T-494/93

COMPAGNIE CONTINENTALE v COMMISSION

J U D G M E N T O F T H E C O U R T O F FIRST INSTANCE (Third Chamber) 24 September 1996"

In Case T-494/93,

Compagnie Continentale (France), a company incorporated under French law, established at Levallois-Perret (France), represented by Patrick Chabrier, of the Paris Bar, with an address for service in Luxembourg at the Chambers of Ernest Arendt, 8-10 Rue Mathias Hardt,

applicant,

v

T H E C O U R T O F FIRST INSTANCE O F T H E E U R O P E A N C O M M U N I T I E S (Third Chamber),

composed of: C. P. Briët, President, B. Vesterdorf and A. Potocki, Judges,

Registrar: J. Palacio González, Administrator,

having regard to the written procedure and further to the hearing on 25 April 1996,

gives the following

Judgment

Article 2

For the purposes of Article 1, the Commission is hereby empowered to borrow, on behalf of the European Economic Community, the necessary resources that will be placed at the disposal of the USSR and its constituent Republics in the form of a loan.

Article 3

The loan referred to in Article 2 shall be managed by the Commission.

Article 4

1. The Community is hereby empowered to finalize, in concert with the authori- ties of the USSR and its constituent Republics (...), the economic and financial con- ditions to be attached to the loan, the rules governing the provision of funds and the necessary guarantees to ensure loan repayment.

The loans shall be concluded on the basis of agreements entered into between the Republics and the Commission which shall include, as conditions for disbursement of the loan, the requirements set out in Articles 3 to 7.

(...)

Article 4

1. The loans shall only finance the purchase and supply under contracts that have been recognized by the Commission as complying with the provisions of Decision 91/658/EEC and with the provisions of the agreements referred to in Article 2.

2. Contracts shall be submitted to the Commission for recognition by the Repub- lics or their designated financial agents.

Article 5

'6. The proceeds of the loan, less commissions and costs incurred by the EEC, shall be disbursed to the Borrower and applied, according to the terms and condi- tions of the Loan Agreement, exclusively to cover irrevocable documentary credits issued by the Borrower in international standard form pursuant to delivery con- tracts provided that such contracts and documentary credits have been approved by the Commission of the European Communities as complying with the Council decision of 16 December 1991 and the present Memorandum of Understanding.'

According to clause 7 of the Memorandum of Understanding, approval of the con- formity of the contract was subject to fulfilment of certain conditions. These included a requirement that suppliers were to be selected by Russian organizations designated to that end by the Government of the Russian Federation.

4 O n 9 December 1992 the Commission and the VEB signed the loan agreement provided for by Regulation N o 1897/92 and the Memorandum of Understanding (hereinafter 'the loan agreement'). That agreement sets out in precise terms the machinery for the disbursement of the loan. It establishes a facility to which recourse may be had during the drawing period (15 January 1993 to 15 July 1993), with a view to the advance of sums authorized for payment of the price of goods supplied.

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JUDGMENT OF 24. 9.1996 — CASE T-494/93

5 The disbursement machinery, based on normal practice in international trade, is described in Part III of the loan agreement as follows:

(a) A Disbursement shall, subject to Clause 5.5, only be made available for draw- ing pursuant to a Disbursement Request received by the Lender from the Borrower to meet a payment falling due from the Borrower to an Approved Confirming Bank. All Disbursement Requests once given shall be irrevocable

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COMPAGNIE CONTINENTALE v COMMISSION

and shall (subject to Clauses 10 and 12) oblige the Borrower to become indebted in the stated amount on the stated day and to accept the Disburse- ment Conditions.

(b) Each Disbursement Request shall:

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

JUDGMENT OF 24. 9. 1996 — CASE T-494/93

Facts

8 The applicant, an international trading company specializing in agricultural raw materials, was contacted, together with other companies, in connection with an invitation to tender organized by Exportkhleb, a State-owned company charged by the Russian Federation with the negotiation of wheat purchases.

9 O n 27 November 1992 the applicant signed two contracts with Exportkhleb for the sale of wheat. Under the first contract, it undertook to supply 500 000 tonnes of milling wheat, 50 000 tonnes of which were subsequently cancelled, at a price of US $140.40 per tonne, C I F free out one safe Baltic Sea discharge port. Under the second contract, it undertook to supply 20 000 tonnes of durum wheat at a price of US $145 per tonne, CIF free out one safe Black Sea port. That second contract was modified on 2 December 1992 to provide for the delivery of an additional 15 000 tonnes of durum wheat at a price of US$148 per tonne, CIF free out one safe Black Sea port. All those consignments were to be shipped by 28 February 1993.

io Following signature of the loan agreement (see paragraph 4 above), the VEB requested the Commission to approve the contracts concluded between Export- khleb and the grain exporting companies, including the contracts signed by the applicant.

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.

i6 According to the applicant, it was decided at the request of Exportkhleb, by reason of the urgency arising from the seriousness of the food situation in Russia and with a view to obviating the ponderous procedure for approval and for setting up the credits, that those modifications would be formalized by simple riders to the initial contracts, which were dated, for the sake of convenience, 23 February 1993, the date of the meeting in Brussels. When the riders were drawn up, it was agreed that the quantity of wheat to be delivered should be reduced, in order, according to the applicant, to prevent the new total price from exceeding the total price ini- tially provided for.

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i7 O n 9 March 1993 Exportkhleb informed the Commission, first, that the contracts concluded with five of its suppliers had been amended and, second, that the deliv- eries still to be made would henceforth be effected at a price of US $155 per tonne, to be converted into ecus at a rate of 1.17418 (ECU 132 per tonne).

is 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 entire 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.

sion was prepared to accept those relating to the postponement of the final dates for delivery and payment. O n the other hand, 'the magnitude of the price increases is of such a nature that we cannot consider them as a necessary adaptation but as a substantial modification of the contracts initially negotiated'. H e went on to state: 'In fact, the present level of prices on the world market (end of March 1993) is not significantly different from the level which prevailed at the time when the initial prices were agreed (end of November 1992).' The Commissioner pointed out that the need, first, to ensure free competition between potential suppliers and, second, to secure the most favourable purchase terms constituted one of the main factors governing the grant of approval by the Commission. H e found that, in the present case, the amendments had been negotiated directly with the companies concerned, without any competition with other suppliers, and concluded: 'The Commission cannot approve such major changes as simple amendments to existing contracts.' The Commissioner stated that he would be willing to approve the amendments relating to the postponement of delivery and payment, subject to compliance with the usual procedure. O n the other hand, he stated that, 'should it be considered necessary to modify the prices or quantities, it would then be appropriate to nego- tiate new contracts to be submitted to the Commission for approval under the full usual procedure (including submission of at least 3 offers)'.

22 O n 5 April 1993 the applicant received a telex from Exportkhleb informing it of the Commission's refusal and quoting extracts from the letter of 1 April 1993, attributed to Mr Legras. O n 20 April it received from Exportkhleb the complete text of the letter in question.

26 U p o n hearing the Report of the Judge-Rapporteur, the Court of First Instance (Third Chamber) decided to open the oral procedure without any preparatory inquiry.

27 At the hearing on 25 April 1996 the parties presented oral argument and answered questions put to them by the Court.

28 The applicant claims that the Court should:

— annul the Commission's decision of 1 April 1993 refusing to approve the agree- ments concluded on 23 February 1993 and the amendments to the letters of credit relating thereto;

— restore the company's right to receive from Credit Lyonnais the balance arising from the difference between the price initially agreed and the prices subsequently agreed in relation to the quantities of wheat delivered from

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— declare the ancillary claim inadmissible;

— order the applicant to pay the costs.

30 In its observations on the objection of inadmissibility, the applicant claims that the Court should:

— dismiss the objection of inadmissibility.

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34 The Commission observes that the Memorandum of Understanding constitutes the basis of the agreement between the Community and the Russian Federation 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.

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35 As regards the loan agreement, the Commission states that the implementation of the loan constitutes a private commercial act. It points out, first, that there is noth- ing to suggest that the facility for which it provides was to become available with effect from 15 January 1993, since clause 4 requires various conditions to be ful- filled prior to its becoming operational, and, second, that the loan agreement does not confer on it any role in the conclusion of the supply contracts, its involvement being limited to verifying that those contracts qualify for financing from the Com- munity loan.

37 As regards the supply contracts concluded with Exportkhleb, the Commission asserts that those contracts were signed before the Memorandum of Understanding and the loan agreement were concluded, and that the applicant had no control either over the loan agreement or over the date on which the issuing bank was to fulfil the conditions to be met in order for the loan to be made available.

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38 As regards the notice of confirmation, the Commission observes that that docu- ment is drawn up in accordance with the provisions of the loan agreement and cannot modify the contractual terms agreed between the applicant and Export- khleb.

4i The Commission refers in that regard to the judgment of the Court of Justice in Case 126/83 STS v Commission, cited above, contending that that judgment raised comparable issues in the context of the Lomé Convention and that the decision on those issues is applicable by analogy to the present case.

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42 The Commission submits, finally, that, just as it is a third party to the sale contract between the Community undertaking and the competent Russian authority, the undertaking is a third party to the loan agreement. In those circumstances, the applicant cannot be directly concerned within the meaning of the fourth paragraph of Article 173 of the Treaty.

44 Next, the applicant contests the parallel drawn by the Commission with the judg- ments delivered by the Court of Justice in the context of the Lomé Convention. Thus, in STS v Commission, cited above, the applicant, in bringing proceedings against the Commission's decision approving the award of the contract to another tenderer, was in fact contesting the decision to accept that other tenderer's offer. In the present case, however, the decision of the Commission was not supplemental to the contract, which had already been concluded, but formed the very condition on which it was based. The action seeks only to contest a decision by the Com- mission refusing to approve the amended contract concluded between the appli- cant and Exportkhleb. Since the commercial contract is conditional on the issue of the credits by the Commission, the latter's refusal means that no legal nexus, and, by extension, no legal remedy, exists between the applicant and the Russian authorities. By contrast, a parallel should be drawn with Joined Cases 41/70, 42/70, 43/70 and 44/70 International Fruit Company and Others v Commission [1971] E C R 4 1 1 .

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JUDGMENT OF 24. 9.1996 — CASE T-494/93

45 Lastly, according to the applicant, it is apparent from the facts of the present case that it is directly concerned. As a direct result of the refusal to approve the amended contract, it has received only partial payment. There were numerous exchanges between the Commission and the applicant, which received, in particu- lar, a copy of the notice of confirmation of 27 January 1993. Furthermore, in so far as performance of the initial contracts has proved problematic, that is solely because of the considerable delay in their being approved, which compromised the progress of the planned delivery programme and rendered the renegotiation of the contracts inevitable.

COMPAGNIE CONTINENTALE v COMMISSION

so The Community rules and the agreements concluded between the Community and the Russian Federation provide for a division of powers between the Commission and the agent appointed by the Russian Federation to arrange the purchase of the wheat. It is for that agent — in the present case, Exportkhleb — to select the other contracting party by means of an invitation to tender and to negotiate and con- clude the contract. The Commission's role is merely to verify that the conditions for Community financing are fulfilled and, where necessary, to acknowledge, for the purposes of the disbursement of the loan, that such contracts are in conformity with the provisions of Decision 91/658 and with the agreements concluded with the Russian Federation. It is not for the Commission, therefore, to assess the com- mercial contract with reference to any other criteria.

si It follows that the undertaking to which a contract is awarded has a legal relation- ship only with the party with whom it contracts, namely Exportkhleb, which is authorized by the Russian Federation to conclude contracts for the purchase of wheat. The Commission, for its part, has legal relations only with the borrower, namely the Russian Federation's financial agent, the VEB, which notifies it of the commercial contracts so that their conformity can be recognized, and which is the addressee of the Commission's decision in that regard.

52 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 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.

55 Moreover, 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 sus- pensory clause making the performance of the contract and payment of the 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 o n the intention of the parties. The appli- cant's argument must therefore be rejected.

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56 Lastly, the Court considers that the applicant's claim for protection of a legitimate expectation that the amendment to the contracts would be validated by the Com- mission goes to the substance of the case and does not, therefore, affect its assess- ment of the admissibility of the action.

57 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.

The claim for restoration of the applicant's rights against a third party

6i Under Article 87(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party's pleadings. Since the applicant has been unsuccessful, it must be ordered to pay the costs.

O n those grounds,

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

hereby:

1. Dismisses the action as inadmissible;

2. Orders the applicant to pay the costs.