1 BY AN APPLICATION LODGED AT THE COURT REGISTRY ON 20 JANUARY 1982 , MURRI FRERES , A PARTNERSHIP REGISTERED AT THE TRIBUNAL DE COMMERCE , ANTALAHA , MADAGASCAR , BROUGHT AN ACTION AGAINST THE COMMISSION UNDER ARTICLE 178 AND THE SECOND PARAGRAPH OF ARTICLE 215 OF THE EEC TREATY FOR DAMAGES BY REASON OF THE COMMISSION ' S LIABILITY FOR THE UNLAWFUL CONDUCT OF ITS OFFICIALS IN CONNECTION WITH THE IMPLEMENTATION OF PUBLIC WORKS CONTRACT NO 6907/EDF/72 , CONCLUDED ON 11 SEPTEMBER 1972 BETWEEN THE APPLICANT AND THE REPUBLIC OF MADAGASCAR AND FINANCED BY THE EUROPEAN DEVELOPMENT FUND ( HEREAFTER REFERRED TO AS ' THE FUND ' ), BY VIRTUE OF FINANCING AGREEMENT NO 1030/MA , CONCLUDED ON 13 MARCH 1972 BETWEEN THE REPUBLIC OF MADAGASCAR AND THE FUND .
2 UNDER THE CONTRACT THE APPLICANT WAS ENTRUSTED WITH THE IMPROVEMENT OF NATIONAL HIGHWAY 5A BETWEEN VOHEMAR AND SAMBAVA IN MADAGASCAR . IN 1974 , FOLLOWING A SUDDEN RISE IN THE PRICE OF BITUMINOUS PETROLEUM PRODUCTS , WHICH RESULTED IN THEIR COST BEING ALMOST DOUBLED , THE APPLICANT REQUESTED THE MALAGASY AUTHORITIES TO REVISE THE UNIT PRICES FOR THOSE PRODUCTS , SINCE THE PRICE REVISION FORMULA CONTAINED IN THE CONTRACT NO LONGER MADE IT POSSIBLE TO COVER THE REAL COSTS OF THE BITUMINOUS PRODUCTS NEEDED TO CARRY OUT THE WORK .
3 IN THE COURSE OF THE NEGOTIATIONS , THE APPLICANT , WHICH WAS AWAITING DELIVERY OF 2 100 TONNES OF ASPHALT AND CONSIDERED THAT THE SITUATION HAD BECOME PARTICULARLY SERIOUS , SENT A TELEGRAM , ON 6 NOVEMBER 1975 , TO THE DELEGATE OF THE FUND IN TANANARIVE , ASKING HIM TO GUARANTEE PAYMENT FOR THAT CONSIGNMENT OF ASPHALT .
4 ON THE SAME DAY , THE DELEGATE OF THE FUND SENT TO THE APPLICANT A REPLY IN THE FOLLOWING TERMS : ' IN REPLY TO YOUR TELEX OF 6 NOVEMBER WE INFORM YOU THAT THE PROPOSAL FOR REASSESSMENT OF YOUR CONTRACT AT FMG 2 200 000 HAS JUST BEEN APPROVED . THAT AMOUNT CORRESPONDS TO THE CURRENT COMMITMENT IN MADAGASCAR . WE ARE ALSO REMINDING THE FUND MANAGEMENT OF OUR NEW COMMITMENT OF FMG 20 000 000 REQUESTED ON 1 OCTOBER . IT SEEMS POSSIBLE TO PAY FOR YOUR SUPPLY OF THE THIRD CONSIGNMENT OF ASPHALT AND WORK UNTIL END 1975 WITH CREDIT UNDER THE FINANCING AGREEMENT . ADDENDUM TO CONTRACT AND PREPARATION TO TAKE RESPONSIBILITY FOR OVERRUN IN 1976 ' .
5 ON 19 NOVEMBER 1975 THE APPLICANT RECEIVED A LETTER FROM THE MALAGASY CHIEF ENGINEER IN CHARGE OF THE PROJECT , WHO INFORMED IT THAT THE AUTHORITIES , IN AGREEMENT WITH THE FUND , WERE PREPARED TO EXAMINE THE ASPHALT PROBLEM AND INVITED IT TO SET OUT ITS CLAIM IN GREATER DETAIL SO THAT A SOLUTION MIGHT BE FOUND .
6 IN THE MEANTIME , THE APPLICANT CONTINUED TO CARRY OUT THE ASPHALTING WORK BUT POINTED OUT IN A LETTER DATED 21 NOVEMBER 1975 : ' IF A CLAIM IS NOT AGREED TO IN THE NEAR FUTURE , WE SHALL BE OBLIGED TO CEASE THE ASPHALTING WORK ' . IN A LETTER OF 1 DECEMBER 1975 ADDRESSED TO THE CHIEF PROJECT ENGINEER , THE APPLICANT SET OUT IN GREATER DETAILS ITS CLAIM FOR A REVISION OF FIVE UNIT PRICES FOR BITUMINOUS PRODUCTS .
7 ON 12 MARCH 1976 THE MALAGASY MINISTER FOR PUBLIC WORKS SUBMITTED TO THE DELEGATE OF THE FUND A DRAFT ADMINISTRATIVE ORDER , TO BE CONFIRMED IN AN ADDENDUM TO THE CONTRACT , IN WHICH THE MALAGASY AUTHORITIES PROPOSED TO RESOLVE THE MATTER BY REVISING THE UNIT PRICES IN QUESTION , AND REQUESTED THE DELEGATE , IF HE WAS IN AGREEMENT , TO APPROVE THE ORDER .
8 THAT DEVELOPMENT WAS FOLLOWED BY A LETTER DATED 29 MAY 1976 , SENT BY THE APPLICANT TO THE DELEGATE OF THE FUND , INFORMING HIM THAT THE MALAGASY AUTHORITIES PROPOSED TO REVISE NOT ONLY THE UNIT PRICES LOWER THAN THOSE WHICH IT HAD ITSELF PROPOSED BUT ALSO THOSE 25 TO 30% LOWER THAN THE PRICES CHARGED BY OTHER UNDERTAKINGS WORKING UNDER MORE FAVOURABLE CONDITIONS THAT THE APPLICANT . IN THE SAME LETTER THE APPLICANT REQUESTED THE DELEGATE OF THE FUND , IN VIEW OF THE ASSURANCES WHICH IT CONSIDERED THAT IT HAD RECEIVED EITHER FROM THE FUND OR FROM THE NATIONAL AUTHORITIES AND ON THE BASIS OF WHICH IT HAD UNDERTAKEN AND CONTINUED THE ASPHALTING WORK , ' TO INTERVENE IN ORDER TO OBTAIN AN IMMEDIATE SOLUTION TO THE PROBLEM ' .
9 ON 29 JUNE 1976 THE DELEGATE OF THE FUND SENT THE FOLLOWING REPLY TO THE APPLICANT CONCERNING THE ASPHALT QUESTION : ' THIS IS A DIFFICULT PROBLEM WHICH HAS BEEN SUBMITTED TO THE DIRECTORATE GENERAL FOR DEVELOPMENT IN BRUSSELS . THE DIRECTORATE GENERAL IS FULLY AWARE OF THE DIFFICULTIES WHICH HAVE ARISEN WITH REGARD TO PAYMENT FOR THE WORK INVOLVING BITUMINOUS PRODUCTS AFTER THE DRAMATIC RISES IN THE PRICE OF ASPHALT IN NOVEMBER 1973 AND MARCH 1974 AND IT CANNOT DENY THE EXISTENCE OF THE LOSS SUFFERED , ALTHOUGH THE EXTENT OF SUCH LOSS HAS NOT YET BEEN ASCERTAINED . THE DIFFICULTY LIES IN AGREEING A NEW METHOD OF PAYING FOR THE SURFACING WORK SO AS TO COMPENSATE FOR THE LOSS SUFFERED BY YOUR UNDERTAKING UNDER THE ITEM ' ' ASPHALT ' ' . AS YOU KNOW , AN AGREEMENT WAS REACHED WITH THE AUTHORITIES IN SEPTEMBER 1987 ON A PROPOSAL TO BRING THE UNIT PRICES FOR THE WORK INVOLVING ASPHALT UP TO THE PRICE LEVELS OF SEPTEMBER 1975 BUT THE PROJECTS DIVISION OF THE DIRECTORATE CONSIDERED THAT THE MATTER SHOULD BE DEALT WITH IN A DIFFERENT WAY . I MYSELF AM AWAITING THE RESULT OF DISCUSSIONS BETWEEN THAT DIVISION AND THE FINANCE DEPARTMENT , AND AS SOON AS THE MATTER IS DECIDED I SHALL INFORM YOU IMMEDIATELY OF THE POSITION WHICH IT HAD ADOPTED ' .
10 ON 10 AUGUST 1976 THE DELEGATE OF THE FUND SENT TO THE APPLICANT THE FOLLOWING LETTER : ' MY DIRECTORATE MAINTAINS THE POSITION WHICH IT HAD PREVIOUSLY ADOPTED ON THIS PROBLEM AND CANNOT ACCEPT THE AMENDMENT OF CERTAIN UNIT PRICES AFTER THEY HAVE BEEN BROUGHT UP TO DATE , WHICH WOULD AMOUNT TO A RETROACTIVE DISTORTION OF THE RULES OF COMPETITION . ACCORDING TO MY DIRECTORATE , THERE CAN BE NO SOLUTION TO THE PROBLEM WITHOUT A GENERAL RECONSTRUCTION OF THE PRICE-REVISION FORMULAE WHICH ARE NOT CONSIDERED ACCEPTABLE . THE AUTHORITIES HAVE BEEN INFORMED OF THAT VIEW AND REQUESTED TO EXAMINE AT ONCE NEW PRICE-REVISION FORMULAE IN WHICH THE WEIGHTINGS FOR VARIOUS FACTORS WOULD BE BETTER ADAPTED TO THE NATURE AND SCALE OF THE WORK . ALTHOUGH THE METHOD PROPOSED BY MY DIRECTORATE DID NOT INITIALLY MEET WITH YOUR APPROVAL , I WOULD ADVISE YOU NOT TO REJECT IT ONCE AGAIN BUT TO COOPERATE IN THE SOLUTION OF THIS COMPLICATED PROBLEM . '
11 THE APPLICANT STATES THAT THROUGHOUT 1977 AND THE FIRST HALF OF 1978 IT REGULARLY SENT REMINDERS TO THE MALAGASY AUTHORITIES DESIGNED IN PARTICULAR TO GIVE A PRECISE ACCOUNT OF THE INTEREST DUE ON THE AMOUNT OF ITS CLAIM .
12 ON 23 JUNE 1978 THE APPLICANT SENT TO THE DIRECTORATE GENERAL OF THE FUND A LETTER REQUESTING IT TO INTERVENE IMMEDIATELY IN ORDER TO HELP IT TO SECURE PAYMENT OF THE SUM DUE IN RESPECT OF THE REVISION OF THE PRICE OF BITUMINOUS PRODUCTS , FAILING WHICH IT INTENDED TO RESORT TO THE PROCEDURE PROVIDED FOR IN ARTICLE 316 OF THE SPECIAL CONDITIONS OF TENDER FOR CONTRACT NO 6907/EDF/72 , WHICH PROVIDES AS FOLLOWS : ' AFTER LOCAL PROCEDURES FOR THE AMICABLE SETTLEMENT OF DISPUTES HAVE BEEN EXHAUSTED , ALL DISPUTES WILL BE DECIDED FINALLY IN ACCORDANCE WITH THE RULES ON CONCILIATION AND ARBITRATION OF THE INTERNATIONAL CHAMBER OF COMMERCE BY ONE OR MORE ARBITRATORS APPOINTED IN ACCORDANCE WITH THOSE RULES . '
13 ON 26 SEPTEMBER 1978 THE COMMISSION ACKNOWLEDGED RECEIPT OF THAT CLAIM IN THE FOLLOWING TERMS : ' THE CLAIM ANNEXED TO YOUR LETTER NO 441/78 OF 23 JUNE 1978 HAS BEEN SENT TO THE DELEGATE OF THE COMMISSION SO THAT HE CAN INVESTIGATE WITH THE MALAGASY AUTHORITIES WHETHER A DECISION HAS BEEN TAKEN LOCALLY . I WOULD POINT OUT THAT ALL CORRESPONDENCE CONCERNING THIS DISPUTES HOULD BE SENT IN THE FIRST INSTANCE TO THE MALAGASY AUTHORITIES , WHOSE FUNCTION IT IS TO DECIDE ON THE MERITS OF THE CLAIM FOR COMPENSATION , WHILST THE FUND CAN INTERVENE ONLY AT THE REQUEST OF THE MALAGASY GOVERNMENT . '
14 IN A LETTER OF 21 SEPTEMBER 1979 ADDRESSED TO THE SECRETARY- GENERAL OF THE MALAGASY MINISTRY OF PUBLIC WORKS , THE APPLICANT INITIATED THE PROCEDURE LAID DOWN IN ARTICLE 316 OF THE SPECIAL CONDITIONS OF TENDER BY GIVING THE NAME OF THE ARBITRATOR WHOM IT HAD CHOSEN AND ASKING THE MALAGASY AUTHORITIES TO APPOINT THEIR ARBITRATOR , WHICH THEY DID IN A LETTER DATED 21 NOVEMBER 1979 . THE ARBITRATORS THUS APPOINTED MET AND CONCLUDED THAT , IN ACCORDANCE WITH ARTICLE 316 OF THE SPECIAL CONDITIONS OF TENDER , LOCAL CONCILIATION PROCEDURES SHOULD FIRST BE EXHAUSTED . HOWEVER , THE APPLICANT ABANDONED THOSE PROCEDURES ON THE GROUND THAT THERE WAS NO DISPUTE BETWEEN IT AND THE MALAGASY AUTHORITIES OVER ITS RIGHT TO COMPENSATION FOR THE LOSS WHICH IT ALLEGED THAT IT HAD SUFFERED .
15 IN A LETTER DATED 16 JANUARY 1979 , THE CHIEF PROJECT ENGINEER REQUESTED THE APPLICANT TO TAKE PART IN NEGOTIATIONS IN ORDER TO ARRIVE AT A COMPROMISE ON THE BASIS OF A SOLUTION CONSISTING OF A GENERAL REDRAFTING OF THE PRICE-REVISION FORMULA AFFECTING ALL THE FACTORS THEREIN . THE APPLICANT REJECTED THE ADOPTION OF SUCH A FORMULA IN A LETTER DATED 12 MARCH 1979 AND CONTINUED TO WRITE TO THE CHIEF PROJECT ENGINEER - ON 10 DECEMBER 1979 , 8 AUGUST 1980 , 19 JANUARY 1981 AND 14 JANUARY 1982 - DEMANDING PAYMENT OF THE CONTESTED AMOUNTS ON THE BASIS OF THE REVISION OF THE UNIT PRICES .
16 AT THAT STAGE THE APPLICANT BROUGHT THE PRESENT ACTION , WHICH WAS REGISTERED AT THE COURT ON 20 JANUARY 1982 , CLAIMING COMPENSATION FOR DAMAGE ASSESSED AT 487 385 969 MALAGASY FRANCS , PLUS 12% INTEREST AS FROM THE DATE OF THE APPLICATION .
17 IN A DOCUMENT DATED 2 APRIL 1982 THE COMMISSION RAISED AN OBJECTION OF INADMISSIBILITY AND REQUESTED THE COURT TO GIVE A DECISION ON THAT OBJECTION WITHOUT GOING INTO THE SUBSTANCE OF THE CASE . BY ORDER OF 22 SEPTEMBER 1982 THE COURT REFUSED THAT REQUEST .
18 THE COMMISSION SUBMITS THAT THE AMOUNT CLAIMED BY THE APPLICANT BY WAY OF COMPENSATION IS IN FACT A CONTRACTUAL DEBT BECAUSE IT ARISES OUT OF THE CONTRACT CONCLUDED BETWEEN IT AND THE MALAGASY STATE AND MAY NOT BE RECOVERED FROM A THIRD PARTY WHO IS NOT PARTY TO THAT CONTRACT . SUCH A DEBT MAY BE RECOVERED ONLY FROM THE APPLICANT ' S CO-CONTRACTOR , THAT IS TO SAY THE MALAGASY STATE , WHICH ACCORDING TO THE REGULATIONS AND CONTRACTUAL PROVISIONS APPLICABLE IS RESPONSIBLE FOR IMPLEMENTING THE CONTRACT . ANY DISPUTES WHICH ARISE IN THAT CONNECTION MAY BE DETERMINED SOLELY BY THE ARBITRATION PROCEDURE PROVIDED FOR THAT PURPOSE BY ARTICLE 316 OF THE SPECIAL CONDITIONS OF TENDER .
19 IN REPLY TO THAT OBJECTION OF INADMISSIBILITY THE APPLICANT MAINTAINS THAT ITS ACTION WAS RIGHTLY BROUGHT AGAINST THE COMMISSION , WHICH MUST BE REGARDED AS BEARING EXCLUSIVE RESPONSIBILITY FOR THE DAMAGE ALLEGED . IT CONSIDERS THAT THERE IS NO DISPUTE BETWEEN IT AND THE MALAGASY AUTHORITIES , WHICH WERE PREPARED TO ADOPT THE MEASURES NEEDED TO MEET ITS CLAIM ; SINCE IT HAS NO DISPUTE WITH THE CONTRACTING AUTHORITY BUT COMPLAINS INSTEAD OF UNLAWFUL CONDUCT ON THE PART OF THE COMMISSION , A FINDING THAT ITS APPLICATION IS INADMISSIBLE WOULD LEAD TO A DENIAL OF JUSTICE IN ITS CASE .
20 IT SHOULD BE STATED IN THIS CONNECTION THAT THE SUBMISSIONS OF INADMISSIBILITY PUT FORWARD BY THE COMMISSION ARE RELATED TO THE SUBSTANCE OF THE CASE AND WILL BE CONSIDERED HEREINAFTER .
21 AS TO THE SUBSTANCE , THE APPLICANT CLAIMS THAT THE ALLEGED DAMAGE AROSE FROM THE CONDUCT OF THE COMMISSION , WHICH FAILED TO HONOUR THE COMMITMENT ORIGINALLY ENTERED INTO BY THE DELEGATE OF THE FUND AS REGARDS THE REQUESTED REVISION , AND SUBSEQUENTLY REFUSED TO ACCEPT THAT IT WAS CONCERNED BY THE NEED TO REVISE THE PRICES OF BITUMINOUS PRODUCTS , AND ADVISED IT TO APPLY TO THE NATIONAL AUTHORITIES . THAT ACTION CONSTITUTED A BREACH OF ITS LEGAL OBLIGATIONS AND OF THE PRINCIPLES OF THE PROTECTION OF LEGITIMATE EXPECTATIONS , LEGAL CERTAINTY AND PROPORTIONALITY .
22 ACCORDING TO THE APPLICANT , THE COMMISSION ' S BREACH OF ITS LEGAL OBLIGATIONS RESULTED FROM THE FACT THAT , AFTER IT HAD BEEN INFORMED THROUGH ITS DELEGATE OF THE POSITION ADOPTED BY THE MALAGASY AUTHORITIES AND AFTER IT HAD RECOGNIZED THAT MURRI HAD SUFFERED DAMAGE AND AGREED TO COMPENSATE MURRI AS SOON AS IT HAD ITSELF DECIDED UPON A METHOD OF SETTLEMENT , THE COMMISSION FAILED TO DO SO , IN SPITE OF THE FACT THAT THE MALAGASY AUTHORITIES ADDRESSED TO IT A PROPOSAL FOR A COMMITMENT TO INCUR SUPPLEMENTARY EXPENDITURE IN AN ADMINISTRATIVE ORDER OF 12 MARCH 1976 ADDRESSED TO THE DELEGATE OF THE FUND . THE COMMISSION THUS INFRINGED THE RULES WHICH IT HAD ITSELF LAID DOWN AND FAILED TO RESPECT THE RIGHTS AND SAFEGUARDS WHICH IT HAD ITSELF INTRODUCED FOR THE BENEFIT OF CONTRACTORS .
23 THE APPLICANT ALSO CLAIMS THAT THE COMMISSION INFRINGED THE PRINCIPLES OF THE PROTECTION OF LEGITIMATE EXPECTATIONS AND OF LEGAL CERTAINTY BY REJECTING , IN THE LETTER OF 26 SEPTEMBER 1978 , THE APPLICANT ' S REQUEST FOR THE AMOUNT OF THE PRICE REVISION TO BE SETTLED , NOTHWITHSTANDING THE FACT THAT , THROUGHOUT THE PERIOD WHEN THE WORK WAS BEING CARRIED OUT , IT HAD PROMISED TO MAKE A SETTLEMENT IN REPLY TO THE LETTERS SENT BY THE APPLICANT TO THE DELEGATE OF THE FUND OR TO THE MALAGASY AUTHORITIES WITH A COPY TO THE DELEGATE OF THE FUND .
24 IN ORDER TO ESTABLISH THAT THE COMMISSION INFRINGED THE PRINCIPLE OF PROPORTIONALITY , THE APPLICANT MAINTAINS THAT , BY COMPELLING IT TO BEAR THE COST OF THE RISE IN THE PRICE OF BITUMINOUS PRODUCTS , THE COMMISSION IMPOSED UPON IT FINANCIAL BURDENS WHICH WERE DISPROPORTIONATE TO ITS OBLIGATION TO EXECUTE THE WORK , WHEN THOSE COSTS SHOULD HAVE BEEN BORNE BY THE CONTRACTING AUTHORITY AND CONSEQUENTLY BY THE AUTHORITY WHICH WAS RESPONSIBLE FOR FINANCING THE WORK .
25 LASTLY , CONCERNING THE CAUSAL LINK BETWEEN THE UNLAWFUL CONDUCT OF THE COMMISSION AND THE ALLEGED DAMAGE , THE APPLICANT ASSERTS THAT IT WAS THE COMMISSION ' S INACTION WHICH DEPRIVED IT OF THE RIGHT TO A REVISION OF THE PRICE OF BITUMINOUS PRODUCTS , A RIGHT WHICH HAD BEEN RECOGNIZED BY THE MALAGASY AUTHORITIES AND BY THE DELEGATE OF THE FUND , WHO WAS ALWAYS KEPT INFORMED OF ITS CLAIMS .
26 THE COMMISSION CONTENDS , FIRST , THAT THE APPLICATION IS OUT OF TIME BY VIRTUE OF ARTICLE 43 OF THE STATUTE OF THE COURT . IT CONSIDERS THAT THE PERIOD OF FIVE YEARS PRESCRIBED BY THAT PROVISION HAD EXPIRED WHEN THE APPLICATION WAS LODGED , IN VIEW OF THE FACT THAT THE APPLICANT ALLEGES THAT THE DAMAGE WAS CAUSE BY THE POSITION ADOPTED BY IT IN ITS LETTER OF 26 SEPTEMBER 1978 , IN WHICH IT REQUESTED THE APPLICANT TO REFER THE PROBLEM OF PRICE REVISION TO THE COMPETENT NATIONAL AUTHORITIES .
27 ACCORDING TO THE COMMISSION , THAT LETTER CAN ONLY BE REGARDED AS SETTING OUT THE PRINCIPLES GOVERNING THE IMPLEMENTATION OF PROJECTS FINANCED BY THE FUND AND THEREFORE CANNOT HAVE CAUSED THE DAMAGE COMPLAINED OF BY THE APPLICANT , SINCE THAT DAMAGE CLEARLY FLOWED FROM THE RISE IN THE PRICE OF ASPHALT , THE LAST CONSIGNMENT OF WHICH WAS DELIVERED TO THE APPLICANT IN NOVEMBER 1975 , THAT IS TO SAY TWO AND A HALF YEARS BEFORE THE LETTER OF 26 SEPTEMBER 1978 .
28 THE COMMISSION THUS CONSIDERS THAT THE FIVE-YEAR PERIOD PRESCRIBED BY ARTICLE 43 OF THE STATUTE OF THE COURT STARTED TO RUN IN NOVEMBER 1975 OR AT THE LATEST ON 1 DECEMBER 1975 , WHEN THE APPLICANT SUBMITTED TO THE CONTRACTING AUTHORITY AND THE CHIEF PROJECT ENGINEER A SERIES OF DETAILED ACCOUNTS WHICH SET OUT THE EXTENT OF THE DAMAGE . THE LIMITATION PERIOD THUS EXPIRED ON 30 NOVEMBER 1980 .
29 SHOULD THE ACTION NOT BE REGARDED AS OUT OF TIME , THE COMMISSION CONTENDS , IN THE FIRST PLACE , THAT IT HAS NO FOUNDATION IN FACT . IT CONSIDERS THAT ITS DELEGATE NEVER GAVE AN UNDERTAKING TO THE APPLICANT THAT IT WOULD BE PAID THE SUMS CLAIMED AFTER REVISION OF THE UNIT PRICES FOR WORK INVOLVING ASPHALT . THE DOCUMENTS ADDRESSED BY THE MALAGASY AUTHORITIES TO ITS DELEGATE ON 12 MARCH 1976 WERE PURELY INTERNAL AND SHOULD NOT BE REGARDED AS A DECISION BY THE LOCAL AUTHORIZING OFFICER CAPABLE OF CONFERRING ANY RIGHT ON THE APPLICANT . CONSEQUENTLY , BY INFORMING THE APPLICANT IN ITS LETTER OF 26 SEPTEMBER 1978 THAT IT SHOULD ADDRESS ITS CLAIM TO THE MALAGASY AUTHORITIES , THE COMMISSION DID NOT BREACH ANY RIGHT OF THE APPLICANT .
30 ACCORDING TO THE COMMISSION , THE ACTION ALSO HAS NO FOUNDATION IN LAW BECAUSE , EVEN IF THE DELEGATE OF THE FUND HAD INCURRED A COMMITMENT TOWARDS THE APPLICANT , SUCH COMMITMENT COULD NOT BE RELIED UPON AGAINST THE COMMISSION , SINCE THE IMPLEMENTATION OF PROJECTS IS THE RESPONSIBILITY OF THE LOCAL AUTHORITIES , AND IN THIS CASE THE APPLICANT DID NOT RECEIVE ANY DECISION ADOPTED BY THE NATIONAL AUTHORITIES . THE APPLICANT OUGHT TO HAVE REALIZED FROM THE VARIOUS LETTERS WHICH WERE ADDRESSED TO IT BY THE DELEGATE OF THE FUND THAT THE COMMISSION HAD NOT ADOPTED A POSITION IN FAVOUR OF ITS CLAIM .
31 IN ADDITION , AS REGARDS THE EXTENT OF THE ALLEGED DAMAGE , THE COMMISSION CONSIDERS NOT ONLY THAT THE AMOUNT OF COMPENSATION CLAIMED WOULD HAVE BEEN QUITE DIFFERENT IF THE APPLICANT , IN SUBMITTING ITS TENDER , HAD NOT UNDERESTIMATED THE PRICE OF ASPHALT IN ORDER TO OBTAIN THE CONTRACT , BUT ALSO THAT ANY DAMAGE SUFFERED OUGHT TO BE DETERMINED ON THE BASIS OF A RE-ASSESSMENT OF ALL THE REVISION CLAUSES IN THE CONTRACT , TAKING INTO ACCOUNT OTHER FACTORS , SUCH AS THE ITEM ' SALARIES ' , THE APPLICATION OF WHICH ENTAILED A RESULT WHICH WAS EXCESSIVELY FAVOURABLE TO THE APPLICANT . HOWEVER , IN THIS CONNECTION THE COMMISSION ACKNOWLEDGES THAT IF THE MALAGASY STATE WERE HELD LIABLE TO COMPENSATE THE APPLICANT IN AN ARBITRATION AWARD MADE IN ACCORDANCE WITH THE PRESCRIBED PROCEDURE , THE FUND WOULD AUTHORIZE THE PAYMENT OF SUCH COMPENSATION OUT OF ITS RESOURCES .
32 AS REGARDS THE CAUSAL LINK BETWEEN ITS ALLEGED UNLAWFUL ACTION AND THE DAMAGE RELIED UPON , THE COMMISSION MAINTAINS THAT SUCH A LINK HAS NOT BEEN ESTABLISHED IN SO FAR AS THE APPLICANT ASSERTS THAT ITS LIABILITY IS FOUNDED ON PROMISES GIVEN BY THE DELEGATE OF THE COMMISSION , ON THE BASIS OF WHICH THE APPLICANT TOOK DELIVERY OF THE QUANTITY OF ASPHALT NEEDED FOR THE CONTINUATION OF THE WORK . THE APPLICANT WOULD IN ANY EVENT HAVE BEEN BOUND , IN ACCORDANCE WITH THE RELEVANT PROVISIONS OF MALAGASY ADMINISTRATIVE LAW , TO COMPLETE THE WORK WITHIN THE TIME-LIMITS FIXED .
33 AS THE COURT STATED IN ITS JUDGMENT OF 10 JULY 1984 IN CASE 126/83 ( STS CONSORZIO V COMMISSION ( 1984 ) ECR 2769 ), THE MEASURES ADOPTED BY THE COMMISSION ' S REPRESENTATIVES DURING THE PROCEDURE FOR THE CONCLUSION OR IMPLEMENTATION OF CONTRACTS CONCLUDED BY THE STATES ASSOCIATED WITH THE COMMUNITY AND FINANCED BY THE FUND , WHETHER APPROVALS OR REFUSALS TO APPROVE , ENDORSEMENTS OR REFUSALS TO ENDORSE , ARE SOLELY INTENDED TO ESTABLISH WHETHER OR NOT THE CONDITIONS FOR COMMUNITY FINANCING ARE MET . THEY ARE NOT INTENDED TO INTERFERE WITH THE PRINCIPLE THAT THE CONTRACTS IN QUESTION REMAIN NATIONAL CONTRACTS WHICH THE ACP STATES ALONE ARE RESPONSIBLE FOR PREPARING , NEGOTIATING AND CONCLUDING ; NOR COULD THEY HAVE THAT EFFECT .
34 CONSEQUENTLY , AS THE COURT ALSO STATED IN THAT CASE , THE COMMISSION ' S AGENTS MAY NOT DEAL DIRECTLY , IN PLACE OF THE ACP STATES , WITH UNDERTAKINGS WHICH SUBMIT TENDERS FOR OR ARE AWARDED CONTRACTS FINANCED BY THE FUND , AND THOSE UNDERTAKINGS REMAIN OUTSIDE THE EXCLUSIVE DEALINGS CONDUCTED ON THIS MATTER BETWEEN THE COMMISSION AND THE ACP STATES , AND THE MEASURES ADOPTED BY THE COMMISSION ' S REPRESENTATIVES IN THE COURSE OF THE PROCEDURE FOR THE PLACING OR IMPLEMENTATION OF THOSE CONTRACTS CANNOT BE REGARDED AS BEING ADDRESSED TO THEM . SUCH AN UNDERTAKING HAS LEGAL RELATIONS ONLY WITH THE ACP STATE WHICH IS RESPONSIBLE FOR THE CONTRACT , AND MEASURES ADOPTED BY THE REPRESENTATIVES OF THE COMMISSION CANNOT SUBSTITUTE , IN RELATION TO THE UNDERTAKING , A COMMUNITY DECISION FOR THE DECISION OF THE ACP STATE .
35 IT SHOULD , HOWEVER , BE NOTED THAT THOSE CONSIDERATIONS CANNOT AFFECT THE ADDITIONAL REMEDIES AVAILABLE TO ANY UNDERTAKING CONCERNED AGAINST THE COMMISSION UNDER THE PROCEDURES LAID DOWN IN ARTICLE 178 AND THE SECOND PARAGRAPH OF ARTICLE 215 OF THE EEC TREATY .
36 IN THAT CONNECTION IT IS CLEAR FROM THE DOCUMENTS BEFORE THE COURT AND FROM THE ORAL ARGUMENT THAT THE DAMAGE OF WHICH MURRI COMPLAINS RESULTED PRIMARILY FROM THE ULTIMATE REJECTION BY THE MALAGASY AUTHORITIES OF ITS CLAIM FOR THE REVISION OF THE UNIT PRICES CONCERNING ASPHALT FIXED BY THE CONTRACT .
37 THAT CONTRACTUAL DISPUTE HAS NOT YET BEEN SETTLED EITHER BY AGREEMENT BETWEEN THE APPLICANT AND THE MALAGASY REPUBLIC OR BY RECOURSE TO ARBITRATION AS PROVIDED FOR BY ARTICLE 316 OF THE SPECIAL CONDITIONS OF TENDER , BECAUSE , AS WAS POINTED OUT ABOVE , THE APPLICANT DID NOT PURSUE THE ARBITRATION PROCEDURE WHICH IT HAD AT ONE TIME INSTITUTED .
38 UNDER THOSE CIRCUMSTANCES , THE APPLICANT IS UNABLE TO ESTABLISH THAT THE COMMISSION ' S ACTION CAUSED IT TO SUSTAIN DAMAGE DISTINCT FROM THE DAMAGE IN RESPECT OF WHICH IT OUGHT TO HAVE SOUGHT COMPENSATION FROM THE MALAGASY STATE , AND OUGHT STILL TO DO SO IF IT CONSIDERS THAT IT HAS A VALID CLAIM , IN ACCORDANCE WITH THE APPROPRIATE PROCEDURE . SINCE THE APPLIANT HAS SO FAR FAILED TO ESTABLISH THE EXISTENCE OF SUCH DAMAGE , ITS APPLICATION DOES NOT SATISFY ONE OF THE ESSENTIAL CONDITIONS FOR ESTABLISHING THE NON-CONTRACTUAL LIABILITY OF THE COMMUNITY .
39 CONSEQUENTLY , THE APPLICATION MUST BE DISMISSED WITHOUT ITS BEING NECESSARY TO RULE ON THE OTHER ARGUMENTS .