Joined opinion of Mr Advocate General La Pergola delivered on 16 December 1997. - Société Louis Dreyfus & Cie and Compagnie Continentale (France) SA v Commission of the European Communities. - Cases C-386/96 P and C-391/96 P. - Glencore Grain Ltd, formerly Richco Commodities Ltd v Commission of the European Communities. - Cases C-403/96 P and C-404/96 P. - Emergency assistance given by the Community to the States of the former Soviet Union - Loan - Documentary credit - Action for annulment - Admissibility - 'Directly concerned'.



European Court reports 1998 Page I-02309



Opinion of the Advocate-General

Legal and factual background to the actions for annulment brought before the Court of First Instance of the EC in 1993 by the appellants in the present cases

1 Only a few months since judgment was delivered in the Geotronics case, (1) the Court of Justice is again called upon to rule on the admissibility of actions brought by legal persons under the fourth paragraph of Article 173 of the EC Treaty (`the Treaty') seeking the annulment of decisions adopted by the Commission of the European Communities (`the Commission') in the exercise of its powers regarding the management of loans to non-member countries within the framework of the `triangular relationship' between the Commission, the beneficiary country and the contracting undertaking.

2 More specifically, Cases C-386/96 P, C-391/96 P and C-403/96 P relate respectively to the appeals lodged separately by the French companies Louis Dreyfus & Cie (`Dreyfus') and Compagnie Continentale (`Continentale'), and by Glencore (formerly Richco Commodities), a company incorporated under the laws of Bermuda, (`Glencore'), against the judgments delivered in respect of them on 24 September 1996 by the Court of First Instance of the EC. (2)

In those interlocutory judgments the Court of First Instance upheld the objection raised by the Commission in the three cases under the first paragraph of Article 114 of the Rules of Procedure and ruled that the actions brought by the abovementioned companies for annulment of a decision adopted by the Commission in connection with the granting of a medium-term loan to the Russian Federation by the Community were inadmissible. (3)

3 The subject-matter of Case C-404/96 P (`the Glencore II case') is similar; in parallel with the appeal I have just mentioned, Glencore has challenged another judgment of the Court of First Instance, delivered on the same day, which ruled that the Bermudan company's application for annulment of another Commission decision was inadmissible. (4)

4 Apart from differences in the facts that are marginal or in any case irrelevant for the purposes of legal analysis, these four proceedings are connected and raise identical questions. The solution that I propose to the Court in this Opinion is therefore substantially the same in all cases.

The legal and factual background to the disputes is described in detail in the four contested judgments. (5) I shall refer to it below only in so far as is necessary for the purposes of the subsequent legal analysis. Moreover, in the context of an appeal to the Court, which in accordance with Article 168a of the Treaty and Article 51 of the Protocol on the EC Statute of the Court of Justice must be confined to points of law, the underlying factual background is necessarily of relative importance.

5 It is well known that since 1989 the countries of Central and Eastern Europe have benefited from financial assistance under the Community's policy of development aid following the commencement of a process of far-reaching political and economic reform.

The Community meets the financial needs of these countries not only by providing traditional assistance in the form of structural loans - which are already granted extensively to the African, Caribbean and Pacific States (the so-called `ACP States'), the overseas States and territories and the countries in the Mediterranean basin - but also by providing financing aimed at overcoming the macroeconomic adjustment difficulties of the beneficiary countries, thereby supporting their efforts to establish democratic machinery and adopt appropriate macroeconomic policies and economic restructuring measures in keeping with market principles.

The financing in question, which is limited in duration, subject to precise disbursement conditions and based on a case-by-case approach, consists of medium-term loans that complement those granted by international financial institutions. (6)

6 In particular, and as regards this Opinion, in December 1991 the Council of the EC adopted Decision 91/658, (7) in which, having noted the critical economic and financial situation in the Soviet Union and its constituent Republics and the urgent need to provide food and medical aid (see the third and fourth recitals of Decision 91/658), it granted to the said States a medium-term loan of not more than ECU 1 250 million to be managed by the Commission in order to enable agricultural and food products and medical supplies originating in the Community or in specified supplier countries in Central and Eastern Europe to be imported.

Article 4(1) of Decision 91/658 empowered the Commission `to finalise, in concert with the authorities of the USSR and its constituent Republics ..., the economic and financial conditions to be attached to the loan, the rules governing the provision of funds and the necessary guarantees to ensure loan repayment'.

7 The detailed rules for implementation of the loan in question were subsequently laid down by the Commission in Regulation No 1897/92. (8)

8 On 9 December 1992, in accordance with Article 2 of Regulation No 1897/92, the EEC, the Russian Federation and its financial agent - Vnesheconombank (`the VEB') - signed a framework agreement providing for a medium-term loan of the principal sum of ECU 349 million to be granted to the VEB, under the guarantee of the Russian Federation, for a maximum term of three years (`the framework agreement with the Russian Federation').

The framework agreement with the Russian Federation laid down specific rules for the disbursement of the loan. There is an important provision in Clause 6 of the agreement regarding the exclusive use of the loan to cover irrevocable documentary credits opened by the VEB, (9) in international standard form, (10) pursuant to contracts for the supply of the products indicated in Decision 91/658. In accordance with Clause 6, disbursement of the loan was subject to recognition by the Commission that both the commercial contracts concluded by the competent Russian authorities and the documentary credits issued by them complied with Decision 91/658 and with the framework agreement.

9 The loan contract provided for in the framework agreement with the Russian Federation, which was concluded on the same date by the Commission and the VEB, established a credit facility at the VEB to which recourse could be made during the contractually defined drawing period (15 January 1993 to 15 July 1993) in order to pay for the shipments made under the contracts approved by the Commission.

10 The granting of the loan to Ukraine, to which the Glencore II case relates, followed similar lines. On 13 July 1992 the EEC and Ukraine signed a framework agreement providing for the granting of a medium-term loan of the principal sum of ECU 130 million for a maximum term of three years via the State Export-Import Bank of Ukraine (`the SEIB'), the financial agent of Ukraine (`the framework agreement with Ukraine').

On the same date the Commission, the SEIB and Ukraine signed the loan contract provided for in the framework agreement with Ukraine, which established a credit facility available - by means of the mechanism for the opening of letters of credit - during the contractually defined drawing period (20 August 1992 to 20 April 1993).

11 In the context of each of the two loan agreements concluded by the EEC, the formal position of the Commission and the State bodies involved in various capacities in the purchase of the goods being financed can be described as follows.

12 The Commission (i) took up a loan in the name of the EEC in order to raise the necessary resources to be placed at the disposal of the Soviet Union and its constituent Republics in the form of loans managed by the Commission; (11) (ii) negotiated the loans to the constituent Republics on the basis of the agreements concluded with each of them containing specific disbursement conditions; (iii) `at its absolute discretion', (12) reserved the right to recognise, by means of the so-called `Notice of Confirmation', (13) whether the financing of the sales contracts notified to it by the Republic in question or by its financial agent (see below) was admissible or not, and (iv) in the event that the conformity of the contracts was recognised, verified that the documentary credits issued by the financial agents of the Republics concerned complied with the terms of the Notice of Confirmation, thus approving the disbursement requests submitted to it by the VEB (or the SEIB) and authorising payment of the contractual amounts within a reasonable period of time by sending a reimbursement commitment to the confirming or advising bank designated in the supply contract (if the bank so wished). (14)

I would like to emphasise that the recognition of conformity of the commercial contracts and documentary credits was subject to compliance with all the conditions laid down in Decision 91/658 and the framework agreements. These included, in particular, the dual requirement that imports of products financed by the loan be effected in accordance with free competition and at world market prices (see Article 4(3) of Decision 91/658). (15)

13 For their part, Exportkhleb and Ukrimpex, the bodies appointed by the Russian Federation and Ukraine respectively to negotiate the purchases of wheat on their behalf, chose the contracting undertakings by means of a tender procedure, conducted the negotiations on the supply contracts and signed them.

14 Finally, the financial agent designated by each of the two Republics, namely the VEB and the SEIB: (i) notified the commercial contracts to the Commission for recognition of conformity; (ii) after receiving the Notice of Confirmation, issued irrevocable documentary credits eligible for the Community guarantee (to the extent that they corresponded to the terms of the Notice) and, if requested by the supplier, subject to confirmation by the bank indicated by the latter, (16) and (iii) sent the Commission, during the contractual drawing period, a request for disbursement in favour of the confirming or advising bank named by the supplier and approved by the Commission.

15 It is also worth recalling the chronology of the events that gave rise to the disputes at issue.

In 1992, pending conclusion of the framework agreement with the Russian Federation (see paragraph 8 above), Exportkhleb organised an informal call for tenders by contacting a number of international trading companies. The eight companies selected by Exportkhleb included, as far as these proceedings are concerned, the appellants.

On 27 November 1992 Continentale signed two sales contracts with the agent of the Russian Federation for the supply of respectively 450 000 tonnes of milling wheat at a price of US $140.40 per tonne and 35 000 tonnes of durum wheat at a price of US $145 per tonne.

On 28 November Exportkhleb concluded a contract with Dreyfus for the supply of 325 000 tonnes of wheat at a price of US $140.50 per tonne and a contract with Glencore for the supply of 700 000 tonnes of wheat at a price of US $140 per tonne.

All the contracts concluded by Exportkhleb with the suppliers used standard terms, such as those for the delivery of the goods (on CIF free out terms) and for the final loading date (set for 28 February 1993).

For the purposes of this Opinion, the most important of all the provisions of these standard contracts is the suspensory clause, which made performance of the contractual obligations, including payment of the price, subject to acknowledgment by the Commission that the conditions for disbursement of the loan were fulfilled (`the suspensory condition'), (17) and the compromissory clause in favour of the arbitration tribunals of the Chambers of Commerce and Industry of Moscow and Kiev respectively for all disputes likely to arise in connection with the supply contracts. (18)

16 After the Commission had asked the three companies in January 1993 to provide certain information (such as the US dollar/ecu exchange rate) which was not contained in the text of the sales contracts signed by Exportkhleb, it sent VEB a notice of confirmation approving the contracts on 27 January 1993.

According to the three appellant companies, the notice from the Commission contained certain important differences by comparison with the contracts: it indicated a loading deadline of 31 March 1993 and the US dollar/ecu exchange rate was different to that which the contracting undertakings had respectively proposed to the purchasing company.

17 Acting on instructions from Exportkhleb, the VEB issued the irrevocable letters of credit in favour of Dreyfus, Continentale and Glencore on 4 February 1993 and forwarded the related payment requests to the Commission on 9 February. However, for reasons not specified in the judgments of the Court of First Instance against which these appeals are directed, the credits did not actually become operational until several days later, between 16 and 25 February, depending on the case. It was only on these dates that the correspondent banks in the suppliers' countries finally received from the Commission the reimbursement commitments relating to the various transactions.

Because of the consequent delay in loading, the contracting undertakings informed Exportkhleb that they would not be able to meet the original deadline for loading all the goods.

18 As the unit price of wheat on the world market had, according to the appellants, increased by about 13% (from US $132 to 149.50 per tonne FOB Rouen) during the brief period since the conclusion of the contracts, Exportkhleb invited all the contracting undertakings to a meeting in Brussels on 22 and 23 February 1993 at which it asked them to submit fresh price quotations for delivery of what it termed the `foreseeable balance' (in other words, the quantities of product which could not reasonably be expected to be delivered on time).

Following negotiations in which the selected companies had to align themselves on the lowest bid (US $155 per tonne), agreement was reached between them and with Exportkhleb on the distribution of the fresh quantities to be delivered by 30 April 1993.

In particular, Dreyfus was allocated 185 000 tonnes, Glencore 450 000 tonnes and Continentale 20 000 tonnes of durum wheat (or milling wheat) and 300 000 tonnes of milling wheat (of which 120 000 tonnes were to be supplied at the initially agreed price of US $140.40 and 180 000 tonnes at a price of US $150 per tonne).

19 On 9 March 1993 Exportkhleb informed the Commission of the contractual amendments which it had agreed (but at that time not yet formalised) with five of its selected suppliers.

In his reply of 12 March 1993 the Director General of the Commission's Directorate-General for Agriculture (DG VI) informed Exportkhleb that the contractual amendments in question could be accepted only if the total value of the deliveries of cereals being financed did not exceed the amount that had already been set in the notice of confirmation of 27 January 1993. This condition could be met by making a corresponding reduction in the quantities of product to be delivered. In the same letter, the Commission also asked that the request for approval of the amendments be officially submitted by the VEB.

As a consequence, when the amendments were formalised (in the third week of March by means of the signature of simple riders to the original contracts, but dated 23 February 1993), the quantities supplied by Glencore and Continentale were reduced in accordance with the Commission's advice.

20 After the VEB had notified the new tenders and amendments to the original contracts to the Commission in the last 10 days of March, the Agriculture Commissioner informed the financial agent of the Russian Federation by a letter dated 1 April 1993 (`the decision of 1 April 1993') that he was prepared to authorise only the amendments relating to the postponement of the final dates for delivery and payment, subject to compliance with the usual procedure.

As to the amendments relating to the prices and quantities sold, by contrast, the Commission asserted - on the basis of Articles 4 and 5 of Regulation No 1897/92 (see footnote 15 above) - first that the said amendments had been agreed by Exportkhleb directly with the contracting undertakings, that is to say without making them compete with other potentially interested suppliers, and secondly that the new prices did not constitute the most favourable purchase terms available, as at the end of March 1993 the prices on the world market were not significantly different from those which prevailed at the end of November 1992.

Moreover, in the opinion of the Commission, the magnitude of the price increases agreed was such as to entail substantial modifications of the original contracts rather than simple amendments. Consequently, the letter from the Commissioner concludes, `should it be considered necessary to modify the prices or quantities, it would then be appropriate to negotiate new contracts to be submitted to the Commission for approval under the full usual procedure (including the submission of at least three offers)'.

Exportkhleb informed Dreyfus, Continentale and Glencore of the Commission's refusal to approve the amendments to the original supply contracts as soon as the Commission's letter was received, in the first 10 days of April.

21 The facts in Glencore II are similar. In May 1993 Ukrimpex, the State company appointed by Ukraine to negotiate the purchase of wheat eligible for Community financing, issued an informal invitation to tender, in response to which it received seven offers from international trading companies. Preference was finally given to the tender from Glencore, even though it was not the lowest in terms of price, as it was the only one to guarantee loading of the goods by 15 June 1993.

On 26 May 1993 Glencore and Ukrimpex therefore signed a contract for the sale of 40 424 tonnes of wheat at a price of ECU 137.47 per tonne CIF free out. The SEIB notified the contract to the Commission for approval on 31 May.

By letter of 10 June 1993 addressed to the Vice Prime Minister of Ukraine, who had intervened personally to urge swift approval of the contract, the Commission pointed out that the Glencore tender was not the best in terms of price among those submitted by the companies participating in the invitation to tender and that the price agreed was unacceptably high; it concluded that it was unable to approve the contract submitted to it by the SEIB. However, in view of the urgent food needs of the Ukrainian population, the Commission stated that it was prepared to commit Community financing for the immediate delivery of 50 000 tonnes of wheat from its intervention stocks at a price which could be US $30 per tonne less than that agreed between Ukrimpex and Glencore. Incidentally, in the fresh invitation to tender Glencore's offer was again accepted.

On 11 June 1993 Ukrimpex informed the appellant of the Commission's refusal to approve the contract concluded on 26 May 1993 and requested it to defer shipment of the goods. However, Glencore, which had already chartered a vessel for that purpose, nevertheless proceeded to deliver about 40 000 tonnes of grain, for which Ukraine never paid the vendor the amount due, which was in the region of ECU 5 500 000.

The Commission's refusal to approve the contract in question was confirmed in a letter that the Agriculture Commissioner sent to the SEIB on 12 July 1993 (`the decision of 12 July 1993'). After recalling that, in accordance with the provisions of the loan agreement of 13 July 1992, the Commission issued notices of confirmation at its absolute discretion, the decision of 12 July 1993 repeated that the price agreed between Glencore and Ukrimpex was more than the Commission could accept. As a consequence, it could not consider that the contract submitted for approval satisfied the condition that it offered the most favourable terms of purchase in relation to the price normally obtaining on the international markets.

The judgments of the Court of First Instance against which the appeals have been brought

22 I have already indicated that the decision of 1 April 1993 and the decision of 12 July 1993 were the subject of four actions for annulment lodged with the Court of First Instance by Dreyfus, Continentale and Glencore.

In addition, Glencore (only in Case T-491/93, relating to the decision of 1 April 1993) and Dreyfus applied for compensation for the material damage that the Commission allegedly caused them respectively as a result of its refusal (in their view illegal) to approve the amendments to the supply contracts concluded with Exportkhleb. Finally, Dreyfus also requested the Court of First Instance to order the Commission to pay the symbolic sum of ECU 1 as compensation for non-material damage suffered as a result of the statement made by an official of the institution to the effect that Dreyfus had engaged in unlawful practices in connection with the negotiation of the said amendments.

23 As I have also mentioned above, in the four judgments delivered on 24 September 1996 the Court of First Instance decided that companies which have been awarded a supply contract in the context of implementation of a loan granted by the Community to third countries are not directly affected by the Commission's decision, (19) adopted in relation to the financial agent of the borrowing State, whereby the Community institution refuses to recognise the conformity with the relevant Community regulations of: (a) the supply contracts that are the subject of the request for disbursement of the loan, which contracts have been signed by the agent, if any, appointed by the borrowing State and the contracting undertakings (as in Case T-509/93), or (b) of any amendments made to contracts already recognised by the Commission as being in compliance (as in the other three cases).

According to the Court of First Instance, the Community rules and the agreements concluded between the Community and the Russian Federation (or Ukraine) created a division of powers between Exportkhleb (or Ukrimpex) and the Commission. Whereas the State agency was the sole body competent to select the other contracting party by means of an invitation to tender and to negotiate and conclude the contract, the role of the Commission - which that institution does not appear to have exceeded in the disputed cases, despite repeated contacts with the State agency and the contracting undertakings - was merely to verify that the conditions imposed by Community regulations for the disbursement of the loan were fulfilled. The undertaking to which a contract was awarded therefore had a legal relationship only with the party with whom it contracted, namely the agent appointed to conclude the purchase contracts, just as the Commission for its part had legal relations only with the financial agent of the borrowing State.

The Court of First Instance went on to state that the action of the Commission, which was not competent to make any assessment beyond verifying that all the conditions for the financing of the contracts concluded by Exportkhleb and Ukrimpex with the appellants had been fulfilled, did not therefore affect the formal legal validity of the contracts in question nor did it modify the terms of the contracts, in particular the prices agreed in each case. The riders signed by the parties on 23 February 1993 therefore remained entirely valid `irrespective of the Commission's decision not to recognise the agreements as being in conformity with the applicable provisions', inasmuch as those decisions did not take the place of a decision of the competent respective national authorities.

24 In the opinion of the Court of First Instance, the appellants could not rely either on the contents of the suspensory clause (see footnote 17 above) to establish that the decision of 1 April 1993 and the decision of 12 July 1993 were of direct concern to them. Indeed, as the Court of First Instance observed, `the admissibility of an application under the fourth paragraph of Article 173 of the Treaty cannot ... be made to depend on the intentions of the parties' to create a link between the contract concluded by them and the Commission's future decision on the conformity or otherwise of the contract with the conditions of the loan.

In the contested judgments the Court of First Instance therefore concluded that the decisions challenged were not of direct concern to Dreyfus, Continentale and Glencore and that the three companies were not entitled to seek annulment of those decisions. (20)

25 The Court of First Instance also declared that the claims of Dreyfus and Glencore for compensation for the material and non-material damage allegedly suffered by the two companies (see paragraph 22 above) were admissible, noting inter alia the autonomous nature of the action for damages provided for by Article 178 and the second paragraph of Article 215 of the Treaty. (21) The Court of First Instance finally ruled that the procedure relating to those claims should be continued in relation to the substance. After the present appeals were lodged by Dreyfus and Glencore, however, the procedure in Cases T-485/93 and T-491/93 was stayed by orders of 27 January 1997 and 26 February 1997 respectively.

Grounds of the appeals lodged by Dreyfus, Continentale and Glencore

26 The grounds of the appeals lodged by the three companies against the judgments described above are broadly identical. (22)

In the view of the appellants, the Court of First Instance committed two errors of law: (i) by wrongly applying the fourth paragraph of Article 173 of the Treaty in ruling that the actions were inadmissible for lack of direct concern, and (ii) by adopting contradictory reasoning in various regards.

27 (i) As to the first plea, the appellants contest the finding of the Court of First Instance that the companies to which contracts were awarded had a legal relationship solely with the respective contractual counterparty to the supply contract (and not with the Commission), so that the disputed decisions did not in any way affect those contractual relations. They maintain that the Court of First Instance erred in that argument, which departed from the settled case-law of the Court of Justice in this regard.

They contend that it follows from that case-law that the existence of direct concern should be assessed on the basis of a different criterion, namely whether or not the contested act causes direct damage to the legal or material situation of the appellant. They maintain that numerous judgments have acknowledged direct concern on the part of the appellant even in the absence of any legal link with the Commission or with the addressee of the contested decision.

In particular, in triangular relationships of the kind in question in the present proceedings, whenever the interposed person (in other words, the competent national authority appointed to implement the Community measure) does not have independent power of assessment and its decision automatically derives from that of the Commission, the economic agent - having no legal recourse against the national authority - should be held to be directly concerned and entitled to bring an action under the fourth paragraph of Article 173 of the Treaty.

In the particular circumstances obtaining in the present cases, the Commission's decision left the competent national authorities with no margin of discretion in the fulfilment of their contractual obligations. Indeed, in the light of the contents of the supply contracts, and in particular the terms of Clause 4 on the obligation to pay the sum due, (23) non-disbursement of the loan to the republic involved would cancel its obligation to pay the agreed sum (or, mutatis mutandis, the new higher price agreed when amending the original contracts that had already been approved). Moreover, in each of the present cases Community financing constituted not only the suspensory condition to which performance of the contract had been made subject in law but also in reality the only possible means of payment.

Furthermore, it would be unacceptable for the Commission's power to punish non-compliance with the conditions for Community financing laid down in Regulation No 1897/92 to be exercised in an arbitrary manner. That power therefore goes hand in hand with an obligation to exercise it correctly, which is subject to scrutiny by the Court.

28 In the alternative, Glencore refers to the Community case-law relating to the fourth paragraph of Article 173 of the Treaty, according to which individuals may be directly concerned by the Community measures on which subsequent provisions are based, the contents of which are known with certainty or a high degree of probability.

29 In addition, Dreyfus, Continentale and Glencore assert that, contrary to the view adopted by the Court of First Instance, in the specific circumstances of the system of emergency assistance established by the Community the contested decisions took the place of decisions within the competence of the Russian and Ukrainian authorities respectively.

In particular, in the decision of 1 April 1993 the Commission stated that it was prepared to accept some of the contractual amendments agreed between Exportkhleb and the contracting undertakings (those relating to the postponement of the final dates for delivery and payment) but not others (those relating to the prices and the quantities supplied). In this way, `by rearranging as it saw fit contracts' to which it was technically not a party, the Commission substituted its own assessment for the will of the parties.

Moreover, in order to honour their commitments towards Dreyfus, Continentale and Glencore, the Russian and Ukrainian authorities were completely dependent on recognition by the Commission for purposes of Community financing. In fact, once they learnt of the adoption by the Commission of a decision of non-conformity of the contract (or mutatis mutandis of the riders to the contracts that had already been approved), the competent national authorities - given their state of insolvency, which was the very reason for the financial assistance granted by the Community - could not have proceeded with the importation of cereals in accordance with the signed agreements since payment of the corresponding price was not covered (wholly or partly) by the loan.

30 According to the appellants, the Court of First Instance then erred in basing its ruling that the companies were not directly concerned by the contested decisions on the fact that the effect of these acts on their legal or material situation was the result of a prior voluntary act.

In the first place, as the suspensory condition was directly and objectively a consequence of the factual and legal situation of the respective parties to the supply contracts, it was strictly wrong for the Court to conclude that the admissibility of the actions must depend on the intentions of the national authorities and the contracting undertakings. In reality, the dual condition on which the parties made the validity of their respective contracts depend was the same condition earlier imposed by the Commission on the borrowing republics, that is to say the need to obtain approval for the contracts in question and for the documentary credits opened to pay for the deliveries.

Moreover, even if it was correct to conclude that the admissibility of the actions depended on the intention of the parties, the Court of First Instance ultimately added a further condition to those provided for in the fourth paragraph of Article 173 of the Treaty for the admissibility of actions for annulment brought by individuals against decisions addressed to another person, that is to say the condition that the harm directly caused by the contested act to the position of the applicants not be the result of a decision taken voluntarily by them in the exercise of their private freedom.

31 Finally, in the view of Glencore, the contested judgments also conflict with the trend of the case-law, which states that a person may be directly concerned within the meaning of the fourth paragraph of Article 173 even in the absence of a legal link with the body from which the contested act emanates and even if the Community measure does not take the place of a decision by the national authorities and leaves the national authorities a certain margin of discretion, and the content of the latter measure is not certain or highly probable.

According to Glencore, that trend stems in particular from the judgments of the Court of Justice and the Court of First Instance, which on several occasions have recognised the admissibility of an action for annulment brought by a potential recipient of State aid against the Commission decision addressed to the relevant Member State declaring the aid in question to be incompatible with the common market.

As the competent national authorities stipulated in the present cases with regard to the payment of the purchase price of the goods, the State granting an aid can also agree with the recipient undertaking to make the disbursement of the aid dependent on the approval of the Commission. The position of Glencore, which moreover was in constant contact with the Commission during the period preceding the adoption of the contested decisions, was therefore very similar to that of an undertaking which was a potential recipient of State aid, even from the procedural point of view.

32 (ii) In the opinion of the appellants, the Court of First Instance also infringed the general principle that every judicial body has an obligation to state the reasons for its decisions, inasmuch as there were grave inconsistencies in the grounds for the contested judgments. In the first place, they contend that the Court of First Instance erred in stating that - notwithstanding the suspensory condition in the supply contracts (see footnote 17 above) - the Commission's decisions did not affect the formal legal validity of the contracts in question and did not modify the terms of the agreements between the parties.

In fact, it is submitted, the exact opposite was true, for as performance of the contract was subject to the suspensory condition (see paragraph 27 above), the Commission's adverse decisions directly affected the legal situation of the contracting undertakings by denying them the right to obtain the price (or the new price) agreed with the competent national authority.

33 Continentale further complains that the Court of First Instance, after having noted that the Commission had requested the formal resubmission by the VEB of the request for approval of the riders to the supply contracts that had already been forwarded by Exportkhleb, and that by means of the decision of 1 April 1993 the Commission had refused to approve the amendments to the contracts, contradicted itself by ruling that the Commission's refusal did not take the place of a decision by the Russian authorities. (24)

That conclusion, the appellants contend, was in the first place arbitrary, since the Court of First Instance did not even consider the possibility of there being an autonomous decision on the part of the competent national authorities, to which the prejudicial effects for the contracting undertakings would in fact be attributable. Secondly, it conflicted with the implicit recognition by the Court of First Instance of the role of mere `conduit' performed in practice by the VEB, at the desire of the Commission itself.

The Commission's defence

34 The Commission first raises an objection of inadmissibility against the four appeals, maintaining that - apart from the plea relating to contradictory grounds - in substance the arguments put forward merely reproduce the pleas and arguments developed at first instance, including those based on facts expressly rejected by the Court of First Instance.

Moreover, the analysis by the Court of First Instance both of the loan contracts between the Community and the republics involved and of the supply contracts concluded by the appellants in the present proceedings with the State companies appointed to negotiate the purchases of wheat was, in the Commission's opinion, factual and could not be the subject of appeal.

Referring to the settled case-law of the Court, the Commission argues that appeals such as those lodged by Dreyfus, Continentale and Glencore are in reality no more than requests to re-examine the actions for annulment already dismissed by the Court of First Instance and, under Article 49 of the EC Statute of the Court of Justice, fall outside the jurisdiction of the latter.

It is therefore only in the alternative that the Commission addresses the substance of the cases before the Court.

35 As a preliminary matter, the Commission observes that the interpretation of the suspensory condition is far from clear. Indeed, it does not appear that the arbitration tribunal of the Moscow Chamber of Commerce and Industry (or the corresponding jurisdiction in Kiev), which alone is entitled to interpret the supply contracts, has ruled on the exact scope of the clause in question. Above all, in the correspondence with Exportkhleb in the days following the adoption of the decision of 1 April 1993, Dreyfus showed that it interpreted the supply contract as `a firm contract'. (25)

36 With regard to the first ground of the appeal, the Commission observes that, for an action for the annulment of a Commission decision to be admissible, the contested decision must produce effects in Community law with regard to the applicant, failing which it is not of direct concern to the applicant.

By contrast, according to the Commission, in the present proceedings the only effects adduced by the appellants were the result of `a combination of the Commission decision and the terms of the contract, to which the Commission was not a party'. Indeed, the supply contracts and the contested decisions were not, it is submitted, acts in implementation of Decision 91/658 and Regulation No 1897/92 nor did they otherwise fall within the scope of Community law. (26)

37 Nor can it be held, the Commission continues, that the competent national authorities, whose respective decisions directly and autonomously gave rise to the damage alleged in the present cases, were performing a function under public law in the context of the implementation of a Community policy. The decisions of those authorities not to proceed with payment of the agreed price (or the higher price) were therefore not, in the view of the Commission, public law measures implementing Community provisions; they produced only effects under private law on the relations established by Ukrimpex and Exportkhleb respectively with the contracting undertakings.

The Commission adds that juridical scrutiny of its acts, stemming from administrative law and hence from a branch of public law, cannot in any case depend on private agreements to which the Commission is not a party.

If the reasoning of the appellants were accepted, the Commission contends, locus standi for the purposes of the fourth paragraph of Article 173 of the Treaty would depend not on the principles developed by Community case-law but on the presence or absence of such agreements, with the result that subjective law would take the place of objective law derived from judgments of the Court.

In particular, granting the present appeals would, in the view of the Commission, necessarily reverse the case-law developed by the Court with regard to the financing of projects by the European Development Fund (see footnote 31 below).

38 Moreover, in the present cases the requests for advances of funds on the basis of the loans to the Russian Federation and Ukraine were sent to the Commission by the republics involved via their respective financial agents. As the contracting undertakings, by contrast, were not in any way party to those requests, the Commission contends that the VEB and the SEIB cannot be regarded as acting simply as intermediaries between the undertakings concerned and the Commission, without any margin of autonomy.

In addition - the Commission's representatives observed at the hearing - the link that the appellants allege exists between the Community loan and the essential purpose (causa) of the supply contracts (see footnote 64 below) is anything but proven. Indeed, according to the Commission, it appears that undertakings similar in size to Dreyfus, Continentale and Glencore sold cereals to the Soviet Union before its dissolution without recourse to any system of financing or other form of assistance from the Community.

39 The Commission also contests Glencore's arguments that the direct concern of the company had to be deduced from the tenor of the two contested decisions - which was such as to make it certain or highly probable that the Russian and Ukrainian authorities respectively would not have paid the agreed price in the absence of Community financing - or, in the alternative, from Community case-law regarding State aid.

According to the Commission, whether or not the disputed act is of direct concern to an individual cannot depend on factors that are extraneous to the act in question and outside the control (or even the knowledge) of the authority from which that act emanates, such as, in the present cases, the solvency of the purchasing authorities and their ability to honour their commitments, or the contents of an agreement under private law. In particular, a negative decision adopted by the authority would always be of direct concern to a potential recipient of aid, irrespective of any previous agreement between the company itself and the State granting the aid.

40 Lastly, with regard to the second ground of appeal relied on by Dreyfus, Continentale and Glencore, the Commission denies that the Court of First Instance analysed the legal consequences of the suspensory condition, mentioned several times above, and concluded that Exportkhleb and Ukrimpex had neither a legal obligation nor the resources to pay the agreed price. Above all, it would not be for the Court of First Instance to carry out such an analysis, as the interpretation of the contracts fell solely within the jurisdiction of the competent arbitration bodies (see paragraph 35 above). The Court of First Instance, by contrast, confined itself in the judgments to stating the applicants' arguments.

41 In addition, the Commission contends that the allegation of contradictory reasoning should in any case be dismissed inasmuch as the decisions of 1 April 1993 and 12 July 1993 in themselves had no direct effects on the position of the appellants in relation to Exportkhleb and Ukrimpex respectively. Such effects could derive solely from the suspensory clauses inserted by the contracting parties themselves. In the Commission's view, the conclusion of the Court of First Instance that the decisions in question were not of direct concern to the three companies was thus correct.

42 Finally, the Commission reiterates that none of the contested judgments proves that the VEB acted as a mere `conduit' between the contracting undertakings and the Commission. The Commission's insistence that the contracts concluded by Exportkhleb be submitted to it by the VEB can be explained by the fact that the approval of conformity gave rise to a financial obligation (in other words, a debit against the loan to the Russian Federation). Hence, the Commission could deal only with a body competent to enter into financial operations. These facts do not, in the Commission's view, in any way contradict the conclusion of the Court of First Instance that the contested decisions did not take the place of the initial choice of suppliers by the Russian and Ukrainian authorities respectively.

The judgment of the Court of Justice in Geotronics and its relevance for assessing whether the present appeals are well founded

43 After the close of the written procedure, however, the Court of Justice asked the appellants and the Commission to comment at the hearing on the possible impact that the judgment delivered by the Court on 22 April 1997 in Geotronics (see footnote 1 above) had had on the arguments they had developed in the present proceedings.

44 As you know, that procedure related to an appeal brought by Geotronics, a company participating in a restricted invitation to tender (for the supply of electronic tachometers for use in the land reform programme) issued jointly by the Commission and the Romanian Government and financed under the PHARE programme, against the judgment in which the Court of First Instance had dismissed as inadmissible the application for annulment brought by that company against a letter addressed to it by the Commission.

More precisely, Geotronics, after having been informed by the competent authority representing the Romanian State that its tender had been successful and that the supply contract had been submitted to the contracting authority for approval, learnt from a fax letter sent to it by the Commission that its tender had been rejected because it did not satisfy the condition of the invitation to tender that the instruments to be supplied originate in a Member State or a beneficiary country under the PHARE programme.

45 In the action for annulment of the abovementioned decision of the Commission, the Court of First Instance - after its President had rejected the applicant's request for interim measures (27) - finally rejected the action by Geotronics as inadmissible on the ground that there was no measure against which an action could be brought. (28)

In the abovementioned judgment the Court of First Instance first recalled the division of roles between the Commission and the authorities of the beneficiary State in implementing actions and projects funded under the Community's cooperation policy, and specifically in the context of external aid granted under the PHARE programme. It then observed that contracts financed by that programme must be regarded as national contracts, which are binding only on the economic operators involved and the beneficiary country, which has the power to prepare, negotiate and conclude the contracts.

By contrast, no legal relationship arises between the tenderers and the Commission, which restricts itself to taking funding decisions on behalf of the Community in relation to the contracts in question. Hence, the measures of the Community cannot have the effect, in relation to tenderers, of substituting a Community decision for the decision of the beneficiary country.

The Court of First Instance therefore excluded the possibility that in this matter measures issued by the Commission could affect the legal situation of the tenderer and therefore be the subject of an action for annulment such as that brought by Geotronics against the Commission's letter described above. The Court of First Instance stated that the annulment of that letter would not avail Geotronics in any event, since it could not in itself call in question the contract between the Romanian authorities and the firm to which the contract was awarded. (29)

46 As you know, the judgment I have described here was set aside by the Court of Justice on appeal in so far as it related to the inadmissibility of the action under the fourth paragraph of Article 173 of the Treaty.

Accepting the lucid Opinion of Advocate General Tesauro, (30) the Court found that the Court of First Instance had erred in law by simply transposing to the case before it the reasoning underlying the case-law concerning public contracts financed by the European Development Fund (`the EDF case-law'). (31)

In fact, as the Court observed, the contested fax letter, which was formally addressed to Geotronics, was adopted by the Commission after it had ascertained whether or not the addressee's tender satisfied the conditions for obtaining Community funding set out in the invitation to tender.

The Court held that the Commission's decision had to be considered separately from the contractual procedure of which it was a part and which was to lead to the conclusion of a national contract. It saw two reasons for doing so: the decision was adopted by the Commission in the exercise of its own powers and it was specifically directed at an individual undertaking, which lost any chance of being awarded the contract simply because that act was adopted.

On the basis of those considerations, the Court concluded that the Commission's decision itself had binding effects likely to affect the legal position of Geotronics. The decision of the Court of First Instance, which had found the company's action for annulment to be inadmissible, was therefore set aside. (32)

47 Inevitably, the three appellants in the present cases and the Commission have drawn differing conclusions from the judgment of the Court of Justice in the Geotronics case.

48 Dreyfus, Continentale and Glencore rely on that judgment in order to dispel any doubt as to the admissibility of their actions in the present cases. Moreover, they maintain that in the Geotronics judgment the Court met the need to provide economic operators with concrete legal protection, a need which the EDF case-law did not satisfy.

The three companies also observe that the applicant in cases subject to EDF case-law was invariably an undertaking participating in an invitation to tender which contested the measure by which the Commission had approved the award of the contract to another undertaking by the national authorities of the ACP State. In other words, it was a person other than the contracting undertaking in relation to which the Commission had adopted the disputed decision that petitioned the Court. The decision was therefore of only indirect concern to the applicant.

The appellants contend that in the Geotronics case, by contrast, the applicant was excluded from the tendering procedure as a direct consequence of the Commission's decision to reject its offer. The Romanian authorities, for their part, remained free to award the contract to the undertaking and had indeed notified Geotronics of their intention to give preference to the company. However, this decision would have required the Romanian Government to forgo Community financing. By departing on this point from the analysis made by the Court of First Instance (33) and endorsing the Opinion of the Advocate General, the Court of Justice demonstrated that it considered this option for the Romanian authorities to be purely theoretical.

Hence in the Geotronics case, as in the cases that are the subject of the EDF case-law, undertakings participating in a tender or to which contracts are awarded have legal relations exclusively with the competent national authorities. In the view of the appellants, by declaring the action brought by Geotronics to be admissible, the Court had therefore, in consideration of the specific circumstances of the case, appropriately revised the criterion it had followed in the other judgments I have just mentioned.

49 The applicants maintain that a similar solution should be adopted in the actions now before the Court and specify the reasons which in their view would oblige the Court to depart from the EDF case-law in these cases as well.

First and foremost, they contend that the Commission's decisions not to approve either the riders to the supply contracts concluded between Exportkhleb and the three appellants or the contract concluded between Ukrimpex and Glencore were adopted in the exercise of its own powers.

50 Secondly, they maintain that the decisions contested by Dreyfus, Continentale and Glencore were specifically directed at them - which moreover accords with the direct nature of the relations between the three companies and the Commission both during the preparatory phase and after the award of contracts in the two tendering procedures - and in themselves had binding legal effects on them. In particular, the Commission's decisions definitively deprived the applicants of any chance of performing the respective sales contracts at the agreed price, which reflected the level of prices then prevailing on the world market.

The alleged ability of the Russian and Ukrainian authorities to pay the three companies the agreed sums even in the absence of Community funding was, it is submitted, in fact purely theoretical in the present case as well, owing to the grave financial crisis in which the two republics found themselves at that time and above all because the suspensory condition to which the parties to the supply contracts had made the performance of their respective obligations subject was not fulfilled.

This fact, in the appellants' opinion, was sufficient to distinguish the present cases from those subject to the EDF case-law in that the successive versions of the Lomé Convention made no express provision for the ACP State automatically to forgo Community financing if it decided to award the contract to a participant which was not approved by the Commission.

51 Precisely because of the binding legal effects which the disputed decisions in themselves produced for the appellants, they contend that no importance attaches to the fact that those decisions were formally addressed not to the three companies but to the financial agents of the Russian Federation and Ukraine.

52 Finally, according to the appellants, the Commission's argument that - from the point of view of the time at which the contested decisions were taken in relation to the course of events - the present disputes differed from the Geotronics case (see paragraph 57 below) and instead presented similarities with the cases decided in accordance with the EDF case-law should be disregarded.

In the latter cases, the action for annulment of the Commission's decision was brought by the third party undertaking, which the national authorities had excluded from the procedure even before the intervention of the Commission. Hence, there did not exist between the applicant undertaking and the beneficiary country a contract whose performance depended, either in fact or in law, on recognition by the Commission.

Dreyfus, Continentale and Glencore contend that the situation is actually the reverse in the present appeals: first the competent national authorities awarded the contracts to the applicant companies and then the Commission refused to grant approval for the purpose of financing the contracts that had already been concluded.

53 What observations does the Commission make, for its part? The representatives of the defendant institution repeated at the hearing that, as far as the Commission's role is concerned, the totally decentralised systems of technical assistance are broadly similar, whether they relate - in particular - to contracts financed by the EDF or operate under the PHARE programme.

In both cases the Commission operates in the name of the Community solely as supplier of public funds, leaving responsibility for implementing the entire programme to the beneficiary country. This division of roles did not, however, prevent the national authorities from calling very frequently on the Commission for technical advice (for example, during the preparation of programmes subject to financing) or financial assistance (for example, in order to pay experts appointed to draw up the terms of invitations to tender).

54 Given the underlying similarity between the decentralised systems of EDF and PHARE financing, the Geotronics judgment of the Court could, in the opinion of the Commission, be explained in the light of the specific circumstances of the case.

In that case the Commission was guilty of a `serious oversight', exceeding its powers in taking the initiative to write directly to the company involved. Above all, the condition that the products to be supplied under the contract should originate in Community or PHARE countries - a condition which according to the contested decision was not fulfilled by the tender from Geotronics - was laid down not in Community law, the only legislation which the Commission was empowered to apply, but in the tender conditions set by the Romanian authorities.

55 According to the Commission, the abovementioned features of the Geotronics case were not, however, encountered in the procedures to which this Opinion relates, notwithstanding the fact that the framework agreements concluded by the Commission with the Russian Federation and Ukraine also established a decentralised system which in principle corresponded to the criteria deriving from the EDF case-law.

56 First, in the present case the Commission did not take initiatives likely to `break' the legal relationship between the contracting companies and the State bodies appointed to conduct and finalise the negotiations for the award of the contract. Whereas in the Geotronics case the Commission's letter had been addressed to the company itself, in the cases in point the addressees of the contested decisions were the financial agents of the republics involved. Hence, in the present disputes there was no Commission decision which took the place of a decision by the national authorities.

57 Moreover, the decision of 1 April 1993 and that of 12 July 1993 were, according to the Commission, different in nature to the decision addressed to Geotronics. The measures against which the appeals have been brought did not relate to a refusal to approve the tenders submitted by the three companies in the two invitations to tender and their consequent exclusion from those procedures. The measures in question came at a completely different time in relation to the course of events, namely after the award, negotiation and conclusion of the supply contracts with the competent Russian and Ukrainian authorities respectively.

In the opinion of the Commission, that temporal distinction is reflected in the different scope of the legal protection available to the applicants. Indeed, as Advocate General Tesauro pointed out in his Opinion, (34) Geotronics could not apply for a review of the legality of the contested act to any court other than the Community judicature, given that in connection with contracts financed by the PHARE programme the unsuccessful tenderer is not entitled to have recourse to a special arbitration procedure. The Commission contends that the situation is different in the case of Dreyfus, Continentale and Glencore. Despite the inadmissibility of their respective actions for annulment before the Community Court, the appellants remained free to invoke the arbitration clause provided for in the supply contracts for any dispute involving interpretation and implementation, (35) by initiating the prescribed procedure in order to obtain from the arbitration tribunal of the Chamber of Commerce and Industry in Moscow (or the equivalent tribunal in Kiev) a ruling on the obligation of Exportkhleb (or Ukrimpex) to honour the obligation to pay the price on the agreed terms.

Legal analysis

(i) The objection of inadmissibility of the appeals

58 In my opinion, the objection of inadmissibility of the appeals raised before the Court by the Commission (see paragraph 34 above) is without merit.

Under Article 51 of the EC Statute of the Court of Justice, any plea which is confined to challenging the findings of fact made by the Court of First Instance must be rejected as inadmissible. (36) However, when the Court of First Instance has found and assessed the facts, defined their legal nature and determined the legal consequences, the Court of Justice certainly has jurisdiction to exercise the power of review conferred on it by Article 168a of the Treaty. (37) Although it is true that in lodging an appeal the applicant may criticise the Court of First Instance for having wrongly applied rules of law the observance of which it had to ensure, it is equally true that such wrongful application may result from an erroneous characterisation of the facts. (38)

This appears to me to be precisely the substance of the claimed infringements of the fourth paragraph of Article 173 and of the general obligation to state reasons of which Dreyfus, Continentale and Glencore complain. According to the three companies, the errors committed by the Court of First Instance in assessing their respective interest in obtaining annulment of the decisions of 1 April 1993 and 12 July 1993 related not - it should be noted - to the facts found in the cases but to the legal assessment of those factual circumstances, which they consider to be inadequate and illogical. Moreover, it cannot, in my opinion, be seriously contested that the applicants clearly stated, as they are required to do by the case-law of the Court, (39) the aspects of the judgments of the Court of First Instance which they criticise and the legal arguments which specifically support the request to set aside those judgments.

(ii) The substance of the appeals

59 Turning to the substance of the present applications, I consider it necessary to recall first the doctrine of the Court on the requirement that the contested act be of direct concern to the applicant under Article 173 of the Treaty.

The mechanism established by that article provides, `in any specific case of unlawful conduct, the possibility of effective legal protection for the interests affected thereby'. (40) In particular, the aim of the fourth paragraph (previously the second paragraph) of Article 173 of the Treaty `is to ensure the legal protection of individuals in all cases in which they are directly and individually concerned by a Community measure - in whatever form it appears - which is not addressed to them'. (41) As `the words and the natural meaning of this provision justify the broadest interpretation' and `moreover provisions of the Treaty regarding the right of interested parties to bring an action must not be interpreted restrictively', the Court has stated that, the Treaty being silent on the point, the fourth paragraph of Article 173 cannot be interpreted in a narrow sense. (42)

60 According to the settled case-law of the Court, it is essential `to determine whether the contested Community measure is directly applicable, that is to say whether it automatically takes effect in relation to individuals or whether action must be taken by another entity which enjoys a discretion - namely the Member States - before it can take effect'. (43)

As you know, the case-law of the Court on the requirement of direct concern initially followed a more formalistic approach, but over the years the Court has gradually, yet increasingly unequivocally, come to agree with the definition contained in the literature, which `is wide enough to encompass not only the direct formal effects but also the direct material effects on a person of a [contested] decision ... A measure taken by the Community is defined as being of direct material concern to an interested party if, even though it requires the adoption of a further national implementing measure, it is possible to foresee with certainty or with a high degree of probability that the implementing measure will affect the applicant and the manner in which it will do so. ... In other words, therefore, in the case-law concerning the requirement of "direct concern", a rational distribution of functions was gradually developed as a result of which the Court of Justice exercises direct jurisdiction if the legal effects on interested parties and their identity can with certainty or with a high degree of probability be inferred from the decision, whereas if that is not the case the national court exercises jurisdiction at first instance.' (44)

61 The Piraiki-Patraiki case is of particular relevance for the purposes of the present Opinion. (45) The Court held in those proceedings that the contested act - that is to say the decision whereby the Commission had authorised the French Republic to institute a general quota system on imports of cotton yarn from Greece - was of direct concern to the applicants (the company Piraiki-Patraiki and the other main Greek undertakings which produce and export the products in question to France) within the meaning of the fourth paragraph of Article 173 of the Treaty, despite the fact that in the case in point it was merely possible (and not certain) that the Member State to which the decision in question was addressed would adopt measures likely to harm the applicant undertakings.

After having joined consideration of the exception of inadmissibility raised by the Commission (46) to consideration of the substance of the case, the Court noted in that judgment that the fact that France retained the option to adopt or not to adopt the authorised general import quota system did not in itself `prevent the decision from being of direct concern to the applicants if other factors justify the conclusion that they have a direct interest in bringing the action'. (47)

The `other factors' mentioned by the Court were the following: (i) even before being authorised to do so by the Commission the French Republic had applied a very restrictive system of licences for imports of cotton yarn of Greek origin, (ii) the request for protective measures came from the French authorities themselves, and (iii) that request sought to establish a system of import quotas more strict than that which the Commission actually sanctioned by means of the contested decision. (48)

In the light of those factors, the Court held that it was legitimate to expect that France would actually adopt the system that had been authorised by the decision that was the subject of the application by the Greek cotton exporters. The Court therefore concluded that `in those circumstance the possibility that the French Republic might decide not to make use of the authorisation granted to it by the Commission decision was entirely theoretical, since there could be no doubt as to the intention of the French authorities to apply the decision. It must therefore be accepted that the decision at issue was of direct concern to the applicants.' (49)

62 This approach of the Court, based on the direct material effects of the contested act on the position of the applicant, is very realistic. (50) By contrast, a different and more formalistic line is adopted in EDF case-law. One need only consider the underlying concept of the triangular relationship between the Commission, the beneficiary State and undertakings participating in the invitation for tenders. (51)

The Court has repeatedly stated that in the framework of the financial and technical cooperation provided for by successive Lomé Conventions the measures adopted by the Commission in the course of the procedure for the placing or implementation of a public contract financed by the EDF and concluded by the associated ACP State are not of direct concern to the tendering undertaking. According to the Court, such measures are solely intended to establish whether or not the conditions for Community financing are met and the relevant procedures have been complied with and fall exclusively within the relations between the Commission and the State involved. (52)

63 Following the example of Advocate General Tesauro in the Geotronics case, (53) I shall refrain here from adopting a position on the correctness of the line pursued by the Court in the EDF case-law with regard to the admissibility of applications under the fourth paragraph of Article 173 of the Treaty. (54)

It is in fact unnecessary for me to adopt a position in that regard; the disputes before the Court today have completely different connotations to the cases covered by EDF case-law. As the appellants have claimed, they are essentially comparable to the dispute settled by the Geotronics judgment.

64 It should be recalled that in the procedures relating to EDF financing the Commission delegate's act against which the appeal was brought before the Court was, depending on the case, the approval of the proposal for the award of the contract drawn up by the national authorising officer in the beneficiary State (55) or the endorsement of the contract concluded by that officer. (56)

On the formal level, at least, the exclusion of the appellants from the procedure for placing the contracts, which were awarded to competitors, therefore stemmed directly from the decision of the national authorities in the ACP State. Hence, the Commission's approval or endorsement did not interfere with the autonomous appraisal which the State receiving the financing had already made, did not vitiate the validity of the conclusion of the contract with the undertaking to which it was awarded and did not prejudice its performance.

65 The principles developed in the EDF case-law cannot, however, be transposed to situations such as that decided in the Geotronics case, as the Court made clear in paragraph 13 of the judgment delivered in that case. (57)

By contrast with the cases subject to EDF case-law, in the Geotronics case the applicant had lost any chance of actually being awarded the contract simply because the contested act had been adopted by the Commission. (58)

66 Similar reasoning should, in my opinion, be applied to the analysis of the admissibility of the applications made by the Court of First Instance, which is at the origin of today's appeals: in the circumstances described above, any margin of discretion left to the competent Russian and Ukrainian authorities as to the application of the disputed decisions should have been assessed in relation to their remaining option to perform the contracts on the price terms contested by the Commission, but naturally on the proviso that they forewent Community financing, which had become unavailable.

Hence, only if that option existed could the possibility that the decisions of 1 April 1993 and 12 July 1993 were of direct concern to the appellants in the present cases be legitimately ruled out.

On that premiss, it is now necessary to ascertain whether or not the measures adopted by the Commission called in question the assessment already made - in the exercise of their own powers provided for and regulated by Regulation No 1897/92 and by the framework agreements - by the competent authorities of the Russian Federation and Ukraine, and thus of themselves made it impossible, in fact and in law, to perform the supply contracts on the terms indicated above.

67 In this regard, the contested judgments confine themselves to finding, as I indicated in paragraphs 23 and 24 above, that the decisions in which the Commission refused to finance payment under the supply contracts concluded by Dreyfus, Continentale and Glencore respectively with Exportkhleb and Ukrimpex did not affect the legal validity of the contracts in question.

The Court of First Instance appears to have reasoned that, as a consequence, the purchasing bodies remained actually obligated to execute the contracts at the prices agreed respectively with the suppliers: the Commission's decision (on the compatibility of the contracts with the statutory terms for financing) did not take the place of the decision of the national authorities (on the overall economic and commercial benefit of the individual contractual terms).

68 In my opinion, however, even if the analysis of the Court of First Instance, which was based on a purely legal approach, is to be endorsed it is anything but certain that the Commission's two refusals did not affect the various parties' rights and obligations arising out of the supply contracts.

It is true that as a result of the arbitration clause included in the contracts in question (59) this question in all probability falls within the jurisdiction of the arbitration tribunals of the Chambers of Commerce and Industry in Moscow and Kiev. However, it will be sufficient to recall here that, on the basis of the agreements between the parties, the validity of the supply contracts to which the present appeals relate was made subject to the suspensory condition that the Commission recognise the conformity of the contracts themselves and of the documentary credits issued by the VEB and the SEIB (on instructions from Exportkhleb and Ukrimpex) for the purposes of implementing those contracts. In particular, no payment could be made unless the bank designated in the supply contract received an appropriate reimbursement commitment issued by the Commission (or, more precisely, from its manager bank). (60)

Moreover, the appellants have explained, persuasively in my opinion, that after having notified the purchasing bodies in the customary manner (see paragraph 35 above) they refrained from any initiative to bring their claims for performance of the contracts before the competent arbitration bodies, precisely because they were aware that such claims were manifestly unfounded in the light of the clear wording of the suspensory condition.

69 The Court of First Instance attached no importance whatsoever to the above considerations, on the basis of the criterion stated in the contested judgments that the admissibility of the actions brought by Dreyfus, Continentale and Glencore could not be made to depend on the intentions of the parties to the individual supply contracts. The parties could not for that purpose establish any link between the legal agreement they had concluded and the future decision of the Commission on the conformity of the contract itself with the conditions for Community financing.

I shall refrain from considering the accuracy of that criterion. However, it is very doubtful that it can be applied to the cases in point. One should not lose sight of the following fact: between the supply contracts concluded by the Russian Federation and Ukraine with the appellant companies `downstream' and the loan contracts concluded by the two republics with the Commission `upstream' there existed - leaving aside its express formalisation by means of the suspensory condition - an undeniable and objective socio-economic link, known to all the actors in the triangular relationship.

In my view, it cannot be denied that both the parties in the respective supply agreements - and especially the vendors, expert commercial operators well acquainted with the urgent problems of insolvency of the purchasing republics in the throes of a serious financial crisis, as was stated clearly in the preamble to Decision 91/658 (see paragraph 6 above) - were prompted to deal with the counterparty solely by the consideration of the virtually simultaneous (61) granting of the loans to the republics involved by the Community.

Moreover, as the appellants have remarked, the concrete operational arrangements for the payment mechanism set up by the framework agreements demonstrate in the clearest manner possible that, for the purposes of satisfying the obligation to pay for the delivered goods, the supply contracts were economically contingent on the granting of Community loans to the two republics.

On the basis of the remarks made above (see paragraphs 8 to 14), I note that under the two emergency loans granted by the Community to the Russian Federation and Ukraine the issue of documentary credits by the respective financial agents of the two republics was not necessarily sufficient to provide certainty to the contracting undertakings that they would receive payment for the goods, nor to the correspondent bank of the VEB or the SEIB - acting as confirming bank at the request of the contracting undertaking (62) - that the sums advanced would be reimbursed. In fact, the guarantee of performance by the purchaser represented by the documentary credit is in principle worth only as much as the creditworthiness of the issuing bank. However, the creditworthiness of the VEB and the SEIB at the time of the events at issue was modest, to say the least. (63)

For the suppliers, the certainty of receiving punctual and complete performance of the consideration stemmed - subject to the recognition of conformity of the commercial contracts with the relevant Community regulations - from the obligations entered into by the Community (in its capacity as lender) towards the VEB and the SEIB. The cover which the Commission provided for the irrevocable letters of credit opened by these banks offered a visible guarantee: a guarantee, one might add, that was on all fours with the guarantee deriving in international commercial practice from the confirmation of a documentary credit by another bank of superior standing.

Hence, what is important here is not the suspensory condition desired by the parties but the objective economic dependence of the supply contracts on the loan agreements on which they were predicated. The insertion of the suspensory condition into the contracts merely reflected that dependence. (64)

70 That having been said, I consider that, partly in the light of the problems of jurisdiction raised by the Commission (see paragraphs 35 and 68 above), it is neither necessary nor permissible here to examine in further detail the question whether the legal position of the Russian and Ukrainian purchasers in relation to performance of the contracts concluded with the appellants can be described as a true obligation.

Moreover, according to the analysis carried out by the Court of First Instance which led to the dismissal of the actions for inadmissibility - for lack of direct concern on the part of Dreyfus, Continentale and Glencore - it was sufficient to find that Exportkhleb and Ukrimpex certainly retained, technically at least, the possibility of forgoing Community financing and implementing the supply contracts in accordance with the price conditions repudiated by the Commission.

Such an approach - which in fact has already been rejected by the Court of Justice in the Geotronics case (65) - should also be discarded, however. In my opinion, it represents no more than a sterile exercise in legal formalism, for the reasons I shall now set out.

Even if the Russian Federation and Ukraine - in other words, the addressees of the disputed decisions (via their respective financial agents) - had themselves had the financial resources (or alternative sources of finance, even if less favourable than Community funds) to meet the purchasing commitments concluded with the three companies, the two republics cannot possibly have had an interest in performing the contracts signed with Dreyfus, Continentale and Glencore at the cost of forgoing a corresponding amount of the Community loan, especially as the grain to which the contracts relate is a homogeneous and undifferentiated good. The purchasing republics could easily have obtained it, though clearly with late delivery, from large competing trading companies on contractual terms acceptable to the Commission.

In any case, moving from speculative considerations to the facts, it is evident from the facts described in the contested judgments that the Russian Federation and Ukraine did not have direct access to such resources. (66) Moreover, the Commission did not really deny that that was so.

As a consequence, the following conclusion must be reached: the alleged option (but the situation would be the same if one preferred to speak of obligation) for the Russian and Ukrainian authorities to perform the contracts on the agreed terms while forgoing Community financing should be considered to be purely theoretical, just as in the Geotronics case it was held that the possibility for the Romanian authorities to decide to award the contract in question to Geotronics, notwithstanding the Commission's refusal to grant it Community aid, was held to be theoretical.

On the basis of the factors set out above, there could be `no doubt' - to borrow the formula used by the Court of Justice in the Piraiki-Patraiki judgment discussed in paragraph 61 above - or at least a high degree of probability as to the intention of the authorities of the two republics to comply with the contested decisions by declining to pay the respective sales prices which the Commission considered to be incompatible with the financing conditions.

71 The decisions not to approve the riders to the supply contracts agreed between Exportkhleb and the three appellants and the contract concluded between Ukrimpex and Glencore were adopted by the Commission in the exercise of its own powers (as provided for and governed by Articles 4 and 5 of Regulation No 1897/92, itself based on Decision 91/658) and deprived Dreyfus, Continentale and Glencore (whether wrongly or rightly is of no importance here) of any effective chance of performing the sales contracts awarded to each of them.

The Commission's decisions therefore in substance took the place of those of the competent national authorities, producing binding legal effects on the positions of the three companies, which therefore had a direct interest in bringing an action for their annulment.

72 I consider this conclusion to be fully in line with the Geotronics judgment to which I have referred several times (see paragraph 46 above). Indeed, the fact that in the present cases the Commission adopted the decisions contested by Dreyfus, Continentale and Glencore after the award, negotiation and conclusion of the supply contracts by the competent national authorities (and not beforehand, as in the Geotronics case) does not, as the Commission contends (see paragraph 57 above), make it legally impossible for the three companies to avail themselves of the legal protection provided for by Community law.

It is true that Dreyfus, Continentale and Glencore remained free to invoke the arbitration clause contained in the supply contracts in order to obtain, if appropriate, an arbitration ruling that Exportkhleb (or Ukrimpex) had failed to comply with a contractual obligation. The arbitration tribunal of the Chamber of Commerce and Industry in Moscow (or the similarly named tribunal in Kiev) would, however, have plainly lacked jurisdiction to assess the compatibility of the decisions of 1 April 1993 and 12 July 1993 with the provisions (contained in Decision 91/658 and Regulation No 1897/92) regulating the power to recognise the conformity of the commercial contracts and documentary credits opened to pay for the supplies, which rests with the Commission. Like Geotronics before them, the present appellants could not submit the disputed decisions for a review of their legality before any court other than the Community court.

73 Finally, it is true that in the Geotronics case the pleas of inadmissibility raised by the Commission, and which the Court of First Instance upheld, related to a different issue to that raised in the four cases before the Court today.

In the Geotronics case the issue hinged on the very nature of the letter sent by the Commission to Geotronics, in other words on whether it was possible to characterise such an act as being capable of forming the subject-matter of an action for annulment inasmuch as it produced binding legal effects likely to affect the interests of the undertaking participating in the invitation to tender. (67) That aspect is not contested in the present proceedings and (except in Case T-509/93) was not at issue before the Court of First Instance. (68)

In the procedural objections upheld in the judgments of 24 September 1996 the Commission confined itself to arguing that the decisions of 1 April 1993 and 12 July 1993 - addressed to the VEB and the SEIB respectively - were not of direct concern to the applicants. (69) In the Geotronics judgment, by contrast, once the Court of Justice had characterised the disputed decision as a measure against which an action could be brought it had no need to establish whether it was of direct (and individual) concern to the appellant since the fax letter from the Commission, which was formally addressed to Geotronics, was characterised as a decision taken in relation to that company for the purposes of the fourth paragraph of Article 173 of the Treaty. (70)

For the reasons I have set out above, even that difference in circumstances cannot affect the admissibility of the actions brought by the appellants in the present cases.

Moreover, as the fourth paragraph of Article 173 clearly states, under the system of legal protection established by the Treaty individuals have the right (albeit a conditional one) to challenge directly decisions taken (formally) in relation to other persons. Such decisions are to be regarded as affecting in the same way not only the addressee but also another person, who may bring an action against them by establishing that they are of direct and individual concern to him. (71) As I have pointed out (see paragraph 59), the purpose of the provision is to prevent the Community institutions from being in a position, merely by choosing the form of the measures they adopt, to exclude or limit applications by individuals and to make clear that the choice of form cannot change the nature of the measure. (72)

Let us suppose, by way of hypothesis, that the formal addressees of the decisions of 1 April 1993 and 12 July 1993 were the appellants in the present proceedings, all other circumstances remaining unchanged. In that case, in accordance with the principles established by the Court in the Geotronics case, the decisions in question would have been capable of forming the subject-matter of an action for annulment by the three companies.

If that is the case, I do not see how one can reach a different conclusion simply on the grounds that in these cases the Commission chose to address the contested measures not to Dreyfus, Continentale and Glencore but to the financial agents of the Russian Federation and Ukraine respectively.

74 According to the first paragraph of Article 54 of the EC Statute of the Court of Justice, `[i]f the appeal is well founded the Court of Justice is to quash the decision of the Court of First Instance. In such case, it may itself give final judgment in the matter where the state of the proceedings so permits, or refer the case back to the Court of First Instance for judgment'.

The rulings on the substance of the disputes that are the subject of the cases before the Court will inevitably require findings of fact in order to assess the pleas originally made by Dreyfus, Continentale and Glencore, which the Court of First Instance did not have occasion to consider in its interlocutory judgments of 24 September 1996. Moreover, Cases T-485/93 and T-491/93 regarding the actions for compensation for damages brought by Dreyfus and Glencore under Article 178 and the second paragraph of Article 215 of the Treaty are still pending before the Court of First Instance. For those reasons I propose that the cases be referred back to the Court of First Instance.

Conclusion

In the light of the foregoing, I propose that the Court should:

- set aside the judgments of the Court of First Instance of 24 September 1996 in Cases T-485/93, T-491/93, T-494/93 and T-509/93 in so far as they dismiss as inadmissible the actions brought by Dreyfus, Continentale and Glencore respectively for annulment of the decision of 1 April 1993 and by Glencore for annulment of the decision of 12 July 1993, and declare the applications admissible;

- refer the cases back to the Court of First Instance.

(1) - Case C-395/95 P Geotronics v Commission [1997] ECR I-2271.

(2) - Cases T-485/93 Dreyfus v Commission [1996] ECR II-1101, T-491/93 Richco v Commission [1996] ECR II-1131 and T-494/93 Compagnie Continentale v Commission [1996] ECR II-1157.

(3) - By this decision, which was contained in a letter addressed by the Agriculture Commissioner to the financial agent of the Russian Federation, the Commission refused to recognise that the amendments to the sales contracts already concluded by Dreyfus, Continentale and Glencore with the State company appointed by the Russian Federation to award a contract for the supply of wheat conformed to the relevant Community regulations (see points 15 to 20 below).

(4) - Case T-509/93 Richco v Commission [1996] ECR II-1181. The second decision contested by Glencore was contained in a letter which the Agriculture Commissioner had addressed to the financial agent of the Ukraine in the context of the granting of a medium-term Community loan to that country. By the decision in question, the Commission refused to recognise that the contract for the supply of wheat already signed by Ukraine's appointed agent with Glencore, as contracting undertaking, conformed to the applicable Community regulations (see point 21 below).

(5) - See the judgments cited in footnotes 2 and 4 above.

(6) - See A. Espino Morcillo and S. Kollias, `Emprunts', in C. Gavalda and R. Kovar (eds.), Répertoire de droit communautaire, Paris, 1992 (and, in looseleaf form, January 1993), Vol. II, paragraphs 51 to 67.

(7) - Decision of the Council of 16 December 1991 granting a medium-term loan to the Soviet Union and its constituent Republics (OJ 1991 L 362, p. 89). By means of this Decision the Council approved the proposal made the preceding month by the Commission, acting partly in its capacity as coordinating institution of the group of 24 industrialised countries of the Organisation for Economic Cooperation and Development (see the Commission's proposal of 8 November 1991 for a Council decision on the granting of a medium-term loan to the Soviet Union and its constituent Republics, COM(91) 443 final; OJ 1991 C 320, p. 3).

(8) - Commission Regulation (EEC) No 1897/92 of 9 July 1992 laying down detailed rules for the implementation of a medium-term loan to the Soviet Union and its constituent Republics [in accordance with] Council Decision 91/658/EEC of 16 December 1991 (OJ 1991 L 191, p. 22).

(9) - The documentary credit is the means of payment traditionally used in international sales contracts as its structure makes it possible to reduce the risks normally inherent in this kind of commercial transaction. In its simplest form, the documentary credit mechanism hinges on the request from the applicant (typically the buyer of specified goods or services) to its bank (the issuing bank) (i) to open a documentary credit in favour of the beneficiary (that is, the seller or lender) and (ii) to pay the sum involved in exchange for the beneficiary (or his bank acting as agent) submitting to the issuing bank (or its agent) within the specified time-limit the documents specified by the applicant in the letter of credit. If the documents accepted by the issuing bank comply with the terms of the credit, the applicant undertakes to repay to the issuing bank the sum it has advanced to the beneficiary plus commission and any interest. Note that the issuing bank's commitment towards the beneficiary is independent of the sales contract between the latter and the applicant; hence, (except in the case of a revocable credit, see below) the bank is obliged to pay the amount indicated by the applicant after checking that the documents submitted comply with the terms of the credit and that they have been presented correctly and within the prescribed time-limit, and can raise no objection regarding the underlying transaction.

In the most frequently used type of documentary credit, however, the issuing bank instructs another bank (normally the issuer's correspondent bank in the beneficiary's country) to `advise the credit'; in that case, the beneficiary's bank pays the beneficiary the price, as agent of the issuer, against presentation of the documents. The advising bank, however, assumes no commitment towards the beneficiary. Alternatively, if the supplier wishes to minimise the risk of default on the part of the buyer he can request that the documentary credit opened by the applicant be `confirmed' by a bank in his own country. The so-called `confirming' bank then enters into an independent commitment towards the beneficiary by adding its own obligation to that of the issuer to make the payment requested by the buyer, on the sole condition that the documents presented conform with those indicated in the letter.

Finally, whereas commercial practice makes extremely wide use of irrevocable documentary credits - in which the issuer is directly obliged to make the requested payment on the simple condition that the documents presented by the beneficiary conform with those indicated in the letter of credit - one speaks of revocable credit when the issuer makes no commitment towards the beneficiary, remaining at any event free to refuse payment (for example, because it considers that the financial situation of the applicant has deteriorated since the credit was opened). However, for obvious reasons, this form of documentary credit is extremely rare in commercial practice (see A. Giampieri, `Il credito documentario', Nuova giur. civ. commentata, 1992, Vol. II, p. 318 ff, in particular pp. 318-319, and R. Jack, Documentary Credits, London, Dublin and Edinburgh, 1991, pp. 1 to 24).

(10) - The irrevocable documentary credit mechanism provided for in the loan contracts concluded by the Commission with the VEB and the SEIB (see paragraphs 9 and 10 below) was in accordance with the `Uniform customs and practice for documentary credits' drawn up by the International Chamber of Commerce in Paris (1983 revision, ICC publication No 400) and adopted by the Community as the standard form of documentary credit to be used by issuing banks.

(11) - In accordance with Article 2 of Decision 91/658, on 15 January 1993 the Commission acting as borrower concluded on behalf of the Community a loan agreement with a consortium of banks led by Crédit Lyonnais expressly to finance the loan granted to the Russian Federation. Under the agreement, the Community received the funds granted to it by the lending banks in the form of advances paid against notices of drawing. Indeed, given the link between the agreement in question and the loan granted to the VEB, the loan agreement of 15 January 1993 provided that when the Commission issued a notice of drawing it could give Crédit Lyonnais express instructions to make the payment in question direct to bank accounts other than those of the Community (such as that of the confirming or advising bank or that of the issuing bank).

(12) - See Clause 5(1)(b) of the loan contracts concluded by the Commission with the VEB and with Ukraine and the SEIB respectively.

(13) - The Notice of Confirmation, which reiterated the compulsory information that was required to be reproduced in all subsequent documents, including the documentary credits, was sent by the Commission to the VEB or the SEIB and a copy was sent to the bank appointed by the Commission to manage the payment procedures (termed the manager bank).

(14) - By means of the reimbursement commitment, which was sent under a covering letter from the manager bank, the Commission undertook to honour the obligation of the issuing bank at the request of the confirming or advising bank designated by the supplier. Once the latter bank had received the reimbursement commitment, it sent a reimbursement request to the manager bank, which arranged for payment of the authorised amount in ecus within three days.

(15) - See also Articles 4(2) and 5(1) and (2) of Regulation No 1897/92, which state that recognition by the Commission of the supply contracts concluded by the Republics concerned was subject, inter alia, to the dual condition that (i) the contracts were awarded `following a procedure guaranteeing free competition' (including the presentation of at least three offers) and (ii) they offered `the most favourable terms of purchase in relation to the price normally obtained on the international markets'.

(16) - In the documentary credits they opened, the financial agents of the Russian Federation and Ukraine requested their correspondent bank in the supplier's country to advise the credit in question, nevertheless at the same time authorising them to add, by means of confirmation, an autonomous payment commitment if requested by the beneficiary.

Copies of the letters of credit issued by the VEB and the SEIB were sent to the Commission and the manager bank for verification of the conformity of the compulsory information (see footnote 13 above). The manager bank in turn notified the confirming or advising bank that payment would be made only after the Commission had received a disbursement request from the VEB or the SEIB.

(17) - The text of Clause 1 of the supply contracts concluded by Exportkhleb was as follows: `This contract is concluded subject to approval of EES (rectius, EEC) authorities and the bank agreement between authorised bank of Russian Federation and the bank authorised by the EEC authorities'. Furthermore, Clause 4 of the abovementioned contracts, entitled `Payment', provided thus: `This contract is subject to receipt (sic) by the relevant advising bank of an appropriate undertaking from the cover account holder (Bank authorised by EEC)'.

Similarly, under the terms of the supply contract concluded by Ukrimpex and Glencore, it was the responsibility of the agent of Ukraine `to obtain all necessary agreements such as approval of the relating contract by the Commission of the European Communities'. With regard to payment for each shipment of the contractual goods, the contract provided that it should be `in accordance with the terms of an EEC Loan Agreement'.

(18) - See, for example, Clause 11 of the so-called standard Eurgrain 2 agreement signed by Exportkhleb with the individual contracting undertakings at the same time as the conclusion of the supply contracts and expressly referred to in Clause 6 of the latter.

(19) - In accordance with the fourth paragraph of Article 173 of the Treaty, `[a]ny natural or legal person may, under the same conditions [as those applicable to actions brought by a Member State, the Council or the Commission], institute proceedings against a decision addressed to that person or against a decision which, although in the form of a regulation or a decision addressed to another person, is of direct and individual concern to the former' (my italics).

As the Court of First Instance found, the objections of inadmissibility raised by the Commission were not, however, based on the absence of individual concern on the part of the applicants (see Case T-485/93, paragraph 48, Case T-491/93, paragraph 49, Case T-494/93, paragraph 49, and Case T-509/93, paragraph 41, cited above in footnotes 2 and 4).

It will be noted that only in Case T-509/93 did the Commission submit a second plea in support of its objection of inadmissibility, namely the plea - which the Court of First Instance dismissed - alleging the absence of an actionable measure. The Court of First Instance ruled that, despite the fact that the loan contract between the Community, Ukraine and the SEIB - which at the wish of the contracting parties was governed by English law - contained a clause assigning (non-exclusive) jurisdiction to the English courts, the Community courts remained competent to hear the action for annulment of the act by w