JUDGMENT OF 7. 12. 1976 — CASE 23/76 PELLEGRINI v COMMISSION

In Case 23/76,

THE COURT composed of: H. Kutscher, President, A. M. Donner and P. Pescatore, Presidents of Chambers, J. Mertens de Wilmars, M. Sørensen, Lord Mackenzie Stuart and A. O'Keeffe, Judges, Advocate-General: H. Mayras Registrar: A. Van Houtte

gives the following

JUDGMENT

Facts

I — Facts and Procedure

II — Conclusions of the parties

III — Submissions and arguments of the parties

The jurisdiction of the Court as regards the application for the implementation of the contract

The law applicable

The substance of the case The application for the implementation of the contract

The application for annulment

IV — Oral procedure

Law

The action on the contract

Jurisdiction

Substance of the case

The application for annulment

The admissibility of the conclusions directed against Flexon-Italia

Costs

I —. Facts and Procedure

(a). This agreement shall be governed by Italian law.

(b). The Court of Justice of the European Communities shall have jurisdiction in any dispute between the Commission and the contractor relating to this agreement.

II —. Conclusions of the parties

1. Subject to reservation of all the rights of the applicant, declare that the Commission must implement the contract in question by recognizing the applicant s right to receive the three month's notice stipulated and order the Commission to pay damages, which will be determined and established during the proceedings;

2. On the basis of Article 146 of the Treaty establishing Euratom, declare unlawful, with all the consequences in law, the measure whereby the Commission, by granting to the company from Venice the contract for cleaning the interior of the establishment, refused to place the implementation of the contract for the supply of services with the applicant.

3. Order the Commission to bear the costs.

(a). Dismiss the action;

(b). Order the applicant to bear the costs.

III —. Submissions and arguments of the parties

IV —. Oral procedure

1. By an application registered at the Court Registry on 9 March 1976, the Luigi Pellegrini & C. S.a.s. undertaking, responsible since 1960 for the cleaning work at the Nuclear Research Centre at Ispra, requests, first, that the Commission should be ordered to pay it damages for breach of contractual commitments and, secondly, the annulment of the Commission's decision conferring the performance of the cleaning work on a rival firm.

2. Having decided in 1971 to bring the previous contractual commitments to an end, the Commission issued a request for tenders with a view to awarding a new contract for the cleaning of the said establishment for a period of 36 months from 1 January 1972, on the basis of a draft agreement drawn up by it.

3. The applicant duly took part in the request for tenders, but its tender was not accepted.

4. When a competing firm, whose offer had been accepted, repudiated the contract before beginning performance of it, the Commission orally requested the applicant to carry out the cleaning of the establishment for the months of January and February 1972 under the terms and conditions set out in the draft agreement.

5. The applicant accepted, and the agreement thus established was confirmed by a letter of 20 December 1971 from the Commission which expressly referred to the services defined in the draft agreement.

6. This agreement was renewed on successive occasions, each time for periods of one, two or three months, until December 1975.

7. Following a fresh request for tenders in which the applicant once again took part, the Commission orally informed the applicant, in December 1975, that a competing firm had won the contract and asked the applicant to continue to carry out the cleaning of the establishment during January 1976 in order to facilitate the transition.

8. The applicant takes the view that the Court has jurisdiction to give a ruling on the first head of its conclusions by virtue of an arbitration clause contained in Article 15 of the draft agreement.

9. Both parties agree that the agreement reached between them in December 1971 involved conferring jurisdiction on the Court.

10. Article 38 (6) of the Rules of Procedure stipulates that any application submitted under Article 153 of the Euratom Treaty shall be accompanied by a copy of the arbitration clause.

11. Since the letter of 20 December 1971 expressly referred to the services laid down in the draft agreement, the terms and conditions of that draft were to govern the contractual relationship in so far as they were not excluded or amended by the express terms of the letters.

12. First, the applicant invoked Article 3 of the draft agreement which reserves to the Commission a right of unilateral repudiation subject to three months' notice, in order to maintain that the Commission was obliged to give it such notice before putting an end to the contractual relationship at issue.

13. Even if this clause applies, under certain circumstances, in cases of anticipatory repudiation of the contract, it cannot come into play in this instance.

14. In fact the letter of 18 September 1975 specifies that the applicant remained responsible for the cleaning work only until 31 December 1975.

15. Furthermore, the applicant was notified, by a letter of 18 September 1975, of the issue of a request for tenders, in which it took part by submitting an offer to the Directorate of the Centre.

16. Under these circumstances, the contractual relationship was to come to an end on 31 December 1975.

17. Secondly, on the basis of Italian law, which applies to the contract by virtue of Article 15 (1) of the draft agreement, the applicant seeks to rely upon the provisions of Article 1563 (2) of the Italian Civil Code.

18. Under that provision, which relates to contracts of somministrazione (supply), if the party entitled to receive the supply has the right to fix the dates of each occasion on which services are to be provided, he must give reasonable advance notice informing the party providing the services of such dates.

19. Even if this provision were applicable to the contract in question, the applicant must have known, from the moment when the Commission had informed it in September 1975 that its services would no longer be required after 31 December 1975 and that a request for tenders had been issued with a view to a new contract, that the contractual relationship would expire on 31 December 1975, that is in three months' time.

20. As that period corresponds to the period fixed in the draft agreement in the event of anticipatory repudiation, it must be considered as reasonable notice.

21. When in December 1975 the applicant was approached by the Commission with a view to carrying out provisionally the cleaning of the establishment at Ispra during January 1976 in order to enable the tasks to be transferred to the new company, the Commission was not acting in the exercise of a right conferred upon it by the draft agreement.

22. Accordingly, in so far as the application is based upon the alleged breach of the contract, it must be dismissed as unfounded.

23. The applicant seeks the annulment of the measure by which the Commission decided to conclude the new cleaning contract for the establishment at Ispra with Flexon-Italia.

24. In this connexion, it bases itself upon the fact that the tender accepted was 50 % higher than all the others, and that the only reasons which the Commission gave for its decision and which appear in the compulsory opinion of the Purchases and Contracts Advisory Committee were irrelevant with regard to the choice of an undertaking carrying out the cleaning of the establishment at Ispra alone.

25. As the applicant had carried out the cleaning service for many years in a perfectly satisfactory manner, as emerges from the assessments made by the Directorate of the establishment at Ispra, the true purpose of the procedure of request for tenders was to remove the applicant and to obtain for Flexon an undue advantage.

26. Under Article 59 (2) of the Financial Regulation of 1973 (OJ L 116, 1973, p. 15) the administrative authority may freely choose the offer thought to be the most attractive, which leaves it a certain margin of discretion.

27. This provision does not stipulate that the price must constitute the only decisive factor in the evaluation of the financial and technical aspects of the offers.

28. In a procedure for request for tenders, the fact that the Commission chose an undertaking whose offer was higher in price than the others does not of itself constitute a misuse of powers.

29. The reasons stated by the Commission to justify its choice, in particular the stability of employment which the chosen undertaking was capable of offering to its workers through its ability to transfer them to other tasks, came within the considerations of a technical nature which it could take into account under Article 59 of the Financial Regulation for the purpose of making its choice.

30. In order to find that there has been a misuse of powers, it would have to be shown that the reasons for the Commission's choice were extraneous to the interests of the service.

31. The applicant brought an action against Flexon-Italia SpA at the same time as against the Commission.

32. As regards the submissions for annulment based on Article 146 of the EAEC Treaty, the only possible defendant is the institution from which the contested measure emanates.

33. Therefore, in so far as the action is directed against the company Flexon-Italia, it is not admissible.

34. Article 69 (2) of the Rules of Procedure provides that the unsuccessful party shall be ordered to pay the costs if they have been asked for in the successful party's pleading.

35. As regards the costs of the Commission, the successful party, Article 69 (3) of the said Rules provides that, where the circumstances are exceptional, the Court may order that the parties bear their own costs.

On these grounds, THE COURT hereby:

1 Dismisses the action;

2 Orders each party to bear its own costs.