Judgment of the General Court (Sixth Chamber) of 6 June 2019 — European Investment Bank v Syrian Arab Republic (Case T-591/17)

JUDGMENT OF THE GENERAL COURT (Sixth Chamber)

6 June 2019 (*)

(Arbitration clause — Water Supply Deir Ez Zor Region Loan Agreement No 80310 — Non-performance of the

agreement — Repayment of the sums advanced — Default interest — Procedure by default)

In Case T‑591/17,

European Investment Bank (EIB), represented initially by P. Chamberlain, T. Gilliams, F. Oxangoiti Briones

and J. Shirran, and subsequently by F. Oxangoiti Briones, J. Klein and J. Shirran, acting as Agents, and D. Arts,

lawyer, and T. Cusworth, Solicitor,

applicant,

v

Syrian Arab Republic,

defendant,

ACTION pursuant to Article 272 TFEU, seeking an order that the Syrian Arab Republic repay sums due under

Water Supply Deir Ez Zor Region Loan Agreement No 80310, plus default interest,

THE GENERAL COURT (Sixth Chamber),

composed of G. Berardis, President, D. Spielmann and Z. Csehi (Rapporteur), Judges,

Registrar: E. Coulon,

gives the following

Judgment

Background to the dispute

Relevant contractual provisions

1

Subsequent to the Cooperation Agreement between the European Economic Community and the Syrian

Arab Republic of 18 January 1977 (OJ 1978 L 269, p. 2) and its protocols, on 26 July 1990, the European

Economic Community, represented by the Commission of the European Communities, concluded with the

Syrian Arab Republic Water Supply Deir Ez Zor Region Loan Agreement No 80310 (‘the loan agreement’)

regarding a water supply project in the Deir Ez Zor region. Article 11.01 of the special conditions of the loan

agreement provides that it is to be governed by French law. Moreover, pursuant to Article 12.01 of the special

conditions of that agreement, the Syrian Arab Republic designated the ambassador of the Syrian Arab Republic

to the European Union in Brussels (Belgium) for any notification or communication involving a dispute.

2

By virtue of Article 1.01 of the general conditions of the loan agreement, read in conjunction with

Article 1.01 of the special conditions, and of Article 1.02 of the general conditions of that agreement, the

Community granted the Syrian Arab Republic a loan of 2 000 000 European Currency Units to be disbursed on

request. By virtue of Article 4.01 of the general conditions of that agreement, the Syrian Arab Republic was to

repay the loan in half-yearly instalments.

3

In accordance with Article 3.01 of the general conditions of the loan agreement, interest is payable on the

outstanding balance of the loan half-yearly in arrears at the nominal annual rate of 1%.

4

According to Article 3.02 of those conditions, interest is accrued on any sum that has fallen overdue at an

annual rate of 3.5%.

5

According to Articles 9.01 and 9.02 of the general conditions of the loan agreement, the Syrian Arab

Republic is to pay all taxes, fees, duties or professional costs incurred in the execution or implementation of that

agreement.

Failure of the Syrian Arab Republic to fulfil its obligations

6

Between June 2012 and June 2017, 11 instalments under the loan agreement fell due, as shown below:

Instalments

EUR 33 602.16

EUR 33 636.00

EUR 33 495.40

EUR 33 528.38

EUR 33 560.50

EUR 33 591.74

EUR 33 622.12

EUR 33 478.05

EUR 33 507.56

EUR 33 536.21

EUR 33 563.96

Due dates

1 June 2012

3 December 2012

3 June 2013

2 December 2013

2 June 2014

1 December 2014

1 June 2015

1 December 2015

1 June 2016

1 December 2016

1 June 2017

7

By means of the payment reminders of 11 June and 13 December 2012, 13 June and 12 December 2013,

12 June and 11 December 2014, 12 June and 11 December 2015, 13 June and 12 December 2016 and 23 August

2017, relating, respectively, to the due dates referred to in paragraph 5 above, the European Investment Bank

(EIB) sent notifications to the Syrian Arab Republic calling for payment of the amounts due.

Procedure and forms of order sought

8

By application lodged at the Court Registry on 30 August 2017, the EIB brought the present action.

9

The application was served on the Syrian Arab Republic, in the person of the ambassador of the Syrian

Arab Republic to the European Union in Brussels on 6 April 2018 by registered post with acknowledgement of

receipt.

10 Since the Syrian Arab Republic had not lodged a defence within the prescribed period, by document

lodged at the Court Registry on 4 July 2018, the EIB applied to the Court for judgment by default, in accordance

with Article 123(1) of the Rules of Procedure of the General Court.

11 By way of measures of organisation of procedure, as provided for in Article 89 of the Rules of Procedure,

the Court put questions in writing to the EIB, to which the latter replied on 5 December 2018.

12

The EIB claims, in essence, that the Court should:

–

declare the application admissible;

–

declare that the Syrian Arab Republic failed to fulfil its contractual obligation under the loan agreement in

so far as concerns payment of the sums and default interest on each of the due and unpaid instalments and,

consequently, order the Syrian Arab Republic to pay, in essence, the European Union, represented by the EIB,

first, the sum of EUR 404 425.58 due to the European Union on 25 August 2017 by way of the principal amount,

interest and default interest accrued between the due date and 25 August 2017 and, secondly, the default interest

accrued up to the time that payment is made;

–

declare that the Syrian Arab Republic failed to fulfil its contractual obligation under the loan agreement as

regards the payment of costs and, consequently, order the Syrian Arab Republic to pay the EIB the taxes and

duties, fees and professional costs accruing from the due date up to the time that payment is made;

–

order the Syrian Arab Republic to pay the sums due to the European Union for all instalments which fall

due after the date of the application and for which the Syrian Arab Republic remains in default of payment, by

way of the principal amount, interest and contractual default interest from the due date of each instalment up to

the time that payment is made;

–

order the Syrian Arab Republic to pay the costs.

Law

13 In accordance with Article 123(3) of the Rules of Procedure, the General Court is to give judgment in

favour of the applicant in the judgment by default, unless it is clear that the General Court has no jurisdiction to

hear and determine the action or that the action is manifestly inadmissible or manifestly lacking any foundation

in law.

The jurisdiction of the General Court

14 In accordance with Article 272 TFEU, the Court of Justice of the European Union is to have jurisdiction to

give judgment pursuant to any arbitration clause contained in a contract concluded by or on behalf of the

European Union, whether that contract be governed by public or private law. In accordance with Article 256(1)

TFEU, the General Court is to have jurisdiction to hear and determine at first instance actions referred to in

Article 272 TFEU.

15 In the present case, it must be noted that Article 11.03 of the general conditions of the loan agreement

contains an arbitration clause under which any disputes concerning that agreement are to be submitted to the

Court of Justice of the European Union.

16

The General Court therefore has jurisdiction to hear the present action.

Admissibility of the action

The second head of claim

17 By the second head of claim, the EIB seeks, first, a declaration that the Syrian Arab Republic failed to

fulfil its contractual obligations on unpaid loan instalments and default interest and, secondly, that the Syrian

Arab Republic be ordered to pay, in essence, the European Union, represented by the EIB, the sums of the

unpaid instalments, interest and default interest from the due date up to 25 August 2017 and the additional

default interest up to the time that payment is made.

18 In that regard, it must be pointed out that, in accordance with Article 1.01(c) of the Convention between

the Commission and the EIB of 17 December 1992 and with the management agreement between the European

Union and the EIB of 20 December 2012 in the framework of the Support to the Facility for Euro-Mediterranean

Investment and Partnership (FEMIP), the Commission, on behalf of the Union, instructed the EIB to initiate

recovery procedures on behalf and in the name of the Union with regard to the amounts due under the loan

agreement.

19 Moreover, it must be recalled that the EIB is an EU body established and endowed with legal personality

by the TFEU (see, to that effect, judgment of 20 September 2011, Evropaïki Dynamiki v EIB, T‑461/08,

EU:T:2011:494, paragraph 46 and the case-law cited), and that, in accordance with Article 309 TFEU, the task of

the EIB is to contribute, by having recourse to the capital market and utilising its own resources, to the balanced

and steady development of the common market in the interest of the European Union and, in accordance with

Article 209(3) TFEU, to contribute to the implementation of the measures necessary for the implementation of

EU development cooperation policy, which may relate to multiannual cooperation programmes with developing

countries. In addition, it should be noted that, in the present case, it acted within the framework of the

Cooperation Agreement between the European Economic Community and the Syrian Arab Republic of

18 January 1977 (see paragraph 1 above).

20

In those circumstances, it must be held that the second head of claim is admissible.

The third and fourth heads of claim

21 By the third head of claim, the EIB asks that the Syrian Arab Republic be ordered to pay the taxes and

duties, fees and professional costs accruing from the due date up to the time that payment is made.

22 In that regard, it must be recalled that, under Article 76(d) and (f) of the Rules of Procedure, it is for the

applicant to set out a summary of the pleas in law and, where appropriate, to submit or offer any evidence when

the application is lodged.

23 However, the EIB has not provided any evidence to enable the Court to assess the existence and extent of

the charges in question. The third head of claim is therefore inadmissible.

24 By the fourth head of claim, the EIB seeks to have the Syrian Arab Republic ordered to pay the sums due

to the European Union for all instalments which fall due after the date of the application and for which the Syrian

Arab Republic remains in default of payment, by way of the principal amount, interest and contractual default

interest from the due date of each instalment up to the time that payment is made.

25 In that regard, it must be recalled that, under Article 76(d) of the Rules of Procedure, an applicant is

required to state the subject matter of the proceedings in the application initiating proceedings. The EU Courts

cannot therefore carry out a speculative review of hypothetical circumstances which have yet to be confirmed

(see, to that effect and by analogy, judgment of 26 February 2015, Sabbagh v Council, T‑652/11, not published,

EU:T:2015:112, paragraph 27).

26 In the present case, it must be held that the head of claim in question, since it relates only to hypothetical

circumstances, is manifestly inadmissible.

Substance of the action

27 It must be held that the action, in so far as it seeks that the Syrian Arab Republic be ordered to pay the

European Union, represented by the EIB, the sums of the unpaid instalments, contractual interest and default

interest, is not manifestly lacking any foundation in law.

28 First, it is apparent from the case file that, on the basis of the loan agreement, the EIB granted the Syrian

Arab Republic a loan in several tranches and, secondly, it is not apparent from those documents that the latter has

made payments relating to the principal amount, contractual interest and default interest as regards the 11

instalments at issue, despite notices being sent by the EIB.

29 Consequently, it is necessary to uphold the form of order sought by the EIB and order the Syrian Arab

Republic to pay the European Union, represented by the EIB, the sum of EUR 404 425.58 which fell due on

25 August 2017 by way of the principal amounts, contractual interest and default interest.

30 Under Article 3(2) of the general conditions of the loan agreement, those sums are to bear default interest,

at the annual rate of 3.5%, on the principal amounts and on the contractual interest, from 25 August 2017 up to

the date of payment.

Costs

31 Under Article 134(1) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if

they have been applied for in the successful party’s pleadings. Since the Syrian Arab Republic has been largely

unsuccessful, it must be ordered to pay the costs, in accordance with the form of order sought by the EIB.

On those grounds,

THE GENERAL COURT (Sixth Chamber)

hereby:

1. Orders the Syrian Arab Republic to repay the European Union, represented by the European

Investment Bank (EIB), the sum of EUR 404 425.58;

2. Declares that that sum is to bear default interest, on the principle amounts and on the contractual

interest, at the annual rate of 3.5%, from 25 August 2017 until the date that payment is made;

3.

Dismisses the action as to the remainder;

4.

Orders the Syrian Arab Republic to pay the costs.

Berardis

Spielmann

Csehi

Delivered in open court in Luxembourg on 6 June 2019.

E. Coulon

G. Berardis

Registrar

President

*

Language of the case: English.

حكم من المحكمة العامة الأوروبية في دعوى بنك الاستثمار الأوروبي ضد الجمهورية العربية السورية لاسترداد مبالغ قرض مشروع إمداد المياه في دير الزور.