Dear Mr T.,

On 28 June 2000 you submitted, on behalf of Nutrinveste Comércio International, S.A., a complaint against the European Commission concerning the latter's handling of a contract for the supply of sunflower oil to Angola.

On 11 July 2000, I forwarded the complaint to the Commission for its comments.

The Commission sent its opinion on your complaint on 20 November 2000. I forwarded the Commission's opinion to you on 24 November 2000 with an invitation to make observations, if you so wished. On 19 December 2000, you sent me your observations on the Commission's opinion.

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

THE COMPLAINT

In January 1998, the complainant, a Portuguese company, entered into a contract for the supply of 1 800 metric tonnes of sunflower oil to Angola in the context of an EU food aid action. The materials had to be delivered to warehouses in Angola. To control the execution of the contract, the Commission nominated a company called Socotec as surveyor. Payment of the contract sum by the Commission was dependent on the presentation of a supply certificate issued by Socotec. According to the complainant, Socotec has to be considered as the Commission's representative or agent. To cover the risks of losses, the complainant had to take out an insurance.

The certificate subsequently issued by Socotec mentioned a shortage of 8 069 cartons of 12 litres (i.e., 97 068 bottles containing 1 litre each) equivalent to € 83 820 which the Commission therefore refused to pay. The Commission furthermore imposed a penalty of € 7 916 on account of the shortage.

The complainant claimed that it had sent all the quantities provided for by the contract. In this context, the complainant pointed out that it had received delivery bills issued by its freight forwarder in Angola and duly signed by "receiver's employers" in Luanda (where one of the warehouses was situated). The complainant furthermore claimed that the control carried out by Socotec had been defective. According to the complainant, Socotec only informed it of the shortages on 5 May 1998 (whereas delivery of the relevant containers had taken place by 5 April) and 19 May 1998 (whereas the bulk of the containers concerned had been delivered during April and the small remainder by 14 May). This meant that the insurance company was not able to investigate the causes of the shortage. As a result, the insurance company only accepted to pay an amount of € 30 510 on account of cartons missing in some containers that had been reported by Socotec as having been violated during transport. The complainant alleged that both Socotec and the EU's delegation in Luanda had been aware of the fact that it was crucial for Socotec to inform the complainant immediately.

The complainant claimed that the Commission should pay the amount still due, i.e. € 53 310, and reimburse the penalty it had been asked to pay. It further complained that the Commission had never explained in writing its reasons for refusing to pay, despite various reminders from the complainant.

In its complaint to the Ombudsman, the complainant made the following claims:

1) The Commission should pay to it an amount of € 61 226 that was still outstanding on account of a contract for the supply of sunflower oil to Angola.

2) The Commission had failed to explain in writing the reasons why it refused to pay the relevant amount.

THE INQUIRY

The Commission's opinion

In its opinion, the Commission made the following comments:

The question of whether or not and on what grounds the Commission effectively owed the complainant payment for any quantity of sunflower oil that was never delivered to the beneficiaries under the contract had eventually to be discussed and decided in the proper courts of law. The Commission therefore restricted its comments to the question of maladministration attributable to any of its services.

Socotec had controlled the shipments on arrival and had attested a shortage of some 102,5 tons that had either been damaged or lost during transport or had not been shipped in the first place. The complainant had been paid the full contract price for the supplies that had been delivered, minus a small contract penalty for late and incomplete delivery.

Socotec had been selected and paid for its services by the Commission but acted as an independent service provider that transacted business under its own professional responsibility and liability. Eventual errors and omissions of this company in the discharge of its duties were not attributable as administrative misconduct to the Commission.

The Commission's reaction to the complainant's claim for full payment formed the subject of an intensive correspondence between the parties. The Commission's point of view had also been discussed with the complainant's representative at a meeting on 25 November 1999 and had been confirmed in a fax dated 12 May 2000.

The complainant’s observations

In its observations on the Commission's opinion, the complainant took the view that even if Socotec was to act independently under the terms of its contract with the Commission, it still had the obligation to fulfil its obligations as a surveyor. According to the complainant, the Commission entirely disregarded the fact that Socotec had failed to do so. The complainant also insisted that the Commission had never communicated in writing its position and the reasons for refusing to pay.

THE DECISION

1 Failure to pay an amount of € 61 226

1.1 The complainant, a Portuguese company, entered into a contract for the supply of 1 800 metric tonnes of sunflower oil to Angola in the context of an EU food aid action. The materials had to be delivered to warehouses in Angola. Payment of the contract sum by the Commission was dependent on the presentation of a supply certificate issued by Socotec, a surveyor nominated by the Commission. After Socotec had reported that there had been shortages, the Commission paid the complainant only for the quantities that had been delivered according to the surveyor's certificate, minus a penalty on account of the shortage. According to the complainant, Socotec informed it too late of the shortages, which meant that the complainant's insurance only paid for part of the shortage. The complainant claims that the Commission should pay it for the remainder of the shortage (€ 53 310) and reimburse the penalty that it had paid (€ 7 916).

1.2 The Commission claims that Socotec had been selected and paid for its services by the Commission but acted as an independent service provider that transacted business under its own professional responsibility and liability. Eventual errors and omissions of this company in the discharge of its duties were thus not attributable as administrative misconduct to the Commission.

1.3 The present allegation essentially concerns the obligations arising under a contract concluded between the Commission and the complainant.

1.4 According to Article 195 of the EC Treaty, the European Ombudsman is empowered to receive complaints "concerning instances of maladministration in the activities of the Community institutions or bodies". The Ombudsman considers that maladministration occurs when a public body fails to act in accordance with a rule or principle binding upon it(1). Maladministration may thus, contrary to what the Commission appears to believe, also be found when the fulfilment of obligations arising from contracts concluded by the institutions or bodies of the Communities is concerned.

1.5 However, the Ombudsman considers that the scope of the review that he can carry out in such cases is necessarily limited. In particular, the Ombudsman is of the view that he should not seek to determine whether there has been a breach of contract by either party, if the matter is in dispute. This question could be dealt with effectively only by a court of competent jurisdiction, which would have the possibility to hear the arguments of the parties concerning the relevant national law and to evaluate conflicting evidence on any disputed issues of fact.

1.6 The Ombudsman therefore takes the view that in cases concerning contractual disputes it is justified to limit his inquiry to examining whether the Community institution or body has provided him with a coherent and reasonable account of the legal basis for its actions and why it believes that its view of the contractual position is justified. If that is the case, the Ombudsman will conclude that his inquiry has not revealed an instance of maladministration. This conclusion will not affect the right of the parties to have their contractual dispute examined and authoritatively settled by a court of competent jurisdiction.

1.7 In the present case, the complainant argues that the surveyor appointed by the Commission failed to inform it in good time that there were shortages. However, the Commission takes the view that Socotec was an independent service provider that transacted business under its own professional responsibility and liability and that eventual errors and omissions on its part could not be attributed to the Commission.

1.8 The Ombudsman considers that the position taken by the Commission does not appear to be without merit.

1.9 In these circumstances, the Ombudsman is unable to establish an instance maladministration on the part of the Commission in so far as the first allegation is concerned.

2 Failure to provide explanations in writing

2.1 The complainant claims that the Commission failed to communicate its position and the reasons for refusing to pay in writing.

2.2 The Commission refers to the correspondence in relation to the complainant's claims. It also takes the view that its point of view had been discussed with the complainant's representative at a meeting on 25 November 1999 and had been confirmed in a fax dated 12 May 2000.

2.3 The Ombudsman notes that among the various documents submitted to him by the Commission there are only four letters sent by the latter to the complainant. The first of these (dated 22 October 1998) is a holding letter. The second (dated 1 March 1999) briefly sets out the position taken by Socotec and requests the complainant to contact this company. The third one (dated 29 June 1999) is again a holding letter. The last letter of 12 May 2000 purports to be the Commission's answer to the complainant's letter of 8 May 2000 in which it asked to be sent the Commission's "written and final position". In its letter, the Commission limits itself to stating that the Commission's position had already been given at the meeting on 25 November 1999.

2.4 The Ombudsman concludes that despite various requests by the complainant, the Commission failed to provide a written account of the reasons why it rejected the complainant's claims. The Commission has given no explanations for this omission.

2.5 It is good administrative practice for the administration to provide written explanations where a citizen or company so requests. The Commission's failure to provide such explanations in writing in the present case thus constitutes an instance of maladministration. The Ombudsman therefore considers it necessary to make a critical remark in this regard.

3 Conclusion

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

It is good administrative practice for the administration to provide written explanations where a citizen or company so requests. The Commission's failure to provide such explanations in writing in the present case thus constitutes an instance of maladministration.

Given that this aspect of the case concerns procedures relating to specific events in the past and that the Commission has provided written explanations in its opinion, it is not appropriate to pursue a friendly settlement of the matter. The Ombudsman therefore closes the case.

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

Yours sincerely,

 

Jacob SÖDERMAN

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(1) See Annual Report 1997, pages 22 sequ.