The Supreme Court has ruled in favor of the Community of Madrid in the lawsuit brought against the Government regarding the distribution of European funds from the Recovery, Transformation, and Resilience Plan, aimed at revitalizing the economy after the health crisis caused by Covid-19. The Court of Administrative Litigation has annulled direct grants of six million euros from this plan granted in 2021 to the Basque Country, Extremadura, and Valencia, ruling that the Government did not sufficiently justify why these communities were given aid at the expense of others. Each of these territories received two million euros, but the judges stated that the Government did not justify the reasons for assigning the aid through a direct granting procedure.
This decision by the Supreme Court is a victory for the Government of Isabel Díaz Ayuso, who took the matter to court feeling aggrieved after being excluded from a package of nine million euros in aid granted by the central Government through a royal decree in October 2021. For the Community of Madrid, these funds were delivered “outside the established channel” and with “sectarian and partisan” criteria. In addition to the Basque Country, Extremadura, and Valencia, Navarra also participated in receiving three million euros for a project on entrepreneurship and microenterprises included in the Economic Reactivation Plan of the Eastern Pyrenees. Madrid included this aid in their appeal, but the Supreme Court upheld that decision as the procedure for direct granting was adequately justified in that case.
Regarding the grants awarded to the Basque Country, Valencia, and Extremadura, the court considers that the memoranda and preamble of the royal decree that regulated them “confuse” the basis for the direct granting of grants. The judges point out that it is not the concurrence of public, economic, and social interest that justifies the direct granting of grants, as the presence and justification of specific reasons for choosing the exceptional procedure of direct granting and the relegation of the general regime of public calls are the key factors. The judges also highlight that while the purpose of the grants is motivated, the reasons for resorting to the exceptional procedure of direct granting are not adequately justified.
The court states that although there may be reasons of urgency to support the immediate satisfaction of needs addressed by these grants, they cannot be observed in this case when it comes to funding projects by administrations for piloting and subsequently extending that experience to other territories. The Supreme Court notes that the grants are not intended for experimental projects whose effectiveness is not guaranteed. The judges also question why other interested autonomous communities were left out if one of the justifications for direct granting is to transfer the experience gained from pilot projects to the entire national territory.
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