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When the state gets it wrong but you pay the price: administrative scenarios and how to recover your losses

This article illustrates situations where administrative mistakes cost citizens or companies time and money, from unlawful fines to blocked projects. It then outlines available remedies—annulment, damages, interest and restitution—and how to work with a lawyer to calculate losses and build a solid compensation claim.

This article is for general information only and does not constitute legal advice. Concrete situations must always be analysed on a case-by-case basis together with a lawyer, in light of the specific facts, documents and deadlines involved.

Many people live with the idea that “the state never really suffers, no matter how badly it messes up”. In practice, however, the Romanian Constitution, the Civil Code and the Administrative Litigation Act all start from a much healthier idea: when a public authority breaches your right or legitimate interest and causes you damage, you have the right to seek both annulment of the act and full compensation for the loss.

The problem is that there is a long road between legal theory and real life: files “lost” in administration, permits issued with excessive delay, wrong tax assessments, unlawful garnishments on bank accounts, vague or evasive replies – or no reply at all. In many cases, the authority makes the mistake, but the individual or business is left to pick up the bill – either because they do not know their rights, or because they are afraid to “get into a fight” with the administration.

This article answers a very practical question: what can you do, in legal and concrete terms, when a public authority’s mistake leaves you with the losses? We will look at the legal framework, typical administrative errors that generate damages, key procedural steps, and several real-life-style scenarios, explained in accessible language.

1. The legal framework: why you do not have to silently absorb state mistakes

1.1. The Constitution – the right of a person injured by a public authority

Article 52 of the Romanian Constitution expressly provides that any person injured in a right or legitimate interest by a public authority, through an administrative act or through failure to resolve a claim within the legal time-limit, is entitled to obtain recognition of the right or interest, annulment of the act and reparation of the damage.

In plain language, this means that you are not condemned to silently endure the effects of an unlawful administrative act or the “silence” of the administration. The Constitution sets the principle; the relevant laws tell you how to enforce it in practice.

1.2. Law no. 554/2004 on administrative litigation – annulment plus compensation

Law no. 554/2004 on administrative litigation is the core statute governing disputes in which a public authority violates your rights through an administrative act or through refusal/omission to act. It allows you, in a single action, to seek: annulment of the act, recognition of the right or legitimate interest, and compensation (material and, in some cases, moral damages).

Legal scholarship and court practice generally see this as a special form of civil (tort) liability: you must prove a wrongful act (or omission), damage and a causal link, but the public authority’s liability is, in essence, objective – you are not required to prove the individual civil servant’s fault in detail.

1.3. The Civil Code – tort liability and the state’s civil liability

The Civil Code lays down the general rule that any person is obliged to repair the damage caused to another by an unlawful act committed with fault (Articles 1349 and 1357 Civil Code). These principles also apply, with the necessary adjustments, to public authorities, alongside the specific rules in Law no. 554/2004.

In addition, Articles 221–224 Civil Code expressly regulate the civil liability of the state and of administrative-territorial units. As a rule, the state and municipalities/counties are liable (often in a subsidiary manner) for obligations of public bodies and institutions that have legal personality – with important consequences when you decide whom to sue (the issuing authority vs. the state/administrative-territorial unit as such).

In short: you can seek not only annulment of the unlawful act, but also full reparation of the damage caused by the authority’s mistake, provided that you prove the loss and the causal link.

2. What types of administrative mistakes actually generate damages?

Administrative mistakes do not always look like a blatant “big injustice” at first glance. Often they hide in details, delays or failures to act. Some frequent patterns:

2.1. Unlawful administrative acts (decisions, orders, resolutions)

  • local tax assessments based on a wrong interpretation of the law or on incorrect factual data;
  • mayor’s orders or local council decisions that restrict property rights without sufficient legal basis;
  • refusals to issue permits/approvals, accompanied by vague or inconsistent reasoning, despite consistent documentation.

In all these cases we are dealing with unilateral administrative acts that can be challenged in administrative litigation, with the possibility to claim compensation for the loss suffered.

2.2. Silence of the administration and informal “no” at the counter

There are situations where you receive no answer at all, even though the legal time-limit for a reply has expired, or you are simply told informally “it can’t be done” without any written act. When failure to reply in time, or an unjustified refusal, causes you a loss (for example, you lose a contract, a client, a funding opportunity), this inaction can also trigger the authority’s liability, if correctly framed in law.

3.3. Unlawful enforcement and garnishment

Another common scenario: based on a questionable enforceable title or an erroneous tax calculation, bank accounts are garnished or enforcement is initiated against assets. Even if the acts are later annulled, the cash-flow blockage, contractual penalties, default interest or lost contracts can represent measurable damages for which you may seek compensation, if you can show the connection with the authority’s acts.

2.4. Registry and planning errors (urban planning, cadastre, registers)

Seemingly “small” errors – an incorrect parcel number, wrong address, erroneous entries in tax or planning records – can block sales, mortgages or investment projects. The real cost of such an error often becomes visible over time: months of delay for a real-estate transaction or project, price differences, lost fees and so on.

3. What can you actually claim when the state makes a mistake?

Depending on the situation, you can claim one or more of the following:

3.1. Annulment of the unlawful administrative act

The first step is usually to seek annulment of the unlawful act or an order compelling the authority to issue the act it refuses. Without annulment or without obtaining the correct act, the discussion about damages remains theoretical in many cases. In an action based on Law no. 554/2004, the court can annul the act in whole or in part, and can order the authority to issue a specific act or to carry out a particular administrative operation.

3.2. Material damages (actual loss and loss of profit)

Material damages can include, for example:

  • amounts paid under an unlawful act (taxes, fines, charges, penalties);
  • additional costs generated by delay (rent, bank interest, financing costs, relocation or redesign costs for a project);
  • loss of profit – for example, the reasonable profit you would have earned under a contract you could not perform because of the act or inaction of the authority, if you can show this profit with a reasonable degree of certainty (contracts, tenders, financial projections, etc.).

3.3. Interest and indexation for inflation

Full compensation often means not only the principal amount, but also statutory interest and indexation for inflation, for the period during which you were deprived of your money or forced to bear an unlawful burden. Courts generally apply the Civil Code rules on legal interest and monetary update, adapted to the nature of the administrative or tax dispute.

3.4. Moral damages for distress and non-pecuniary harm

Although awarded more cautiously than material damages, moral damages can be granted where the authority’s mistake or abuse seriously affects your dignity, reputation or psychological balance (for example, unlawful garnishment of a natural person’s accounts, with severe consequences for family life or social standing). You must show the seriousness of the non-pecuniary harm and the connection with the authority’s act or omission.

4. Procedural steps: from prior administrative complaint to a claim for damages

4.1. Prior administrative complaint (mandatory in most cases)

Law no. 554/2004 requires that, before going to court, you must usually address the issuing authority (or its hierarchical superior) with a prior administrative complaint, within a general time-limit of 30 days from the date you became aware of the act. In this complaint you may seek both revocation/modification of the act and, at least in principle, reparation of the damage.

The law also covers situations where the authority fails to answer within the legal deadline (“administrative silence”) or expressly refuses to resolve your request; these can be challenged in court similarly to an unlawful act.

4.2. Court action for annulment and damages in administrative litigation

If the prior complaint is rejected or remains unanswered, you may bring an action before the administrative court (typically the county tribunal – administrative and tax litigation section). As a rule, you have six months from the reply to the prior complaint, or from the expiry of the reply deadline, to file the action.

In this action you usually:

  • seek annulment of the act or an order compelling the authority to issue the act it unlawfully refuses to issue;
  • add a distinct head of claim seeking damages for material and moral loss, with clear explanations on calculation and evidence;
  • rely, where appropriate, on Article 52 of the Constitution, the relevant provisions of Law no. 554/2004 and the Civil Code rules on liability.

Under Articles 18–19 of Law no. 554/2004 and the prevailing doctrine, you may either claim damages in the same action as the annulment or bring a separate action later, within the limitation period, if the full extent of the loss becomes clear only after the act has been annulled.

4.3. Tax contestation and administrative-tax litigation

For tax acts (tax assessment decisions, decisions on tax contestations, enforcement documents), the procedure is somewhat different. You must first lodge an administrative tax contestation – usually within 45 days of communication – under the Tax Procedure Code (Law no. 207/2015). Only after this can you challenge the decision on the contestation before the administrative-tax court.

In that litigation you can ask for annulment of the tax act and for compensation for the damage caused (for example, bank interest paid because of blocked accounts, contractual penalties paid to your partners, etc.).

4.4. Direct tort action under the Civil Code

In some situations – such as where damage is caused by a material act of the authority or its staff (for example, unlawful demolition, physical interference with your property) – a direct tort action under the Civil Code can also be considered, based on Articles 1349 and 221–224 on the liability of legal persons governed by public law and on the state’s civil liability.

Choosing the correct legal basis (special administrative litigation vs. general tort liability) is a strategic decision and should be discussed with a lawyer in light of the specific facts of the case.

5. Concrete administrative scenarios: how “the state is wrong, the citizen pays” looks in real life

5.1. The architect whose permit “gets lost”

Imagine an architect who files with the municipality a complete documentation for an interior fit-out permit. The file is complete, receipts are in order, but for months the only replies are “come back next week” and “the file is being checked”. Eventually he learns that the file “has been misplaced”. During all this time, he pays rent on the space, loses a contract with a client and cannot start his activity.

What can be done?

  • file a prior administrative complaint invoking administrative silence and seeking issuance of the permit within a short, reasonable time;
  • if the situation is not remedied, bring an administrative action to compel the authority to issue the permit, plus a claim for material damages (rent, expenses, possibly loss of profit) for the period during which the permit should normally have been issued but was not;
  • depending on the overall risk, consider a request for interim measures or suspension in order to prevent further knock-on effects (for example, loss of other contracts dependent on the permit).

5.2. The retired teacher and the “recovery” decision

A retired teacher receives, years later, a decision demanding reimbursement of amounts allegedly received “unduly”. The calculation table is opaque; it is not clear how the figures were reached. At the counter she is told “this came from higher up, you must pay”. Out of fear and lack of information, she pays – only to find out later from a specialist that the decision was substantively wrong.

Possible steps:

  • challenge the recovery decision in due time, through a prior complaint and then administrative litigation;
  • seek annulment of the decision and repayment of the sums paid, with statutory interest and indexation for inflation;
  • in appropriate cases, claim moral damages, especially if she was subjected to unjustified pressure or if her professional reputation was seriously affected in the community.

5.3. The entrepreneur and the unlawful garnishment of business accounts

An entrepreneur wakes up to find company bank accounts frozen, based on a local tax decision issued in breach of an essential procedural step (no prior communication of the assessment, no chance to lodge a tax contestation in time, etc.). The blockage lasts several months, during which the company cannot pay suppliers, loses two major clients and enters serious liquidity difficulties.

In such a case, a possible strategy is:

  • lodging a tax contestation and bringing an action in administrative-tax litigation for annulment of the tax acts and the enforcement measures;
  • claiming damages for actual loss (for example, bank interest, enforcement costs, contractual penalties) and, where evidence allows, loss of profit (lost contracts) resulting directly from the unlawful acts;
  • relying on the principles of legality and proportionality reflected in recent case-law of the High Court of Cassation and Justice on state liability for damage caused by unlawful administrative or legislative measures.

5.4. The planning error that blocks a real-estate transaction

A property owner wants to sell a building, but the urban planning certificate issued by City Hall contains a serious regulatory error (incorrect zoning, conditions that do not match the approved PUZ, etc.). The financing bank therefore refuses to grant the buyer a mortgage. The deal falls through, and the seller loses a favourable price negotiated in a particular market window.

A potential approach includes:

  • challenging the unlawful planning certificate and requesting a corrected one;
  • if documentary evidence supports it (pre-contract, valuation reports, correspondence with the bank), claiming compensation for the loss (difference in price actually obtained later, additional costs, etc.);
  • in more complex matters, considering the potential liability of designers or other private actors, if the error is partly outside the public authority’s fault.

6. How do you prove the damage and its link to the state’s mistake?

The mere fact that an administrative act is unlawful does not automatically mean that you have a compensable loss. In practice, courts generally expect proof of:

  • a certain (or at least sufficiently determinable) damage – not just annoyance or dissatisfaction, but concrete financial loss or serious non-pecuniary harm;
  • a causal link – the loss must result from the authority’s wrongful act or omission, not from risky business choices, external market factors or other independent causes;
  • the extent of the damage – amounts must be explained and supported by documents (invoices, bank statements, contracts, e-mail correspondence, expert valuations, etc.).

This is where the lawyer – and, where necessary, court-appointed experts (accountants, valuers, technical experts) – help you quantify and substantiate your claims in a credible and structured way.

7. Limits and risks: what you should know before suing the state

Although the legal framework gives you the right to compensation, litigation against public authorities is neither simple nor risk-free. Some points to consider:

  • Limitation periods are relatively short (as a rule, six months for an action in administrative litigation, and – for certain stand-alone claims for damages under Law no. 554/2004 – one year from the date you became aware of the extent of the damage);
  • Proof of damage can be challenging, especially for loss of profit or moral damages;
  • Duration: proceedings can be lengthy, particularly if the case goes through all levels of jurisdiction;
  • Costs: court fees, potential expert costs, lawyer’s fees, time invested in managing the case.

On the other hand, doing nothing often means practically accepting an abuse or error that will likely be repeated in the future with other people in similar situations.

8. When does it make practical sense to pursue compensation?

The decision to start litigation for damages against the state should be pragmatic, not purely emotional. It often makes sense to insist when:

  • the damage is significant (not just a few hundred lei, but sums that seriously affect your budget or professional activity);
  • you have – or can reasonably obtain – clear evidence of the damage and its link to the authority’s act or omission;
  • there are reasonable prospects that the court will find the act/inaction unlawful;
  • you are prepared to bear the time, costs and effort involved, in light of your lawyer’s explanations.

Sometimes the optimal solution is to focus on annulment of the act and correction of the situation going forward; in other cases, given the financial stakes, it may be worth going all the way on the damages track as well.

9. How a lawyer can concretely help you in disputes with public authorities

In disputes with public authorities, a lawyer is not just “someone who files documents”, but the person who:

  • translates your factual situation into legal language and correctly frames it (Law no. 554/2004, tax law, Civil Code, special legislation);
  • checks deadlines and ensures you do not lose rights through missed procedural time-limits;
  • helps you calculate and document the damage (including by working with experts where necessary);
  • chooses the right strategy: a single action combining annulment and damages, a separate tort action, requests for suspension, etc.;
  • gives you a realistic view of prospects and risks, including financial ones.

If you are in a situation where you feel “the state made the mistake, but you are left with the loss” and you do not know where to start, an initial discussion with a lawyer specialised in administrative and tax litigation can help you decide whether and how to move forward.

10. Frequently Asked Questions (FAQ) on damage caused by administrative mistakes

Can I claim compensation if an administrative act is annulled but I suffered losses in the meantime?

Yes. As a rule, in addition to annulment of the act you can seek compensation for the loss caused by that act, either in the same action or through a separate action within the limitation period set by Law no. 554/2004, if the full extent of the damage becomes clear only after annulment.

Can I obtain compensation where the authority simply “does not reply” to my application?

Yes, under certain conditions. Failure to resolve a request within the legal deadline or an unjustified refusal to deal with it is, in certain circumstances, treated like an administrative act and can trigger liability, if you can prove that this inaction caused you a concrete loss (for example, loss of a funding opportunity or contract).

What is the difference between an action under Law no. 554/2004 and a tort action under the Civil Code?

Law no. 554/2004 is the special statute governing disputes over administrative acts and certain forms of administrative inaction; it specifically regulates how you challenge the act and seek compensation. The Civil Code offers the general rules on tort liability, which apply in the background or in situations where the damage arises from material acts of the authority rather than from an administrative act in the technical sense.

Can I claim moral damages for the stress and humiliation caused by an administrative mistake?

Yes, but courts award moral damages cautiously. You must show a serious infringement of your dignity, honour or mental well-being and a clear connection with the authority’s act or omission. Minor inconvenience or annoyance is usually not enough.

Who ultimately pays compensation – the individual civil servant or the institution?

As a rule, the public authority or institution is the defendant and pays compensation to the injured person. The state or administrative-territorial unit can then pursue a recourse action against the civil servant at fault, in the conditions set by law, but this is an internal matter between the institution and its employee.

How long do I have to bring an action for compensation against the state?

Time-limits depend on the specific situation. Generally, the action in administrative litigation must be brought within six months from the reply to the prior complaint or from expiry of the reply deadline, and a separate action for damages under Article 19 of Law no. 554/2004 has a one-year limitation period from the date you became aware of the extent of the damage.

Does it practically make sense to sue the state for the damage caused?

It depends on the financial stakes, the quality of your evidence and the legal strength of your case. As a rule, it is worth going ahead when the damage is significant, provable and clearly linked to an unlawful act or administrative silence. The final decision should be made after a discussion with a lawyer specialised in administrative litigation and, where relevant, tax law.

Sources and further reading