T-485/93

Commission of the European Communities, represented by Marie-José Jonczy, Legal Adviser, Nicholas Khan, of its Legal Service, and, at the hearing, Berend Jan Drijber, of its Legal Service, acting as Agents, with an address for service in Luxembourg at the office of Carlos Gómez de la Cruz, of its Legal Service, Wagner Centre, Kirchberg,

defendant,

A P P L I C A T I O N (i) for annulment of the decision of the Commission of 1 April 1993 addressed to the Vnesheconombank and (ii) for damages for the loss allegedly suffered by the applicant,

* Language of the case: French.

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Legal background

1 O n 16 December 1991, having established the need to provide food and medical aid to the Soviet Union and its constituent Republics, the Council adopted Decision 91/658/EEC granting a medium-term loan to the Soviet Union and its constituent Republics (OJ 1991 L 362, p. 89, hereinafter 'Decision 91/658'), which provides as follows:

'Article 1

1. The Community shall grant to the USSR and its constituent Republics a medium-term loan of not more than E C U 1 250 million in principal, in three suc- cessive instalments and for a maximum duration of three years, in order to enable agricultural and food products and medical supplies (...) to be imported.

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(...)

3. Imports of products financed by the loan shall be effected at world market prices. Free competition shall be guaranteed for the purchase and supply of prod- ucts, which shall meet internationally recognized standards of quality.'

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2 O n 9 July 1992 the Commission adopted Regulation (EEC) N o 1897/92 laying down detailed rules for the implementation of a medium-term loan to the Soviet Union and its constituent Republics (OJ 1992 L 191, p. 22, hereinafter 'Regulation N o 1897/92'), which provides:

'Article 2

Recognition referred to in Article 4 shall only be granted subject to fulfilment of, in particular, the conditions referred to in this Article.

1. The contract was awarded following a procedure guaranteeing free competition. (...)

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2. The contract offers the most favourable terms of purchase in relation to the price normally obtained on the international markets.'

3 O n 9 December 1992 the E E C , the Russian Federation and its financial agent, the Vnesheconombank ('VEB') signed, pursuant to Regulation N o 1897/92, a Memo- randum of Understanding, on the basis of which the European Community was to grant to Russia the loan provided for by Decision 91/658. It was provided that the E E C as lender would grant to the VEB, as borrower, under the guarantee of the Russian Federation, a medium-term loan of the principal sum of E C U 349 million for a maximum term of three years. The Memorandum of Understanding states:

'5. DRAWING

5.1 Procedure

(a) The Borrower shall notify the Lender of a proposed Disbursement by issuing an Approval Request (...)

(b) If the Drawing Period has commenced and if the Lender is satisfied, on the basis of the information contained in the Approval Request and in its absolute discretion, that the purpose of the proposed Disbursement is in accordance with Clause 3 and the Memorandum of Understanding and the Advising/ Confirming Bank named in the Approval Request is acceptable to the Lender, it shall within a reasonable time issue a Notice of Confirmation substantially in the form of Schedule 3.

(c) Following receipt of a Notice of Confirmation in respect of a proposed Dis- bursement the Borrower shall issue a Disbursement Request within the Dis- bursement Period in accordance with the provisions of Clause 5.3.

(...)

(i) be in the form set out in Schedule 4;

(ii) be signed by the Borrower;

(iii) request the relevant payment to be made not later than the last Business Day of the Drawing Period to the Approved Confirming Bank by having the account of such bank credited with the amount of such payment;

(iv) be accompanied by documents as specified in Schedule 4.'

6 The irrevocable documentary credit machinery provided for is in accordance with the 'uniform customs and practices for documentary credits' elaborated by the Paris International Chamber of Commerce and adopted by the Community as the standard form of documentary credit to be used by issuing banks.

7 O n 15 January 1993, in accordance with Article 2 of Decision 91/658, the Com- mission as borrower concluded on behalf of the Community a loan agreement with a consortium of banks led by Credit Lyonnais.

n After the Commission had obtained from the applicant various additional items of essential information, concerning in particular the ecu/US$ exchange rate, which had not been fixed in the contract, it finally gave its approval on 27 January 1993, in the form of a notice of confirmation addressed to the VEB. According to the applicant, that notice of confirmation modified the contract in two respects, namely the shipment period, which the Commission automatically extended until 31 March 1993, and the ecu/US$ exchange rate, which was neither that proposed by the applicant to Exportkhleb on 25January 1993 ( E C U l = US$1.1711) nor that agreed between them on 28 January 1993 (ECU 1 = US $1.1714, bringing the agreed price up to E C U 119.94 per tonne).

1 2 According to the applicant, the documentary credit was set up by the VEB on 4 February 1993 but the letter of credit did not become effective until 16 February 1993, that is to say, approximately two weeks before the end of the shipment period provided for by the contracts (28 February 1993).

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i3 Although a substantial part of the goods had been delivered or was in the course of shipment, it was becoming clear, according to the applicant, that it would not be possible to deliver all the goods by 28 February 1993.

14 O n 19 February 1993 Exportkhleb invited all the exporters to attend a meeting in Brussels, which was held on 22 and 23 February 1993. At that meeting Export- khleb requested the exporters to submit fresh quotations for delivery of what it termed the 'foreseeable balance', that is to say, the quantities which could not rea- sonably be expected to be delivered by 28 February 1993. According to the appli- cant, the price of wheat on the world market rose considerably between Novem- ber 1992, when the sale contract was concluded, and February 1993, when the fresh negotiations took place, going up from US$132 in November 1992 to US $149.50 in February 1993.

i9 O n 12 March 1993 Mr Legras, Director General in the Directorate-General for Agriculture (DG VI), replied to Exportkhleb, stating that he wished to draw its attention to the fact that, since the maximum value of those contracts had already been set by the Commission's notice of confirmation and the whole available amount of credits for wheat was already contracted, such a request could only be accepted by the Commission if the total value of the contracts was maintained, which could be done by a corresponding reduction in outstanding quantities to be delivered. H e further stated that the request for approval of the amendments could only be considered by the Commission pursuant to an official request from the VEB.

20 According to the applicant, that information was interpreted as confirming the Commission's agreement in principle, subject to scrutiny for the purposes of for- mal approval once the documentation was sent by the VEB. It was for that reason that the applicant continued to ship the cargoes of wheat bound for Russia.

2i According to the applicant, the documentation containing the new bids and the amendments to the contract were officially sent by the VEB to the Commission on 22 and 26 March 1993. The applicant maintains that on 5 April 1993 it was informed by Exportkhleb of the Commission's refusal to approve the amendments to the contract as initially concluded; that refusal was given concrete form by a let- ter sent to the VEB on 1 April 1993 by the Agriculture Commissioner. O n that same day, 5 April 1993, the applicant decided to stop its deliveries of wheat.

Procedure and forms of order sought

23 It was in those circumstances that, b y application lodged at the Registry of the Court of Justice on 9 June 1993 and registered under number C-311/93, the appli- cant brought the present action.

24 By order of 27 September 1993 the Court of Justice referred the case to the Court of First Instance pursuant to Council Decision 93/350/Euratom, ECSC, E E C of 8 June 1993 amending Decision 88/591/ECSC, EEC, Euratom establishing a Court of First Instance of the European Communities (OJ 1993 L 144, p. 21).

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25 The case was registered in the Registry of the Court of First Instance under num- ber T-485/93. By document lodged at the Registry on 15 September 1993 the Commission raised an objection of inadmissibility.

— order the Commission to pay the costs.

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29 In its objection of inadmissibility, the Commission contends that the Court should:

— declare the application for annulment inadmissible on the ground that the mat- ter is not of direct concern to the applicant;

— declare either that the contested decision does not give rise to liability on the part of the Commission or that the action is inadmissible since it concerns a complaint which does not put the Commission's non-contractual liability in issue;

Arguments of the parties

3i The Commission has raised an objection of inadmissibility on the ground that the contested measure is not of direct concern to the applicant within the meaning of the fourth paragraph of Article 173 of the Treaty.

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32 The Commission first presents lengthy explanations describing the machinery of the rules and agreements in issue. It points out that the very nature of the arrange- ments made is such as to render the application for annulment inadmissible.

33 The Commission observes that the Memorandum of Understanding constitutes the basis of the agreement between the Community and Russia for the grant of the loan. The Memorandum of Understanding fixes the amount of the loan (ECU 349 million) and lists the conditions for approval of contracts.

35 A s regards the actual d o c u m e n t a r y credit o p e r a t i o n , t h e C o m m i s s i o n observes that, even t h o u g h an irrevocable credit creates a legally b i n d i n g c o n t r a c t b e t w e e n the issuing b a n k and the debtor, such a contract nevertheless contains n o c o v e n a n t by the Community requiring the supplier's demand for payment to be met by the Community authorities. Moreover, like any unconfirmed credit, the documentary credit issued by the issuing bank merely creates a contingent liability on the part of that bank towards the supplier, since the latter's right to receive payment arises only when the company has submitted the documents showing that the acts required for payment have been performed, for example, the production of ship- ment invoices. The Commission infers from this that the Community conse- quently assumes no liability towards the supplier or its bank, and observes that, although in practice the Community sends the supplier's bank a reimbursement undertaking when it receives a satisfactory disbursement request, that undertaking remains in any event subject to the essential data set out in the notice of confirma- tion and is, in particular, valid only in relation to the supplier's bank, to whom the Community merely guarantees that the issuing bank's obligation will be honoured

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in accordance with the documentary credit. The Commission points out that the right per se of a supplier to receive payment on the basis of an unconfirmed letter of credit exists only against the bank issuing the credit — in the present case, the VEB.

38 C o n t i n u i n g w i t h its o p e n i n g remarks, t h e C o m m i s s i o n n o t e s the analogies b e t w e e n t h a t s y s t e m a n d t h e system governing the financing of d e v e l o p m e n t projects in the context of the Lomé Convention. As the Court of Justice stated in its judgment in Case 126/83 STS v Commission [1984] ECR2769, Article 120 of the Lomé Convention lays down the principle that States have sole responsibility for implementing projects and action programmes. Accordingly, they are respon- sible for preparing, negotiating and concluding the necessary contracts for the implementation of those operations. The Commission observes that the position is the same as regards the system set up for the financing of imports of wheat, since the Memorandum of Understanding provides that the loan is to cover irrevocable documentary credits issued by the borrower pursuant to supply contracts. It main- tains that it plays an even greater role within the Lomé system than in the context of the Russian loan, inasmuch as in the latter case it takes no part in the award of the contract.

39 In the Commission's view, the contested letter of 1 April 1993 cannot be regarded as being of direct concern to the applicant within the meaning of the fourth para- graph of Article 173 of the Treaty. That letter was not, and could not have been,

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intended to modify the terms of the commercial contract between the applicant and Exportkhleb. The Commission's role was solely to verify whether the financ- ing conditions laid down by the documentation were fulfilled and, if so, to autho- rize disbursement of the Russian loan. It was not for the Commission to 'validate' the commercial agreement. The consequence of the Commission's letter is merely that the loan can no longer be used to pay for deliveries of wheat under the revised terms of the contract.

42 The applicant maintains that the Commission played a crucial role in the conclu- sion of its contract with Exportkhleb. Moreover, that role is expressly acknowl- edged in all the applicable documents, that is to say, the Memorandum of Under- standing, Regulation N o 1897/92 and the loan agreement, which shows that the financing of the contracts for the supply of wheat is conditional on those contracts being approved by the Commission. The Commission cannot therefore contend that it does not have to 'validate' the contracts. The applicant observes, moreover, that the contested decision of 1 April 1993 expressly mentioned the approval pro- cedure prescribed by the Community provisions and referred in an annex to the supply contract concluded by the applicant. Consequently, there can be no doubt that it is for the Commission, pursuant to those provisions, to approve the supply contract between the applicant and Exportkhleb; it follows that the refusal to approve the amendments is of direct concern to the applicant.

43 In addition, on the facts, the Commission played a crucial role in the award of the sale contract by intervening with regard both to the applicant and Exportkhleb. Thus, as regards the applicant, in January 1993 the Commission requested certain

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information which it needed prior t o approving the initial contract and in May 1993 organized a meeting in Brussels with the representatives of the Grain and Feed Trade Committee of the EEC ( C O C E R A L ) , of which the applicant is a member. As regards Exportkhleb, the applicant points out an exchange of corre- spondence of 9 and 12 March 1993 between the Commission and Exportkhleb. Yet if the Commission's argument that the Russian financial agent is the only party with which it is required to have dealings were right, such interventions should not have taken place.

45 A c c o r d i n g t o t h e applicant, a more useful parallel m a y instead be d r a w n w i t h J o i n e d Cases 4 1 / 7 0 , 4 2 / 7 0 , 43/70 and 44/70 International Fruit Company and Oth- ers v Commission [1971] E C R 4 1 1 ; first, by reason of its s u s p e n s o r y p r o v i s i o n s , t h e s u p p l y c o n t r a c t w a s expressly subject t o a p p r o v a l b y t h e C o m m i s s i o n , a n d , sec- o n d , t h e V E B ' s p o s i t i o n w a s analogous t o that of t h e national authorities in that case, t h a t is t o say, it h a d n o discretion w h a t e v e r as regards t h e C o m m i s s i o n ' s decision. I n t h o s e circumstances, that decision, w h i c h has t h e direct effect, in rela- t i o n t o t h e applicant, of n o t validating the agreement and, consequently, of s t o p - p i n g p a y m e n t for t h e deliveries of wheat m a d e o n t h e c o n d i t i o n s laid d o w n in t h e c o n t r a c t , particularly as regards the C o m m u n i t y loan financing, w a s of direct c o n - cern to the applicant.

Findings of the Court

46 According to the fourth paragraph of Article 173 of the Treaty, any natural or legal person may institute proceedings against a decision which, although in the form of a decision addressed to another person, is of direct and individual concern to the former.

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47 It is necessary, therefore, to determine whether the letter sent by the Commission to the VEB on 1 April 1993 is of direct and individual concern to the applicant.

51 The action of the Commission does not therefore affect the legal validity of the commercial contract concluded between the applicant and Exportkhleb; nor does it modify the terms of the contract, particularly as regards the prices agreed by the

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parties. Thus, irrespective of the Commission's decision not to recognize the agreements as being in conformity with the applicable provisions, the amendment which the parties made on 23 February 1993 to their contract of 28 November 1992 remains validly concluded on the terms agreed between them.

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54 Lastly, in order to establish that the contested decision is of direct concern to it, the applicant cannot rely on the presence in the commercial contracts of a suspen- sory clause making performance of the contract and payment of the contract price subject to acknowledgement by the Commission that the criteria for disbursement of the Community loan are fulfilled. Such a clause is a link which the contracting parties decide to make between the contract concluded by them and a contingent future event; their agreement will be binding only if the latter occurs. The admis- sibility of an application under the fourth paragraph of Article 173 of the Treaty cannot, however, be made to depend on the intention of the parties. The appli- cant's argument must therefore be rejected.

55 In view of the foregoing, the Court considers that the Commission's decision of 1 April 1993, addressed to the VEB, is not of direct concern to the applicant, within the meaning of the fourth paragraph of Article 173 of the Treaty. Conse- quently, the application for annulment of that decision must be declared inadmis- sible.

Admissibility of the claim for compensation for pecuniary damage

Arguments of the parties

59 The applicant maintains that the principle that claims for damages and claims for annulment are separate in nature was laid down by the Court of Justice in its judg- ment in Lütticke, cited above, and that it has been confirmed many times since then (in particular in CMC v Commission, cited above, and in Case 175/84 Krohn v Commission [1986] E C R 753). It follows, first, that the inadmissibility of a claim for annulment, or the absence of such a claim, does not preclude a claim for dam- ages (judgments in STS v Commission and Krohn v Commission, cited above) and, second, that, where a claim for damages is made at the same time as a claim for annulment, the admissibility of the first claim does not depend on that of the sec- ond (see CMC v Commission and the judgment of the Court of Justice in Case C-87/89 Sonito and Others v Commission [1990] ECR 1-1981).

60 However, in declaring inadmissible claims for damages brought by applicants with standing to bring an action for annulment of the harmful act but out of time for doing so, the Court of Justice intended to stop 'abuse of process' (judgment of the Court of Justice in Case 59/65 Schreckenberg [1966] ECR 543). Then, in Krohn, the Court of Justice stated that the decision in PUumann, relied on by the

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Commission, related solely to the exceptional case where an application for damages sought payment of an amount exactly the same as the amount of duty paid by the applicant pursuant to an individual decision, so that the true purpose of the application for damages was to have that individual decision withdrawn.

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64 Finally, the applicant m a i n t a i n s that t h e C o m m i s s i o n ' s a r g u m e n t t h a t the decision of 1 April 1993 is perfectly valid in law pertains n o t t o the admissibility of t h e claim for damages b u t t o t h e substance of the case.

Findings of the Court

65 T h e C o m m i s s i o n advances, in essence, three arguments in s u p p o r t of its objection t o t h e admissibility of t h e claim for d a m a g e s for the loss allegedly suffered b y the applicant as a result of t h e decision of 1 April 1993. First of all, that decision was perfectly legal; next, it c a n n o t b e held liable for a breach of c o n t r a c t b y E x p o r t - k h l e b o r t h e V E B at a t i m e w h e n it h a d n o t yet entered into any c o m m i t m e n t ; and lastly, the claim for d a m a g e s is not separate from the claim for a n n u l m e n t .

66 The Court observes, first, that the arguments maintaining that the decision was legal and denying liability for breach of contract by one of the Russian parties go to the substance of the case and cannot constitute a ground of inadmissibility.

69 In the present case, the Court considers that the Commission has not discharged that burden. First, the defendant has simply asserted that the applicant is merely seeking to obtain the same price as it would have obtained if the Commission had approved the amendment to the contract. Second, as the Court of Justice held in its judgment in CMC v Commission, which concerned an invitation to tender under the Lomé Convention, it would be wrong, in circumstances such as those of the present case, to dismiss the possibility that acts or conduct of the Commission or its officials or agents might cause damage to third parties. Any person who claims to have been injured by such acts or conduct must therefore have the pos- sibility of bringing an action, if he is able to establish liability, that is, the existence of damage caused by an illegal act or illegal conduct on the part of the Community (judgment in CMC v Commission, paragraph 31).

70 In view of all the foregoing considerations, the claim for compensation for the pecuniary damage allegedly suffered by the applicant as a result of the Commis- sion's decision must be declared admissible.

Admissibility of the claim for compensation for non-material damage

71 In its objection of inadmissibility, the Commission does not make any submissions concerning the claim for the award of one ecu for the non-material damage which the applicant claims to have suffered as a result of statements made by the Director General of D G VI to the effect that the applicant had engaged in unlawful prac- tices at the time when the contract amendments were negotiated in February 1993.

Costs

76 Under Article 87(1) of the Rules of Procedure, a decision as to costs is to be given in the final judgment or in the order which closes the proceedings.

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O n those grounds,

T H E C O U R T O F FIRST INSTANCE (Third Chamber)

Delivered in open court in Luxembourg on 24 September 1996.

H. Jung C. P. Briët

Registrar President

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