Judgment of the Court of 22 April 1997. - Geotronics SA v Commission of the European Communities. - PHARE programme - Restricted invitation to tender - Action for annulment - Admissibility - EEA Agreement - Product origin - Discrimination - Action for damages. - Case C-395/95 P.



European Court reports 1997 Page I-02271



Summary

Parties

Grounds

Decision on costs

Operative part



Keywords

1 Budget of the European Communities - Financial Regulation - Provisions applicable to external aid - Procedure for tendering for public contracts financed under the PHARE programme - Different roles of the beneficiary country and the Commission - Powers of the beneficiary country as regards the conclusion of contracts - Commission decision rejecting a tender submitted by a tendering undertaking because it did not satisfy the conditions for Community funding - Decision severable from the contractual procedure which was to lead to the conclusion of the contract - Act capable of being the subject of an action for annulment

(EC Treaty, Art. 173, para. 4)

2 International agreements - Agreement on the European Economic Area - Temporal application - Inapplicable to legal situations arising before the agreement came into force - Procedure for awarding a public works contract opened before but closed after 1 January 1994 - Inapplicability

Summary

3 The act by which the Commission, in the context of a tendering procedure for the award of public contracts financed by the PHARE programme, informs a tendering undertaking that it is rejecting its tender on the ground that the tender does not satisfy the conditions for obtaining Community funding set out in the invitation to tender, while forming part of a contractual procedure which is to lead to the conclusion of a national contract by the beneficiary State, can be severed from that context inasmuch as, first, it is adopted by the Commission in the exercise of its own powers and, secondly, it is specifically directed to an individual undertaking, which loses any chance of actually being awarded the contract simply because that act is adopted. Accordingly, the Commission's decision to refuse the undertaking in question the benefit of Community funding in itself has binding legal effects as regards the undertaking and can therefore be the subject of an action for annulment.

4 The legal framework for the tendering procedure for the award of public contracts financed by the PHARE programme is established by the general conditions of the restricted invitation to tender. Since tenders were submitted and the competitive tender stage was definitively closed in 1993 under those general conditions, the European Economic Area Agreement, which entered into force on 1 January 1994, was not applicable ratione temporis to that procedure. That agreement cannot, without infringing the principle of legal certainty, have the effect of changing the conditions on which the invitation to tender was issued and on the basis of which the tenders were submitted, or of requiring the contract-awarding procedure to be reopened.

Parties

In Case C-395/95 P,

Geotronics SA, a company incorporated under the laws of France, having its registered office at Lognes (France), represented by Tommy Pettersson, of the Swedish Bar, with an address for service in Luxembourg at the Chambers of Arendt & Medernach, 8-10 Rue Mathias Hardt,

appellant,

APPEAL against the judgment of the Court of First Instance of the European Communities of 26 October 1995 in Case T-185/94 Geotronics v Commission [1995] ECR II-2795, seeking to have that judgment set aside, the other party to the proceedings being: Commission of the European Communities, represented by John Forman, Legal Adviser, acting as Agent, with an address for service in Luxembourg at the office of Carlos Gómez de la Cruz, of its Legal Service, Wagner Centre, Kirchberg,

THE COURT,

composed of: G.C. Rodríguez Iglesias, President, J.C. Moitinho de Almeida, J.L. Murray and L. Sevón, (Presidents of Chambers), C.N. Kakouris, P.J.G. Kapteyn, C. Gulmann, G. Hirsch, P. Jann, H. Ragnemalm and M. Wathelet (Rapporteur), Judges,

Advocate General: G. Tesauro,

Registrar: H. von Holstein, Deputy Registrar,

having regard to the Report for the Hearing,

after hearing oral argument from the parties at the hearing on 3 December 1996,

after hearing the Opinion of the Advocate General at the sitting on 30 January 1997,

gives the following

Judgment

Grounds

1 By application lodged at the Registry of the Court of Justice on 18 December 1995, Geotronics SA (`Geotronics') brought an appeal pursuant to Article 49 of the EC Statute of the Court of Justice against the judgment of 26 October 1995 in Case T-185/94 Geotronics v Commission [1995] ECR II-2795 (`the contested judgment'), in which the Court of First Instance dismissed its application for, first, annulment under the fourth paragraph of Article 173 of the EC Treaty of the Commission's decision of 10 March 1994 rejecting its tender for the supply of electronic tacheometers under the PHARE Programme and, second, for compensation pursuant to Articles 178 and 215 of the EC Treaty for the damage which Geotronics claims to have suffered as a result of the contested decision.

The facts

2 The Court of First Instance made the following findings in its judgment:

`1 The PHARE Programme, which is based on Council Regulation (EEC) No 3906/89 of 18 December 1989 on economic aid to the Republic of Hungary and the Polish People's Republic (OJ 1989 L 375, p. 11, "Regulation No 3906/89"), as amended by Council Regulations (EEC) Nos 2698/90 of 17 September 1990 (OJ 1990 L 257, p. 1), 3800/91 of 23 December 1991 (OJ 1991 L 357, p. 10), and 2334/92 of 7 August 1992 (OJ 1992 L 227, p. 1), in order to extend economic aid to other countries of Central and Eastern Europe, is the means whereby the European Community channels economic aid to the countries of Central and Eastern Europe in order to implement measures intended to support the process of economic and social reform under way in those countries.

2 On 9 July 1993 the Commission, acting "on behalf of the Government of Romania", and the Romanian Ministry for Agriculture and Food Industry jointly issued a restricted invitation to tender through the intermediary of the "EC/PHARE Programme Management UNIT-Bucharest" (hereinafter "PMU-Bucharest"), the Romanian State authority to which the project was entrusted, for the supply of electronic tacheometers ("total stations") to the Romanian Ministry of Agriculture and Food Industry for use in the Romanian land reform programme. Under Article 2 of the general conditions of the restricted invitation to tender, the equipment to be supplied had to originate in a Member State of the European Community or in one of the beneficiary countries under the PHARE Programme.

3 On 16 July 1993 the French company Geotronics SA (hereinafter "Geotronics" or "the applicant"), a wholly-owned subsidiary of the Swedish company Geotronics AB, submitted a tender for the supply of 80 total stations of the Geodimeter 510 N type ("electronic total stations with inbuilt memory for data storage").

4 By fax letter of 18 October 1993, PMU-Bucharest informed the applicant that its tender had been successful and that a contract would be submitted to the contracting authority for approval.

5 By fax letter of 19 November 1993, the Commission informed the applicant that the evaluation committee had recommended that it be awarded the contract, but expressed doubts as to the origin of the products tendered by Geotronics and asked for further clarification in that respect.

6 By letter of 14 December 1993, Geotronics supplied the Commission with further details as to the assembly of the tacheometers and informed it that they were manufactured in the United Kingdom.

7 On 2 March 1994 the applicant informed the Commission that it had heard that its tender would be rejected because the equipment was of Swedish origin. The applicant considered that the criteria concerning the origin of the goods had changed following the entry into force on 1 January 1994 of the Agreement on the European Economic Area (OJ 1994 L 1, p. 3, hereinafter "the EEA Agreement"), and asked the Commission to reopen the restricted tendering procedure.

8 By fax letter to the applicant of 10 March 1994, the Commission rejected its tender on the ground that, contrary to the conditions applicable to the restricted invitation to tender, Geotronics' equipment did not originate in a Member State of the Community or a beneficiary country under the PHARE Programme.

9 On 11 March 1994 the Commission informed PMU-Bucharest that, having examined the two tenders received on completion of the restricted tendering procedure for the electronic tacheometers, it had decided that only the tender by a German firm satisfied the tender conditions and was acceptable. The Commission therefore requested PMU-Bucharest to contact the German firm to finalize the contract.

10 It was in those circumstances that the applicant brought this action, by application lodged at the Registry of the Court of First Instance on 29 April 1994.

11 By a separate document lodged at the Registry of the Court of First Instance on the same day, the applicant submitted under Article 185 of the Treaty an application for interim measures suspending the operation of the contested decision.

12 On 17 May 1994 PMU-Bucharest informed the Commission that the Romanian Ministry of Agriculture and Food Industry, the contracting authority, had awarded the contract to the German firm by decision of 15 April 1994.

13 On the same day, PMU-Bucharest informed the applicant that, because its tender did not satisfy the criteria of origin laid down by the restricted invitation to tender, the Romanian authorities were unable to award the contract to it.'

3 By order of the President of the Court of First Instance of 7 July 1994 in Case T-185/94 R Geotronics v Commission [1994] ECR II-519, Geotronics' request for interim measures, which was lodged at the same time as its application, was dismissed.

The judgment of the Court of First Instance

4 According to the contested judgment, Geotronics' principal claim was for annulment of the Commission's decision to reject its tender, as notified to it by fax letter of 10 March 1994; in the alternative, it claimed that the Commission should be ordered to pay compensation for the damage which it had caused to Geotronics by taking that decision.

Admissibility of the action for annulment

5 The Court of First Instance dismissed the action for annulment of the decision contained in the letter of 10 March 1994 as inadmissible on the following grounds:

`27 It should be noted, first, that under the basic regulation for the PHARE Programme, aid is granted by the Community either independently or in the form of co-financing with the Member States, the European Investment Bank, third countries or multilateral bodies or the recipient countries themselves.

28 Secondly, aid granted under the PHARE Programme is funded by the general budget, in accordance with the Financial Regulation, as amended in particular by Regulation No 610/90, Title IX of which relates to external aid.

29 By Articles 107 and 108(2) of Regulation No 610/90, measures and projects funded under the Community's cooperation policy are implemented by the beneficiary country in close collaboration with the Commission, which, as the body administering the aid, grants credits and ensures that participants in tendering procedures can compete on an equal footing, that there is no discrimination and that the tender selected is economically the most advantageous.

30 Nevertheless, under Article 109(2) of that regulation, it is for the beneficiary country to issue invitations to tender, receive tenders, preside over the examination of tenders and establish the results of the tendering procedure. It is also for that country to sign contracts, additions to contracts and estimates and notify the Commission thereof. It follows that the power to award a contract lies with the beneficiary country under the PHARE Programme. In that respect, the applicant's representative conceded at the hearing that, in this case, the Romanian Government was free to award the contract to Geotronics, notwithstanding the Commission's refusal to grant it Community aid.

31 It follows from that division of roles that contracts financed by the PHARE Programme must be regarded as national contracts, which are binding only on the beneficiary country and the economic operator. The preparation, negotiation and conclusion of the contracts take place between those two partners only.

32 By contrast, no legal relationship arises between the tenderers and the Commission, since the latter restricts itself to taking funding decisions on behalf of the Community, and its measures cannot have the effect, in relation to tenderers, of substituting a Community decision for the decision of the beneficiary country under the PHARE Programme. In this area, therefore, there can be no Commission decision, so far as tenderers are concerned, which is capable of forming the subject-matter of an action under the fourth paragraph of Article 173 of the EC Treaty (see, by way of analogy, the judgments in Case 126/83 STS v Commission [1984] ECR 2769, paragraphs 18 and 19; Case 118/83 CMC and Others v Commission [1985] ECR 2325, paragraphs 28 and 29; Case C-257/90 Italsolar v Commission [[1993] ECR I-9], paragraphs 22 and 26; and Case C-182/91 Forafrique Burkinabe v Commission [[1993] ECR I-2161], paragraph 23).

33 Therefore, despite the terms used by the Commission, the letter of 10 March 1994 in which it informed the applicant that it was obliged to reject its tender on account of the non-Community origin of the equipment cannot be regarded as a Commission decision which produced binding legal effects capable of affecting the legal position of the applicant.

34 A further point, moreover, is that the annulment of the Commission's letter of 10 March 1994 would not avail the applicant in any event, since it could not in itself call in question the contract between the Romanian Government and the German firm to which the contract was awarded.

35 The claim for the annulment of the Commission's letter of 10 March 1994 must therefore be rejected as inadmissible.'

The claim for compensation

6 After pointing out that:

`the fact that the action for annulment is inadmissible does not necessarily mean that the claim for compensation is inadmissible also, since the latter constitutes an autonomous form of action (see the judgment in Case 175/84 Krohn v Commission [1986] ECR 753, paragraph 32)' (paragraph 38),

the Court of First Instance took the view that it was necessary to establish whether the Commission, which was responsible for funding projects under the PHARE Programme, had committed a fault capable of giving rise to liability under the second paragraph of Article 215 of the Treaty and to examine, in that regard, whether it had acted in breach of the EEA Agreement (paragraphs 39 and 40).

7 After that examination, the Court of First Instance held that the claim for compensation should be rejected on the following grounds:

`48 The Court first points out that, in the absence of transitional provisions, the EEA Agreement takes effect in full as from its entry into force, namely 1 January 1994, and that it can therefore apply only to legal situations which came into being after its entry into force.

49 In this case, it was the restricted invitation to tender, issued by the Commission on behalf of the Romanian Government on 9 July 1993, which established the legal framework for the contract-awarding procedure, especially as regards the condition concerning the origin of the products in question.

50 Both the Commission, by laying down the general conditions for the invitation to tender on 9 July 1993, and the applicant, by submitting its tender on 16 July 1993, should reasonably have anticipated the possibility of the decision to award the aid granted by the Community on the basis of those conditions being taken before 1 January 1994, the date on which the EEA Agreement entered into force.

51 Nevertheless, when confronted with the doubts expressed by the Commission in its letter to the applicant of 19 November 1993 as to the Community origin of the products in question, the applicant alleged in its reply of 14 December 1993 that the products were manufactured in the United Kingdom. It was only as a result of the contacts which took place between the applicant and the Commission after 1 January 1994 that the latter was able to obtain confirmation of its doubts, by establishing that the products were principally of Swedish origin.

52 Moreover, the applicant's representative conceded at the hearing that the applicant caused the delay in the proceedings as, although not in bad faith, it misled the Commission as to the origin of the products. He also acknowledged that, had the Commission given its ruling before 1 January 1994, the applicant would have had no standing to raise the question of the applicability of the EEA Agreement to the contract-awarding procedure at issue in these proceedings.

53 The Court of First Instance therefore considers that the Commission was right, in reliance on the general conditions laid down by it in the restricted invitation to tender and accepted by the applicant before the entry into force of the EEA Agreement, to inform the applicant on 10 March 1994 that its tender had to be rejected on the ground that, contrary to the conditions applicable to the invitation to tender, the equipment tendered by it did not originate in Member States of the Community or in a beneficiary country under the PHARE Programme.

54 The letter of 10 March 1994 merely implemented the conditions laid down by the restricted invitation to tender and cannot be regarded as having created a new legal situation different from that which arose as a result of the restricted invitation to tender. Therefore, the fact that such implementation occurred at a time when the legal context had changed, on account of the entry into force of the EEA Agreement, cannot be such as to affect the legal framework established by the invitation to tender and confer upon the applicant rights which it could not have asserted at the time when the invitation to tender was issued.

55 Moreover, and in any event, the EEA Agreement cannot apply to contracts governed by legal relations to which a State that is not a signatory of the EEA Agreement is party. Contrary to the applicant's argument that, under the PHARE Programme, it is in fact the Commission which buys the products tendered in order subsequently to resell them to the beneficiary countries, it follows from the foregoing that the contracts in question are national contracts which fall exclusively within the sphere of the legal relations which exist between the tenderer and the beneficiary country, in this case Romania, which is not a party to the EEA Agreement.

56 Accordingly, the Commission cannot be held to blame for not applying the EEA Agreement to the contract-awarding procedure at issue.

57 Therefore, in the absence of any unlawful conduct whatever on the part of the Commission, the claim for compensation must be rejected as unfounded.

58 It follows from all of the foregoing that the action must be dismissed in its entirety.'

The appeal

The dismissal of the action for annulment

8 According to Geotronics, the Court of First Instance erred in law in holding that an action under Article 173 of the Treaty would not lie against the decision contained in the letter of 10 March 1994. Geotronics claims that the contract at issue would undoubtedly have been awarded to it had the Commission not rejected its offer, and that, by determining the outcome of the tender procedure in the way that it did, the contested decision had binding legal effects on it and brought about a distinct change in its legal position.

9 It should be borne in mind that, under the fourth paragraph of Article 173 of the Treaty, any natural or legal person may institute proceedings for annulment of a decision addressed to that person or of a decision which, although in the form of a decision addressed to another person, is of direct and individual concern to the former.

10 Furthermore, the Court has consistently held that an action for annulment under Article 173 of the Treaty will lie only against acts or decisions which have binding legal effects such as to affect the interests of the applicant (see, in particular, Case 60/81 IBM v Commission [1981] ECR 2639, paragraph 9).

11 In this case, after describing the different roles allocated to the beneficiary country and the Commission in the procedure for tendering for contracts financed under the PHARE Programme, the Court of First Instance held in paragraph 33 of the contested judgment that, despite the terms used by the Commission, the letter of 10 March 1994 could not be regarded as a decision which produced binding legal effects capable of affecting Geotronics' legal position, with the result that the claim for annulment of that letter had to be rejected as inadmissible.

12 Admittedly, it follows from the Court's decisions concerning the award of public contracts financed by the European Development Fund that measures adopted by the Commission's representatives, whether approvals or refusals to approve, endorsements or refusals to endorse, are intended solely to establish whether or not the conditions for Community financing have been met, and are not intended to interfere with the principle that the contracts in question remain national contracts which the beneficiary States alone are responsible for preparing, negotiating and concluding (see, in particular, STS v Commission, paragraph 16). According to that case-law, undertakings which submit tenders for or are awarded the contracts in question have legal relations only with the beneficiary State responsible for the contract and measures adopted by the representatives of the Commission cannot substitute, in relation to them, a Community decision for the decision of the ACP State, which has sole power to conclude and sign that contract (see STS v Commission, paragraph 18; see also CMC and Others v Commission, paragraph 28; Italsolar v Commission, paragraph 22, and Forafrique Burkinabe v Commission, paragraph 23).

13 However, the reasoning underlying that case-law could not simply be transposed to the case before the Court of First Instance in order to find that the claim for annulment was inadmissible.

14 It is clear from paragraph 8 of the contested judgment that by its letter of 10 March 1994 the Commission informed Geotronics that it rejected its tender on the ground that the equipment on offer did not originate in a Member State of the Community or a beneficiary country under the PHARE Programme. Accordingly, the contested decision, which was formally addressed to Geotronics, was taken by the Commission after it had ascertained whether or not that company's tender satisfied the conditions for obtaining Community funding set out in the invitation to tender. Even though that decision formed part of a contractual procedure which was to lead to the conclusion of a national contract, it could be severed from that context inasmuch as, first, it was adopted by the Commission in the exercise of its own powers and, secondly, it was specifically directed at an individual undertaking, which lost any chance of actually being awarded the contract simply because that act was adopted.

15 In those circumstances, the Commission's decision to refuse Geotronics the benefit of Community funding in itself had binding legal effects as regards the appellant and could therefore be the subject of an action for annulment.

16 It follows that the Court of First Instance erred in law in considering that the letter of 10 March 1994 could not be regarded as an act which had binding legal effects such as to affect Geotronics' legal position, and in declaring the action for annulment of that act inadmissible on that ground.

17 The appeal is, therefore, well founded in so far as it challenges the contested judgment for dismissing the action for annulment as inadmissible.

18 Before drawing conclusions from that finding, the appeal should be considered further with regard to the damages claim, since the pleas put forward by Geotronics in that connection are concerned with the Court of First Instance's assessment of the legality of the Commission conduct complained of. Consideration of that issue, as one of the requirements for non-contractual liability within the meaning of the second paragraph of Article 215 of the Treaty, is coincident in this case with the review of the legality of the contested measure which should be carried out pursuant to Article 173 of the Treaty.

The dismissal of the claim for damages

19 In support of its appeal, Geotronics considers that the Court of First Instance erred in law when it held at paragraph 53 of the contested judgment that the Commission was right to take as its basis the general conditions set out in the invitation to tender, although under the Agreement on the European Economic Area (`the EEA Agreement'), which entered into force on 1 January 1994, in particular Articles 4, 8, 11 and 65(1), the Commission was also required to take into consideration goods originating in non-member countries party to that agreement, in this case Sweden, on the same terms as products originating in a Member State.

20 As the Court of First Instance correctly held in paragraphs 49 to 54 of the contested judgment, the legal framework for the contract-awarding procedure, especially as regards the condition concerning the origin of the products in question, was established by the restricted invitation to tender issued by the Commission on behalf of the Romanian Government on 9 July 1993.

21 As is clear from the Court of First Instance's findings of fact, it was under the general conditions of that invitation to tender that Geotronics submitted its tender on 16 July 1993 and the competitive tender stage was definitively closed. The EEA Agreement, which entered into force on 1 January 1994, could by no means have the effect of changing the conditions on which the invitation to tender had been issued and on the basis of which the tenders were submitted, or of requiring the contract-awarding procedure to be reopened, without infringing the principle of legal certainty.

22 Consequently, it was legitimate for the Court of First Instance to consider that the Commission was entitled, notwithstanding the subsequent entry into force of the EEA Agreement, to take as its basis the general conditions laid down in that invitation to tender, in particular, Article 2 thereof, by virtue of which the equipment to be supplied had to originate either in a Member State of the European Community or in a beneficiary country under the PHARE Programme.

23 In those circumstances, it is of no importance that the Court of First Instance further held in paragraph 55 of its judgment that the EEA Agreement could not apply to contracts governed by legal relations to which a State not a signatory of that agreement was a party. Since that consideration is supererogatory, the criticisms levelled at it cannot result in the judgment of the Court of First Instance being set aside, and are hence ineffectual (Case C-244/91 Pincherle v Commission [1993] ECR I-6965, paragraph 25).

24 It follows that in so far as the appeal relates to the rejection of the claim for compensation, it must be dismissed.

The consequences of setting aside the judgment of the Court of First Instance

25 According to the first paragraph of Article 54 of the EC Statute of the Court of Justice, if 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.

26 Since the state of the proceedings does so permit, final judgment must be given on the application for annulment of the Commission's decision notified to Geotronics by letter of 10 March 1994 and wrongly dismissed as inadmissible by the Court of First Instance.

27 In support of that application, Geotronics argued that the Commission infringed the EEA Agreement, in particular, Article 4 thereof.

28 In this respect it is sufficient to find, for the reasons set out in paragraphs 48 to 54 of the contested judgment and summarized in paragraphs 19 to 22 of this judgment, that the EEA Agreement was not applicable ratione temporis to the facts of this case.

29 Consequently, the application to have the contested judgment set aside must be dismissed as unfounded.

Decision on costs

Costs

30 Under Article 122 of the Rules of Procedure, where an appeal is well founded and the Court itself gives final judgment in the case, the Court shall make a decision as to costs. Under Article 69(2), which is applicable to appeals by virtue of Article 118, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party's pleadings. Since Geotronics has been essentially unsuccessful, it must be ordered to bear, in addition to its own costs, all the costs incurred by the Commission both in the proceedings before the Court of First Instance and in those before the Court of Justice.

Operative part

On those grounds,

THE COURT

hereby:

1. Sets aside the judgment of the Court of First Instance of 26 October 1995 in Case T-185/94 Geotronics v Commission in so far as it dismissed the application for annulment of the Commission's letter of 10 March 1994 as inadmissible;

2. Dismisses the remainder of the appeal;

3. Dismisses the application for annulment;

4. Orders Geotronics SA to bear all the costs incurred both in the proceedings before the Court of First Instance and in those before the Court of Justice.$