Judgment of the Court (Third Chamber) of 1 June 1995. - Heidemij Advies BV v European Parliament. - Article 181 of the EEC Treaty - Arbitration clause - Extension of the European Parliament in Brussels - Unilateral termination by the European Parliament of the contract for services - Claim for damages by the contractor. - Case C-42/94.



European Court reports 1995 Page I-01417



Parties

Grounds

Decision on costs

Operative part



Keywords

++++

European Communities public procurement ° Arbitration clause conferring jurisdiction on the Court of Justice ° Contract for services ° Unilateral termination pursuant to contractual provisions ° Applicable law ° Right to damages ° Calculation ° Right to default interest

(ECSC Treaty, Art. 42; EEC Treaty, Art. 181; EAEC Treaty, Art. 153)

Parties

In Case C-42/94,

Heidemij Advies BV, a company incorporated under Netherlands law whose registered office is in Arnhem (Netherlands), represented by Vera Van Houtte, of the Brussels Bar, with an address for service in Luxembourg at the Chambers of Marc Loesch, of the Luxembourg Bar, 11 Rue Goethe,

applicant,

v

European Parliament, represented by François Vainker, of the Legal Service, acting as Agent, assisted by Pierre Van Ommeslaghe, Avocat of the Belgian Cour de Cassation, with an address for service in Luxembourg at the Secretariat of the European Parliament, Kirchberg,

defendant,

APPLICATION for damages for unilateral termination of a contract for services,

THE COURT (Third Chamber),

composed of: C. Gulmann, President of the Chamber, J.C. Moitinho de Almeida and J.-P. Puissochet (Rapporteur), Judges,

Advocate General: P. Léger,

Registrar: R. Grass,

having regard to the report of the Judge-Rapporteur,

after hearing the Opinion of the Advocate General at the sitting on 2 May 1995,

gives the following

Judgment

Grounds

1 By application lodged at the Court Registry on 1 February 1994, the Netherlands company Heidemij Advies BV (hereinafter "Heidemij") brought an action under Article 42 of the ECSC Treaty, Article 181 of the EEC Treaty and Article 153 of the EAEC Treaty against the European Parliament (hereinafter "the Parliament") for damages for unilateral termination of a contract for services.

2 In 1990, after an invitation to tender issued by the Parliament, Heidemij was given responsibility for, inter alia, supervising and inspecting the construction of buildings as part of the extension of the Parliament in Brussels.

3 The contract, entered into on 27 July 1990, provided for an annual payment of ECU 71 600 for that work. That sum was for 200 days' work, the cost of a day consequently being ECU 358. Since the actual scale of the work could not be precisely determined at that time, it was agreed that additional services would be remunerated at the rate of ECU 640 per day (clause 3 of the agreement).

4 In principle, the contract was to come to an end at the date when the buildings are finally handed over, which will be on 1 June 1996. However, the fifth paragraph of clause 4 of the contract provided that the Parliament was "entitled to terminate Heidemij' s assignment ... at the end of each period of twelve months by notice sent by registered post at least three months before the end of each such period".

5 Clause 10 of the agreement provided that Belgian law was to apply and on the basis of Article 42 of the ECSC Treaty, 181 of the EEC Treaty and 153 of the EAEC Treaty gave the Court of Justice of the European Communities jurisdiction in any dispute relating to the contract.

6 Heidemij began contractual work on 1 January 1991. The scale proved to be significantly greater than originally envisaged. Instead of the annual fixed payment of ECU 71 600, the Parliament paid ECU 345 302.77 in 1991 and ECU 1 925 000 in 1992.

7 Since the parties were unable to agree on a new method of remuneration, the Parliament, by letter sent to Heidemij on 21 January 1993, terminated its contract with effect from 1 July 1993 pursuant to the fifth paragraph of clause 4 and stated that a new invitation to tender would be issued for the remaining work.

8 On 5 April 1993 Heidemij submitted a bid of ECU 7 971 500 in response to the new invitation to tender. That bid was rejected by the Parliament by letter of 11 June 1993.

9 By letters of 28 June and 1 July 1993, Heidemij demanded payment from the Parliament of the sum of ECU 797 150, which was 10% of the amount of its tender, in compensation for lost earnings allegedly suffered by reason of the premature termination of the contract. That claim was rejected by the Parliament on 15 July 1993.

10 Those are the circumstances in which Heidemij brought an application claiming that the Court should:

° order the Parliament to pay it, by way of agreed damages for breach of contract, the principal sum of ECU 797 150 together with interest at the contractual rate of 8% per annum as from 15 September 1993;

° order the Parliament to pay all the costs of the proceedings.

11 The Parliament contends that the Court should:

° declare unfounded and dismiss Heidemij' s action and order Heidemij to pay the costs;

° in the alternative, fix the amount of the damages at ECU 20 883.33 and order Heidemij to pay the costs.

12 The issue is whether Heidemij' s is entitled to damages and, if so, the quantum to be awarded.

Entitlement to damages

13 Heidemij relies on Article 1794 of the Belgian Civil Code, which gives the contractor a right to damages in the event of unilateral termination of the contract by the contract awarder.

14 That article reads:

"A person awarding a building contract may of his own accord terminate a fixed-price contract, even though building work has already commenced, by indemnifying the contractor in respect of all his expenses, all work done and all his potential earnings under the contract"

15 The Parliament submits that Heidemij has no right to damages since the fifth paragraph of clause 4 of the contract excludes application of Article 1794 of the Belgian Civil Code. That construction is borne out by Heidemij' s conduct: it never disputed the lawfulness of the termination and it responded to the new invitation to tender without the slightest protest or reservation.

16 It is common ground that the agreement of 27 July 1990 falls within the scope of Article 1794 of the Belgian Civil Code and that the parties may derogate from that provision since it is not one concerning a matter of public interest.

17 The fifth paragraph of clause 4 of the contract cannot, however, be construed as derogating expressly or by implication from Article 1794 of the Belgian Civil Code with regard to the contractor' s right to damages.

18 That provision simply deals with the procedure for premature termination of the contract by the contract awarder without making any provision with regard to the contractor' s right to compensation.

19 It cannot be argued that by their silence the parties intended to rule out any compensation. It is clear from clause 12 of the agreement that, where the parties intended to deprive the contractor of all rights to compensation they have done so explicitly. Thus, in order to exclude all rights to compensation for the contractor in the event of unilateral termination of the contract by the Parliament following termination by either party of the leases of the buildings to which Heidemij' s contractual work relates, they considered it necessary to provide expressly that the contract would be annulled "without any compensation for termination being payable".

20 Furthermore, Heidemij' s conduct after termination of the agreement does not suggest that there was a tacit agreement excluding any right to compensation. The termination was a unilateral act of the Parliament which Heidemij did not have to oppose and Heidemij' s failure to protest may equally well be explained by its concern not to spoil its chances of winning the new contract.

21 It follows from the foregoing that under Article 1794 of the Belgian Civil Code Heidemij is entitled to damages for the termination of the contract.

The quantum of damages

22 Although the parties agree that the amount of compensation must be assessed at 10% of the value of the works remaining to be performed, they disagree on the value of those works.

23 Heidemij considers that the annual fixed payment of ECU 71 600 does not reflect the true extent of the contractual work and argues that the amount of its tender of 5 April 1993, namely ECU 7 971 500, which takes into account the extent of the work carried out in 1991 to 1993, is the only equitable basis of calculation unless the total to be paid to the next contractor is used.

24 The Parliament, on the other hand, submits that the damages must be calculated on the basis of the annual fixed payment of ECU 71 600 laid down by the contract.

25 It must be observed here that, contrary to Heidemij' s argument, the cost of the works still to be carried out cannot be calculated on the basis of an evaluation put which has put forward with a view to entering into a new contract, but solely on the basis of the remuneration which it could have claimed had the terminated contract been performed for its full term.

26 Under the third subparagraph of clause 3(1) of the agreement of 27 July 1990, Heidemij was entitled only to an annual fixed payment of ECU 71 600, any additional payment requiring the consent of the other contracting party.

27 As a result of the unilateral termination of the contract, Heidemij has therefore lost only the chance of having to provide services over and above the 200 days of work covered by the annual fixed payment.

28 In accordance with generally accepted principles of Belgian law, a specific value must be put on the loss of that chance.

29 It is clear from the negotiations to determine new remuneration and the Parliament' s letter of 12 November 1993 that the Parliament considered that Heidemij' s services and in particular its additional services were too expensive. In those circumstances, Heidemij cannot be considered to have suffered any damage arising from the loss of a chance of providing additional services.

30 The main amount of damages to which Heidemij is entitled is consequently 10% of the sum which it would have received by way of the annual fixed payment between 1 July 1993 and 1 June 1996 (ECU 208 833.33), namely ECU 20 883.33.

31 Default interest must be calculated not on the basis of clause 7 of the agreement, which solely concerns payment for works duly performed, but in accordance with Article 1153 of the Belgian Civil Code, by virtue of which it is payable as from the notice of claim.

32 Since it gave notice to the Parliament by letter of 17 August 1993, Heidemij is entitled to claim default interest as from 15 September 1993.

33 Pursuant to Article 1153 of the Belgian Civil Code, the interest is to be calculated at the Belgian statutory rate, which is currently 8%.

34 It follows from the foregoing that the Parliament must be ordered to pay Heidemij the sum of ECU 20 883,33 together with default interest at the rate of 8% as from 15 September 1993.

Decision on costs

Costs

35 Under Article 69(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party' s pleadings. Since the defendant has been unsuccessful, it must be ordered to pay the costs.

Operative part

On those grounds,

THE COURT (Third Chamber)

hereby:

1. Orders the defendant to pay the applicant the sum of ECU 20 883.33 together with default interest at the rate of 8% as from 15 September 1993;

2. Dismisses the remainder of the application;

3. Orders the defendant to pay the costs.