Decision n. 22-19.444, 26th October 2023, Cass., Civ. 3e, France
Article(s) in Directive 2014/24/EU: Art. 2, 1 (6) c); 3 (3)
Topic: Public works contract; Requirements specified by the contracting authority exercising a decisive influence on the type or design of the work; Civil Law
Member State: FR
Court/rev. board: Council of State
1. IMPLEMENTATION / RELEVANT NATIONAL LEGISLATION
Articles 2, 1 (6) c) and 3 (3) of the Directive 2014/24/EU were implemented by the Code de la commande publique (CCP), with the article L. 1111-2. The wording of national legislation regarding the public works contract’s definition is similar to the wording of the Directive.
2. FACTS
A public authority (a municipality) sold two of its properties to two companies. The payment consisted mainly of the delivery to the public authority (the seller) of unfinished premises and parking spaces. The companies (the buyers) also undertook to build several social accommodations. As the public authority no longer wished to proceed with the sale due to irregularities in the award procedure, the buyers asked the court to order the sale to go ahead. The parties disputed whether the contract had an administrative or civil nature and, consequently, the competent judge.
3. JUDGMENT
This decision should be read in conjunction with CE, 3rd April 2024, no. 472476, Société Victor Hugo 21.
The issue at stake in this case concerned above all the jurisdiction of both civil and administrative courts, since a contrary solution would have led to the conclusion that a works contract had been awarded by a public entity, and therefore that an administrative contract existed by virtue of the law. This would have raised the question of formal competitive bidding, as the municipality had conducted a non-formalized competitive bidding procedure. But the Cour de cassation did not proceed with the requalification, applying a priori an orthodox reasoning.
Firstly, it cites European case law on the definition of a works contract in the case of a sales transaction (CJEU, judgment of 25th March 2010, Helmut Müller GmbH v/ Bundesanstalt für Immobilienaufgaben, C-451/08, point 54) and the reference to works “carried out in the direct economic interest of the contracting authority” before applying it negatively.
In this case, the Court ruled that the municipality had not made any request concerning the architectural structure of the buildings, even though they involved the creation of social housing on the municipality’s territory, with the percentage of social housing (40) corresponding to the requirements of the local urban development plan. If municipalities fail to meet their obligations in terms of the number of social housing units on their territory, they are liable to financial penalties imposed by the State (art. L. 302-7 Code de la construction et de l’habitation). Consequently, these works were not carried out in the direct economic interest of the municipality, as the municipality had not exercised any decisive influence on their nature or design. One may wonder if the Cour de cassation should have checked nonetheless if the city at stake was under the risk of financial penalties…
It is perhaps regarding the premises handed over to the municipality as partial payment of the price that the debate may even more arise. Under the notion of mixed contracts (the Ordinance no. 2015-899, 23rd July 2015, art. 23 is applicable to the case),
“Where a single contract covers both services falling within the scope of this Ordinance and services not falling within the scope of this Ordinance, this Ordinance shall not apply if the services not falling within the scope of this Ordinance constitute the main subject matter of the contract and the various parts of the contract are objectively inseparable. Where it is not possible to determine the main subject of the contract, this Ordinance shall apply.”
The fact that the main purpose of the contract was not to carry out work that met the needs of the contracting authority can be accepted, as the Court pointed out that, out of a construction program for 250 multi-family dwellings representing a floor area of 16,350 square meters, only 650 square meters corresponded to a raw building and 17 parking spaces to be handed over to the municipality.
It is regarding the objectively inseparable nature – or indissociable nature, as the Code now puts it – that the judgment is lacking in reasoning, which would have deserved to be clarified. Any property complex that includes premises and/or parking spaces to be handed over to a public authority will be objectively indissociable. Will this always be the case?
Article R. 2122-3 CPP authorizes the award of a contract without advertising or competitive bidding, for technical reasons, “in the case of the acquisition or lease of a minority and indivisible part of a building to be constructed, together with work meeting the needs of the contracting authority which cannot be carried out by an economic operator other than the one responsible for the work on the main part of the building to be constructed“. Admittedly, there is no question of associated services, unlike in the case under review (and we are dealing with an acquisition and not a sale). We may wonder whether the judge could not have taken inspiration from this in a praetorian way in the case under review, to avoid the temptation of circumventing the texts.
It could always be argued that unlike in the case under review, article R. 2122-3 CPP does not deal with associated services, and that it is an acquisition and not a sale. And it is indeed the text that is more demanding in terms of proof of inseparability.
Link to the original decision: https://www.courdecassation.fr/decision/653a0498d0451e8318d0e7db
