Liability, Administrative Sanctions & Force Majeure (Articles 33–35)

ARTICLE 33

DAMAGES

33.1 Liability of the granting authority The granting authority cannot be held liable for any damage caused to the beneficiaries or to third parties as a consequence of the implementation of the Agreement, including for gross negligence. The granting authority cannot be held liable for any damage caused by any of the beneficiaries or other participants involved in the action, as a consequence of the implementation of the Agreement.

1. Liability for damages (of the EU) When signing the grant, the beneficiaries agree that the granting authority can NOT be held liable if — in implementing the Grant Agreement — the granting authority (or its staff/representatives) cause damage to a beneficiary or third party.

Moreover, the granting authority can NOT be held liable if — in implementing the Grant Agreement — a beneficiary or third party involved in the action causes damage to another beneficiary or third party.

Examples: 1. An experiment carried out by a beneficiary leads to an accidental escape of pollutants into the local river. 2. A fire breaks out in a beneficiary’s laboratory in the course of an experiment for the action conducted during an audit by the granting authority.

Subsidiary (secondary) liability is also excluded.

The granting authority is also not liable for damages caused by other participants involved in the action (i.e. affiliated entities, associated partners, subcontractors and recipients of financial support to third parties (FSTP)).

33.2 Liability of the beneficiaries The beneficiaries must compensate the granting authority for any damage it sustains as a result of the implementation of the action or because the action was not implemented in full compliance with the Agreement, provided that it was caused by gross negligence or wilful act. The liability does not extend to indirect or consequential losses or similar damage (such as loss of profit, loss of revenue or loss of contracts), provided such damage was not caused by wilful act or by a breach of confidentiality.

1. Liability for damages (of the Consortium) What? If by implementing the action (or by not implementing the action as agreed) a beneficiary causes damage to the granting authority, intentionally or as a result of gross negligence, the granting authority may claim compensation.

Examples: 1. Costs of legal proceedings borne by the granting authority. 2. At a meeting on the granting authority’s premises, a beneficiary smokes and causes a fire.

2. Procedure How? For liability cases, the granting authority will follow the normal procedure for damages claims (i.e. bringing an action for contractual damages before the EU courts (General Court)).

General > Article 34 — Administrative sanctions and other measures

ARTICLE 34

ADMINISTRATIVE SANCTIONS AND OTHER MEASURES

Nothing in this Agreement may be construed as preventing the adoption of administrative sanctions (i.e. exclusion from EU award procedures and/or financial penalties) or other public law measures, in addition or as an alternative to the contractual measures provided under this Agreement (see, for instance, Articles 137 to 148 EU Financial Regulation 2024/2509 and Articles 4 and 7 of Regulation 2988/9546).

Council Regulation (EC, Euratom) No 2988/95 of 18 December 1995 on the protection of the European Communities financial interests (OJ L 312, 23.12.1995, p. 1).

1. Administrative sanctions What? In the framework of the EU Early Detection and Exclusion System (EDES), the Financial Regulation 2024/2509provides that the competent EU services can take the following measures:

− exclusion from participation in award procedures and from being selected for implementing Union funds, when the beneficiary (or a natural or legal person who is a member of the administrative, management or supervisory body of the beneficiary, a natural person who is essential for the award or for the implementation of the Grant Agreement, a natural or legal person that assumes unlimited liability for the debts of the beneficiary) is in one or more of the exclusion situations mentioned in Article 138 of the Financial Regulation50 (e.g. grave professional misconduct, breach of obligations, fraud, corruption, irregularity, bankruptcy, etc)

− financial penalties, in the cases described in Article 142 of the Financial Regulation 51 (e.g. grave professional misconduct, breach of obligations, fraud, irregularity)

− in order to reinforce the deterrent effect of the above measures, publication of the information related to the case on the Europa website.

These measures are public law measures (not based on the Grant Agreement) and are conditional on established facts and findings that are substantiated by reliable evidence (e.g. OLAF reports; EPPO’s investigations; checks, audit or controls of EU services etc).

When there is only a suspicion of risk threatening the EU financial interests and the relevant facts are not yet established, the case may be registered in the database for information, to enable further verifications and reinforced monitoring.

Example

The representative of a non-governmental organisation campaigning for justice regardless of religious or political background released controversial statements of anti-Semitic nature, in particular by calling to destroy country X. Expressing the wish to destroy country X is considered a breach of EU values (non-discrimination) and a grave professional misconduct (a conduct which has an impact on the integrity and professional credibility of the organisation and represents a breach of the generally accepted professional ethical standards). The organisation was excluded for a specific duration from participation in award procedures covered by the general budget of the Union.

[old Financial Regulation: Article 136 Financial Regulation 2018/1046]. [old Financial Regulation: Article 140 Financial Regulation 2018/1046].

2. Procedure How? Before taking any of the administrative measures above, the competent EU service will normally follow a contradictory procedure with the person or entity concerned to give them the possibility to submit observations (— except if it is necessary to preserve the confidentiality of an investigation or of national judicial proceedings).

SECTION 4 FORCE MAJEURE General > Article 35 — Force majeure

ARTICLE 35

FORCE MAJEURE

A party prevented by force majeure from fulfilling its obligations under the Agreement cannot be considered in breach of them. ‘Force majeure’ means any situation or event that: - prevents either party from fulfilling their obligations under the Agreement, - was unforeseeable, exceptional situation and beyond the parties’ control, - was not due to error or negligence on their part (or on the part of other participants involved in the action), and - proves to be inevitable in spite of exercising all due diligence. Any situation constituting force majeure must be formally notified to the other party without delay, stating the nature, likely duration and foreseeable effects. The parties must immediately take all the necessary steps to limit any damage due to force majeure and do their best to resume implementation of the action as soon as possible.

1. Force majeure What? In case of force majeure, the parties will be excused from not fulfilling their obligations (i.e. there will be no breach of obligations under the Grant Agreement and none of the adverse measures for breach of contract will be applied).

‘Force majeure’ relates to an extraordinary event or situation that is beyond the party’s control and that prevents it from fulfilling its obligations under the Grant Agreement.

The event or situation must be inevitable (despite the beneficiary’s due diligence, i.e. level of care that can reasonably be expected from a beneficiary, in order to ensure the fulfilment of its obligations under the Grant Agreement) and unforeseeable. Force majeure can NOT be used to justify situations caused by a beneficiary’s negligence, events that could reasonably have been anticipated or events that are inherent to the normal activity of the beneficiary (e.g. sick leaves, strikes, technical failure, human errors, etc.).

Examples (force majeure): An earthquake, terrorist attack or volcanic eruption; delay in using equipment due to floods in the region/country. Examples (not force majeure): machine malfunctions, robberies; a subcontractor building a test site goes bankrupt, labour disputes or strikes, financial difficulties, personnel issues, for example sickness

Usually, force majeure can be evoked ONLY for the immediate impact of the situation. Once earthquakes, extreme weather events, etc. have taken place and impact on the further implementation of the action becomes foreseeable, the beneficiaries must adapt their planning, take mitigation measures and take all other necessary steps to fulfil their obligations under the Grant Agreement under the new circumstances.

If force majeure entails extra costs for the implementation of the action they may be eligible but it will normally be the beneficiaries that will have to bear them (since they were not budgeted in the proposal and the maximum grant amount in Annex 2 cannot be increased).

If a task for the action could not be executed due to a situation of force majeure but certain costs were incurred for that task and could not have been avoided, those costs may still be eligible and can be charged to the action.

Example

Airline tickets bought by a beneficiary to attend a meeting related to the action. The flight is cancelled because the air traffic is suspended due a terrorist threat, and so the beneficiary cannot travel to the meeting. If the ticket costs fulfil the eligibility conditions set out under Article 6 of the Grant Agreement and it is impossible for the beneficiary to get those costs reimbursed (e.g by the airline or a travel insurance) then they may be eligible, even if the beneficiary did not travel.

Force majeure may lead to Grant Agreement suspension (see Article 31) or Grant Agreement termination (see Article 32).

How? The coordinator must immediately formally notify the granting authority (through Portal Formal Notifications: My Projects > Actions > Manage Project > Launch new interaction with the EU > Formal Notification).

The beneficiary concerned must quickly put in place all possible measures to limit the damage caused by the force majeure, including measures to limit related costs.

CHAPTER 6 FINAL PROVISIONS