CELEX: 61993CJ0360
Language: en
Date: 1996-03-07
Title: Judgment of the Court (Sixth Chamber) of 7 March 1996. # European Parliament v Council of the European Union. # Common commercial policy - Services - Government procurement. # Case C-360/93.

Case C-360/93 European ParliamentvCouncil of the European Union
            «(Common commercial policy – Services – Government procurement)»
            
               
                  Opinion of Advocate General Tesauro delivered on 23 November 1995 
                     
                
               
            
                   
               
               
            
               
                  Judgment of the Court (Sixth Chamber), 7 March 1996  
                     
                
               
            
                   
               
               
            
            Summary of the Order
         
         
                  1..
                  Actions for annulment – Right of the Parliament to bring an action – Conditions of admissibility – Safeguarding its prerogatives – Involvement in the legislative process – Infringement as a result of the Council's choice of the legal basis for a measure of secondary legislation – Admissibility  (EEC Treaty, Art. 173) 
         
                  2..
                  Acts of the institutions – Choice of legal basis – Criteria  
         
                  3..
                  International agreements – Community agreements – Conclusion – EEC-United States Agreement on government procurement   – Agreements on services not confined to trans-frontier supply – Agreement going beyond the confines of the common commercial policy – Concluded and implemented on the basis of Article 113 of the Treaty only – Unlawful  (EEC Treaty, Art. 113; Council Decisions 93/323 and 93/324) 
         
                  4..
                  Actions for annulment – Judgment annulling a measure – Effects – Limitation by the Court – Case of a decision approving an international agreement  (EEC Treaty, Art. 174, second para.) 
         
         1.
          An action for annulment brought by the Parliament against an act of the Council or the Commission is admissible provided that
         the action seeks only to safeguard its prerogatives and that it is founded only on submissions alleging their infringement.
          Consequently, an action will lie on the ground that the sole legal basis wrongly used for the contested measures was an article
         which does not require the procedure involving cooperation with the Parliament, thereby excluding articles requiring that
         procedure. 
         
         2.
          In the context of the organization of the powers of the Community, the choice of the legal basis for a measure must be based
         on objective factors which are amenable to judicial review.  Those factors include in particular the aim and content of the
         measure. 
         
         3.
          Decision 93/323 approves an agreement in the form of a Memorandum of Understanding between the Community and the United States
         of America on government procurement.  That agreement provides that public contracts are no longer to be open only to the
         acquisition of products and any services ancillary to their supply, as was provided for by the GATT Multilateral Agreement
         on Government Procurement, and applies in particular to contracts for which the principal object is the obtaining of one or
         more services, including maintenance and repair, transport, computer, advertising and accounting services.  As for Decision
         93/324, it aims to extend the benefit of the provisions of Directive 90/531 on the procurement procedures of entities operating
         in the water, energy, transport and telecommunications sectors to the United States of America. Since the types of service provision covered by both decisions cannot be reduced to the sole hypothesis of a trans-frontier
         supply involving no movement of persons, but relate also to supplies made thanks to a commercial presence or the presence
         of natural persons on the territory of the other Contracting Party, the two decisions exceed the scope of Article 113 of the
         Treaty.  Since, however, they were adopted on the basis of that article alone, they must be annulled. 
         
         4.
          Since simply to annul Decision 93/323 concerning the conclusion of an Agreement in the form of a Memorandum of Understanding
         between the Community and the United States of America on government procurement and Decision 93/324 concerning the extension
         of the benefit of the provisions of Directive 90/531 in respect of the United States of America would be liable adversely
         to affect the exercise of the rights arising under those decisions and given that the agreement in question has expired, there
         are important reasons of legal certainty, comparable to those which arise where certain regulations are annulled, which warrant
         the Court's exercising the power conferred upon it by the second paragraph of Article 174 of the Treaty where a regulation
         is annulled and deciding to maintain in force all the effects of the decisions which have been annulled. 
      

      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
            
            JUDGMENT OF THE COURT (Sixth Chamber)7 March 1996  (1)
         
         
            
         
               ((Common commercial policy – Services – Government procurement))
               
            In Case C-360/93, 
            
            
             European Parliament , represented by Johann Schoo and José Luis Rufas Quintana, of its Legal Service, acting as Agents, with an address for service
            in Luxembourg at the General Secretariat of the European Parliament, Kirchberg,
            
            
            applicant, 
            
            v
             Council of the European Union , represented by Ramon Torrent and Amadeu Lopes Sabino, Legal Advisers, acting as Agents, with an address for service in Luxembourg
            at the office of Bruno Eynard, Director of the Legal Affairs Directorate of the European Investment Bank, 100 Boulevard Konrad
            Adenauer,
            
            defendant, supported by Commission of the European Communities , represented by Jörn Sack, Legal Adviser, and Patrick Hetsch, of its Legal Service, acting as Agents, with an address for
            service in Luxembourg at the office of Carlos Gómez de la Cruz, of its Legal Service, Wagner Centre, Kirchberg,and by United Kingdom of Great Britain and Northern Ireland , represented by John E. Collins, of the Treasury Solicitor's Department, acting as Agent, with an address for service at
            the British Embassy, 14 Boulevard Roosevelt,
            
            interveners, 
            
            APPLICATION for the annulment of Council Decision 93/323/EEC of 10 May 1993 concerning the conclusion of an Agreement in the
            form of a Memorandum of Understanding between the European Economic Community and the United States of America on government
            procurement (OJ 1993 L 125, p. 1) and Council Decision 93/324/EEC of 10 May 1993 concerning the extension of the benefit of
            the provisions of Directive 90/531/EEC in respect of the United States of America (OJ 1993 L 125, p. 54),
            
            
            THE COURT (Sixth Chamber),,
            
            composed of: C.N. Kakouris, President of the Chamber, G.F. Mancini, F.A. Schockweiler, P.J.G. Kapteyn (Rapporteur) and J.L. Murray, Judges, 
            
            Advocate General: G. Tesauro, Registrar: R. Grass, 
            
            
            having regard to the report of the Judge-Rapporteur,
            
            after hearing the Opinion of the Advocate General at the sitting on 23 November 1995, 
         gives the following
         
         
         Judgment
         1
            
         By application lodged at the Court Registry on 20 July 1993, the European Parliament brought an action under the first paragraph
         of Article 173 of the EEC Treaty for the annulment of Council Decision 93/323/EEC of 10 May 1993 concerning the conclusion
         of an Agreement in the form of a Memorandum of Understanding between the European Economic Community and the United States
         of America on government procurement (OJ 1993 L 125, p. 1,  
         Decision 93/323) and Council Decision 93/324/EEC of 10 May 1993 concerning the extension of the benefit of the provisions of Directive 90/531/EEC
         in respect of the United States of America (OJ 1993 L 125, p. 54,  
         Decision 93/324). 
         
         
         2
            
         Council Directive 90/531/EEC of 17 September 1990 on the procurement procedures of entities operating in the water, energy,
         transport and telecommunications sectors (OJ 1990 L 297, p. 1,  
         Directive 90/531) was adopted on the basis of the last sentence of Article 57(2) and Articles 66, 100a and 113 of the EEC Treaty. 
         
         
         3
            
         Article 29 of that directive reads as follows: 
         
         1.
          This Article shall apply to tenders comprising products originating in third countries with which the Community has not concluded,
         multilaterally or bilaterally, an agreement ensuring comparable and effective access for Community undertakings to the markets
         of those third countries.  It shall be without prejudice to the obligations of the Community or its Member States in respect
         of third countries.
         
         
         2.
          Any tender made for the award of a supply contract may be rejected where the proportion of the products originating in third
         countries, as determined in accordance with Council Regulation (EEC) No 802/68 of 27 June 1968 on the common definition of
         the concept of the origin of goods, as last amended by Regulation (EEC) No 3860/87, exceeds 50% of the total value of the
         products constituting the tender.  For the purposes of this Article, software used in the equipment of telecommunication networks
         shall be considered as products.
         
         
         3.
          Subject to paragraph 4, where two or more tenders are equivalent in the light of the award criteria defined in Article 27,
         preference shall be given to the tenders which may not be rejected pursuant to paragraph 2.  The prices of tenders shall be
         considered equivalent for the purposes of this Article, if the price difference does not exceed 3%.
         
         
         4.
          However, a tender shall not be preferred to another pursuant to paragraph 3 where its acceptance would oblige the contracting
         entity to acquire  material having technical characteristics different from those of existing material, resulting in incompatibility
         or technical difficulties in operation and maintenance or disproportionate costs.
         
         
         5.
          For the purposes, in this Article, of determining the proportion referred to in paragraph 2 of products originating in third
         countries, those third countries to which the benefit of the provisions of this Directive has been extended by a Council Decision
         in accordance with paragraph 1 shall not be taken into account.
         
         
         6.
          The Commission shall submit an annual report to the Council (for the first time in the second half of 1991) on progress made
         in multilateral or bilateral negotiations regarding access for Community undertakings to the markets of third countries in
         the fields covered by this Directive, on any result which such negotiations may have achieved, and on the implementation in
         practice of all the agreements which have been concluded.
         The Council, acting by a qualified majority on a proposal from the Commission, may amend the provisions of this Article in
         the light of such developments.
         
         
         4
            
         On 10 May 1993 the Council adopted Decisions 93/323 and 93/324 on the basis of Article 113 of the Treaty. 
         
         
         5
            
         By Decision 93/323 the Council approved on behalf of the Community the Agreement in the form of a Memorandum of Understanding
         between the European Economic Community and the United States of America on government procurement (
         the Agreement). 
         
         
         6
            
         According to Article 1 of the Agreement, it applies to contracts for goods, works and other services awarded, as far as the
         Community is concerned, by the entities included in Annex 1 and to contracts for goods and works awarded, also as far as the
         Community is concerned, by the entities included in Annex 3 to the Agreement. 
         
         
         7
            
         Article 2(1) of the Agreement provides that, in the award of public contracts whose value exceeds certain thresholds by entities
         included in Annex 1, the Community is to afford to suppliers, contractors and service-providers of the United States and to
         goods and services originating in the United States the award procedures of Council Directive 77/62/EEC of 21 December 1976
         coordinating procedures for the award of public supply contracts (OJ 1977 L 13, p. 1), Council Directive 92/50/EEC of 18 June
         1992 relating to the coordination of procedures for the award of public service contracts (OJ 1992 L 209, p. 1) and Council
         Directive 71/305/EEC of 26 July 1971 concerning the coordination of procedures for the award of public works contracts (OJ,
         English Special Edition 1971(II), p. 682). 
         
         
         8
            
         As far as supplies and works relating to the sector of the production, transportation and distribution of electricity are
         concerned, the first clause of Article 3(1) puts the Community under a duty to extend the benefits of Directive 90/531 to
         US products, suppliers and contractors in the award of contracts by entities included in Annex 3 and the second clause of
         that provision puts it under a duty to make available to them the benefits of Council Directive 92/13/EEC of 25 February 1992
         coordinating the laws, regulations and administrative provisions relating to the application of Community rules on the procurement
         procedures of entities operating in the water, energy, transport and telecommunications sectors (OJ 1992 L 76, p. 14). 
         
         
         9
            
         Pursuant to those commitments, Article 1 of Decision 93/324 extends the benefit of the provisions of Directive 90/531 to tenders
         comprising products originating in the United States made for the award of a supply contract by contracting entities listed
         in Annex 3 to the Agreement. 
         
         
         10
            
         The European Parliament bases its action on infringement of the Treaty and its essential procedural requirements in so far
         as Decisions 93/323 and 93/324 are based solely on Article 113 of the Treaty notwithstanding the existence of articles specific
         to the fields envisaged.  As regards more particularly Decision 93/324, the Parliament maintains that it has the effect of
         amending Directive 90/531, which was adopted in cooperation with the Parliament on the basis of Articles 57, 66 and 100a,
         in addition to Article 113, which at present is the sole legal basis used for Decision 93/324. 
         
         
         11
            
         The Council considers that Article 113 of the Treaty is the proper legal basis for the adoption of Decisions 93/323 and 93/324,
         since the commitments set out in Article 2(1) and the last clause of Article 3(1) of the Agreement are ancillary to the commitment
         contained in the first clause of Article 3(1), which is intended only to regulate the Community's external trade within the
         meaning of Article 113. 
         
         
         12
            
         As to whether Decisions 93/323 and 93/324 constitute an amendment of Directive 90/531, as the Parliament claims, or an extension
         of the benefit of that directive to a third country, as referred to in Article 29(5) of the directive, the directive has,
         in the Council's contention, no bearing on the validity of those decisions. 
         
         
         13
            
         Since their main aim is merely to set aside the Community preference referred to in Article 29(3) as regards certain tenders
         comprising goods from the United States, the procedure for adopting those decisions should be the same, whether they are construed
         as amending Article 29 of the directive or as an extension of the benefit of the directive.  
         
         
         14
            
         The Council argues that, in the first case, the legal basis would be Article 29(6) of the directive and, in the second case,
         Article 113 of the Treaty.  In either case it would be bound to act by a qualified majority on a proposal from the Commission,
         there being no provision for any involvement of the Parliament. 
         
         
         15
            
         In those circumstances, any unlawfulness attaching to the choice which it made between those two legal bases would be a purely
         formal defect which could not make the decisions void.  The Council refers in this connection to Case 165/87  
          Commission  v  
          Council  [1988] ECR 5545, paragraph 19. 
         
         
         16
            
         The Commission, intervening in support of the Council's submissions, points out that it had proposed that Article 113 should
         be the legal basis for Decision 93/323 on the ground that, for the reasons set out in its statement in intervention, the commercial
         policy provided for in that provision covers trade in both goods and services. 
         
            
               Admissibility
            
         
         17
            
         The Court points out  
          in limine  that, as it has consistently held (see, in particular, Case C-187/93  
          Parliament  v  
          Council  [1994] ECR I-2857, paragraph 14), an action for annulment brought by the Parliament against an act of the Council or the
         Commission is admissible provided that the action seeks only to safeguard its prerogatives and that it is founded only on
         submissions alleging their infringement. 
         
         
         18
            
         In this case, the Parliament argues that Decisions 93/323 and 93/324 should have been adopted on the basis, not only of Article
         113, but also of Article 57(2) and Articles 66 and 100a of the Treaty, which, before the Treaty on European Union entered
         into force, provided, unlike Article 113, for the procedure involving cooperation with it.  In maintains that, by adopting
         those decisions on the basis of Article 113 alone, the Council infringed that prerogative. 
         
         
         19
            
         It must therefore be held that the Parliament's application is admissible. 
         
         
         20
            
         The Parliament claims, pursuant to the third paragraph of Article 37 of the Statute of the Court, that the Commission's application
         to intervene, for which it was given leave by order of the President of the Court of 8 November 1993, should be declared inadmissible
         in so far as it advocates an interpretation of Article 113 of the Treaty which is radically opposed to the Council's. 
         
         
         21
            
         That objection of inadmissibility must be rejected. 
         
         
         22
            
         Even if it is true that the scope of the arguments put forward by the Commission in favour of the choice of Article 113 of
         the Treaty as the legal basis for Decision 93/323 differs considerably from the scope of those advanced by the Council in
         that regard, the form of order sought in the application to intervene nevertheless complies with the terms of the third paragraph
         of Article 37 of the Statue in that it is limited to supporting the Council's submissions. 
         Substance
         
         23
            
         The Court has consistently held that, in the context of the organization of the powers of the Community, the choice of the
         legal basis for a measure must be based on objective factors which are amenable to judicial review.  Those factors include
         in particular the aim and content of the measures (see, in particular, Case C-187/93  
          Parliament  v  
          Council , cited above, paragraph 17). 
         
         
         24
            
         As for the aim pursued, it appears in the first place from the preamble to the Agreement approved by Decision 93/323 that
         it seeks, in accordance with the commitments already entered into by the parties in the context of the GATT Multilateral Agreement
         on Government Procurement and in order to facilitate the achievement of a new multilateral agreement on this matter, the acceptance,
         bilaterally and on the basis of reciprocity, of certain obligations to open their procurement markets. 
         
         
         25
            
         To that end, the Agreement provides that public contracts in the two Contracting Parties are no longer to be open only to
         the acquisition of products and any services ancillary to their supply, as was provided for by the GATT Multilateral Agreement
         on Government Procurement, approved by Council Decision 80/271/EEC of 10 December 1979 concerning the conclusion of the Multilateral
         Agreements resulting from the 1973 to 1979 trade negotiations (OJ 1980 L 71, p. 1), on the basis of Article 113 of the Treaty.
         
         
         
         26
            
         On the contrary, according to Article 1(1) of the Agreement, it applies to contracts for goods, works and other services awarded
         by entities included in Annexes 1 and 2 and to contracts for goods and works awarded by entities listed in Annexes 3 and 4
         to the Agreement.  According to the second subparagraph of Article 1(2) of the Agreement, the expression  
         other services refers to contracts for which the principal object is the obtaining of one or more of the services included in Annexes 5
         and 6, which include, among other things, maintenance and repair, transport, computer, advertising and accounting services.
         
         
         
         27
            
         It follows that the Agreement is also concerned, on an independent basis, with the provision of services. 
         
         
         28
            
         As for Decision 93/324, according to the second and third recitals in its preamble, it aims to extend the benefit of the provisions
         of Directive 90/531 to the government procurement contracts covered by the Agreement. 
         
         
         29
            
         Next, as the Court has held, in the present state of Community law, only services which are supplied across frontiers fall
         within the scope of Article 113 of the Treaty (Opinion 1/94 [1994] ECR I-5267, paragraph 53). 
         
         
         30
            
         Since the types of service provision covered both by Decision 93/323, by which the Agreement was approved, and by Decision
         93/324, by which the benefit of the provisions of Directive 90/531 was extended to the public procurement contracts covered
         by the Agreement, cannot be reduced to the sole hypothesis of a trans-frontier supply involving no movement of persons, but
         relate also to supplies made thanks to a commercial presence or the presence of natural persons on the territory of the other
         Contracting Party, it must be held that Decisions 93/323 and 93/324 should not have been based on Article 113 of the Treaty
         alone. 
         
         
         31
            
         It follows that Decisions 93/323 and 93/324 must be annulled. 
         Limitation of the effects of the annulment
         
         32
            
         The Council has asked the Court to limit the effects of a possible annulment of the decisions and the Parliament has not opposed
         this request. 
         
         
         33
            
         In this connection, the Court observes that if Decisions 93/323 and 93/324 were simply annulled, this would be liable adversely
         to affect the exercise of the rights arising under them. 
         
         
         34
            
         Account must also be taken of the fact that the Agreement expired on 30 May 1995. 
         
         
         35
            
         In those circumstances, there are important reasons of legal certainty, comparable to those which arise where certain regulations
         are annulled, which warrant the Court's exercising the power conferred upon it by Article 174(2) of the EEC Treaty where a
         regulation is annulled and indicating the effects of the decisions which must be conserved. 
         
         
         36
            
         In the specific circumstances of this case, all the effects of the annulled decisions should be conserved. 
         
         Costs
         37
            
         Under Article 69(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs.  Since the Council
         has been unsuccessful, it must be ordered to pay the costs.  In accordance with the first subparagraph of Article 69(4) of
         those Rules, the Commission and the United Kingdom, which intervened in the proceedings, must be ordered to bear their own
         costs. 
         
         On those grounds, 
         
         
         
            
            THE COURT (Sixth Chamber)
         
         
         hereby:  
         
            
            1.
             Annuls Council Decision 93/323/EEC of 10 May 1993 concerning the conclusion of an Agreement in the form of a Memorandum of
            Understanding between the European Economic Community and the United States of America on government procurement and Council
            Decision 93/324/EEC of 10 May 1993 concerning the extension of the benefit of the provisions of Directive 90/531/EEC in respect
            of the United States of America; 
            
            
            2.
             Maintains in force the effects of the annulled decisions; 
            
            
            3.
             Orders the Council to pay the costs; 
            
            
            4.
             Orders the Commission and the United Kingdom to bear their own costs. 
            
            
                  Kakouris
               
               
                  Mancini 
               
               
                  Schockweiler 
               
            
                  Kapteyn
               
               
                  Murray 
               
               
                  
               
            
                  
               
               
                  
               
               
                  
               
            
                  
               
               
                  
               
               
                  
               
            
                  
               
               
                  
               
               
                  
               
            
            
            
            
            
            
            
            
         
         
         Delivered in open court in Luxembourg on 7 March 1996. 
         
         
         
         
                  R. Grass 
               
               
                  C.N. Kakouris  
               
            
         
         
         
                  Registrar
               
               
                  President of the Sixth Chamber
               
            
      
      
          1 –
            
             Language of the case: French.