C-69/97

COMMISSION ν SNUA

OPINION OF ADVOCATE GENERAL LA PERGOLA delivered on 15 October 1998 *

1. By this action, which has been brought tion clause in Clause 13, the Court of Justice under Article 181 of the EC Treaty, the Com­ has jurisdiction to hear all disputes con- mission of the European Communities (here­ cerning the validity, interpretation or applica- inafter 'the Commission') claims that SNUA tion of the Contract. Sri (hereinafter 'SNUA'), a company incor­ porated under Italian law, should be ordered to repay a sum advanced to it under a con- . tract which the Commission maintains was terminated owing to SNUA's non­ performance. 3. The construction work on the plant was to have begun in June 1987 and been completed in August 1988. Under Clause 4.3.1 of the Contract, SNUA was required, in the event I — Facts of its being unable to commence work on that date, to give the Commission at least two weeks' prior notice and to propose a new date for beginning work. If the Commission rejected the change proposed by the con- tractor, the Contract was to be terminated 2. Under Contract N o BM 441/86, concluded automatically and the advances repaid. 2 on 8 January 1998 between the European Economic Community, represented by the Commission, and SNUA (hereinafter 'the Contract'), SNUA agreed to install, in the municipality of S. Quirino, an integrated system for the collection and recycling of solid waste at a private plant with financial support from the Commission. The system 4. Clause 8 of the Contract, which refers to was one of the demonstration projects and Clause 4.3, states: 'The Commission may uni- industrial pilot projects in the energy field laterally terminate the Contract in the event referred to in Regulation EEC N o 3640/85 ì of [SNUA]'s non-performance of any of its for which the Commission had given finan- obligations thereunder, in particular if it fails cial support. The Contract is governed by to comply with the stipulations made in Italian law (see Clause 14). Under the arbitra- Clause 4.3 thereof; termination shall take effect on expiry of a period of one month after

notice has been served by registered letter 1989. Meanwhile, by letter of 6 March 1989, with acknowledgement of receipt, where non- SNUA applied to the Commission for an performance persists'. Clause 8 further pro- extension of the deadline for commencing the vides that, in those circumstances, 'the con- works. It informed the Commission that, tractor shall immediately repay to the although all official authorisations had been Commission any amounts advanced by way obtained, including planning permission from of financial assistance, together with interest the municipality, the execution of the project payable from the date of receipt of such was being impeded by strong opposition on funding. Interest shall be payable at the Euro- the part of local communities to its going pean Investment Bank's rate applicable as at ahead as approved. It was therefore necessary the date of the Commission's decision [11 for the autonomous region of Friuli-Venezia- November 1986] on the award of funding for Giulia (hereinafter 'the Region') to adopt a the project'. decision. Finding there to be force majeure, the Commission, by letter of 13 April 1989, set a deadline of 30 September 1989 for a definitive decision authorising work to be resumed, failing which the Contract might be terminated under Clause 9.

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COMMISSION ν SNUA

of receipt, stating that the Contract would be mination clause in Clause 8 of the Contract terminated on 31 December 1991 if the works when it served notice on SNUA in its letter had still not been carried out by then. By of 18 September 1991 was valid. It claims that 3 letter of 5 November 1992, the Commission under Article 1456 of the Civil Code, the informed SNUA that, since it had received Contract was terminated on 31 December no information as to the commencement of 1991 by operation of law. The Commission the works, it had decided to invoke Clause 9 does not accept, in particular, that the Region's of the Contract. None of the subsequent inefficiency can exempt SNUA from any requests the Commission sent to SNUA on responsibility for failure to execute the works 25 January 1994, 2 June 1994 and 15 Feb­ which were begun seven years late. The dif­ ruary 1995 for repayment of the advance ficulties associated with choosing the initial originally paid to it, plus interest, met with site did not amount to unforeseeable circum­ any response. stances and, had SNUA shown itself to be a reasonably diligent contractor, it would at the very least have been under a duty to inform the Commission that there was a risk of delay. The Commission furthermore stated that the reference, in some of the letters it sent to SNUA at the time, to Clause 9 of the Con­ tract, which gives the parties the right to ter­ minate the Contract if it serves no further 8. Following various actions brought by purpose to continue the agreed works pro­ SNUA against, first of all, the municipality of gramme (see point 5 above), was a simple fac­ S. Quirino and then the Region, the latter, on tual error. 15 July 1993, adopted the necessary decisions for the project to go ahead. The construction work for the plant finally began on 7 December 1994, barely two months after the municipality of Aviano had granted planning permission for the plant.

on activities which contributed little to the (3) to pay the costs of the proceedings. common interest and furthermore damaged its credibility vis-à-vis the other Community institutions, the Member States and potential third party contractors. The Commission therefore considers that, pursuant to Article 1453 of the Civil Code, 4 it is entitled to be compensated for damage it can prove, which it estimates at ECU 60 000, subject to the Court's assessment ex aequo et bono under 10. SNUA, for its part, contended that the Article 1226 of the Civil Code. 5 The Com- Court should dismiss the action and order mission therefore claimed that the Court the applicant to pay the costs. SNUA observes should order SNUA: first of all that Clause 8 of the Contract, which contains a general reference to breach of con- tractual obligations, does not fulfil the condi- tions set out in Article 1456 of the Civil Code, cited above, which provides for automatic termination only where it has been expressly agreed upon as the result of non-performance of a specified obligation. In SNUA's view, the basis for the Commission's notice is actu- (1) to repay to it E C U 195 397 plus interest ally Article 1454 of the Civil Code. 6 If that in the amount of E C U 43.09 per day is so, in order for the notice to have the effect from 1 April 1988 to the actual date of of terminating the contract, a specific applica- payment; tion for termination must be made to a court in order to establish whether the period accorded the party in default is sufficient, to assess how serious the non-performance is, and to determine where responsibility for it

If sion, it shall be evaluated by the court with a view to a fair the contract has not been performed within that period, it assessment.' shall be terminated by operation of law.'

12. I should like to begin by considering — 13. Therefore, having established that the con­ albeit only to reject it — the defendant's tractual clause in question cannot be consid­ argument that the clause in question is no ered invalid on the ground that it is couched more than a 'style clause'. It is true that the in general terms, it remains to be determined case-law of the Corte Suprema di Cassazione whether or not the Commission's reliance on unambiguously tends towards the view that a the express termination clause in its letter of clause is only an express termination clause if the parties have provided that non­ performance of one or more specifically defined obligations would result in termina­ 7 — See judgment of the Court of Cassation N o 6827 of 16 November 1983, Arch, civ., 1984, p. 158. I would point out tion of the contract, whereas a style clause is that, where the parties have provided for termination of a contract by operation of law for non-performance of any one which contains a general reference to obligation thereunder, the seriousness of any non-performance breach of all contractual obligations — and must be analysed in the context of the overall scheme of the contract; however, it is not sufficient to establish fault alone which adds nothing to the general provisions where there is a valid express termination clause (see judg­ ments of the Court of Cassation N o 3119 of 23 May 1985, of Articles 1453 (Termination of contract for and N o 5169 of 2 June 1990). non-performance) and 1455 (Seriousness of 8 — See judgment of 16 November 1983, cited in footnote' 7.

14. However, whether the letter of 18 Sep- tember 1991 is taken as notice to perform, 15. Could it be that in this case SNUA com- which I think is the better view, or as a state- plied with its obligation to provide evidence ment to the other party of an intention to in exoneration, as Article 1218 of the Civil rely on the express termination clause, the Code (see footnote 10) requires the defaulting result is in practice the same for the purposes party to do? It is probably worth recalling of this analysis. 9 O n either view, a statement that the test which seems to emerge from the of intent by the party not in default can only case-law of the Corte Suprema di Cassazione have the intended result of terminating the is that evidence that the defaulting party contract if the other party can be held respon- cannot be held to blame for the non- sible for the non-performance, within the performance must be exhaustive and must meaning of Article 1218 of the Civil Code. 10 More specifically, as the Corte Suprema di Cassazione has held, where there is an express 11 — See judgments of the Court of Cassation N o 5710 of 27 June termination clause, in order for the contract 1987, and N o 4659 of 16 April 1992. See also judgment to be terminated by operation of law there 11960 of 17 December 1990 in Giur. it., 1991, part 1, sec- tion 1, column 773, according to which, even if the defaulting party is presumed to be at fault for the purposes of Article 1218 of the Civil Code, the court is not only bound, as regards termination of the contract, to find that the event provided for in the express termination clause has occurred 9 — See, however, footnote 13 and the relevant part of the text. but must consider the conduct of the defaulting party, in the light of the principle of good faith, since the contract cannot 10 — That provision, on 'Liability of the defaulting party', pro- be terminated unless the defaulting party (at least) was to vides as follows: 'Where the defaulting party fails to perform blame. the contracted obligation, he shall be bound to pay damages unless he can show that the reason why he did not perform 12 — See judgments of the Court of Cassation N o 1355 of the obligation, or performed it late, was that he was unable 31 March 1950 and N o 1812 of 30 May 1981. to perform owing to a circumstance for which he cannot be 13 — See judgment of the Court of Cassation N o 2979 of held responsible. 20 March 1991.

demonstrate that that party is not at fault in 16. In the light of the principles set out above, any way, either because a particular impedi­ it seems to me that SNU A's conduct was not ment made the obligation impossible to per­ blameworthy, as alleged, having regard to the form, or at least because, whatever the reason exonerating evidence of the factum principis for the failure, that party was not to blame in the form of the forceful and protracted for it. 14 opposition of the S. Quirino community and local authority to the recycling plant. More­ over, at the time the Commission viewed this circumstance as constituting force majeure (in its letter to SNUA of 13 April 1989; see point 6 above). Accordingly, and having regard to the length of time for which that state of affairs continued, SNUA cannot be held Responsibility for non-performance may in responsible for the fact that the works did particular be excluded if there is what is not begin before expiry of the 31 December known as factum principis, which may take 1991 deadline set by the Commission in its the form of a legislative or administrative letter of 18 September 1991. The opposition measure (including inaction by the authori­ to the works commencing any sooner consti­ ties) 1 5 adopted in the general interest which tuted a circumstance wholly unintended by makes performance impossible, irrespective SNUA and beyond the reach of its duty to of the conduct of the defaulting party. 1 6 The act with reasonable diligence. In fact the case- requirement that the order or prohibition file shows that SNUA repeatedly and assidu­ emanating from the authorities should be ously petitioned the competent municipal and wholly unintended by the defaulting party regional authorities in an attempt to end the and beyond the reach of the duty to act with impasse by the most appropriate administra­ reasonable diligence does not mean that he tive judicial means and, and that it gave the need take no action, but that he must embark Commission ample notice, in particular upon and exhaust, within the bounds of rea­ involving the regional environmental assessor sonable diligence, all possible courses of action in person in its correspondence with the to counteract the public authority's resistance Commission. or refusal to cooperate. 1 7 Therefore, where the obligation provided for under the con­ tract is an activity requiring official permis­ sion, a defaulting party will incur blame if he cannot show that he used reasonable endeav­ ours to obtain the permission required and that, upon such permission being refused, he exhausted all possible administrative and legal remedies. 1 8

— dismiss t h e C o m m i s s i o n ' s action, and

— o r d e r t h e C o m m i s s i o n t o p a y t h e costs.

19 — See footnote 13 and the relevant part of the text.

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