Office belge de l'economie et de l'agriculture (OBEA) v Etablissements Soules & Cie SA. [1988] EUECJ R-79/87 (23 February 1988)

JUDGMENT 1 . BY JUDGMENT OF 10 MARCH 1987, WHICH WAS RECEIVED AT THE COURT ON 18 MARCH 1987, THE TRIBUNAL DE COMMERCE, BRUSSELS REFERRED TO THE COURT FOR A PRELIMINARY RULING UNDER ARTICLE 177 OF THE EEC TREATY TWO QUESTIONS ON THE INTERPRETATION OF COMMISSION REGULATION NO 1974/80 OF 22 JULY 1980 LAYING DOWN GENERAL IMPLEMENTING RULES IN RESPECT OF CERTAIN FOOD-AID OPERATIONS INVOLVING CEREALS AND RICE ( OFFICIAL JOURNAL 1980, L 192, P . 11 ). 2 . THOSE QUESTIONS WERE RAISED IN PROCEEDINGS BETWEEN THE OFFICE BELGE DE L' ECONOMIE ET DE L' AGRICULTURE ( OBEA ), THE BELGIAN INTERVENTION AGENCY, THE PLAINTIFF, AND ETABLISSEMENTS SOULES ET CIE SA ( HEREINAFTER REFERRED TO AS "SOULES "), THE DEFENDANT, WHICH HAD BEEN THE SUCCESSFUL TENDERER IN A TENDERING PROCEDURE PROVIDED FOR BY COMMISSION REGULATION ( EEC ) NO 3611/81 OF 14 DECEMBER 1981 ( OFFICIAL JOURNAL 1981, L 362, P . 14 ) TO SUPPLY 550 TONNES OF COMMON WHEAT FLOUR TO THE SUDAN THROUGH THE INTERMEDIARY OF THE INTERNATIONAL COMMITTEE OF THE RED CROSS . 3 . SOULES ANNOUNCED THAT IT WAS WITHDRAWING FROM THE CONTRACT BECAUSE OF ITS SUPPLIER BEING MADE SUBJECT TO A CESSATION OF PAYMENTS ORDER . THE COMMISSION THEREUPON ADOPTED A NEW REGULATION CONCERNING THE MOBILIZATION OF THE SAME QUANTITY OF FLOUR BY MEANS OF A DIRECT AWARD PROCEDURE ( COMMISSION REGULATION ( EEC ) NO 1058/82 OF 4 MAY 1982, OFFICIAL JOURNAL 1982, L 123, P . 18 ). THIS PROCEDURE FINALLY LED TO THE CONCLUSION OF A CONTRACT WITH A BELGIAN UNDERTAKING WHICH HAD ALREADY SUBMITTED A TENDER DURING THE TENDERING PROCEDURE . 4 . THE OBEA OBTAINED PAYMENT OF THE SECURITY PROVIDED BY SOULES BUT THEN ALSO ASKED IT TO PAY BFR 1 667 050, REPRESENTING THE DIFFERENCE BETWEEN THE PRICE OF BFR 14 479 PER TONNE OF WHEAT WHICH SOULES HAD QUOTED IN JANUARY 1982 DURING THE EARLIER TENDERING PROCEDURE AND THE HIGHER PRICE OF BFR 17 510 PER TONNE QUOTED FOR SUPPLYING THE SAME GOODS BY THE BELGIAN UNDERTAKING ON 5 MAY 1982 FOLLOWING THE INVITATION TO TENDER MADE BY THE OBEA IN A LETTER OF 3 MAY 1982 IN WHICH THE DEADLINE FOR THE SUBMISSION OF TENDERS WAS FIXED "AT 2.30 ON 5 MAY AT THE LATEST ". 5 . SOULES REFUSED TO PAY THAT SUM AND THE OBEA SUED IT FOR PAYMENT BEFORE THE TRIBUNAL DE COMMERCE, BRUSSELS . IN THE MAIN PROCEEDINGS, IN VIEW OF THE LINK BETWEEN THE SUM SOUGHT AND THE TENDER AT A HIGHER PRICE MADE BY THE BELGIAN UNDERTAKING ON 5 MAY 1982 IN THE DIRECT AWARD PROCEDURE, SOULES ASKED THE NATIONAL COURT TO DISMISS THE CLAIM FOR PAYMENT OF THAT SUM, SUBMITTING INTER ALIA THAT : ( A ) THE INVITATION TO TENDER MADE ON 3 MAY 1982 BY THE OBEA WAS ILLEGAL SINCE IT WAS LIMITED TO THE TWO UNDERTAKINGS WHICH HAD EARLIER BEEN UNSUCCESSFUL IN THE TENDERING PROCEDURE; AND ( B ) THAT INVITATION WAS ILLEGAL SINCE THE TENDERS WERE SUBMITTED ON 5 MAY 1982 FOLLOWING THAT INVITATION, THAT IS TO SAY BEFORE THE ENTRY INTO FORCE OF COMMISSION REGULATION ( EEC ) NO 1058/82 OF 4 MAY 1982 WHICH PROVIDED FOR THE OBEA TO IMPLEMENT THE DIRECT AWARD PROCEDURE . 6 . THE NATIONAL COURT TOOK THE VIEW THAT THE ARGUMENTS PUT FORWARD BY SOULES RAISED PROBLEMS CONCERNING THE INTERPRETATION OF PROVISIONS OF COMMUNITY LAW AND THEREFORE STAYED PROCEEDINGS AND REFERRED THE FOLLOWING TWO QUESTIONS TO THE COURT FOR A PRELIMINARY RULING : "1 . WAS THE PLAINTIFF, THE OBEA, ENTITLED TO SOLICIT, BY LETTER OF 3 MAY 1982, TENDERS FROM THE UNITED BELGIAN MILLS AND AFM, WHICH HAD PREVIOUSLY TAKEN PART IN THE TENDERING PROCEDURE OPENED BY REGULATION ( EEC ) NO 3611/81? 2 . WAS THE PLAINTIFF LAWFULLY ENTITLED TO ACCEPT, IN ITS LETTER OF 10 MAY 1982, THE TENDER DATED 5 MAY 1982 SUBMITTED BY AFM EVEN THOUGH ARTICLE 2 OF REGULATION ( EEC ) NO 1058/82 OF 4 MAY 1982, UNDER WHICH THE PLAINTIFF PURPORTS TO HAVE ACTED, PROVIDES THAT THE REGULATION IS TO ENTER INTO FORCE ON THE DAY FOLLOWING ITS PUBLICATION IN THE OFFICIAL JOURNAL OF THE EUROPEAN COMMUNITIES, WHEREAS IT WAS PUBLISHED IN THE SAID OFFICIAL JOURNAL DATED 6 MAY 1982?" 7 . REFERENCE IS MADE TO THE REPORT FOR THE HEARING FOR A FULLER ACCOUNT OF THE FACTS OF THE CASE AND THE OBSERVATIONS SUBMITTED BY THE PARTIES AND BY THE COMMISSION, WHICH ARE MENTIONED OR DISCUSSED HEREINAFTER ONLY IN SO FAR AS IS NECESSARY FOR THE REASONING OF THE COURT . 8 . IT IS FIRST OF ALL NECESSARY TO DEFINE THE SCOPE OF THOSE QUESTIONS . IT IS APPARENT FROM THE JUDGMENT MAKING THE REFERENCE THAT THE NATIONAL COURT IS ASKING THE COURT FOR A RULING ON THE INTERPRETATION OF COMMUNITY LAW WHICH WILL ENABLE IT TO ASSESS THE LEGALITY OF THE MEASURES IMPLEMENTING REGULATION NO 1058/82 AS REGARDS : ( A ) OBEA' S ENTITLEMENT TO INVITE TENDERS FROM THE TWO UNDERTAKINGS WHICH HAD UNSUCCESSFULLY PARTICIPATED IN THE EARLIER TENDERING PROCEDURE; ( B ) THE LEGALITY OF THE INVITATION AND THE SUBMISSION OF TENDERS MADE BEFORE THE ENTRY INTO FORCE OF REGULATION NO 1058/82 WHICH GAVE THE OBEA RESPONSIBILITY FOR ENSURING THE SUPPLY OF THE FOODS IN QUESTION . THE FIRST QUESTION 9 . AS REGARDS THE FIRST QUESTION, IT MUST BE POINTED OUT FIRST THAT ARTICLE 9 OF REGULATION NO 1974/80, CITED ABOVE, PROVIDES THAT THE AGENCY RESPONSIBLE FOR THE MOBILIZATION IS TO ENSURE "COMPETITION BETWEEN SEVERAL TENDERERS" AND SECONDLY THAT THERE IS NO PROVISION IN THE BASIC REGULATION OR THE REGULATION WHICH AUTHORIZED THE OPENING OF THE DIRECT AWARD PROCEDURE WHICH PROVIDES THAT UNDERTAKINGS WHICH MADE UNSUCCESSFUL TENDERS DURING AN EARLIER TENDERING PROCEDURE RELATING TO THE SAME OPERATION MUST BE EXCLUDED . 10 . IN GENERAL USAGE AND NORMAL LEGAL TERMINOLOGY IT IS ACCEPTED THAT "SEVERAL" MEANS "MORE THAN ONE" AND IT THEREFORE FOLLOWS THAT ARTICLE 9 OF COMMISSION REGULATION ( EEC ) NO 1974/80 OF 22 JULY 1980 MUST BE INTERPRETED AS MEANING THAT AN AGENCY RESPONSIBLE FOR THE MOBILIZATION OF FOOD AID BY A DIRECT AWARD PROCEDURE IS NOT THEREBY PROHIBITED FROM ENSURING COMPETITION ONLY BETWEEN TWO UNDERTAKINGS WHICH HAVE ALREADY UNSUCCESSFULLY TAKEN PART IN A TENDERING PROCEDURE RELATING TO THE SAME OPERATION . THE SECOND QUESTION 11 . AS REGARDS THE SECOND QUESTION, REFERENCE MUST BE MADE AT THE OUTSET TO ARTICLE 7 ( 4 ) OF REGULATION ( EEC ) NO 2750/75 OF THE COUNCIL OF 29 OCTOBER 1975 FIXING CRITERIA FOR THE MOBILIZATION OF MATERIALS INTENDED AS FOOD AID ( OFFICIAL JOURNAL 1975, L 281, P . 89 ) WHICH PROVIDES THAT AS SOON AS THE PRINCIPLE OF AN EMERGENCY COMMUNITY ACTION HAS BEEN ADOPTED THE COMMISSION SHALL DECIDE WHICH MEMBER STATE OR STATES SHALL BE RESPONSIBLE FOR CARRYING OUT THE ACTION . ARTICLE 7 ( 6 ) PROVIDES THAT THE COMMISSION IS TO ADOPT THE DETAILED RULES FOR APPLYING EMERGENCY COMMUNITY ACTION CONCERNING CEREALS . 12 . IN REGULATION NO 1974/80 OF 22 JULY 1980, THE COMMISSION ADOPTED THE DETAILED RULES FOR IMPLEMENTING THE ABOVEMENTIONED COUNCIL REGULATION . IN PARTICULAR, ARTICLE 2 PROVIDES THAT THE INTERVENTION AGENCY OF THE DESIGNATED MEMBER STATE IS RESPONSIBLE FOR PUTTING INTO OPERATION THE PROCEDURES FOR THE MOBILIZATION AND SUPPLY OF THE PRODUCTS AND THEN PROVIDES THAT SUPPLY OF THE PRODUCTS IS TO BE BY CONTRACT AWARDED BY TENDERING PROCEDURE . THE SECOND SUBPARAGRAPH OF ARTICLE 2 ( 2 ) PROVIDES : "HOWEVER, WHERE, IN THE EXCEPTIONAL CIRCUMSTANCES REFERRED TO IN ARTICLE 7 OF REGULATION ( EEC ) NO 2750/75 AND ARTICLE 1 OF REGULATION ( EEC ) NO 696/76, IT IS DECIDED TO INITIATE A DIRECT AWARD PROCEDURE, THE PROVISIONS SET OUT IN TITLE III SHALL APPLY ". ARTICLE 9 OF TITLE III PROVIDES THAT THE INTERVENTION AGENCY DESIGNATED FOR THE PURPOSE IS TO CONCLUDE THE CONTRACT ON THE BASIS OF THE MOST FAVOURABLE TERMS AFTER ENSURING COMPETITION BETWEEN SEVERAL TENDERERS . ARTICLE 10 OF TITLE III PROVIDES THAT CERTAIN PROVISIONS OF THE TENDERING PROCEDURE ARE APPLICABLE MUTATIS MUTANDIS EVEN TO THE DIRECT AWARD PROCEDURE . THE PROVISIONS IN QUESTION ARE THOSE CONCERNING IN PARTICULAR THE SUBMISSION OF TENDERS UNDER ARTICLE 4 ( 3 ) OF THE ABOVEMENTIONED REGULATION NO 1974/80, THE UNDERTAKINGS GIVEN BY THE TENDERER WHICH MUST ACCOMPANY THE TENDER UNDER ARTICLE 4 ( 4 ) ( B ), ( C ), ( D ) AND ( E ) AND THE FURNISHING OF SECURITY UNDER ARTICLE 5 OF THAT REGULATION . 13 . IT IS APPARENT FROM THE FOREGOING THAT WHEN, IN THE EXCEPTIONAL CIRCUMSTANCES REFERRED TO IN ARTICLE 7 OF REGULATION NO 2750/75 AND ARTICLE 1 OF REGULATION NO 696/76, IT IS DECIDED TO HAVE RECOURSE TO A DIRECT AWARD PROCEDURE A MORE FLEXIBLE PROCEDURE THAN THE TENDERING PROCEDURE MAY BE APPLIED IN ORDER TO EXPEDITE THE SUPPLY OF THE PRODUCTS . IN PARTICULAR, UNDER SUCH A FLEXIBLE PROCEDURE IT IS POSSIBLE TO REDUCE THE TIME ALLOWED FOR THE SUBMISSION OF TENDERS, SHORTEN THE SHIPMENT PERIOD AND FIX THE SECURITY TO BE FURNISHED AT A LOWER SUM THAN IN THE CASE OF THE TENDERING PROCEDURE . 14 . IN THE LIGHT OF THE ABOVE CONSIDERATIONS, THE COURT MUST EXAMINE THE ARGUMENT ADVANCED BY THE OBEA AND ENDORSED BY THE COMMISSION THAT A DIRECT AWARD PROCEDURE COMPRISES TWO PHASES : THE FIRST, A PRE-CONTRACTUAL PHASE DURING WHICH THE AUTHORITY MAKES NO COMMITMENTS BUT OPENS NEGOTIATIONS AND RECEIVES TENDERS, AND THE SECOND, THE CONTRACTUAL PHASE DURING WHICH THE CONTRACT IS CONCLUDED . GIVEN THE URGENT NEED TO MOBILIZE THE FLOUR RAPIDLY, IT IS SAID THAT THE OBEA WAS ENTITLED TO INVITE TENDERS FROM THE TWO UNDERTAKINGS WHICH TOOK PART IN THE FIRST TENDERING PROCEDURE EVEN BEFORE THE COMMISSION REGULATION WAS PUBLISHED OR ENTERED INTO FORCE, IN ORDER TO FACILITATE THE IMPLEMENTATION OF THE DIRECT AWARD PROCEDURE . THOSE INVITATIONS TO TENDER WERE SIMPLE PREPARATORY MEASURES WHICH THE OBEA WAS ENTITLED TO TAKE SINCE, IN ITS VIEW, THE DIRECT AWARD PROCEDURE BESTOWS ON THE PUBLIC BODY MAKING USE OF IT THE SAME FREEDOM OF ACTION AS IS ENJOYED BY INDIVIDUALS . FURTHERMORE, THE OBEA SUBMITS THAT THE VERY FLEXIBLE DIRECT AWARD PROCEDURE IS NOT SUBJECT TO ANY STRICT FORMAL REQUIREMENTS . 15 . THAT ARGUMENT CANNOT BE UPHELD . 16 . THE "DIRECT AWARD PROCEDURE", TAKEN IN ITS ENTIRETY, CONSISTS OF SEVERAL ESSENTIAL INTERLINKED ELEMENTS . IT STARTS WITH THE TASK ENTRUSTED TO THE INTERVENTION AGENCY TO IMPLEMENT THE PROCEDURE . THE NEXT PHASE COMPRISES THE INVITATION TO TENDER AND THE SUBMISSION OF TENDERS WHICH MUST BE ACCOMPANIED BY THE UNDERTAKINGS REQUIRED OF THE TENDERER AND THE FURNISHING OF A SECURITY IN THE AMOUNT FIXED IN THE REGULATION OPENING THE PROCEDURE . THE PROCEDURE IS CONCLUDED WHEN THE INTERVENTION AGENCY ACCEPTS THE MOST FAVOURABLE TENDER . 17 . THOSE ARE IN FACT THE ELEMENTS WHICH APPEAR IN REGULATION NO 1058/82 OF 4 MAY 1982, CITED ABOVE, CONCERNING THE DIRECT AWARD PROCEDURE INVOLVED IN THIS CASE . 18 . IT FOLLOWS THAT THE DIRECT AWARD PROCEDURE MUST BE CARRIED OUT IN COMPLIANCE WITH THE REQUIREMENTS IMPOSED BY ARTICLES 9 AND 10 OF REGULATION NO 1974/80 WHICH FORM A CORPUS OF UNSEVERABLE RULES UPON WHICH THE LEGALITY OF THE IMPLEMENTATION OF THE DIRECT AWARD PROCEDURE IS DEPENDENT . 19 . THEREFORE, UNTIL THE REGULATION AUTHORIZING THE OPENING OF THE DIRECT AWARD PROCEDURE AND FIXING THE AMOUNT OF THE SECURITY HAS ENTERED INTO FORCE, THE AUTHORITY RESPONSIBLE FOR MOBILIZATION OF THE PRODUCTS IS NOT EMPOWERED EITHER TO INVITE OR RECEIVE TENDERS CONCERNING THE PRODUCTS TO BE MOBILIZED . 20 . IN THE LIGHT OF THE FOREGOING, THE REPLY TO THE NATIONAL COURT' S SECOND QUESTION MUST BE THAT COMMISSION REGULATION NO 1974/80, READ IN CONJUNCTION WITH REGULATION ( EEC ) NO 2750/75 OF THE COUNCIL, MUST BE INTERPRETED AS PRECLUDING THE BODY RESPONSIBLE FOR MOBILIZING PRODUCTS INTENDED FOR A FOOD-AID OPERATION FROM INVITING AND RECEIVING TENDERS FROM UNDERTAKINGS INTERESTED IN SUPPLYING THOSE PRODUCTS BEFORE THE ENTRY INTO FORCE OF THE COMMISSION REGULATION AUTHORIZING RECOURSE TO A DIRECT AWARD PROCEDURE FOR THE MOBILIZATION OF THOSE PRODUCTS . COSTS 21 . THE COSTS INCURRED BY THE COMMISSION OF THE EUROPEAN COMMUNITIES WHICH HAS SUBMITTED OBSERVATIONS TO THE COURT ARE NOT RECOVERABLE . AS THESE PROCEEDINGS ARE, IN SO FAR AS THE PARTIES TO THE MAIN ACTION ARE CONCERNED, IN THE NATURE OF A STEP IN THE PROCEEDINGS BEFORE THE NATIONAL COURT, THE DECISION ON COSTS IS A MATTER FOR THAT COURT . ON THOSE GROUNDS, THE COURT ( FIRST CHAMBER ), IN ANSWER TO THE QUESTIONS REFERRED TO IT BY THE TRIBUNAL DE COMMERCE, BRUSSELS, BY JUDGMENT OF 10 MARCH 1987 HEREBY RULES : ( 1 ) ARTICLE 9 OF COMMISSION REGULATION NO 1974/80 OF 22 JULY 1980 MUST BE INTERPRETED AS MEANING THAT AN AGENCY RESPONSIBLE FOR THE MOBILIZATION OF FOOD AID BY A DIRECT AWARD PROCEDURE IS NOT THEREBY PROHIBITED FROM ONLY ENSURING COMPETITION BETWEEN TWO UNDERTAKINGS WHICH HAVE ALREADY UNSUCCESSFULLY TAKEN PART IN A TENDERING PROCEDURE RELATING TO THE SAME OPERATION; ( 2 ) COMMISSION REGULATION NO 1974/80, READ IN CONJUNCTION WITH REGULATION ( EEC ) NO 2750/75 OF THE COUNCIL, MUST BE INTREPRETED AS PRECLUDING THE BODY RESPONSIBLE FROM MOBILIZING PRODUCTS INTENDED FOR A FOOD-AID OPERATION FROM INVITING AND RECEIVING TENDERS FROM UNDERTAKINGS INTERESTED IN SUPPLYING THOSE PRODUCTS BEFORE THE ENTRY INTO FORCE OF THE COMMISSION REGULATION AUTHORIZING RECOURSE TO A DIRECT AWARD PROCEDURE FOR THE MOBILIZATION OF THOSE PRODUCTS . © European Communities, 2001 All rights reserved BAILII: Copyright Policy | Disclaimers | Privacy Policy | Feedback | Donate to BAILII