Decision n. 469319, 12th July 2023, Council of State, 7th and 2nd Joint Chambers, Grand port maritime de Marseille, classé B, France
Article(s) in Directive 2014/24/EU: Art. 72 and 73
Topic: Continued performance of the contract on grounds of public interest and termination of the contract (regarding insurance contract)
Member State: FR
Court/rev. board: Council of State
1. IMPLEMENTATION / RELEVANT NATIONAL LEGISLATION
Art. 72 of Directive 2014/24/EU was implemented by the Code de la commande publique (CCP) with several articles (articles L. 2194-1, R. 2194-3, R. 2194-4, and R. 2194-7). The wording of national legislation regarding the modification without a new competitive tendering procedure (admissible cases and limits concerning value and substantial nature of the modification) is similar to the wording of the Directive.
Art. 73 of Directive 2014/24/EU was implemented by the CCP with two articles (articles L. 2195-4 and L. 2195-5). The wording of national legislation regarding contract termination is also similar to the wording of the Directive.
2. FACTS
A public insurance contract was concluded on 2019, November 30th, between the Grand port maritime de Marseille and a joint consortium of companies. The insurance company informed the Grand port maritime de Marseille of its decision to terminate the contract with effect from 2023, January 1st. The Grand port maritime de Marseille objected and gave formal notice to the two companies to continue performing the contract.
In the absence of a response, the Grand port maritime de Marseille asked the Marseille administrative court, by way of interlocutory procedure, to order continued performance of the contract for at least one year.
In an interlocutory statement dated 2022, November 16th, the Marseille administrative court rejected its request.
The Grand port maritime de Marseille appealed to the Conseil d’État.
3. JUDGMENT
The history of the relationship between insurance law and public procurement law has not been a smooth one. It even began with a tumultuous period, when the Conseil d’État ruled that “the insurance regime subjects insurance contracts, by virtue of their nature, to a specific regime which has the effect of excluding them from the scope of the Code des marchés publics”, and therefore excluded them from any obligation to advertise and put out to tender (CE, Section, October 12th, 1984, no. 34671, published in the Recueil Lebon). This was not helped by the fact that, prior to the Murcef Act of December 11th, 2001, they were considered as private law contracts (see Labrune’s conclusions on the present case).
This restrictive concept did not sit well with the broad definition of a public contract in EU law. The Conseil d’État therefore ruled on the legality of the decree introducing the 2001 Code des marchés publics with regard to “the public policy provisions of Articles L. 112-2 to L. 112-8 and L. 113-12 of the Code des assurances relating to the conclusion and proof of insurance contracts, the form and transmission of policies, and the termination of contracts” (CE, April 28th, 2003, Fédération française des courtiers d’assurances et autres, no. 233343, 233344, T. pp. 704-856), implicitly bringing these contracts back within the scope of the Code des marchés publics. The ruling that applied Article L. 113-8 of the Code des assurances to a public procurement contract in order to hold that a “deliberate concealment or misrepresentation on the part of the insured” constituted a ground for nullity of the insurance contract entered into by a public entity went even further, since it combined here the regime of the Code des assurances and the regime of the administrative contract, as the Pellissier conclusions revealed (CE, December 6th, 2017, Société Axa corporate solutions assurances, no. 396751, T. pp. 669-674-687).
However, these conclusions reserved the case for “adjustments that would appear necessary to guarantee the fundamental principles of administrative action“. In the judgment under review, which concerned a decision by a public authority to oppose termination of the policy by the insurer by means of an interim injunction, this is indeed what is decided under Article L. 113-12 of the Code des assurances, which reserves the insurer’s right to terminate the policy unilaterally at the end of a period of one year following its conclusion, with at least two months’ notice. It is held that: “However, it follows from the general principles applicable to administrative contracts that when the insurer intends to apply them in order to unilaterally terminate the contract binding it to the insured public entity and the contract does not provide for sufficient notice of termination in order to award a new insurance contract, the latter may, for a reason of general interest based in particular on the requirements of the public utility for which the public entity is responsible, oppose it and require it to continue performance of the contract for the period strictly necessary, in the light of the applicable laws and regulations, for the procedure for awarding a new public insurance contract to be carried out, without this period exceeding twelve months in any event, including when the procedure proves unsuccessful. The insurer may contest this decision before the court to obtain termination of the contract“.
This is word for word what the rapporteur public proposed: not to set aside the article in question, which might possibly be possible if conciliation is impossible, but to adjust the insurer’s power of termination to take account of a reason of general interest. This is, moreover, merely the transposition of the Société Grenke location case law to the Code des assurances (CE, October 8th, 2014, no 370644, p. 302). But it is true that there is a leap here: in Grenke only a contractual clause was at issue, in the present case, a… legislative provision is at issue.
Under the general interest ground, the ruling therefore illustrates the need to consider the time required to renew (up to a limit of one year, however; a period decided by the Conseil d’État ex nihilo, which nevertheless has the merit of simplicity compared to the vaguer notion of reasonable period…). However, the rapporteur public added, as a reason of general interest, all cases of compulsory insurance associated with a shortage in the insurance market, which is currently sometimes the case, and should therefore make it possible to extend the period. However, the Conseil d’État did not take up this example, which does not mean that it will not do so later.
The judgement under review therefore sets up a special legislative regime in the name of principles of administrative contract law established in case law… In terms of the hierarchy of norms alone, it is quite remarkable. As for the substantive solution, admitting that a reason of general interest can justify a unilateral extension can only be approved. However, the question remains as to why neither the Conseil d’État nor the rapporteur public examined the legal conditions for amending a public contract (R. 2194-1 et seq. of the CCP). On closer examination, it is a case of the judge ordering the resumption of contractual relations… at the request of the public entity, and therefore not really a modification of the contract in the strict sense.
