Keywords

Summary



Keywords

1. Procedure – Referral to the Court of First Instance under an arbitration clause

(Arts 238 EC and 240 EC)

2. Procedure – Referral to the Court of First Instance under an arbitration clause – Application initiating proceedings

(Art. 238 EC; Rules of Procedure of the Court of First Instance, Art. 44(5a))

3. Procedure – Referral to the Court of First Instance under an arbitration clause

(Art. 238 EC)

4. Non-contractual liability – Conditions – Sufficiently serious breach of Community law

(Art. 288, second para., EC)

5. Non-contractual liability – Conditions – Infringement of a rule of law conferring rights on individuals

(Art. 288, second para., EC)

6. Budget of the European Communities – Financial regulation – Provisions applicable to procedures for the award of public contracts

(Council Regulation No 1605/2002, Art. 101, first para.)

7. Community law – Principles – Protection of legitimate expectations – European Communities’ public procurement

8. European Communities’ public procurement – Negotiated procedure

(Art. 288, second para., EC)

9. Non-contractual liability – Conditions

(Art. 288, second para., EC)

10. Budget of the European Communities – Financial regulation – Provisions applicable to procedures for the award of public contracts

(Council Regulation No 1605/2002, Art. 101, first para.)

Summary

1. Only the parties to an arbitration clause can be parties to an action brought on the basis of Article 238 EC. In the absence of any expression of the parties’ intention to confer jurisdiction on it to adjudicate on a contractual dispute, the Court cannot accept the referral of the case, otherwise it would extend its jurisdiction beyond the limits placed by Article 240 EC, since that article specifically gives national courts or tribunals ordinary jurisdiction over disputes to which the Community is a party. As this Community jurisdiction derogates from ordinary law, it must also be given a restrictive interpretation.

If, under an arbitration clause entered into pursuant to Article 238 EC, the Community judicature may be called on to decide a dispute on the basis of the national law governing the contract, its jurisdiction to determine a dispute concerning that contract falls to be determined solely in the light of Article 238 EC and the terms of the arbitration clause, and this cannot be affected by provisions of national law which allegedly exclude its jurisdiction.

(see paras 53, 55)

2. Whilst Article 238 EC does not state what form the arbitration clause is to take, it is clear from Article 44(5a) of the Rules of Procedure of the Court of First Instance, which requires an application submitted under Article 225(1) EC and Article 238 EC to be accompanied by a copy of the clause conferring jurisdiction on the Community courts, that the clause must in principle be stipulated in writing. Article 44(5a) of the Rules of Procedure has an evidential purpose and the formal requirement which it prescribes must be deemed to have been fulfilled where the documents produced by the applicant provide the Community court with sufficient information on the agreement between the parties to the action to remove the dispute between them from the purview of the national courts and to submit it to the Community courts.

(see para. 56)

3. Assuming that the theory of ostensible authority is recognised in Community law, particularly with regard to the representation of parties to a contract, applying that theory necessarily presupposes that the third party pleading that authority establishes that the circumstances of the case justified his belief that such ostensible authority accorded with reality. It follows that an applicant who has brought his action on the basis of an arbitration clause ‘apparently’ entered into by him and the Commission must at least show that, having regard to the circumstances of the case, he could legitimately have believed that an official of the Office for infrastructure and logistics in Brussels, an entity constituted by Decision 2003/523, was empowered to bind the Commission contractually, acting for and on behalf of the Community.

(see para. 60)

4. As regards non-contractual liability of the Community, illegal conduct of which the institution stands accused must constitute a sufficiently serious breach of a rule of law intended to confer rights on individuals. The decisive criterion for finding that a breach of Community law is sufficiently serious is whether the Community institution concerned manifestly and gravely disregarded the limits to its discretion. Where an institution has only a considerably reduced, or even no, discretion, the mere infringement of Community law may be sufficient to establish the existence of a sufficiently serious breach.

(see para. 105)

5. The conduct of the Community public authority, in administrative as in contractual matters, is at all times subject to observance of the principle of good faith. Moreover, individuals cannot seek to misuse Community measures. Where negotiations take place for the conclusion of a contract between the Community public authority and a tenderer in the context of a public procurement procedure, those rules of law confer rights on the tenderer, breach of which can render the Community non-contractually liable, by imposing certain limits on the conduct of a Community contracting authority which decides to abandon the procurement and not to contract. Furthermore, the principle of the protection of legitimate expectations is a general principle of Community law which confers rights on individuals. In a public procurement procedure, that principle confers rights on any tenderer who is in a situation in which it is apparent that, in giving him specific assurances, the Community administration has led him to entertain reasonable expectations.

(see paras 107-109)

6. It follows from, inter alia, the first paragraph of Article 101 of Regulation No 1605/2002 on the Financial Regulation applicable to the general budget of the European Communities that, in the context of a negotiated procedure for the award of a public contract, without prior publication of a contract notice, the contracting authority has a very broad discretion to refuse to conclude the contract and, therefore, to terminate the pre-contract negotiations which have been started.

(see para. 111)

7. The right to rely on the principle of the protection of legitimate expectations extends to any individual in a situation where the Community authorities, by giving him precise assurances, have caused him to entertain legitimate expectations. Such assurances, in whatever form they are given, are precise, unconditional and consistent information from authorised and reliable sources. Whilst it is true, in that regard, that traders must bear the economic risks inherent in their activities, and that, in connection with a tendering procedure for the award of a public contract, those economic risks include, inter alia, the costs connected with the preparation of the bid, there may be a breach of the principle of the protection of legitimate expectations, capable of rendering the Community non‑contractually liable, if, before the contract in question is awarded to the successful tenderer, a tenderer is encouraged by the contracting institution to make irreversible investments in advance and thereby to go beyond the risks inherent in the business under consideration, consisting in making a bid.

(see paras 138-139)

8. In the context of a property procurement negotiated with a single partner, concerning a building which is not available because of pre-contract negotiations, the Commission breaches the principle of good faith to a sufficiently serious degree and abuses its right not to contract if it delays more than two months in informing its partner of its decision to abandon the procurement and therefore break off the pre-contract negotiations, thereby continuing pre‑contract negotiations which it knows are bound to fail and thus depriving its partner of the opportunity to seek another tenant for the building concerned from the date of the decision.

The Commission also commits a sufficiently serious breach of the principle of the protection of legitimate expectations if it breaks off pre‑contract negotiations after encouraging its partner in those negotiations to carry out fitting‑out work so as to be able to let the building from the anticipated commencement date of the lease. The partner is thereby encouraged by the Commission, in its capacity as contracting authority, to make irreversible investments in advance and, consequently, to go beyond the risks inherent in the activities concerned, consisting in submitting a tender in the context of a public procurement procedure. Furthermore, the partner acts reasonably and realistically in agreeing to make the necessary investments in advance so as to be able to implement the lease in accordance with the Commission’s requirements, having previously received specific assurances from the Commission that it would reimburse the partner for the fitting‑out work performed outside the contractual cover.

Therefore, in breaking off the pre-contract negotiations, the Commission’s conduct is unlawful and capable of giving rise to non-contractual liability on the part of the Community by allowing pre-contract negotiations, which it knew were bound to fail, to continue, and by breaking off the pre-contract negotiations after encouraging its partner in those negotiations to carry out the fitting-out work necessary for letting the building from the anticipated commencement date of the lease.

(see paras 131-132, 137, 153, 155-156)

9. In the context of a negotiated procedure for the award of a Community public contract, unilateral termination of the contractual negotiations falls within the scope of the contracting authority’s right not to take up the planned lease pursuant to the first paragraph of Article 101 of Regulation No 1605/2002 on the Financial Regulation applicable to the general budget of the European Communities. Consequently, the economic operator never acquires a right to conclude the lease. Furthermore, without a binding agreement between the parties, the tenderer cannot acquire a right of any kind under the lease or, therefore, a right to obtain the anticipated contractual earnings. It follows that the unlawful conduct of the institution, which arises entirely from the circumstances of its exercise of the right to abandon the procurement and to terminate the pre-contract negotiations unilaterally cannot be regarded as the cause of the damage consisting in the loss of an opportunity to contract and to obtain the earnings anticipated from the conclusion of the lease.

(see paras 161-162)

10. It is clear from the first paragraph of Article 101 of Regulation No 1605/2002 on the Financial Regulation applicable to the general budget of the European Communities that, in principle, the charges and expenses incurred to no purpose by a tenderer in connection with his participation in a procurement procedure cannot in principle constitute damage which is capable of being remedied by an award of damages. However, that provision cannot, without potentially undermining the principles of legal certainty and of protection of legitimate expectations, apply in cases where an infringement of Community law in the conduct of the tendering procedure has affected a tenderer’s chances of being awarded the contract or led him to incur unjustified charges or expenses.

(see para. 165)