Masdar (UK) Ltd v Commission of the European Communities.
Date: 2008-12-16
34. Subsequently, the Court of First Instance also rejected Masdar’s other pleas. Masdar’s arguments alleging breach of the principle of the protection of legitimate expectations were rejected by the Court of First Instance on the following grounds:
‘119. … the right to rely on the principle of the protection of legitimate expectations … extends to any individual who is in a situation in which it is clear that the Community administration has, by giving him precise assurances, led him to entertain justified expectations. Irrespective of the manner in which it was communicated, precise, unconditional and consistent information coming from authorised and reliable sources amount to such assurances ... It is also established in the case-law that the principle of the protection of legitimate expectations constitutes a rule of law conferring rights on individuals ... The Community may thus incur liability for infringement of that principle. Nevertheless economic operators must bear the economic risks inherent in their operations having regard to the circumstances specific to each case ...
120. According to the case-file, the expectations cited by [Masdar] relate to the payment by the Commission for services provided under contract to Helmico. It is clear in this case that the written documents emanating from the Commission before the Court cannot in any way be interpreted as precise assurances that the Commission undertook to pay for [Masdar]’s services which could give rise to justified expectations on its part.’
44. According to the principles common to the laws of the Member States, a person who has suffered a loss which increases the wealth of another person without there being any legal basis for that enrichment has the right, as a general rule, to restitution from the person enriched, up to the amount of the loss.
45. In that regard, as the Court of First Instance stated, legal redress for undue enrichment, as provided for in the majority of national legal systems, is not necessarily conditional upon unlawfulness or fault with regard to the defendant’s conduct.
46. On the other hand, in order for an action for unjust enrichment to be upheld, it is essential that there be no valid legal basis for the enrichment. That condition is not satisfied, in particular, where the enrichment derives from contractual obligations.
49. Actions for unjust enrichment do not fall under the rules governing non‑contractual liability in the strict sense, which, to be invoked, require a number of conditions to be satisfied, relating to the unlawfulness of the conduct imputed to the Community, the fact of the damage alleged and the existence of a causal link between that conduct and the damage complained of (see, inter alia, Joined Cases C‑120/06 P and C‑121/06 P FIAMM and Others  v Council and Commission  [2008] ECR I‑0000, paragraph 106 and the case‑law cited). They differ from actions brought under those rules in that they do not require proof of unlawful conduct – indeed, of any form of conduct at all – on the part of the defendant, but merely proof of enrichment on the part of the defendant for which there is no valid legal basis and of impoverishment on the part of the applicant which is linked to that enrichment.
50. However, despite those characteristics, the possibility of bringing an action for unjust enrichment against the Community cannot be denied to a person solely on the ground that the EC Treaty does not make express provision for a means of pursuing that type of action. If Article 235 EC and the second paragraph of Article 288 EC were to be construed as excluding that possibility, the result would be contrary to the principle of effective judicial protection, laid down in the case‑law of the Court and confirmed in Article 47 of the Charter of fundamental rights of the European Union, proclaimed at Nice on 7 December 2000 (OJ 2000 C 364, p. 1) (see Case C‑432/05 Unibet  [2007] ECR I‑2271, paragraph 37, and Joined Cases C‑402/05 P and C‑415/05 P Kadi and Al Barakaat International Foundation v Council and Commission  [2008] ECR I‑0000, paragraph 335).
76. It should be borne in mind at the outset that the question whether the grounds of a judgment of the Court of First Instance are contradictory or inadequate is a question of law which is amenable, as such, to review on appeal (Joined Cases C‑403/04 P and C-405/04 P Sumitomo Metal Industries and Nippon Steel  v Commission  [2007] ECR I‑729, paragraph 77 and the case‑law cited).
81. As regards, next, the test set out by the Court of First Instance in paragraph 119 of the judgment under appeal, for the purposes of applying to the case before it the principle of the protection of legitimate expectations, it must be held that that test clearly reflects settled case‑law according to which a party may not plead breach of that principle unless it has been given precise assurances by the administration (see, to that effect, Joined Cases C‑182/03 and C‑217/03 Belgium and Forum 187  v Commission  [2006] ECR I‑5479, paragraph 147, and Case C‑213/06 P EAR  v Karatzoglou  [2007] ECR I‑6733, paragraph 33 and the case‑law cited).
84. In that regard, it should be borne in mind that the system of assistance programmes provided for under Community legislation is based on the implementation, by the Commission’s co‑contractor, of a series of obligations entitling it to payment of the financial assistance provided for. Where the co‑contractor has not implemented the project in accordance with the conditions to which the grant of assistance was made subject, it cannot rely on the principle of protection of legitimate expectations in order to secure payment of that financial assistance (see, to that effect, Joined Cases C‑383/06 to C‑385/06 Vereniging Nationaal Overlegorgaan Sociale Werkvoorziening and Others  [2008] ECR I‑0000, paragraph 56).
90. As the Court has already pointed out, ‘negligence’ entails an act or omission by which the party responsible breaches the duty of care which it should have discharged, and could have discharged, in view of its attributes, knowledge and abilities (see, to that effect, Case C‑308/06 Intertanko and Others  [2008] ECR I‑0000, paragraph 74 to 77).
91. It is therefore possible for the Community administration to be non‑contractually liable for wrongful conduct where it fails to act with all necessary care and, as a result, causes harm (see, to that effect, Case 145/83 Adams  v Commission  [1985] ECR 3539, paragraph 44, and Case C‑331/05 P Internationaler Hilfsfonds  v Commission  [2007] ECR I‑5475, paragraph 24).
93. … the second paragraph of Article 288 EC founds an obligation for the Community to make good any damage caused by its institutions, without restricting the rules governing the non-contractual liability of the Community solely to unlawful conduct on the part of those institutions …
…
95. In order to determine whether those principles apply, it must therefore be examined whether the conditions governing the action de in rem verso  or the action based on negotiorum gestio  are satisfied in this case.
96. In that regard it is clear … that in the factual and legal context of this case actions based on unjust enrichment or negotiorum gestio  cannot succeed.
97. According to the general principles common to the laws of the Member States, those actions cannot succeed where the justification for the advantage gained by the enriched party or the principal derives from a contract or legal obligation. Further, in accordance with t hose same principles, it is generally possible to plead such actions only in the alternative, that is to say, where the injured party has no other action available to obtain what it is owed.
98. It is common ground in this case that there is a contractual relationship between the Commission and Helmico, on the one hand, and between Helmico and [Masdar], on the other. The direct harm alleged corresponds to the payment owed to [Masdar] by Helmico under the subcontracts concluded between those two parties, which contain [a choice of jurisdiction] clause in that respect, designating the courts of England and Wales as having jurisdiction over any contractual disputes. It is therefore unquestionably Helmico’s responsibility to pay for the work carried out by [Masdar] and to incur any liability arising from non-payment, as is shown, moreover, by the legal proceedings brought by [Masdar] against Helmico to that effect before the High Court of Justice, which are currently pending but stayed. The possible insolvency of Helmico is no reason for the Commission to take on that liability, since [Masdar] cannot have two sources in respect of the same entitlement to payment. According to the documents in the file, and as is not disputed by the parties, those proceedings before the High Court of Justice relate to the payment of the services at issue in the present proceedings.
99. It follows that any enrichment of the Commission or impoverishment of [Masdar], as it arose from the contractual framework in place, cannot be described as being without cause.
100. … The conditions governing the civil action based on negotiorum gestio  are manifestly not satisfied for the following reasons.
101. Performance by [Masdar] of its contractual obligations with regard to Helmico cannot reasonably be described as benevolent intervention in another’s affairs which it is imperative to manage, as required by the action in question … Finally, [Masdar]’s argument is also in conflict with the principles of negotiorum gestio  as regards the principal’s awareness of the manager’s action. The manager’s action is generally carried out without the knowledge of the principal, or at least without the latter being aware of the need to act immediately. Yet [Masdar] itself submits that its choice to continue with the work in October 1998 was induced by the Commission.
102. In addition it is not without relevance that, according to case-law, it is the economic operators themselves who must bear the economic risks inherent in their operations, taking account of the circumstances of each case …
103. It has not been established that [Masdar] suffered unusual and special damage going beyond the limits of the economic and commercial risks inherent in its operations. In all contractual relationships there is a certain risk that a party will not perform the contract satisfactorily or will even become insolvent. It is for the contracting parties to mitigate that risk in a suitable manner in the contract itself. [Masdar] was not unaware that Helmico was not fulfilling its contractual obligations, but knowingly chose to continue to fulfil its own obligations rather than to take formal action. In so doing it ran a commercial risk which could be described as normal …’
34. Subsequently, the Court of First Instance also rejected Masdar’s other pleas. Masdar’s arguments alleging breach of the principle of the protection of legitimate expectations were rejected by the Court of First Instance on the following grounds:
‘119. … the right to rely on the principle of the protection of legitimate expectations … extends to any individual who is in a situation in which it is clear that the Community administration has, by giving him precise assurances, led him to entertain justified expectations. Irrespective of the manner in which it was communicated, precise, unconditional and consistent information coming from authorised and reliable sources amount to such assurances ... It is also established in the case-law that the principle of the protection of legitimate expectations constitutes a rule of law conferring rights on individuals ... The Community may thus incur liability for infringement of that principle. Nevertheless economic operators must bear the economic risks inherent in their operations having regard to the circumstances specific to each case ...
120. According to the case-file, the expectations cited by [Masdar] relate to the payment by the Commission for services provided under contract to Helmico. It is clear in this case that the written documents emanating from the Commission before the Court cannot in any way be interpreted as precise assurances that the Commission undertook to pay for [Masdar]’s services which could give rise to justified expectations on its part.’
35. At paragraphs 121 to 129 of the judgment under appeal, the Court of First Instance substantiated the finding made in paragraph 120 of that judgment with a detailed examination of the evidence before it.
36. With regard to the plea alleging that the Commission failed to exercise care, the Court of First Instance found as follows:
‘140 It is clear from [Masdar]’s pleadings that the conduct of the Commission complained of is the suspension of payments to Helmico. The Commission’s conduct is unlawful, according to [Masdar], because it did not exercise reasonable care to ensure that that suspension did not cause harm to third parties and, if necessary, to indemnify those third parties for the damage thereby suffered.
141 …[F]irst of all … [Masdar] merely states that such a duty of care exists, without adducing the slightest proof or putting forward legal arguments in support of its claim or specifying the origin and scope of that duty. The Court takes the view that a very vague reference to the general principles of non-contractual liability for fault under civil law systems and the principle of tortious liability for negligence under Anglo-Saxon systems does not show that the Commission is under an obligation to have regard to the interests of third parties when it makes a decision regarding the suspension of payments in the course of its contractual relationships … The Court also considers … that [Masdar] has not shown that there is a causal link between breach of the alleged obligation and the damage pleaded …’
Forms of order sought
37. By its appeal, Masdar claims that the Court should:
– set aside the judgment under appeal;
– order the Commission to pay to Masdar the sum of EUR 448 947.78 claimed by Masdar at first instance or, failing that, the sum of EUR 249 314.35 or such other sum as the Court considers appropriate, plus interest on the sum chosen;
– order the Commission to pay the costs of the present proceedings and of the proceedings before the Court of First Instance.
38. The Commission contends that the Court should:
– dismiss the appeal;
– in the alternative, should the Court set aside, in whole or in part, the judgment under appeal, dismiss Masdar’s claim for monetary compensation;
– order Masdar to pay the costs of the present proceedings and of the proceedings before the Court of First Instance;
– in the alternative, should the Court find for Masdar, order Masdar to bear one-third of its own costs as incurred in the proceedings before the Court of First Instance.
The appeal
39. Masdar relies essentially on five pleas in law in support of its appeal, alleging in respect of the judgment under appeal: (i) errors in law and failure to state reasons in relation to the treatment of the issue of unjust enrichment; (ii) distortion of the facts and error in law in the treatment of the issue of negotiorum gestio ; (iii) breach of the principle of the protection of legitimate expectations and inconsistency in the reasons stated; (iv) incorrect treatment of the plea alleging fault ( faute ) or negligence; and (v) incomplete assessment of the facts.
The first plea in law, alleging errors in law and failure to state reasons in relation to the treatment of the issue of unjust enrichment
Arguments of the parties
40. Masdar claims that the Court of First Instance erred in finding that Masdar had merely acted in pursuance of its contractual obligations towards Helmico.
41. In addition, the Court of First Instance erred in law, according to Masdar, by failing to take into consideration the fact that the Commission was no ordinary co‑contractor vis-à-vis Helmico, but one with powers of recovery. By leaving Masdar to complete the works and by then exercising its powers of recovery, the Commission – which had thereby emptied the previously existing contractual relations of their content – unduly enriched itself.
42. The Commission notes that Masdar did not terminate its contracts with Helmico.
43. In any event, according to the Commission, the Court of First Instance correctly found in paragraphs 97 to 99 of the judgment under appeal that the Commission had not unjustly enriched itself, because the Commission derived its advantage from its contract with Helmico, and Masdar was under an obligation to act because of its subcontract with Helmico.
Findings of the Court
44. According to the principles common to the laws of the Member States, a person who has suffered a loss which increases the wealth of another person without there being any legal basis for that enrichment has the right, as a general rule, to restitution from the person enriched, up to the amount of the loss.
45. In that regard, as the Court of First Instance stated, legal redress for undue enrichment, as provided for in the majority of national legal systems, is not necessarily conditional upon unlawfulness or fault with regard to the defendant’s conduct.
46. On the other hand, in order for an action for unjust enrichment to be upheld, it is essential that there be no valid legal basis for the enrichment. That condition is not satisfied, in particular, where the enrichment derives from contractual obligations.
47. Given that unjust enrichment, as defined above, is a source of non‑contractual obligation common to the legal systems of the Member States, the Community cannot be dispensed from the application to itself of the same principles where a natural or legal person alleges that the Community has been unjustly enriched to the detriment of that person.
48. Moreover, since any obligation arising out of unjust enrichment is by definition non‑contractual in nature, it is necessary to allow it to be invoked pursuant to Article 235 EC and the second paragraph of Article 288 EC, as the Court of First Instance did in the case before it.
49. Actions for unjust enrichment do not fall under the rules governing non‑contractual liability in the strict sense, which, to be invoked, require a number of conditions to be satisfied, relating to the unlawfulness of the conduct imputed to the Community, the fact of the damage alleged and the existence of a causal link between that conduct and the damage complained of (see, inter alia, Joined Cases C‑120/06 P and C‑121/06 P FIAMM and Others  v Council and Commission  [2008] ECR I‑0000, paragraph 106 and the case‑law cited). They differ from actions brought under those rules in that they do not require proof of unlawful conduct – indeed, of any form of conduct at all – on the part of the defendant, but merely proof of enrichment on the part of the defendant for which there is no valid legal basis and of impoverishment on the part of the applicant which is linked to that enrichment.
50. However, despite those characteristics, the possibility of bringing an action for unjust enrichment against the Community cannot be denied to a person solely on the ground that the EC Treaty does not make express provision for a means of pursuing that type of action. If Article 235 EC and the second paragraph of Article 288 EC were to be construed as excluding that possibility, the result would be contrary to the principle of effective judicial protection, laid down in the case‑law of the Court and confirmed in Article 47 of the Charter of fundamental rights of the European Union, proclaimed at Nice on 7 December 2000 (OJ 2000 C 364, p. 1) (see Case C‑432/05 Unibet  [2007] ECR I‑2271, paragraph 37, and Joined Cases C‑402/05 P and C‑415/05 P Kadi and Al Barakaat International Foundation v Council and Commission  [2008] ECR I‑0000, paragraph 335).
51. The question whether the Court of First Instance erred in law in its examination of the issue of unjust enrichment should be examined in the light of those preliminary considerations.
52. It is apparent from the judgment under appeal that the Court of First Instance rejected Masdar’s arguments on the ground that there was a contractual relationship between the Commission and Helmico, on the one hand, and between Helmico and Masdar, on the other. The Court of First instance inferred from this that any enrichment on the part of the Commission or impoverishment on the part of Masdar arose from the contractual framework in place and, in consequence, could not be categorised as ‘unjust’.
53. In addition, according to the Court of First Instance, Masdar had an alternative means of obtaining what it was owed, since, under its subcontracts with Helmico, it could bring an action against that company for breach of contract before the courts of England and Wales as designated by those contracts.
54. As was pointed out in paragraph 46 above, enrichment cannot be categorised as ‘unjust’, where it derives from contractual obligations.
55. On the other hand, where contracts under which services are provided prove to be invalid and cease to exist, the enrichment of the beneficiary of those services must, in accordance with the principles developed in the legal systems of the Member States, give rise, in certain circumstances, to restitution.
56. Without it being necessary to determine the circumstances in which restitution is due, it must be held that the Court of First Instance correctly applied the distinction, outlined above, between enrichment which derives from contractual relationships and enrichment which is ‘unjust’.
57. For the reasons set out by the Advocate General at points 53 and 54 of his Opinion, the Court of First Instance found, correctly, that the contracts concluded between the Commission and Helmico, on the one hand, and between Helmico and Masdar, on the other, had not ceased to exist. The Court of First Instance inferred from this, correctly, that there could be no non‑contractual obligation for the Community to assume responsibility for the expenses incurred by Masdar in order to complete the Russian and Moldovan projects.
58. The Court of First Instance noted, in particular, that, while fully aware that Helmico was in breach of its contractual obligations, Masdar knowingly chose to continue to fulfil its own obligations. It also pointed out that Masdar had initiated legal proceedings against Helmico, in accordance with the choice of jurisdiction clause in its contracts with that company.
59. Moreover, the Court of First Instance stated, rightly, that in all contractual relationships there is a certain risk that a party will not perform the contract satisfactorily or that it will become insolvent. That is a commercial risk inherent in the activities of economic operators.
60. That last element is of particular importance in the context of Community assistance programmes. It is not uncommon for the co‑contractor to which the Community has entrusted a project to confine itself to a management role and to delegate implementation of the project to subcontractors, who may in turn subcontract work to other undertakings. In such a context, each economic operator involved in the project must accept the risk that its co‑contractor may become insolvent or that it may commit irregularities leading the Community to suspend payments or even to issue recovery orders. In those circumstances, it cannot easily be accepted that the losses flowing from the materialisation of such risks must give rise to ad hoc payments on the part of the Community.
61. It follows from the foregoing that the Court of First Instance did not err in law or fail to state reasons in its treatment of the issue of unjust enrichment. The first plea in law must therefore be rejected.
The second plea in law, alleging distortion of the facts and error in law in the treatment of the issue of negotiorum gestio
Arguments of the parties
62. According to Masdar, the arguments underpinning the judgment under appeal on the issue of negotiorum gestio  are incorrect in fact and in law.
63. The findings of the Court of First Instance that Masdar’s conduct was not in the nature of benevolent intervention and that the Commission was capable of managing the projects itself are manifestly incorrect.
64. Moreover, the Court of First Instance erred in law by finding, at paragraph 101 of the judgment under appeal, that the principle of negotiorum gestio  cannot apply where the principal is aware of the need for immediate action.
65. The Commission contends that the finding, at paragraph 97 et seq. of the judgment under appeal, that Masdar acted in pursuance of its contracts with Helmico, is a sufficient basis for rejecting the arguments regarding negotiorum gestio .
Findings of the Court
66. Without it being necessary to determine whether the Court of First Instance made a correct classification of the legal nature of actions based on negotiorum gestio , it should be pointed out that the arguments put forward by Masdar in support of this second plea in law cannot, in any case, be upheld.
67. First, Masdar cannot validly claim that its services were benevolent. In fact, both at first instance and in the context of this appeal, Masdar has stated that the reason why it continued to provide its services after discovering the irregularities committed by Helmico was because it believed that the Commission had undertaken to ensure that it would be paid for those services. That alone is sufficient to preclude a finding that the Court of First Instance distorted the facts by refusing to recognise that Masdar’s conduct was in the nature of benevolent intervention.
68. Concerning, next, the argument that the Court of First Instance distorted the facts by finding that the Commission was capable of managing the projects itself, it is sufficient to note that Masdar has not provided evidence showing that the Commission was no longer able to ensure the management of the programme or of the projects at issue.
69. Lastly, as regards the argument that the Court of First Instance erred in law, it should be pointed out that, at paragraph 101 of the judgment under appeal, the Court of First Instance stated that the manager’s action is ‘generally’ carried out without the knowledge of the principal, or at least without the latter being aware of the need to act immediately. Contrary to Masdar’s argument, the Court of First Instance thus did not exclude the possibility that the principle of negotiorum gestio  might be invoked in circumstances where the principal was conscious of such a need.
70. In consequence, the second plea in law must also be rejected.
The third plea in law, alleging breach of the principle of the protection of legitimate expectations and inconsistency in the reasons stated
Arguments of the parties
71. Masdar argues that there is inconsistency between the reasons stated by the Court of First Instance concerning unjust enrichment and negotiorum gestio , on the one hand, and concerning the principle of the protection of legitimate expectations, on the other.
72. Masdar notes that the Court of First Instance accepted, at paragraph 101 of the judgment under appeal, that the Commission induced Masdar to continue to provide services and, at paragraph 148 of that judgment, that the Commission and Masdar had evinced a common intention that Masdar should complete the projects and be paid. Consequently, the finding at paragraph 130 of the judgment under appeal that ‘it must be concluded that the evidence available, examined separately or as a whole, does not reveal precise assurances given by the Commission which could give rise to reasonable expectations on the part of [Masdar], enabling it to rely on the principle of the protection of legitimate expectations’ is manifestly incorrect.
73. In the alternative, Masdar claims that the test used by the Court of First Instance is too narrow for cases such as this. According to Masdar, precise assurances should be inferred where the conduct of the Community institution is such as to induce a subcontractor to provide services for the benefit of the institution in circumstances where it has become clear that that subcontractor will not be paid by the main co‑contractor.
74. The Commission contends, first, that that plea relates to questions of fact and is therefore inadmissible.
75. Concerning, next, the principle of the protection of legitimate expectations, the Commission notes that the Court of First Instance examined in detail, first, whether the written documents originating from the Commission could be interpreted as precise assurances that the Commission was going to assume responsibility for payments and, secondly, whether the evidence suggested that such precise assurances had been given at the meeting of 2 October 1998.
Findings of the Court
76. It should be borne in mind at the outset that the question whether the grounds of a judgment of the Court of First Instance are contradictory or inadequate is a question of law which is amenable, as such, to review on appeal (Joined Cases C‑403/04 P and C-405/04 P Sumitomo Metal Industries and Nippon Steel  v Commission  [2007] ECR I‑729, paragraph 77 and the case‑law cited).
77. This plea is also admissible in so far as it alleges breach of the principle of the protection of legitimate expectations. Masdar’s arguments in that regard do not relate to the finding of certain facts, but concern the test used by the Court of First Instance to apply that principle. The question whether the Court of First Instance applied the correct legal standard when examining the facts is a question of law ( Sumitomo Metal Industries and Nippon Steel  v Commission , paragraph 40).
78. Thus, contrary to the Commission’s contention, it is necessary to examine the substance of this plea.
79. As regards, first, the alleged inconsistency of the reasons stated, Masdar argues that the findings of the Court of First Instance that the Commission and Masdar had a common objective – the completion in full of the projects as initially planned – and that the Commission had induced Masdar to continue to provide services, contradicts its conclusion that the Commission had not given precise assurances.
80. That argument cannot succeed. As the Court of First Instance pointed out at paragraph 120 of the judgment under appeal, the precise assurances alleged by Masdar related to the payment by the Commission of services which Masdar had provided to Helmico. The fact – noted by the Court of First Instance elsewhere in the judgment under appeal – that the Commission, wishing the projects to be carried out as planned, had induced Masdar to continue to provide services is clearly unrelated to Masdar’s argument that the Commission undertook to pay Masdar directly. Consequently, there cannot be any inconsistency between the findings of the Court of First Instance concerning, on the one hand, the wishes expressed by the Commission concerning the completion of the projects and, on the other, the Commission’s refusal to pay Masdar directly.
81. As regards, next, the test set out by the Court of First Instance in paragraph 119 of the judgment under appeal, for the purposes of applying to the case before it the principle of the protection of legitimate expectations, it must be held that that test clearly reflects settled case‑law according to which a party may not plead breach of that principle unless it has been given precise assurances by the administration (see, to that effect, Joined Cases C‑182/03 and C‑217/03 Belgium and Forum 187  v Commission  [2006] ECR I‑5479, paragraph 147, and Case C‑213/06 P EAR  v Karatzoglou  [2007] ECR I‑6733, paragraph 33 and the case‑law cited).
82. Masdar claims that the requirement of precise assurances must be applied with a degree of flexibility in cases such as this. Legitimate expectations arise where the conduct of the Community institution is such as to induce a subcontractor to provide services to the benefit of that institution in circumstances where it has become clear that the subcontractor will not be paid by the Community’s co‑contractor.
83. That argument cannot be accepted.
84. In that regard, it should be borne in mind that the system of assistance programmes provided for under Community legislation is based on the implementation, by the Commission’s co‑contractor, of a series of obligations entitling it to payment of the financial assistance provided for. Where the co‑contractor has not implemented the project in accordance with the conditions to which the grant of assistance was made subject, it cannot rely on the principle of protection of legitimate expectations in order to secure payment of that financial assistance (see, to that effect, Joined Cases C‑383/06 to C‑385/06 Vereniging Nationaal Overlegorgaan Sociale Werkvoorziening and Others  [2008] ECR I‑0000, paragraph 56).
85. That enables the Commission, where a co‑contractor is guilty of irregularities in the context of a Community assistance project, to discharge its duty to protect the financial interests and budgetary discipline of the Community.
86. In that context, which is distinguished by the great importance attaching to the financial supervision of the project, subcontractors cannot rely on vague indications to claim that they had a legitimate expectation that the Commission would make a financial gesture in their regard by paying them directly for their services. Such a legitimate expectation can arise only from precise assurances from that institution indicating unambiguously that it will guarantee payment for the subcontracted services. As the Court of First Instance found, it has not been shown that such assurances were given.
87. It follows from the foregoing that the third plea in law must also be rejected.
The fourth plea in law, alleging incorrect treatment of the plea alleging fault (faute) or negligence
Arguments of the parties
88. Masdar criticises the Court of First Instance for finding, in paragraph 141 of the judgment under appeal, that ‘Masdar merely states that … a duty of care [as described in paragraph 140 of that judgment] exists, without adducing the slightest proof or putting forward legal arguments in support of its claim’, when Masdar had set out, in the light of a legal analysis of the concepts of fault ( faute ) and negligence, that where the Commission exercises its power to suspend the payment of a contract in the case of irregularities committed by the co‑contractor, knowing that a subcontractor has been working for the co‑contractor, it must exercise care so as to ensure that it does not harm that subcontractor. Moreover, Masdar claims that it is evident that the Commission acted negligently, because it first allowed Masdar to complete the work and only then exercised its powers of recovery.
89. The Commission contends that the Court of First Instance was right to find, at paragraph 141 of the judgment under appeal, that Masdar had failed to substantiate its argument.
Findings of the Court
90. As the Court has already pointed out, ‘negligence’ entails an act or omission by which the party responsible breaches the duty of care which it should have discharged, and could have discharged, in view of its attributes, knowledge and abilities (see, to that effect, Case C‑308/06 Intertanko and Others  [2008] ECR I‑0000, paragraph 74 to 77).
91. It is therefore possible for the Community administration to be non‑contractually liable for wrongful conduct where it fails to act with all necessary care and, as a result, causes harm (see, to that effect, Case 145/83 Adams  v Commission  [1985] ECR 3539, paragraph 44, and Case C‑331/05 P Internationaler Hilfsfonds  v Commission  [2007] ECR I‑5475, paragraph 24).
92. That duty of care is inherent in the principle of sound administration. It applies generally to the actions of the Community administration in its relations with the public. It must, therefore, also be discharged by the Commission in its relations with Masdar and in its commitments in respect of that undertaking.
93. However, the duty of care does not have the scope which Masdar ascribes to it. It entails that the Community administration must act with care and caution. On the other hand, the administration is not required to remove from economic operators all harm flowing from normal commercial risks, such as the risk described at paragraph 59 above.