C-172/97

Β — Facts 4. The first technical progress report was made to the Commission by letter of 23 May 1991. The Commission gave its approval on 4 July 1991. However, since 2. On 6 December 1990 the European the report contained no financial informa- Community, represented by the Commis­ tion, the Commission requested, by letter of sion, entered into contract no. HY 84-89 5 August 1991, that the defendants provide FR ('the contract') with SIVU1 du plan a financial report covering the period d'eau de la Vallée du Lot ('SIVU') and beginning with the commencement of work SARL Hydro-Réalisations, acting jointly (1 April to 30 June 1990). That report was and severally. The aim of the contract was communicated to the Commission by letter to provide financial support by the Eur- of 13 August 1991. opean Community for the following proj- ect: Water level on the River Lot — Incor- 2 — In French: 'Plan d'eau sur le Lot. Intégration d'une microcentrale hydroélectrique basse chute dans le seuil.' 3 — Council Regulation (EEC) No 3640/85 of 20 December * Original language: German. 1985 on the promotion, by financial support, of demonstra- 1 — Syndicat intercommunal â vocation unique de droit fran- tion projects and industrial pilot projects in the energy field çais. (OJ 1985 L 350, p. 29).

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6. By letter of 6 November 1992 SIVU announced a fundamental change to the original project due to the misgivings of environmental groups. According to this change, the construction of a small low- 10. By application lodged at the Court on head hydro-electricity power station in the 2 May 1997 the Commission requested barrage weir would be replaced by the construction of a spill-weir. In addition, SIVU expressly declined to accept any further payments from the Commission and offered to repay the amount already received. 1. that SIVU and SARL Hydro-Réalisa- tions be ordered to pay ECU 83 928 (eighty three thousand, nine hundred and twenty eight ECU) together with interest as from 17 January 1991 at the rate applied by the EMCF for its ECU 7. By letter of 18 November 1992 the transactions, published on the first Commission terminated the contract in working day of every month, in addi- accordance with Clause 9 and demanded tion to statutory default interest as repayment of the advance of ECU 83 928 from February 28 1993; together with interest accumulated since receipt of the payment. On 8 December 1992 the Commission issued a requisition order against SIVU for that amount, pay- able by 28 February 1993. 2. that SIVU and SARL Hydro-Réalisa- 4 — Annex I contains the work programme as agreed between tions be ordered to bear the costs of the the parties. proceedings.

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11. As evidenced by the acknowledgment The letter contained no further informa- of receipt, notice of the proceedings was tion. served on SIVU on 10 May 1997. Such service was not immediately achieved in regard to SARL Hydro-Réalisations.

17. Pursuant to point 1 of Clause 1, the object of the contract is the promotion of 2. Unprivileged claims stand no chance of the project 'Water level on the River Lot — being satisfied.' Incorporation in the barrage weir of a small

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low-head hydro-electric power station' for been paid is to be repaid to the Commission which, according to Clause 3, the financial with interest. support of the Community is to amount to a maximum of ECU 279 761.

5 — This term is meant to denote both defendants. 6 — In the original French '... le contrat est résilié d'office...'. 7 — European Monetary Cooperation Fund.

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validity, interpretation and application of Paragraph (2) states: the contract.

'Before giving judgment by default the Court shall, after hearing the Advocate 24. Pursuant to Clause 14, the contract is General, consider whether the application subject to French law. initiating proceedings is admissible, whe- ther the appropriate formalities have been complied with, and whether the application appears well founded...'

D — Procedural provisions 27. As regards the contents of the defence, Article 40(1) of the Rules of Procedure of the Court of Justice states: 25. Article 38 of the Statute of the Court of Justice provides:

28. I shall refer where necessary to details of the Commission's submissions and the relevant provisions later in this Opinion. 32. Pursuant to Article 40(1) of the Rules of Procedure of the Court of Justice the defence to the application must include arguments of fact and law as well as the form of order sought by the defendant. E — Opinion

29. In proceedings for judgment by default the Court must consider the admissibility of the application (general and special proce- 33. It is not contested that SIVU failed to dural requirements) as well as its merits react, in any way whatsoever, to the duly (whether the application 'appears well served application initiating proceedings, founded') so that no defence to the application was made. The administrator of SARL Hydro- Réalisations has informed the Court that the company has been in liquidation since 1992 and that there is no hope of satisfying unprivileged claims.

Admissibility

30. After the second defendant — SARL Hydro Réalisations — was also duly noti- fied on 30 April 1998, no doubt subsists as 34. It was in IRACO 8that the Court last to the admissibility of the original applica- considered the question whether a written tion. pleading contained the elements necessary to constitute a defence. In that case, the written pleading bore the title 'Defence and Counterclaim', which did indicate a certain defensive intention. In particular, the reply 31. The only question here is whether the special requirements for giving judgment by 8 — Case C-337/96 Commission v Industrial Refuse & Coal default are met, that is to say, that no Energy [1998] ECR I-7943.

35. The situation is different in this case, as the letter from the second defendant's administrator contains no arguments what- soever pertaining to the facts and the legal situation. Nothing resembling the content of the written pleading in IR ACO is to be found in the administrator's letter. No Merits opinion whatsoever is expressed in regard to the Commission's arguments, and in particular no defensive intention is appar- ent. To conclude from the statement that 38. As regards the merits, Article 94(2) of unprivileged claims stand no chance of the Rules of Procedure requires the Court being satisfied that the defendant wishes of Justice to consider whether the applica- to reject the Commission's claim would, tion of the Commission appears well foun- first, be contrary to the wording of Arti- ded. cle 40(1) of the Rules of Procedure of the Court of Justice and, secondly, ascribe a meaning to these few words which they clearly do not have. It is not apparent how far, if at all, the defendant challenges the Commission's claims. 39. The Commission has applied, first, for the reimbursement of the advance paid. Secondly, the Commission claims contrac- tual interest from the date of receipt of the advance, as well as statutory default inter- est from the date of service of the requisi- tion order (28 February 1993).

36. The administrator's letter could, on the contrary, even be interpreted to indicate that the claim to reimbursement, as such, is not contested. The statements would thus be considered as pertaining less to the 40. The right to reimbursement may be existence of the claim to reimbursement derived from Clause 9 of the contract, upon

41. Clause 9 provides for the right to terminate where the continuation of the agreed works is of no further interest, in particular for technical, economic, or financial reasons. 44. It is, however, questionable whether the right to terminate under Clause 9 requires that work already have been carried out. The wording of this clause seems to support such an interpretation, as it refers to pursuance of the work programme. How- 42. The Commission justifies the action it ever, where (construction) work has yet to took under Clause 9 by stating that its be carried out at all, as is the case here, letter of 7 October 1992 had put the there may be doubt as to whether termina- defendants on notice of default regarding tion of the contract under Clause 9 is communication of the technical and finan- possible. cial reports provided for by the contract. The Commission had already thus adverted to the possibility of termination in the event of non-performance. After SIVU, for its part, had informed the Commission in its letter of 6 November 1992 that the project initially agreed had been altered due to the misgivings of environmental protection groups and had offered to repay the advance, the Commission chose to termi- 45. Nevertheless, the Commission's action nate the contract in accordance with Clause under Clause 9 seems permissible. The 9. It maintains that continuation of the defendants had only sent a preliminary project had ceased to be of interest. In technical progress report to the Commis- reaching that conclusion, the Commission sion prior to the commencement of work. considers that whether work on the project After it became apparent that the project as had begun or not is immaterial. initially planned could not be carried out due to the misgivings of environmental protection groups, SIVU informed the Commission of the situation. In addition, it declined further funds and offered to reimburse the amount already received. The Commission was, thus far, right to 43. It is beyond question that continuation assume that continuation of the project had of the project is of no further interest become pointless.

47. The question need not be answered in 49. From those considerations — and from the present case in any event, as the the Commission's submissions, which are Commission, in addition to termination, sufficient for the purposes of considering also had the possibility of revocation under the application for judgment by default — Clause 8. It was entitled to revoke because the Commission's application appears well the defendants were in breach of their founded. contractual obligations, inasmuch as they failed, despite having been warned and given a time-limit, to submit to the Com- mission the reports as stipulated in Clause 4.3 of the contract. 50. As regards, next, the amount of the interest claimed by the Commission, it may be remarked that this claim exists only in so far as contractual interest is owed since 48. The legal consequences under both receipt of the advance. The claim for Clause 8 and Clause 9 of the contract additional interest (statutory default inter- would have been the same in the present est) is unfounded. case. Both the advance paid and the contractually-owed interest would have had to have been reimbursed. It is true that Clause 9 gives the right to claim interest in principle only once work has been com- pleted or terminated. However, in the 51. It was agreed in the contract, in both present case no (construction) work had Clause 8 and Clause 9, that in the case of been done; only the preliminary technical termination interest would be owed at the

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rate used by the EMCF for its ECU 55. From all that I have said it follows that transactions, as published on the first the Commission's application may likewise working day of each month. be upheld only to that extent, but must, for the rest, be rejected.

G — Right of appeal

54. To conclude, therefore, the Commis- sion's claim for reimbursement of the 57. Pursuant to Article 94(4) of the Rules advance together with interest appears well of Procedure of the Court of Justice, an founded only to the extent that it refers to application to set aside a judgment by the sum of the advance as such, as well as default can be made within one month of the contractual interest. the date of service of the judgment.

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H — Conclusion

58. I propose that judgment by default pursuant to Article 94(2) of the Rules of Procedure of the Court of Justice be given as follows: