Using European Union funds involves a complex process; Member States must adhere to wide-ranging EU and domestic legislation, non-compliance can lead to irregularities. Besides accordance with the letter of the law, also the general EU budgetary principles, in particular sound financial management, must be given full consideration. The paper presents Hungary’s evolving approach to handling irregularities and her experience in creating the corresponding legal and institutional framework. The research also assesses how the perspective of the European Commission, in particular of its auditors, has contributed to legal uncertainties.In the draft legislation for the 2021 – 2027 budgetary period, the European Commission proposes a new requirement, namely the rule of law conditionality.3 Its clarity and objectivity, however, are still being widely discussed. Additionally, cohesion policy conditionalities have always contained an obligation for the proper functioning of the institutions – including the courts. Nonetheless, the European Commission has not previously examined the performance of the courts in relation to proceeding irregularity and recovery disputes. The presented Hungarian case study not only explains the particular challenges that call for revisiting the appeal system in Hungary; it warns of the general difficulties Member States may face when embedding the irregularity and recovery management functions into their national legislation, whereas the paper also gives notice to the long-awaited analysis of the root problems invoking irregularities.

Hungary is one of the main beneficiaries of the EU Cohesion Policy, which aids the development of the regions lagging behind. As one of the policy’s main objectives is territorial cohesion, both the functioning of the territorial delivery system and the role of the regional and local stakeholders have crucial importance. The paper presents and evaluates the regime Hungary uses for integrated territorial development: the territorial strategies devised by municipalities as integrated plans on the basis of a pre-set financial allocation, a pre-defined menu of measures and obligatory performance targets. The research explores the interactions between multilevel governance structures and effectiveness of delivery. The paper is based on a mix of desk research and fieldwork (desk research of publicly available data presented in official reports, documents and data from the Hungarian institutions and authorities and on the relevant EU and national legislation together with the result of interviews with the local stakeholders and experiences of the authors) and it offers empirical experience on how this regime has been functioning and what the impacts are. The Hungarian mechanism implies a renewed system of domestic collaboration and increased territorial responsibilities. Despite similarities, it is a distinct mode from the ESIF territorial toolkit, and even with the establishment of a dedicated financial framework for counties and cities with county rights, the decentralisation of the programming and implementation of ITPs have not been realised.