Clean Sky 2 Joint Undertaking v Revoind Industriale di Pindaru Gelu (Arbitration clause - Non-performance of the contract - Judgment) [2021] EUECJ T-271/17 (27 October 2021)

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(Arbitration clause – Grant agreement concluded in the framework of the Seventh Framework Programme for research and technological development including demonstration activities (2007-2013) – Non-performance of the contract – Repayment of the amounts advanced – Default interest – Procedure by default)

Clean Sky 2 Joint Undertaking, represented by B. Mastantuono, acting as Agent, and by M. Velardo, lawyer,

ACTION brought under Article 272 TFEU seeking an order for Revoind Industriale di Pindaru Gelu to repay the advanced payment paid under the Grant Agreement for partners No 632456, plus accrued late payment interest,

composed of J. Svenningsen, President, R. Barents and C. Mac Eochaidh (Rapporteur), Judges,

1 Article 2(1) of Council Regulation (EC) No 71/2008 of 20 December 2007 setting up the Clean Sky Joint Undertaking (OJ 2008 L 30, p. 1) provides that that undertaking contributes to the implementation of the Seventh Framework Programme of the European Union for research and technological development including demonstration activities (2007-2013). Under Article 1(2) and Article 2 of Council Regulation (EU) No 558/2014 of 6 May 2014 establishing the Clean Sky 2 Joint Undertaking (OJ 2014 L 169, p. 77), the applicant, Clean Sky 2 Joint Undertaking, replaced and succeeded the Clean Sky Joint Undertaking.

2 On 23 January 2015, the applicant concluded with a consortium, together with IBK-Innovation GmbH & Co. KG, as coordinator of the consortium (‘the coordinator’), and Revoind Industriale di Pindaru Gelu Sas and the Università degli Studi Roma Tre, as beneficiaries, the Grant Agreement for partners No 632456 (‘the Grant Agreement’), relating to the project entitled ‘Wittiness-Wind tunnel tests on an innovative regional A/C for noise assessment’ (‘the Wittiness project’).

3 On the basis of Article 6 of the Grant Agreement, the applicant paid the coordinator an advance payment of EUR 523 730.20 to be distributed among the beneficiaries. Subsequently, the coordinator paid Revoind Industriale di Pindaru Gelu the amount of EUR 189 128.26 as payment of part of its pre-financing.

4 Articles 3 and 4 of the Grant Agreement provided that the Wittiness project had a duration of 12 months from 1 October 2014, with a sole final reporting period.

5 In October 2015, the coordinator informed the applicant of the difficulties encountered by the consortium in carrying out the Wittiness project on account of Revoind Industriale di Pindaru Gelu’s failure to perform its contractual obligations.

6 On 31 March 2016, at a teleconference, including inter alia the applicant, the coordinator and Revoind Industriale di Pindaru Gelu, Revoind Industriale di Pindaru Gelu stated that it wished to leave the consortium and also undertook to repay the entire pre-financing which it had received, after deducting the money spent in the context of the Wittiness project.

7 By letter of 14 April 2016, the applicant, in accordance with point II.38 of Annex II to the Grant Agreement, requested Revoind Industriale di Pindaru Gelu to rectify its contractual breaches within a period of 30 days. The applicant also requested Revoind Industriale di Pindaru Gelu to submit to it, and to the coordinator, a detailed report on the technical activities and financial resources used for the project, but also to repay the unused funds, which had been paid by the coordinator, in view of the implementation of the project. The applicant also informed Revoind Industriale di Pindaru Gelu that, in the case of lack of transmission of that information or in the case of a negative assessment of the technical and financial reports received, it would be able to terminate Revoind Industriale di Pindaru Gelu’s participation in the Grant Agreement and issue a recovery order in the case of unjustified use of the funds.

8 Revoind Industriale di Pindaru Gelu did not reply to that letter or provide the information requested.

9 By registered letter of 23 August 2016, the applicant, in accordance with point II.38 of Annex II to the Grant Agreement, informed Revoind Industriale di Pindaru Gelu that it had terminated its participation in the Grant Agreement with effect from 1 September 2016. The applicant also requested Revoind Industriale di Pindaru Gelu to communicate to it, within a period of 45 days of the date of termination, all the reports and deliverables referred to in point II.4 of Annex II to the Grant Agreement. The applicant also stated that, in the absence of communication of those documents within that period of 45 days, it would request the repayment of the pre-financing received by Revoind Industriale di Pindaru Gelu.

10 By registered letter of 19 October 2016, the applicant informed Revoind Industriale di Pindaru Gelu that it had not received the documents requested in the registered letter of 23 August 2016. The applicant also informed Revoind Industriale di Pindaru Gelu that it granted it an additional period of 30 days to provide those documents. The applicant also stated that, in the event of failure to comply with that time limit, it would request the full repayment of the pre-financing paid to Revoind Industriale di Pindaru Gelu.

11 By registered letter of 7 December 2016, the applicant notified Revoind Industriale di Pindaru Gelu of the pre-financing recovery order of EUR 189 128.26. The applicant also informed Revoind Industriale di Pindaru Gelu that it granted Revoind Industriale di Pindaru Gelu a period of 15 days to raise any objections. The applicant also stated that, in the event of late payment, the principal debt would bear default interest at the rate indicated in the debit note.

12 By registered letter of 14 December 2016 addressed to the applicant, Revoind Industriale di Pindaru Gelu stated that it had complied with all of its contractual obligations under the Grant Agreement and that the Wittiness project’s delays were attributable to the coordinator. No annex, such as, in particular, the documents requested by the applicant in its registered letters of 23 August and 19 October 2016, was attached to that registered letter from Revoind Industriale di Pindaru Gelu.

13 On 23 December 2016, the applicant issued a debit note for an amount of EUR 189 128.26 with a due date set at 6 February 2017. That debit note also informed Revoind Industriale di Pindaru Gelu that, in the absence of payment by the due date, interest would be payable on the amount to be repaid.

14 In that regard, point II.21.2 of Annex II to the Grant Agreement provides that, if the obligation to repay is not honoured by the date set by the applicant, the sum due is to bear interest for late payment, at the rate indicated in point II.5.5 of that annex, namely the interest rate applied by the European Central Bank (ECB) for its main refinancing operations on the first day of the month during which the time limit set by the applicant for repayment is reached, plus 3.5 points. That point II.21.2 of Annex II to the Grant Agreement also provides that the interest for late repayment covers the period between the final date for repayment, exclusive, and the date of final payment, inclusive.

15 It is apparent from the Official Journal of the European Union (OJ 2017 C 33, p. 1) that the rate applied by the ECB for its main refinancing operations was fixed, on 1 February 2017, at 0.00%.

16 Despite two reminder letters sent by the applicant on 8 and 23 February 2017, Revoind Industriale di Pindaru Gelu did not make any repayment.

17 By application drafted in English and lodged at the Court Registry on 8 May 2017, the applicant brought the present action.

18 Following a number of unsuccessful attempts to serve the application by registered post and by bailiff at the address in Italy communicated by the applicant, that applicant, by documents lodged at the Court Registry on 6 July 2017 and 18 December 2018, provided details relating to the conversion of Revoind Industriale di Pindaru Gelu, which was a limited liability company, whose company name was Revoind Industriale Srl, with its registered office in Oricola (Italy), before becoming a limited partnership, whose company name is Revoind Industriale di Pindaru Gelu Sas, with its registered office in Rome (Italy) and whose ‘socio accomandatario’ (general partner) and ‘rappresentante dell’impresa’ (company representative) is Mr Gelu Pindaru, at the address of that company representative in Bucharest (Romania).

19 By decision of 23 October 2019, and following a change in the composition of the Chambers of the General Court, the present case was reassigned to the Eighth Chamber.

20 Following a further attempt to serve the application on Revoind Industriale di Pindaru Gelu made by registered letter of 18 December 2019 and the questions sent to the applicant on the same date, to which that applicant replied on 9 January 2020, the Court Registry served the application again on Revoind Industriale di Pindaru Gelu, by express courier of 3 June 2020 addressed to Mr Pindaru, in his capacity as general partner and representative of that company, at the address of that company representative in Romania. That letter was received on 12 June 2020.

21 By decision of 16 July 2020, the President of the Eighth Chamber found that the application had been served, in accordance with Article 80(1) of the Rules of Procedure of the General Court, on 12 June 2020.

22 By letters sent to the parties on 10 September 2020, the Court Registry, first, stated that the application had been served on 12 June 2020 and that Revoind Industriale di Pindaru Gelu had not lodged a defence within the period prescribed in Article 81 of the Rules of Procedure and, second, requested the applicant to submit its observations on the further steps taken in the proceedings and, in particular, whether, pursuant to Article 123(1) of those rules, it intended to apply to the Court for judgment by default.

23 By document lodged at the Court Registry on 25 September 2020 and served on Revoind Industriale di Pindaru Gelu on 12 October 2020 through Mr Pindaru, the applicant applied to the Court, under Article 123(1) of the Rules of Procedure, for judgment by default.

– order Revoind Industriale di Pindaru Gelu to pay the sum due of EUR 189 128.26 corresponding to the principal amount due plus the amount of EUR 979.32 by way of late payment calculated interest at a rate of 3.5% for the period between 7 February 2017 and 1 April 2017;

– order Revoind Industriale di Pindaru Gelu to pay EUR 18.14 per day by way of interest from 2 April 2017 until the date on which the debt is repaid in full;

25 In accordance with Article 123(3) of the Rules of Procedure, the General Court is to give judgment in favour of the applicant in the default judgment, unless it is clear that the General Court has no jurisdiction to hear and determine the action or that the action is manifestly inadmissible or manifestly lacking any foundation in law.

26 First of all, the General Court does not manifestly lack jurisdiction to hear and determine this action in the light of the presence, in Article 9(2) of the Grant Agreement, of an arbitration clause, within the meaning of Article 272 TFEU, according to which the General Court and, in the event of an appeal, the Court of Justice alone have jurisdiction to hear and determine disputes between the applicant and any beneficiary as to the interpretation, application or validity of that Grant Agreement, and in the light of the provisions of Article 10(1)(b) of Regulation No 71/2008, which were reproduced, in essence, in Article 10(1)(a) of Regulation No 558/2014.

28 In that regard, it should be noted that it is true that the application lodged by the applicant was drafted in English and, therefore, in a language different from that designated by Article 45(1)(a) of the Rules of Procedure, given that Revoind Industriale di Pindaru Gelu was established in Italy.

29 However, such an irregularity cannot, in the particular circumstances of the case, lead to that application having to be regarded as manifestly inadmissible within the meaning of Article 123(3) of the Rules of Procedure.

30 It is established, following numerous unsuccessful attempts to serve the application by registered letters with acknowledgment of receipt and by bailiff, both at the address of Revoind Industriale di Pindaru Gelu in Italy and at the address, in Bucharest, of its legal representative, that the said application was nonetheless served on him, more than three years and one month after the action was brought.

31 Neither Revoind Industriale di Pindaru Gelu nor its legal representative, who could not be unaware that that service had been effected by the General Court, made themselves known to the court, either to refer to their lack of understanding of that application on account of the language in which it was written, or to argue that it did not comply with the requirements of Article 45(1)(a) of the Rules of Procedure.

32 Moreover, it is apparent that the English language used in the application is also the language used in the Grant Agreement and the language required to be used, under Article 4 of that agreement, for communications between the applicant and Revoind Industriale di Pindaru Gelu and for drafting of reports to be submitted by Revoind Industriale di Pindaru Gelu to the applicant.

33 Accordingly, it cannot be considered that Revoind Industriale di Pindaru Gelu was not in a position to understand, at the very least, the subject matter of the application which had been served on it through its representative.

34 Furthermore, it should be noted that, in accordance with Article 45(1)(b) of the Rules of Procedure, Revoind Industriale di Pindaru Gelu was entitled to subscribe to the use of a language other than that determined pursuant to subparagraph (a) of that paragraph.

35 Lastly, having regard to the background to the dispute set out in paragraphs 2 to 16 above, corresponding to the description of the facts submitted by the applicant in the context of the application and substantiated by the documents in the file, the action is not manifestly lacking any foundation in law.

36 That finding is not invalidated by the registered letter of 14 December 2016, in which Revoind Industriale di Pindaru Gelu stated that it had complied with all of its contractual obligations under the Grant Agreement and that the delays in the Wittiness project were attributable to the coordinator. It is sufficient to find that Revoind Industriale di Pindaru Gelu has not put forward any argument or attached any evidence to that registered letter in support of its assertions.

37 It follows that Revoind Industriale di Pindaru Gelu must be ordered to repay the applicant the amount of EUR 189 128.26, together with default interest calculated at 3.5% per annum – that is, 0.00% plus 3.5 points, a rate which corresponds to default interest of EUR 18.14 per day – from 7 February 2017 and until the date of full payment of the amount due.

38 Under Article 134(1) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. Since Revoind Industriale di Pindaru Gelu has been unsuccessful, it must be ordered to pay the costs, in accordance with the form of order sought by the applicant.

1. Orders Revoind Industriale di Pindaru Gelu to pay Clean Sky 2 Joint Undertaking the amount of EUR 189 128.26, together with default interest calculated at 3.5% per annum from 7 February 2017 and until the date of full payment of the amount due;

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You are here: BAILII >> Databases >> Court of Justice of the European Communities (including Court of First Instance Decisions) >> Clean Sky 2 Joint Undertaking v Revoind Industriale di Pindaru Gelu (Arbitration clause - Non-performance of the contract - Judgment) [2021] EUECJ T-271/17 (27 October 2021) URL: http://www.bailii.org/eu/cases/EUECJ/2021/T27117.html Cite as: EU:T:2021:740, ECLI:EU:T:2021:740, [2021] EUECJ T-271/17

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