Strasbourg, 2 October 2007

Dear Mr X,

On 10 August 2004, Mr Y., Attorney-at-Law, submitted a complaint to the European Ombudsman on behalf of your company against the European Commission, concerning the latter's decision to retain the sum of EUR 50 000 from the amounts due to your company and to list it in its Early Warning System.

On 28 September 2004, I forwarded the complaint to the President of the Commission. The Commission sent its opinion on 14 December 2004. I forwarded it to Mr Y. with an invitation to make observations, which he sent on 23 February 2005.

On 31 March 2006, I wrote to the President of the Commission with a request for further information and for an opinion on new allegations. I informed Mr Y. in a letter of the same day.

On 9 June 2006, the Commission sent its additional opinion. I forwarded it to Mr Y. with an invitation to make observations by 31 July 2006.

By letter of 23 July 2006, Mr Y. informed me that he was no longer representing your company. On 26 July 2006, you sent me a letter to inform me that the complaint would be dealt with internally by the legal department of your company. At the same time you asked for an extension of the deadline to submit additional observations from 31 July 2006 to 30 September 2006.

By letter of 11 September 2006, I granted your request for an extension of the deadline until 30 September 2006. You sent your additional observations on 29 September 2006.

On 12 February 2007, I wrote to the Commission in order to request to inspect several documents. I informed you of this by letter of the same day. The inspection was carried out by my services on 28 March 2007 at the Commission's premises in Brussels.

By letter of 17 April 2007, I sent you a copy of the inspection report, as well as a copy of two non-confidential documents obtained during the inspection. On the same day I also sent the inspection report to the Commission. On 12 June 2007, you sent your observations on the inspection report.

After a detailed analysis of all the documents in the file, my Office contacted you by telephone on 7 September 2007 in order to discuss the possibility of a friendly solution between you and the Commission. You replied that you needed to discuss the matter with the management of your company. By e-mail of 10 September 2007, you informed my Office that you did not wish to pursue a friendly solution.

I am writing now to let you know the results of the inquiries that have been made.

I apologise for the length of time it has taken to deal with your complaint.

THE COMPLAINT

According to the complainant, the relevant facts are, in summary, as follows:

In the context of a commercial dispute with a subcontractor of the complainant, arising from some invoices which the complainant contested, the complainant's subcontractor obtained from the President of the District Court of Luxembourg an attachment order(1) against the complainant for an amount of EUR 50 000. The subcontractor presented this attachment order to the European Commission, which subsequently, and without any prior hearing of the complainant, took the decision to retain the sum of EUR 50 000 from the amounts due to the complainant by the Joint Research Centre ("JRC") in Seville. According to the complainant, this decision was disproportionate and illegal. The dispute between the subcontractor and the complainant was pending before courts in Luxemburg and the Member State where the complainant had its office.

Upon receiving the attachment order, the Commission's Accounting Officer furthermore listed the complainant in the Commission's "Early Warning System" ("EWS"). According to the complainant, there was no justification for doing so. Furthermore, according to it, since the attachment order was communicated to all Commission services and because of the listing of the complainant in the Commission's EWS, it suffered serious loss as regards new contracts, major delays in payments, administrative overheads and irreparable damage to its reputation. The complainant exchanged several letters with the Commission concerning the matter.

Not satisfied with the Commission's reaction, the complainant submitted, on 10 August 2004, the present complaint to the European Ombudsman. The complainant alleged that:

1. The Commission's decision (i) to retain the sum of EUR 50 000 from the amounts due to the complainant and (ii) to list the complainant in the EWS is illegal, unfounded and unfair and infringes the European Code of Good Administrative Behaviour(2).
2. The Commission transmitted personal data of the complainant to unauthorised individuals or legal entities co-operating with the complainant and thereby infringed Article 21 of the European Code of Good Administrative Behaviour(3).

The complainant claimed that:

The Commission should (i) remove the complainant from the EWS and (ii) circulate an explanatory letter to all Commission services to restore the complainant's reputation.

THE INQUIRY

The Commission's opinion

In its opinion, the Commission made the following comments:

The Commission was informed on 3 September 2003 of an attachment order obtained by a subcontractor against the complainant from the District Court of Luxembourg. Following this information, the procedure as described in the Practical Guide to Attachment Orders (SEC(2000)465, 10 March 2000) was implemented.

In his letter of 12 September 2003, the Accounting Officer informed the bailiff of the existence of the Commission's debts towards the complainant, without invoking, for most of these debts, the Protocol on the Privileges and Immunities of the European Communities ("PPI"). A copy of this registered letter was addressed to the complainant. The complainant was thus informed of the Commission's action.

It must be noted that, as soon as the formal document containing an attachment order was received, the attached party (the Commission in this case) could no longer dispose of the sums or assets attached. If it had done so, it could have been held liable in respect of the subject-matter of the attachment order. An attachment order was valid until such time as the court had decided on the substance of the creditor's claim.

In accordance with the Commission's standard and agreed procedures, as outlined in the Practical Guide to Attachment Orders (point 21(c)), the complainant was listed in the EWS by the Accounting Officer. The EWS clearly indicated the reference to an attachment order of which all Commission services had already been informed by note SG(03)A/8367 of 3 September 2003. The fact of listing a company on the EWS never led to blocked payment orders and had no impact per se on the conclusion of (new) contracts (point 19 of the Practical Guide to Attachment Orders).

The use of the EWS for attachment orders was confirmed in Commission Memorandum C(2004)193/3 of 3 February 2004. Inclusion in the EWS, which is decided on the initiative of the Accounting Officer, allows the latter to undertake a proper follow up of payment orders in favour of contractors which are subject to an attachment order and thus enables him better to protect the Commission's financial interests.

The decision of the District Court of Luxembourg of 21 October 2003, communicated to the Commission on 4 November 2003, stated that the amount of the attachment order was limited to EUR 50 000. This Court decision allowed the Commission to release all authorised payments orders, with the exception of EUR 50 000. At the request of the Accounting Officer, one particular Commission Service, the JRC, was asked to block this amount pending the Court's final decision.

By letter of 13 November 2003, the Commission's Accounting Officer informed the complainant about the blocking of the above amount. In further correspondence between the complainant and the Accounting Officer and in telephone conversations between the Accounting Department and the complainant, it was explained that the Commission was in no way blocking contracts or any payments other than the amount of EUR 50 000. The complainant received the e-mail address of the Accounting Department in case it should experience any problem as regards the conclusion of contracts or notice a delay in payments because of the attachment order. The complainant agreed to this "hot-line" procedure.

The Accounting Department also explained to the complainant that the Commission's action was based on the application of the law of Luxembourg.

The complainant's name remained on the EWS until the subcontractor's lawyer informed the Commission, on 12 October 2004, that the attachment order had been lifted. Following receipt of this communication, the complainant's name was immediately removed from the EWS and the JRC was informed that the suspended amount could be freed as from that day.

In view of the above, the Commission concluded that:

1. the blocking of the amount of EUR 50 000 was fully justified according to the national law which governs the contract with the complainant;
2. as far as being listed in the EWS was concerned, the Commission had followed the standard procedures, as defined by the Practical Guide to Attachment Orders;
3. there was no evidence of an infringement of Article 21 of the European Code of Good Administrative Behaviour brought about by the transmission of the complainant's personal data to unauthorised individuals co-operating with the complainant;
4. all the necessary information as to the precise nature of the complainant's inclusion on the EWS had been put at the disposal of the relevant Commission services. This information was permanently available in the Accounting System which was governed by its appropriate security rules. There was thus no need to send any supplementary information to the services, as requested by the complainant;
5. the procedure followed in the complainant's case was not different from the one applied in other cases where attachment orders had been communicated to the Commission and should thus not have had an impact on the conclusion of contracts, or on the time taken to pay amounts not affected by the attachment order.

The complainant's observations

The complainant submitted, in summary, the following observations:

The Commission never explained to the complainant the procedure it used and the rationale of this procedure. The complainant discovered its inclusion in the EWS from direct or indirect statements made by some Commission officials to the complainant's staff on a strictly confidential basis. The complainant had to write to the Accounting Officer in order to obtain this information.

The complainant described the background of the case, in order to explain the damage it suffered. The complainant had a disagreement with the subcontractor on the quality of a deliverable that the latter had presented to the complainant in the context of a contract for the provision of services to the Commission itself. After receiving complaints from the Commission, the complainant decided to use extra services from third parties to replace the unsatisfactory deliverable to the full satisfaction of the Commission. Consequently, the complainant rejected the invoices of the subcontractor in default, exercising its rights as stipulated in the contract. According to the contract, the subcontractor could bring this case before the competent courts. Instead, the subcontractor in default requested and obtained an attachment order from a court in Luxembourg using a procedure unknown to the complainant. The subcontractor presented this attachment order to the Commission in order to exert pressure on the complainant. The subcontractor considered that the complainant would pay the invoice in order to avoid damaging its reputation with the Commission, although it was in default by not delivering what it was supposed to deliver. The complainant trusted that the Commission would deal with this case in a fair and objective manner, but it had done exactly the opposite as it immediately considered that the complainant was guilty of wrongdoing and in default. The complainant asked why and on what grounds the Commission interfered in a private relationship taking a position in favour of the subcontractor without waiting for a final judgment. The Commission's actions resulted in defamation of the complainant and harm to its reputation vis-à-vis a wide spectrum of Commission decision makers, the market, competitors and even the complainant's employees.

The Commission could have blocked a payment due to the complainant for an amount of EUR 50 000, instead of blocking almost all the payments as it had done. The Commission's action caused delays of several months in payments due to the complainant.

Since the Commission decided to block the amount of EUR 50 000, the complainant asked why it had additionally entered the complainant's name in the EWS. If the inclusion of the complainant in the EWS was such a harmless act, the complainant asked why all the Commission officials were saying to the complainant that it was a blacklisted company. The complainant furthermore asked why the Commission did not explain the situation to the complainant and assist it in order to address this issue, as well as why it did not intervene when the complainant reported its concern that the interpretation by all Commission officers of its being on the EWS was that it was a blacklisted company. More importantly, the Commission took such a serious decision against the complainant's interests without respecting the rights of defence and on the basis of a procedure that was not published in the Official Journal.

The Commission's statement that the EWS never led to blocked payment orders was contradicted by the facts, as the blocking of the complainant's payments was almost a permanent situation after it was added to the EWS. Several of the Commission's officers explained that the administrative overhead for the conclusion of a Specific Agreement, in the context of various Framework contracts ("framework contracts") for the provision of IT services, was such that they were trying to find alternative ways of doing their work by avoiding contracts with the complainant. The complainant referred to one example in which an official from the Directorate-General for Informatics ("DIGIT") informed the complainant in July 2004 that the main reason why it was losing specific contracts was because it was listed in the EWS.

The complainant wondered why the whole Commission would have to know about the EWS if it were only meant to facilitate the Accounting Officer's work. The complainant also asked why the Accounting Officer had not attached a small explanatory note to its listing in the EWS explaining that inclusion in the EWS did not imply that the complainant faced any kind of financial problem and that the Commission could continue using its services without any problem.

The correspondence to which the Commission referred in its opinion was neither clear nor satisfactory and the complainant had had to obtain information from Commission officials who were informing the complainant "off the record" and "confidentially". This was not a fair and transparent way for a public administration to operate in its dealings with a company.

The complainant also pointed out that, in order to be removed from the EWS, it was forced to accept a compromise with its subcontractor and to allow various Commission officers to request its services with fewer administrative overheads. The complainant however considered that it should not have been obliged to go through such a process.

As regards the Commission's reference to "the Accounting System which is governed by its appropriate security rules", the complainant stated that it had serious reasons to believe that the "security rules" were not appropriate, as they harmed it in an unreasonable and unfair manner. Furthermore, these security rules misled the majority of the Commission officials about the complainant, since they regarded it as a blacklisted company.

The complainant referred to the Commission's statement that the procedure implemented in its case was not different from that used in other cases and should thus not have had an impact on the conclusion of contracts or on the payment of amounts not affected by the attachment order. The complainant considered that this statement by the Commission was wrong and was contradicted by the serious payment delays it incurred over recent years.

The complainant concluded that the rights of the defence had not been respected before the Commission took decisions with serious negative effects, and that the Commission's decisions were based on regulations which are not public.

Further inquiries

After careful consideration of the Commission's opinion and the complainant's observations, the Ombudsman considered that further inquiries were necessary. The Ombudsman therefore asked the Commission for the following further information and for an additional opinion on two further allegations:

Request for further information

(1) Could the Commission please explain why it did not inform the complainant that it had been listed in the EWS and why it did not explain to the complainant the standard procedures on which its decisions (to block the amount of EUR 50 000 and to list the complainant in the EWS) were based, despite several requests addressed to it to that effect by the complainant?

(2) Considering that the Commission had blocked the payment of EUR 50 000 to the complainant, could the Commission please explain why it was also considered necessary to list the complainant in the EWS and to inform all Commission services about this?

(3) In its opinion, the Commission stated that listing a company in the EWS never leads to blocked payment orders and has no impact per se on the conclusion of new contracts. In its observations, the complainant stated that, in reality, nearly all payments were blocked for several months. Could the Commission please comment on this?

(4) In its opinion, the Commission referred to three documents in order to support its position, namely, (i) the Practical Guide to Attachment Orders (SEC(2000)465, 10 March 2000); (ii) the note SG(03)A/8367 of 3 September 2003; and (iii) the Commission's Memorandum of 3 February 2004 (C(2004)193/3). Could the Commission please provide a copy of each of these documents?

Request for an opinion on two new allegations:

In its observations, the complainant alleged that (i) its rights of defence had not been respected and that the Commission had taken decisions on the basis of a procedure which had not been made public, and (ii) the Commission's actions resulted in defamation and harm to its reputation vis-à-vis a wide spectrum of Commission decision makers, the market, competitors and even its employees. Could the Commission please provide an opinion on these two new allegations?

The Commission's additional opinion

With regard to the request for further information:

(1) In reply to the Ombudsman's first question, the Commission explained that a preventive attachment order is a court order whereby the Commission is ordered to refrain from paying debts it owes to a principal creditor's debtor (the principal debtor) until such time as the court had decided on the substance of the principal creditor's claim.

In the case of the preventive attachment order issued by the District Court of Luxembourg on 29 August 2003, the Commission always acted on the understanding that an attachment order is communicated to the legal entity whose claim is the subject of the attachment order, and that, consequently, the complainant had been informed of the attachment order issued against its entitlements by the District Court of Luxembourg. As a matter of law, this obligation is clearly set out under Article 563 of the Luxembourg Code of Civil Procedure(4).

By virtue of the above-mentioned order communicated to the Commission on 3 September 2003, the attached party, that is, the Commission, was no longer free to dispose of the sums or assets attached, unless respecting the order would have interfered with the Commission's functioning and independence. In the case of such interference, the Commission could have invoked the privileges it enjoys under the PPI. The Commission could only justify very few such cases. Consequently, the Commission had to abide by the order served by the bailiff to its Secretariat-General on 3 September 2003.

Respect for a legal obligation is a matter of internal concern for the Commission. The internal tool used to circulate this restricted information to the competent persons within the Commission's authorising services, namely, the Commission's EWS, does not have any purpose or effect other than to ensure due respect for this obligation. It does not in itself entail any additional prejudice to the party concerned. Therefore the Commission does not consider it is under an obligation to inform the legal entity concerned how it records these data in order to fulfil its own legal obligations (i) to abide by an attachment order and (ii) to protect the Communities' financial interests.

This having been said, the Commission pointed out that it always responded swiftly to all requests for information sent by the complainant.

(2) In reply to the Ombudsman's second question, the Commission observed that established case-law in the various Member States set out the general principle that all sums and assets related to the attached debtor are to be blocked and that a limitation of the order to a specific amount does not undermine this principle. Consequently, the Commission's Practical Guide to Attachment Orders follows this common approach and provides for all payments to be suspended pending the final judicial ruling on the principal creditor's debt. Similarly, Article 15 bis (1) of the Commission's internal EWS decision provides for registration of the legal entity concerned until such a final judicial ruling is issued.

In light of the above, the Commission's Accounting Officer maintained the activation of a specific warning in the EWS after the attachment order had been limited on 21 October 2003 to the sum of EUR 50 000 relating to the disagreement between the complainant and the subcontractor. The Accounting Officer kept the complainant on the EWS until 12 October 2004, when it was informed (by registered letter from the subcontractor's counsel with copy to the complainant's counsel) that the order was lifted by decision of the District Court of Luxembourg.

Following this limitation however, and on the basis of the complainant's repeated position that the dispute with its subcontractor resulted from its due diligence in the implementation of contracts with the Commission, the Accounting Officer agreed to take the risk of executing payments to the complainant in excess of the amount of EUR 50 000 indicated in the order of the District Court of Luxembourg of 21 October 2003.

(3) In reply to the Ombudsman's third question, the Commission observed that the execution of payment orders to legal entities subject to preventive attachment orders needs to be evaluated in the light of the abovementioned legal principles and related Commission procedures. In this context, the Commission's Accounting Officer treated payment orders to the benefit of the complainant with particular indulgence, since they were all ultimately released under his responsibility. The Accounting Officer informed the complainant on 13 and 28 November 2003 that all payments in favour of the complainant in excess of the amount of EUR 50 000 due by the JRC would be released and confirmed this information on 2 April 2004, on which occasion he invited the complainant to report directly to his services to settle any delayed payment. For the rest, the Commission could only reiterate that consequences attached to an active warning in the EWS informing authorising services of the existence of a preventive attachment order (W3a registration) are limited to payments, not to the possibility of awarding new contracts. New legal commitments vis-à-vis such legal entities can still be entered into.

(4) As regards the Ombudsman's fourth question to be provided with a copy of three documents, the Commission: (i) stated that the Guide contains information which may not be made available to the public and invited the Ombudsman to inspect the said document at its premises; (ii) agreed to provide the Ombudsman with a copy of the internal note communicating the attachment order; and (iii) interpreted the Ombudsman's request for access to the EWS Decision as concerning only those parts of the document that relate to attachment orders and reproduced the relevant extracts in an enclosure to its opinion. Should this conclusion be wrong, the Commission invited the Ombudsman to inspect the other parts of the Decision at the Commission's premises.

Opinion on two new allegations:

As regards the first new allegation, the Commission could not see to what extent the complainant's rights of defence could possibly have been breached, since, as was explained above, registration in the EWS does not in itself cause any prejudice to the complainant. The Commission stated that it was clear that only the attachment order was causing such prejudice. It added that it was bound by that order and acted accordingly.

As regards the second new allegation, the Commission could not see to what extent its internal organisation, which is solely aimed at respecting the above-mentioned attachment order and protecting its financial interests, could possibly have resulted in any kind of defamation. As a matter of fact, the information provided by the Commission's EWS is exclusively restricted to authorised users of the EWS and may not be disclosed to third parties. In the present case, this information was only provided by Commission officials to authorised employees of the complainant. Besides, the complainant has not produced any evidence to demonstrate that unauthorised parties were aware of the existence of the EWS, and even less so to demonstrate that such unauthorised knowledge could be imputed to a fault by the Commission.

The complainant's additional observations

The complainant observed that the Commission's opinion distorted the reality and tried to mislead the Ombudsman. According to the complainant, the Commission should block only the amount of EUR 50 000, and not delay or block literally every payment to the complainant, which is exactly what happened.

Always according to the complainant, an attachment order clearly has a provisional character. In the present case, the complainant was not present when the court issued the attachment order and was not even informed about this order, which was granted on the basis of inaccurate evidence. The Commission does not have any right whatsoever to circulate the attachment order in a misleading way, seriously affecting the complainant's interests.

Despite repeated reminders and protests by the complainant, which were ignored, the Commission entered the information in the EWS with the following effects:

(1) All the users understood, on the basis of the content of the EWS, that the complainant was facing financial difficulties or that it had been convicted of a serious offence. A wide spectrum of Commission officials were continually alerting the complainant confidentially and "off the record" of this serious problem. This seriously harmed the complainant's reputation.

(2) The information was not available just to a limited amount of persons, as the Commission wrongly stated. It was known to everyone and circulated "propagated" by word of mouth to the entire market.

(3) All the Commission officers who were trying to implement Specific Contracts with the complainant in the context of various Framework Contracts were automatically obliged by the EWS not to deal with the complainant. This caused serious financial losses.

(4) Any contractual relation of the complainant with the Commission was almost impossible because of this situation.

(5) The registration of the complainant in the EWS implied that it was a blacklisted organisation, as was repeatedly mentioned to the complainant by many Commission officials.

The complainant failed to understand why the Commission had to block all the payments in order to "protect the financial interests of the Commission" or which interests the Commission referred to. In its view, there was a flagrant contradiction between the fact that the Commission stated on, the one hand, that the EWS has "no impact per se" on the payments and new contracts, and, on the other hand, that it had to use the EWS in order to protect its interests. In reality the attachment order for EUR 50 000 was enforced independently of the EWS. The complainant therefore failed to see what legitimate purpose the EWS served in this instance. It only served as a defamatory tool by simultaneously misleading all Commission decision-makers who were involved with the complainant.

The complainant also recalled that, contrary to what was stated by the Commission, most of its letters and requests had been ignored. The Commission also never explained to the complainant the provisions of the Practical Guide to Attachment Orders or the rules of its internal EWS decision. The Commission did not disclose any information to the complainant, which obtained all the information it came to possess through unofficial channels and from statements made off the record.

With respect to the Commission's reply to the Ombudsman's first question, the complainant stated that, as soon as the Commission received the attachment order, it should have informed the complainant about the order and the procedure it would follow.

With respect to the Commission's reply to the Ombudsman's second question, the complainant stated that the Commission's comments were vague and that there is no case-law to suggest that there is a general principle that all sums and assets related to the attached debtor have to be blocked. In any case, the attachment order in the matter provided the attachment for the amount of EUR 50 000 only, without entitling the Commission to block any other pending payment in excess of this sum.

With respect to the Commission's reply to the Ombudsman's third question, the complainant stated that, due to the payments being repeatedly blocked, it faced tremendous delays in all pending payments from various Commission departments, precisely due to the attachment order. In its comments, the Commission itself accepted that the consequences of the activation of the EWS were financial.

The inspection of the Commission's file

After having examined the complainant's observations on the Commission's reply, the Ombudsman considered that further information was needed in order to deal with the complainant's allegation concerning the Commission's decisions to retain the sum of EUR 50 000 from the complainant and to list the complainant in the EWS.

The Ombudsman therefore wrote to the Commission on 12 February 2007, asking that his services be allowed to inspect the following documents:

1. the set of rules concerning the EWS that were applicable at the time of the facts relevant to the complaint; and
2. the Practical Guide to Attachment Orders (SEC(2000)465 of 10 March 2000).

The inspection took place on 28 March 2007 at the Commission's premises in Brussels. The Ombudsman's representatives explained to the Commission that the EWS decision (or the parts thereof) which had been communicated to the Ombudsman by the Commission as an enclosure to its opinion of 8 June 2006 was a decision from 2004 (C(2004) 1993/3) and which had last been modified by the 2006 internal rules. The Ombudsman's representatives explained to the Commission that it was therefore important to inspect the rules which were applicable at the time of the facts, namely, September/October 2003 when the complainant was listed in the EWS.

The Commission representative pointed out that, as of a few months, the EWS decision was available on the "Europa" website, but that this was not the case at the time of the complaint. He also explained that the EWS system had been created in 1997 and that there was a Communication by Commissioner Schreyer of 31 October 2000 which reviewed the system. Therefore, the rules applicable at the time of the facts of the complaint were the 1997 Communication as amended by the Communication of 2000.

The Ombudsman's representatives inspected and obtained a copy of the following three documents:

1. The Practical Guide to Attachment Orders (SEC(2000)465) of 10 March 2000 (French language version);
2. Memorandum SEC(97)1562/2 of the President, Mrs Gradin and Mr Liikanan adopted by the Commission on 30 July 1997 on the Early Warning System concerning administrative errors or fraud committed by bodies or companies benefiting from Community funds(5).
3. Communication C(2000)1811/4 from Mrs Schreyer adopted by the Commission on 31 October 2000 on the optimisation of the Early Warning System(6).

The Commission's representative stated that document (1) was confidential, but that documents (2) and (3) were not confidential and could be released to the complainant.

The complainant's additional observations on the inspection report

The inspection report, as well as the two non-confidential documents obtained during the inspection, were sent to the complainant which, in summary, submitted the following additional observations:

The complainant stated that the Commission had constantly and officially denied that the complainant was listed in the EWS. When the Commission decided to register the complainant in the EWS, the applicable legal basis for this was the Commission's Memorandum of 30 July 1997. Paragraph 5 of its section III, "Application field", defines in an exhaustive way the four categories which can justify the activation of the EWS.

According to the complainant, the Commission committed five irregularities:

(i) The Commission could not and should not have listed the complainant in the EWS, on the basis of the attachment order, which clearly does not fall within one of the four categories of section III of Memorandum SEC(97)1562/2 of 30 July 1997. By listing the complainant in the EWS without explaining the exact situation to all persons who had access to it, the Commission allowed all Commission officers to assume that the complainant had committed a serious fraud or misconduct. This undeniable fact unreasonably defamed the complainant for a long time. The EWS was activated every time some Commission officer was trying to make a payment to the complainant (see Communication SEC(00)1811/4 of 31 October 2000, section 2.1, final paragraph).

(ii) The complainant was at that time a contractor implementing successfully many contracts with the Commission which lasted for many years and had a global value of many millions of euro. Therefore, further to the communication of the attachment order, the Commission should simply have ensured that the amount due to the complainant would never be lower than the value of the attachment order, that is, EUR 50 000. This would have allowed the Commission to proceed to the payment to the third party, that is, the subcontractor, in the case of a final court decision ordering such payment (and assuming that the complainant would not want to make such a payment). The complainant submitted almost every week a tender to the Commission which included updated financial information, showing that the complainant could easily proceed to a payment of EUR 50 000 in case of a final court decision.

However, the Commission decided unilaterally to block the amount of money indicated in the attachment order (actually it blocked all the complainant's payments and for a much higher amount). The Commission was therefore fully and duly protected and the complainant failed to see why it had additionally decided to list it in the EWS. The complainant wondered whom the Commission wanted to protect by listing the complainant in the EWS. Moreover, the retention of the aforementioned amount by the Commission prevented the complainant from earning interest corresponding to the aforementioned amount for the period running from when the attachment order was issued until the amount was paid.

(iii) Assuming that the complainant's case deserved "exceptionally" to be reported in the EWS, the Commission should have done this in a proper manner, clarifying to any person who had access to the EWS the exact situation the complainant was facing and that the case had nothing to do with one of the four cases referred to in section III in Communication SEC(97)1562/2 of 30 July 1997. The Commission had however failed to do so.

(iv) The EWS was activated every time a Commission officer was trying to make a payment to the complainant. This clearly showed that the Commission could monitor all its payments to the complainant, and that there was no need for the Commission to block any amount to be paid to the complainant.

(v) The Commission apparently introduced the case of attachment orders in its Decision C(2004)193/3 as amended in 2006 (see page 4, Article 2, par. 4). However, in this case the Commission clearly confused attachment orders (which may have an innocent character as in the complainant's case) and "judicial proceedings for serious administrative errors or frauds". This meant that, in case a company which happens to be a supplier of the Commission faces litigation with one of its partners or subcontractors, the latter may obtain an attachment order and communicate it to the Commission in order to (i) defame the company and (ii) exert pressure on the latter.

The Ombudsman's efforts to achieve a friendly solution

The Ombudsman's Office contacted the complainant by telephone on 7 September 2007 in order to explore the possibility of a friendly solution between the complainant and the Commission, which would consist in the Commission circulating an explanatory note to its services with a view to repairing any damage to the complainant's reputation that might still persist in the Commission.

By e-mail of 10 September 2007 and in a telephone call of the same day, the complainant stated that it would not be willing to accept such a friendly solution because, six years after the facts, adding that it was too late for the Commission to remedy the situation simply by circulating a letter. The complainant indicated that the circulation of such a letter could actually contribute to the further deterioration of the situation, as it would remind a large spectrum of Commission officials of the whole case, and would highlight again the fact that the complainant had complained against the Commission. The complainant indicated that it was looking forward to the Ombudsman's decision on the case and that it would subsequently contact the Commission directly with a view to seeking a mutually acceptable solution.

THE DECISION

1 Preliminary remark

1.1 The European Ombudsman notes that the present complaint raises several problems with regard to the working of the European Commission's Early Warning System ("EWS"). Some of these problems would appear to be of a more general nature. In the framework of the present inquiry, however, the Ombudsman will not deal with the general issues of the EWS, but exclusively with the specific allegations as set out by the complainant in this case. The Ombudsman will consider whether an own-initiative inquiry should be undertaken at some future stage with regard to the working of the EWS in general. In the framework of an own-initiative inquiry, the Ombudsman could consider the general issue of applying the EWS to cases where an attachment order has been served on the Commission, and more particularly whether such an application strikes a fair balance between the protection of the Communities' financial interests and the respect for the rights of the defence of the parties involved.

1.2 In this context, the Ombudsman would like to point out that the applicable rules on the EWS are now contained in the Commission's Decision C(2004) 193/3 of 3 February 2004(7) on the Early Warning System, as modified by corrigendum C(2004)517 of 23 February 2004. This Decision was not yet applicable at the time of the facts of the complaint, as it entered into force on 3 February 2004(8). The analysis of the present complaint will therefore be carried out on the basis of the texts that were applicable at the time of the facts (see point 2.16 below).

2 The allegations concerning the Commission's decisions (i) to retain the sum of EUR 50 000 and (ii) to list the complainant in the EWS

2.1 In the context of a commercial dispute, a subcontractor of the complainant obtained from the President of the District Court of Luxembourg an attachment order(9) against the complainant for an amount of EUR 50 000. The subcontractor communicated this attachment order to the Commission which, without any prior hearing of the complainant, blocked all its payments to the complainant. When the Commission was informed that the amount of the attachment order was limited to EUR 50 000, it decided to retain the sum of EUR 50 000 from the amounts due to the complainant by the Joint Research Centre ("JRC") in Seville. The Commission's Accounting Officer furthermore listed the complainant in the Commission's EWS. According to the complainant, there was no justification for doing so. The complainant submitted that because of the attachment order, which was communicated to all Commission services, and because of the listing of the complainant in the EWS, it had suffered serious loss as regards new contracts, major delays in payments, administrative overheads and irreparable damage to its reputation. In its complaint to the Ombudsman, the complainant alleged that the Commission's decision (i) to retain the sum of EUR 50 000 from the amounts due to the complainant and (ii) to list it in the EWS was illegal, unfounded and unfair and infringed the European Code of Good Administrative Behaviour(10).

2.2 In its opinion, the Commission observed that, once informed about an attachment order obtained by the subcontractor against the complainant from the District Court of Luxembourg, it implemented the procedure described in the Practical Guide to Attachment Orders (SEC(2000)465, 10 March 2000). According to the procedures outlined in point 21(c) of the Practical Guide, the complainant was listed in the EWS by the Accounting Officer. The EWS clearly indicated the reference to an attachment order of which all Commission services had already been informed by note SG(03)A/8367 of 3 September 2003. The Commission stated that the fact of being on the EWS never led to blocked payment orders and had no impact per se on the conclusion of (new) contracts. The use of the EWS for attachment orders was confirmed in the Commission's Memorandum C(2004)193/3 of 3 February 2004. At the request of the Accounting Officer, one particular Commission Service, that is, the JRC, had been asked to block the amount of EUR 50 000 pending the Court's final decision. In correspondence between the complainant and the Accounting Officer and in telephone conversations between the Accounting Department and the complainant, it was explained that the Commission was in no way blocking contracts or any payments other than the amount of EUR 50 000. The Commission concluded that the blocking of the amount of EUR 50 000 was fully justified according to the national law governing the contract with the complainant. The Commission also pointed out that the procedure implemented in the complainant's case was not different from the one applied in other cases where attachment orders had been communicated to the Commission. The procedure applied to the complainant should thus not have had an impact on the conclusion of contracts between it and the Commission, or on the timely payment by the Commission of amounts not affected by the attachment order.

2.3 In its observations, the complainant observed that t he Commission had never explained to it the procedure it used and the rationale of this procedure. The complainant discovered its inclusion in the EWS from direct or indirect statements made by some Commission officials to the complainant's staff on a strictly confidential manner. The complainant had to write to the Accounting Officer in order to obtain this information. The Commission's action caused delays of several months in payments due to the complainant. If the inclusion of the complainant in the EWS had been such a harmless act, the complainant asked why all the Commission officials had been saying to the complainant that it was a blacklisted company. The Commission's statement that the fact of being on the EWS never led to blocked payment orders was in contradiction with the facts, as the blocking of the complainant's payments was almost a permanent situation since it was added to the EWS. The complainant asked why the Commission had not bothered to intervene when the complainant was reporting its concern that the interpretation by all Commission officers of the complainant's presence on the EWS was that it was blacklisted.

In connection with the main allegation, t he complainant also made two new allegations, namely, that (i) its rights of defence had not been respected and that the Commission had taken decisions on the basis of a procedure which had not been made public, and (ii) the Commission's actions had resulted in defamation and harm to its reputation vis-à-vis a wide spectrum of Commission decision makers, the market, competitors and even its employees.

2.4 In his letter of further inquiries, the Ombudsman asked the Commission for further information on the following four points:

(1) Could the Commission please explain why it did not inform the complainant that it had been listed in the EWS and why it did not explain to the complainant the standard procedures on which its decisions (to block the amount of EUR 50 000 and to list the complainant in the EWS) were based, despite several requests addressed to it to that effect by the complainant?

(2) Considering that the Commission had blocked the payment of EUR 50 000 to the complainant, could the Commission please explain why it was also considered necessary to list the complainant in the EWS and to inform all Commission services about this?

(3) In its opinion, the Commission stated that listing a company on the EWS never leads to blocked payment orders and has no impact per se on the conclusion of new contracts. In its observations, the complainant stated that, in reality, nearly all payments were blocked for several months. Could the Commission please comment on this?

(4) In its opinion, the Commission referred to three documents in order to support its position, namely (i) the Practical Guide to Attachment Orders (SEC(2000)465) of 10 March 2000); (ii) note SG(03)A/8367 of 3 September 2003; and (iii) Commission Memorandum (C(2004)193/3) of 3 February 2004. Could the Commission please provide a copy of each of these documents?

In its observations, the complainant alleged that (i) its rights of defence had not been respected and that the Commission had taken decisions on the basis of a procedure which had not been made public, and (ii) the Commission's actions resulted in defamation and harm to its reputation vis-à-vis a wide spectrum of Commission decision makers, the market, competitors and even the complainant's employees. The Ombudsman therefore also asked the Commission to provide an opinion on these two new allegations.

2.5 In reply to the Ombudsman's first question of the further inquiries, the Commission stated that it had always acted on the understanding that an attachment order is communicated to the legal entity whose claim is the subject of the attachment order. Consequently, the complainant had been informed of the attachment order issued against its entitlements by the District Court of Luxembourg. The Commission does not consider that it is under an obligation to inform the legal entity concerned how it records data in order to fulfil its own legal obligations (i) to abide by an attachment order and (ii) to protect the Communities' financial interests. The Commission further pointed out that it always responded swiftly to all requests for information sent by the complainant.

In reply to the Ombudsman's second question, the Commission stated that the established case-law in the various Member States espouses the general principle that all sums and assets related to the attached debtor are to be blocked. Consequently, the Commission's internal Guide to Attachment Orders follows this common approach and provides for all payments to be suspended pending the final judicial ruling on the principal creditor's debt. Similarly, Article 15 bis (1) of the Commission's internal EWS decision provides for registration of the legal entity concerned until such a final judicial ruling is issued.

In reply to the Ombudsman's third question, the Commission stated that the Commission's Accounting Officer treated payment orders to the benefit of the complainant with particular indulgence, since they were all ultimately released under his responsibility. The Accounting Officer informed the complainant on 13 and 28 November 2003 that all payments in favour of the complainant in excess of EUR50 000 due by the JRC would be released and confirmed this information in his letter of 2 April 2004, in which he invited the complainant to report directly to his services in order to settle any delayed payment.

In reply to the Ombudsman's fourth question, the Commission (i) stated that the Practical Guide to Attachment Orders contains information which may not be made available to the public and invited the Ombudsman to inspect the said document at its premises; (ii) provided the Ombudsman with a copy of the internal note of 3 September 2003 communicating the attachment order; and (iii) interpreted the Ombudsman's request for access to the EWS Decision as concerning only those parts of the document that relate to attachment orders and reproduced the relevant extracts in an enclosure to its opinion.

As regards the complainant's first new allegation, the Commission stated that it could not see how the complainant's rights of defence could possibly have been breached, since registration in the EWS did not in itself cause any prejudice to the complainant. Only the attachment order was obviously causing such prejudice, and the Commission was bound by it and acted accordingly.

As regards the complainant's second new allegation, the Commission stated that it could not see to what extent its internal organisation could have possibly resulted in any kind of defamation. As a matter of fact, the information provided by the Commission's EWS is exclusively restricted to authorised users of the EWS and may not be disclosed to third parties. In the present case, this information was only provided by Commission officials to authorised employees of the complainant. The Commission also stated that the complainant had not produced any evidence to demonstrate that unauthorised parties knew of the existence of the EWS, and even less so to demonstrate that such unauthorised knowledge could be imputed to a fault by the Commission.

2.6 In its additional observations, the complainant maintained that the Commission had blocked literally every payment and that the institution did not have the right to circulate the attachment order in a misleading way. The complainant also failed to understand why the Commission had to block all the payments in order to "protect the financial interests of the Commission" and to which interests the Commission referred. In its view, there was a flagrant contradiction between the fact that the Commission had stated that, on the one hand, the EWS has "no impact per se" on the payments and new contracts, and, on the other hand, that it had to use the EWS in order to protect its interests. In reality the attachment order of EUR 50 000 was enforced independently of the EWS.

The complainant stated that, as soon as the Commission received the attachment order, it should have informed the complainant about it as well as about the procedure to be followed by the Commission. The complainant stated that there is no case-law to suggest that there is a general principle that all sums and assets related to the attached debtor have to be blocked. In any case, the attachment order in question provided for the attachment of EUR 50 000 only, without entitling the Commission to block any other pending payment in excess of this sum.

The complainant further stated that all the users of the EWS understood, on the basis of the content of the EWS, that the complainant was facing financial difficulties or that it had been convicted of a serious offence. A wide spectrum of Commission officials were continually alerting the complainant confidentially and "off the record" of this serious problem. The listing in the EWS had thus seriously harmed the complainant's reputation.

2.7 On 28 March 2007, the Ombudsman's representatives carried out an inspection in the Commission's premises in Brussels. The Commission official present at the inspection pointed out that the EWS decision was currently available on the "Europa" website, but that this had not been the case at the time of the complaint. He explained that the EWS system was created in 1997 and that there was a Communication from Commissioner Schreyer of 31 October 2000 which reviewed the system. Therefore, the rules applicable at the time of the facts of the complaint were the 1997 Memorandum as amended by the Communication of 31 October 2000. The Ombudsman's representatives inspected and obtained a copy of three documents, one of which was declared to be confidential by the Commission. The inspection report, as well as a copy of the two non-confidential documents, were sent to the complainant for observations.

2.8 In its additional observations, the complainant maintained its complaint and stated that the Commission had committed five irregularities.

2.9 In order to deal with the complaint, the Ombudsman finds it useful, on the basis of the documents in the file, to recall the chronology of the facts of the present case:

On 3 September 2003, a bailiff in Luxembourg communicated to the Commission an attachment order concerning the complainant which had been issued by the District Court of Luxembourg on 29 August 2003. The attachment order was registered by the Commission on 3 September 2003. On that day also, the Commission's Secretariat-General sent the attachment order, for information, to various Commission services.

In a letter of 12 September 2003, which was copied to the complainant, the Commission's Accounting Officer, referring to the attachment order of 29 August 2003, informed the bailiff that it had debts towards the complainant (for a total amount of more than EUR 5.5 million), and that, for most of these debts, the Commission did not wish to invoke the provisions of the Protocol on the Privileges and Immunities of the EC of 8 April 1965 ("PPI")(11).

In its reply of 21 October 2003 to a letter of the complainant dated 15 October 2003, in which the latter had raised concerns with regard to the attachment order, the Commission's Accounting Officer informed the complainant that "this particular attachment order has been the subject of the normal procedure applied within the European Commission in order to reply to the legal requirements that are in place for attachment orders". The Accounting Officer also informed the complainant that the Commission's reaction was "in full compliance with the internal, written procedure laid down specifically for this matter."

On 4 November 2003, the decision of the District Court of Luxembourg of 21 October 2003, according to which the amount of the attachment order was limited to EUR 50 000, was communicated to the Commission.

On 7 November 2003, the complainant wrote to the Accounting Officer stating that it had received information from various Commission services that it was listed in the EWS and that this was unjustified, unfair and defamatory, and that this could lead Commission officials to consider that it faced serious financial problems. The complainant therefore asked the Commission to remove it from the EWS and to circulate an official letter to all its services stating that it enjoyed outstanding relations with the Commission and that the entry should not have been made.

In his reply of 13 November 2003 to the complainant, the Accounting Officer stated, with regard to the ruling of the District Court of Luxembourg, which had reduced the amount of the attachment order to EUR 50 000, that

"I have the pleasure to announce [to] you that all the necessary measures allowing the release of all payments in favour of your company (...) in excess of this amount had been taken by my services before the arrival of your letter."

As regards the internal handling of attachment orders, the Accounting Officer however confirmed his

"previous position that the relevant internal procedure is applied in full compliance with the Commission's specific rules and guidelines in that matter. All services within the Commission are well aware of the exact nature of this procedure. The processing of attachment orders should not, in any way, have an effect on the contractual relations between the companies involved and the operational departments of the EC".

By letter of 20 November 2003 to the Accounting Officer, the complainant asked the Commission to explain to what procedure the Commission referred with regard to attachment orders. The complainant repeated its request to be removed from the EWS and to have an official letter circulated to all Commission services stating that it enjoyed outstanding relations with the Commission.

In his reply of 28 November 2003, the Accounting Officer informed the complainant that the only amount that remained blocked was the amount of EUR 50 000 due by the JRC. The letter further stated that

"[a]ccording to the specific judicial ruling in Luxembourg, all payments in favour of the [complainant] have to be frozen. It is only when the Court explicitly decides that the impact can be limited to a specified amount, that all payments beyond the initially stated amount can be executed. This explains why, prior to the Court decision of October 21st, payments in favour of [the complainant] were suspended. This is not a Commission regulation, but the mere application of a national jurisdiction[sic]".

The Accounting Officer further stated that "I do not dispose of any element which could lead me to the conclusion that it would be necessary to issue any message whatsoever to the EC's operational departments on the impact that this attachment order should have had on the reputation of your company".

The Accounting Officer concluded that "with regard to the liberation of the EUR 50 000 retained by the JRC, I can only invite you to seek a settlement with [the subcontractor]. Only such a settlement can at the end of the day bring a final end to the effects of this attachment order."

The complainant sent further letters to the Commission with regard to the matter on 3 December 2003 and 1 April 2004. On 2 April 2004, the Commission's Accounting Officer sent another letter to the complainant with regard to delayed payments.

By letter of 12 October 2004, which was copied to the complainant, the subcontractor's lawyer informed the Commission that the attachment order had been lifted by the District Court of Luxembourg. Following this information, the complainant was removed from the EWS by the Commission and the JRC was informed that the suspended amount could be released.

2.10 The Ombudsman considers that, in order to deal with the complainant's allegations, a distinction has to be made between, on the one hand, the retention of the sum of EUR 50 000 from the complainant and, on the other hand, the listing of the complainant in the EWS.

(i) As regards the retention of the sum of EUR 50 000 from the complainant

2.11 As regards the Commission's decision to retain the sum of EUR 50 000 from the complainant, the Ombudsman notes that, on 3 September 2003, the Commission was informed of the attachment order issued by the District Court of Luxembourg on 29 August 2003. The Ombudsman further notes that the Commission informed the complainant rapidly of this attachment order by sending it a copy of its letter of 12 September 2003 addressed to the bailiff in Luxembourg, merely nine days after the Commission had been informed. On 4 November 2003, the Commission was informed of the decision of the District Court of Luxembourg of 21 October 2003, according to which the amount of the attachment order was limited to EUR 50 000.

2.12 The Ombudsman notes that, in its observations on the Commission's reply to the Ombudsman's request for further information, the complainant pointed out that it failed to understand why the Commission had initially blocked all payments. The complainant suggested that the general principle of law to which the Commission had referred in this context did not exist. It appears useful to note that the allegation that the Ombudsman had identified in the complaint and on which the Commission had been asked to comment concerned the retention of the sum of EUR 50 000, and not the initial suspension of all payments. In order to deal with the latter issue, the Commission would have to be asked to provide a supplementary opinion, on which the complainant could then comment. It is not excluded that further inquiries might become necessary as regards this issue. Taking up this further issue for examination at this stage of the inquiry would be likely further to delay its conclusion. Given that this can hardly be in the complainant's interest, the Ombudsman takes the view that it is appropriate for him only to deal with the retention of the amount of EUR 50 000.

2.13 The Ombudsman notes that an attachment order, such as the one served in the present case, is a judicial order from a national court in a Member State. In the Ombudsman's view, it appears to be clear that the Commission has to abide by such an attachment order by virtue of Community law, unless the PPI entitles it to refrain from doing so. The Ombudsman notes that the Commission has established detailed rules as regards how to handle such attachment orders that are set out in its Practical Guide to Attachment Orders SEC(2000)465 of 10 March 2000. The attachment order in the present case was a preventive attachment order, which means that the amount that is the subject of the attachment order remains blocked (as opposed to an executable attachment order where the amount has to be paid). To the extent that the provisions of the PPI did not apply, the Commission was thus obliged to abide by the attachment order of the District Court of Luxembourg of 29 August 2003. This means that, once it had been informed that the relevant amount was limited to EUR 50 000, the Commission had to block a payment due to the complainant that corresponded to that amount. This obligation continued to bind the Commission until it was informed, on 12 October 2004, that the attachment order had been lifted.

2.14 On the basis of the above considerations, the Ombudsman concludes that the Commission's decision to retain the sum of EUR 50 000 from the complainant constituted the mere execution of an attachment order received from a judicial authority in a Member State. The Ombudsman therefore does not consider that this decision was illegal, unfounded, or unfair or that it infringed the European Code of Good Administrative Behaviour. On the basis of the above considerations, no instance of maladministration was therefore found with regard to the allegation in so far as it concerns the retention of the amount of EUR 50 000 from the complainant.

(ii) As regards the listing of the complainant in the EWS

2.15 As regards the other aspect of the allegation, namely, the Commission's decision to list the complainant in the EWS, the Ombudsman firstly notes that, although the Commission has not specified the exact date, it is clear that the complainant was listed in the EWS shortly after the Commission had been informed of the attachment order. Furthermore, it is clear that the listing of the complainant in the EWS was maintained even after the District Court of Luxembourg had informed the Commission that the amount of the attachment order was limited to EUR 50 000.

2.16 The Ombudsman notes that, at the time of the facts, the relevant rules on the EWS were contained in (i) Memorandum SEC(97)1562/2 of 30 July 1997 from the Commission President, Mrs Gradin and Mr Liikanen on the EWS concerning administrative errors or fraud committed by bodies or companies benefiting from Community funds, and (ii) Communication C(2000)1811/4 from Mrs Schreyer of 31 October 2000 on the optimisation of the EWS. The Ombudsman furthermore notes that, in this context, the Practical Guide to Attachment Orders SEC(2000)465 of 10 March 2000 is also relevant. In order to deal with the allegation, it appears useful to recall the most important provisions of the above documents:

(i) As regards the Guide, which his services inspected on the Commission's premises, the Ombudsman notes that the Commission considers it to be a confidential document. The Ombudsman is not certain that this position is well founded. However, it does not appear to be necessary to form a final conclusion regarding this issue, since the information concerning the contents of the Guide that the Commission has provided in its opinion is sufficient to deal with the present case. In its opinion, the Commission pointed out that the complainant had been listed in the EWS in accordance with paragraph 21(c) of the Guide. The Ombudsman further notes from the Commission's opinion that the Guide provides that all payments to the attached debtor are suspended pending the final judicial ruling on the principal creditor's debt.

(ii) The Memorandum of 30 July 1997, as its title indicates, concerns the establishment of an EWS "concerning administrative errors or fraud committed by bodies or companies benefiting from Community funds". As its introduction shows, the Memorandum aims at informing the Commission of the project to install an EWS, which was finally completed by Commission Decision C(2004) 193/3 of 3 February 2004. The Memorandum foresees two phases for the installation of the EWS, namely, (a) a phase of immediate measures and (b) a phase for preparing the definitive system.

As regards the field of application, Section III (Application field), paragraph 5, foresees that the EWS will identify real or potential beneficiaries who:

1. can be legally excluded on the basis of the public procurement Directives; or
2. have been the subject of conclusions by (a) UCLAF(12), (b) the Financial Controller and (c) the Court of Auditors; or
3. are known to be the subject of a judicial action in this regard(13); or
4. are the subject of recovery orders by the Commission above a certain amount and where there is an important delay in payment.

As regards the immediate measures, paragraph 8 of Section IV of the Memorandum mentions that Parliament's(14) main concern related to the conclusion of new tenders with beneficiaries whose reliability is seriously in doubt vis-à-vis the Community institutions. These immediate measures were therefore intended to establish a list of beneficiaries which either (i) are considered inappropriate for the conclusion of new contracts, (ii) require a careful investigation by each Directorate-General which envisages concluding a new contract, or (iii) require an increased vigilance from the Directorates General that manage the already existing contracts.

The Memorandum also mentions, in paragraph 5, the possibility of revising (or deleting from) the EWS, further to the conclusion of an administrative or judicial procedure. Paragraph 12 provides that every Directorate General which introduced a beneficiary in the EWS has the responsibility to delete or correct the entry without delay if necessary.

(iii) The Communication of 31 October 2000 foresaw various new measures to be implemented in order to improve the functioning of the EWS. The Communication mentioned that the fact of being listed in the EWS has as a result that an automatic warning message is sent to the Authorising Officer every time he intends to make a payment. The Communication also highlighted the insufficient knowledge by the Commission services of the management of the EWS and stated that precautions had to be taken in order to avoid complaints from legal or physical persons who are listed in the EWS.

2.17 It appears from the complaint and the complainant's observations on the Commission's opinion that the latter considers that the Commission's decision to list it in the EWS was (i) illegal/unfounded and (ii) unfair. Furthermore, (iii) it infringed the European Code of Good Administrative Behaviour(15) and (iv) the complainant's rights of defence, (v) was taken on the basis of a procedure which had not been made public and (vi) resulted in defamation and harm to the complainant's reputation. The Ombudsman considers it appropriate to start his examination by analysing whether the Commission's decision to list the complainant in the EWS was fair.

2.18 Principles of good administration require that the institutions should act fairly(16). In order to examine whether the Commission's decision was fair, it is important to consider the purpose of listing an entity on the EWS. The Ombudsman notes that the title of the Memorandum on the EWS refers to "administrative errors or fraud committed by bodies or companies benefiting from Community funds". In its press release on the EWS published on 3 February 2004(17), the Commission stated that the EWS system "sets up mechanisms ensuring that contractors and beneficiaries presenting the same level of risk for the Communities' interest are known to and receive the same treatment by all Commission services". This press release stated that the EWS was set up in 1997 and that its main purpose "is to reduce the risk of awarding contracts or grants to third parties who should be excluded in accordance with the Financial Regulation's rules such as bankruptcy, serious professional misconduct, conflict of interest (...) and prevents new budgetary commitments in favour of such entities by flagging companies or individuals that have been found guilty of fraud, administrative misconduct or irregularities to the detriment of the EU budget" (emphasis added). It is clear from the title and the provisions of the Memorandum (more particularly from the "Application field" and the "Immediate measures" sections) that the EWS was thus established by the Commission in order to alert its services to cases where a beneficiary or potential beneficiary has or may have committed (serious) administrative errors or even fraud. The Commission has not suggested that this was the case with regard to the complainant.

The Ombudsman notes that it appears to emerge from the relevant rules that an entity can also be listed in the EWS if it is in serious financial difficulties or bankrupt. It is possible that an attachment order could, in certain circumstances, be an indication of such financial difficulties. The Ombudsman notes, however, that the Commission has not alleged that this was indeed the reason for its decision to list the complainant in the EWS. On the contrary, it is clear that this listing was made automatically upon receipt of the attachment order without any examination as to whether the complainant encountered serious financial difficulties.

It is true that paragraph (5)(c) of the Memorandum provides for the listing in the EWS of entities that "are known to be the subject of a judicial action with this regard" (emphasis added). The Ombudsman considers it obvious, however, that this does not mean that an entity should be listed in the EWS whenever it is involved in legal action. As the words "with this regard" make clear, it appears justified to assume that this legal action would have to concern allegations of serious administrative irregularities or fraud in order to be relevant. This is clearly not so in the present case.

2.19 The Ombudsman notes that the listing in the EWS had negative consequences for the complainant. The Commission itself acknowledged that, as a result of the initial listing, all payments due to the complainant were suspended. The Ombudsman notes that the complainant alleged that, even after the Commission had lifted the suspension of all payments other than the amount of EUR 50 000 that remained blocked, it encountered problems and delays as regards the payments of amounts due to it. The complainant mentioned that, as regards payment, it still encountered problems with certain Commission departments in April 2004, that is, long after the Commission had been informed in November 2003 that the attachment order had been limited to EUR 50 000. Although the Commission seems to deny that these problems were related to the complainant's inclusion in the EWS, the Ombudsman considers that such a link is highly probable. It should not be forgotten that the complainant's name was kept on a list that, as is obvious from the wording of the Memorandum and the text of the press release, had been established mainly with a view to warning the Commission's services of entities suspected of serious irregularities or fraud. The Ombudsman therefore considers that the complainant's view that its inclusion in the EWS had a detrimental effect on it, for instance by making it more difficult for it to obtain new contracts with the Commission, is highly credible. As a matter of fact, the listing in the EWS must be presumed negatively to have affected the complainant's reputation. In this regard, the Ombudsman would like to recall that, in his draft recommendation in case 1351/2000/ADB(18), he noted that, although the Commission stated that this was not the case, some Commission officials appear to consider the EWS in fact as a blacklist. The comments of certain unnamed Commission officials reported by the complainant would, even though the complainant has not provided any more concrete indications in this context, appear to suggest that this is still the case even today.

2.20 In view of these additional negative effects, difficult to establish and to evaluate though they may be, the Ombudsman considers that it could be argued that the listing of the complainant in the EWS was unfair from the very beginning. As a matter of fact, if all the Commission wanted to do was to suspend all payments in order to comply with the preventive attachment order issued by the Luxembourg court, it could easily have done so by giving the necessary instructions to its services without any need to list the complainant in the EWS.

2.21 However, it appears that there is no need to reach a final conclusion on this issue, given that it is clear, in the Ombudsman's view, that the listing in any event became unfair once the Commission had been informed on 4 November 2003 that the attachment order had been limited to EUR 50 000. As the Commission itself has explained, all that complying with the attachment order required of it from that moment onwards was to ensure that a payment of that order due to the complainant was blocked. The Commission did so by instructing the JRC to suspend a payment amounting to EUR 50 000. At that moment, there was thus no longer any need to keep the complainant on the EWS and no justification for doing so either.

2.22 The Ombudsman considers that the Commission itself seems to accept this, without however drawing the necessary conclusions. More particularly, the Ombudsman notes that, in its opinion, the Commission indicated that once it had been informed that the attachment order had been limited to EUR 50 000, it had been able to release all payments to the complainant with the exception of the above amount, and that one particular service (the JRC) had been requested by the Accounting Officer to block this amount. It appears therefore from the Commission's own opinion that, after that moment, there was clearly no need anymore to maintain the listing of the complainant in the EWS.

2.23 On the basis of the above considerations, the Ombudsman's conclusion is that, once the attachment order had been limited to EUR 50 000, it was unfair for the Commission to maintain the listing of the complainant in the EWS. The Commission's decision to maintain this listing thus constitutes an instance of maladministration and the Ombudsman therefore makes the critical remark below.

2.24 The Ombudsman takes note of the other parts of the allegation, namely, that the decision to list the complainant in the EWS was illegal/unfounded, infringed the European Code of Good Administrative Behaviour as well as the complainant's rights of defence, and was taken on the basis of a procedure which had not been made public. In light of his finding of maladministration with regard to the allegation of unfairness, and in view of the fact that an own-initiative inquiry may be undertaken at some future stage with regard to the working of the EWS in general, the Ombudsman considers that there is no need to examine these other parts of the allegation. In any event, the Ombudsman notes that the Commission's decision to keep the complainant listed in the EWS was also not proportionate to the aim it intended to pursue, since the Commission, further to the communication in November 2003 that the attachment order had been limited to EUR 50 000, had immediately blocked the said amount. The Commission had therefore already taken all the measures needed to execute the attachment order received.

3 The allegedly unauthorised transmission of personal data to third persons

3.1 The complainant alleged that the Commission transmitted its personal data to unauthorised individuals or legal entities co-operating with the complainant and thereby infringed Article 21 of the European Code of Good Administrative Behaviour.

3.2 In its opinion, the Commission stated that there was no evidence of an infringement of Article 21 of the European Code of Good Administrative Behaviour by the transmission of personal data of the complainant to unauthorised individuals co-operating with the complainant.

3.3 The Ombudsman notes that the complainant is a legal person and that data concerning legal persons are not "personal data" in the sense of Regulation 45/2001(19). Anyway, the Ombudsman notes that, in its complaint, the complainant merely set out its allegation, without however substantiating it with facts or supporting elements. The Ombudsman further notes that, in its observations on the Commission's opinion, the complainant did not further substantiate its allegation, or comment on the Commission's opinion rejecting it. The Ombudsman therefore concludes that the complainant has not established its allegation that the Commission infringed Article 21 of the European Code of Good Administrative Behaviour. No instance of maladministration is thus found with regard to this aspect of the case.

4 The complainant's claims

4.1 In its complaint, the complainant claimed that the Commission should (i) remove it from the EWS and (ii) circulate an explanatory letter to all Commission services to restore its reputation.

4.2 In its opinion, the Commission stated, with regard to the first claim, that the complainant was immediately removed from the EWS on 12 October 2004, when it had formally been informed by the subcontractor's lawyer that the attachment order had been lifted. Following receipt of this communication, the Commission was also informed that the suspended amount could be freed as from that day.

With regard to the second claim, the Commission stated that there was no need for any supplementary information to be provided to its services.

4.3 In its observations, the complainant stated that, in order to be removed from the EWS, it was forced to accept a compromise with its subcontractor.

4.4 The Ombudsman notes that, as regards the complainant's first claim to be removed from the EWS, it appears from the Commission's opinion that the complainant was removed from the EWS after the Commission received the information from the subcontractor's lawyer, on 12 October 2004, that the attachment order had been lifted by the District Court of Luxembourg. It further appears that the amount of EUR 50 000 was also freed on that day. Therefore, no further inquiries as regards this claim are necessary.

4.5 As regards the complainant's second claim that the Commission should circulate an explanatory letter to all Commission services to restore the complainant's reputation, the Ombudsman notes from the documents in the file that the complainant had already made this request earlier, namely, in its letter of 20 November 2003 addressed to the Accounting Officer. However, the Officer rejected this request. More particularly, in his reply of 28 November 2003, the Accounting Officer stated that

"I do not dispose of any element which could lead me to the conclusion that it would be necessary to issue any message whatsoever to the EC's operational departments on the impact that this attachment order should have had on the reputation of your company"(20).

The Ombudsman notes that, in its opinion on the complaint, the Commission again denied that there was a need to send supplementary information to its services, as requested by the complainant.

4.6 The Ombudsman notes that the complainant's claim was made at a moment when the complainant was still listed in the EWS. The complainant has since been removed from the EWS, namely, in October 2004. However, given that the complainant appears to have frequent contacts with the Commission and that the listing lasted for more than a year, it can be presumed that the listing in the EWS came to the attention of many of the complainant's interlocutors within the Commission. Given the doubts that at least some of these officials appear to entertain as regards the significance of such a listing (see point 2.19 above), it cannot be excluded that the listing may have raised questions with respect to the complainant's reliability. In these circumstances, circulating an explanatory letter could still appear to be useful for the complainant even today.

4.7 The Ombudsman therefore takes the view that the second claim is justified. He notes, however, that the complainant has rejected his suggestion to make a proposal for a friendly solution which would have consisted precisely in inviting the Commission to consider circulating an explanatory note to its services with a view to repairing any damage to the complainant's reputation that might still persist within the Commission. It therefore appears that the complainant no longer wishes to pursue the relevant claim originally made in its complaint of 10 August 2004. No further action with regard to this aspect of the case therefore appears to be necessary.

5 Conclusion

On the basis of the Ombudsman's inquiries into this complaint, it is necessary to make the following critical remark:

Principles of good administration require that the institutions should act fairly(21). In the present case, the Commission maintained the listing of the complainant on its EWS even after the attachment order that had led it to make this listing had been limited to EUR 50 000 and after the Commission had instructed one of its services to block the payment of this sum. The Commission's decision to maintain this listing beyond that date was unfair. This constitutes an instance of maladministration.

On 7 September 2007, the Ombudsman's Office contacted the complainant in order to explore the possibility of a friendly solution between the complainant and the Commission. However, on 10 September 2007 the complainant informed the Ombudsman that it did not wish to pursue a friendly settlement of the matter and that it was looking forward to the Ombudsman's decision. In these circumstances, it was not possible for the Ombudsman to try to bring about a friendly solution. The Ombudsman therefore closes the case.

The President of the Commission will also be informed of this decision.

Yours sincerely,

 

P. Nikiforos DIAMANDOUROS

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(1) "Saisie-arrêt" in French.

(2) The complainant referred in particular to Articles 4 (lawfulness), 6 (proportionality), 7 (absence of abuse of power), 8 (impartiality and independence), 11 (fairness) and 12 (courtesy).

(3) Article 21 of the European Code of Good Administrative Behaviour concerns the protection of personal data.

(4) Article 563: "Dans les huit jours de la saisie-arrêt, le saississant sera tenu de la dénoncer au débiteur saisi et de l'assigner en validité".

(5) The document which the Ombudsman's representatives inspected was the French version: "Communication de M. le Président, Mme Gradin et M. Liikanen du 30 juillet 1997 'Système d'alerte précoce en matière d'erreurs administratives ou de fraudes par les organisations ou entreprises bénéficiant de fonds communautaires'".

(6) The document which the Ombudsman's representatives inspected was the French version: "Communication (SEC(00)1811/4 de Mme Schreyer du 31 octobre 2000: 'Optimisation du système d'alerte précoce: Action 95 de la réforme administrative'".

(7) In its initial opinion, the Commission referred to this document as the Commission's "Memorandum".

(8) See Article 25 of the Decision, which can be consulted on the Commission's website (http://ec.europa.eu/budget/documents/implement_control_en.htm), under "Early Warning System". The version which is published on the Commission's website was last modified by the 2007 internal rules.

(9) "Saisie-arrêt" in French.

(10) The complainant referred in particular to Articles 4 (lawfulness), 6 (proportionality), 7 (absence of abuse of power), 8 (impartiality and independence), 11 (fairness) and 12 (courtesy).

(11) However, for a part of the debts, the Commission invoked Article 1 of the PPI which provides that "the properties and assets of the Communities shall not be the subject of any administrative or legal measure of constraint without the authorisation of the Court of Justice".

(12) This is the predecessor of OLAF, the European Anti-Fraud Office.

(13) The French version reads: "sont connus pour faire l'objet d'une action en justice à cet égard".

(14) The Memorandum mentions that debates took place in Parliament on the subject (paragraph 4).

(15) The complainant referred in particular to Articles 4 (lawfulness), 6 (proportionality), 7 (absence of abuse of power), 8 (impartiality and independence), 11 (fairness) and 12 (courtesy).

(16) See Article 11 of the European Code of Good Administrative Behaviour, which is available on the Ombudsman's website (http://www.ombudsman.europa.eu/code/en/default.htm).

(17) Press release IP/04/143 "Commission reinforces its early warning system on recipients of EU money in order to better protect its financial interests", which is available on the Europa website (http://europa.eu.int/rapid) under "Optional Search Criteria/Reference".

(18) This draft recommendation is available on the Ombudsman's website (http://www.euro-ombudsman.eu.int/recommen/en/001351.htm).

(19) Article 2(a) of Regulation 45/2001 provides "that 'personal data' shall mean any information relating to an identified or identifiable natural person hereinafter referred to as 'data subject'; an identifiable person is one who can be identified, directly or indirectly, in particular by reference to an identification number or to one or more factors specific to his or her physical, physiological, mental, economic, cultural or social identity" (emphasis added).

(20) The letter continued as follows: "I invite you to discuss the quality of those relations directly with those departments. The Accounting Officer of the Commission is not competent to evaluate these matters".

(21) See Article 11 of the European Code of Good Administrative Behaviour, which is available on the Ombudsman's website (http://www.ombudsman.europa.eu/code/en/default.htm).