Court of Justice of the European Communities (including Court of First Instance Decisions)

Facts and legal background

'The work on the superstructure of the buildings is expected to start on 1 October 1994. SERS shall have an estimated period of 36 months to complete the buildings starting from that date.

The period for completion within the meaning of this subclause shall, however, be extended appropriately in the event of delay duly justified by SERS. That shall apply inter alia in the event of:

- additional modifying work requested by the European Parliament;

- delay in obtaining administrative authorisation(s) attributable to the authorities responsible for examining or issuing them, or to third parties;

- consequences of the putting into administration or judicial winding-up of one (or more) of the parties contracting with the main contractor;

- force majeure or accidental occurrence as defined in the case-law and legal writing;

- strike affecting the site;

- administrative or judicial decision or order ordering work to stop;

- vandalism, bad weather, natural disaster, war, terrorism, archaeological excavations;

- failure to reply or delay in replying on the part of the European Parliament beyond three weeks from the date of communication.'

'The buildings shall be regarded as completed either on the date of acceptance if there is only one, or on the date of the last acceptance if they are successive or partial, except in the case of an objection by the European Parliament duly founded on non-compliance with the programme documentation in its entirety. In the latter case, the date of completion shall be the subject of agreement between the parties or, failing that, a decision of the competent French court. Acceptance means acceptance within the meaning of Article 1792-6 of the French Civil Code.

...

SERS shall, by registered letter sent at least 10 calendar days before the date proposed, invite the European Parliament to a site visit prior to each acceptance and to the acceptance(s). SERS undertakes not to issue one or other acceptance without taking account of any observations and comments the European Parliament may make which are duly founded on compliance with the programme documentation in its entirety.

Failing agreement between SERS and the undertakings on fixing the date of one or other acceptance, it shall be the date fixed judicially pursuant to Article 1792-6 of the French Civil Code, and this is expressly accepted by the parties. In the event of an application for judicial acceptance to be delivered, SERS undertakes to inform the European Parliament thereof forthwith.

...'

'5.1 Even if the period of 36 months referred to in clause 3.3 extends beyond the date provided for in clause 3.2, possibly postponed under clause 5.2, SERS shall be liable as from the date referred to in clause 3.2, possibly postponed under clause 5.2, automatically and without any formalities being required, solely because of that extension, for a daily penalty of ECU 28 000, subject to a ceiling of 3% of the confirmed cost of construction (amount of works plus consultants' fees).

...

The daily penalty - or reduced penalty mentioned above - shall cease to run on the date of confirmation of completion referred to in clause 4, and in any event when the ceiling is reached.

5.2 The period provided for in clause 3.2 shall be extended in the event of:

- force majeure or accidental occurrence duly confirmed;

- decision of an administrative or judicial body ordering work to stop;

- natural disaster, war, terrorism, archaeological excavations;

- bad weather recognised by the Caisse des congés payés du bâtiment de Strasbourg;

- delay in obtaining administrative authorisation(s) attributable to the authorities responsible for examining or issuing them, excluding those within the competence of the City of Strasbourg.

In such cases an additional period shall be laid down by common agreement of the parties or, failing that, by the court referred to in clause 29.

SERS shall inform the European Parliament, as soon as it becomes aware thereof, of the occurrence of any possible cause of delay. If it does not do so, it may not rely thereon to obtain an additional period.

5.3 The date provided for in clause 3.2 does not take account of additional or modifying works requested or accepted by the European Parliament.

For each such work, the additional periods must be fixed in accordance with the procedures defined in the protocol.'

'Interim interest shall apply to all the items of expenditure in the financial statement as from the date of payment by SERS, until the date of drawing up the first intermediate investment cost statement or the confirmed investment cost for the sums not taken into account in the intermediate investment cost statement(s).

In this respect, interim interest shall apply in particular between the date when a payment is first due and the actual date of payment.

It shall be calculated according to the rates and conditions which appear to be the best on the financial markets, which SERS shall explore constantly for that purpose, following the procedure laid down in clause 6.4.

The calculations concerning the calculation of days and capitalisation of interest shall be done in accordance with banking methods the description of which shall be an integral part of the financing contract mentioned in clause 6.4.

For determining the provisional investment cost, the interim interest has been fixed at an indicative rate of 7.3%.

Interim interest shall not be due from the European Parliament for the period between the completion date provided for in clause 3.2, possibly postponed under clause 5.2,and the actual completion date if the postponement of the completion date derives from fault on the part of SERS or a delay not accepted as justified by the court referred to in clause 29.'

'In the absence of prior amicable agreement, all disputes relating to this contract shall be brought before the Court of First Instance of the European Communities, pursuant to Article 181 of the EEC Treaty, Article 153 of the ECSC Treaty and Article 42 of the Euratom Treaty.'

- a supplement to the framework contract ('the supplementary contract'), supplementing clause 29 and concerning the establishment of a committee of conciliators ('the conciliators') strictly for the purpose of resolving the dispute on the differences of interpretation and application as regards the fixing of the contractual date of completion of the buildings on the basis of clauses 3, 5, 6 and 25 of the framework contract;

- a conciliation protocol, in which the parties decided to submit to the opinion of the conciliators the dispute as defined in the supplementary contract;

- a document recording completion of the buildings, in which the parties agreed inter alia that the completion date provided for in clause 4(1) of the framework contract was fixed at 15 December 1998 and that the lease concluded between SERS and the Parliament consequently took effect on that date on the terms provided for in that contract.

- 25 working days caused by the additional works resulting from the modifications requested in amending memoranda PEU 008 and 055;

- 128 working days due to the failure of the first call for tenders for the contract for the structural works;

- 180 working days because of bad weather;

- 106 working days because of defaults of undertakings;

- 4 working days because of a strike;

- 16 working days as a result of road closures because of bad weather and the setting up of road barriers in thaw conditions;

- 20 working days as a result of administrative orders;

- 81 working days because of the abandonment of the site by the DRE-Lefort-Francheteau consortium ('DRE') and the undertaking doing the plastering work.

'...

... the contract contains two groups of terms which are quite distinct, those of clause 3.3 relating to the estimated period and those of clauses 3.2 and 5 concerning the completion date;

... the contract makes provision for grounds of postponement which are themselves different for the estimated period and the completion date;

... the contract consistently attaches the date of completion fixed in clause 3.2 to the grounds of postponement provided for in clause 5.2 (see clauses 5.1, 6.3, 7.2);

... clause 5.1 provides that:

Even if the period of 36 months referred to in clause 3.3 extends beyond the date provided for in clause 3.2, possibly postponed under clause 5.2, SERS shall be liable as from the date referred to in clause 3.2, possibly postponed under clause 5.2, automatically and without any formalities being required ... for a ... penalty.

That latter provision, notwithstanding the incorrect inflectional endings on the French word prorogé (postponed) which confuse its interpretation but which the parties have agreed to accept as mistakes, can only have the following meaning: any delivery of the work beyond the time-limit fixed by clause 3.2 extended solely by the grounds of postponement in clause 5.2 gives rise to payment of the penalties for delay laid down in the contract, even if the estimated period fixed in clause 3.3 has been exceeded as a result of legitimate grounds of delay provided for in clause 3.3 but not repeated in clause 5.2.

Consequently, the very terms of clause 5.1, combined with the provisions which associate clause 3.2 (completion date) with clause 5.2 (grounds of postponement of the completion date), require a distinction to be drawn between the estimated period in clause 3.3 and the date of completion.

In those circumstances, the College ... is of the opinion that the contractual date of completion is the date of 31 December 1997, possibly postponed in accordance withthe effects only of the grounds of postponement provided for in clause 5.2. That is therefore the date from which the penalties for delay are due.'

'...

Having regard to the terms of clause 3.3, the grounds of postponement it lists can apply only in so far as they have arisen before 31 December 1997 and can be taken into account only within the three-month limit which follows from clause 3.2 in conjunction with clause 3.3.

In this respect, it is apparent from the document produced by the European Parliament at the meeting on 5 March 1999 (points 24 and 25) that it recognised, implicitly but necessarily, that that three-month limit was properly used by SERS pursuant to clause 3.3.

However, the European Parliament does not make clear which of the grounds put forward by SERS it relies on in accepting that extension of the estimated period. It is not possible for the same ground of postponement to be used twice, once to extend the estimated period of 36 months, and again to postpone the contractual date of completion.

We ... therefore recommend the parties to come together to determine the grounds of postponement of the period of 36 months, while of course giving priority to the grounds of postponement allowed under clause 3.3 but not allowed under clause 5.2.

It thus follows from the above that the only remaining disagreement between the parties concerns the grounds of the postponement of the completion date beyond 31 December 1997 under clause 5.2.

We ... consider that the grounds of postponement in clause 5.2 for their part entail a postponement of the completion date provided for in clause 3.2 (31 December 1997) to the due extent, whatever their date of occurrence and even if they occur after 31 December 1997, provided that they take place during a period of postponement which is permitted under clause 5.2.'

'The first event capable of being a case of force majeure is constituted by the delay resulting from the unsuccessful outcome of the call for tenders for the contract relating to the structural work, based on the assumption of agreement between the tendering undertakings and on the need to carry out another call for tenders in order to award that contract.

...

However, it must be observed that the letter dated 20 December 1994 addressed by [the] managing director of SERS to [the] director-general of the administration of the European Parliament suggests that SERS will observe the time-limit laid down in the framework contract notwithstanding the restart of consultations and the time wasted as a result of that serious incident.

We ... consider, however, that the elements which constitute a case of force majeure are objective in nature; they must therefore be assessed in themselves independently of the way, which may be incorrect, in which they may have been assessed by a party at a time when not all the consequences of the event had as yet manifested themselves

In those circumstances, our position ... is to invite both parties to come together to examine together a posteriori the actual effect of the event in question on the progress of the site from the point of view of the obligation of diligence on the part of SERS.

They will have to decide on the basis of that examination whether to reject or to accept in whole or in part that event as a ground of postponement of the completion date.'

'...

* In general, such acts are not regarded as cases of force majeure in that they cannot, in principle, be regarded as unforeseeable. Defaults on the part of undertakings are comparatively common in the course of carrying out works and are regarded by the case-law as normal hazards of a building site.

** However, the default of the [DRE] group assumes a particular aspect in view of the circumstances in which it took place. That group, after tendering in the context of a call for tenders and having its tender accepted, refused to sign the contract itself.

That situation, taken in itself, could count as force majeure, provided that the considerable delay it led to is accepted as insurmountable by the parties for whom it is to examine this point.

Were they to decide it by accepting that there was force majeure, we ... would, however, take the view that in this very special case the payment of penalties for delay could not be avoided. Exemption from such payment would amount to exonerating the group of undertakings in default from the consequences of its default and making the European Parliament bear a loss which was undoubtedly suffered by SERS, but for which SERS can obtain compensation from that group.

Our opinion is, however, based on the assumption of default on the part of the DRE group which refused to honour its commitments. If the competent court before which SERS brought the matter reached a contrary conclusion, the question of force majeure would then have to be reconsidered by the parties in the light of that judicial decision.

...'

'...

The operating protocol constituting Annex 5 to the framework contract provides that:

For the application of clause 5.3 of the framework contract, and with respect to modifications having consequences for the planning, SERS shall inform the European Parliament of the effects of the proposed modifications on the overall time scale.

Countersignature of the modifications by the European Parliament shall automatically to the appropriate extent entail postponement of the time-limit referred to in clause 3 of the framework contract.

We ... consider that, pursuant to that provision, the delays resulting from additional works or modifications requested or accepted by the Parliament must be taken into account in their entirety for postponement of the completion date, where the conditions laid down in clause 3.2 of the operating protocol are satisfied.

This must all the more be so as it is apparent from the documents in the case that the delays resulting from [amending memorandum] PEU 055 - Conference network - were taken into account by the European Parliament and those resulting from [amending memorandum] PEU 008 - Modification of the hemicycle - were expressly accepted by it, as may be seen from that amending memorandum.'

'...

It appears [from the provisions of the final paragraph of clause 6.3 of the framework contract] that the system of interim interest is independent of the system of penalties for delay; that is attributable to their different objectives.

It follows that the European Parliament may benefit from an exemption from the obligation concerning the payment of interim interest only if two conditions are fulfilled:

- first, the actual date of completion of the buildings is later than their contractual completion date;

- second, that slippage is attributable to fault on the part of SERS or is the result of a delay not recognised as justified by the court mentioned in clause 29.

We ... consider that fault on the part of SERS must be understood as a personal fault of SERS, excluding inter alia faults attributable to its contracting parties or their subcontractors.

As regards the delays not recognised as justified by the court mentioned in clause 29, the contract gives no criterion of assessment and refers the matter to the Court of First Instance.

We ... have consequently raised the question of what criteria that court or the parties, prior to bringing the matter before the court, could rely on to determine whether or not a delay relied on by SERS is justified.

We consider that, since the grounds of postponement listed in clause 5.2 have already been taken into account simply because of the wording of the final paragraph of clause 6.3, it is those listed in clause 3.3, which it should be remembered is not an exhaustive list, which could be of relevance in this respect.'

Procedure

Forms of order sought

- declare the plea admissible and well founded, pursuant to Article 91 et seq. of the Rules of Procedure of the Court;

- hold and declare that the predetermined period of 30 days for making an application to the competent court against the Opinion had expired on the date on which the Court of Justice was seised, namely 5 May 1999;

- declare that the Opinion has become final and irrevocable;

- order the Parliament to pay the costs and to pay each of them a procedural indemnity of EUR 20 000;

- in the alternative, and in the highly unlikely event of the Court deciding either to join the plea to the substance or to reject the plea by separate decision, to grant the City and SERS the necessary time to make submissions on the substance.

- dismiss the plea of inadmissibility as unfounded;

- dismiss the claim of the City and SERS for payment of a procedural indemnity of EUR 20 000;

- order those parties to pay the costs;

- continue the proceedings on the substance or, in the alternative, remit the case to the Court of First Instance.

- order SERS to pay penalties for delay from 9 January 1998, the contractual date of completion of the buildings, until 14 December 1998 inclusive, the day before the date of confirmation of the completion of the buildings, or else, in the alternative, order SERS to pay penalties for delay as from the contractual completion date fixed by the Court;

- declare unjustified the delays after 9 October 1998, the contractual date of completion of the buildings, and consequently declare that the Parliament is not liable to pay interim interest from that date until 14 December 1998 inclusive, the day before the date of confirmation of completion of the buildings, or else, in the alternative, declare that the Parliament is not liable to pay interim interest as from the contractual completion date fixed by the Court;

- annul the Opinion;

- order the City and SERS to pay the costs;

- declare inadmissible the purported counterclaim brought by those parties against the Opinion;

- dismiss the claim by those parties for payment of a procedural indemnity of FRF 300 000;

- dismiss all the other claims of those parties.

- take note that they make submissions on the substance only subject to the plea of inadmissibility of the Parliament's application, without abandoning that plea, and on the contrary maintaining it;

subject to that reservation:

- take note that they bring a counterclaim against the Opinion, in so far as the conciliators considered that the period for completion expired on 31 December 1997 and was extended only on the grounds referred to in clause 5.2 of the framework contract;

- hold that the time-limit of 31 December 1997 is merely an estimated time-limit which may be postponed for any reason justified under clause 3 of the framework contract in all its provisions, which constitutes an indivisible whole;

and, as regards the Parliament's application:

- dismiss that application;

- hold that the Court has no other power or no more power than the conciliators;

- hold that the Court can rule only on the principles of law applicable to the dispute, to the exclusion of any analysis of the facts, and a fortiori that the Court cannot order or fix a completion date concerning questions of fact not within the competence of the conciliators and the Court, which is hearing the case on the basis of the devolutive effect of the Parliament's application;

- confirm the Opinion on all points not the subject of the counterclaim by the City and SERS;

- order the Parliament to pay the costs and expenses and a procedural indemnity of FRF 300 000.

Admissibility of the application by the Parliament

Arguments of the parties

Findings of the Court

Admissibility of the counterclaim of the City and SERS

Arguments of the parties

Findings of the Court

'A response may seek:

- to dismiss, in whole or in part, the appeal or to set aside, in whole or in part, the decision of the Court of First Instance;

- the same form of order, in whole or in part, as that sought at first instance and shall not seek a different form of order.'

Devolutive effect of the application by the Parliament

Arguments of the parties

Findings of the Court

The Opinion

Arguments of the parties

- the Parliament has been informed by SERS, as soon as SERS became aware thereof, of the occurrence of any possible ground of delay referred to in clause 5.2 of the framework contract;

- an extension of the contractual date of completion of the buildings has been requested by SERS and then agreed between the parties; and

- SERS has indicated to the Parliament the adequate remedial measures envisaged for remedying the delay.

Findings of the Court

The counterclaim of the City and SERS

The Parliament's application

- the contractual date of completion of the buildings must be fixed at 6 February 1998;

- SERS must be ordered to pay the penalties provided for in clause 5.1 of the framework contract from that date, in accordance with the conditions laid down by that provision.

Costs