European Development Fund (EDF)
The European Development Fund (EDF) is a key financial instrument of the European Union (EU) aimed at promoting development cooperation with African, Caribbean and Pacific (ACP) countries as well as with Overseas Countries and Territories (OCTs). The EDF complements the EU’s external budget and is governed by specific treaties and acts reflecting the special nature of this fund. Below, the concept of the European Development Fund is presented comprehensively in its legal context.
Legal basis of the European Development Fund
International legal basis: Cotonou Agreement and its predecessors
The legal foundation of the EDF is established by the Cotonou Agreement, signed on June 23, 2000, which governs cooperation between the EU and ACP countries. The Cotonou Agreement replaced the Lomé Agreement and includes provisions on development cooperation, political dialogue, and trade. Under this agreement, the EU commits to providing financial assistance, in particular via the EDF.
Primary and secondary law of the European Union
The EDF is not part of the regular EU budget according to Art. 310(1) TFEU (Treaty on the Functioning of the European Union), but is instead based on intergovernmental agreements between the Member States. The establishment, management and financing of the EDF is governed by its own legal instruments, including the internal agreement, which stipulates the modalities of operation, contributions, and governance structures.
Duration and Multiannual Financial Frameworks
The EDF is established for specific multiannual financial periods, for example as the 10th EDF (2008-2013), 11th EDF (2014-2020), etc. It is designed through special legally binding instruments and the involvement of Member States, which appear as parties alongside the EU.
Organization and management of the European Development Fund
Administrative structures
The EDF is managed by the European Commission and (in certain respects) the European Investment Bank (EIB). Management is carried out using separate budgets under project-related procurement procedures and the EU’s budgetary and procurement law. Decision-making powers are also exercised in the EDF Committee, in which both the Member States and the Commission are represented.
Legal control and oversight
The use of EDF resources is subject to strict supervision, audit, and accountability requirements. The European Court of Auditors is authorized to audit financial transactions. The legality of funding decisions and their implementation is regularly evaluated, with oversight also exercised by the European Parliament and Member States.
Legal nature of the EDF: Special assets and funding
Special status outside the EU budget
The EDF is considered a so-called special asset of the EU. Legally, the fund is separated from the ordinary budget management of the Union. Member States make contributions according to specified keys, fulfilling their obligations outside of the EU budget.
Internal agreements and decision-making procedures
The funding and concrete structure of the EDF is determined by the internal agreement on the EDF, which must be ratified by all Member States and defines the contribution amounts, modalities, and internal management procedures. This agreement contains detailed provisions on payment deadlines, payment modalities, and rules in the event of delayed contributions.
Relationship to EU law
Although the EDF is legally outside the EU budget, key requirements of EU law, particularly in the areas of oversight, transparency, and good governance, apply. This concerns especially the budgetary framework, procurement directives, and regulations on anti-corruption and use of funds.
Eligible measures and legal basis for development cooperation
Scope of application and programming
The EDF funds measures to promote economic, social, and human development in partner countries. These include, for example, infrastructure projects, health care, education, agriculture, environmental initiatives, and the promotion of rule of law and democracy. The legal basis for the eligibility of specific measures is derived from the acts of the EDF and respective partnership agreements.
Public procurement, contract and state aid law
The allocation of funds and project financing are subject to strict regulations under EU procurement and state aid law. Tenders must be conducted openly, fairly, and transparently. Grants are awarded according to objective criteria, with requirements for equal treatment and legal remedies for applicants to be observed.
Reform, expiration, and integration of the EDF into the EU budget
Reforms and future development financing
With the Multiannual Financial Framework 2021-2027, a paradigm shift was introduced: the EDF was integrated into the Neighbourhood, Development, and International Cooperation Instrument (NDICI, “Global Europe”). Thus, the previous special status of the EDF as a special asset outside the EU budget has been formally abolished.
Legal effects of the integration
With the transfer into the NDICI, general EU budget rules now apply to development cooperation. The legal basis is the NDICI Regulation (Regulation (EU) 2021/947). The historical EDF remains operative for ongoing projects, but as of 2021, the NDICI governs new funding measures.
Literature and web links
For further information, it is recommended to consult the relevant regulations, the Cotonou Agreement, and the documents of the European Court of Auditors and the European Commission. Particularly noteworthy are:
Summary: Until 2021, the European Development Fund was the EU’s main instrument for development cooperation with ACP countries and OCTs, with its own legal structure governed outside the EU budget. The legal framework of the EDF was based on international and EU law, defined internal agreements, and stringent administrative mechanisms. With its integration into the regular EU budget through the NDICI, the EDF’s special status has effectively ended; however, a specific legal basis remains for the administration of ongoing projects.
Frequently asked questions
Which legal provisions regulate the European Development Fund?
The legal foundation of the European Development Fund (EDF) is based primarily on the Treaty on the Functioning of the European Union (TFEU) as well as on the respective internal EDF agreements between the EU Member States. Unlike other EU funds, the EDF is managed outside the EU budget, and thus, its administration and allocation of funds are governed by specific legal acts, particularly the internal EDF agreement. These are supplemented by partnership agreements (such as the Cotonou Agreement or its successor, the Post-Cotonou Agreement), which establish the relationships and cooperation with the African, Caribbean, and Pacific countries (ACP countries) on an international legal basis. The implementation and oversight of the EDF are also subject to specific implementing provisions, procurement regulations, and requirements for financial accountability, which are monitored by EU institutions, especially the Commission and the Court of Auditors.
What rules apply to the allocation and oversight of EDF funds?
The allocation of funds under the European Development Fund is governed by detailed legal provisions, including those set forth in the EDF’s financial regulations and implementing provisions. The award procedures must ensure transparency, equal treatment, and non-discrimination and are carried out in accordance with the requirements for public procurement, which are binding for both the Commission and the recipient countries. The oversight of how funds are used lies with several bodies: the European Commission bears primary responsibility for financial management, while the European Court of Auditors examines the proper use of funds. There is also a requirement to report to Member States, which are involved in the monitoring process through specific oversight and auditing committees. Irregularities and fraud cases are subject to reporting and recovery proceedings under EDF law.
What legal remedies are available in the event of disputes?
For disputes arising from the administration or allocation of EDF funds, the legal remedies provided for in the EDF agreement generally apply. Affected parties may file formal complaints against decisions of the Commission or the implementing bodies within specified deadlines. Furthermore, disputes, particularly those related to contractual breaches or recoveries, may be brought before the European Court of Justice (ECJ) if they result directly from the application of EDF law. In some cases, arbitration in accordance with the provisions of the respective partnership agreements is also foreseen. National courts in recipient countries generally have only limited jurisdiction, unless national procurement law applies to EDF projects.
How is the liability of the European Union towards third countries regulated under the EDF?
The liability of the European Union under the EDF is clearly defined by the respective agreements and implementing provisions. As a rule, the EU is liable only for actions and omissions of its own institutions and in connection with the administration of EDF funds. For actions carried out independently by recipient countries, primary liability remains with those countries. However, in cases of proven misappropriation, mismanagement, or legal violations connected with EDF funds, contractual clauses may apply that provide for the recovery or suspension of funds. In case of disputes, the rights and obligations of the parties are detailed in the partnership or financing agreements.
What compliance and anti-corruption rules apply to the EDF?
In the legal context, the EDF is subject to strict compliance requirements established at EU level by the internal EDF agreement, procurement directives, and specific anti-corruption provisions. These include obligations to prevent, detect and prosecute fraud, corruption and other irregularities at all levels of project implementation. The actors involved—both within the EU and in recipient countries—must establish effective control mechanisms, report suspected cases and cooperate closely with the European Anti-Fraud Office (OLAF). In addition to internal audits, there is also external supervision by the European Court of Auditors. Violations of compliance requirements may result in financial penalties, recovery of funds, and exclusion from further funding.
To what extent is there a reporting obligation for actors involved in the EDF?
The actors involved in the EDF are subject to extensive legally established reporting requirements. The European Commission is obliged to report annually on the implementation of EDF measures to the European Parliament, the Council, and the Member States. The recipient countries, for their part, must document the proper use of funds and provide regular progress reports, with the form and content specifically regulated by the internal EDF agreement and supplementary implementing provisions. In addition, in the event of significant project changes or irregularities, there is an immediate obligation to inform and report to the Commission and, if applicable, to other oversight bodies. Reporting serves accountability, transparency, and effective oversight of the use of funds.
