Beneficiaries of EU grants often assume that since funding is based on a grant agreement, any dispute concerning repayment of the funds should be resolved by a civil court. Recent case law of the Polish Supreme Court demonstrates that such an approach may lead to a serious procedural mistake and significant financial consequences.
In its judgment of 22 January 2026 (case no. II CSKP 625/24), the Supreme Court confirmed that once an administrative decision ordering repayment has been issued, an action seeking a declaration that the repayment obligation has expired is inadmissible before a civil court.
Background of the Case – Repayment of Over PLN 6.9 million
A general partnership, acting as a beneficiary under the Innovative Economy Operational Programme, received more than PLN 6.9 million in funding for the implementation of an innovative window and door manufacturing technology.
The grant agreement imposed, among others, the following obligations:
- maintaining the project’s durability for a specified period,
- implementing the investment in accordance with the agreed schedule,
- refraining from substantial modifications to the project,
- submitting to inspections carried out by the financing institution.
During the project durability period, the company suspended its business operations. Following an inspection, the financing institution concluded that the conditions of the grant agreement had been breached and that the project objectives had not been maintained.
As a consequence:
- the company was requested to repay the funds,
- an administrative decision specifying the repayment amount was subsequently issued.
The company attempted to challenge the repayment obligation before a civil court by filing a claim seeking a declaration that the obligation had expired.
Why Did the Civil Court Reject the Claim?
Both lower courts held that the civil court route was inadmissible, and the Supreme Court upheld this position.
The decisive factor was that the procedure for recovering EU funds is comprehensively regulated under the Polish Public Finance Act.
Under these regulations:
- the authority first requests the beneficiary to repay the funds,
- if repayment is not made within the prescribed deadline, an administrative decision is issued,
- the beneficiary may challenge that decision through administrative and administrative court proceedings.
The Supreme Court emphasized that once an administrative decision concerning repayment has been issued, disputes regarding the repayment obligation must be resolved exclusively within the administrative law framework.
A Grant Agreement Does Not Automatically Mean a Civil Law Dispute
In practice, entrepreneurs often argue that because the relationship with the financing institution is based on a contract, the dispute should be treated as a civil law matter.
The Supreme Court rejected this argument.
The Court explained that:
- EU grant funds constitute public funds,
- the repayment obligation arises directly from the Public Finance Act,
- contractual provisions do not alter the public-law nature of the recovery procedure.
This means that even if the beneficiary’s obligations are described in a contract, once the administrative recovery procedure has commenced, the proper legal route remains administrative.
What Does This Mean for Grant Beneficiaries?
The judgment has significant practical implications for businesses using EU funding.
Where the proper implementation of a project is questioned, it is crucial to act promptly already at the stage of:
- project inspections,
- repayment requests,
- administrative proceedings.
Bringing the case before the wrong court may result in:
- rejection of the claim,
- loss of valuable time,
- continued accrual of interest,
- parallel continuation of administrative enforcement proceedings.
Our experience shows, however, that grant beneficiaries are not deprived of effective means of defence. In many cases, decisions issued by financing institutions may be successfully challenged before administrative courts, both with respect to the finding of irregularities itself and the amount claimed for repayment.
What Is the Proper Defence Strategy?
If an administrative decision ordering repayment is issued, the beneficiary should:
- file an appeal within the administrative proceedings,
- if necessary, challenge the decision before the Voivodeship Administrative Court,
- subsequently consider filing a cassation appeal with the Supreme Administrative Court.
Administrative and administrative court proceedings therefore become the primary instruments for protecting the beneficiary’s rights in such cases.
Conclusions
The Supreme Court’s judgment confirms that disputes concerning repayment of EU grants are administrative law matters in nature. Even where the funding relationship is based on a grant agreement, once an administrative repayment decision has been issued, the civil court route may no longer be available.
Attorney-at-law / Partner
