OPINION OF ADVOCATE GENERAL

SIR GORDON SLYNN

delivered on 11 July 1985

My Lords,

The present proceedings, which have been brought in pursuance of Article 181 of the EEC Treaty and Article 153 of the Euratom Treaty, relate to two contracts for the construction of two separate buildings at the Joint Research Centre at Ispra. The parties to both contracts were the Commission, represented by its Deputy Director-General of the Centre, and CO.DE.MI. SpA. The first contract, which was concluded on 14 December 1979, concerned the ‘ingresso principale’ or main entrance to the Centre (the ‘IP contract’). The second contract was concluded on 20 December 1979 and provided for the construction of a ‘management building’ within the precincts of the Centre (the ‘MB contract’).

By virtue of Article 2 (7) of each contract the general terms and conditions applicable to contracts awarded by the Joint Research Centre of February 1976 were incorporated into that contract. Article 13 of each contract set the price of the works at LIT 1068351682 and LIT 1370000000 respectively. According to Article 18 of each contract, half of this price was to be paid over within 60 days of the receipt by the Commission of the contract bearing CO.DE.MI.'s signature. The rest was to be paid in stages depending on the speed of the work. Article 15 of each contract, which was underlined in full, was in the following terms: ‘the prices are fixed and unalterable for the entire duration of the works, even if for reasons which are attributable to us the date of handing over of the works as fixed in point 14 above must be postponed by up to two months’. Article 16 provided that a memorandum would be made out for the start and the finish of the works. Article 14 of each contract stipulated that the work was to be completed within 420 and 450 days respectively following the date of the memorandum recording the start of the works.

That memorandum was made out on 20 March 1980 for the IP contract so that the main entrance building should have been completed by 13 May 1981. The memorandum for the MB contract was dated 11 February 1980 and accordingly, taking into account delays caused by intemperate weather, the deadline for the performance of that contract expired at the end of June 1981.

Both contracts referred expressly to two articles of the Italian Civil Code. In the first place, mention was made of Article 1341 which requires certain types of contractual clause to be specifically approved in writing. Purportedly in pursuance of that provision CO.DE.MI. expressly declared its approval of Articles 6 (subcontracting), 13 (termination), 14 (liability) and 16 (clause specifying the competent court) of the general terms and conditions. Secondly, CO.DE.MI. signed a specific declaration at the end of each contract stating that prices of labour and materials set out in the contract would not be revised for any reason whatever, so that Article 1664 of the Civil Code would not apply.

The general terms and conditions were not signed by the parties.

Article 13 (3) thereof provided :

‘Without prejudice to the other rights provided for in the law applicable to the contract, the Commission shall have every right to terminate the contract, without legal intervention, if the contractor fails to perform the contract, after notice has been given laying down a reasonable time limit and this notice has not had the desired effect, or if, owing to nonperformance of the contract, the performance thereof ceases to be of consequence to the Commission. In the latter event, notice need not be served.’

Article 15 provided for the designation of an expert to carry out a technical inspection in the event of a dispute between the parties requiring such an inspection. The expert was to be appointed by common agreement of the parties. Where no such agreement could be reached, the expert was to be nominated by the Court of Justice. Article 16 conferred exclusive jurisdiction on the Court of Justice with respect to proceedings relating to the performance of the contract, on the basis of Article 181 of the EEC Treaty and Article 153 of the Euratom Treaty. Article 17 provided:

‘Save as may otherwise be expressly provided in the special terms and conditions, the contract shall be subject to Belgian law.’

Serious disagreement arose between the parties with respect to the performance of the contracts. As a result, on 5 May 1981 CO.DE.MI. applied to the President of the Tribunale di Varese for an order appointing an expert to ascertain the state of the work carried out and to determine what decisions had been taken by the parties with regard to certain aspects of the work. Such an order was made ex parte by the President of that court on 12 May 1981. CO.DE.MI. alleges that the Commission refused to allow the appointed expert access to the site. In any event, it would seem that on 11 May 1981, CO.DE.MI. officially stopped work on the MB building and on 17 May 1981 it officially stopped work on the IP building. The second experts' report states that in reality work on both buildings stopped on 14 April 1981, although nothing turns on this. On 30 June 1981 the Commission lodged written pleadings with the Tribunale di Varese contesting that court's jurisdiction to make the order in question. This led the President of that court to make a request to the Court of Justice dated 20 July 1981 to ‘enforce’ the order of 12 May. By an Order dated 9 February 1982, based on Article 92 of the Rules of Procedure, the President of the Court of Justice declared the request of the Italian court to be inadmissible (Case 229/81 CO.DE.MI. v Commission [1982] ECR 377).

In the meantime the Commission had exercised its right under Article 13 (3) of the general terms and conditions to bring both contracts to an end. It did so by registered letter of 1 July 1981, which stated that the contracts would be terminated on the 15 day following the receipt of that letter by CO.DE.MI. However, during that 15-day period CO.DE.MI. was at liberty to prove that it was able to resume the work and meet the deadline stipulated in the contracts. Since the Commission received no reply, the contracts were duly terminated with effect from 18 July 1981.

On 23 December 1981 the Commission's application in the present proceedings was received by the Court of Justice. The Commission requested the Court to declare the action admissible pursuant to Articles 181 EEC and 153 Euratom. It also sought various measures of enquiry. In addition, it sought the following substantive relief:

(1) A declaration that the contracts had been terminated on 18 July 1981 by reason of the Commission's letter sent on 1 July 1981 in reliance on Article 13 (3) of the general terms and conditions; in the alternative, a ruling to the effect that the contracts were terminated by reason of CO.DE.MI.'s breach;

(2) A declaration that CO.DE.MI. was required to vacate the site as from 18 July 1981 and an order that it should do so with immediate effect;

(3) An order that CO.DE.MI. refund the excess part of the price paid in advance plus interest; and

(4) An order requiring CO.DE.MI. to pay damages for the breach of its obligations.

At the hearing the Commission withdrew its request as to 2, since the site had already been vacated on 21 December 1982.

In its defence and counterclaim, CO.DE.MI. sought a declaration that the contracts were governed by Italian law. It also requested the Court to reject all the Commission's arguments concerning the termination of the contracts, the refunding of certain sums of money and the payment of damages. Instead it sought the following relief:

(1) A declaration that the awarding authority and the supervisory authority were responsible for the delays which occurred in the execution of the works;

(2) A declaration that the costs of the contracts in question had become excessive for CO.DE.MI., resulting in an economic imbalance in the consideration furnished by each of the parties;

(3) A declaration that the alterations requested by the awarding authority during the execution of the works exceeded a sixth of the total price agreed upon;

(4) A declaration that the contracts were cancelled by reason of the breach of contract by the awarding authority and/or the excessive cost of the works and/or the fact that the alterations requested during the course of the work exceeded the limit of one-sixth of the contract price;

(5) A determination of the sums due to CO.DE.MI. for the work carried out;

(6) An order that the Commission pay the remaining sums due, if any, and in any event, compensate CO.DE.MI. for the damage it had suffered, in particular loss of profit on the portion of the works which were not carried out and the site expenses, which were relatively heavy by reason of the fact that the works were only partially completed.

Subsequently a reply and a rejoinder were lodged with the Court.

By a further application registered at the Court on 31 March 1982, the Commission requested the Court, by way of interim measures, to appoint an expert to ascertain the extent and quality of the work carried out. An Order of the President to this effect was duly made on 28 April 1982, ([1982] ECR 1325). The expert appointed by the Order was required to: (a) describe the works executed by CO.DE.MI. and determine how far they had progressed; (b) describe the quality of that work, stating its present condition and the extent to which it complied with the terms of the contracts; and (c) describe the equipment and materials still on the site and their present condition. The Order required the expert to submit his report to the Court within three months of receiving notification of the Order, but the deadline was extended by a further Order of the President of 4 August 1982. The report was in fact registered at the Court on 8 November 1982.

On 25 April 1983 at a preliminary hearing it became clear that the parties had not reached agreement on any of the issues of fact and law which arose. However, broad agreement was reached on the draft text of questions on which a further expert's report was to be obtained.

Accordingly, on 18 May 1983, the President of the Court made a further Order appointing the person who had drafted the first expert's report to chair a fresh panel of experts. He was required to nominate the other two members of the panel from two lists presented to him. In its report the panel was to make the findings of fact necessary to answer the detailed questions contained in the Order. Those questions related to the liability incurred with regard to the suspension of the works by CO.DE.MI., to the delay in commencing and carrying out the works and to defects in that part of the work which had been completed. The panel was also required to evaluate the damage alleged to have been incurred by each of the parties.

On 9 August 1984 this report was registered with the Court, whereupon the Court invited the parties to submit written observations on it. CO.DE.MI.'s observations were duly registered at the Court on 17 September 1984, and the Commission's observations were registered on the following day.

The hearing took place before the Fifth Chamber on 19 March 1985.

In its defence and counterclaim CO.DE.MI. has expressly conceded that the Court had jurisdiction to decide this case. As I understand it, this is because Article 16 of the general terms and conditions, which confers jurisdiction on the Court, is one of the provisions to which CO.DE.MI. has expressly assented in each of the contracts. In any event, it seems that the Court's jurisdiction is beyond doubt.

On the other hand, CO.DE.MI. does not accept the Commission's view that the contracts are governed by Belgian law in accordance with Article 17 of the general terms and conditions. According to CO.DE.MI., Italian law applies.

The Commission's reasoning is as follows: Article 2 of each contract incorporated the general terms and conditions by reference; Article 17 of the general terms and conditions provided that, in the absence of an express provision to the contrary, Belgian law applied; neither the general terms and conditions nor the contracts contained such a provision; therefore Belgian law applied.

CO.DE.MI. seeks to counter this reasoning by three arguments. Firstly, it points out that the contracts were concluded in Ispra and were to be performed there. Consequently, in its submission there is a presumption that Italian law applied. On this view, Article 17 of the general terms and conditions is merely to be seen as an attempt by the Commission to oust that principle.

To my mind, this approach overlooks the principle that a contract is governed by the law chosen by the parties. The Giuliano Report on the draft Convention on the Law Applicable to Contractual Obligations states that this principle is recognized in all the Member States, including Belgium and Italy (Official Journal 1980, C 282 blz.1 at p. 15). It is true that there are cases where mandatory rules preclude the parties from freely choosing the law of the contract (see Article 3 (3) of the draft Convention (Official Journal 1980, L 266, p. 1) and the Giuliano Report (at p. 18)). However, it has not been suggested that that is the case here. I can see no valid reason why the law expresslychosen by the parties, Belgian law, should not apply.

Secondly, CO.DE.MI. claims that it is not bound by Article 17 of the general terms and conditions because it never expressed its specific assent to it. Article 17 was not one of the provisions of the general terms and conditions to which CO.DE.MI. expressed its specific assent at the end of each contract, purportedly in pursuance of Article 1341 of the Italian Civil Code. CO.DE.MI. claims that the other provisions of the general terms and conditions did not apply to either contract, since it never signed the general terms and conditions.

This clause did not have to be specifically assented to by virtue of Article 1341 of the Italian Civil Code. It is, however, still part of the Terms and Conditions incorporated by reference. The fact that CO.DE.MI., without being obliged to do so, specifically agreed to Articles 6 and 13 of the general terms and conditions, does not mean that other clauses were not applicable. In my view this argument should be rejected.

Lastly, CO.DE.MI. maintains that the reference to Articles 1341 and 1664 of the Italian Civil Code show that Italian law applied.

Neither of these references can in my opinion be said to constitute an express provision that Italian law applied, for the purposes of Article 17, so as to oust the agreement that in general Belgian law applied.

I therefore take the view that the contracts were both governed by Belgian law.

Moreover, these being contracts concluded by public authorities, they are governed not by the Belgian Civil Code but by the Belgian law relating to public works contracts. This is confirmed by certain provisions of the general terms and conditions, which one would not expect to find in a contract between private parties. Thus Article 13 (1) empowered the Commission to terminate the contracts at any time during its performance, subject only to the payment of fair compensation with respect to the outstanding part of the work. CO.DE.MI. did not enjoy any such right under the contracts. The same applies to Article 13 (3), which has been quoted.

The circumstances in which a party may stop work before its completion are much more limited in the case of public works contracts than in the case of contracts between private parties subject to the Civil Code. Indeed, a party may only discontinue performance of a public works contract where this is necessary to avoid irreparable damage to him or it has become absolutely impossible to perform it. In the case of other breaches by the administration, the contractor must bring an action before the courts to have the contract terminated and must continue to perform the contract pending judgment. Otherwise he commits a breach of contract himself, for which he will be liable in damages. In such a case, there is no apportionment of liability as between the contractor and the administration. This means that, in calculating damages, breaches by the administration which caused the contractor to discontinue the works must be disregarded. This rule is said to be justified by the principle of the continuity of the administration and by the compensating advantages of having the public authorities as a client.

Clear authority that this is a situation under Belgian law is to be found in Flamme ‘Traité théorique et pratique des marchés publics’ 1969 at pp. 755-764. The author cites, inter alia, a judgment of the Court of Appeal of Liège dated 10 June 1961. A company had contracted to build a number of sewers for a local authority. After completing some of the work, it was unable to continue because one of the main sewers to which the contract work was to be connected did not exist. The local authority wrote to the company suggesting that it should give up the remainder of the contract without compensation. Not unnaturally the company declined and a period of unfruitful negotiations ensued, whereupon the company repudiated the contract. Despite the unreasonable conduct of the local authority, the Court of Appeal held that this repudiation was not justified, since the acts of the local authority would not have caused irreparable damage to the company.

Since then a Law of 14 July 1976 on public works has been adopted. This has been implemented by Ministerial Decree of 10 August 1977. Neither of these instruments has altered Belgian law in this respect (Flamme ‘Commentaire pratique de la réglementation des marchés publiques’ 1978 at p. 524). Furthermore, a search of the Belgian law reports since 1978 has not revealed any fresh case law on the point.

What is more, these principles of Belgian law were not ousted by the two contracts concluded between the parties. On the contrary, Article 19 of each contract stipulated that the only justification for delay or suspension of work was force majeure. This implies that a fortiori CO.DE.MI. was not entitled to leave the work unfinished in the absence of imperative circumstances.

It is clear from the second experts' report that the delays and difficulties which led CO.DE.MI. to discontinue the works were in part attributable to the Commission and its agents. Nevertheless, that report shows equally clearly that the fault lay predominantly with CO.DE.MI. and that the breaches committed by the Commission were not such as to render the performance by CO.DE.MI. of its contractual obligations absolutely impossible.

The memorandum provided for by Article 16 of the MB contract recording the start of the works was made out on 11 February 1980, that is 52 days after the conclusion of the contract. According to the report, in Italy 45 days would be regarded as a reasonable period of time and the rest would in effect be regarded as de minimis. Consequently, the authors of the report consider that work commenced without delay. What is more, it commenced when the memorandum was drawn up. Since the time stipulated for performing the contract ran from that date, there was thus strictly speaking no delay in any event.

Thereafter, work on the MB contract proceeded at a proper pace. However, difficulties arose in relation to certain changes in the specifications proposed by CO.DE.MI., notably with regard to the air-conditioning. These were approved by the supervisors of the work, who were the agents of the Commission, subject to the confirmation of the Commission itself. Such confirmation was never forthcoming so that CO.DE.MI. never had the necessary approval to proceed with those parts of the work.

The situation as regards the IP building appears to have been far more serious from the start. The memorandum for the start of the IP works was dated 20 March 1980, namely 90 days after the conclusion of the contract, although work had begun shortly before then. Thus, work officially began 45 days later than it should have done. This delay is attributed by the authors of the report to the Commission, which failed to hand the site over to CO.DE.MI. before then. Here again, the problem related to changes in the specifications. The Commission initially proposed a programme known as ‘PERT’ which would take one year longer to perform than the contract period, apparently without proposing that a supplement be paid. This was unacceptable to CO.DE.MI. Once again, however, there was strictly speaking no delay, because work had already started when the memorandum was drawn up and that was the moment when the period for performing the contract began to run.

After that, the situation appears to have gone from bad to worse. There were continued disagreements about changes in the specifications and the Commission never gave the necessary approval for the IP contract. Moreover CO.DE.MI. concluded subcontracts for air-conditioning and electrical installations too late, it frequently interrupted the work and the number of workmen on the site fluctuated considerably. These irregularities were matched by what the report describes as the ‘inexplicable inertia’ of the supervisors, who consistently failed to put adequate pressure on CO.DE.MI. to meet its deadline.

The upshot was that in May 1981 when the IP contract should have been fully performed only a small part of the work had been completed. The contract provided for the construction of the main entrance building in three parts, part A being a small building, part B a porch and part C a larger building. In May 1981, most of the work on part A had been carried out but parts B and C had not been started.

It would seem that the relationship between the parties became embittered because of two interconnected factors. On the one hand, it seems to have become clear at an early stage that changes in the specifications for both contracts were necessary or at least desirable. These changes required the agreement of both parties. On the other hand, there was disagreement as to whether each change of specification should be linked to an increase in the price and, if so, how great that increase should be. This was rendered particularly acute by the terms of each contract which precluded the revision of the price of labour and materials. In its application the Commission goes so far as to suggest that CO.DE.MI. quoted artificially low prices so as to be awarded the contracts with the intention of adjusting the contractual relationship to its own advantage while the work was in progress. A further charge made by the Commission is that, having received 50% of the contract price shortly after the conclusion of the contracts, CO.DE.MI. had lost interest in performing them properly. In any event, the climate of distrust was such that the Commission failed to give the approval necessary for the work to go ahead.

While the Commission's inaction clearly hindered performance of the contracts, it did not make it definitively impossible for CO.DE.MI. to continue. Since CO.DE.MI. was in no financial difficulty whatever, it could perfectly well wait until the necessary approvals were given and seek compensation with respect to the delay caused by the Commission. Alternatively, it could request the Court to terminate the contracts, as it was entitled to do under Belgian law.

However, what CO.DE.MI. could not do in these circumstances was to take the law into its own hands and decide unilaterally not to perform the contracts. This is precisely what it did. Such conduct therefore constituted a failure by CO.DE.MI. to perform its contracts such as to render recourse to Article 13 (3) of the general terms and conditions justified. Accordingly, the contracts were validly terminated by the Commission's letter of 1 July 1981.

Thus CO.DE.MI.'s request in its counterclaim that the Court terminate the contracts must be dismissed; they had already been terminated.

Where a building contractor unilaterally stops work on a public works contract without justification, Belgian law does not allow for apportionment of liability between the parties. The contractor bears sole responsibility. Damages are calculated disregarding any breaches which may have been committed by the public authorities.

Apart from damages with respect to defects in the works carried out (which will be discussed separately), the compensation due may be divided into three heads. Firstly, CO.DE.MI. must reimburse the difference between the advances paid by the Commission and the value of the work carried out. Secondly, the Commission must be compensated for the additional costs of having the work carried out by other contractors. Thirdly, damages may be due for loss of enjoyment of the buildings.

The first of these heads is a debt which was due on 18 July 1981 when the contracts were terminated. To my mind the experts followed the right approach in calculating the excess paid by the Commission on that date. They first took the advances paid to CO.DE.MI., namely LIT 861380201 for the MB contract and LIT 591396569 for the IP building. From this they deducted the value at that date of the work carried out, namely LIT 555838017 and LIT 115609817 respectively. This left an excess of LIT 305542184 and LIT 475786752 respectively, which makes a total of LIT 781328936. On a minor point it seems to me that these figures must be slightly revised: for the reasons explained below, I consider that the value of the work done must be reduced so as to take account of the fact that the concrete in each building was below the strength stipulated in the contract.

I would dismiss the alternative approach suggested by CO.DE.MI. based not on the value of the work carried out, but on the sums disbursed by it in pursuance of the contracts to subcontractors and suppliers of materials. This suggestion overlooks the purpose of the operation, which is to refund to the Commission that part of the advances which exceeded the value of the work performed. Moreover, it does not befit CO.DE.MI., having failed to perform the contracts, to complain that its expenses exceeded the value of the work which it carried out.

On the other hand, the value of the materials which CO.DE.MI. left on the site must be taken into account. Otherwise, unjust enrichment to the Commission would result. Since this head of compensation concerns a debt due on 18 July 1981, the value of the materials on that date must be taken. It cannot be right to take their value on 21 December 1982, when CO.DE.MI.'s occupation of the site ended. That would confer a benefit on CO.DE.MI. for having continued to occupy the site after the contracts were terminated. The valuation of the materials as at 18 July 1981 is not available and needs to be made and the resulting figure deducted from LIT 781328936 revised to take account of the fact that the concrete was not up to strength.

Interest must be awarded on the ensuing sum as from 18 July 1981. As the Commission has suggested, the rate should be 5%, the going rate in Italy. On the other hand, it seems to me that the Commission's suggestion that this sum should be multiplied by a coefficient so as to bring it up to 1985 prices must be dismissed. This suggestion is incompatible with the fact that the sum in question was a debt due on 18 July 1981.

As to the second head of compensation (the cost of having the work done by other contractors at a later date), the parties accept that the experts followed the correct approach. They first calculated the value of the unfinished part of the works at the contractual prices. They then increased it by a coefficient so as to bring it into line with prices applicable when contracts could reasonably have been concluded with CO.DE.MI.'s successors. On the other hand, there has been disagreement as to what date should be taken. The experts took 18 May 1983, the date of the Court's Order, and the Commission agrees. In contrast, CO.DE.MI. says that the value should merely be updated to 21 December 1982 when it vacated the site. I would agree that 18 May 1983 was the correct date. This is not because the Court's Order was in any way decisive. It is because the Commission could not begin to prepare the site or instigate a fresh tendering procedure until after CO.DE.MI.'s occupation had ended. It is reasonable to take a five-month period for this, which brings one to May 1983.

Moreover, I would not accept CO.DE.MI.'s submission that the 45-day delay in commencing work on the IP contract, which the authors of the report laid at the Commission's door, should be taken into account. As the Commission said at the hearing, this delay was counterbalanced by CO.DE.MI.'s delay after work had begun. Nor do I think it possible to take into account under this head the value of the materials left on the site by CO.DE.MI., as CO.DE.MI. appears to suggest. That would mean taking the value of those materials into account twice.

On this basis I would accept the experts' approach and reject CO.DE.MI.'s conclusions. In the result the figures given by the experts should be taken namely (a) for the management building, LIT 704263865; (b) for the IP building, LIT782201071, making a total of LIT 1486464936.

As to the third head, the Commission refers to Article 19 of each contract which provided for penalties to be paid in the event of delay. However, that provision stated expressly that such penalties were only to be due for the period prior to the termination of the contract. As already mentioned, both contracts were terminated on 18 July 1981. Nevertheless, the Commission claims that Article 19 should be applied by analogy to the period beginning on that date, at least until 21 December 1982 when CO.DE.MI. vacated the site.

It is generally agreed that no penalties were provided for by the contracts for loss of enjoyment of the buildings after the contracts were terminated. Consequently, general principles apply to the calculation of this damage. It does not seem to me that damages should be awarded unless damage is shown to have been suffered. The Commission has not attempted to show that it has suffered damage under this head. It has simply taken this for granted, which it was not entitled to do. I therefore take the view that no compensation should be awarded under this head, since none has been proved.

I do not consider that this conclusion is altered by the wrongful occupation of the site by CO.DE.MI., which lasted for almost one-and-a-half years after the termination of the contracts. Compensation for wrongful occupation should not be awarded without proof of damage any more than any other form of compensation. I would not be prepared to award nominal damages in the circumstances of this case.

There is also a fourth head of compensation, which is wholly independent of the stoppage of the work and relates to defects in the work carried out and bad workmanship. The experts found that there were indeed a number of defects and instances of bad workmanship. They evaluated them at the prices obtaining on 18 May 1983, the date on which the Commission could reasonably be expected to have concluded fresh contracts. For the reasons already given, I would agree that that should be used as the reference date.

As to the management building, the experts found that the partly prefabricated floor on the ground floor was defective in that it was too small for the area to be covered. This defect is imputed entirely to CO.DE.MI. Compensation was evaluated at LIT 22776970. At the hearing, CO.DE.MI. conceded liability for this defect and accepted the figure mentioned.

A further instance of bad workmanship was the strength of the concrete, which was 15% below the contract specification. However, the experts found that the viability of the building was not affected. Accordingly, it would seem that under Belgian law no compensation is due. In any event, as already mentioned, this matter must be taken into account in evaluating the work already carried out by CO.DE.MI.

The other floors in the management building were also defective and the experts evaluated this damage at LIT 47346000. Nevertheless, the report states that this defect was partly the fault of the Commission or its agents, the supervisors, since they should have raised objections while the work was in progress. I therefore think it appropriate to reduce these damages by 50% to LIT 23673000. Apportionment is possible here, because the defects are unconnected with the stoppage of the work.

The experts also found a number of other defects on the management building and these findings are not really contested by CO.DE.MI. Nor does CO.DE.MI. contest the experts' evaluation of this damage. Accordingly, these sums are also due to the Commission.

As for the IP building, the experts found that the concrete was 10% below the contract strength. Once again, this did not affect the viability of the building. Accordingly, what I have said with respect to the management building also applies here. The experts further found that the balustrades on the IP building were defective. However, CO.DE.MI. has alleged that the manner in which these were made was specifically approved by the supervisor, and this assertion has not been contested by the Commission. It follows that no compensation is due.

Next, the visible concrete was also found by the experts to be defective in that it was not

cast smoothly or uniformly and was thus unsightly. The damage was evaluated by them at LIT 9888758. That figure I would accept.

In the result taking the figures accepted by the experts, amended as suggested above, the damages for defects are as follows:

(a) Defective prefabricated floor LIT 22 776 970 (b) Defective floors in the management building LIT 23 673 000 (c) Defective visible concrete LIT 9 888 758 (d) Ducts LIT 13 657 000 (e) Marble parts of staircases LIT 2 546 973 (f) Plaster LIT 2 014 388 (g) Cement windowsills LIT 5 324 347 LIT 79 881 436

All the compensation calculated by reference to 18 May 1983 — relating to the cost of having the work carried out at a later date by other contractors, and to defects — is subject to 5% interest as from that date.

In summary CO.DE.MI. should in my view be ordered to pay the following sums to the Commission:

(1) A sum representing the difference between, on the one hand, the advances paid to CO.DE.MI. (LIT 1452776770) less the value on 18 July 1981 of the materials left on the site and, on the other hand, the value of the work carried out at the prices obtaining on 18 July 1981 taking into account the fact that the concrete was below the stipulated strength, plus interest at 5% on this sum as from 18 July 1981;

(2) The sum of LIT 1486464936 (representing the extra cost of having the work completed by other contractors) plus interest at 5% as from 18 May 1983;

(3) The sum of LIT 79881436 (for damages in relation to defects and bad workmanship) plus 5% interest thereon as from 18 May 1983.

With some give and take the parties should be able to arrive at a figure for point 1, without it being necessary for them to come back to the Court. If they cannot do so a further application will have to be made.

Finally, CO.DE.MI. should be ordered to pay the Commission's costs. These include the costs of both experts' reports, since costs were reserved in the Court's Orders of 28 April 1982 and 18 May 1983.

On the other hand, the Court cannot make any order with respect to the costs incurred by the Commission in presenting observations in Case 229/81. It is true that the Court's Order of 9 February 1982 in that case was silent as to costs. Nevertheless, this was a matter for the Tribunale di Varese to decide, failing which the Commission must bear these costs itself.