Diadikasia Symvouloi Epicheiriseon AE v European Commission (CFCU)[2013] EUECJ C-520/12 (04 July 2013)

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(Appeals – Instrument for Pre-Accession Assistance – Public procurement – Project for the enlargement of the European Turkish Business Centres Network – Decision not to award the project – Application for damages for the alleged losses – National decision – No involvement by European Union bodies)

Diadikasia Symvouloi Epicheiriseon AE, established in Chalandri (Greece), represented by A. Krystallidis, avocat,

European Commission, represented by A. Aresu and F. Erlbacher, acting as Agents, with an address for service in Luxembourg,

having decided, after hearing the Advocate General, to give a decision by reasoned order, pursuant to Article 181 of the Rules of Procedure of the Court of Justice,

1 By its appeal, Diadikasia Symvouloi Epicheiriseon AE seeks to have set aside the order of the General Court of the European Union of 13 September 2012 in Case T-369/11 Diadikasia Symvouloi Epicheiriseon v Commission and Others (‘the order under appeal’), by which it dismissed its action for damages for losses it alleges it suffered as a result of a decision eliminating it from a tendering procedure initiated for the award of a contract for the implementation of a regional development programme in Turkey, instituted pursuant to Council Regulation (EC) No 1085/2006 of 17 July 2006 establishing an Instrument for Pre-Accession Assistance (IPA) (OJ 2006 L 210, p. 82).

2 The background to the dispute, as set out in paragraphs 14 to 26 of the order under appeal, may be summarised as follows.

3 Under Article 1 of Regulation No 1085/2006, the European Union is to assist the countries listed in Annexes I and II thereto in their progressive alignment with the standards and policies of the European Union, including where appropriate the acquis communautaire, with a view to membership.

4 Article 10 of Commission Regulation (EC) No 718/2007 of 12 June 2007 implementing Council Regulation (EC) No 1085/2006 (OJ 2007 L 170, p. 1) provides, under the general principles for implementation of aid, that the Commission is to entrust the recipient country with the decentralised management of certain actions, whilst retaining ultimate responsibility for general budget execution. Decentralised management is to cover at least tendering, contracting and payments.

5 Article 21(1)(f) of Regulation No 718/2007 provides that the recipient country is to designate an operating structure by IPA component or programme, responsible for managing and implementing the aid under Regulation No 1085/2006. The operating structure is to be a body or a collection of bodies within the administration of the recipient country. It is to be in charge of, inter alia, tendering procedures, grant award procedures and the ensuing contracts.

6 On 29 November 2007, the Commission adopted Decision C(2007)5729 on the Multi-annual Operational Programme ‘Regional Competitiveness’ for European Union assistance in the context of the ‘Regional Development’ component of the IPA in Turkey (‘the Multi-annual Programme’).

7 On 11 July 2008, the Commission concluded a Framework Agreement with the Republic of Turkey which generally defines the rules for cooperation concerning IPA assistance (‘the Framework Agreement’). Article 6 provided that it was for the Republic of Turkey, in the event of decentralised management of the programme, to designate operation structures.

8 On 24 July 2009, the Commission concluded a Financing Agreement with the Republic of Turkey concerning the Multi-annual Programme (‘the Financing Agreement’).

9 Under Article 26(1) of the Financing Agreement, the entities constituting the operating structure of the Multi-annual Programme are, first, the ‘Ministry of Labour and Social Security, IPA Management Department (EU Coordination Department)’ and, second, the Central Finance & Contracts Unit (CFCU).

10 On 21 January 2010, on the basis of Regulation No 1085/2006, a contract notice for a service contract in Turkey for the enlargement of the European Turkish Business Centres Network to Sivas, Antakya, Batman and Van was published in the Supplement to the Official Journal of the European Union (OJ S 14). The contract in question had the objective of reinforcing the competitiveness of small and medium-sized enterprises in Turkey. The contracting authority designated in that contract notice was the CFCU.

11 Several tenders, including that of a consortium of which the appellant was a leading member (‘the consortium’), were submitted.

12 After the appellant had responded to a request for clarification from the CFCU, the CFCU informed it, by letter dated 11 January 2011, that the contract would be awarded to the consortium, subject to the presentation, within 15 days, of certain documents.

13 However, by letter dated 5 April 2011, the CFCU informed the appellant that, following the appellant’s letters of 11 January, 10 March and 11 March 2011, and in the light of information communicated by the EU Delegation to Turkey, the evaluation of its offer was seemingly vitiated by a false declaration. For that reason, the CFCU, in its capacity as the contracting authority, indicated that the contract would not be awarded to the consortium.

14 By application lodged at the Registry of the General Court on 5 July 2011, the applicant in those proceedings, appellant before this Court, brought an action for damages to compensate for the loss it alleged it had suffered as a result of the adoption of the CFCU’s decision of 5 April 2011.

15 By separate document, lodged at the General Court Registry on 21 November 2011, the Commission raised an objection of inadmissibility pursuant to Article 114(1) of the Rules of Procedure of the General Court.

17 In paragraph 38 of the order under appeal, the General Court considered that the action for damages was directed jointly against the CFCU, the Commission and the EU Delegation to Turkey.

18 Assessing of its own motion the admissibility of the action in so far as it was directed against the EU Delegation to Turkey, the General Court, in paragraph 45 of the order under appeal, dismissed that part of the action as manifestly inadmissible, holding that EU delegations do not have legal personality and that, accordingly, only the Commission could be held liable for the actions and omissions which could be attributed to that EU delegation in that regard.

19 Next, the General Court observed that the CFCU is an authority governed by Turkish law and attached to the Government of the Republic of Turkey. Moreover, under both Article 21(1)(f) of Regulation No 718/2007 and paragraph 6(a) of Annex A to the Framework Agreement, it is for the recipient country – in the present case, the Republic of Turkey – to name an operating structure by IPA component or programme. Consequently, the CFCU could not be considered to be an institution or a body of the European Union for the purposes of the second paragraph of Article 340 TFEU. The General Court went on to conclude, in paragraph 49 of the order under appeal, that it had no jurisdiction to rule on the action for damages in so far as it was directed against the CFCU.

20 After analysing the action for damages brought by the applicant before it as relating to the loss it would incur as a result of the CFCU’s letter of 5 April 2011 and ‘any subsequent decision’, the General Court first considered, in paragraph 51 of the order under appeal, that in the absence of sufficient precision, the action was manifestly inadmissible in so far as it sought to obtain damages for loss resulting from ‘any subsequent decision’.

21 The General Court, after observing in paragraph 52 of the order under appeal that public contracts awarded by non-member countries and capable of benefiting from assistance under the IPA, subject to the principle of decentralised management, remain national contracts, then analysed the CFCU’s decision of 5 April 2011 as originating from the national operating structure of the Multi-annual Programme, designated as the contracting authority, with the Commission being solely competent to ascertain whether the European Union project financing conditions were fulfilled.

22 Lastly, the General Court concluded in paragraph 62 of the order under appeal, firstly, that the action, in so far as it was directed against the Commission, was inadmissible inasmuch as the Commission was not the author of the letter of 5 April 2011 and, secondly, that since the CFCU’s letter of 5 April 2011 was adopted by a Turkish authority, it did not have jurisdiction to rule on damages for the loss which that measure might allegedly have caused to the applicant before it.

– rule on the merits of the case and uphold its application for damages for the losses sustained as a result of the decision of 5 April 2011; and

25 The appellant puts forward three grounds in support of its appeal. The first alleges a two-fold error in law by the General Court in denying the CFCU the status of body of the European Union within the meaning of Article 263 TFEU and in refusing to recognise any legal personality for the EU Delegation to Turkey. The second ground of appeal alleges infringement of the appellant’s right to an effective remedy and a fair trial inasmuch as the General Court failed to address its arguments put forward by way of reply to the objection of inadmissibility raised by the Commission, as it failed to take account of its observations concerning the Court of Justice’s case-law relating to case-law on losses caused by EU officials. The third ground of appeal alleges that the General Court distorted the evidence adduced to establish that the CFCU serves the Commission’s interests and that the Commission is therefore liable for the implementation of projects financed by the European Union.

26 Under Article 181 of its Rules of Procedure, where the appeal or cross-appeal is, in whole or in part, manifestly inadmissible or manifestly unfounded, the Court may at any time, acting on a proposal from the Judge-Rapporteur and after hearing the Advocate General, decide by reasoned order to dismiss that appeal or cross-appeal in whole or in part. It is appropriate to make use of that power in this case.

27 In support of its first ground of appeal, the appellant argues in essence that the General Court adopted an overly restrictive interpretation of the concept of European Union institution and of acts of bodies of the European Union within the meaning of Article 263 TFEU in refusing to see in the CFCU’s decision of 5 April 2011 and in the decision confirming that decision, taken on 3 June 2011 by the EU Delegation to Turkey, acts of entities which must be considered to be servants of the Commission working for the needs of the European Union and enabling it to fulfil its purpose.

28 The Commission submits that the General Court was correct in considering that the CFCU was not a body or department of the European Union, but an authority of the Republic of Turkey and that the European Union delegations have no legal personality.

29 It should be observed, as a preliminary point, that in paragraph 51 of the order under appeal the General Court analysed the subject matter of the application made to it as seeking damages for the loss which would result for the applicant before it not only from the CFCU’s letter of 5 April 2011 but also from ‘any subsequent decision’. However, the General Court found merely that, since no such subsequent decisions had been identified, the forms of order seeking damages arising therefrom were manifestly inadmissible.

30 The appellant does not contest that ground of inadmissibility. Accordingly, the line of argument to the effect that the General Court erred in not considering the correspondence of 3 June 2011 from the EU Delegation to Turkey as a legal instrument producing legal effects results from a manifestly incorrect reading of the order under appeal.

31 The appellant must also be understood as arguing that the General Court erred in law in not considering the decision of 5 April 2011 as an act of the Commission or, at the very least, as an act of a body of the European Union within the meaning of Article 263 TFEU.

32 It should be borne in mind in that regard, firstly, that under the general principles for implementing pre-accession aid, Article 10 of Regulation No 718/2007 provides that the Commission is to entrust the decentralised management for certain actions to the recipient country, whilst retaining overall final responsibility for general budget execution. Decentralised management covers, at least, the management of tendering procedures, awards and payments. Secondly, under Article 21(1)(f) of that regulation, the recipient country is to designate an operating structure by IPA component or programme charged with managing and implementing that aid. The operating structure is to be a body or a collection of bodies within the administration of the recipient country, and is to be in charge of tendering procedures, granting procedures and the resulting contracts.

33 It follows both from those provisions and from the Framework Agreement and the Financing Agreement referred to in paragraphs 7 to 9 of the present Order that the European Union and the Republic of Turkey intended to entrust the decentralised IPA management for Turkey to bodies which are part of that country’s administration and that, in that context, the CFCU was designated as the operating structure charged with the management of the tendering procedures necessary for carrying out the actions under the IPA programme.

34 Moreover, as rightly observed by the General Court in paragraph 52 of the order under appeal, public contracts awarded by non-member countries and capable of benefiting from assistance under the IPA, subject to the principle of decentralised management, remain national contracts which only the national contracting authority responsible for following them through has the power to prepare, negotiate and conclude, the involvement of the Commission representatives in the procedure for the award of those contracts being confined solely to establishing whether or not the conditions for European Union financing are met. Moreover, the undertakings that submit tenders which are awarded the contract in question have legal relations only with the non-member country which is responsible for the contract and the measures adopted by representatives of the Commission cannot have the effect of substituting, in relation to them, a European Union decision for the decision of that non-member country (see, by analogy, Case C-257/90 Italsolar v Commission [1993] ECR I-9, paragraph 22).

35 In those circumstances, the General Court did not err in law in holding, in paragraph 62 of the order under appeal, that the decision of 5 April 2011 by which the CFCU informed the appellant that the contract in question would not be awarded to the consortium was adopted by a national authority, responsible in its capacity as contracting authority for conducting the entire procedure for awarding that public contract.

36 This conclusion is not affected by the fact that the Commission ensures compliance with the conditions for European Union financing in the procedure for awarding contracts such as the one at issue in the present case. Its competence in this area, which stems from the fact that it retains overall final responsibility for general budget execution, must never be confused with the responsibility for the operating structure, which decides on the award of the contract in question.

37 Consequently, the appellant has no grounds to argue that, in taking the decision of 5 April 2011, the CFCU acted as a servant of the Commission or as a body of the European Union; nor, therefore, may it infer therefrom that the Commission is liable for losses allegedly caused by that decision.

38 For this reason, nor did the General Court err in law in holding that the action, in so far as it was directed against the Commission, was inadmissible on the ground that the Commission was not the author of the decision of 5 April 2011.

39 It follows from the foregoing that the appellant’s first ground of appeal is clearly unfounded.

40 In support of its second ground of appeal the appellant submits that, in failing to take account of its observations challenging, on the basis of the Court of Justice’s case-law on losses caused by EU officials, the objection of inadmissibility put forward by the Commission before the General Court, it failed in its obligation to provide a statement of reasons in its order and denied the applicant before it its right to an effective remedy.

41 The Commission contends that the General Court made no error of law in not taking into account the reference to such losses, since all the arguments put forward in support of the application were in essence directed against the CFCU’s decision and the applicant in those proceedings had not made out proof of the causal link between the losses it allegedly suffered and a supposedly unlawful action on the part of the EU Delegation to Turkey.

42 According to settled case-law, the General Court’s obligation to state reasons does not require it to address the applicants’ arguments in detail.

43 As stated in paragraph 35 of the present Order, the General Court did not err in law in holding that the decision of 5 April 2011 had been adopted by a national authority, responsible in its capacity as contracting authority for conducting the entire procedure for awarding the public contract in question. The General Court concluded, correctly, in paragraph 62 of the order under appeal, that it had no jurisdiction to rule on the issue of losses which that measure might allegedly have caused to the applicant before it, and that such losses which may have been caused by national institutions may give rise to liability only on the part of those institutions and the national courts, that is to say, in the present case, the Turkish courts, alone retain jurisdiction to order damages.

44 In thus setting out in a clear and exhaustive manner the reasons why, in its view, the forms of order sought by the applicant before it in fact sought damages for losses caused by national institutions, the General Court – implicitly but unmistakably – rejected the arguments of the applicant before it seeking damages for losses caused by servants of the European Union, which were inoperative. It did not disregard its obligation to state reasons and did not deny the applicant before it its right to an effective remedy.

46 In support of its third ground of appeal, the appellant submits that the General Court distorted the evidence adduced before it in failing to take account of the facts which were submitted to it by the applicant before it and which established clearly that the CFCU was a servant of the European Union and ‘equally liable’ to compensate for losses caused to persons who have suffered losses as a result of its action.

47 The Commission observes that the act which allegedly caused the appellant losses was not an act of the Commission, or even an act of the EU Delegation to Turkey, but rather an act of the competent Turkish authority, which is why the General Court was justified in holding that it had no jurisdiction to rule on the issue of damages for such losses.

48 It should be noted that it was solely on the basis of legal grounds that the General Court, in the light of, inter alia, the provisions of Regulation No 718/2007, concluded, correctly and having regard to the circumstances of the case as a whole, as observed in paragraphs 32 to 35 above, that the decision of 5 April 2011 was adopted by an authority governed by Turkish law.

49 These considerations alone are sufficient grounds on which the order under appeal may be based. It follows that the appellant has no grounds to argue that the evidence submitted to the General Court was distorted. The third ground of appeal must therefore also be dismissed as manifestly unfounded.

50 It follows from all the foregoing considerations that the appeal must be rejected in its entirety as manifestly inadmissible and clearly unfounded.

51 Under Article 138(1) of the Rules of Procedure of the Court of Justice, which applies to appeal proceedings pursuant to Article 184(1) thereof, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. Since the Commission has applied for costs and the appellant has been unsuccessful, the latter must be ordered to pay the costs.

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You are here: BAILII >> Databases >> Court of Justice of the European Communities (including Court of First Instance Decisions) >> Diadikasia Symvouloi Epicheiriseon AE v European Commission (CFCU)[2013] EUECJ C-520/12 (04 July 2013) URL: http://www.bailii.org/eu/cases/EUECJ/2013/C52012_A.html Cite as: [2013] EUECJ C-520/12

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