C-172/97 · GlobalLawDB

Contents

Judgment of the Court (Third Chamber)10 June 1999^noteIn Case C-172/97,Commission of the European Communities, represented initially by Richard B. Wainwright, Principal Legal Adviser, and Jean-Francis Pasquier, a national civil servant on secondment to the Legal Service, acting as Agents, assisted by Nicole Coutrelis and Stéphanie Ponsot, of the Paris Bar, and subsequently by Richard B. Wainwright and Olivier Couvert-Castéra, a national civil servant on secondment to the same service, acting as Agents, assisted by Nicole Coutrelis, with an address for service in Luxembourg at the office of Carlos Gómez de la Cruz, of the same service, Wagner Centre, Kirchberg,vSIVU du plan d'eau de la Vallée du Lot, otherwise known as SIVU du pays d'accueil de la Vallée du Lot, a public enterprise established in La Canourgue, France,andHydro-Réalisations SARL, a company established in Rodez, France,THE COURT (Third Chamber),composed of: J.-P. Puissochet (Rapporteur), President of the Chamber, J.C. Moitinho de Almeida and C. Gulmann, Judges,Advocate General: S. Alber,Registrar: R. Grass,having regard to the report of the Judge-Rapporteur,after hearing the Opinion of the Advocate General at the sitting on 28 January 1999,gives the following

Judgment

1By application lodged at the Court Registry on 2 May 1997, the Commission of the European Communities brought an action under an arbitration clause based on Article 181 of the EC Treaty (now Article 238 EC) against the public enterprise SIVU (syndicat intercommunal à vocation unique) du plan d'eau de la Vallée du Lot, otherwise known as SIVU du pays d'accueil de la Vallée du Lot (‘SIVU’), and Hydro-Réalisations SARL seeking reimbursement of an advance of ECU 83928 paid by the Commission for completion of a project entitled ‘Plan d'eau sur le Lot. Intégration d'une microcentrale hydroélectrique basse chute dans le seuil’, together with interest as agreed in the contract at the rate applied by the European Monetary Cooperation Fund for its transactions in ecus published on the first working day of each month as from 17 January 1991 and interest at the legal rate determined annually by decree published in the Journal Officiel de la République Française as from 28 February 1993.

2On 6 December 1990 the European Economic Community, represented by the Commission, entered into a contract (No HY 84/89 FR; ‘the contract’) with SIVU and Hydro-Réalisations acting jointly and severally (‘the contractor’) under which the Community was to provide financial support for the contractor in return for an undertaking to construct a weir with a small low-head hydroelectric power station on the River Lot.

3The financial support was granted in accordance with Council Regulation (EEC) No 3640/85 of 20 December 1985 on the promotion, by financial support, of demonstration projects and industrial pilot projects in the energy field (OJ 1985 L 350, p. 29).

4Under Clause 4.3.2 of the contract, the contractor was required, initially within three months of signature of the contract and thereafter every six months, to prepare interim progress reports containing statements of expenditure incurred.

5Under the first paragraph of Clause 9 of the contract the latter ‘may be terminated by any of the contracting parties subject to two months' notice if continuance of the work programme set out in Annex I has been deprived of its purpose, in particular where it becomes apparent that the work programme will become technically or economically unfeasible or if the estimated cost of the project is exceeded by an unreasonable amount’. In such a case, the third paragraph of Clause 9 of the contract stipulates that ‘if verification of the amounts paid by the Commission reveals that the contractor has been overpaid, the latter shall reimburse the Commission immediately the excess, together with interest from the date of the completion or cessation of the works which are the subject of this contract’.

6Under Clause 13 of the contract, the parties agreed to refer to the Court of Justice all disputes concerning the validity, interpretation or performance of the contract which, in accordance with Clause 14, is governed by French law.

7Under Annex I to the contract, the project comprises five stages (preliminary studies and procedures, research and testing, execution of works, delivery and verification, and pilot tests), of which, according to Table 2 therein, only the last three are eligible for financial support from the Community. In accordance with that annex the work, commenced on 1 April 1990, was to have been completed on 31 July 1992.

8On 31 December 1990 the Commission paid the contractor, in accordance with point 1(1 )(a) of Annex II to the contract and by way of advance on its financial contribution, the sum of ECU 83928, which was received by the contractor on 17 January 1991.

9On 23 May 1991 the contractor transmitted to the Commission a first interim technical report, which was followed on 13 August 1991, after a reminder from the Commission, by a financial report for the period from 1 April 1990 to 30 June 1991, corresponding to the initial phase of the work. The expenditure incurred by the contractor related to the first two stages of the project, so that the Commission made no new payment.

10Having subsequently sought in vain to obtain from the contractor technical and financial reports for the period from 1 July to 31 December 1991, the Commission notified SIVU, by letter of 7 October 1992, that it must complete performance within one month, stating that if it did not do so the Commission reserved the right to take the appropriate steps regarding continuation of the contract.

11On 6 November 1992 SIVU informed the Commission that the project had been altered in order to take account of observations which had been made inter alia by environmental protection associations, and that the construction of the small hydro-electric station had been abandoned in favour of a spill-weir. In consequence it no longer required financial support from the Community and had decided to reimburse the advance it had already obtained.

12By letter of 18 November 1992 the Commission informed SIVU that it was terminating the contract in accordance with Clause 9, and asked it to effect reimbursement of the ECU 83928 advanced together with interest from the date on which that sum had been received. On 8 December 1992 it issued a debit note against SIVU for the amount of the advance, together with interest, payable by 28 February 1993.

13Since SIVU did not comply with that request, or with subsequent requests to repay the advance sent to it by the Commission on 27 January 1994, 1 June 1994, 31 October 1994 and 12 October 1995, the Commission brought this action.

14The Commission's application was duly notified to SIVU and to Hydro-Réalisations. SIVU did not reply; the court-appointed representative of Hydro-Réalisations informed the Court that the company had been placed in liquidation by judgment of the Tribunal de Commerce of Rodez of 13 February 1992 and that there was no hope of obtaining recovery of unsecured debts.

15The Commission has asked the Court to give judgment by default in accordance with Article 94(1) of the Rules of Procedure of the Court of Justice on the ground that neither of the defendants submitted a defence within the time-limit.

16It is clear that neither SIVU nor Hydro-Réalisations, although duly notified of the action, lodged a statement in defence in due time in accordance with Article 40(1) of the Rules of Procedure. Accordingly, the Court must give judgment by default. Since there is no doubt as to the admissibility of the action it need only determine whether the application appears well founded, in accordance with Article 94(2) of the Rules of Procedure.

Termination of the contract and repayment of the advance

17Under the first paragraph of Clause 9 of the contract the latter could be terminated by any of the contracting parties on two months' notice if continuance of the work programme in Annex I became devoid of purpose.

18It is common ground that SIVU and Hydro-Réalisations stated that they were abandoning the idea of constructing the small low-head hydro-electric power station which they had undertaken to complete in return for financial support from the Community. Consequently, the Commission was correct to conclude that continuance of the work programme in question had become devoid of purpose. Furthermore, it is not in dispute that the Commission duly notified the contractor of its decision to terminate the contract by letter of 18 November 1992.

19The third paragraph of Clause 9 of the contract provides that in the event of termination, if verification of the amount paid by the Commission revealed that the contractor had been overpaid, the latter was to reimburse the Commission immediately.

20From the information supplied by the Commission it appears that the contractor received on 17 January 1991 an advance of ECU 83928 and that the work it completed related to stages I and II of the project, expenditure which was not eligible for Community financing, in accordance with Table 2 of Annex I to the contract. In its letter of 6 November 1992 informing the Commission that the project to construct a small hydro-electric power station was being abandoned, SIVU stated in any event that it had decided to reimburse the whole of the advance it had received.

21Consequently, the Commission's claim for reimbursement of the advance must be upheld.

Interest

Contractual interest

22Under the third paragraph of Clause 9 of the contract the contractor was to reimburse the Commission immediately for any overpayment, together with interest from the date of termination or cessation of the work which was the subject-matter of the contract. Under the fourth paragraph of Clause 9 of the contract the applicable rate of interest was that of the European Monetary Cooperation Fund for its transactions in ecus, published on the first working day of each month.

23The Commission submits that it is entitled to contractual interest on the sum of ECU 83928 as from 17 January 1991, the date on which the advance was received by the contractor. That is because, it maintains, although work was done by the contractor up to May 1991, that work related not to the construction of the hydro-electric station itself and did not therefore directly concern the project which was the subject-matter of the contract.

24The Commission's application indicates that the work which was completed by the contractor concerned stages I and II of the project it had undertaken to complete. However, it is stipulated in Clause 1 of the contract, which determines the subject-matter, that the contractor undertakes to complete the project in accordance with the work schedule set out in Annex I. According to that annex, the two stages in question are an integral part of the agreed project in the same way as are the three following stages. Consequently, the Commission cannot maintain that the work relating to the first two stages of the project did not form part of the subject-matter of the contract under the third paragraph of Clause 9.

25Accordingly, the contractual interest claimed by the Commission can run only from the date on which the contractor ceased work. The Commission stated in the application that the work relating to the subject-matter of the contract continued until 31 May 1991.

26Consequently, the Commission is entitled only to the interest provided for in the third paragraph of Clause 9 of the contract with effect from 31 May 1991.

Legal interest

27In addition to contractual interest, the Commission considers that it is entitled with effect from the date on which the debit note issued against SIVU fell due, 28 February 1993, to interest for late payment at the legal rate determined annually by decree published in the Journal Officiel de la République Française.

28The first paragraph of Article 1153 of the Code Civil provides that ‘where liability is limited to the payment of a certain sum, damages for late performance cannot exceed an order to pay interest at the legal rate, save for special rules pertaining to trade and sureties’. However, the parties to a contract may derogate from those provisions, for example by agreeing on a different rate of interest.

29As interpreted by the national courts, interest for late payment at the legal rate cannot be cumulated with contractual interest. That is because the latter, which continues until the date of reimbursement of the sum due, is already designed to make good the damage caused to the creditor by being deprived of the income of that sum.

30Since the Commission is already entitled to contractual interest as provided for in Clause 9 of the contract, its claim for legal interest must be rejected.

31In accordance with Article 2(1) of Council Regulation (EC) No 1103/97 of 17 June 1997 on certain provisions relating to the introduction of the euro (OJ 1997 L 162, p. 1) references to the ecu are to be replaced by references to the euro at the rate of one euro for one ecu.

32Consequently, SIVU and Hydro-Réalisations must be ordered jointly and severally to pay the Commission the sum of EUR 83928 together with contractual interest from 31 May 1991 until discharge of the debt in full.

Costs

33Under Article 69(2) of the Rules of Procedure the unsuccessful party is to be ordered to pay the costs if they have been applied for. Since the Commission has applied for costs against SIVU and Hydro-Réalisations and the latter have been unsuccessful in the main, they must be ordered to bear the costs jointly and severally.

Operative part

On those grounds,THE COURT (Third Chamber)hereby:

1.Orders SIVU du plan d'eau de la Vallée du Lot, otherwise known as SIVU du pays d'accueil de la Vallée du Lot, and Hydro-Réalisations SARL jointly and severally to pay to the Commission of the European Communities the sum of EUR 83928, together with contractual interest with effect from 31 May 1991 until discharge of the debt in full;

2.Dismisses the remainder of the application;

3.Orders SIVU du plan d'eau de la Vallée du Lot, otherwise known as SIVU du pays d'accueil de la Vallée du Lot, and Hydro-Réalisations SARL jointly and severally to pay the costs.

Delivered in open court in Luxembourg on 10 June 1999.