Information Note on the Court’s case-law No. 127
February 2010
Sud Parisienne de Construction v. France - 33704/04
Judgment 11.2.2010 [Section V]
Article 1 of Protocol No. 1
Article 1 para. 1 of Protocol No. 1
Deprivation of property
Legislative amendment with retrospective effect to rate of default interest applicable to public-procurement contracts: no violation
Facts – In 1986 Assistance publique-Hôpitaux de Paris (AP-HP) approved the applicant company as a subcontractor in construction work on a hospital. An agreement provided, among other things, that, if the administrative authorities delayed payment for the work performed, default interest would be payable at a rate of 17%. In 1987 the subcontract was terminated. On 3 June 1997 AP-HP was ordered to pay the applicant company directly the principal sums due and the contractual default interest for the work performed before the subcontract was terminated. In the course of the proceedings in the administrative courts concerning the dispute between the applicant company and AP-HP over the execution of the payment order, a Budget Amendment Act was passed and the statutory rate of default interest was reduced and standardised for all public-procurement contracts, not only for future contracts but also for those concluded before 1993. In 1998 the applicant company applied to the Administrative Court of Appeal, seeking the execution of the judgment of 3 June 1997. The court reduced the interest payable to the applicant company to the new statutory level of 11.5% and the Conseil d’Etat upheld that position.
Law – Article 1 of Protocol No. 1: The applicant company had had a pecuniary interest in the form of the principal debt and the contractual default interest payable on it. The method for calculating interest for late payment had been amended shortly before the judgment of 3 June 1997 had been delivered. Accordingly, the applicant company had a possession within the meaning of the first sentence of Article 1 of Protocol No. 1, which was thus applicable in the present case. The principal debt, which had been paid, had not been affected in any way by the Act in question. With regard to the default interest, however, the Act had resulted in interference by the State on account of its retrospective effect. The reasons given by the Government to justify the legislative amendment appeared relevant, sufficient and convincing; the main purpose of the Act in question had been to rectify an anomaly caused by external economic circumstances, and to standardise, by means of a uniform interest rate, the method for calculating outstanding interest, irrespective of the date on which the public-procurement contract had been signed. The Act in question had therefore been justified on compelling grounds in the general interest. The interference had been in the public interest. However, the rate of default interest had been set with retrospective effect. The Court had previously held that the passing of legislation with retrospective effect was disproportionate where it had the consequence of destroying the substance of the case and thus settling the issue in dispute before the courts. It considered, however, that the present case concerned a different situation. The interference had concerned only part of the interest payable to the applicant company for delayed payment, since it had related solely to the setting of the interest rate. The legislative provision in question had not impeded the execution of the judgment of 3 June 1997, in so far as the national courts dealing with the case had found in the applicant company’s favour as regards the principal sum. As to the default interest payable, the Act had not undermined the applicant company’s right to compensation for the loss sustained as a result of the delayed payment but had rectified, at a rate reasonably linked to inflation, a deviation resulting from the intervening change in monetary conditions. The measure in issue had therefore not impaired the very essence of the applicant company’s right of property. The interference with its possessions had been proportionate and had not upset the fair balance between the demands of the general interest and the requirements of the protection of the individual’s fundamental rights.
Conclusion: no violation (unanimously).
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This summary by the Registry does not bind the Court.
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