrument which protects the EU budget first, particularly when its integrity and use are threatened by breaches of the rule of law. 78 The latter interpretation has now been validated by the Court of Justice in the two famous judgments on the actions for annulment brought by Hungary and Poland. 79 The Conditionality Regulation seems to have less potential as an instrument for the protection of fundamental rights when compared to the enabling condition contained in the Common Provisions Regulation. 80 So far, the former instrument has only been activated against Hungary and led to the suspension of €6.3 billion of cohesion funds. 81
Finally, rule of law reforms have been integrated among the RRF milestones to be achieved by several Member States. This was for instance the case in the national plans adopted for Italy, Bulgaria and Greece, 82 and the recovery plans of Hungary and Poland even include ‘super milestones’ related to rule of law reforms without which no payment under the RRF will be allowed. The Hungarian recovery plan contains 27 rule of law ‘super milestones’, which essentially correspond to the commitments to be undertaken by Hungary in the framework of the Conditionality Regulation. Regarding Poland, the two ‘super milestones’ essentially concern the independence of the judiciary and were considered as fulfilled by the Commission in February 2024. 83
Besides the tools described above, the possibilities of external control of the respect of EU fundamental rights in the implementation of RRF funds remain very limited. The RRF is entangled with the European economic governance framework and shares with it the same characteristics. The requirements contained in the recovery plans, likewise the instruments adopted in the framework of the European Semester, are very broad and generic. 84 Moreover, the nature of the requirements contained in legal acts such as the recovery plans is not very clear. Once again, the blending between the Member States and EU institutions – mainly the Commission – in the process of law making raises the question of the autonomy of Member States in the implementation of measures financed by the EU.
EU funds as a means to bring a situation within the scope of EU law and the limits of judicial review before the Court of Justice of the EU
The previous sections have aimed to explain the peculiarities of EU funding governance, with a special focus on their contribution to the protection of EU fundamental rights. Understanding the specificities of EU funds’ implementation is fundamental to understand what role the Court of Justice can play in this respect. This section aims to shed light on the role of the Court of Justice to review the action of Member States implementing EU funds in light of EU fundamental rights. In fact, little attention has been given to this dimension in the literature. 85 And yet the debate on the scope of EU fundamental rights has mainly focused on the justiciability of national situations before the Court of Justice. That is because, as recalled in section 2, it is the role of the Court of Justice to assess whether a national situation is sufficiently covered by Union law to apply EU fundamental rights.
The obligation to respect EU fundamental rights falls in the first place on administrations and authorities which are to apply fundamental rights when acting within the scope of Union law. Moreover, the fact that a situation is covered by Union law also activates the mandate of the FRA to assess compliance with EU fundamental rights. 86 The Court of Justice, however, has the final say on the interpretation of what falls within the scope of Union law. Notwithstanding the importance of the control of the Court of Justice, it appears that in some situations, which fall within the scope of EU law or are strongly related to EU law, the specific EU act or the peculiar technique of EU law making has not been sufficient to activate the jurisdiction of the Court. In this respect, it is interesting to look at the case law connected to EU funding. I will analyse below two cases which represent two main scenarios in which national measures implementing EU funds have been subject to the scrutiny of the Court of Justice: the Liivimaa case and the Poclava case. Liivimaa concerns a typical situation of funds implementation, corresponding to one of the cases outlined by the Commission in the 2016 Guidelines mentioned above. 87 The case involves an operational programme between Latvia and Estonia to promote European territorial cooperation, adopted under Regulation No 1083/2006 (the Common Provisions Regulation in force at the time). In the framework of this operational programme, a monitoring committee, set up by the Member States, adopted a ‘programme manual’ containing more detailed provisions on the implementation of the operational programme. The Court of Justice was asked to rule on whether the CPR, read in light of Art. 47 Charter, precluded a provision of a programme manual according to which the decision of the monitoring committee rejecting an application for funding cannot be subject to an appeal. 88 The Court of Justice ruled that a monitoring committee is not an institution or body of the Union, therefore the Court has no jurisdiction to rule on the validity of the programme manual in the framework of an action for annulment or a preliminary ruling. 89 However, this does not mean that the situation falls outside the scope of EU law. The adoption of the programme manual was considered by the Court of Justice as an act of implementation of EU law by the Member States. 90 Indeed, the two Member States in question were required by national law to implement the operational programme and set up a monitoring committee in compliance with the CPR. 91 Therefore, the Court concluded that the CPR, read in conclusion with the Charter, precludes a provision of a programme manual which does not provide that a decision of the monitoring committee rejecting an application for aid can be subject to appeal before the Court of a Member State. 92 The Livimaa case can be contrasted with Poclava, in which the Court of Justice came to the opposite conclusion, although in a different setting. 93 Poclava was a Bolivian national working in a hotel company in Spain with a full-time employment contract which may be co-financed by the European Social Fund. When Poclava was informed that she did not meet expectations during the probation period of one year established by the contract and was not employed any more, she contested the decision of dismissal before the referring Spanish court. The latter asked the Court of Justice whether the Spanish legislation at stake was contrary to Article 30 of the Charter and to Directive 1999/70. Before delving into the merits of the case, the Court had to rule on whether the situation was to be considered as falling within the scope of EU law. The reasoning of the Court is very didactic in this case, and it is thus worth analysing it in detail to understand how the Court of Justice determines whether a situation falls within or outside the scope of the application of EU fundamental rights. Firstly, the Court examines whether the situation constitutes an implementation of an EU act of secondary law (Directive 1999/70 in this case). If so, this would be one of the ‘core’ situations in which the Charter is without doubt applicable. 94 However, the Court concludes that the Spanish national legislation at stake does not regulate fixed-term contracts and therefore does not fall within the scope of the Directive. Secondly, the Court answers the question of whether the situation is linked to the scope of EU law by reference to primary law provisions, in particular Arts. 148 and 151 TFEU. In its reference for a preliminary ruling, the Spanish court had argued those provisions of EU law support a finding that the legal situation at stake falls within the scope of EU law. 95 This is an interesting point since it is not always clear to what extent a provision of the Treaties is alone sufficient to trigger EU fundamental rights. According to the Court, these provisions set out the objectives of the European Union and the Member States in the field of social policy but do not impose any specific obligation with respect to probationary periods in employment contracts. 96 Certainly, the termination of the employment contract is one of the means of attaining the objectives laid down in Art. 151 TFEU and the EU legislature has competence in this field. However, if the situation is not covered by measures adopted on the basis of those provisions, the national situation will not be sufficiently linked to the scope of EU law. The reasoning of the Court could have stopped here. However, the Court added that ‘the fact the contract […] may be financed by structural funds is not sufficient, in itself, to support the conclusion that the situation at issue in the main proceedings involves the implementation of EU law for the purposes of Article 51(1) of the Charter’. 97 This was unprecedented at the time since the Court had never taken a stance on the use of EU funds as an ‘independent’ means to bring a situation within the scope of EU law. Vita and Podstawa have defined this decision as ‘in line with the obligation-based analysis’ but ‘counter-intuitive’, since the main reason why the Charter is not applicable seems to be the EU governance model under which EU funds are delivered, in particular in the framework of social and employment policy. 98
Generally, EU funds are only deemed to influence the Member States’ policy making, without imposing any specific obligations. However, this is in contrast with the important implications that EU funds’ implementation may have from a fundamental rights perspective. While it is true that the implementation of EU funds falls under Member States’ administrative autonomy, the funded actions are still perceived as EU acts at national level. 99 It is very difficult to draw a general conclusion from the Poclava case, given that no similar cases have been brought before the Court. Moreover, it is not clear whether the conclusion of the Court has been influenced by the specific policy area or by the fact that the employment contract was only potentially financed by EU structural funds. Furthermore, one may wonder whether the Court would take the same stand today. In particular, looking at a subsequent judgment such as Florescu, 100 it may be questioned whether the legal reasoning adopted by the Court in the Poclava case could be applied to the implementation of EU funds in this new framework created by the blending of cohesion and economic governance. The Florescu case concerns the implementation of a Memorandum of Understanding (MoU) concluded between the Commission and Romania in the framework of a financial assistance programme during the financial crisis. It was questioned whether the national laws adopted by Romania to fulfil its commitments under the MoU constitute an implementation of EU law in light of Article 51(1) Charter. Surprisingly, the Court of Justice concluded that Member States are bound by the Charter when they implement a MoU providing for financial assistance. 101 In its judgment, the Court describes a MoU as giving ‘concrete form to an agreement between the EU and a Member State on an economic programme, negotiated by those parties, whereby that Member State undertakes to comply with predefined economic objectives in order to be able, subject to fulfilling that agreement, to benefit from financial assistance from the EU’. 102 Therefore, legislation that aims at reducing the public sector wage bill to comply with requirements established in the Memorandum of Understanding (MoU) constitutes an implementation of EU law. According to the Court, these requirements are ‘sufficiently detailed and precise’. 103 Dermine and Markakis have argued that the relevant factor in this case is not the level of detail of precision but rather the binding nature of the triggering rule. 104 In fact, the Court refers to the MoU as ‘mandatory’ 105 for Romania, where mandatory would mean ‘binding in nature’. The Florescu case seems to imply that the implementation of commitments which are necessary to receive financial assistance is not in principle excluded from the situations of implementation of EU fundamental rights. Despite the differences between the context of financial assistance in the framework of the economic crisis, the rationale of the Florescu judgment could be considered as another step to the reasoning in Poclava, and applied the acts concluded between the Commission and the Member States – and then endorsed by the Council – in order to implement funding received from the RRF. In fact, as outlined by Fromont, the recovery plan equally be qualified as ‘acte unilatéral négocié’ 106 with a quasi-contractual nature. 107 The same consideration can be made for the partnership agreements concluded between the Member States and the Commission in the framework of the cohesion policy. It is to be acknowledged, however, that partnership agreements and recovery plans differ from MoUs when it comes to the specificity of requirements contained in these acts. The latter remain quite generic, making it more challenging to argue that they contain sufficiently detailed and precise obligations and extend judicial review of Member States’ action implementing EU funds.
Conclusion
This paper has shown that the criteria to allow judicial review in light of EU fundamental rights are difficult to apply when it comes to the development new forms of EU law making. This is particularly evident in the framework of EU governance through funding, a field of EU law which may bring new situations in the grey area between what is in or out of the scope of EU law. The current legal framework is characterized by the blending of cohesion and economic policy, realized through the adoption of a new Common Provisions Regulation and the Recovery and Resilience Facility Regulation. Despite some differences, the two ‘blocks’ of EU funds – ESI and RRF funds – will be implemented together by the national administrations. This raises the question of whether and to what extent national actors implementing EU funds are to be considered as acting within the scope of EU law. The analysis of the legal framework has shown that national actors might not always be considered as directly implementing EU law. In fact, the process of implementation of EU funds happens through a complex process of collaboration and exchange between the EU institutions – mainly the Commission – and the Member States. This peculiar technique of law making according to which standards are agreed between the supranational and the national level in an almost contractual process fades the boundaries between the two levels and does not allow to give a clear answer to the question as to whether Member States are implementing EU law for the purpose of Art. 51 of the Charter. Moreover, a direct and sufficient link to the scope of EU law may be difficult to demonstrate due to the generic content of partnership agreements and recovery plans, leading to the paradox that several actions undertaken by the Member States to comply with EU law and involving the rights of individuals might be excluded from the judicial review of the Court of Justice. The existing case law is not very developed on the matter and does not allow to reach certain conclusions. This is problematic, given the importance that EU funds are acquiring as an instrument to drive change at national level. Future cases should follow a different approach and recognize that the scope of EU law is also shaped by new situations arising from the increasing recourse to EU funding instruments.
Footnotes
Acknowledgements
I am very grateful to Elise Muir, Matteo Bonelli, Chloé Brière, Paul Dermine and two anonymous reviewers for their comments on earlier versions of this paper. I would also like to thank the organisers and participants of two academic events in which I presented this paper: the 6th Young European Law Scholars Conference on ‘The Future of EU Fundamental Rights’ at Maastricht University and the Doctoral Workshop celebrating the sixtieth anniversary of the Department of EU Legal Studies at the University of Liège. All errors remain my own.
Declaration of conflicting interests
The author declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.
Funding
The author disclosed receipt of the following financial support for the research, authorship, and/or publication of this article: This work was supported by the Fonds Wetenschappelijk Onderzoek, (grant number 11B7523N).
