C-315/99

IV —The appeal I-5288

First plea: flaws in the procedure before the Court of First Instance (failure to rule on the application for a hearing of witnesses and an inadequate preparatory inquiry) I - 5288

Second plea: breach of Community law, and failure to state sufficient reasons, regarding 'the principle that proceedings should be inter partes' I-5289

Third plea: failure to adjudicate (failure to address the claim concerning the right to a hearing and to proceedings inter partes) I - 5290

Fourth plea: breach of Community law, and failure to state sufficient reasons, regarding 'defamation' I - 5290

Fifth plea: distortion of the facts relating to the alleged 'confusion of interests' and failure to state sufficient reasons or to define the legal situation correctly I - 5290

1 — Original language: Spanisih.

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(b) The action for annulment and the Court of Auditors I-5295 (i) Is it possible to bring actions for annulment against acts of the Court of Auditors? I-5296 (ii)The definition of acts having legal effects vis-à-vis third parties I-5299 (a) The nature of the work of the Court of Auditors I-5300 (b)The auditing function and the monitoring of the implementation of the Community budget I - 5301 (iii) The time-limit for bringing an action for annulment I-5301 2. Refutation of the facts established by the Court of First Instance (sixth plea and first part of the fifth plea) I - 5302 3. Substance (second and fourth pleas and second part of the fifth plea) I-5304 A. The definition of 'confusion of interests' I-5304 B. The reports of the Court of Auditors, identification by name and the hearing procedure I-5305 (a) Identification by name I - 5306 (b) The hearing procedure I - 5309 C. Rejection of the claim for damages and for publication of the applicant's comments on the report of the Court of Auditors I-5312 VI — Costs I-5313 VII— Conclusion I-5314

I — Introduction 2. The application made three claims, for:

1. Ismeri Europa Srl (hereinafter 'Ismeri') brought an application for damages, under Articles 178 and 215 of the EC Treaty (now Articles 235 and 288 EC), for injury (1) a declaration that 'the Court of Audi- allegedly suffered following criticisms tors had infringed the fundamental made against it by the Court of Auditors principle of the right to a hearing and in Special Report No 1/96 on the MED to proceedings inter partes and had programmes. therefore acted unlawfully';

— Projects are approved by a Commit- ment Committee, made up of represen- — The MED programmes form part of tatives of both the ARTM and the the policy of providing aid from the

3 — Local government (MED-Urbs), higher education IMED- 2 — Case T-277/97 Ismen Europu v Court of Auditors [ 1999] Campus), the media (MED-Media), research (MED-Avic- ECR II-1825. enne) and companies (MED-Invest).

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technical assistance bureaux, the latter observed. It repeated the request twice, attending discussions in order to give on 24 April and 12 June 1997, and technical advice but without voting was refused on both occasions. rights. The committee is presided over by the Commission official responsible.

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I I I— The judgment under appeal therefore acted unlawfully by not doing so, the content of the report would have been the same. The Court of First Instance bases that conclusion on the 5. As to the substance of the action, 9the fact that the Court of Auditors refuted judgment of the Court of First Instance is all the observations made by Ismeri in divided into two distinct parts. One deals its letter of 31 January 1997. It is clear with the alleged infringement of the prin- from the tenor of its reply that the ciple that proceedings should be inter Court of Auditors would not have partes and the other concerns the claim rectified the report if the company that the criticisms in Special Report had been able to submit its observa- No 1/96 of the Court of Auditors are tions before the report was adopted. defamatory to Ismeri.

6. With regard to the infringement of the principle that proceedings should be inter partes, the Court of First makes the follow- ing observations: 10 7. As regards the defamatory nature of the criticisms of Ismeri contained in the report, the Court of First Instance reasons as follows: 11

— in the exercise of its duties, the Court of Auditors was obliged to report a situation in which a public contract was awarded to a person who had IV — The appeal helped to evaluate and select the ten- ders. Since one of Ismeri's directors was part of the ARTM, the company was in a position to influence the decision- making process and further its own 8. Ismeri divides its appeal into six pleas. In interests. The situation in which Ismeri the following lines I shall set out their found itself therefore involved a con- content and the response given to each by flict of interests; 13 the Court of Auditors. I shall analyse them in Part V of this Opinion.

matters submitted for its consideration. and that its main argument was that This implicit refusal to admit proposed consideration by the auditors would not evidence constitutes an inadequate inquiry have changed the tenor of their report, even into the matter, in that the Court of First if Ismeri had been given a hearing before it Instance has made it clear that it doubts the was published. Ismeri considers that obser- credibility of certain documents and has vance of the principle that proceedings preferred to rely on the version of events should be inter partes, which requires that given in Special Report No 1/96 of the the persons concerned be heard before the Court of Auditors. decision is taken, is a fundamental condi- tion of the exercise by a public authority of its discretionary power. Under Article 206 of the EC Treaty (now, after amendment, Article 276 EC), the right to a hearing must be afforded both to the institutions and to 10. The Court of Auditors contends that the other persons who are subject to this plea is inadmissible, because it seeks to monitoring by the Court of Auditors. A obtain the intervention of the Court of prior hearing is also a necessary part of the Justice in a sphere — the appraisal of discharge proceedings before the European evidence — which does not concern it Parliament. and which lies within the absolute discre- tion of the Court of First Instance, unless, in its assessment, it distorts the sense of the evidence, and that has not been alleged. In the alternative, the Court of Auditors argues that it is unfounded, both because the inquiry was adequate and because the Court is under no obligation to state, in the judgment, its reasons — which, in any event, were obvious in this case — for not giving a ruling on an application for a hearing of witnesses. 12. The Court of Auditors points out that the subject-matter of the proceedings is a declaration of non-contractual liability, not the determination of an unlawful act. Since that declaration requires the presence of three factors (unlawful conduct, damage and a causal link between the two), the Second plea: breach of Community law, absence of one (a causal link) makes it and failure to state sufficient reasons, possible to decide that there is no liability, regarding 'the principle that proceedings without having to give a ruling on the other should be inter partes' two (unlawfulness and damage). The Court of Auditors takes the view that, apart from that, the appellant company merely repro- duces the arguments it put forward in the 11. Ismeri complains that the contested proceedings at first instance, without criti- judgment did not rule on the application cising the grounds of the judgment on the of the principle of inter partes in the matter, which renders the plea inadmissi- proceedings before the Court of Auditors, ble.

17. Ismeri considers that the statement 15. The view expressed by the Court of made by the Court of First Instance regard- First Instance regarding the notion of ing the decisive role played by the manage- defamation seems, in Ismeri's opinion, to ment board of the ARTM in the award of have neither grounds nor substance. The contracts to the technical assistance identification by name, in the Special bureaux, its findings in respect of the two Report, of the two technical assistance contracts awarded to Ismeri and its views bureaux and the reference to the possibility on the so-called 'trial phase' are the con-

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sequence of a manifest distortion of the cast doubt on the credibility of a document facts and, furthermore, there is no state- which shows that the Commission had ment of reasons. It also considers that the waived its request that Ismeri's representa- Court's legal interpretation of the term tive should resign from the ARTM, and 'confusion of interests' is incorrect and denies that the representative resigned only unsupported by a statement of reasons. after certain conditions had been accepted following prolonged negotiations.

— those by which Ismeri disputes the nity law inspired by Article 6(1) of the findings of fact contained in the judg- European Convention for the Protection of ment: part of the fifth plea and all of Human Rights and Fundamental Freedoms the sixth plea; of 4 November 1950. 16 The right to proof, the right to use the means necessary to establish the facts which are at the basis of the legally relevant interest defended by every litigant, forms part of the range of options which make up the right to a fair — finally, the substantive pleas, by which hearing. It is, of course, true that this right the appellant company challenges the does not prevent the court from assessing legal interpretation given by the Court the relevance of the evidence adduced and of First Instance: the second and fourth rejecting that which seems irrelevant or not pleas and the second part of the fifth pertinent to the subject-matter of the case; plea. but it is also true that the grounds for such rejection must be stated and there can be no greater failure to state reasons than to keep silent.

22. The only virtue of this classification is that it brings a certain clarity to the debate, but it may turn out to be artificial since the arguments put forward in some pleas are repeated in others. They all have points in common so, on more than one occasion, I shall have to look back and pick up a thread of argument which has been momentarily suspended.

24. However, the formalities, even the procedural formalities, are a tool, not an objective. For an appeal to succeed on a plea of this kind, it is not enough for the 1. Pleas relating to procedure procedural flaw to have occurred; it also has to be shown that, as a consequence of its existence, the means of defence of the party who invokes the plea have actually been restricted. Furthermore, a person who claims that he is not afforded a proper A. Failure to address the application for a defence because there has been a proce- hearing of witnesses (first plea) dural error must have been aware of it

when it happened and reported it at the of the proceedings had been completed and earliest opportunity. before judgment was pronounced, it appar- ently did not feel the need to remind the Court of First Instance that the evidence, which was of interest at first, should be heard, or, much less, that Ismeri might be left without a proper defence. I think that a party cannot complain that he lacks a proper defence if, through passivity or negligence, he has contributed to the situa- 25. Ismeri states that it suggested, in its tion. Since Ismeri lost the case, it has been application, that witness evidence be taken compelled to formulate this ground of from nine persons and that the Court of appeal, using the pretext of a procedural First Instance did not give an express reply flaw which even the party concerned con- to that request. Both statements are true sidered to be irrelevant at the time. but they do not reflect the whole truth. What Ismeri does not say is that, in the reply, it repeated the request for a hearing of witnesses, but only 'if the Court con- siders that the documents submitted by the applicant and the defendant do not provide an adequate basis on which to reconstruct the facts and establish that the observations made by the Court of Auditors with regard to Ismeri's conduct were unfounded'. It also fails to mention that, from that moment onwards, it did not remind the Court of 27. Underlying the way in which this First Instance that it had a duty to rule on ground of appeal is raised there is a the application for evidence. recurring point in Ismeri's arguments: the Court of First Instance preferred to follow the version of the facts provided by the Court of Auditors and refrained from taking the evidence suggested by Ismeri. Expressed in these terms, the ground of appeal is manifestly inadmissible. It is for the Court of First Instance to determine the facts in the case by evaluating the available 26. It may be inferred from the above that evidence. The appeal court may intervene this ground of appeal is unfounded. Firstly, in this regard only if, in the acquiring of because, in its reply, the applicant itself evidence, there has been an infringement of made the hearing of witnesses conditional a provision or general principle of Com- on the Court of First Instance considering munity law, or if, in the appraisal of the that the documents presented by the parties evidence, there has been an infringement of were insufficient, which, according to the the rules governing the burden of proof and content of the judgment (in particular, the appraisal of evidence, because it is paragraphs 95 to 147), was not the case. illogical or arbitrary and distorts the evi- However, even more significantly, Ismeri dence. The Court of Justice may only itself cannot have thought that that evi- redress the legal infringement committed dence was necessary. After the written stage by the court of first instance; it may never

(a) Failure to adjudicate on Ismeri's request for a declaration that its right to be heard 30. Ismeri complains that the Court of first by the Court of Auditors had been Instance did not address its first claim. 1 8 It infringed is true that the judgment under appeal does not mention it and goes directly to an examination of the second of the claims, which it rejects on the basis that, even if the Court of Auditors ought to have given 28. The failure to adjudicate on a request is Ismeri a hearing before publishing its report a denial of justice which goes straight to the and therefore, by not doing so, acted core of the right to due process. If any unlawfully, there is no non-contractual person has the right to put his case, silence liability because there is no causal link is the most serious infringement of that between that supposed unlawful conduct right. and the losses which that company claims it has sustained.

29. Ismeri made three claims before the Court of First Instance. The first is complex in content and seeks recognition of Ismeri's right to be heard by the Court of Auditors before publication of the report which 31. However, for there to be failure to concerns it, and a declaration that the adjudicate, the claim disregarded must be institution has infringed that right. The relevant and, consequently, deserve to be processed and answered. Otherwise, the Court's silence on the matter is irrelevant. 17 — See, amongst others, the judgment in Case C-53/92 P Hilti A person who does not have the right to v Commission [1994] ECR I-667, paragraph 42, and the order in Case C-346/99 P(R) DSR-Senator Lines v Commission [1999] ECR I-8733, paragraph 45. See also the Opinion I delivered in Case C-119/97 P Ufex and Others v Commission [1999] ECR I-1341, point 41. 18 — It did not address the third claim, either.

35. On first consideration of the matter, a negative answer ought to be given to that question. In proceedings under Article 173 of the Treaty (now, after amendment, Article 230 EC) the Court can do no more than annul the measure at issue, 20 and no 33. There is nothing to prevent this proce- mere declaration may be sought on matters dural course of action. It is wholly accep- of fact or of law. 21What Ismeri seeks is the table to join several causes of action in one annulment of Special Report No 1/96 (a case, 19 provided that they are connected different question is whether such a proce- and are not incompatible. This is in dure may be subject to annulment, which I response to a metalegal rule, which requires shall consider later). A declaration that the the economical use of resources. However, right to a proper defence and to proceed- there are also legal reasons for joining ings inter partes was infringed in the them: to avoid splitting the subject-matter procedure followed for the adoption of of the action and the risk of contradiction. Special Report No 1/96 would render it

19 — This must not be confused with the joinder of cases or procedures referred to in Article 50 of the Rules of 20 —See Case C-123/92 Lezzi Vidro v Commission [1993] Procedure of the Court of First Instance (see also ECR 1-809, paragraph 10. Article 43 of the Rules of Procedure of the Court of Justice). 2 1 — S e e Case C-303/96 P Bernardi v Parliament [1997] ECR I-1239, paragraph 45.

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Auditors? paradoxical that it should be afforded that standing, 24 since it does not participate in the exercise of any of the fundamental powers of the Community, as the other institutions do, but is self-governing, has 36. Article 173 of the Treaty refers only to acts adopted jointly by the European Par- liament and the Council, to acts of the Council, of the Commission and of the Central European Bank other than recom- mendations or opinions, and to acts of the European Parliament designed to produce 22 — The Court of Auditors was created by the Treaty of Brussels of 22 July 1975, amending certain financial legal effects vis-à-vis third parties. There is provisions of the Treaties establishing the European Economic Communities and of the Treaty establishing a no mention of the Court of Auditors. single Council and a single Commission of the European Therefore, according to the wording of Communities. According to Lelong P., El Tribunal de Cuentas de las Comunidades Europeas: composición y that provision, the report of the Court of funcionamiento, PGP, No 20 (1984), p. 181, it was created 'to meet a political and technical need' because 'it was Auditors and the procedure followed for its necessary to respond to the sensitivity of European public opinion, which was formed by taxpayers who, by their adoption are not subject to judicial review contributions, directly provided the Communities' budget'. and, on this point, Ismeri's action would be Márquez Gutiérrez, J.M_, 'El Tribunal de Cuentas en el marco de las Comunidades Europeas', Tribunal de Cuen-

37. Nevertheless, I think that the reasoning países miembros: competencias y relaciones, cited above, cannot stop there; it must go further and p. 218; Gómez Sánchez, Y., El Tribunal de Cuentas. El control económico financiero externo en el ordenamiento analyse the provision's rationale in order to constitucional español. Ed. Marcial Pons, Madrid-Barce- lona, 2001, p. 71, maintains that the Court of Auditors is determine whether the acts of the Court of an Institution. Lelong, P., 'El Tribunal de Cuentas de Ia Auditors may not, in fact, be the subject of Comunidad Económica Europea', La función de los Tribunales de Cuentas en la sociedad democrática, Ed. an action for annulment. It may be inferred Tribunal de Cuentas, Madrid, 1985, p. 208, argues that it is a quasi-institutional body. Pérez Pérez, F. Bautista, from an examination of Article 173 of the Algunas notas sobre el Tribunal de Cuentas de las Treaty that an action for annulment has a Comunidades Europeas, PGP, No 6 (1980), p. 71, is not in favour of granting the Court of Auditors of the dual aim: to monitor compliance with European Communities the status of an Institution.

legal capacity and the ability freely to adopt opean Community is a Community based its own internal rules. on the rule of law, inasmuch as neither its Member States nor its institutions can avoid review of whether the measures adopted by them are in conformity with the constitutional charter represented by the Treaty. In Articles 173 and 164 (now Article 220 EC), on the one hand, and in 38. This is not the first time that the Court Article 177 (now Article 234 EC), on the of Justice has had to consider whether other, the Treaty establishes a complete Article 173 of the Treaty is applicable to system of legal remedies and procedures the acts of institutions which are not designed to permit the Court of Justice to specifically mentioned in its text. The review the legality of measures adopted by matter first arose in Luxembourg v Parlia- the institutions. This system makes a direct ment,25 in which the Court avoided action available against 'all measures answering whether the provision could be adopted by the institutions which are

39. In its judgment in Les Verts v Parlia- adopt measures intended to have legal ment, the Court emphasised that the Eur- effects vis-à-vis third parties. Where the Parliament was given the opportunity to adopt provisions of that kind, an action for 25 — Case 230/81 Luxembourg v Parlameni [1983] ECU 255. annulment might lie. This was the case 26 — In paragraph 20 of the ludgment, the Court stated that 'since the first paragraph of Article 38 of the ECSC Treaty under Article 38 of the ECSC Treaty. applies in the present case, there is no need to consider the Consequently, it had to be concluded that question whether the principles appertaining to observance of the law and review in that respect by the Court as measures and provisions adopted by the embodied in Article 164 of the EEC Treaty and Arti- cle 136 of the EAEC Treaty require that Article 173 of tile Parliament in the context of the EEC EEC Treaty and Article 146 of the EAEC Treaty he Treaty, which could have effects outside interpreted as meaning that the Parliament may be a party to proceedings before the Court'. that institution, were subject to review by 27 — Case 294/83 Les Verts v Parliament ( 1986) ECR 1339. 28 — See Case 34/86 Comic;/ v Parliament |1986] ECR 2155, paragraph 5; Case C-314/91 Weber v Parliament [1993] LCR I-1093, paragraph 8; and Case 78/85 Croup of the 29 — Paragraphs Zi and 24. The phrase in inverted commas is European Right v Parliament |1986| ECR 1753, para- from tile judgment in Case 22/70 Commission v Council graph 10. 119711 ECR 263.

31 — See Article 6 EU. 32 — This view was maintained by Advocate General Darmon in his Opinion in Joined Cases 193/87 and 194/87 Maiirissen 43. The institutions, each within the limits and European Public Service Union v Court of Auditors [1989] ECR 1-1045. He stated: 'The ratio decidendi of the of the powers conferred upon it by the Court' s judgment in that case (he is referring to the judgment in Les Verts v Parliament)... renders otiose any Treaty, are to carry out the tasks entrusted discussion whether the Court of Auditors is an institution to the Community (Article 4 of the Treaty). in the strict sense. The need to review the legality of measures can be no less pressing in the case of a measure The achievement of those tasks, which are adopted by a "quasi-institution" or "an auxiliary body vested with specific powers of an administrative nature"' set out in Article 2, requires the implemen- (point 54). In its judgment the Court did not rule on the matter. Advocate General Lenz expressed the same view as tation of policies and activities which, like Advocate General Darmon in his Opinion in Case those prescribed in Article 3, may affect the C-416/92 H v Court of Auditors [1994] ECR I-1741. In its judgment in this case too, the Court did not give an express ruling on whether actions could be brought under Article 173 of the Treaty against measures adopted by the Court of Auditors, but it did allow the claim after stating 30 — Paragraphs 24 and 25 of the judgment in Les Verts v at the outset that the action had been brought under that Parliament, cited above. provision.

36 — Joined Cases 1/57 and 14/57 Usines à tubes de la Sarre v 46. The form of the measure is irrelevant, High Authority |1957| ECR 105. 37 — Joined Cases 316/82 and 40/83 Kohler v Court of Auditors since the Court has considered admissible 11984) ECR 641. This related, specifically, to a verbal decision of the Court of Auditors communicated to an official m its translation service. 38 — Sec the judgment m Case 20/58 Phoemx-Rhemrohr v High 33 — In Case 22/70 in Commission v Council, cited above, the Authority (1959| ECR 7X Court held that an action for annulment must be available 39 — See the judgment in Phoenix-Rhetnrohr v High Authority, in the case of all measures adopted by the institutions, cited m the previous footnote. whatever their nature or form, which may have legal 40 — See the judgments in Joined Cases 42/59 and 49/59 effects (paragraph 42). SNUPAT [1961] ECR 53, Case 26/76 Melro v Commis- 34 — See the judgment in Commission v Council, cited m the sion |1977J ECR 1875, and Case C-I99/91 foyer culturel previous footnote. du Sart-Tifmaii v Commission [19931 ECR 1-2667. 35 -— See the judgment in Case C-325/91 Prance v Commission 41 — Sec the judgment in Case 190/84 Les Verts v Parliament 11993) ECU 1-3283. 11988) ECR 1017.

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50. The (annual or special) reports of the Court of Auditors contain its opinions and observations on the financial management (a) The nature of the work of the Court of which is the subject of examination. They Auditors are the final stage in a procedure in which, after the necessary audits have been carried out, the results are evaluated, but not before the audited body's views on the Court's comments have been obtained, since this helps to ensure the accuracy and 49. The Court of Auditors 42 has a dual correctness of their findings. 44 However, role: auditing and consultative. In the first the reports, by their very nature, are unable of these, it checks the Community's accounts by examining all its revenue and expenditure. It also considers the legality 43 — See Articles 246, 248, 279 and 280 EC (Articles 188 A, 188 C, 209 and 209 A, respectively, of the EC Treaty, and regularity of the revenue and expendi- before amendment). ture transactions and whether the financial 44 — See Article 83 et seq. of the Financial Regulation of 21 December 1977 applicable to the general budget of the management has been sound. In particular, European Communities (OJ 1977 L 356, p. 1), as amen- it is required to report any case of irregu- ded by Council Regulation (Euratom, ECSC, EEC) No 610/90 of 13 March 1990 (OJ 1990 L 70, p. 1). Also larity. In order to gather the information it Title III of the Rules of Procedure of the Court of Auditors, approved at the session held on 29 April 1999. It may be requires to fulfil its function, the Court of inferred from these provisions that a characteristic feature of the procedure followed by the Court of Auditors for Auditors may carry out the necessary preparing and adopting a report is a constant dialogue accounting investigations in the appropri- with the auditee. On completion of the fieldwork, draft preliminary observations are drawn up; these are sent to ate departments of the other Community the audited Institution, which must reply to them in writing. This marks the beginning of the proceedings inter institutions, on the premises of any body partes, which enables verification of the facts established which manages revenue or expenditure of and the conclusions reached. The procedure culminates in the adoption of the final report, which must be accom- panied by the Institution's replies. The report may be published in the Official Journal of the European Com- munities — in the case of the annual report, it must be published. 42 — Although it is called 'Court', it has no judicial functions.

51. The auditing work carried out by the 53. It might be argued that the Court of Court of Auditors is part of a much larger Justice does not require that the measure process — the monitoring of the imple- adopted by the institution has a direct mentation of the Community budget — effect on the legal position of those to which is the responsibility of the Council whom it is addressed, such as to change it, and the European Parliament and which but merely that it has an impact, 48 even an takes the form of a rendering of accounts or indirect impact, such as an unfavourable 'discharge' in which the Court of Auditors mention in a report of the Court of plays an indispensable, 45though auxiliary, Auditors published in the Official journal role: that of assisting those two institutions of the European Communities. by giving them its opinion of the imple- mentation of the budget. 46 The final deci- sion to approve the management of the budget lies with the Parliament, on the recommendation of the Council. 47 54. However, even if that were the case, Ismeri's first claim would be inadmissible because it was time-barred. Under the fifth paragraph of Article 230 EC, Ismeri had to 52. Consequently, a report of the Court of bring its claim within two months of the Auditors is not, in my view, a measure date on which the report was published in capable of producing legal effects vis-à-vis third parties and, according to the case-law 48 — This is incorrect. We need only read the fourth paragraph of the Court of Justice, may not be the of Article 230 EC (formerly the second paragraph of subject of an action for annulment. There- Article 173 of the EC Treaty) and the case-law which interprets it to conclude that the measure in question must he able to have a direct effect on the legal position of third parties. There is no other way of explaining the condition for locus standi — of ordinary or non-privileged appli- 45 — It has been called the 'financial conscience' or the cants — that they must be directly and individually concerned by the measure they are contesting (see, for Community. example, the judgment in Case 11/82 Piraiki-Patraiki v 4 6 — See Article 188 C of the EC Treaty (now, after amend- Commission [1985] ECR 207, paragraph 4, and Case ment, Article 248 EC), especially paragraph 4. C-404/96 P Clencore Gram v Commission [1998] 47 — See Article 206 of the Treaty. ECR I-2435, paragraph 41).

55. As I have pointed out on another occasion, 50 the general rule that final measures are unchallengeable cannot be relied upon as against measures which are ipso jure void, that is to say, which have a 57. In short, there is no chance by which defect which cannot be rectified, even given Ismeri's first claim could be admissible and, time and the tacit agreement of the person consequently, by which the silence of the affected. I mentioned as classic examples of Court of First Instance could be regarded as measures which are ipso jure void those a denial of justice owing to failure to adopted with total disregard for the pre- adjudicate. scribed legal procedure or by a body which is manifestly not empowered to do so. I also pointed out that this legal category and its effects have been acknowledged, although very restrictively, by the Court of Justice, in the concept of the non- existent measure. 51 2. Refutation of the facts established by the Court of First Instance (sixth plea and first part of the fifth plea)

62. In order to evaluate the significance of these alleged errors, we must keep a sense of perspective. The factual statements which Ismeri is challenging occur in the Court of First Instance's reasoning in relation to the conflict of interests to which 60. As regards the decisive role played by the Court of Auditors draws attention in the ARTM in the award of the contracts, Special Report No 1/96. In its judgment, the terms of the appeal (points 91 to 98) the Court of First Instance considers that suffice to show that what the appellant that conflict is genuine, in the light of facts company is doing is, purely and simply, which are not disputed: the ARTM's func- disagreeing with the findings of fact made tions, its composition, the presence on its by the Court of First Instance. That decisive management board of a director of Ismeri, intervention by the ARTM in the award of the award to that company of several the contracts is a piece of information technical assistance contracts. Facts such which the Court of First Instance obtains as the date on which the so-called trial from facts not disputed by Ismeri relating phase ended or whether one of the con- to the Agency's composition, functions and tracts was awarded at the ARTM's sugges- operation. Since the Court's conclusion tion or as the result of a direct order from does not appear to be arbitrary, improbable the Commission are therefore irrelevant. or absurd, the plea is inadmissible.

63. Even if the Court of First Instance has erred on this point, its mistake would not have implications for the outcome of the 61. The errors which Ismeri considers the case; the plea is therefore unfounded. Court of First Instance has made in respect of the end of the trial phase, during which the contracts were awarded directly, 55 and of the two technical assistance contracts

65. I shall begin my examination of the pleas relating to the legal interpretation contained in the contested judgment with 67. There is, therefore, nothing to com- the claim made in the second part of the plain of in the statements made on this

56 — A passage in the appeal is revealing: 'The appellant is 57 — The distinction which Ismeri makes between 'confusion of convinced that, with all due respect, the Court of First interests' and 'conflict of interests' is a play on words Instance has disregarded and distorted the meaning of which is unnecessary and irrelevant to the outcome of the these documents (it refers to the document which the case. The fact is that the French version of the judgment of Court analyses in paragraphs 135 and 136 of its judgment) the Court of First Instance speaks of 'confusion' and the and the true situation of which they form part' (point 26). Spanish version of 'conflict'.

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point in the contested judgment, in parti- liability; this, in Ismeri's view, disregar- cular those contained in paragraphs 112 58 ded the rationale of the principle that and 119. 59 The factual basis on which the proceedings must be inter partes and Court of First Instance makes those state- the fact that it must be applied in ments is a different matter but, as I have proceedings before the Court of Audi- already pointed out, the Court of Justice tors (second plea); must leave that question aside because it has not been given reasons by the appellant which would justify its interference in that area, which, in principle, it is forbidden to enter.

69. Let it be said, first of all, that this 58 — 'Tile fact that a person who helps to evaluate and select tenders for a public contract has the contract awarded to resurrects indirectly an issue which was him is highly tjuestionable..., regard being had to the defunct and which Ismeri raised, out of principle or equal treatment in the award of public contracts, the concern for sound financial management time, as the first claim in its application. In of Community funds and the prevention of fraud.' my view, this is not right, especially as the 59 — 'It follows that the applicant was in a position to influence the decision-making process and thus to use its position, reply given by the Court of First Instance to and that of its director, in order to further its own interests. The situation in which it found itself therefore involved a the claim for compensation on the basis of conflict of interests.' non-contractual liability is legally correct,

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even if it is debatable whether it was not take decisions; nor does it impose desirable for it to evade the crux of the threats or sanctions. issue.

70. Nevertheless, conscious as I am of my judicial function of assisting the Court of 72. Consequently, in order to carry out the Justice in the performance of its task task entrusted to it, the Court of Auditors (second paragraph of Article 222 EC), I must make known all the facts which shall set out my view on the matter below. establish an irregularity or malpractice, but does not need to identify the perpetra- tors. An objective description of the situa- tion suffices for those with jurisdiction to adopt the relevant measures to rectify it.

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Freedoms. However, there are exceptions keep in mind in the future their previous to every rule. involvement in the formation of the pro- grammes.

74. A first exception is imposed by the same reasons which preclude third persons being mentioned by name in the reports of 76. The Court of First Instance refers to the the Court of Auditors. If, in order to second exception in its judgment (para- achieve the objective it is sought to attain graph 109), finding justification for it in by reporting the irregularities detected, it is the same consideration which imposes the essential to identify the person at fault, the general rule of secrecy with regard to the Court of Auditors not only may, but must, identity of those responsible for irregula- do so. The protection of the Community rities in the management of the budget. public interest, which is the foundation for When anonymity may create doubts and its functions, requires that, in such cases, responsibility for budgetary malpractices the Court of Auditors indicate the person may insidiously attach to persons who are or persons responsible. not involved in them, confidentiality must yield to clarity where obscurity is liable to harm the legitimate interests of those who have had nothing to do with the situation which is being criticised.

Community institutions and also to those scope and content of the value judgments who do not hold those positions but, expressed in the report, must be no more nevertheless, manage, administer, and even than is strictly necessary to protect the receive, Community public funds. The values which give a reason for the general Court of Auditors has power to examine rule of confidentiality to yield and make all the revenue and expenditure of the way for the exception. Community and is entitled to the coopera- tion of those who manage funds from the budget, to whose offices it may have access in order to carry out its task. 63 Those who administer and, as the case may be, receive those funds do so in order to achieve the objectives of the Community and, in so far as they act by delegation from the Com- munity institutions, remain subject to mon- 80. In the present case it was necessary to itoring by the Court of Auditors. 64 eliminate, and to avoid in the future, the confusion of interests which existed in two of the technical assistance bureaux owing to the fact that they each had a director on the ARTM's management board and, as I have already pointed out, to that end it was necessary to name them; also, it was only fair, in order to prevent the conduct of the other two administrators being called in question. The Court of Auditors did it in the way which was least onerous for everyone: it identified the two administra- tors concerned by naming the technical assistance bureaux of which they were 79. The general rule is secrecy, but with directors, thus achieving both aims. In my exceptions. However, if it is necessary to view, the principle of proportionality and reveal the identity of those responsible for the least onerous solution was fully the irregularities, who are criticised by the observed. Court of Auditors, the principle of propor- tionality must be observed; this requires that measures adopted by Community institutions should not exceed the limits of what is appropriate and necessary in order to attain the objectives pursued, so that, when there is a choice between several appropriate measures, recourse must be had to the least onerous. 65 The principle 81. Ismeri states that, in any event, the dictates that identification, and also the Court of Auditors infringed the principle of proportionality by alluding in its report to the criminal liability which might arise 63 — See Article 248 EC. 64 — See the judgment in Case 9156 Meroiii v High Authority from the facts it describes. It so happens, [1957 and 1958] ECR p. 133. however, that, of the main language ver- 65 — See, for example, the judgments in Case 125/83 Corman sions of the report, the only one which uses [1985] ECR 3039, paragraph 36, and Case C-101/98 UDL [1999] ECR 1-8841, paragraph 30. a term specifically related to liability of a

66 — 'Azione penale' and 'procedimento penale'. 70 — The European Parliament stated in its Resolution (para- 67 — In the Spanish text of the report, on both occasions, the graph Q) that managers of technical assistance bureaux expression 'iniciar acciones legales' is used, and in the who were at the same time members of ARTM's manage- French text, 'engager des poursuites'. The English version ment board were in a situation which could be a criminal refers to 'legal action' and the German version to offence. The Court of First Instance also made observa- 'rechtliche Schritte'. tions on the matter. In paragraph 112 of its judgment it states that situations such as those described in the report 68 — See point 57 of its report. constitute chargeable offences under the criminal law or 69 — I am using the Italian version or the report. several Member States.

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upon to express their views on the observa- 86. In my view, Ismeri is wrong to say that tions made by the Court of Auditors: it ought to have been given a hearing, because the procedure is provided for for the institutions. It is the Commission which is being monitored in Special Report 1/96 and, if reference is made to Ismeri, it is because, through one of its directors, it assisted in the implementation of the bud- (1) The first is when the report is only at get and was also in receipt of Community the draft stage and before the Court of funds. Auditors converts it into the definitive text (Article 32 of the abovementioned Rules of Procedure).

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rules governing the proceedings in ques- and burdens on Ismeri, but it is no less true tion. 74 that the mention which is made of it may damage its reputation and cause serious harm to its legitimate interests.

90. I take the view, therefore, that in circumstances which, in accordance with the above considerations, justify naming, in 89. Here, the term 'affect' has a much a report of the Court of Auditors, the wider sense than that which I have used to person or body responsible for budgetary deny the possibility of bringing an action irregularities, they must be afforded the for the annulment of a report of the Court opportunity to defend themselves, provided of Auditors. 75 To affect means to have an that the report is to be published or widely adverse impact on the addressee's legal circulated. The Court of Auditors must position, an impact which may occur when keep this in mind and, if appropriate, open someone is unfavourably assessed by the a hearing procedure. Court of Auditors in a report which is to be published in the Official journal of the European Communities for general con- sumption or to be 'widely' circulated. 76It is true, as I have already noted, that the report does not directly impose obligations

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C. Rejection of the claim for damages and 94. The second claim, that of non-contrac- for publication of the applicant's comments tual liability, must be rejected, because on the report of the Court of Auditors there is not the necessary causal link between the unlawful conduct of the Court of Auditors and the damage which Ismeri states it has suffered. This is not for the reasons given by the Court of First Instance,78 but because if Ismeri has sus- tained any loss it is its own fault.

92. If the appeal were allowed on that ground, it would be necessary to uphold the first claim presented by Ismeri in the application and, after acknowledging that Ismeri had that right, to declare that it has been infringed by the Court of First Instance. However, the second and third claims are destined to fail.

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limits within which it must operate. The Court of Auditors commits an irrelevant origin of the damage for which Ismeri procedural irregularity, whose adverse con- claims compensation lies not in the failure sequences for the appellant originate in its of the Court of Auditors to grant it a own conduct, which breaks the causal link hearing but, long before, in Ismeri's own which, for the Community to incur liability conduct. In my view, the Community's for payment of compensation, must exist rules on non-contractual liability would between the alleged unlawful conduct of be distorted if, on the pretext of a formal the Court of Auditors and the damage irregularity, a person were afforded the suffered by Ismeri.80 right to compensation because an institu- tion, in the exercise of its duties, recounted what he had done.

VII — Conclusion

99. On the grounds set out above, I propose that the Court of Justice should declare that the appeal is partially inadmissible and partially unfounded. If the Court upholds one of the grounds of appeal and, consequently, gives final judgment in the case, I suggest that the claims presented by the applicant should be rejected and that it should be ordered to pay the costs of the proceedings at first instance and of this appeal.

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