JUDGMENT OF 4. 3. 1982 — CASE 182/80 GAUFF v COMMISSION

In Case 182/80

THE COURT (Second Chamber) composed of: O. Due, President of Chamber, A. Chloros and F. Grévisse, Judges, Advocate General: S. Rozès Registrar: P. Heim

gives the following

JUDGMENT

Facts and Issues

The facts and arguments put forward by the parties in the course of the written procedure may be summarized as follows:

I — Facts and written procedure

The applicant, a German engineering firm, which specializes in the field of transport and hydraulic installations, has since 1965 operated exclusively in the ACP countries within the framework of international aid to those countries. In particular, the company has operated since 1965, within the framework of projects financed by the European Development Fund [hereinafter referred to as “the Fund”], in Cameroon, Gabon, and the People's Republic of the Congo and Zaire, it has permanent and active establishments in other African countries and maintains firms participating in the business of engineering consultancy in Nigeria, Cameroon and Gabon.

Since the middle of the nineteen seventies, the applicant has been excluded from participation in projects in the ACP countries financed by the Community.

It cites, by way of example, the following cases:

a) Zaire

a) 1) At the beginning of 1975 the negotiations concerning the second phase of the construction of the Mosango-Kiwit road, which were about to be concluded, were broken off by the European Community without any explanation of the reasons for this. The supervision of the work was then entrusted through direct negotiations, against the wishes of the local administration, to an association of Italian engineers.

a)(2) On the basis of an oral recommendation by the local representative of the European Communities the applicant was not included in the list of selected candidates for the construction of the Aku la and Penetungu-Libutu dyke, despite the wishes. of the authorities of that area.

b) Gabon Once again, on the basis of an objection on the pan of the European Communities the undertaking “Gabon Engineering” of Libreville, which is the applicant's Gabonese subsidiary, was excluded in 1977/78 from participation in the project for the road-system for Port Gentil — Lambaréné.

c) Tanzania The applicant had been awarded the contract for the project for the road-system for Mufindi, pursuant to an invitation to tender previously issued by the local administration. After the amendment of the arrangements for financing the scheme and intervention from Brussels, the applicant was not allowed to participate in the new invitation to tender because the local representative of the European Communities indicated that the Gauff undertaking was considered undesirable in Brussels.

d) Zambia Despite the proposals of the Zambián Government authorities that the applicant should be placed on the list of selected candidates, the applicant was not taken into consideration as a result of an objection on the pan of the European Community. The projects in question were tnter alia the following:

d)(1) November 1977 Study of Zambián transport, Ministn- for Energy, Transpon and Communications, in Lusaka.

d) 2) 1978 Water supply structures for rural communities in the northern provinces of Zambia.

d)(3) 1978 Water supply structures for rural communities in the southern provinces of Zambia.

d) 4) 1978 Three agricultural supply roads.

d)(5) 1978 Road link with Angola. The preparatory work carried out by the applicant for this project was considerable (topographical repon in October 1977, two inspections of the locality, submission of two tenders in June and August 1978, and reconnaissance flights over the difficult sector of Sitaka-Watopa-Lukulu in August 1978).

d)(6) 1978 Feasibility study concerning the supplying of water for districts in the nonhern province and for the central and southern provinces (two separate projects) for the Ministry for Water in Lusaka.

d) (7) For the taking of aerial photographs for the purposes of the wheat cultivation scheme at Mpongwe, the applicant submitted the lowest tender and obtained the contract from the Zambián administration. As a result of an objection emanating from Brussels the applicant was deprived of the order and it was only because the applicant's aircraft was already available in Zambia and because the scheme could no longer be postponed that the Zambián Government rejected financing from Brussels and awarded the contract directly to the applicant.

The applicant considers that the defendant's conduct constitutes a conscious and deliberate boycott which jeopardizes its existence and the employment of its 300 collaborators. It maintains that the Commission of the European Communities is wrongly holding it to be ineligible to panicipate in contracts financed by the Fund in the ACP countries because of a matter concerning the corruption of an official of the Commission in which the applicant, according to the Commission, was involved.

In March 1975 the Commission was informed that, as a result of a tax investigation by the German authorities carried out on the applicant's premises, it was etablished that in 1967 and 1968 payments amounting in all to DM 88000 had been made to an official of Directorate General VIII of the Commission whose responsibilities covered the preparation, implementation and technical supervision of projects financed by the Fund. The applicant declared to the tax authorities t^it it had sought authorization from that official to transmit a sum of DM 50000 to an African by way of commission which he was to receive in respect of contracts financed in the country in question.

The repon drawn up on the investigation of this matter by the German tax authorities was transmitted to the Commission by the permanent representative of the Federal Republic of Germany on 5 March 1975.

As a resuit the Commission immediately suspended the official and instituted disciplinary proceedings against him. The official in question maintained that he was unaware of the fact that a sum amounting to DM 38000 was paid into his wife's account and that DM 50000 had been transmitted to a highly-placed person in an African State. The disciplinan proceedings which had been instituted resulted in the dismissal of the official who was found guilty, in a decision of 22 July 1975, of a particularly serious failure to comply with his obligations as an official.

The applicant approached the defendant on a number of occasions in order to obtain clarification of its attitude towards it and by a letter dated 13 January 1976, addressed to the Director General of Directorate General VIII of the Commission, it offered to undertake various projects financed by the Fund in Zaire and Cameroon. In his reply of 9 February 1976 the Director General, Mr Krohn, rejected that offer. In another letter, dated 3 December 1976, the applicant again raised the matter of what it considered to be its exclusion from the projects financed by the Fund, which had already lasted for three years, and it proposed to make a new start, on the basis of a resumption of its panicipation in the projects financed by the Fund.

In his reply of 22 December 1976, Mr Krohn informed the applicant that he had passed the letter to the competent department of his General Directorate but did not provide further information as to the action taken in regard to that letter. On 21 December 1977 two members of the applicant's staff, Mr E. Wassong and Mr P. Bauer, called on Mr Meyer, Mr Krohn's successor in Directorate General VIII, in order to appraise themselves of the intentions of the Commission regarding the possible panicipation of the applicant in future projects. The applicant alleges that Mr Meyer emphasized to Mr Wassong and Mr Bauer that the obstacle to placing relations with the applicant on a normal footing was the view that the latter was untrustworthy as a result of the case of corruption. Furthermore, he emphasized to the applicant's representatives that all decisions concerning the award of contracts for works were taken case bv case and that he therefore saw no possibility of taking, in the abstract, a general decision on the applicant's eligibility.

The applicant's legal representative again wrote to the Commission on 21 April 1980 stating that he intended to institute proceedings before the Court of Justice under Article 173 or 175 of the EEC Treaty should the Commission persist in its refusal to state whether his client was eligible to be entrusted with, the execution of projects on the basis of the procedure of invitation to tender or of mutual agreement contracts. The Director General of the Legal Department of the Commission replied by a letter dated 20 June 1980, in which he maintained that the Commission had no power to give a reply in the abstract to the applicant's request since the selection of candidates for participation in invitations to tender was only made case by case.

As the applicant considered that letter as an indication that the defendant intended to “continue its arbitrary boycott and to exclude it from participation, thereby jeopardizing the applicant's existence”, it reacted against it by an application to the Coun, which was received at the Court Registry on 25 August 1980.

On hearing the report of the Judge-Rapporteur and the views of the Advocate General the Court (Second Chamber) decided to open the oral procedure without any preparatory inquiry.

II — The legal context

The legal context of the case is as follows:

The procedures for the award of contracts, whether by way of invitation to tender or mutual agreement prescribed within the framework of the technical cooperation measures financed by the Fund under the Convention of Lomė of 28 February 1975 are governed by Protocol No 2 to the said Convention, on the application of financial and technical cooperation (Official Journal L 25 of 30 January 1976, p. 104). The provisions of that Protocol remain applicable after the date of the expiry of the validity of the agreement of 28 February 1975 (1 March 1980) for so long as the projects are financed by the fourth European Development Fund.

According to the requirements laid down in Article 25 of the Protocol for compiling the list of selected candidates, the latter must be nationals of Member States or AC P States and selected according to criteria guaranteeing their qualifications, experience and independence and taking into account their availability for the proposed undertaking. In mutual agreement procedures the Commission compiles a list of selected candidates from which the ACP State concerned chooses freely the listed candidate it wishes to deal with. With regard to competirve tendering the list of selected candidates is drawn up in close collaboration with the Commission and the ACP State concerned on the basis of the same criteria and the contraa is awarded to the listed candidate that submits a tender judged by the Commission and ACP State concerned to be economically the most advantageous. Furthermore Article 26 of the Protocol provides that the technical cooperation contract must be prepared, negotiated and concluded by the appropriate authorities of the ACP States, in participation and agreement with the delegate of the Commission.

The same criteria are laid down in Article 16 of the General Conditions for Public Supply Contracts financed by the Fund (Regulation No 1536/78 of 27 June 1978) which in addition requires that there be taken into consideration in particular the legal and financial situation of the candidates as indicated by the requirements of Articles 17 and 18 of the same draft. These articles specify the barriers to participation in contracts and the documents required to establish the qualifications. Article 17 provides inter alia that:

“the following natural or legal persons shall not be entitled to participate in contracts: .... (d) Those who have been convicted, by a final judgment, of any offence concerning their professional conduct”.

According to the Joint Declaration on Article 22 of Protocol No 2, contained in Annex IX to the Convention, the placing and performance of public contracts financed by the Fund are to be governed until the implementation of the decision of the Council of Ministers referred to in Article 22 of Protocol No 2:

As regards the ACP States party to the Convention signed at Yaoundé on 29 July 1969, by the legislation in force on 31 January 1975;

As regards the other ACP States, by their respective national laws or established practices regarding international contracts.

The Council of Association of the Yaounde Convention adopted on 30 November 1971 Decision No 42/71 concerning the general provisions and conditions for the placing and performance of public work contracts financed by the European Development Fund. Article 22 of that decision contains provisions similar to those of Article 17 of the abovementioned draft and Article 23 corresponds to Article 18 of that draft with regard to the documentary evidence of the standing and ability of candidates. Article 142 of the second Lomé Convention provides that the rules governing the placing and award of service contracts within the framework of measures of technical cooperation must be determined by the Council of Ministers in the form of a decision. However, until the entry into force of that decision, Articles 24 to 27 of Protocol No 2 to the first Lomé Convention of 28 February 1975 remain in force.

Furthermore, according to Article 132 (4) of the EEC Treaty, participation in tenders and supplies are to be open on equal terms to all natural and legal persons who are nationals of a Member State or of the associated States. The same provisions are adopted in Articles 25 and 26 of the first and second Yaoundé Conventions and in Article 56 of the Lomé Convention.

That is also the tenor of Article 5 of Council Decision No 73/313/EEC of 24 July 1973 on the General Conditions for

Public Works and Supply Contracts financed by the European Development Fund which lays down the principle of nondiscrimination. Article 22 (1) of the Decision repeats the necessary conditions for participation in such procedures and in paragraph (2) the barriers to participation, and in particular, the suspension of payments or a conviction for an offence concerning professional conduct by a final judgment.

III — Conclusions of the parties

The applicant claims that the Court should:

1) Declare void the defendant's decision that the applicant is not eligible to participate in the tendering procedures or mutual agreement contracts for public services financed by the Fund;

2) Alternatively, declare that the defendant is bound to inform the applicant whether or not it is eligible for the purposes mentioned under (1);

3) Order the defendant to pay the applicant the sum of DM 1 by way of damages;

4) Order the defendant to pay the costs of the action, including costs other than court fees.

The defendant contends that the Court should:

1) Dismiss the application as inadmissible in its entirety and in any case as unfounded;

2) Order the applicant to pay the costs.

IV — Submissions and arguments of the parties

Admissibility

The application for a declaration that the decision is void

The applicant asserts the admissibility of its application under the second paragraph of Article 173 of the EEC Treaty for a declaration, on the grounds of infringement of the Treaty and misuse of powers, that the decision constituted by the Commission's letter of 20 June 1980 rejecting the applicant's request to be informed whether it was eligible to participate in the procedures for the award of contracts financed by the Fund, is void.

Since the measure in question constitutes a decision addressed to it and is of direct and individual concern to it, the applicant is entitled to demand that the decision should not infringe the Treaty and, should the case be one in which the exercise of a discretion was concerned, that its decision should be untainted by arbitran. considerations and be in conformity with the requirements of the rule of law.

The defendant considers that its letter of 20 June 1980 may not be treated as equivalent in law to a decision, either from the point of view of the powers of the officer who issued it (the Director General of the Legal Department) or from the point of view of its content or factual context. According to the Commission that letter must be interpreted in the context of the request made to it by the applicant in its letter of 21 April 1980, calling upon it to act, and it consists therefore merely of information concerning the provisions applicable to the matter and the legal consequences to be inferred from the request addressed by the applicant to the Commission on 21 April 1980.

The Commission claims that in pursuance of Article 23 of Protocol No 2 to the Lomé Convention the decision on the selection of candidates to participate in invitations to tender is made for each operation separately, in other words, case by case. The content of the letter of 20 June 1980 provides no possibility in law for a genera! promise whereby the Commission undertakes to permit the applicant to participate in the procedures for invitations to tender and mutual agreement contracts.

The Commission maintains that the letter of 20 June 1980 therefore merely constitutes information as to the legal position and, since it does not produce definitive legal effects on the applicant's legal situation, cannot be considered as a decision within the meaning of the second paragraph of Article 173 of the EEC Treaty.

Furthermore, even if it were supposed that a decision of principle had in fact been taken as to the applicant's eligibility, the applicant should have contested the letter of the Director General of Directorate General VIII of 9 February 1976 in which the applicant's proposals to undertake various projects financed by the Fund were rejected and which can no longer form the subject-matter of proceedings because the time for bringing such proceedings has expired. The letter of 20 June 1980 is, then, merely a confirmatory measure.

According to the Commission the applicant does not at this stage have an interest worthy of protection in raising an abstract question of law unrelated to a specific procedure for an invitation to tender or to the complex decisions involved in the selection of candidates within the framework of the procedure laid down in Article 25 of Protocol No 2 to the Lomé Convention.

The action for failure to act

The applicant considers that if the defendant's letter of 20 June 1980 is interpreted as meaning that it does not contain a decision as to the applicant's eligibility, the alternative application, based on a failure to act and founded on the third paragraph of Article 175 of the EEC Treaty, is admissible. It maintains that it is justified in claiming that the Commission should give a clear definition of its position on the question whether it is considered eligible or not and the absence of such a decision constitutes at least a misuse of powers.

Likewise, the applicant emphasizes that it is entitled to demand that the Treaty and the rules of law relating to its application be complied with and that, because the Commission not only has power but is also under a duty to take action for this purpose, the lack of a decision on the applicant's eligibility constitutes an infringement of the Treaty.

The defendant considers that on the contrary it is not obliged, either on the basis of powers conferred upon it under Community law or by virtue of a binding agreement concluded in the circumstances laid down in Article 228 of the EEC Treaty, to take a decision concerning the principle of the applicant's eligibility.

It observes that the request submitted by the applicant in its letter of 21 April 1980 is in fact aimed at procuring a restriction of the Commission's discretion which is intended to be exercised in an indeterminate number of future decisions on the selection of candidates in certain procedures concerning the award of contracts.

The Commission goes on to say that Article 173 of the EEC Treaty enables a complaint to be made to the effect that an institution of the Community has failed to address to the person concerned a measure having direct and definitive legal effects but not that it has failed to adopt measures which, if they were legally possible, would merely consist in determining in advance many decisions which produce direct legal effects.

Moreover, according to the Commission, the conditions which give rise to a right of action under Article 175 are not fulfilled in this case because in fact it has not failed to define its position on the request to act contained in the applicant's letter of 21 April 1980.

Finally, the Commission maintains that, in so far as the applicant supposes that there exists a decision selecting in advance undertakings which are eligible, a proposition which, according to the Commission, is not justified either by the relevant provisions or by the administrative practice which it follows, the applicant should, in view of the system of legal protection provided by the EEC Treaty, have instituted proceedings for a declaration that that decision was void. The Commission observes that the applicant failed to do so in any of the cases in which it claims to have suffered discrimination and consequently it cannot now, by using the procedure under Article 175 of the Treaty, institute proceedings in order to obtain a review by the Court of decisions which can no longer be contested.

The claim for damages

The applicant maintains that under Article 215 of the EEC Treaty it may claim to have made good the damage which has been caused to it by the conduct of the defendant and which may be assessed at DM 1. It observes that the fact that it has been unable to participate in contracts for the provision of services, which must be imputed to the unlawful conduct of the Commission, has prevented it from being awarded other contracts which might well have been open to it in view of its previous achievements and its special knowledge and experience.

Futhermore, the applicant claims that its exclusion from any participation in the projects of the Fund, which is indefensible in law, has tarnished its reputation and has had a harmful effect on its operations abroad since the authorities of the States which are in receipt of finance from the Fund and other tenderers are not unaware of the exclusion. The applicant considers that by reason of its being treated as ineligible and of unjustified opinions expressed in regard to it national administrations have become uncertain, with the result that it is excluded from projects financed by other agencies.

For its part, the defendant considers that, as regards the damage allegedly suffered by the applicant as a result of its unlawful exclusion from the procedures for the award af contracts, the real objective of its application is not to obtain reparation for material damage caused by an unlawful act or omission on the part of the administration but to obtain an ancillary declaration of the alleged illegality of the defendant's failure to take into consideration the applicant's candidature on the occasion of previous award procedures. The Commission observes that, since the applicant failed to exercise the right open to it under the second paragraph of Article 173 of the EEC Treaty, namely to contest the decisions awarding contracts to other candidates, it may not now, by means of an action for damages, claim even token recognition of the profit which the award of a contract in one of the procedures which have already taken place would have meant to it.

The Commission contends that the conditions laid down in the second paragraph of Article 173 of the EEC Treatv for the admissibility of proceedings would be circumvented if applicants were able to make good the financial consequences of a decision, which may no longer be contested by means of an application for a declaration that it is void, by instituting an action for damages under Article 215 of the Treaty.

Furthermore, the Commission observes that in so far as the claim for damages is based on the “defendant's unclear statements” which are said to have caused damage to the applicant, those statements are not adequately identified in the application and consequently the requirements of Article 38 (1) of the Rules of Procedure of the Court concerning the designation of the subject-matter of the dispute and statement of the grounds on which the application is based are not fulfilled.

The substance of the case

Admission to the procedure for the award of contracts

The applicant maintains that in order to ensure that rule of law and the principle of nondiscrimination are observed in tendering procedures and in carrying out investments financed by the Fund it is necessary to apply the rules for determining the persons who are entitled to tender for the contracts in question and the conditions for refusing permission to participate in an invitation to lender or a mutual agreement procedure. The applicant observes that Article 132 (4) of the EEC Treaty thus permits the participation in tenders for contracts for investments financed by the Community of all natural and legal persons who are nationals of a Member State or of the associated countries and territories. It also refers to Article 25 of the first and Article 26 of the second Yaounde Conventions and to Article 56 of the Lomé Convention which contains similar provisions and which were repeated in Article 5 of the General Conditions for Public Works and Supply contracts financed by the European Development Fund (Council Decision No 73/313/EEC of 24 July 1973). It remarks that this body of rules concerning the principle of admission to procedures concerning contracts are subject to precise and exhaustive exceptions introduced by provisions laying down obstacles to participation which must be interpreted restrictively. This is the case with Article 22 (2) of the General Conditions for Public Works and Supply Contracts which defines the barriers to participation in the procedures.

The applicant emphasizes that such barriers consist in the fact that a candidate has suspended payments or has been convicted under a final judgment of any offence affecting his professional conduct or is guilty of serious misrepresentation with regard to information required for participation in the invitation to tender. It also refers to Article 27 of the draft of the new conditions applicable to public works and supply contracts which contains a similar provision.

The applicant maintains that the same rules apply by analogy to participation in contracts for the pvovision of services and refers to Article 17 of the draft of the General Conditions for Public Contracts financed by the Fund entitled “Barriers to participation in contracts” which in this connection lists the same criteria for barring participation as the abovementioned provisions.

According to the applicant all those concurring provisions, which are applicable by analogy to contracts for the provision of services, reflect and establish the intention of the Communities to regulate restrictively the grounds for barring participation in invitations to tender, will not bear an interpretation which could result in the application of other criteria.

The applicant maintains that in its case none of the obstacles enumerated in the relevant provisions exist. It claims that with regard to the facts alleged against it by the Commission concerning the case of corruption, that case has never been the subject of an investigation by the Public Prosecutor or of department judicial proceedings under German law which requires that for the acts in question to constitute an offence the person concerned in the corruption must be a German civil servant or a public servant treated as such, and the official of the Commission concerned in the case does not fall into that category. Moreover, since the applicant was not concerned or implicated in the disciplinary proceedings instituted against the official by the Commission, it has never been heard, so that it was never able to clarify and correct the facts from its point of view, which constitutes a breach of the principle, inherent in the rule of law, to a right to a hearing.

Furthermore, the applicant, an undertaking registered in 1966, is in no way concerned in the incident in question because that incident can only concern the firm H. P. Gauff, which ceased to exist on 1 January 1970 since on that date it became merged with the Kommanditgesellschaft [limited partnership] H. P. Gauff.

For the rest, the applicant states that the Commission never even requested it to provide proof of its standing and abilities, as it could have done under Article 23 of the General Conditions for Public Works and Supply Contracts and Article 18 of the General Conditions for Public Contracts for the Provision of Services because it was fully aware that none of the barriers laid down in those provisions applies to the applicant whose standing and standards are in all respects beyond reproach.

It follows, according to the applicant, that despite the fact that there is always a certain discretion in drawing up the list of selected candidates within the specific framework of each project, the Commission's conduct which consists in systematically excluding the applicant although the latter fulfils all the conditions for being placed on the lists of selected candidates and moreover is not affected by the provisions concerning the barriers to participation in the invitations to tender, amounts to an arbitrary and illegal boycott.

The applicant thus concludes that the letter of 20 June 1980, whereby the Commission replied to its request to notify it whether the Commission considered it eligible or not must be considered as unlawful on the grounds of an infringement of the Treaties and of the rules of law relating to their application and a misuse of powers if it is to be viewed as a refusal to consider the applicant as eligible in principle. On the other hand, if the letter of 20 June 1980 were to be considered as a refusal to reply to the applicant's question as to whether it was eligible in principle there would be an infringement of the Treaty, according to the applicant, in the form of a failure on the part of the defendant to reply to the question submitted to it.

The defendant considers that the applicant's request of 21 April 1980 is designed to procure the applicant's inclusion in the list of selected candidates drawn up under Article 25 of Protocol No 2 of the Lomé Convention. The Commission considers that that list is not based on a single decision of principle but it is drawn up on the basis of the specific characteristics of each project financed by the Fund. The Commission maintains that it is accordingly unable to give an undertaking to the applicant concerning the exercise of its power when drawing up that list and likewise that it cannot in law provide the general assurances desired by the applicant which would entail refraining from exercising the discretion conferred upon it by Article 25 of Protocol No 2 for the purpose of compiling the list of selected candidates. The Commission considers that on the contrary it is obliged to exercise its discretion by taking into account the circumstances of each case in the interests of the Community, of the ACP States and of the applicants for the award of contracts themselves.

On the other hand, according to the Commission, the declaration requested by the applicant, which would amount to a statement that it is permitted to participate in procedures for the award of contracts in respect of projects financed by the Fund, would presuppose that the defendant is persuaded that the applicant meets the criteria laid down by Article 25 of Protocol No 2 of the Lomé Convention.

According to the Commission, for it to be so persuaded, it is not sufficient that the candidate cannot be excluded because it is not affected by any of the barriers listed in Article 17 of the draft General Conditions for Public Service Contracts financed by the Fund, which, moreover, has not yet entered into force, or in Article 22 of the General Conditions for Public Works or Supply Contracts financed by the Fund which does not concern public service contracts. The Commission considers that such barriers merely constitute absolute grounds for disqualification and their non-applicability constitutes a prior condition to participation in the contracts financed by the Fund but not a criterion automatically and necessarily entailing a favourable appraisal of an application. According to the Commission admission is only possible if in addition certain positive criteria concerning the necessary standing and ability of applicants are satisfied as is made clear, in particular, by Article 18 of the draft General Conditions for Public Service Contracts and by Article 23 of the General Conditions for Public Works and Supply Contracts which in fact require candidates to produce “documentary evidence” of their ability and standing.

Consequently, any judgment which the Commission may form of the standing and ability of a candidate falls within the discretion conferred upon it in this regard by Article 25 of Protocol No 2 of the Lomé Convention.

It is clear from the foregoing, according to the Commission, that where a person abuses the trust which is necessarily placed in him through the award of a public service contract this may properly be considered as a ground for the exclusion of the candidate in question. This is the case as regards the payments made by the applicant to an official of the Commission which not only constitute an unfair business practice, but also adversely affect the integrity of Community officials as a whole, jeopardize the reputation of the Commission and imperil the proper execution of technical cooperation with the ACP States. The Commission maintains that the modification in 1970 of the legal structure of the undertaking in question does not affect the facts of the case since the determinant factor is not the legal structure of the undertaking but the person exercising a decisive influence on the management of its business. In this case, from the case of corruption up to the present day, that person has been and still is Mr Gauff. In that respect the Commission states that so long as Mr Gauff exercises a decisive influence on the management of the applicant's affairs it is unable to appraise the trust to be placed in the applicant in any particular case otherwise than in terms of the trust which may be placed in Mr Helmut P. Gauff.

With regard to the applicant's argument to the effect that the question whether a candidate meets the conditions for participation in procedures for the award of contracts financed by the Fund arises is independent of the fact that the official corrupted by an undertaking is employed by a German authority or by the Commission, the Commission retorts that under German criminal law penalties are prescribed for the first case but noi for the second, since the provisions in question are designed exclusively to protect the integrity of the German civil service.

That being so, the institution of criminal proceedings by the Commission against the Gauff undertaking would of necessity have been fruitless. That consideration therefore wholly invalidates the applicant's argument to the effect that an undertaking which is involved in a case of corruption and against which criminal proceedings have not been instituted must be deemed to be innocent and considered as satisfying the conditions of eligibility for participation in procedures for the award of contracts. According to the Commission the insufficiency of the protection of the Communities under the criminal law, owing to the absence of an appropriate svstem governing the responsibility and protection of officials and other servants of the European Community in criminal matters — which prompted it to submit to the Council on 10 August 1976 a draft treaty covering this matter — constitutes a gap in the law which justifies the conclusion that the criteria for the eligibility of candidates relied upon by the applicant do not constitute an exhaustive set of rules governing the grounds which may justify the exclusion of a candidate from participating in procedures for the award of contracts financed by the Fund and do not, in particular, cover cases where the Community itself has suffered damage through unlawful practices.

According to the Commission, the fact that the Community has suffered damage as a result of the unlawful conduct of a candidate which is not covered by a provision or an appropriate body of rules within the framework of the protection of the Communities under criminal law or of the rules for the award of contracts financed by the Fund must be considered on the basis of the general principles of law by virtue of which it is improbable that the Community is obliged to continue normal cooperation with a candidate who has harmed the integrity of the Commission's officials as a whole and who is therefore insufficiently trustworthy to be admitted to participate in procedures for the award of public contracts. It is accordingly important that no authorization for participation in the various procedures for the award of contracts within the framework of the Fund should be granted to all undertakings whose managing director, according to his judicial record, has not been convicted of a criminal offence without taking into consideration their business practices in the past in relation to the Community.

The claim for damages

1. The applicant maintains that by reason of the unlawful conduct of the Commission, consisting in holding it ineligible for and excluding it from contracts for the provision of services financed by the Fund, it has suffered damage amounting to at least DM 1. It also maintains that the same relation of cause and effect exists between that damage and the damage caused to its reputation with the authorities of the States, which are assisted by the Fund, by its continued exclusion from contracts financed by the Fund and by the fact that certain officials have made unjustified statements as to its conduct. According to the applicant its claim is fully justified as regards this point although it wishes to obtain only token damages.

2. The defendant considers that its refusal to include the applicant in the list of selected candidates does not constitute a wrongful act or omission, so that the applicant's claim for damages is accordingly entirely unfounded. Furthermore, the Commission maintains that the complaint that it is guilty ot an unlawful boycott of the applicant in mat certain of its officials have maûc statements calculated to discredit it is likewise unfounded. The Commission observes that the applicant refers onl\to a note of Mr Meyer, the Director General of Directorate General \III from which it is clear that the aürjrrd statements have been neither cleans identified nor proved by the applicant Finally the Commission remark that if the matter of the project for wheat in Zambia, in which trtr applicant's success invalidates us claims concerning an unlawful boycott, v. merely exercised with regard to /ambu its contractual rights by refusing te finance the projects with which it was envisaged that the applicant would be entrusted. Furthermore any unfavourable statements made by its officials can be justified, according to the Commission, by a concern to safeguard interesu worthy of protection, such as the integrity of the administrations of the AC P States. Since there has been no wrongful act or admission whatever on the part of its officials there is no reason to consider the other conditions necessary for the applicant to succeed in its claim for damages.

V — Oral procedure

At the sitting on 18 June 1981 oral argument was presented by the applicant, represented by Gerd Coeler, Rechtsanwalt, and by the Commission of the European Communities, represented by Jörn Pipkom, a member of its Legal Department, acting as Agent.

The Advocate General delivered her opinion at the sitting on 29 October 1981.

Decision

1. By application lodged at the Court Registry on 25 August 1980, H. P. Gauff Ingenieure GmbH & Co. KG, brought an action under the second paragraph of Article 173 of the EEC Treaty for a declaration that the decision, which in its view is contained in the letter of 20 June 1980 addressed to it by the Commission and according to which it is not eligible to participate in invitations to tender or mutual agreement contracts concerning public service contracts financed by the European Development Fund (hereinafter referred to as the “Fund”), is void. In the alternative, its action seeks to obtain, on the basis of the third paragraph of Article 175 of the EEC Treaty, a declaration that the defendant is under a duty to inform the applicant whether or not it is eligible for the abovementioned purposes. Finally, the applicant requests, pursuant to the second paragraph of Article 215 of the EEC Treaty, that the Commission be ordered to compensate it for the damage, amounting to at least DM 1, which the Commission has allegedly caused to it.

2. After the applicant had applied on a number of occasions to the Commission for admission to the procedures for the award of contracts for the implementation of projects financed by the Fund in the ACP countries from which it considered itself unlawfully excluded by the Commission on the ground that its managing director had been involved in a case of corrupting an official of the Commission, it requested the Commission in a letter dated 21 April 1980 to inform it whether or not the Commission considered it eligible to participate in the procedures in question.

3. By letter of 20 June 1980 the Director General of the Legal Department of the Commission referred to the absence of any provisions compelling or permitting the departments of the Commission to give a statement of views on the general question of the applicant's eligibility and refused to accede to its request.

4. The applicant maintains that the letter of 20 June 1980 which was addressed to it by the departments of the Commission is unlawful on the grounds of infringement of the Treaty and of the rules of law relating to its application, as well as of misuse of powers, in so far as the letter constitutes a refusal to confirm the applicant's eligibility for participating in the procedures by way of invitation to tender in respect of or for the conclusion by mutual agreement of public service contracts financed by the Fund.

5. The applicant emphasizes that it fulfils all the conditions prescribed by the relevant provisions for admission to participate in procedures for the award of the contracts in question and that furthermore none of the obstacles, of which an exhaustive list is laid down by those provisions, prevents its participation. It follows that, despite the discretion which the Commission enjoys within the framework of each individual procedure in drawing up the list of candidates, the systematic exclusion of the applicant amounts to an arbitrary and unlawful boycott.

6. In this connection it observes that the complaints made against it concerning a case of corrupting an official of the Commission in which its managing director was involved have never formed the subject-matter of an investigation by the Public Prosecutor's Department or of judicial proceedings in accordance with German law.

7. The applicant adds that, since the disciplinary proceedings brought by the Commission against its official did not concern it and since it took no part in these proceedings it has never, in disregard of the fundamental rights recognized in the Community, been heard, in conformity with the requirement, inherent in the rule of law, of the right to a hearing.

8. The applicant maintains, furthermore, that the incident in question in any case concerned only the one-man firm, H. P. Gauff, which ceased to exist after 1 January 1970 when it merged with the limited partnership H. P. Gauff GmbH & Co. KG.

9. The applicant considers in addition that if the defendant's letter of 20 June 1980 is construed as not containing a decision on the question of the applicant's eligibility, then there is a failure to act on the part of the Commission, inasmuch as it omitted to provide a clearly-defined statement of its position on that question. The duty of the Commission in that respect arises under the Treaty and the rules relating to its application since the Commission has not only the right but also the duty to define its position. Its refusal to state its position on the eligibility of the applicant constitutes misuse of powers and an infringement of the Treaty.

10. Finally the applicant claims that the unlawful conduct of the defendant has caused it damage consisting in the harm done to the reputation which it enjoys with the national authorities and in particular with the authorities of the ACP countries which are empowered to award the contracts in question within the framework of the projects financed by other agencies.

11. The Commission contends that the letter of the Director of its Legal Department of 20 June 1980 does not constitute a decision within the meaning of the second paragraph of Article 173 of the EEC Treaty, either with regard to the powers of its author or as regards its content or the factual circumstances in which it came to be written. It maintains that since that letter did not produce legal effects with regard to the applicant, the latter has no interest worthy of protection in raising an abstract question of law unrelated to a specific procedure concerning the award of a contract; only the implementation of such a procedure enables a decision of that kind to be adopted.

12. Furthermore, the Commission observes that, even supposing that that letter contained a decision refusing to accept the applicant as eligible, that decision would be well founded in law as being taken in the exercise of a discretion in the drawing up of the list of selected candidates on the basis of the criteria concerning the standing and ability of the candidates in accordance with Article 25 of Protocol No 2 to the Convention with the ACP States.

13. With regard to the complaint that it failed to act the Commission contends essentially that it is not obliged, by virtue of any powers conferred upon it by a provision of Community law or under a binding agreement concluded under the conditions laid down in Article 228 of the Treaty, to adopt a decision of principle on the applicant's eligibility. Such a decision, which would have no effects so far as Article 175 of the EEC Treaty is concerned, would merely predetermine many decisions which themselves produce direct legal effects.

14. With regard to the claim for damages the Commission observes that it is not based on an adequate identification of the wrongful act or omission which caused the alleged damage and that it accordingly does not satisfy the conditions laid down in Article 38 (c) of the Rules of Procedure of the Court. There is accordingly no need to consider the other conditions which are necessary to establish the applicant's right of compensation for damage.

The application for a declaration that the decision is void and the application on the ground of failure to act

15. Article 25 of Protocol No 2 to the Convention of Lomé of 28 February 1975 on the application of financial and technical cooperation (Official Journal L 25 of 31 January 1976, p. 104) concerning the award of contracts within the framework of the European Development Fund provides:

“(1) For each operation of technical cooperation which will involve a mutual agreement procedure, the Commission shall compile a list of selected candidates from Member States or ACP States, selected according to criteria guaranteeing their qualifications, experience and independence and taking into account their availability for the proposed undertaking.

2) When competitive tendering is resorted to, the list of selected candidates shall be drawn up in close collaboration with the Commission and the ACP State concerned on the basis of the criteria set out in paragraph (1)”.

16. It must be emphasized that neither that provision nor any other relevant provision empowers any department of the defendant institution to define the latter's position, by way of a decision of general scope, on the eligibility of an interested party for the award of the contracts in question.

17. In the absence of such a power the Director General of the Legal Department of the Commission could not adopt a decision having the purport for which the applicant contends. Furthermore the Director General, in his letter of 20 June 1980, merely referred to the relevant provisions in order to conclude that “the choice of candidates was effected ... case by case” by taking the circumstances into account and that it was accordingly impossible to provide the applicant with the assurances in principle which it requested regarding its admission to participate in the projects financed by the Fund.

18. In the absence of the exercise, upon the conclusion of an internal procedure laid down by law, of a power provided for by law which is intended to produce legal effects of such a nature as to affect adversely the interests of the applicant by modifying its legal position, the letter of 20 June 1980 may not be validly considered as a decision within the meaning of the second paragraph of Article 173 of the EEC Treaty and accordingly cannot give rise to a review by means of the proceedings under that provision.

19. The foregoing considerations concerning the reasons which prevent the letter of the Commission of 20 June 1980 from being considered as a decision within the meaning of the second paragraph of Article 173 also entail the finding that there is no failure to act, capable of forming the subject of the proceedings provided for in the third paragraph of Article 175 of the EEC Treaty, which may be imputed to the Commission.

The claim for damages

20. It follows from the foregoing that there is no unlawful act or omission of an administrative nature for which the Commission may be held liable, even supposing that the applicant has suffered damage and that a connection can be established between such damage and the conduct of the Commission.

21. The application must therefore be dismissed.

Costs

22. Under Article 69 (2) of the Rules of Procedure the unsuccessful party is to be ordered to pay the costs.

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

1 Dismisses the application;

2 Orders the applicant to bear the costs.