C-416/98

1 — Original language: French. 2 — Hereinafter 'the Contract'. — the installation of a 300 kW wind 3 — Hereinafter 'NET' or 'the defendant'. 4 — Otherwise referred to as 'the applicant'. energy converter on a Greek island no 5 — Hereinafter 'the Civil Code'. later than 1 January 1986;

I - 1760

COMMISSION v NEAENERGIAKI TECHNOLOGIA

— a two-year demonstration, starting on contract the Commission may serve notice 1 January 1986, that the system by registered post with acknowledgement worked; of service. If on the expiry of one month following such service the Contractor is still in breach of its obligations, the Com- mission may terminate the contract without further formality. The contract may also be — the handing over of the system to the terminated where, in order to obtain the users for commercial exploitation at financial assistance, the Contractor has the end of that period, namely on made false statements and may be held 1 April 1988. responsible for them. In both cases the Contractor shall immediately repay to the Commission the amount of the financial assistance received by it, plus interest from the end of the period of one month referred to above. The rate of interest shall be the 5. Article 3 of the Contract sets the amount European Investment Bank 6rate in force of the financial assistance to be provided by on the date of the Commission decision to the Community at 40% of the actual cost grant financial assistance to the project.' of the project, as verified and accepted by the Commission, subject to a cap of GRD 46 000 000, exclusive of value added tax.

9. Article 13 of the Contract states that all 12. Under Article 249 of the Civil Code, disputes concerning the validity, interpre- '[t]he limitation period for claims is 20 tation or application of the Contract are to years, unless otherwise provided'. be referred to the Court of Justice of the European Communities. Article 14 pro- vides for the contract to be governed by Greek law. 13. Article 345 of the Civil Code provides:

'In the case of pecuniary debts, the creditor Greek Law shall be entitled, after notice of default has been served, to claim default interest as prescribed by law or by the legal act concerned without having to prove loss. A 10. Article 147 of the Civil Code states: creditor who also proves other actual damage shall also be entitled to claim in respect thereof, save as otherwise provided by law.'

'Any person who is induced by deception to make a declaration of intent shall be entitled to seek annulment of the act. In 14. Article 346 of the Civil Code states: the event of a representation made to another person, if the deception is attribu- table to a third party, annulment may be sought only if the addressee of the repre- sentation or any other person directly acquiring rights as a result of that repre- 'A person from whom a pecuniary debt is sentation knew or should have known of due shall, even if not formally placed in the deception.' default, be liable to pay interest at the

I - 1762

COMMISSION v NEA ENERGIAKI TECHNOLOGIA

statutory rate as from the date of service of 17. In response to these various requests, judicial process to enforce payment of the NET invariably indicated that the works debt due.' were about to commence. It did not send the documents asked for by the Commis- sion.

21. It proposed accordingly that this III — Forms of order sought expenditure should be deducted from its debt. It requested furthermore that it be allowed to repay the sum of GRD 10 000 000 which remained available from the amounts paid by the Commission and that the Contract be terminated in accordance 25. In these proceedings, lodged at the with Article 9. Court Registry on 20 November 1998, the Commission claims that the Court should:

22. The Commission accepted NET's pro- posals and on 27 March 1990 7 it made out a recovery order for GRD 9 257 051, '— grant the application in full, together with GRD 241 500 representing bank interest, amounting in aggregate to GRD 9 498 551. Payment was to be made no later than 15 May 1990.

27. The Commission claims that it accepted NET's proposed settlement as a result of the latter's assertions that it had at — order the defendant in each case to pay its disposal the sum of GRD 10 000 000. the Commission's legal costs including This amount represented, according to the fees of its authorised lawyers.' NET, the balance of the advance of GRD 13 800 000 received by it. The acceptance of the proposal was furthermore subject to the condition subsequent, which although implied was none the less clear and indis- putable, that the said sum be actually 26. NET contends that the Court should: remitted.

'— dismiss the application in its entirety; 28. The Commission relies on NET's com- munication of 29 May 1998 in support of its claim. It submits that it follows there- from that at the time when NET was presenting its proposal for settlement it — in the alternative, order it to pay to the plainly did not intend to repay part of the applicant the sum of GRD 3 986 545, advance received but that its sole aim was without interest; to deceive the Commission in order to

I - 1765

OPINION OF MR LÉGER — CASE C-416/98

delay its obligations to make repayment and had to be found. 8It follows that the and ultimately to gain a reduction in its decision to terminate the Contract under debt. As part of this strategy, NET Article 9 is not subject to the condition, refrained from informing the Commission implied or otherwise, that the sum in that it had been put into liquidation. question be paid.

I - 1766

COMMISSION v NEA ENERGIAKI TECHNOLOGIA

34. As regards the first condition, under the entered into the contract even if there had settled case-law of the Greek courts, any been no fraudulent conduct. conduct liable to create or reinforce an incorrect impression or perception of real- ity through misrepresentation or the con- cealment of facts or only partial disclosure of facts constitutes deception. The obli- gation to disclose certain facts or provide 37. Lastly, under Greek law deception is the other party with certain information not presumed but must be proved by the depends on the type of contract, the party who claims to be a victim of it. requirements of good faith in the relations between the parties, morally sound conduct and bilateral contractual practice. In com- mercial transactions and particularly where a commercial risk is to be assumed, the obligation to provide information on the financial status of either party is greater Applicability of Article 147 of the Civil than usual. Code to the present proceedings

38. The Commission claims that the settle- 35. As far as the second condition is ment of 27 March 1990 is void. It submits concerned, the perpetrator's intention con- that its acceptance was obtained as a result sists of fraudulent intent on his part, that is of the defendant's false representation as to to say the knowledge or, at least, the its financial situation. NET indicated that it awareness that his conduct is misleading, retained GRD 10 000 000 from the and of acceptance of the consequences of amounts advanced by the Community, the deception. The concept of deception and accordingly that it was in a position accordingly excludes negligence, even seri- to repay this sum to the Commission. The ous negligence, on the perpetrator's part. Commission further contends that NET concealed important facts, such as the winding up proceedings commenced against it.

40. The defendant accepts that it did not inferred from the efforts which it made to have the sum which it proposed to remit to obtain a reduction in the amount of its the applicant available to it at the time indebtedness, as evidenced by the arrange- when it proposed the settlement. 9 ment for settlement that it proposed to the Commission on 26 June 1989. According to NET, there would have been no point in its striving to obtain this reduction in the amount of its indebtedness to the Commis- sion if it had had no intention at all to 41. Given the very wide meaning of the repay the sums due from it. concept of deception in Greek positive law, which it should be remembered provides that any conduct liable to create or rein- force an incorrect impression or perception of reality may amount to deception, it is my view that the fact that NET lied about the sums available to it and which it proposed to remit to the applicant means that it may be concluded that the act of deception is present in this case. 44. It must be found that the allegations made by the Commission are not substanti- ated by any matter or prima facie evidence supporting the conclusion that NET found itself in a financial position which made the repayment that it proposed in its letter of 42. According to the Commission, the 26 June 1989 completely illusory or fraudulent nature of NET's conduct may impossible. No information is given as to be deduced from the fact that it did not the date on which NET suspended pay- have the sums which it proposed to remit to ments. Nor has the Commission produced the Commission available to it at the time any accounting documents which would when it was attempting to obtain the prove that, for example, at the time when Commission's agreement to a reduction of the proposal for settlement was made, NET its debt. The Commission submits that the did not have any debts which it could misrepresentation of NET's financial pos- recover from a third party or any credit ition would be enough to prove that NET facility. did not intend to make the repayment agreed to by it.

46. In the alternative, should the Court hold that the acceptance by the Commis- sion of the settlement of 27 March 1990 is valid and binding on the Community, the Commission claims that NET is bound to 49. NET accepts that it is indebted to the repay the amount which this arrangement Commission and the validity of the settle- requires, namely GRD 9 498 551, together ment of 27 March 1990, but submits that with interest under Article 9 of the the amount of the expenditure incurred in Contract and statutory default interest. connection with the contract for financial assistance is greater than the figure declared by it to the Commission in its letters of 26 June and 21 September 1989. It explains that the expenditure declared and subsequently approved by the Com- mission, in connection with the settlement 47. The Commission submits that, as pro- of 27 March 1990, corresponded to the vided in the settlement of 27 March 1990, figures set out in its tax returns but not to the contract to provide financial assistance the contractual position. It states, however, entered into by the parties was terminated that it is unable to furnish proof of the under Article 9 of the Contract. This clause additional expenditure to which it refers. expressly provides that the Commission may request full or partial repayment of the amounts paid as financial assistance, together with interest from the date when the Contract is terminated. The clause also states that the rate of interest is the EIB rate in force on the date of the Commission decision to grant financial assistance to the project. 50. NET also submits that, if the Court were to grant one of the Commission's claims, the rate of interest should be that of the EIB. It challenges the Commission's claim for statutory default interest. Accord- ing to NET, as default interest was not 48. The Commission further claims that provided for by the parties, it cannot be NET must be ordered to pay statutory ordered to pay such interest on the basis of default interest on the whole of its debt in Article 346 of the Civil Code.

55. As regards the claim for payment of contractual and statutory default interest on the whole amount owing, Article 9 of 59. I accordingly propose that the Court the Contract expressly provides that the should order NET to pay the sum of GRD Commission may request full or partial repayment of the amounts paid as financial assistance, together with default interest 10 — NoB 1995, p. 57, NOMOS database.

I - 1770

COMMISSION v NEA ENERGIAKI TECHNOLOGIA

9 498 551, together with interest calculated 60. Under Article 69(2) of the Rules of by reference to the EIB rate in force on the Procedure of the Court, the unsuccessful date of the Commission decision to provide party is to be ordered to pay the costs if financial assistance to the 'Kea Island' they have been applied for in the successful project, for the period from the date of party's pleadings. As the Commission has termination of the Contract until the applied for such an order against NET and defendant has fully discharged the debt. the latter is unsuccessful, it should be ordered to pay the costs.

Conclusion

61. For the reasons set out above, I propose that the Court should order Nea Energeiaki Technologia EPE, a company governed by Greek law, to: