Summary
Parties
Subject of the case
Grounds
Decision on costs
Operative part
Keywords
1 . PROCEDURE - APPLICATION - JURISDICTION OF THE COURT - ARBITRATION CLAUSE CONTAINED IN A CONTRACT - SUBMISSION OF THE APPLICATION - FORM
( EAEC TREATY , ARTICLE 153 )
2 . REQUEST FOR TENDERS - EVALUATION - FACTORS - DISCRETION OF THE ADMINISTRATIVE AUTHORITY - PRICE - HIGHER THAN THE OTHER OFFERS - THAT OFFER CHOSEN - MISUSE OF POWERS - ABSENCE THEREOF
( FINANCIAL REGULATION OF 1973 , ARTICLE 59 ( 2 ))
3 . PROCEDURE - APPLICATION - GROUNDS - MISUSE OF POWERS - EVIDENCE
4 . PROCEDURE - COSTS - ORDER THAT THE PARTIES BEAR THEIR OWN COSTS - EXCEPTIONAL CIRCUMSTANCE
( RULES OF PROCEDURE , ARTICLE 69 ( 3 ))
Summary
1 . THE SUBMISSION OF AN APPLICATION UNDER ARTICLE 153 OF THE EAEC TREATY IS VALID IF THAT APPLICATION IS ACCOMPANIED BY THE CONTRACTUAL DOCUMENTS AND THE CORRESPONDENCE REFERRING THERETO .
2 . THERE IS NO PROVISION WHICH STIPULATES THAT PRICE MUST CONSTITUTE THE ONLY DECISIVE FACTOR IN THE EVALUATION OF THE FINANCIAL AND TECHNICAL ASPECTS OF THE OFFERS . THEREFORE IF , IN A PROCEDURE FOR REQUEST FOR TENDERS , THE ADMINISTRATIVE AUTHORITY CHOOSES AN UNDERTAKING WHOSE OFFER IS HIGHER IN PRICE THAN THE OTHERS , THAT FACT DOES NOT OF ITSELF CONSTITUTE A MISUSE OF POWERS .
3 . IN ORDER TO FIND THAT THERE HAS BEEN A MISUSE OF POWERS , IT MUST BE SHOWN THAT THE REASONS FOR THE ADMINISTRATIVE AUTHORITY ' S CHOICE WERE EXTRANEOUS TO THE INTERESTS OF THE SERVICE .
4 . IF , IN THE COURSE OF A PROCEDURE OF REQUEST FOR TENDERS , A PARTY HAD GOOD REASON TO CONSIDER ITSELF JUSTIFIED IN ASKING THE ADMINISTRATIVE AUTHORITY TO EXPLAIN BEFORE THE COURT THE GROUNDS FOR ITS CHOICE , THIS CONSTITUTES AN EXCEPTIONAL CIRCUMSTANCE GIVING GROUNDS FOR AN ORDER THAT THE PARTIES BEAR THEIR OWN COSTS .
Parties
IN CASE 23/76 ,
LUIGI PELLEGRINI & C . S.A.S ., VARESE , REPRESENTED AND ASSISTED BY ATTILIO SPOZIO AND ALESSANDRO MIGLIAZZA , ADVOCATES AT HIGHER ITALIAN COURTS , WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT THE CHAMBERS OF MR ARENDT , 34 B/IV RUE PHILLIPPE II ,
APPLICANT ,
V COMMISSION OF THE EUROPEAN COMMUNITIES , REPRESENTED BY GIANLUIGI CAMPOGRANDE , A MEMBER OF ITS LEGAL DEPARTMENT , WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT THE OFFICES OF MARIO CERVINO , LEGAL ADVISER TO THE COMMISSION , PLACE DE LA GARE ,
DEFENDANT ,
AND
FLEXON-ITALIA SPA , VENICE ( MESTRE ), REPRESENTED BY G . B . GASPARINI OF THE VENICE BAR ,
DEFENDANT ,
Subject of the case
APPLICATION FOR THE IMPLEMENTATION OF A CONTRACT CONCLUDED BETWEEN THE APPLICANT AND THE COMMISSION AND FOR COMPENSATION FOR THE DAMAGE SUFFERED BECAUSE OF THE FAILURE TO OBSERVE THE PERIOD OF NOTICE , SUBMITTED TO THE COURT OF JUSTICE PURSUANT TO AN ARBITRATION CLAUSE WITHIN THE MEANING OF ARTICLE 153 OF THE EAEC TREATY AND FOR THE ANNULMENT OF THE DECISION BY THE COMMISSION PLACING WITH THE FLEXON-ITALIA UNDERTAKING A CONTRACT FOR THE CLEANING OF THE ESTABLISHMENT AT ISPRA .
Grounds
1 BY AN APPLICATION REGISTERED AT THE COURT REGISTRY ON 9 MARCH 1976 , THE LUIGI PELLEGRINI & C . S.A.S . UNDERTAKING , RESPONSIBLE SINCE 1960 FOR THE CLEANING WORK AT THE NUCLEAR RESEARCH CENTRE AT ISPRA , REQUESTS , FIRST , THAT THE COMMISSION SHOULD BE ORDERED TO PAY IT DAMAGES FOR BREACH OF CONTRACTUAL COMMITMENTS AND , SECONDLY , THE ANNULMENT OF THE COMMISSION ' S DECISION CONFERRING THE PERFORMANCE OF THE CLEANING WORK ON A RIVAL FIRM .
2 HAVING DECIDED IN 1971 TO BRING THE PREVIOUS CONTRACTUAL COMMITMENTS TO AN END , THE COMMISSION ISSUED A REQUEST FOR TENDERS WITH A VIEW TO AWARDING A NEW CONTRACT FOR THE CLEANING OF THE SAID ESTABLISHMENT FOR A PERIOD OF 36 MONTHS FROM 1 JANUARY 1972 , ON THE BASIS OF A DRAFT AGREEMENT DRAWN UP BY IT .
3 THE APPLICANT DULY TOOK PART IN THE REQUEST FOR TENDERS , BUT ITS TENDER WAS NOT ACCEPTED .
4 WHEN A COMPETING FIRM , WHOSE OFFER HAD BEEN ACCEPTED , REPUDIATED THE CONTRACT BEFORE BEGINNING PERFORMANCE OF IT , THE COMMISSION ORALLY REQUESTED THE APPLICANT TO CARRY OUT THE CLEANING OF THE ESTABLISHMENT FOR THE MONTHS OF JANUARY AND FEBRUARY 1972 UNDER THE TERMS AND CONDITIONS SET OUT IN THE ' DRAFT AGREEMENT ' .
5 THE APPLICANT ACCEPTED , AND THE AGREEMENT THUS ESTABLISHED WAS CONFIRMED BY A LETTER OF 20 DECEMBER 1971 FROM THE COMMISSION WHICH EXPRESSLY REFERRED TO THE ' SERVICES DEFINED IN THE DRAFT AGREEMENT ' .
6 THIS AGREEMENT WAS RENEWED ON SUCCESSIVE OCCASIONS , EACH TIME FOR PERIODS OF ONE , TWO OR THREE MONTHS , UNTIL DECEMBER 1975 .
7 FOLLOWING A FRESH REQUEST FOR TENDERS IN WHICH THE APPLICANT ONCE AGAIN TOOK PART , THE COMMISSION ORALLY INFORMED THE APPLICANT , IN DECEMBER 1975 , THAT A COMPETING FIRM HAD WON THE CONTRACT AND ASKED THE APPLICANT TO CONTINUE TO CARRY OUT THE CLEANING OF THE ESTABLISHMENT DURING JANUARY 1976 IN ORDER TO FACILITATE THE TRANSITION .
THE ACTION ON THE CONTRACT
JURISDICTION
8 THE APPLICANT TAKES THE VIEW THAT THE COURT HAS JURISDICTION TO GIVE A RULING ON THE FIRST HEAD OF ITS CONCLUSIONS BY VIRTUE OF AN ARBITRATION CLAUSE CONTAINED IN ARTICLE 15 OF THE ' DRAFT AGREEMENT ' .
IT IS EXPRESSLY PROVIDED IN ARTICLE 15 OF THE ' DRAFT AGREEMENT ' THAT THE COURT SHALL HAVE JURISDICTION , PURSUANT TO ARTICLE 153 OF THE EAEC TREATY , TO DECIDE ANY DISPUTES BETWEEN THE COMMISSION AND THE CONTRACTOR RELATING TO THE SAID AGREEMENT , THE AGREEMENT BEING MOREOVER GOVERNED BY ITALIAN LAW .
9 BOTH PARTIES AGREE THAT THE AGREEMENT REACHED BETWEEN THEM IN DECEMBER 1971 INVOLVED CONFERRING JURISDICTION ON THE COURT .
HOWEVER , WHILE DECLARING ITSELF PREPARED TO ACCEPT THIS JURISDICTION , THE COMMISSION EXPRESSED A DOUBT AS TO THE FORMAL VALIDITY OF THE CLAUSE CONFERRING JURISDICTION .
10 ARTICLE 38 ( 6 ) OF THE RULES OF PROCEDURE STIPULATES THAT ANY APPLICATION SUBMITTED UNDER ARTICLE 153 OF THE EURATOM TREATY SHALL BE ACCOMPANIED BY A COPY OF THE ARBITRATION CLAUSE .
SINCE THESE REQUIREMENTS HAVE BEEN FULFILLED IN THIS INSTANCE BY THE PRODUCTION OF THE CONTRACTUAL DOCUMENTS , CONSISTING IN THE ' DRAFT AGREEMENT ' AND THE CORRESPONDENCE REFERRING THERETO , THE BRINGING OF THE MATTER BEFORE THE COURT OF JUSTICE UNDER ARTICLE 153 IS VALID .
SUBSTANCE OF THE CASE
11 SINCE THE LETTER OF 20 DECEMBER 1971 EXPRESSLY REFERRED TO THE SERVICES LAID DOWN IN THE ' DRAFT AGREEMENT ' , THE TERMS AND CONDITIONS OF THAT DRAFT WERE TO GOVERN THE CONTRACTUAL RELATIONSHIP IN SO FAR AS THEY WERE NOT EXCLUDED OR AMENDED BY THE EXPRESS TERMS OF THE LETTERS .
THUS THE CLAUSE IN ARTICLE 2 WHICH FIXED THE TERM OF THE CONTRACT AT 36 MONTHS WAS EXCLUDED .
12 FIRST , THE APPLICANT INVOKED ARTICLE 3 OF THE ' DRAFT AGREEMENT ' WHICH RESERVES TO THE COMMISSION A RIGHT OF UNILATERAL REPUDIATION SUBJECT TO THREE MONTHS ' NOTICE , IN ORDER TO MAINTAIN THAT THE COMMISSION WAS OBLIGED TO GIVE IT SUCH NOTICE BEFORE PUTTING AN END TO THE CONTRACTUAL RELATIONSHIP AT ISSUE .
13 EVEN IF THIS CLAUSE APPLIES , UNDER CERTAIN CIRCUMSTANCES , IN CASES OF ANTICIPATORY REPUDIATION OF THE CONTRACT , IT CANNOT COME INTO PLAY IN THIS INSTANCE .
14 IN FACT THE LETTER OF 18 SEPTEMBER 1975 SPECIFIES THAT THE APPLICANT REMAINED RESPONSIBLE FOR THE CLEANING WORK ONLY UNTIL 31 DECEMBER 1975 .
15 FURTHERMORE , THE APPLICANT WAS NOTIFIED , BY A LETTER OF 18 SEPTEMBER 1975 , OF THE ISSUE OF A REQUEST FOR TENDERS , IN WHICH IT TOOK PART BY SUBMITTING AN OFFER TO THE DIRECTORATE OF THE CENTRE .
16 UNDER THESE CIRCUMSTANCES , THE CONTRACTUAL RELATIONSHIP WAS TO COME TO AN END ON 31 DECEMBER 1975 .
17 SECONDLY , ON THE BASIS OF ITALIAN LAW , WHICH APPLIES TO THE CONTRACT BY VIRTUE OF ARTICLE 15 ( 1 ) OF THE ' DRAFT AGREEMENT ' , THE APPLICANT SEEKS TO RELY UPON THE PROVISIONS OF ARTICLE 1563 ( 2 ) OF THE ITALIAN CIVIL CODE .
18 UNDER THAT PROVISION , WHICH RELATES TO CONTRACTS OF ' SOMMINISTRAZIONE ' ( SUPPLY ), IF THE PARTY ENTITLED TO RECEIVE THE SUPPLY HAS THE RIGHT TO FIX THE DATES OF EACH OCCASION ON WHICH SERVICES ARE TO BE PROVIDED , HE MUST GIVE REASONABLE ADVANCE NOTICE INFORMING THE PARTY PROVIDING THE SERVICES OF SUCH DATES .
19 EVEN IF THIS PROVISION WERE APPLICABLE TO THE CONTRACT IN QUESTION , THE APPLICANT MUST HAVE KNOWN , FROM THE MOMENT WHEN THE COMMISSION HAD INFORMED IT IN SEPTEMBER 1975 THAT ITS SERVICES WOULD NO LONGER BE REQUIRED AFTER 31 DECEMBER 1975 AND THAT A REQUEST FOR TENDERS HAD BEEN ISSUED WITH A VIEW TO A NEW CONTRACT , THAT THE CONTRACTUAL RELATIONSHIP WOULD EXPIRE ON 31 DECEMBER 1975 , THAT IS IN THREE MONTHS ' TIME .
20 AS THAT PERIOD CORRESPONDS TO THE PERIOD FIXED IN THE ' DRAFT AGREEMENT ' IN THE EVENT OF ANTICIPATORY REPUDIATION , IT MUST BE CONSIDERED AS REASONABLE NOTICE .
21 WHEN IN DECEMBER 1975 THE APPLICANT WAS APPROACHED BY THE COMMISSION WITH A VIEW TO CARRYING OUT PROVISIONALLY THE CLEANING OF THE ESTABLISHMENT AT ISPRA DURING JANUARY 1976 IN ORDER TO ENABLE THE TASKS TO BE TRANSFERRED TO THE NEW COMPANY , THE COMMISSION WAS NOT ACTING IN THE EXERCISE OF A RIGHT CONFERRED UPON IT BY THE ' DRAFT AGREEMENT ' .
BY THAT MEANS , IT WAS PROPOSING , FOR A SHORT PERIOD , A NEW FIXED-TERM CONTRACT WHICH PELLEGRINI ACCEPTED .
22 ACCORDINGLY , IN SO FAR AS THE APPLICATION IS BASED UPON THE ALLEGED BREACH OF THE CONTRACT , IT MUST BE DISMISSED AS UNFOUNDED .
THE APPLICATION FOR ANNULMENT
23 THE APPLICANT SEEKS THE ANNULMENT OF THE MEASURE BY WHICH THE COMMISSION DECIDED TO CONCLUDE THE NEW CLEANING CONTRACT FOR THE ESTABLISHMENT AT ISPRA WITH FLEXON-ITALIA .
IT ALLEGES THAT THE ACT IS VITIATED BY MISUSE OF POWERS OR AT LEAST BY NEGLIGENCE .
24 IN THIS CONNEXION , IT BASES ITSELF UPON THE FACT THAT THE TENDER ACCEPTED WAS 50 % HIGHER THAN ALL THE OTHERS , AND THAT THE ONLY REASONS WHICH THE COMMISSION GAVE FOR ITS DECISION AND WHICH APPEAR IN THE COMPULSORY OPINION OF THE PURCHASES AND CONTRACTS ADVISORY COMMITTEE WERE IRRELEVANT WITH REGARD TO THE CHOICE OF AN UNDERTAKING CARRYING OUT THE CLEANING OF THE ESTABLISHMENT AT ISPRA ALONE .
25 AS THE APPLICANT HAD CARRIED OUT THE CLEANING SERVICE FOR MANY YEARS IN A PERFECTLY SATISFACTORY MANNER , AS EMERGES FROM THE ASSESSMENTS MADE BY THE DIRECTORATE OF THE ESTABLISHMENT AT ISPRA , THE TRUE PURPOSE OF THE PROCEDURE OF REQUEST FOR TENDERS WAS TO REMOVE THE APPLICANT AND TO OBTAIN FOR FLEXON AN UNDUE ADVANTAGE .
26 UNDER ARTICLE 59 ( 2 ) OF THE FINANCIAL REGULATION OF 1973 ( OJ L 116 , 1973 , P . 15 ) THE ADMINISTRATIVE AUTHORITY MAY FREELY CHOOSE THE OFFER ' THOUGHT TO BE THE MOST ATTRACTIVE ' , WHICH LEAVES IT A CERTAIN MARGIN OF DISCRETION .
27 THIS PROVISION DOES NOT STIPULATE THAT THE PRICE MUST CONSTITUTE THE ONLY DECISIVE FACTOR IN THE EVALUATION OF THE FINANCIAL AND TECHNICAL ASPECTS OF THE OFFERS .
28 IN A PROCEDURE FOR REQUEST FOR TENDERS , THE FACT THAT THE COMMISSION CHOSE AN UNDERTAKING WHOSE OFFER WAS HIGHER IN PRICE THAN THE OTHERS DOES NOT OF ITSELF CONSTITUTE A MISUSE OF POWERS .
29 THE REASONS STATED BY THE COMMISSION TO JUSTIFY ITS CHOICE , IN PARTICULAR THE STABILITY OF EMPLOYMENT WHICH THE CHOSEN UNDERTAKING WAS CAPABLE OF OFFERING TO ITS WORKERS THROUGH ITS ABILITY TO TRANSFER THEM TO OTHER TASKS , CAME WITHIN THE CONSIDERATIONS OF A TECHNICAL NATURE WHICH IT COULD TAKE INTO ACCOUNT UNDER ARTICLE 59 OF THE FINANCIAL REGULATION FOR THE PURPOSE OF MAKING ITS CHOICE .
30 IN ORDER TO FIND THAT THERE HAS BEEN A MISUSE OF POWERS , IT WOULD HAVE TO BE SHOWN THAT THE REASONS FOR THE COMMISSION ' S CHOICE WERE EXTRANEOUS TO THE INTERESTS OF THE SERVICE .
ALTHOUGH THE APPLICANT ' S STATEMENTS MAY GIVE RISE TO DOUBTS IN THIS CONNEXION , IT HAS NONETHELESS NOT PROVED THIS FACT SUFFICIENTLY IN LAW .
THE ADMISSIBILITY OF THE CONCLUSIONS DIRECTED AGAINST FLEXON-ITALIA
31 THE APPLICANT BROUGHT AN ACTION AGAINST FLEXON-ITALIA SPA AT THE SAME TIME AS AGAINST THE COMMISSION .
SINCE THE SAID COMPANY IS NOT A PARTY TO THE ARBITRATION CLAUSE WHICH GOVERNS THE FIRST HEAD OF THE APPLICATION , THE COURT HAS NO JURISDICTION WITH REGARD TO IT .
32 AS REGARDS THE SUBMISSIONS FOR ANNULMENT BASED ON ARTICLE 146 OF THE EAEC TREATY , THE ONLY POSSIBLE DEFENDANT IS THE INSTITUTION FROM WHICH THE CONTESTED MEASURE EMANATES .
33 THEREFORE , IN SO FAR AS THE ACTION IS DIRECTED AGAINST THE COMPANY FLEXON-ITALIA , IT IS NOT ADMISSIBLE .
Decision on costs
COSTS
34 ARTICLE 69 ( 2 ) OF THE RULES OF PROCEDURE PROVIDES THAT THE UNSUCCESSFUL PARTY SHALL BE ORDERED TO PAY THE COSTS IF THEY HAVE BEEN ASKED FOR IN THE SUCCESSFUL PARTY ' S PLEADING .
SINCE FLEXON DID NOT SUBMIT ANY PLEADINGS IN THIS CONNEXION , IT MUST BEAR ITS OWN COSTS .
35 AS REGARDS THE COSTS OF THE COMMISSION , THE SUCCESSFUL PARTY , ARTICLE 69 ( 3 ) OF THE SAID RULES PROVIDES THAT , WHERE THE CIRCUMSTANCES ARE EXCEPTIONAL , THE COURT MAY ORDER THAT THE PARTIES BEAR THEIR OWN COSTS .
IN THIS INSTANCE , SINCE IT HAD BEEN INFORMED BY THE COMMISSION THAT ITS WORK IN THE PAST HAD BEEN ENTIRELY SATISFACTORY AND HAD LEARNED THAT THE PRICES OF FLEXON WERE MARKEDLY HIGHER THAN ITS OWN , THE APPLICANT HAD GOOD REASON TO CONSIDER ITSELF JUSTIFIED IN ASKING THE COMMISSION TO EXPLAIN BEFORE THE COURT THE GROUNDS FOR ITS CHOICE .
IN THESE CIRCUMSTANCES , INSTEAD OF ORDERING THE APPLICANT TO BEAR ALL THE COSTS , IT SHOULD BE ORDERED ONLY TO BEAR ITS OWN COSTS .
Operative part
ON THESE GROUNDS ,
THE COURT
HEREBY :
1 . DISMISSES THE ACTION ;
2 . ORDERS EACH PARTY TO BEAR ITS OWN COSTS .
Full & Egal Universal Law Academy