T-509/93

Commission of the European Communities, represented by Berend Jan Drijber and Nicholas Khan, of its Legal Service, and, at the hearing, by Marie-José Jonczy, Legal Adviser, 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 for annulment of the decision of the Commission of 12 July 1993 addressed to the State Export-Import Bank of Ukraine,

* Language of the case: Dutch.

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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.

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.

(...)

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.'

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

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.

(...)

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. (...)

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

3 O n 13 July 1992 the Community and Ukraine signed, pursuant to Regulation N o 1897/92, a Memorandum of Understanding establishing the basis on which the Community was to grant to Ukraine the loan provided for by Decision 91/658. It was thereby provided that the Community, as lender, would grant to Ukraine, as borrower, through the intermediary of its financial agent, the State Export-Import Bank of Ukraine ('the SEIB'), a medium-term loan of the principal sum of E C U 130 million for a maximum term of three years. The Memorandum of Understanding states:

'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

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5.1 Procedure

(a) The Agent, on behalf of 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

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with Clause 3 and the Memorandum of Understanding and the Confirming Bank named in the Approval Request is acceptable to the Lender, it shall within a reasonable delay issue a Notice of Confirmation substantially in the form of Schedule 3.

(ii) be signed by the Agent;

(iii) request the relevant payment to be made not later than the last Business Day of the Drawing Period t o 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.'

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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.

8 Following notification of the contract by the SEIB to the Commission for approval by the latter, and after the personal intervention of Mr Demianov, Vice- Prime Minister of Ukraine, who requested approval of the contract with the mini- mum of delay, the Commission stated in a letter of 10 June 1993 addressed to Mr Demianov that it was unable to approve the contract submitted to it by the SEIB. The Commission considered that that contract did not offer the best pur- chase terms, particularly as regards the price, which was regarded as exceeding the acceptable level. The Commission stated in the same letter that it was prepared, in view of the seriousness of the food situation, to open the Community stocks for immediate delivery to Ukraine of 50 000 tonnes of wheat at a price which could be as much as US $30 per tonne lower than that proposed by the applicant. That delivery formed the subject of a fresh invitation to tender in which the applicant's tender was accepted.

9 O n 11 June 1993 Ukrimpex informed the applicant of the Commission's refusal decision and requested it to defer the transportation of the goods. The applicant replied that it had already chartered a vessel. Thus nearly 40 000 tonnes of grain were in fact delivered.

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12 By document lodged at the Registry on 30 November 1993 the Commission raised an objection of inadmissibility.

1 3 Upon hearing the Report of the Judge-Rapporteur, the Court of First Instance (Third Chamber) decided to open the oral procedure without any preparatory inquiry.

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i4 At the hearing on 25 April 1996 the parties presented oral argument and answered questions put to them by the Court.

is The applicant claims that the Court should:

— dismiss the objection of inadmissibility;

— alternatively, reserve its decision on the objection until final judgment;

— order the Commission to produce to the Court the full text of the two loan agreements and allow the applicant to submit its observations in that regard.

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The objection of inadmissibility

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21 Lastly, the Commission refers to the judgment in Case 118/83 CMC and Others v Commission [1985] ECR2325, in which the Court of Justice held that, under the system set up by the Lomé Convention, there could be no actionable measure within the meaning of Article 173 of the Treaty.

22 The applicant asserts, first, that the relationship between the Commission and Ukraine cannot fall within the scope of private law, as the Commission claims, since the Commission is obliged, when credits are granted, to observe the rules published in the Official Journal of the European Communities.

23 Second, it maintains that actionable measures comprise all acts of the institutions which are intended to produce legal effects, even towards third parties. In the present case, according to the applicant, Article 5 of Regulation N o 1897/92 is directly applicable and creates a right to recognition of contracts submitted to the Commission. The Commission's decision, which was based on that provision, pro- duces a fortiori legal effects.

24 Third, in the present case, and in contrast to the judgment in CMC and Others v Commission, cited above, the collaboration between the Commission and the bor- rower was not confined to those two parties but extended, on the Commission's initiative, to the parties who were signatories to the sale contract. Thus, the C o m - mission addressed itself directly to the applicant and Ukrimpex and actively inter- vened in the contractual relations between them, in particular by attempting to impose a price.

28 I n s o far as the objection of inadmissibility is founded o n the absence of an action- able m e a s u r e w i t h i n the m e a n i n g of t h e first p a r a g r a p h of Article 173 of the Treaty, it m u s t therefore b e rejected.

The objection that the act which the applicant is seeking to have annulled is not of direct concern to it

A r g u m e n t s of t h e parties

29 In the Commission's view, the contested letter of 12 July 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, intended to affect the validity and the performance of the contract concluded between the applicant and Ukrimpex. The Commission's role is solely to verify whether the financing conditions laid down by the provisions are fulfilled and, if so, to authorize disbursement of the loan.

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34 First, the Court of Justice held in Joined Cases 106/63 and 107/63 Toepfer and Getreide-Import v Commission [1965] ECR 405 that a decision of an institution is of direct concern to an individual where that decision takes the place of a decision of the national authorities. That ruling is applicable by analogy to the present case, on the ground that the Commission's recognition decision takes the place of the decision of Ukraine, of the SEIB or of Ukrimpex whether or not to proceed with

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the purchase of wheat. Performance of the contract is totally dependent, in fact, on the grant of Community credits, as is apparent, moreover, from the sale contract, which contains a suspensory condition.

35 Second, the SEIB, as addressee of the decision of the C o m m i s s i o n , has n o discre- t i o n in the event t h a t t h e C o m m i s s i o n refuses t o recognize the contract. In the light of the reasoning of t h e C o u r t of Justice in International Fruit Company and Others, cited above, it is the C o m m i s s i o n ' s decision, therefore, w h i c h is of direct c o n c e r n to the applicant.

36 T h i r d , the C o m m i s s i o n has n o discretion in applying the c o n d i t i o n s laid d o w n in R e g u l a t i o n N o 1897/92, w h i c h p r o d u c e s direct effects. C o n s e q u e n t l y , t h e c o n t r a c t - ing u n d e r t a k i n g s are entitled t o require t h e C o m m i s s i o n t o a d o p t a decision, w h e t h e r favourable o r unfavourable, c o n c e r n i n g recognition of the contract. If t h o s e u n d e r t a k i n g s are d e p r i v e d of t h a t right, their interests are affected and t h e y are therefore directly concerned.

40 In the present case, inasmuch as the contested measure takes the form of a letter addressed by the Commission to the SEIB on 12 July 1993, it is necessary to deter- mine whether that measure is of direct and individual concern to the applicant.

4i First of all, the Commission has not denied that the applicant is individually con- cerned. Having regard to the circumstances of the case, the Court considers that only the question whether the contested decision is of direct concern to the appli- cant need be examined.

42 The Community rules and the agreements concluded between the Community, Ukraine and the SEIB provide for a division of powers between the Commission and the agent appointed by Ukraine to arrange the purchase of wheat. It is for that agent — in the present case, Ukrimpex — to select the other contracting party by means of an invitation to tender and to negotiate and conclude 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 disbursement of the loan, that such contracts are in conformity with the provisions of Decision 91/658 and with the agreements concluded with Ukraine and the SEIB. It is not for the Commission, therefore, to assess the commercial contract with reference to any other criteria.

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43 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 Ukrimpex, which is authorized by Ukraine to conclude contracts for the purchase of wheat. The Com- mission, for its part, has legal relations only with the borrower and its financial agent, the SEIB, which notifies it of commercial contracts so that their conformity can be recognized, and which is the addressee of the Commission's decision in that regard.

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decision does not take the place of a decision taken by the Ukrainian national authorities, since the Commission may only examine the conformity of contracts for the purposes of Community financing.

47 Furthermore, as regards the direct applicability of Regulation N o 1897/92, on which the applicant relies, the Court observes that Article 5 of that regulation lists on a non-exhaustive basis — as is apparent from the use of the adverbial phrase 'in particular' — the conditions which contracts must fulfil in order to qualify for Community financing; in addition, Article 4(1) of the regulation expressly refers to the provisions of the agreements concluded between the Ukraine and the Commis- sion. As regards the loan agreement, which sets out in precise terms the detailed rules pursuant to which Community financing is granted, Article 5.1 thereof refers to the absolute discretion of the Commission. In those circumstances, the appli- cant's argument does not appear to be well founded.

48 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 the performance of the contract and payment of the contract price subject to acknowledgement by the Commission that the criteria for dis- bursement 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 admissibility of an application under the fourth paragraph of Article 173 of the Treaty cannot, however, be made dependent on the intention of the parties. The applicant's argument must therefore be rejected.

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.

Briët Vesterdorf Potocki

Delivered in open court in Luxembourg on 24 September 1996.