Court of Justice 26-01-1993 ECLI:EU:C:1993:25

Factual background

3. The Republic of Mali sought financial assistance from the Community in connection with the planned construction of a high voltage electricity line between the towns of Bamako and Seguo under the rules of the Third ACPEEC Convention (the Lomé Convention).⁽¹⁾ The Community decided to finance part of the project out of the resources of the Sixth European Development Fund (EDF). On that basis Mali requested finance from the European Investment Bank in the form of a loan of risk capital under Article 199 of the Lomé Convention. The contract for finance between Mali and the Bank, acting on behalf of the Community, was signed in 1988.

4. The Government of Mali entrusted the execution of the project to the Société Energie du Mali (EDM). A Canadian company, Hydro Québec International (HQI), was given the task of preparing the tender procedure for the various parts of the project and assisting in the choice of the successful tenderers for the contracts.

5. The tendering for the work to which this case relates took place in autumn 1987; when the time-limit for submission expired in February 1988 tenders had been received from eight companies. SGEEM's tender was manifestly lower than those of the other companies.

6. Over the following months HQI prepared various reports on the tenders. SGEEM's tender was not considered acceptable for certain specified reasons. Inter alia it was stated that the company's unsuitability for carrying out the work was evidenced by its ‘submission of an unrealistic programme and costs’. HQI's final repon in June 1988 concluded with a recommendation that the work should not be awarded to SGEEM but to the company whose tender was regarded as the next lowest. However, negotiations were to take place with that company on certain specific points. In July EDM expressed its agreement with HQI's view. In a report prepared at the beginning of August 1988 by an ad hoc committee set up within EDM to deal with the tenders, it was similarly concluded that SGEEM's offer was unsatisfactory on certain specific points and that the cost quoted was unrealistic. The ad hoc committee recommended in its report that the contract should be awarded to the tenderer who submitted the next lowest tender.

7. During August the ad hoc committee continued its work on the matter, however, and sought further information concerning SGEEM. The outcome was that the Committee changed its mind and in its final report in September 1988 recommended that the contract should be awarded to SGEEM. On 30 September 1988 that report was sent to the Investment Bank by the Minister responsible for the project, who supported the report's conclusions.

8. In November 1988 the Investment Bank obtained HQI's report which it had requested the Minister responsible to forward. At the same time the Minister sent an explanation as to why he had not complied with HQI's report. The explanation was highly critical of HQI's report.

By a telex of 15 November 1988 to the Minister responsible, the EIB noted the borrower's choice of SGEEM, but stated:

‘so long as the tenders which have been submitted remain valid, the absence of reasons satisfactory to the Bank from the technical, economic and financial point of view for not taking into account the tender considered the best in relation to the international invitation to tender by an independent consultant, on the basis of the usually accepted criteria, will mean that the EIB will be unable to finance the project.’

9. At the request of the authorities in Mali, HQI then reexamined SGEEM's tender. The result of that examination was communicated to the Minister responsible in a telex of 9 February 1989 in which HQI inter alia commented on certain unfortunate aspects of the latest developments and continued to maintain that SGEEM's tender should not be accepted.

10. HQI's Deputy Director was then summoned to a meeting with the Minister responsible. The company agreed to reconsider its opinion. The outcome was that HQI recommended that SGEEM's tender should be accepted subject to certain additional guarantees or securities to ensure adherence to schedules and prices, which in HQI's view were still too low.

The Investment Bank requested an explanation from HQI as to why the company had changed its view and enquired in particular whether the first reports contained errors or whether new information had come to light which could justify a recommendation different from that contained in the earlier reports. HQI replied to those questions in writing and at a meeting with the Investment Bank in July.

11. The replies did not, however, cause the Investment Bank to alter its opinion and the Minister responsible was informed to that effect; after a change in the Government this was no longer the same person as had hitherto been responsible for the project. In a telex of 20 July 1989 the Bank confirmed to the new Minister that

‘In spite of HQI's additional investigations which undoubtedly have clarified certain issues, SGEEM's tender, even with the further information supplied, reveals obvious weaknesses which risk compromising the execution of the project. In our mutual concern for its speedy and effective implementation we are therefore all agreed not to award the contract to that company ...’.

12. By a telex of 24 July 1989 the next lowest tenderer was informed by the ad hoc committee set up by the EDM that ‘in view of the difficulties encountered in awarding a contract in accordance with the criteria in the invitation to tender’ it had decided to open negotiations with the company in order to clear up points on which its tender did not comply with the invitation to tender. Those negotiations were successful and a contract was concluded with that company on 6 September 1989. The contract provided that the total price was to be increased at EDM's request by 10% to cover unforeseen expenses which had to be duly substantiated.

The contractor's remuneration was determined on the basis of the quantities used and the unit prices in the price list.

Legal assessment

13. The Court has dealt with the issues which are of significance in this case in various judgments. It is true that those judgments related to the conduct of the Commission rather than the conduct of the Investment Bank in connection with tendering procedures, and they concerned tendering procedures covered by earlier Lomé Conventions. Those differences are, however, in my view immaterial as far as the paragraphs in the judgments to which I refer below are concerned.

14. In introduction, it is worth pointing out that the Court has decided that the mere fact that power to enter into contracts lies with the authorities in the ACP State in question does not mean that the possibility that acts of the body acting on behalf of the Community might cause damage to a third party should be dismissed. The Court thus held that:

‘Any person who claims to have been injured by such acts or conduct must... have the possibility of bringing an action, if he is able to establish liability, that is, the existence of damage caused by an illegal act or by illegal conduct on the part of the Community’.⁽²⁾

15. In the present case the applicants have claimed that they suffered damage as a result of the Investment Bank's conduct and allege that its conduct was unlawful.

16. The applicants claim, first, that the Investment Bank acted unlawfully because it interfered in the decision of the ACP State in question on the award of the contract by prompting, or compelling, the State to take a decision on the award of the contact. The applicant states that the Investment Bank misused its powers by interfering in the negotiations on the contract, in particular by threatening to refuse financing and, in a discriminatory and arbitrary manner, compelling Mali, which, because of its economic situation, was eager to reduce the costs of the project, to exclude SGEEM, which had submitted the lowest and, in the experts' view, economically the most advantageous tender. The applicants claim that such interference is contrary to the division of powers between the Community and the ACP State as provided for in the Lomé Convention.

17. It is apparent from the rules of the Lomé Convention and emphasized in the Court's case-law that there is a clear division of powers between the ACP States and the Community.

In this connection the Court has stated,

‘contracts financed by the Fund (EDF) remain national contracts which the authorities of each ACP State have the power to prepare, negotiate and conclude. It is for the Commission, on the other hand, to adopt on behalf of the Community the financing decisions required for the implementation of the projects and programmes decided upon in agreement with the ACP States’.⁽³⁾

The Court has stressed that it is clear from the Convention that

‘the measures adopted by the Commission's representatives during that procedure, whether approvals or refusals to approve, endorsements or refusals to endorse, are solely intended to establish whether or not the conditions for Community financing are met. They are not intended to interfere with the principle that the contracts in question remain national contracts which the ACP States alone are responsible for preparing, negotiating and concluding, and they cannot have that effect’ (emphasis added).⁽⁴⁾

The Court has further stated in connection with the competent Community body's responsibilities that:

‘... the Commission has not only the right but also the duty, as part of the responsibilities conferred upon it for the proper management of the resources of the fund, to ensure that the appropriate procedural rules are complied with and that the tender selected is economically the most advantageous, taking into account in particular the qualifications of and the guarantees offered by the tenderers, the nature and conditions of execution of the works and the price, utilization costs and technical value of those works’ (emphasis added).⁽⁵⁾

Similarly the Court has stated that the body which acts on the Community's behalf ‘is not only entitled but is in fact under a duty to obtain [the] information necessary for it in fulfilment of the responsibilities conferred on it to ensure the economical administration of the resources of the European Development Fund.’⁽⁶⁾

18. The applicants have not, in my view, in any way shown that, contrary to the division of responsibilities under the Lomé Convention, the Investment Bank unlawfully ‘interfered’ in the Mali authorities' decisions concerning the conclusion of the contract. There is nothing in the case to show that the Investment Bank did not confine itself, in accordance with its responsibilities, to determining whether the conditions for Community financing were fulfilled, meaning that it was the tender which was economically the most advantageous that had to be accepted.

19. There is nothing in the evidence available to suggest that the Bank exercised the discretion which it has in that connection wrongly and even less to show that in its assessment it allowed itself to be influenced by irrelevant considerations. It is clear from the Court's case-law that the Investment Bank must carry out an independent assessment as to which tender is economically the most advantageous and is not in that connection bound by any evaluation carried out in the ACP country in question.⁽⁷⁾

20. It is therefore sufficient to hold that the applicants have in no way shown that the Bank acted in disregard of the division of responsibilities laid down in the Lomé Convention or that the Bank adopted an unreasonable decision. It should perhaps be pointed out that the course of events described above shows that the Bank had an objective basis for taking the view that SGEEM's tender was not economically the most advantageous.

21. The applicants also claim that the various tenderers did not receive equal treatment from the Bank since it accepted that negotiations should be initiated with the next lowest tenderer with the aim of altering its tender, that is to say, by accepting a subsequent alteration of the tender to the benefit of that company contrary to the duty to treat the tenders equally; on this point reference is made to the raising of the contract price by 10%, as mentioned in paragraph 12 above.

22. That argument must be dismissed, simply because the applicants have not proved that there was a breach of the principle of equal treatment in the award of the contract. The Bank is therefore correct, in my opinion, in stating that the raising of the total contract price requested by EDM which the Bank accepted for the purpose of covering contingencies that had to be duly substantiated, is covered by Paragraph 2.22 of the tender conditions, according to which

‘the Proprietor reserves the right to increase or reduce by a maximum of twenty five (25) per cent the quantities of supplies and services specified in the invitation to tender without a change in the unit price list or other terms and conditions.’

23. The applicants lastly claimed that the Investment Bank incurred liability by failing adequately to supervise the acts of its staff and ‘inadequately following up SGEEM's letters to the Bank’, constituting a breach of the principles of sound administration.

24. That argument is clearly untenable. The argument that the Bank is liable as a result of inadequate supervision of the acts of its staff must fail, together with the arguments concerning the Bank's unlawful conduct which were rejected above.

‘Inadequately following up SGEEM's letters to the Bank’ — which as far as I can see means no more than that the Bank replied to SGEEM's letter of complaint to the Bank in a manner regarded as unsatisfactory by the company — can in no circumstance in connection with the present case lead to the Bank's being held liable to pay compensation.

25. Accordingly the applicants have not shown that the Investment Bank has incurred liability by unlawful conduct towards them as alleged. On that ground alone the action against the Investment Bank must be dismissed.

Conclusion

26. On the basis of the above considerations I would accordingly suggest to the Court that it dismiss the action against the Investment Bank and order the applicants to pay the costs.