C-114/94

IDE v COMMISSION

OPINION OF ADVOCATE GENERAL COSMAS delivered on 28 March 1996 *

Summary

I — Introductory remarks I - 806

II — Factual and legal context I - 806

A — Community activity of which the contract concluded between the parties

A — Objectivity of the 'Evaluation Panel' I - 819

B — The circumstances in which the product delivered was evaluated and the

criteria applied in that evaluation I - 822

C — Performance by IDE of its principal obligation I - 823

1) The essential clauses of the contract I - 823

2) The subject-matter of IDE's part of the contract I - 824

OPINION OF MR COSMAS — CASE C-114/94

3) The composition of the group of organizations collaborating with IDE was changed without the approval of the Commission I-833 4) IDE's relations with the other members of the consortium I - 835 5) IDE's allegation that the Commission failed to fulfil its contractual obli- gations I - 837 VI — Other claims made in the application I - 838 1) Claim for the payment of extra-judicial expenses I - 838 2) Claim for the payment of interest I - 839 3) Claim for damages I - 839 (a) Admissibility I-839 (b) Substance I-840 VII — Possibility of apportioning liability between the Commission and IDE I - 841 A — Conditions governing the apportionment of liability I - 842 B — Proposed solution I - 843 VIII — Costs I-845 IX — Conclusion I - 845

I — Introductory remarks bution provided for in the contract con- cluded between the parties and the payment of damages. The Commission's counterclaim is for repayment of the amounts paid by it to IDE, together with interest. 1. The present case concerns a dispute aris- ing in the course of the performance of a contract concluded on 31 January 1990 by the Commission of the European Communi- ties with the Netherlands limited company Intelligente systemen, Database toepassin- II — Factual and legal context gen, Elektronische diensten ('IDE'). The dis- pute was brought before the Court pursuant to the arbitration clause contained in the contract, in accordance with Article 181 of A — Community activity of which the con- the EC Treaty. tract concluded between the parties forms part

7. According to the contract, IDE's obliga- tion to develop software included that of creating a toolkit in collaboration with the 5. In July 1988 the Council of Ministers of Netherlands research organization T N O and the European Communities approved a plan the University of Amsterdam. The adapta- of action for setting up an information ser- tion of the software to the specific needs of vices market, 3 known as 'Impact', and the information sources and the establish- decided (second paragraph of Article 4) that ment of the network was to be carried out the contractors should bear a substantial by a dozen organizations from various share of the financing amounting to at least Member States, most of which owned agri- 50% of the total cost. cultural activity databases. According to the Commission, the development of the soft- ware amounted to approximately one third 1 — OJ 1987 C 188, p. 2. of the project's total budget, the remainder 2 — OJ 1988 C 182, p. 4. being intended for the completion and estab- 3 — Council Decision 88/524/EEC of 26 July 1988 concerning lishment of the network. At the technical the establishment of a plan of action for setting up an infor- mation services market (OJ 1988 L 288, p. 39). level, development of the network could

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only commence after an operational version 10. Article 2, 'Duration', provides: of the toolkit was available to the owners of the databases.

'The Contractor undertakes to carry out the Project within 30 months following the date of commencement of work, hereinafter referred to as "the Operative Commence- 8. Both the rights and the obligations of the ment Date", in accordance with the timetable contractors are defined in the contract and in laid down in Annex I. annexes I, II and III thereto.

— second progress report (3 copies) within 3.2 On completion of the work, the Con- 12 months of the Operative Commence- tractor shall make a demonstration of the ment Date; successful completion of the Project on the premises of the Commission in Luxembourg, or at an alternative location acceptable to the Commission.

— third progress report (3 copies) within 18 months of the Operative Commencement Date; 3.3 Within two months of the completion, cessation or termination of the work pro- gramme set out in Annex I, the Contractor shall furnish to the Commission a final com- prehensive report covering the whole project. It shall be accompanied by a consoli- — fourth progress report (3 copies) within dated statement of expenditure together with 24 months of the Operative Commence- supporting documents and the accounts will ment Date. thereby be considered closed.

3.4 Deliverables are any significant outputs of the Project to be submitted in accordance with Annex I.' In addition, the Contractor shall submit to the Commission:

12. Article 4 contains the 'Financial provi- sions': — Management Reports (3 copies) every 3 months;

'4.1 The total estimated costs of the Project are 2 349 400 ECU (two million three hun- — edited progress reports suitable for pub- dred forty-nine thousand four hundred lication every 12 months after the Opera- European Currency Units), for the work tive Commencement Date. specified in Annex I.

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(d) the total of the advance and periodic payments shall not exceed the total financial contribution of the Commis- (b) periodic payments within 2 months in sion less the amount deducted by way of respect of the statements of expenditure retention.

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IDE v COMMISSION

6.2.1 The Contractor, acting in accordance with the procedure laid down in Article 6.2.2, may entrust the performance of part of the work programme set out in Annex I to third parties, whether natural or 5.4 ...' legal persons. He shall not thereby be

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released from his obligations to the Commu- 6.3 Duty to provide information nity under this contract, in particular as regards his technical and financial responsi- bility as referred to in paragraph 1 hereof.

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IDE v COMMISSION

15. Article 7 is entitled Ownership and 17. Article 9, 'Variations or additions', pro- exploitation of results'. Under Annex II, to vides: which Article 7 refers, it is for the Contrac- tor to exploit and circulate the results of the project, since they are its property.

'Any variation of or addition to provisions of this contract must be agreed in writing between the parties hereto. The work pro- gramme and the timetable set out in Annex I may be modified by agreement between the parties in the light of progress.' 16. Article 8, 'Liability', provides:

18. Article 10, 'Termination in the event of the Contractor's breach', is worded as fol- lows:

19. Article 14, 'Annexes', provides: C — The background to the dispute

'Annexes I, II and III form an integral part of this contract.' 21. 15 March 1990 was fixed as the date for the launching of the Disnet project. Accord- ing to the contract, the work was to be com- pleted by 15 September 1992.

Annex I, 'Disnet Technical Annex', describes in particular the project in detail and con- tains a workplan. Annex II is entided 'Own- ership, commercial exploitation and circula- tion of the results of the project'. Finally, 22. According to the first six-month Annex III lists the allowable costs. progress report, the technical programme was being carried out as provided in the con- tract although, according to the Commis- sion, organizations collaborating with IDE expressed certain unease because the compo- sition of the consortium was unstable and, furthermore, IDE had not paid to those organizations their share of the Community contribution. 20. According to Article 16, 'Applicable law and conferment of jurisdiction':

23. Following an inspection in October 1991, an expert, whose impartiality is chal- 'The provisions of the law of the Grand lenged by IDE, found in his report of 3 Duchy of Luxembourg shall govern exclus- December 1991 that the project as completed ively this contract and shall likewise apply to did not fulfil the contractual obligations and all rights and obligations of the parties not he recommended that the Commission laid down therein. should suspend its financial support.

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IDE v COMMISSION

29. In a letter dated 30 April 1993 the Com- mission pointed out that the product deliv- ered did not comply with the specifications in the technical annex. Moreover, it empha- sized that IDE had not paid to the group of 25. In March and April 1992 the Commis- companies collaborating with it on the sion invited IDE to Luxembourg in order to project, the membership of which, according discuss problems which, in its view, had to the Commission, was continually chang- arisen in the performance of the contract. In ing, the sums due to them, even though the its correspondence with IDE, the Commis- Commission had already paid to IDE sion also mentioned the changes in the com- E C U 533 456. It stated that it would not position of the group of organizations col- insist on a demonstration of the finished laborating with IDE, the delay with which product in order to avoid additional costs IDE communicated to them the results of and because, in its view, it did not appear the work and various technical failures. that such a demonstration would change its initial negative assessment. Moreover, by way of an amicable settlement, it proposed to limit its contribution to 75% of the maxi- mum amount provided for in the contract (ECU 682 425) and not to pay the remainder (ECU 682 425 less E C U 533 456, that is to say E C U 148 969) until IDE had submitted 26. As a result, the technical annex to the the final report and a consolidated statement contract was amended. of expenditure and proved that it had ful- filled all its contractual and financial obliga- tions in respect of all its existing and former partners.

34. The demonstration took place on 20 July 38. O n 7 September 1993 the Commission 1993. The software demonstrated was that sent those reports to IDE. In a covering let- sent to the Commission on 11 March 1993. ter it made the following observations: (a) However, it appears from the 'Panel's' report IDE had failed to fulfil its obligations under that a more recent version, submitted by the specifications in the technical annex to IDE after the expiry of the contract, was also the contract; (b) the final report, dated examined. 17 May 1993, received by the Commission

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IDE v COMMISSION

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OPINION OF MR COSMAS — CASE C-114/94

43. The Commission contends that the IV — Admissibility of the counterclaim Court should:

— dismiss the action as unfounded; 45. In its reply to the counterclaim made by the Commission, IDE raises the question of its admissibility. It plainly considers that the Court has no jurisdiction to hear and deter- mine the counterclaim.

— order the applicant to pay to the Com- mission E C U 533 456, together with interest at 7.97% per annum;

50. The respective submissions of the parties V — Main heads of the principal claim and should now be dealt with as follows: first, counterclaim the parties' submissions as regards the objec- tivity of the 'Evaluation Panel'; secondly, those relating to the evaluation conditions and criteria of the product delivered; thirdly, the parties' respective arguments concerning the extent to which IDE fulfilled its principal obligation, namely to deliver a product in 48. In its counterclaim the Commission, conformity with the specifications imposed; relying on Article 5.3 of the contract, seeks finally, I will deal with the Commission's the repayment by IDE of the sums it has submissions on IDE's failure to fulfil other paid to it, together with interest. The Com- contractual obligations and the latter's sub- mission bases this head of claim mainly on missions with regard to the Commission's the negative report of the 'Evaluation Panel', failure to fulfil its contractual obligations. according to which the product delivered by IDE did not fully satisfy all the specifica- tions set forth in the technical annex. The Commission considers that the fact that IDE did not fulfil its obligation to supply a prod- uct corresponding to all the specifications in the technical annex constitutes sufficient grounds for upholding its counterclaim. Its submissions concerning IDE's failure to ful- A — Objectivity of the 'Evaluation Panel' fil other contractual obligations must be regarded as put forward in the alternative.

51. In the documents it lodged in reply to 49. IDE claims that the 'Evaluation Panel's' the Commission's submissions (paragraph 11 report is not reliable, first, because it was not of the reply in the main proceedings and in certain that that 'Panel' was objective and, the reply to the counterclaim) and also dur- secondly, because its evaluation of the prod- ing the hearing IDE challenged the 'Evalua- uct was erroneous in substance. It also states tion Panel's' objectivity on the following

55. However, since the contract confers on the Commission the power to appoint all of the members of the informal 'Evaluation Panel', there is no particular purpose in ascertaining whether or not IDE appointed 53. It is true that the contract does not one of its members. specify the body before which such a dem- onstration is to be carried out. However, from the wording of the contract, interpreted in the light of Article 1135 of the Civil Code of the Grand Duchy of Luxembourg, 6 which is applicable in the present case, it fol- lows that the clause concerning the demon- 56. Moreover, the fact that the third member stration carried out on the Commission's of the 'Panel' was paid by the Commission, premises before the representatives as IDE points out (paragraph 18 of the rejoinder to the counterclaim) is not, of itself, of any particular significance because, 6 — According to Article 1135, a contract is binding not only as since, pursuant to the contract, the Commis- regards its express terms but also as regards all consequences sion appointed the members of the 'Panel', it which, according to its nature, flow from it by virtue of equity, custom or statute. was obliged a fortiori to pay them.

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IDE v COMMISSION

57. Furthermore, the question whether or 61. However, IDE has not substantiated not the members of the 'Panel' had been those assertions, which must therefore be involved in the Disnet project is irrelevant disregarded. since, according to the contract, the Com- mission was unfettered as to whom it appointed.

62. That the objectivity of the 'Panel' cannot be put in question is also clear from the fact that, of the observers whom the contracting 58. Accordingly, the impartiality of the parties had appointed as independent experts 'Panel' cannot be called in question merely for the purposes of following the demonstra- on the grounds that the Commission alone tion, only the Commission's expert drew up had appointed and paid its members. a report, dated 2 August 1993 (Annex III to the defence), in which he confirmed the con- clusions of the 'Evaluation Panel' on the matter, while the expert appointed by IDE had not submitted a report.

B — The circumstances in which the product delivered was evaluated and the criteria applied in that evaluation 69. In the aforementioned letter of 12 July 1993, IDE's lawyer indicated a number of essential aspects which were to be demon- strated. He also mentioned four different options for the demonstration and pointed out a number of possible technical difficulties 66. Article 3.2 of the contract provides that, that the Luxembourg demonstration might on completion of the work, the contractor is present. to make a demonstration of the successful completion of the project on the premises of the Commission in Luxembourg, or at an alternative location acceptable to the Com- mission.

74. In view of the foregoing considerations, IDE's submission that the demonstration took place under extremely unfavourable conditions must be rejected as unfounded. 72. As confirmed in the 'Panel's' report, IDE was authorized to install the day before the demonstration the software it had devel- oped. The 'Panel' also stated in its report that it arrived at its conclusions at the end of the demonstration of five hours' duration presented by IDE on 20 July 1993 and that five hours seemed sufficient to demonstrate C — Performance by IDE of its principal the end product. It also observed that, obligation despite a number of technical problems which arose at the beginning of the demon- stration, IDE had agreed to continue with the demonstration. None the less, no inci- dents attributable to the network occurred, according to the 'Panel's' report, once the demonstration had begun or during it. 1) The essential clauses of the contract

75. It appears from the wording of the con- 73. Admittedly, during the demonstration tract and of its technical annex that the IDE mentioned some technical problems Commission and IDE entered into a synal- connected with the site of the demonstration lagmatic contract under which the former and the shortcomings of the local Unix net- agreed to pay a sum of money by way of work and the telecommunications links as contribution for the performance by the lat- well as other problems which had a detri- ter of work consisting in the development of mental effect on the demonstration (see p. 4 the Disnet software, which was to be com- of IDE's comments of 15 September 1993 on mercially viable and marketable.

82. In both the original and the amended 2) The subject-matter of IDE's part of the versions of the technical annex (p. 3 et seq.), contract it is provided that there are three end prod- ucts: (a) the Disnet software, which should be marketable and should run under DOS,

7 — Article 1134 of the Civil Code provides that contracts law- fully entered into have the force of law for the contracting 79. Since Clause 16 of the contract states parties. It thus reproduces the principle of Roman law that that the law of the Grand Duchy of Luxem- 'pacta sunt servanda'. It further provides that contracts must be performed in good faith. Article 1135 has already been bourg is applicable, it is necessary to examine referred to at footnote 6 above.

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IDE v COMMISSION

Windows 3 and Unix; (b) a network to be set More specifically, it states that the three up between a number of European hosts objectives of the project were attained. Those and networks using the Disnet interface; and objectives consisted in producing Disnet: (a) (c) applications that were to be built using as a toolkit; (b) as a network; and (c) as a the Disnet interface by a number of basis for a large range of applications to be organizations participating in the Disnet built by its partners (p. 2 of the letter of project. 2 May 1993, which is attached to the applica- tion and which IDE sent to the project supervisor appointed by the Commission).

83. It is apparent from the whole of the documents relating to the principal claim and to the counterclaim, as well as from the hear- 86. IDE states (paragraph 9 of its rejoinder ing that in the present case there is a funda- in the counterclaim proceedings) that the mental divergence of views as to the subject- product which it delivered was commercially matter of the contract and, consequently, as attractive enough to be exploited on the mar- to whether or not the product delivered to ket and that external observers had acknowl- the Commission by IDE was in conformity edged as much. At the hearing it described with the specifications set out in the contract the product as delivered as outstanding, as and defined in the technical annex. constituting software which was ahead of its time and as commercially successful.

91. The fact that the Commission describes the Disnet project as a pilot/demonstration project is of no particular significance 89. In the light of the foregoing analysis, because it is the contract alone which is with regard to the product which IDE had binding on the contracting parties. More par- undertaken to deliver, I have to take the view ticularly, the precise characteristics and, more that the term 'marketable product' used in generally, the description of the project are the technical annex with regard to Disnet laid down in the contract itself and in its describes a product with characteristics (such technical annex and the fact that the Com- as its stability and fitness for the purpose to mission describes the project in a certain way be served) such that it is capable of being in some other document unconnected with exploited on the market. Accordingly, IDE's the contract cannot in itself alter the obliga- contention that it would run counter to the tions of the parties. contract itself to require it to deliver stable software ready for sale on the market is unfounded. However, the fact that the resources made available by the Commission were inadequate, as it claims, does not sub- stantiate its assertions regarding the charac- teristics of the product which it was to deliver. Moreover, IDE states that the end product, with the improvements it had 92. IDE emphasized at the hearing that it already incorporated, is commercially suc- was necessary to take into account the deve- cessful. lopment of the software, which is a collec- tion of extremely complex data which is con- stantly evolving. It pointed out that the final version of Disnet had reached a particularly advanced stage, that it was nearly completed, that it met all the specifications of the con- tract and took into account technological developments, since the contract had been signed on 31 January 1990. It concluded by 90. IDE also maintains that it was to deliver saying that the project was in its initial stages a pilot/demonstration project (paragraph 8 and would be completed in the form of a of its rejoinder in the counterclaim proceed- network. That network was ultimately cre- ings) and relies on this point on a Commis- ated by the group of organizations collabo- sion document, dated December 1992 and rating with IDE and belonging to all the attached to that rejoinder, in which the Member States of the Community.

97. In its report the 'Evaluation Panel' acknowledged that the conceptual basis for Disnet was innovative and raised high expec- tations. However, it found that the end 95. Moreover, in support of its arguments, product as demonstrated did not live up to the Commission lodged (Annex II to the those expectations, that is to say, it did not statement in rejoinder in the original action meet the specifications set out in the techni- and in reply in the counterclaim proceed- cal annex. It emphasized that that finding ings) a document from IDE entitled 'System held true irrespective of whichever version of Design' which deals with the natural Disnet was considered.

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99. Moreover, according to the 'Panel's' report, IDE failed to deliver two products which were also included in the contract: it 103. It follows from the foregoing consider- did not complete the network or the ations that the 'Evaluation Panel's' report is domain-specific applications of the toolkit. not lacking in objectivity and that its find- ings must be accepted, namely that IDE did not fulfil its obligations. Moreover, IDE has not furnished any evidence such as to sup- port its argument and thus refute the 'Pan- el's' unfavourable substantive evaluation according to which the product demon- strated did not meet the specifications set out in the technical annex. N o r did the expert 100. In view of the foregoing, the 'Panel' appointed by IDE issue an opinion in writ- considered that the Disnet project had not ing to the contrary. been successfully completed and that it met between 50% and 75% of the specifications set out in the technical annex.

4) The question whether IDE failed to fulfil its principal obligation

101. In a report lodged on 2 August 1993 (annexed to the defence), the expert appointed by the Commission made similar 104. The object of the contract concluded negative observations on the results of the between the Commission and IDE was to demonstration. create a marketable domain-independent

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105. Article 5.3 of the contract provided that should no such demonstration of the project take place or the demonstration not be suc- cessful, the Commission could call for full or partial repayment of the amounts paid as a financial contribution together with interest. From that article, in my opinion, the follow- 106. According to the findings of the 'Evalu- ing inferences may be drawn: ation Panel', IDE had delivered only the first of the three products which it was to supply. Furthermore, the completed product, that is to say the Disnet toolkit demonstrated, met 50% to 75% of the specifications in the tech- nical annex. In view of this, the Commission may not call for repayment of the full amount of the contribution paid by it but only part of that amount. (a) The Commission may call for total repayment of the amounts paid only where no demonstration takes place or the end product demonstrated does not 8 — That view is confirmed by the fact that, according to Article 3.4 of the contract, the deliverable products are any signifi- at all meet (or meets only to a negligible cant outputs of the completed Disnet project.

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109. For the sake of completeness, I shall 108. Since in my view the three end prod- consider the Commission's alternative sub- ucts were equally important to the comple- missions relating to the failure of IDE to ful- tion of the project as a whole, a third of the fil other contractual obligations. E C U 909 900, that is to say E C U 303 300, corresponds to the completion of each of the end products. Thus, since the product deliv- ered attained 75% of the objectives set, according to the evaluation which is most favourable to IDE, the latter should keep solely the amount remaining after subtract- ing 25% (that is E C U 75 825) of E C U 303 300, corresponding to the first of 110. These submissions are put forward as the three products encompassed by the an alternative basis, first for the counterclaim project. Accordingly, IDE is entitled to for the repayment of the amounts already keep E C U 227 475 (ECU 303 300 less paid and, secondly, for refuting IDE's asser- E C U 75 825) and must reimburse to the tions that it fulfilled all its obligations and Commission E C U 305 981 (ECU 533 456 that the Commission should therefore pay it less E C U 227 475), together with interest. the remainder of its contribution. I shall also The rate of interest to be applied, fixed in consider IDE's arguments alleging failure on accordance with Article 5.3 (in fine) of the the part of the Commission to fulfil its con- contract, is, according to the Commission, tractual obligations.

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1) Failure by IDE to fulfil its obligations to 114. It appears from reports drawn up at the manage the project properly and to keep the request of the Commission, first, by an inde- Commission informed pendent expert and, secondly, by a firm of accountants (Annexes I and II to the defence), that certain irregularities in the sphere of management were noted in IDE's implementation of the project.

116. Secondly, the report of 22 June 1992, drawn up by the firm of accountants, con- cerned the audit of the progress made by the 113. In the same letter the Commission project in periods 1, 2 and 3 (from 15 March points out that it has not received the state- 1990 to 15 September 1991). The audit ment of expenditure for the period 15 Sep- started on 18 May 1992. According to the tember 1992 to 15 March 1993. report, IDE did not make available the

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ledgers for the period in question, reserva- 2) IDE did not submit to the Commission tions were expressed as to the accuracy of the comprehensive final report covering the the costs statements submitted and a 34% whole project or a consolidated statement of reduction in expenditure was proposed. expenditure

119. Under Article 3.3 of the contract, the contractor, IDE, was, within two months of the completion of the work programme, to furnish to the Commission a final compre- hensive report covering the whole project, accompanied by a consolidated statement of expenditure together with final supporting 117. IDE contests the results of the assess- documents. ment made by the accounting firm in ques- tion (paragraph 8 of the statement in reply to the defence and in answer to the counter- claim) and states that it managed its expendi- ture scrupulously and kept an hourly record of work during the project.

120. According to the Commission, IDE's comprehensive final report on the project, dated 17 May 1993, does not fulfil the requirements of the contract because it does not explain clearly the objectives and the results of the project and contains statements that are in contradiction with the interim reports (see the letter of 7 September from the Commission to IDE, annexed to the application).

123. Since IDE did not lodge, within two months after the delivery of its work, the comprehensive final report covering the whole project, the consolidated statement of expenditure or the final supporting docu- 126. In reply to the Commission's assertion ments, it is clear that it failed to fulfil its that, in the course of the project, the compo- obligations under Article 3.3 of the contract. sition of the group of organizations collabo- rating with IDE had been continuously changed, IDE admitted that changes had in fact taken place but it denied any responsi- bility in this regard. Those changes, accord- ing to IDE (see p. 7 of the letter sent to the Commission on 2 May 1993, referred to 3) The composition of the group of organi- above), were due to economic reasons which zations collaborating with IDE was changed led certain members of the original group to without the approval of the Commission withdraw or to the irresponsible behaviour of the original partners.

124. Article 6.2 of the contract provides that 127. However, IDE insists that the Commis- the contractor may entrust the performance sion approved those changes expressly or of part of the work programme to third par- tacitly, in conformity with Article 6.2.2, and ties subject to the condition that the drafts of that all the rights and obligations of the part- all subcontracts are to be notified by regis- ners who withdrew were transferred to the tered letter to the Commission, which may, new co-contractors. This proves, according provided it acts within 15 working days fol- to IDE, that there was no problem with lowing the receipt of such a letter, refuse to regard either to the approval of subcontracts approve the subcontracting. If the Commis- by the Commission or to the supervision of

the whole of the work programme, which it establishment of a plan of action for setting was required to undertake in its capacity as up an information services market. It appears coordinator of the work of the group. from the recitals in the preamble to and the provisions of that decision that the plan of action was directed at organizations in the Member States of the European Communi- ties and was intended to set up a Commu- nity information services market. 128. There is no provision in the contract which places an obligation on IDE to ensure that the composition of the group remains stable from the beginning to the end of the project. That means that IDE could, with the express or implied approval of the Commis- sion, change, for reasons of its own, the 131. Moreover, the technical annex (p. 3 of composition of the group of organizations the original version and p. 2 of the amended collaborating with it. The Commission's version) indicates that, during the course of assertions to the contrary are therefore the Disnet project, IDE was to work closely unfounded. with a number of organizations from seven (original version) or ten (amended version) Member States. As the Commission rightly points out, it therefore excludes non- Community companies from participating in the group entrusted with carrying out the 129. According to the Commission, con- Disnet project. trary to the provisions of the contract, IDE subcontracted, without its prior authoriza- tion, certain work to Hungarian undertak- ings (p. 9 of the defence). It stresses that the Impact programme concerns the Commu- nity information services market and that therefore, by subcontracting work to Hun- 132. I D E states that all it did use was some garian undertakings, IDE acted in breach of Hungarian workers and that, in conformity its contractual obligations. with Hungarian law, the temporary recruit- ment of workers must be notified to a spe- cific organization which registers this (para- graph 17 of the rejoinder in the counterclaim proceedings). IDE counters the Commis- sion's assertion that it resorted to subcon- 130. According to Article 1 of the contract tracts which were not authorized under the between the Commission and IDE, at issue contract by claiming that in each case it noti- in this case, the contract was concluded in fied the subcontracts, as required under the framework of the Community's Impact Article 6 of the contract, and it produces a programme on the basis of the Council's registered letter concerning six new partners Decision of 26 July 1988 9 concerning the but not the disputed subcontract with a Hungarian company (Annex VIII to the statement in reply to the defence and in 9 — Referred to in footnote 3. answer to the counterclaim).

136. According to the technical annex, the two phases would normally be executed con- secutively. That means that as soon as the intelligent interface was ready it could be used for applications. However, since that 4) IDE's relations with the other members of would take too much time, the timescale of the consortium the Impact I project being two years, certain activities coming under the second phase were to be carried out concurrently as from the commencement of the first phase in order to prepare the participants for the sub- sequent application and integration of the 134. Under Article 6.1 of the contract, the intelligent interface as a toolkit for their spe- contractor is to have technical and financial cial human interfacing needs. responsibility for the work and is to provide the personnel, the facilities, equipment and materials necessary for the proper perfor- mance of the contract. In so far as the work is to be carried out by organizations associ- ated with the contractor for this purpose, the contractor is responsible for ensuring that the Community financial contribution is shared amongst the participating organiza- tions according to the progress of work and the participation of each organization. 137. The Commission stresses that IDE, contrary to Article 6.1 of the contract and the terms of the technical annex and although it accepted technical responsibility for the performance of the work, failed to send its partners in good time an operational version of the toolkit. That omission pre- 135. The technical annex (p. 16 of the origi- vented them from starting work in good nal version and p. 10 of the amended ver- time on the adaptation of the toolkit in ques- sion) provides that the project has two tion to the specific requirements of their phases: (a) the building of the intelligent databases.

142. Whether IDE did or did not send to the other members of the consortium an opera- tional version of the toolkit a year before the expiry of the deadline for the completion of the whole project and whether a year was long enough to enable them to carry out 139. The Commission also refers to the min- their part of the work are questions of evi- utes of the meeting of the 17 partners of IDE dence. IDE has not furnished any proof of in the Disnet project, which took place in its assertion on those points so that the Luxembourg on 18 May 1993 (Annex III to assessment contained in the abovementioned the statement in rejoinder in the original minutes of IDE's partners' meeting will have action and in reply in the counterclaim pro- to suffice. ceedings), according to which the progress of the project had been unjustifiably delayed by IDE. The same document also indicates that it was not until February 1993 that IDE's partners received a release of the toolbox which should have been ready by November 1992 and that in July 1993 only a small num- 143. The Commission further maintains that ber of partners had been able to create IDE also failed to fulfil its obligation to allo- operational applications with that toolkit. cate the Community contribution between its partners, that is to say that it failed to ful- fil its financial obligations under Article 6.1.

140. IDE, on the other hand, maintains that 144. In support of its assertion, the Com- it sent in good time, that is to say one year mission produced (a) the abovementioned before the expiry of the deadline for the minutes of the meeting on the progress of completion of the whole project, the opera- the Disnet project held on 18 May 1993, tional version of the toolkit which it was to where it is stated (at paragraph 3.3) that IDE send to the other members of the consortium failed to pay its partners the share of the so that they could carry out the parts of the Community contribution due to them; and project allocated to them. (b) letters addressed to IDE containing cora-

145. IDE denies having failed to fulfil its obligation to pay its partners the share of the Community contribution due to them and to that effect produces a number of statistical reports (Annex XI to the statement in reply 5) IDE's allegation that the Commission to the defence and in answer to the counter- failed to fulfil its contractual obligations claim). However, those reports merely prove the existence of a current account for the transactions between IDE and its partners. Moreover, it justifies its conduct by main- taining (at paragraph 16 of the rejoinder in the counterclaim proceedings) that the other members of the group collaborating with it 148. Under Article 6.3 of the contract the had not received any amounts because the contractor must, without delay, provide the advances paid were set off against the expen- Commission with full particulars of any inci- diture incurred by it on behalf of the whole dent or event likely to prejudice the perfor- consortium and, in any event, because the mance of the contract. Commission had not paid it the total amount of the contribution.

149. According to IDE (p. 3 of its letter to the Commission of 2 May 1993, referred to 146. In particular, IDE considers the com- above), the Commission failed to meet its plaints made by two of the members of the responsibilities because it did not reply to consortium to be unfounded because, in one IDE's repeated warnings concerning the dif- case, the partner in question did not deliver ficulties encountered in executing the project the program it was to supply, while in the as a result of the need to carry out unex- other case, the amounts which were to be pected additional work, which gave rise to

155. IDE claims the payment of E C U 37 650 10 — See point 41 et seq. of the Opinion of Advocate General to cover extra-judicial expenses which, it Lenz in a similar case: Case C-209/90 Commission v Feil- bauer [1992] ECR I-2613. explains, it incurred for 'legal advice'.

I-838

IDE v COMMISSION

156. It is for IDE to prove that it incurred the contract and consisting in the non- such costs. However, since it has not pro- payment of the whole amount of the contri- duced any supporting documents, the claim bution due to it under the contract is admis- in question must be rejected as unsupported sible and well founded. by any evidence.

2) Claim for the payment of interest (a) Admissibility

(b) E C U 3 188.80 for the sale of two that request and sets a value on the amount company motor cars; (c) E C U 54 554.35 of the damage, the claim for compensation for dismissing most of its staff and being for damage formulated in the reply may be obliged to train new members of staff; and regarded as an amplification of the claim (d) E C U 68 331.52 for the considerable delay contained in the application and therefore as in entering the market, resulting in loss of admissible. 13 customers and goodwill. It failed, however, to quantify the amount of the damage it suffered as a result of the devaluation of the E C U against the florin.

164. In its application to the Court IDE sat- isfactorily defined from the outset the subject-matter of its claim. This means that the fact that it formulated its claim for com- pensation in the originating application, 162. Since IDE has not specified in its appli- without quantifying precisely the amount of cation the amount of the damage it suffered, the damage, which it did in its reply, does the admissibility of its claim poses a prob- not render that claim inadmissible, except for lem. The Court may consider this question the limb concerning damage suffered as a of its own motion, 1 1basing itself, obviously, result of the devaluation of the E C U against on its Rules of Procedure, since Article 16 of the florin but not quantified by IDE. the contract at issue, relating to the applica- tion of Luxembourg law, must be considered to refer only to the provisions of substantive law. 12

(b) Substance

and 7 of the defence). O n those grounds, it 168. The first condition is not met because requests the Court to reject IDE's claim. the Commission has not failed to fulfil any of its contractual obligations. Even if the Court were to find otherwise, the second condition would not be met either because IDE describes the damage which it has suf- fered by specifying the amounts making up that damage, but does not adduce any evi- dence as to the actual damage and its extent. 166. As regards the first of the Commis- That lack of evidence makes it impossible to sion's arguments, I would observe that judge the extent to which there is a causal according to Article 8.1 of the contract IDE link between the damage suffered by IDE assumes sole responsibility for any damage and the Commission's conduct. or injury suffered by it in or in connection with the performance of the contract. That clause refers, however, to damage arising from matters unrelated to the contract. In the present case IDE requests compensation for damage which it claims to have suffered as a result of the fact that the Commission 169. In conclusion, even if the Court were did not fulfil its principal contractual obliga- to uphold the principal claim formulated by tion, namely to pay the whole of the agreed IDE in its application, namely for an order contribution. The contract does not appear, that the Commission pay the remainder of prima facie, to exclude the Commission's the contribution, its other claim, which is in liability in such an event. damages, should be dismissed, first, because it is unfounded and, secondly, because it is unsubstantiated by any evidence.

173. Where the conduct of the victim of the damage constitutes force majeure, that is to 171. Under the law governing contractual say if it is unforeseeable and inevitable, the liability, a contracting party who has not ful- defaulting party is exempted if no fault filled all his contractual obligations, or has attaches to him as a result of his act or omis- fulfilled them only in part, must make good sion. However, if it is proven that the con- the damage which his non-performance, be it duct of the injured party was neither unfore- total or partial, has caused to the other party seeable nor inevitable and contributed to an to the contract. In particular, Articles 1147 extension of the damage, then such conduct and 1148 of the Luxembourg Civil Code may lead to a partial exemption of the indicate when the party who has failed to defaulting party, if such conduct constitutes perform his contractual obligations is exempt fault. 17 from the obligation to pay damages. 15

I-842

IDE v COMMISSION

party to be partially exonerated. 1 9With B — Proposed solution regard to contracts, the case-law does not appear to admit of the partial exoneration of the defaulting party where the injured par- ty's conduct does not amount to fault. 20 Once it has been established that the injured party's fault contributed to the occurrence of the damage, the court adjudicating on the 176. As I have already said, the Commission merits determines how liability is to be and IDE concluded a synallagmatic contract apportioned on the basis either of the gravity under which the former undertook to pay a of the fault on the part of the defaulting certain sum by way of contribution for the party and the injured party respectively, or performance of work by the latter, namely of the causal link between each such case of the creation of Disnet. This means that we fault and the supervening damage. Accord- are concerned with a contract under which ingly, the findings made by the court adjudi- the defaulting party, in this case IDE, is cating on the merits with regard to the exist- required to obtain a specific result (obliga- ence and gravity of the fault and the tion of result), that is to say that its principal apportionment of liability are therefore not obligation consists in the delivery of a spe- open to review. cific product. At the same time IDE was to perform a number of other obligations, of a secondary nature, which, as shown, it did not perform. 175. Where the defaulting party is required to produce a specific result (obligation of result), 21 that is to deliver a given product, liability is normally apportioned, where no fault on his part has been proved, on the basis of the causal link existing between the damage and the fault on the part of the 177. The Commission paid to IDE a large injured party, although the courts tend also part of the contribution due. The fact that to take into account the gravity of the the work was not successfully completed led fault. 22 to its decision to call for refund of the advance payments together with interest, pursuant to Article 5.3 of the contract.

I-843

OPINION OF MR COSMAS — CASE C-114/94

Commission and IDE's breach of its con- 181. The claims put forward by IDE, which tractual obligations. are intended to show that the Commission acted wrongfully, are, however, unfounded. In so far as IDE submitted a project with a view to concluding a contract with the Com- mission involving a financial contribution by the latter towards the work it was to carry out, IDE should have taken into consider- ation all the factors which might make that 179. None the less, it may not be concluded project be more costly than expected and, that the Commission contributed by its fault accordingly, requested from the outset a (action or omission) to IDE's breach of its readjustment of the amounts specified in the contractual obligations, which gave rise to contract, that is to say the total cost of the damage. In other words, the necessary executing the project and the corresponding causal link between the Commission's con- contribution by the Commission. None the duct and IDE's breach of its obligations, less, this fact alone does not prove any which constitutes the event giving rise to the neglect on the part of the Commission which damage, is lacking. Moreover, the Commis- prevented IDE from fulfilling its obligations sion's intention in paying advances on its and which should be taken into consider- contribution was, ultimately, to bring about ation with a view to apportioning liability the realization of the objective of the project, between the two contracting parties. and for this reason it would be incorrect to conclude that it acted wrongfully and that liability should therefore be apportioned between itself and IDE.

185. Under the first subparagraph of Article 184. Consequently, I consider that in the 69(3) of the Rules of Procedure the Court present case the requirements for an appor- may order that the parties bear their own tionment of liability are not satisfied, since costs if each party succeeds on some and fails on the Commission's part there was no fault on other heads. Since, as I have indicated contributing to IDE's breach of its contrac- above, the Commission's claims can be tual obligations which was the cause of the upheld only in part, the parties should bear damage suffered by the Commission. their own costs.

IX — C o n c l u s i o n

186. F o r the foregoing reasons I therefore p r o p o s e that the C o u r t should give j u d g - m e n t in the following terms:

(1) I D E ' s application is dismissed.

(2) T h e C o m m i s s i o n ' s counterclaim is allowed in p a r t and I D E is o r d e r e d t o p a y t o t h e C o m m i s s i o n t h e s u m of E C U 305 9 8 1 , t o g e t h e r w i t h interest at 7.97% per annum from o n e m o n t h following t h e date (29 J u n e 1994) o n w h i c h t h e C o m m i s s i o n requested r e i m b u r s e m e n t of t h e s u m s already paid, that is t o say as from 29 J u l y 1994.

(3) T h e parties are o r d e r e d t o bear their o w n costs.