C-118/83

ORDER OF 5. 8. 1983 — CASE 118/83 R

In Case 118 / 83 R

1. CMC COOPERATIVA MURATORI E CEMENTISTI , Ravenna ( Italy ),

2. CRC COOPERATIVA REGGIANA COSTRUZIONI , Reggio Emilia ( Italy ),

3. CMB COOPERATIVA MURATORI E BRACCIANTI, Carpi , Modena ( Italy ),

CMC v COMMISSION

represented by Professor Giorgio Bernini, Avvocato and Procuratore, member of the Bologna Bar, and Stanley A. Crossick, Solicitor of the Supreme Court of England and Wales, with an address for service in Luxem¬ bourg at the Chambers of Ernest Arendt, 34 B Rue Philippe-Il,

ORDER

Facts and background to the dispute

1. By application lodged at the Court Cooperativa Reggiana Costruzioni, Registry on 28 June 1983, the established at Reggio Emilia in Italy, and Cooperativa Muratori e Cementisti, the Cooperativa Muratori e Braccianti, , established at Ravenna in Italy, the established at Carpi, Modena, in Italy,

ORDER OF 5. 8. 1983 — CASE 118/83 R

Tenderers were also Council Regulation (EEC) No 3225/80 required to demonstrate their current of 25 November 1980 (Official Journal financial capability (Clause IT-1 , 4d). 1980, L 347, p. 1) (hereinafter referred to as "the Convention") and to be financed by the European Development 4. Tenderers' qualifications were to be Fund (hereinafter referred to as "the examined by a tender committee ap Fund").

dixes. It was also stated that the suc 2. It . appears from the file that in cessful tenderer would be informed of December 1981 the Ethiopian the acceptance of his tender and would Government, acting through the be invited to send to Addis Ababa a rep intermediary of the Ethiopian Electric resentative with a proper power of Light and Power Authority (EELPA) in attorney for the purpose of executing a its capacity as "employer", issued an contract (Clause IT-11). invitation to tender in respect of the construction works relating to the diversion of the River Amarti, involving 6. The time-limit specified for the the diversion of the river, on the central submission of tenders was 5 November plateau approximately 190 kilometres 1982 (see corrigendum to the invitation north-west of Addis Ababa, into the to tender published in Official Journal, existing Finchaa reservoir. The invitation S 193, p. 3, of 6. 10. 1982).

CMC v COMMISSION

by Boskalis Westminster-Baresel, a 'Tou are hereby invited to come to our company incorporated under English head office in Addis Ababa Ethiopia for law. contract negotiations of the above project. Negotiation is scheduled to start on March 14/1983 at our head office in 7. It should be noted that Rush and Addis Ababa. Tompkins BV submitted its tender only in the form of a telex communication, since the dispatch of the tender documents to Addis Ababa had been If the negotiation proves successful the delayed owing to forwarding difficulties Authority shall conclude a contract with beyond the control of the tenderer. It your Consortium. Therefore, your rep­ seems that the Ethiopian authorities resentatives should bring along with accepted that these circumstances them the relevant power of attorney amounted to a case of force majeure and which will enable them to sign a contract considered the tender to have been duly on behalf of the Consortium." received within the prescribed period.

11. When the representatives of the 8. On 8 November 1982, the opening Italian Consortium arrived at the head date of the tender, the following prices office of EELPA in Addis Ababa on the (in millions of ECU) were established: specified date, they were not received. On the following day, 15 March 1983, 1. Rush and Tompkins BV 24.3 they were informed that negotiations could not take place as the Commission 2. Italian Consortium 26.7 had " ordered " that negotiations be opened with Rush and Tompkins BV. 3. Boskalis Westminster-Baresel 28.2

mktee for this Project but also by the with Rush and Tompkins BV fails, the Consultant as evidenced by their recent Consortium is still considered a qualified telex to the Authority. and potential contractor whom we look forward to conclude a contract with."

Quote 13. Having approached the Com­ May we ... mention that the receipt of mission on several occasions without sujDplementary information on the success with a view to bringing about a experience of the Rush and Tompkins change in the attitude adopted by the Group PLC created — after the competent authority, or at least to completion of our Draft Report —• a obtaining information concerning the new situation requiring decision making reasons for the change in attitude of which we found to be beyond our which they had learned, the applicants authority. brought an action for the annulment of the act, acts or measures of the Com­ mission by which the applicants were May we take this opportunity to restate deprived of their status as "lowest our opinion that: qualified tenderer". In the alternative, the applicants ask the Court to find that The lowest tenderer Rush and Tompkins the Commission failed to take action BV is considered unqualified. designed to enable the applicants to continue the negotiations the opening of which had been notified to them. Finally, The Rush and Tompkins Group PLC, they ask that, in any event they be however, is considered qualified, but awarded compensation for the damage they are not the tenderer. caused to them by the acts, measures or omissions of the Commission. We consider it contrary to normal rules for open tendering to negotiate with the Rush and Tompkins Group PLC, and 14. By a document lodged at the Court only the client can decide whether such Registry on 14 July 1983, the applicants negotiations should be held. If this is brought an application under Articles decided against them, negotiations 185 and 186 of the EEC Treaty and should be held with the Italian Con­ Article 83 of the Rules of Procedure for sortium with the objective of resolving the adoption, as a matter or urgency, of the Contractor for the works. interim measures, which may be defined as follows:

Committee at the meeting held on 24 contract between the national authority February 1983 in Addis Ababa; and Rush and Tompkins BV was signed on 6 July 1983 in Addis Ababa and (c) An order that the Commission endorsed by the local Commission undertake that no contract shall be delegate on the same date. signed with Rush and Tompkins BV and that the works shall not be started by that company until the 17. As a preliminary matter, the Com­ Court has given its decision on the mission challenges the jurisdiction of the main application; Court. Under the system established by the Convention for financial and (d) An order, if a contract has already technical cooperation, the ACP State, in been signed with Rush and this case Ethiopia, is responsible, Tompkins BV, suspending all legal according to the Commission, for effect deriving from that contract preparing, negotiating and concluding until the Court has given its decision contracts. The Commission's cooperation on the main application. in the execution of the projects of the Fund is of a purely internal nature in relations with the ACP State concerned. 15. On 17 July 1983 the Commission According to the Convention, any submitted its written observations and on disputes between a tenderer and the ACP 29 July 1983 the parties presented oral State must be settled by arbitration and argument in the presence of the therefore fall outside the jurisdiction of Advocate General. the Court. The Commission refers in that regard to Article 132(1) of the Con­ vention and to the "joint declaration" 16. It is clear from the Commission's which is the subject of Annex XIII to the written and oral observations that on 22 Convention. February 1983 the Committee of the European Development Fund delivered a favourable opinion on the financing proposal and that the final financing 18. As regards the interim measures decision was taken by the Commission sought by the applicants, the Com­ on 7 March 1983. The national auth­ mission contests both their urgency and ority's choice, the date of which has not the existence of grounds establishing a been indicated, was approved by the case for granting them within the Chief Authorizing Officer appointed by meaning of Article 83 of the Rules of the Commission on 10 June 1983. The Procedure.

2i According to Article 95 of the Convention, projects and programmes envisaged by Title VII are to be financed by the European Development Fund, the administration of which is entrusted to the Commission.

22 Under the terms of Article 108, "operations financed by the Community are to be implemented by the ACP States and the Community in close cooperation, the concept of equality between the parties being recognized." The same article defines the responsibilities regarding the administration of the programme of financial and technical cooperation which are to be borne by the ACP States, the ACP States and the Community jointly and the Community. For the purposes of the present case it should be pointed out in that regard that:

The ACP States are responsible for choosing the projects, for presenting them for Community financing, for preparing, negotiating and concluding contracts and for implementing projects (Article 108 (2) (b) (d) and (e));

The ACP States and the Community are jointly responsible for appraising projects, for taking the necessary implementing measures to ensure equality of conditions for participation in invitations to tender and contracts and for ensuring that the projects financed by the Community are executed in

CMC v COMMISSION

accordance with the arrangements decided upon and with the provisions of the Convention (Article 108 (4) (c) (d) and (f));

ORDER OF 5. 8. 1983 — CASE 118/83 R

the most advantageous. In this connection the chief authorizing officer shall approve the dossiers before invitations to tender are issued, receive the result of the examination of the tenders and approve the proposal for the placing of the contract."

26 According to Article 122, the government of each ACP State is to appoint a "national authorizing officer" to represent the authorities of his country in all operations financed from the Fund's resources administered by the Commission. The national authorizing officer may delegate some of those functions. Under the terms of Article 122 (2), the national authorizing officer is in his turn to ensure, in close cooperation with the chief authorizing officer, "that there is equality of conditions for participation in invitations to tender, that there is no discrimination and that the tender which is economically the most advantageous is chosen" (Article 122 (2) (a)). He is to prepare invitation to tender dossiers and submit them to the delegate for agreement before invitations to tender are issued; he is to issue invitations to tender, receive tenders, preside over the examination of tenders, decide the outcome of that examination and transmit it to the delegate with a proposal for the placing of the contract; finally it is he who signs the contracts (Article 122 (2) (b), (c), (d) and (e)).

27 Under Article 123, the Commission is to appoint a "delegate" to each ACP State or group of States to represent it for the purpose of facilitating the application of the Convention. The delegate is to work in close cooperation with the national authorizing officer and deal with that officer on behalf of the Commission. In that capacity he is to approve the invitation to tender dossier and be present at the opening of tenders (Article 123 (2) (a) and (b)). He is to approve the national authorizing officer's proposal for the placing of the contract wherever the following three condition are fulfilled: the tender selected is the lowest, it is economically the most advantageous and does not exceed the sum earmarked for the contract (Article 123 (2) (c)).

si Article 132 provides as follows with regard to the settlement of disputes:

" 1 . Any dispute arising between the authorities of an ACP State and a contractor, supplier or provider of services on the occasion of the placing or performance of a contract financed by the Fund shall be settled by arbitration in accordance with rules of procedure adopted by the Council of Ministers.

2. The rules of procedure referred to above shall be adopted, on a proposal, by a decision of the Council of Ministers not later than its first meeting following the entry into force of this Convention."

32 Since the rules referred to in Article 132 have not yet been adopted, reference must be made to Annex XIII of the Convention, which is entitled "Joint declaration on Article 132 of the Convention" and is worded as follows :

ORDER OF 5. 8. 1983 — CASE 118/83 R

"As a transitional measure pending the implementation of the decision provided for in Article 132 the final decision on all disputes shall be taken in accordance with the rules on conciliation and arbitration of the International Chamber of Commerce."

CMC v COMMISSION

37 The answers to all those questions, the complexity of which should not be underestimated, is a matter for the Court's decision on the substance of the main application. However, since the preliminary objections raised by the Commission regarding the jurisdiction of the Court and the admissibility of the main application constitute a prerequisite for the decision on the admissibility of the application for the adoption of interim measures, the judge hearing that application cannot escape the necessity of resolving pro­ visionally the various problems raised. From his point of view, it is sufficient it he can establish, with a sufficient degree of probability, that there is a basis, albeit partial, on which the Court may found its jurisdiction in order to enable him to acknowledge the existence of a legitimate interest in the adoption of interim measures designed to preserve the existing position pending a decision on the substance of the case.

38 Subject to those reservations, the following observations may be made with regard to the preliminary objections raised by the Commission.

39 As the Commission rightly pointed out, the tenderers established a legal relationship solely with the Ethiopian national authority and more par­ ticularly with the national authorizing officer, who, according to the infor­ mation supplied during the proceedings, is the Ethiopian Government acting, tor the purposes of the present project, through the intermediary of EELPA under the terms of Clause IT-I, paragraph (2), of the conditions of tender.

42 It does not appear that Article 132, concerning the settlement of disputes, and the joint declaration on that subject, embodied in Annex XIII to the Convention, has the effect of eliminating any, judicial protection with may be available under the Treaty. As the Commission has acknowledged, the Convention could not derogate, as far as Community subjects are concerned, from the provisions of the EEC Treaty governing access to the Court. Moreover, it was apparent from the arguments of the parties that it remains doubtful whether Article 132 applies only to disputes which may arise, on the occasion of the placing or performance of a contract, between the ACP State and the undertaking which is awarded the contract or whether that provision is also applicable to disputes which arise between the ACP State and any undertaking which is not awarded the contract but has participated in the tender procedure. That doubt is increased by the uncertainty regarding the interpretation which the ACP States, and Ethiopia in particular, may give to the terms of Article 132 and Annex XIII.

43 Moreover, the question arises whether, in arbitration proceedings initiated pursuant to Article 132 and Annex XIII, that is to say within the framework of the procedure for conciliation and arbitration of the International Chamber of Commerce, acts of the Commission may be challenged and whether an arbitral decision to be given in that context may contain a judgment on the validity of acts of the Commission or establish a basis lor Community liability.

44 Consequently, whilst it seems certain that the contract concluded between the ACP State and the successful tenderer falls outside the juridiction ol the Court, that does not mean that there can be not judicial review under the EEC Treaty of acts of the Commission in the context of the tender procedure set up by the Convention.

48 The Commission's objection that the action is out of time must be rejected. The applicants have explained at great length the difficulties which they experienced in obtaining information regarding the attitude taken by the Commission in this case and the reasons for their elimination. The infor­ mation which they were able to obtain in Addis Ababa on 15 May 1983 was no mor than hearsay. Such information cannot therefore be regarded as fulfilling the condition laid down by the third paragraph of Article 173 of the EEC Treaty.

ORDER OF 5. 8. 1983 — CASE 118/83 R

49 It follows from the foregoing that, although the placing of the public works contract in question occurred outside the sphere of jurisdiction of the Community, there are nevertheless sufficient connecting factors between the circumstances of the dispute and the provisions of the Treaty governing access to the Court — namely, the active participation of the Commission in the process for reaching a decision on the award of the contract, the financing of the project in question by the European Development Fund and the judicial protection to which the applicants are, as Communty subjects, entitled to claim in the implementation of a convention concluded by the Community — to allow the finding that there exists a legitimate interest in the adoption of interim measures pending the Court's decision on the questions of jurisdiction and admissibility raised by the Commission.

Urgency

so The applicants claim that an interim decision of the Court is required as a matter of urgency owing to the irreparable damage which would be caused to their corporate reputation in the international tender market if they were eliminated in spite of their status as "lowest qualified tenderer" in the tender procedure in question, particularly since it has received wide international publicity. Only the intervention of the Court at this stage could prevent damage which otherwise would be irreversible for them.

54 The question arises whether the applicants have been able to make out a prima facie case for the existence of circumstances which could justify such a measure.

ss The facts which the applicants have alleged and which the Commission has been unable to contest do indeed raise serious doubts concerning the regu­ larity of the procedure followed for the award of the contract. As has already been mentioned, the applicants had been summoned by the competent national authority in circumstances which afforded grounds for believing that the contract would be signed upon the conclusion of a final round of negotiations. It appears from the communications of the employer endorsing the findings of the Tender Committee and the consultant engineer, that the lowest tenderer was not regarded as technically and financially qualified and for that reason it had originally been intended to award the contract to the applicants. It also appears that that situation was changed not as a result of a decision of the employer but at the request of the Commission.

ORDER OF 5. 8. 1983 — CASE 118/83 R

56 When the Commission was questioned on this matter, it stated that following investigations which are normal in public tender procedures it became apparent that the lowest tenderer, Rush and Tompkins BV, which is a member of the British Rush and Tompkins group, whose technical and financial qualifications are undeniable, had the backing of that group and that the group undertook to guarantee, for the benefit of its Netherlands subsidiary, that the work would be successfully completed. The Commission produced in that connection a letter of guarantee issued by the Rush and Tompkins group, dated 21 June 1983.

6i It must be borne in mind that the applicants were only the second lowest tenderers. The Commission, which is responsible for the financial administration of the Fund, was therefore under a duty to give priority to its examination of the tender submitted by the lowest tenderer with a view to clarifying, in conformity with the criteria laid down by Article 130 of the Convention, the question of the qualifications and guarantees of that tenderer which were in dispute. As regards the designation "lowest qualified tenderer", which the applicants bestowed upon themselves, following a pre­ liminary appraisal made by the employer, it should be observed that that status was at no time conferred upon them by the competent authority, namely the national authorizing officer.

62 It appears, moreover, from the explanations supplied by the Commission that, following checks carried out on the technical and financial qualifications of the lowest tenderer, both the national authorizing officer and the chief authorizing officer are now satisfied with the choice made for the award of the contract. This attitude emerges from a telex message sent on 22 June 1983 by EELPA to the applicants, in which the employer, after explaining the situation, requests the applicants " to drop the whole matter and let bygones be bygones."

63 In those circumstances it seems that the blocking of the funds earmarked for the execution of the project, with the grave consequences which such a measure would entail for all the parties concerned, would be a dispro­ portionate response to the doubts which the facts alleged by the applicants have raised concerning the regularity of the tender procedures.

hereby orders as follows :

1. The application for the adoption of interim measures is dismissed;

2. The costs are reserved.

Luxembourg, 5 August 1983.

For the Registrar

H. A. Rühi Pierre Pescatore