Judgment — ECLI:EU:T:1999:124
Date: 1999-06-15
Language of the case: Italian
Court formation: Third Chamber
Based on: Treaty establishing the European Economic Community (1957)
Subject matter: External relations
Concepts: Admissibility and examination of applications, forms of order sought and pleas in law;Causal link;Basis of liability
Procedure: Action for damages - unfounded
Origin: Italy

summary 
form, coherently and intelligibly in the application itself (see Case C-347/88 
Commission v Greece [1990] ECR I-4747, paragraph 28 ; Case C-52/90 
Commission v Denmark [1992] ECR I-2187, paragraph 17 et seq.; Case 
T-387/94 Asia Motor France and Others v Commission [1996] ECR 11-961, 
paragraph 106; and Case T-113/96 Dubois et Fils v Council and Commission 
[1998] ECR II-125, paragraph 29). 
30 In order to satisfy those requirements, an application seeking compensation for 
damage allegedly caused by a Community institution must state the evidence 
from which the conduct which the applicant alleges against the institution can be 
identified, the reasons for which the applicant considers that there is a causal link 
between the conduct and the damage it claims to have suffered, and the nature 
and extent of that damage (see, for example, Dubois et Fils v Council and 
Commission, cited above, paragraph 30, and the order in Case T-262/97 
Goldstein v Commission [1998] ECR II-2175, paragraph 22). 
31 In the present case, the application states that publication by the defendant of 
Special Report No 1/96 led the Commission to terminate the FEDER contract. It 
therefore indicates in a coherent and comprehensible manner the causal link, 
according to the applicant, between the defendant's alleged conduct and the 
damage reportedly sustained. The fact that there is evidence in the case-file which 
may refute the argument advanced by the applicant is not capable of rendering 
the application inadmissible but merely calls in question whether it is well 
founded. 
32 It follows that the application satisfies the formal requirements laid down by the 
abovementioned provisions and that the plea must therefore be rejected. 
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— The plea of inadmissibility alleging that the claim for damages is of a 
contractual nature 
33 The defendant contends that, in the present case, the applicant is bringing an 
action to establish the non-contractual liability of the other party to the contract, 
namely the Community, on the ground of the latter's termination of the contract. 
The termination of that contract is, it is contended, a matter of contractual 
liability which is governed by the first paragraph of Article 215 of the Treaty. 
Since the application in the present case seeks damages for losses arising out of a 
contract, it is inadmissible (order in Case T-l80/95 Nutria AE ν Commission 
[1997] ECR 11-1317, paragraphs 39 and 40). 
34 The Court notes that the Community may indeed incur non-contractual liability 
as provided for in the second paragraph of Article 215 of the Treaty, on which the 
action is based. None the less, such liability is incurred as a result of 'damage 
caused by (the) institutions', which means that the institution to which the 
damage is to be imputed must be determined. 
35 In the present case, the applicant bases its claim for damages on the termination 
by the Commission of the FEDER contract, entered into with the Community. It 
does not challenge the legality of such termination, whether formally or 
substantively. Its action is directed solely against publication by the defendant 
of Special Report No 1/96, which induced the Commission to terminate the 
contract in question. 
36 It follows that the defendant's alleged conduct is unconnected with the 
performance of obligations arising under the contract between the applicant 
and the Community. The liability which it is sought to establish is thus of a non­
contractual kind. 
37 The plea must therefore be rejected. 
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ISMERI EUROPA V COURT OF AUDITORS 
The claim in respect of financial loss arising from failure to award a contract 
38 The applicant refers to the loss arising from the fact that it was deprived of the 
possibility of being awarded a contract following a major tendering procedure 
launched by the Commission for the creation of a technological park in Santiago, 
Chile (project CHI/B7-3011/94/172). 
39 The defendant points to the contractual origin of the loss. It takes the view that 
the act by the Commission which occasioned the loss cannot be imputed to the 
latter and that the action is therefore inadmissible. Finally, it contends that the 
application does not indicate to a sufficient extent the causal link between the loss 
and the act alleged against it, namely publication of Special Report No 1/96. As a 
matter of logic, this last plea must be examined first. 
— The plea of inadmissibility based on insufficient evidence in the application of 
the causal link between the alleged fault and the loss reportedly sustained 
40 The defendant takes the view that the applicant did not indicate with the requisite 
degree of clarity and precision what constituted the causal link between the 
allegedly unlawful conduct and the loss arising from the fact that the Commission 
failed to award it a contract. Moreover, the applicant did not produce any 
Commission document giving particulars of that contract and stating the reasons 
why it was not awarded to the applicant. The defendant concludes that the claim 
in question is inadmissible. 
41 According to the application, publication of Special Report No 1/96 by the 
defendant induced the Commission not to include the applicant amongst the 
firms eligible for the award of the contract in question. It is apparent from the 
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JUDGMENT OF 15. 6. 1999 — CASE T-277/97 
documents appended to the application that the applicant had participated in the 
tendering procedure. Finally, the applicant claims that it was probably selected as 
one of the companies submitting the most favourable tenders. It offers to prove 
this by proposing that the Court order the Commission to produce the relevant 
documents. 
42 Those statements are sufficiently clear and precise to enable the defendant to 
prepare its defence and the Court to rule on the application. Thus, in that respect, 
the application complies with the requirements laid down in Article 19 of the EC 
Statute of the Court of Justice and in Article 44(1 )(c) of the Rules of Procedure of 
the Court of First Instance. 
43 The plea must therefore be rejected. 
— The plea of inadmissibility alleging that the loss suffered is of a contractual 
nature 
44 The defendant contends that if the loss occasioned by the failure to award a 
contract were to be regarded as being contractual in nature, the claim for 
damages based, in the present case, on non-contractual liability would be 
inadmissible. 
45 The Court finds that the alleged loss consists in the Commission's failure to 
award a contract to the applicant. The latter holds the defendant to blame for 
that loss in that, by publishing Special Report No 1/96, it induced the 
Commission not to award the contract in question to the applicant. Accordingly, 
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ISMERI EUROPA V COURT OF AUDITORS 
the loss suffered is unconnected with the performance of contractual obligations. 
The liability incurred in that regard is therefore of a non-contractual nature. 
46 The plea must therefore be rejected. 
— The plea of inadmissibility alleging that the defendant cannot be held liable for 
the loss suffered 
47 The defendant contends that the action is inadmissible because the alleged loss, 
that is to say the failure to award the contract, was caused by the Commission. 
Special Report No 1/96 is not in any way binding and thus in no way limited the 
Commission's freedom of action. 
48 The Court notes that by this plea the defendant seeks to argue that the 
Commission's freedom of action broke the alleged causal link between the act 
attributable to the defendant, namely publication of Special Report No 1/96, and 
the alleged loss, namely that occasioned by failure to award the contract. The 
defendant is calling in question the existence of a causal link, which is one of the 
substantive conditions for establishing the Community's non-contractual liability. 
Accordingly, it is a matter to be examined in connection with the substance of the 
case rather than at the stage of admissibility. 
49 In support of this plea, the defendant cites two judgments of the Court (Case 
133/79 Sucrimex and Westzucker v Commission [1980] ECR 1299, paragraphs 
22 and 23, and Case 217/81 Interagra v Commission [1982] ECR 2233, 
paragraph 8), which declared actions for damages to be inadmissible on the 
ground that the act occasioning injury could not be imputed to the defendant 
institution. However, those judgments were given in cases in which an action for 
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JUDGMENT OF 15. 6. 1999 — CASE T-277/97 
damages had been brought against the Community, although the decision 
adversely affecting the applicants had been taken by a national agency acting in 
implementation of Community rules. Since the combined provisions of Arti­
cles 178 and 215 of the Treaty confer on the Court jurisdiction only to award 
compensation for damage capable of giving rise to non-contractual liability on 
the part of the Community, the allocation to a national agency of liability for 
injury removes jurisdiction from the Court, thus rendering the action inadmissible 
(see also, to that effect, Case 175/84 Krohn ν Commission [1986] ECR 753, 
paragraphs 18 and 19, and Joined Cases 89/86 and 91/86 L'Étoile Commerciale 
and CNTA ν Commission [1987] ECR 3005, paragraphs 17 and 18). 
50 However, in the present case the question of liability for injury arises exclusively 
as between two Community institutions. The liability incurred by them is a 
matter for the Community judicature. 
51 The plea must therefore be rejected. 
The claim for damages in respect of financial loss incurred as a result of the 
termination of a contract with ARCI 
52 The applicant refers to the loss resulting from the termination, on 16 July 1997, 
of a contract entered into on 23 December 1996 with ARCI. 
53 The defendant contends that the claim for damages under this head is 
inadmissible on the grounds, first, that it cannot be held liable for the loss and, 
secondly, that the application did not indicate with the requisite degree of clarity 
and precision the causal link between the act which purportedly gave rise to 
liability and the injury. 
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54 As a matter of logic, the second plea must be examined first. 
— The plea of inadmissibility based on insufficient evidence in the application of 
the causal link between the alleged fault and the loss reportedly sustained 
55 The defendant takes the view that the applicant did not indicate with the requisite 
degree of clarity and precision what constituted the causal link between the 
allegedly unlawful conduct and the loss arising from the termination of a contract 
with ARCI. 
56 The defendant points out in that connection that the letter produced by the 
applicant does not state the reason for termination. Moreover, the applicant, it is 
contended, agreed that the contract should be terminated. Finally, the contract in 
question was entered into with the applicant on 23 December 1996, that is to say 
after publication of Special Report No 1/96, which made it very unlikely, if not 
impossible, for there to be any causal link between the special report and any loss 
arising from termination of the contract. 
57 The defendant accordingly concludes that the application is inadmissible. 
58 The Court notes that the application states that publication by the defendant of 
Special Report No 1/96 led ARCI to terminate the contract in question. It 
therefore indicates in a coherent and comprehensible manner the causal link, 
according to the applicant, between the defendant's alleged conduct and the 
damage reportedly sustained. It should be borne in mind (see paragraph 31 
above) that the fact that there is evidence in the case-file which may refute the 
argument advanced by the applicant is not capable of rendering the application 
inadmissible but merely calls in question whether it is well founded. 
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JUDGMENT OF 15. 6. 1999 — CASE T-277/97 
59 It follows that the application satisfies the formal requirements laid down by the 
provisions mentioned at paragraphs 28 to 30 above and that the plea must 
therefore be rejected. 
— The plea of inadmissibility alleging that the defendant cannot be held liable for 
the loss suffered 
60 The defendant contends that the action is inadmissible because the alleged loss, 
that is to say the termination of the contract, was caused by ARCI, either of its 
own accord or at the Commission's behest. In any event, the defendant had no 
way of compelling ARCI to take that step. Special Report No 1/96 is not in any 
way binding and thus in no way limited the Commission's, or ARCI's, freedom of 
action. 
61 The Court notes that by this plea, which is analogous to that examined at 
paragraphs 47 to 51 above, the defendant seeks to argue that ARCI's and the 
Commission's freedom of action broke the alleged causal link between the act 
attributable to the defendant, namely publication of Special Report No 1/96, and 
the alleged loss, namely that occasioned by termination of the contract. The 
defendant is thus calling in question the existence of a causal link, which is one of 
the substantive conditions for establishing the Community's non-contractual 
liability. Accordingly, it is a matter to be examined in connection with the 
substance of the case rather than at the stage of admissibility. 
62 The plea must therefore be rejected. 
The claim for damages for financial injury deriving from loss of profit 
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63 The defendant contends that the claim under this head is inadmissible on the 
ground that the application did not indicate with the requisite degree of clarity 
and precision the injury, on the one hand, and the causal link between the act 
which purportedly gave rise to liability and the injury, on the other. 
— The plea of inadmissibility alleging that the application gave insufficient 
particulars of the loss 
64 The defendant states that, in the absence of any indication either of the amount of 
the loss or at least of the factual criteria on the basis of which its nature and 
extent might be assessed, a claim for damages for loss arising out of an alleged 
downturn in the applicant's commercial activities is inadmissible (Case T-64/89 
Automec v Commission [1990] ECR 11-367, paragraphs 73 to 77). 
65 The Court, whilst referring to the principles set out at paragraphs 28 to 30 above, 
points out that a claim for any unspecified form of damages is not sufficiently 
concrete and must therefore be regarded as inadmissible (see Case 5/71 
Zuckerfabrik Schöppenstedt v Council [1971] ECR 975, paragraph 9; Case 
T-64/89 Automec v Commission, cited above, paragraph 73, and Case T-13/96 
TEAM v Commission [1998] ECR 11-4073, paragraph 27). 
66 In the present case, the applicant stated in its application that the injury sustained 
by it in respect of loss of profit stemmed from the fact that contract CHI/B7-
3011/94/172 (see paragraphs 38 to 51 above) was not awarded to it, from the 
fact that it was deprived of the possibility of participating in tendering procedures 
organised by the Community and from the attendant loss of prospective business 
opportunities. The loss sustained is said to be evidenced by damage to the 
intangible assets of its business and by the impossibility of acquiring new business 
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JUDGMENT OF 15. 6. 1999 — CASE T-277/97 
expertise. Furthermore, its balance sheet showed turnover varying between 
ITL 2 000 million and 2 500 million. Finally, it stated that it was in the light of 
those figures that the injury caused to it by Special Report No 1/96, in terms of 
the downturn in its commercial activities, should be assessed. 
67 From this, the Court concludes that, although the applicant has not quantified the 
loss which it claims to have been suffered, it has indicated the evidence on the 
basis of which its nature and extent can be assessed. The defendant has thus been 
able to defend itself and the Court is in a position to give judgment in the action. 
In those circumstances, the absence of figures in the application does not affect 
the rights of the defence, especially since the applicant produced those figures in 
the reply, thereby enabling the defendant to discuss them both in the rejoinder 
and at the hearing (see, to that effect, Joined Cases 29/63, 31/63, 36/63, 39/63 to 
47/63, 50/63 and 51/63 Usines de la Providence and Others ν High Authority 
[1965] ECR 911 at p. 935). 
68 Thus, in the present case the applicant has produced in the reply a table showing 
that its turnover, which from 1993 to 1995 had increased each year by 8%, fell 
sharply by around 55% in 1996 and 1997 compared to 1995. That loss could be 
quantified as ECU 683 742 per annum. 
69 The plea must therefore be rejected. 
— The plea of inadmissibility based on insufficient evidence in the application of 
the causal link between the alleged fault and the loss reportedly sustained 
70 The defendant maintains that the applicant did not indicate with the requisite 
degree of clarity and precision what constituted the causal link between the 
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unlawful conduct alleged against it, on the one hand, and the loss of profit, on the 
other. The applicant merely submits that its turnover fell, but makes no attempt 
to explain how that came about. 
71 First of all, if termination of both the FEDER contract and the contract entered 
into with ARCI were recognised as having contributed to the fall in its turnover, 
the applicant would in fact be seeking damages twice over for the same loss. 
72 Secondly, the applicant's argument that, owing to Special Report No 1/96, it was 
no longer able to operate as before in regard to the provision of assistance under 
and the evaluation of Community programmes should, the defendant contends, 
be rejected. In the first place, the two abovementioned contracts were entered 
into at a time when the special report was already in the public domain, that is to 
say known to all participants. Secondly, during an audit of expenditure under the 
European Social Fund carried out in Italy by the defendant's auditors from 2 to 
6 February 1998, the applicant was found to have secured in September and 
October 1997, jointly with another undertaking, two consultancy agreements for 
ITL 800 million and ITL 1 200 million respectively, which were wholly financed 
out of Community funds. The total amount of those two contracts was significant 
in relation to the applicant's annual turnover. 
73 The defendant concludes from the foregoing that the application is inadmissible 
in that respect as well. 
74 The Court notes that the application explains in what way the injury arising from 
loss of profit was caused by Special Report No 1/96. That report, which was 
unfavourable to the applicant, was drawn up by a Community institution 
enjoying considerable prestige; it was published in the Official Journal of the 
European Communities and was thus widely distributed in all the Member States 
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JUDGMENT OF 15. 6. 1999 — CASE T-277/97 
and particularly in circles which play an influential role in political and economic 
terms. 
75 The application goes on to distinguish clearly between injury due to loss of profit 
and injury deriving from the termination of contracts entered into with the 
Commission and ARCI. Those two heads of damage are described and evaluated 
separately. A distinction is drawn between them according to their degree of 
certainty, injury deriving from the termination of contracts being described as 
'loss', as opposed to mere loss of profit. 
76 The Court therefore considers that those indications are sufficiently clear and 
precise to enable the defendant to prepare its defence and for judgment to be 
given in the action. 
77 Moreover, the argument put forward by the defendant in the rejoinder to the 
effect that in September and October 1997 the applicant secured major contracts 
financed by Community funds can have no bearing on the issue of the 
application's admissibility. That argument does not cast doubt on the internal 
coherence of the application or on its formal validity but can only go to the merits 
of the case. 
78 It follows that the application complies with the requirements of Article 19 of the 
EC Statute of the Court of Justice and Article 44(l)(c) of the Rules of Procedure 
of the Court of First Instance. 
79 The plea must therefore be rejected. 
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Admissibility of the claim for damages in respect of non-material injury 
80 The defendant pleads that the application is inadmissible on the ground that it did 
not indicate with the requisite degree of clarity and precision the extent and 
nature of the non-material injury allegedly sustained. Moreover, the figure of 
ECU 200 000 put on the claim in the reply is inadmissible as a fresh claim and is 
not sufficiently precise. 
81 The Court refers to the principles set out at paragraphs 28 to 30 and 65 above 
and adds that a claim for damages in respect of non-material injury, whether as 
symbolic reparation or as genuine compensation, must give particulars of the 
nature of the injury alleged in connection with the conduct for which the 
defendant is held responsible and must quantify the whole of that injury, even if 
approximately (see, to that effect, the order in Case T-l 12/94 Moat v 
Commission [1995] ECR-SC 11-135, paragraph 38, and Case T-157/96 Affatato 
v Commission [1998] ECR-SC 11-97, paragraph 49). 
82 In the present case, the applicant states in the application that the non-material 
injury consists in an attack on its integrity and reputation by the publication of 
Special Report No 1/96, which it describes as defamatory. It lays emphasis on the 
fact that, as stated in paragraph 74 above, that attack was made by a Community 
institution enjoying considerable prestige and was published in the Official 
Journal of the European Communities which is an official publication and is 
widely distributed in all the Member States and particularly in circles which play 
an influential role in political and economic terms. It points out that an attack of 
that kind on integrity and reputation seriously disrupts the smooth functioning of 
a firm which, as in the applicant's case, is a small or medium-sized one. 
83 From this, the Court concludes that, although the applicant has not quantified the 
loss which it claims to have suffered, it has indicated the evidence on the basis of 
which its nature and extent can be assessed. The defendant has thus been able to 
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defend itself and the Court is in a position to give judgment in the action. In those 
circumstances, as stated in paragraph 67 above, the absence of figures in the 
application does not affect the rights of the defence, especially since the applicant 
produced those figures in the reply, thereby enabling the defendant to discuss 
them both in the rejoinder and at the hearing (see, to that effect, Usines de la 
Providence and Others ν High Authority, cited above, and TEAM ν Commission, 
cited above, paragraph 29). 
84 Thus, the applicant submitted in the reply an exhaustive analysis of the non-
material injury suffered by it. First, it set out five criteria for evaluating that 
injury, namely the extent of the damage, its seriousness, whether it could have 
been avoided, the financial standing of the person occasioning the injury and the 
status of the person injured. Then, on the basis of the judgment in Case T-52/92 
Caronna ν Commission [1993] ECR II-1129, paragraph 107, it proposed that the 
damage be quantified as ECU 200 000. Finally, it added that it would be prepared 
to accept such sum as the Court may consider appropriate. 
85 The plea alleging that the extent of the injury was not specified to a sufficient 
extent in the application must therefore be rejected. 
86 Furthermore, it follows from the arguments put forward by the applicant, as they 
have been set out, that the quantum of damages proposed in the reply has as its 
purpose merely to particularise the claim for damages in respect of non-material 
injury made in the application, and does not amount to a fresh claim. 
87 Accordingly, the plea alleging that the evaluation of non-material injury at ECU 
200 000 is inadmissible inasmuch as it constitutes a fresh claim must be rejected. 
88 Next, the defendant takes issue with the applicant's attempt to include under the 
heading of non-material injury the health problems suffered by its director. The 
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conclusion it draws therefrom is that this head of the claim is inadmissible for 
lack of sufficient particulars. 
89 The Court considers, however, that this line of argument by the defendant fails to 
recognise that the formal requirements laid down in Article 19 of the EC Statute 
of the Court of Justice and Article 44(1 )(c) of the Rules of Procedure of the Court 
of First Instance are merely intended to enable the defendant to prepare its 
defence and the Court to give judgment in the action. The head of claim at issue 
complies with those requirements. The fact that it may not be well founded does 
not mean that it is inadmissible. 
90 The plea must therefore be rejected. 
91 Finally, the defendant contends that the claim for damages does not adequately 
distinguish between material and non-material injury. In that connection it refers 
to paragraphs 68 and 72 of the reply. 
92 Admittedly, at paragraph 68 of the reply, the applicant refers to paragraphs 58 to 
61 and 64 of the application for an assessment of the non-material injury. 
Paragraphs 58 to 61 of the reply deal with the causal link between Special Report 
No 1/96 and all the heads of damage. At paragraph 64, the applicant states that it 
has provided all the evidence necessary to enable the damage to be quantified, 
which therefore covers non-material injury as well. Moreover, the nine 
paragraphs following paragraph 68 are intended to specify and quantify that 
injury. 
93 At paragraph 72 of the reply, the applicant explains in what respect its status and 
functions should be taken into account in assessing non-material injury. It claims 
to be highly regarded professionally and to carry on the bulk of its business with 
the Community institutions. Moreover, an attack on a person's integrity 
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aggravates the financial loss suffered where the event which gave rise to that 
attack is brought to the knowledge of the circles in which the victim carries on 
business. However, that reference to financial loss is merely incidental. 
94 The plea must therefore be rejected. 
Substance 
95 The Community's liability under the second paragraph of Article 215 of the 
Treaty depends on the fulfilment of a series of conditions as regards the 
unlawfulness of the conduct alleged against the Community institutions, the fact 
of damage and the existence of a causal link between the conduct of the 
institution concerned and the damage complained of (Case C-308/87 Grifoni ν 
EAEC [1990] ECR 1-1203, paragraph 6, and Case T-168/94 Blackspur and 
Others ν Council and Commission [1995] ECR II-2627, paragraph 38). 
96 The applicant takes the view that the defendant conducted itself unlawfully, 
inasmuch as it infringed the principle that proceedings must be inter partes and 
expressed defamatory criticisms of the applicant in Special Report No 1/96. 
Infringement of the principle that proceedings must be inter partes 
97 The applicant points out that Special Report No 1/96 is highly critical of it. In 
accordance with the principle that proceedings must be inter partes, the 
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defendant ought to have given the applicant the opportunity of submitting its 
observations before the adoption of the report and ought to have re-examined it 
in the light of the observations which the applicant made after the report's 
publication. 
98 The defendant contends, primarily, that the plea is devoid of purpose since the 
applicant had the opportunity of making its point of view known both before and 
after the adoption of Special Report No 1/96. In the alternative, it contends that 
the plea is unfounded, the principle that proceedings must be inter partes being 
applicable only to judicial proceedings or administrative proceedings capable of 
resulting in the imposition of penalties. However, the special report is not in the 
nature of a decision and merely expresses an opinion. In the further alternative, it 
contends that the plea is irrelevant since infringement of the principle that 
proceedings must be inter partes could not have caused the injury claimed. 
99 The Court proposes to examine the defendant's last argument first. 
100 Fault does not of itself establish the Community's liability and confer on the 
applicant entitlement to the compensation claimed. In that connection, the Court 
observes that, for the Community to incur liability, the applicant must prove not 
only the illegality of the conduct alleged against the institution concerned and the 
fact of the damage but also the existence of a causal link between that conduct 
and the damage complained of (Joined Cases 197/80, 198/80, 199/80, 200/80, 
243/80, 245/80 and 247/80 Ludwigshafener Walzmühle and Others v Council 
and Commission [1981] ECR 3211, paragraph 18; Case C-257/90 Italsolar v 
Commission [1993] ECR I-9, paragraph 33; and Joined Cases T-481/93 and 
T-484/93 Exporteurs in Levende Varkens and Others v Commission [1995] ECR 
11-2941, paragraph 80). Moreover, it is settled case-law that the damage must be a 
sufficiently direct consequence of the conduct complained of (Joined Cases 64/76, 
113/76, 167/78, 239/78, 27/79, 28/79 and 45/79 Dumortier Frères and Others v 
Council [1979] ECR 3091, paragraph 21; Case T-175/94 International Procure­
ment Services v Commission [1996] ECR II-729, paragraph 55; and Case T-7/96 
Perillo v Commission [1997] ECR II-1063, paragraph 41). 
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101 In the present case, the injury allegedly sustained by the applicant stems from the 
adoption and publication by the defendant of Special Report No 1/96. On the 
assumption, however, that the defendant was under an obligation to allow the 
applicant to make its point of view known before the adoption and publication of 
the report, or was required to examine in greater detail any observations 
submitted by the applicant, neither course could, in the circumstances of the case, 
have led to any alteration or rectification of the contents of the report, as 
published. 
102 Notwithstanding the existence and implementation of the principle that 
proceedings must be inter partes, the defendant still retained its discretionary 
power and the right to maintain its point of view. The defendant's appraisal of the 
arguments submitted by the applicant is contained in its reply of 7 March 1997, 
cited at paragraph 16 above, to the request by the applicant's lawyer, cited at 
paragraph 15 above, to publish in the Official journal of the European 
Communities a rectification to Special Report No 1/96. In that reply, the 
defendant refutes, in detail and point by point, the applicant's observations on the 
inaccuracy of passages in the special report concerning the applicant and informs 
the latter that there are no grounds on which to rectify the report. If the applicant 
had been in a position to submit those observations prior to adoption of the 
special report, therefore, the defendant would not have adopted a different 
viewpoint. Similarly, it is sufficiently clear from the tenor of that reply that, after 
an even more exhaustive examination of the applicant's observations, the 
defendant would still not have rectified the report. 
103 Likewise, on the assumption that the defendant was under an obligation to re­
examine the report in light of the applicant's observations and that its letter of 
7 March 1997 does not indicate satisfactory compliance with that obligation, the 
tenor of that letter shows sufficiently clearly that the defendant would not, even 
after a still more exhaustive examination of the applicant's observations, have 
rectified Special Report No 1/96. 
104 It follows that neither the defendant's failure to request the applicant to submit its 
observations prior to the adoption and publication of Special Report No 1/96 nor 
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the failure to examine those observations in sufficient depth could have caused or 
aggravated the injury claimed in the application. 
105 The plea alleging infringement of the principle that proceedings must be inter 
partes must therefore be rejected without there being any need to consider the 
question whether or not, in the present case, the applicant was entitled to rely on 
that principle. 
Defamatory nature of the defendant's criticisms of the applicant 
The principle of defamation 
106 The applicant claims that in Special Report No 1/96 the defendant expressed 
criticisms of it which are unfounded. This is, it states, the first time that the 
defendant has included in a special report to the Parliament serious criticisms 
relating directly to persons outside the Community institutions and referring to 
them by name. The accusations made are based on a partial and distorted view of 
the true state of affairs. 
107 It takes the view that an assertion may be defamatory irrespective of whether or 
not the matter reported is well founded. A statement may be defamatory even if 
the matter raised is true or partly true. Thus, under Italian law, not only untrue or 
subjective statements but also insinuations are deemed liable to injure or 
jeopardise the reputation of another person. 
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108 The Court notes that, under the first subparagraph of Article 188c(2) of the 
Treaty, the Court of Auditors is required to examine whether all revenue has been 
received and all expenditure incurred by the Community in a lawful and regular 
manner and whether financial management has been sound. Under paragraph 4 
of that provision, it is to submit its observations either in the annual report or in 
the form of special reports. 
109 Actuated by the concern to ensure that its tasks are properly carried out, the 
Court of Auditors may exceptionally, and in particular where there is a serious 
malfunction affecting the lawfulness and regularity of revenue and expenditure or 
the requirements of sound financial management, make a full report on the facts 
established and give the names of any third parties directly involved. The naming 
of those involved is all the more necessary where anonymity may give rise to 
confusion or cast doubt on their identity, which is liable to harm the interests of 
those concerned by the investigation of the Court of Auditors but not implicated 
by its critical assessments. 
110 In those circumstances, the assessments made concerning third parties are fully 
subject to review by the Court of First Instance. They may constitute 
maladministration and thus give rise, where appropriate, to non-contractual 
liability on the part of the Community, if either the facts reported are not 
substantively correct or the interpretation placed on facts which are substantively 
correct is erroneous or one-sided. 
The specific allegations of defamation 
111 The applicant denies that it gained a privileged position for itself as a result of a 
conflict of interests or that it resisted the Commission's requests. Furthermore, the 
defendant allegedly failed to take account of the significant results yielded by 
work to which the applicant had contributed. 
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— The conflict of interests 
112 The fact that a person who helps to evaluate and select tenders for a public 
contract has the contract awarded to him is highly questionable and constitutes a 
chargeable offence under the criminal law of several Member States, regard being 
had to the principle of equal treatment in the award of public contracts, the 
concern for sound financial management of Community funds and the prevention 
of fraud. 
1 1 3 Where, in the exercise of its duties, the Court of Auditors encounters serious 
irregularities of that kind, it is obliged to report them. 
114 In the present case, Special Report No 1/96 states, at paragraphs 50 to 55 and in 
Annex 3 thereto, that the applicant participated in the proceedings of the 
management board of the ARTM, its director being one of the ARTM's four 
administrators, in the planning of the MED programmes, including the stage at 
which draft financing proposals were prepared, and in monitoring the 
programmes. Yet, during that period, in its capacity as a BAT it was awarded 
contracts under those programmes totalling ECU 2 088 700. 
115 The applicant does not contest the accuracy of the facts, which are moreover 
supported by ample documentary evidence produced by the defendant, but 
maintains that there could be no conflict of interests. The Commission, it asserts, 
retained decision-making power and the ARTM merely had a preparatory and 
executive role. 
116 However, that argument is not relevant. Even if that assertion is correct, the fact 
remains that the applicant participated in meetings at which decisions were taken 
on the assessment and selection of projects entrusted to it. 
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117 Thus, the technical assistance contract for the implementation of the MED-
Campus programme, which is mentioned at paragraph 52(a) of the special report 
and was entered into on 21 December 1992 between the ARTM and the 
applicant for ECU 748 900, was proposed by the ARTM of which the applicant 
was a founder member and its director one of the four administrators. 
118 Moreover, the contract mentioned at paragraph 52(b) of the special report and 
entered into on 12 July 1993 between the ARTM and the applicant for ECU 
405 000 was awarded on a private treaty basis, without any tendering or 
selection procedure. 
119 It follows that the applicant was in a position to influence the decision-making 
process and thus to use its position, and that of its director, in order to further its 
own interests. The situation in which it found itself therefore involved a conflict 
of interests. 
120 Furthermore, although it is true, as the applicant maintains, that the Commission 
had a right of veto within the Commitment Committee, the fact remains that the 
applicant's director for his part enjoyed voting rights on the ARTM's manage­
ment board. In the circumstances referred to above, the projects which the 
applicant was offered were adopted without any objection from the Commission. 
121 The applicant further emphasises that, during the trial phase of the MED 
programmes, the Commission entered into contracts directly with the consul­
tancy firms assisting it; those firms were then invited to participate in the newly-
established ARTM; the applicant itself accepted the additional workload in a 
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spirit of cooperation and never sought to obtain any advantage from that 
situation. 
122 It is common ground that, during a trial period, the Commission had to enter into 
contracts on a private treaty basis with consultancy firms including the applicant. 
In that connection Special Report No 1/96 refers at paragraph 51 to the contract 
entered into on 10 August 1992 between the Commission and the applicant for 
ECU 199 960 involving the preparation of draft financing proposals as part of the 
MED-Campus programme. The conclusion of that contract preceded the setting 
up, on 24 September 1992, of the ARTM, of which the applicant was a founder 
member. 
123 However, that argument is not relevant. The conflict of interests constitutes, 
objectively and in itself, a serious irregularity without there being any need to 
qualify it by having regard to the intentions of the parties concerned and whether 
they were acting in good or bad faith. The presence of BATs, including the 
applicant, on the ARTM's management board was objectively incapable of being 
justified. The defendant was therefore bound to report it without being required 
to consider whether that serious irregularity was due to a mere lack of foresight 
or a clear intent to defraud. That question, which has no bearing on the financial 
supervision exercised by the Court of Auditors, is, however, relevant to any action 
to be taken by the Commission in response to Special Report No 1/96. 
124 It follows that there was no maladministration on the part of the defendant, nor 
did the latter misinterpret or put a one-sided interpretation on the facts by 
drawing attention in the special report to a conflict of interests involving the 
applicant. 
125 The plea must therefore be rejected. 
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— The applicant's opposition to the Commission's requests 
126 The applicant criticises the following passage in Special Report No 1/96 
(paragraph 56): 
'... The minutes of the meetings of the Agency's Management Board show how 
vigorously those concerned resisted the Commission's requests. Nearly a year and 
a half went by before they finally decided to step down, in circumstances which 
are questionable to say the least.' 
127 The applicant considers this presentation of the facts to be a complete distortion. 
There was no resistance on the part of those concerned to resigning, nor were the 
circumstances in which they resigned questionable. 
128 The Court notes that on 28 May 1993 the Commission informed the ARTM of 
its wish to see the directors of the BAT leave the management board of the ARTM 
since, in its view, their presence on the board was ambivalent and giving rise in 
certain quarters to increasingly persistent questions. 
129 Initially, that request was favourably received by the ARTM. Thus, in an internal 
memorandum dated 14 June 1993, it submitted a plan and a specific timetable to 
that end, the proposed change in composition to be carried through by January 
1994. That intention was confirmed by the management board of ARTM at its 
meetings on 1 July 1993 and 5 October 1993. On 18 June 1993 steps were taken 
with a view to appointing new members to the management board. 
130 Subsequently, however, not only was the timetable not adhered to but the ARTM 
proved reluctant to change the composition of its management board and made 
any change subject to compliance with a number of conditions, laid down 
successively. 
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131 Thus, on 18 May 1994, when the ARTM applied to take part in the tendering 
procedure organised for the continued implementation and monitoring of the 
MED programmes, the chairman of the ARTM wrote to the Commission that the 
management board would resign only if the ARTM were awarded that contract. 
132 However, even though that contract was awarded to it, and signed on 
1 September 1994, the ARTM did not carry out the promised alteration in the 
composition of the board. On the contrary, the general meeting of the ARTM 
held on 11 October 1994 renewed the term of office of the applicant's director 
for a further two years. The minutes of that meeting note that the applicant's 
director would none the less have been prepared to resign if, first, the applicant 
were reappointed as the BAT for the MED-Campus programme and, secondly, 
the director were allowed to put forward a candidate of his own choosing in the 
event of his resignation. This was confirmed by the ARTM in an internal 
document dated 12 January 1995. 
133 That twofold condition was apparently complied with. In the first place, the 
applicant's appointment as BAT for the MED-Campus programme was renewed 
for 1995 by a contract signed with the Commission on 18 January 1995. 
Secondly, it is clear from the ARTM's observations of 12 January 1996 on the 
draft of Special Report No 1/96 that one of its new administrators had formerly 
worked with the applicant. 
134 It was in those circumstances that the applicant's director finally resigned from 
the management board of the ARTM in April 1995. 
135 The applicant claims that Special Report No 1/96 misinterprets the conduct of 
the ARTM as from 1994, inasmuch as in January 1994 the Commission waived 
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its request that the ARTM's management board should resign. In that connection 
the applicant refers to the minutes of the meeting of the ARTM's management 
board of 21 January 1994 which, at point 3.6 'Changes in the management 
board', states as follows: 
'The Commission requested some months ago that the ARTM's management 
board be modified so that the BATs running the programmes no longer 
participate at the same time in proceedings of the ARTM's management board. 
The Commission and the administrators consider that that request is no longer 
appropriate.' 
136 The Court notes, first of all, that the credibility of this document is open to doubt. 
It does not explain why the Commission's request is no longer appropriate. It 
does not state which Commission representative expressed that view of the 
matter and by what authority. Finally, the document emanates from the ARTM 
and not the Commission. 
137 In the second place, it is contradicted by other, subsequent documents emanating 
from both the ARTM and the Commission. 
138 Accordingly, the reference, in the abovementioned letter of 18 May 1994 from 
the chairman of the ARTM to the Commission, to the problem caused by the 
presence of BAT representatives on the ARTM's management board and the 
statement that they would resign if the contract were awarded to the ARTM, 
would be meaningless if the Commission had in fact decided in January 1994 not 
to seek their resignation. Moreover, that letter was addressed to Mrs Y. of D G I 
who, according to the minutes of the meeting of the ARTM's management board 
of 21 January 1994 in which the passage under discussion appears, was present at 
that meeting. It would therefore make no sense for the ARTM to write to her four 
months after that meeting without mentioning that alleged change of attitude, 
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and to offer to comply, subject to certain conditions, with a request which the 
Commission had reportedly waived. 
139 Besides, in its observations on the draft version of Special Report No 1/96, the 
ARTM pointed out that the Commission had expressed the wish to see the BAT 
representatives leave the management board of the agency and had itself initially 
consented to it. However, not only does the ARTM not mention a decision by the 
Commission not to seek their resignation but it clearly states that the resignations 
were postponed on the ARTM's own initiative. 
140 In its observations appended to Special Report No 1/96, the Commission 
considers that the long delay recorded before the resignation of the BAT 
representatives from the ARTM's management board, despite the assurances it 
had received, was unacceptable. In no way does it bear out, therefore, the 
observation in the document under discussion. 
1 4 1 Moreover, the applicant explains the alleged decision by the Commission not to 
seek a change in the composition of the management board of the ARTM by the 
fact that the tasks hitherto performed by the ARTM, namely the operation of the 
MED programmes, were to be reallocated in 1994 by means of a tendering 
procedure in which the ARTM was free to participate. However, that justification 
is not persuasive, as the defendant has rightly contended. The conflict of interests 
arising from the presence of BAT representatives on the management board of the 
ARTM cannot be avoided or resolved by the participation of the ARTM in a 
tendering procedure with a view to being entrusted with the management of those 
programmes. That problem would persist undiminished once the ARTM had 
secured the award of the contract. 
142 In conclusion, paragraph 56 of Special Report No 1/96 not only refers to 
established facts but also gives an objective and comprehensive interpretation of 
those facts by stressing that the circumstances in which the applicant's director 
resigned were questionable. That resignation, which was justified owing to a 
conflict of interests, was subsequently made subject to a series of new conditions. 
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Initially, it was made subject to the grant to the ARTM of the contract for the 
management of the MED programmes. Then it was made subject to the twofold 
condition that the applicant be reappointed as the BAT for the MED-Campus 
programme and that the applicant's director could propose a candidate of his 
choice to replace him. It was only after all those conditions had been fulfilled that 
the applicant's director finally resigned in April 1995. However, between the date 
on which the Commission first sought that resignation, in May 1993, and the 
date on which it finally occurred, in April 1995, the applicant was awarded two 
contracts as the BAT for the MED-Campus programme, the first in January 1994 
relating to 1994 for ECU 610 800, and the second on 18 January 1995 relating to 
1995 for ECU 720 000. 
143 The plea must therefore be rejected. 
— Failure by the defendant to take into consideration the results of work to 
which the applicant contributed 
144 The applicant criticises the defendant for making no mention whatever in Special 
Report No 1/96 of the results obtained under the MED programmes during the 
trial period. It considers those results to have been very positive, a conclusion 
based on the outcome of a survey conducted at the Commission's request with the 
network participants mentioned in the Parliament's Resolution of 17 July 1997 
on the special report. Furthermore, the independent auditors called upon to 
appraise the activities carried on during the trial period had even laid emphasis on 
the need to strengthen the applicant's role as a BAT. 
145 The Court points out that, under Article 188c(2) of the Treaty, the Court of 
Auditors is competent to examine whether revenue has been received and 
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expenditure incurred in a lawful and regular manner and whether the financial 
management of the Community has been sound. In principle, therefore, its 
competence is limited to the financial sphere. Without there being any need to 
answer the question whether that competence might also extend to the appraisal 
of fundamental policy choices, it must nevertheless be held that it plainly covers a 
review, in terms of sound financial management, of the means by which effect is 
given to those choices. 
146 In the present case, the defendant uncovered serious irregularities in the financial 
management of the MED programmes which took the form, in particular, of a 
conflict of interests involving the applicant. A conflict of interests as regards the 
award of public contracts already compromises the sound management of 
Community funds and equal access for all to such contracts, without there being 
any need for it to cause quantifiable material injury as well. Assessment of the 
quality of the work carried out by the applicant and of the results achieved is not 
therefore a criterion which is capable of calling into question the relevance of the 
findings made by the defendant. 
147 The plea must therefore be rejected. 
148 It follows from the foregoing that the action must be dismissed in its entirety. 
Costs 
149 Under Article 87(2) of the Rules of Procedure, the unsuccessful party is to be 
ordered to pay the costs if they have been applied for in the successful party's 
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pleadings. Since the applicant has been unsuccessful in its submissions, it must be 
ordered to pay the costs, in accordance with the form of order sought by the 
defendant. 
On those grounds, 
THE COURT OF FIRST INSTANCE (Third Chamber) 
hereby: 
1. Dismisses the action; 
2. Orders the applicant to pay the costs. 
Jaeger Lenaerts Azizi 
Delivered in open court in Luxembourg on 15 June 1999. 
H. Jung 
Registrar 
M. Jaeger 
President 
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