CEDH · PRESS;CHAMBERJUDGMENTS;ENG — 11 février 2010

.s800EAC49 { font-size:12pt } .s598389F8 { margin-top:0pt; margin-bottom:0pt; text-align:center; font-size:11pt } .s29100277 { font-family:Arial; font-weight:bold } .sA678F94A { margin-top:0pt; margin-bottom:0pt; text-align:right; font-size:11pt } .s7ED160F0 { text-decoration:none } .s2F5E426D { font-family:Arial; font-size:6pt; font-weight:bold; vertical-align:super; color:#0069d6 } .s4DDA3AA3 { font-family:Arial; font-weight:bold; font-style:italic } .sA36B60A1 { font-family:Arial; font-style:italic } .sBB9EE52A { font-family:Arial } .s2E932ED2 { margin-top:0pt; margin-bottom:0pt; font-size:11pt } .s99A63BFE { margin-top:0pt; margin-bottom:0pt; text-align:left; font-size:11pt } .s32563E28 { margin-top:0pt; margin-bottom:0pt } .s4BAE41EE { font-family:Arial; font-size:11pt } .sBACB3E60 { font-family:Arial; font-size:11pt; text-decoration:underline; color:#800080 } .s9FE28126 { margin-top:0pt; margin-right:42.5pt; margin-bottom:0pt; text-align:left; font-size:11pt } .sC7EAD8B { font-family:Arial; font-weight:bold; text-decoration:underline } .sF6A12959 { width:33%; height:1px; text-align:left } .s2EB42ED2 { margin-top:0pt; margin-bottom:0pt; font-size:10pt } .s653E6C45 { font-family:Arial; font-size:6.67pt; vertical-align:super; color:#0069d6 } .sB853CD26 { font-family:Arial; font-size:8pt }   110 11.02.2010   Press release issued by the Registrar   Chamber judgment [1] Sud Parisienne de Construction v. France (application no. 33704/04)     RETROSPECTIVE ADJUSTMENT OF THE DEFAULT INTEREST RATE FOR PUBLIC PROCUREMENT CONTRACTS DID NOT BREACH A COMPANY’S RIGHT TO PEACEFUL ENJOYMENT OF ITS POSSESSIONS   No violation of Article 1 of Protocol No. 1 (protection of property) of the European Convention on Human Rights     Principal facts   The applicant, Sud Parisienne de Construction, is a company incorporated under French law with its registered office in Mandres-les-Roses (France). In 1986 it took part as a subcontractor in construction work on the Robert Debré Hospital in Paris. Its involvement   had previously been approved in an agreement concluded between Assistance Publique-Hôpitaux de Paris (APHP) and the main building contractor. The agreement also provided that if the administrative authorities delayed payment for the work performed, default interest would be payable at a rate of 17% (2.5% above the “interest rate for secured bonds”, set at 14.5%).   In October 1987 the subcontract was terminated. In accordance with the Public Procurement Contracts Code, Sud Parisienne de Construction asked APHP to pay it directly for the work it had carried out prior to the termination of the contract, corresponding to approximately 308,000 euros. APHP’s implicit rejection of that request was endorsed at first instance by the Paris Administrative Court on 19 December 1995. The Paris Administrative Court of Appeal quashed that judgment on 3 June 1997, ordering APHP to pay the applicant company directly the principal sums due and the contractual default interest (17%). On 11 October 1999 the Conseil d’Etat dismissed an appeal on points of law by APHP against that decision.   During the same period, the statutory rate of default interest was reduced and standardised for all public procurement contracts (by the Budget Amendment Act of 30 December 1996 and the ministerial order of 31 May 1997), not only for future contracts but also for public procurement contracts concluded before 19 December 1993. All references to the “interest rate for secured bonds”, a rate which had not changed since 1981, were removed.   During the proceedings concerning the execution of the Administrative Court of Appeal’s judgment of 3 June 1997 (ordering direct payment to the applicant company of the amount due for the work plus contractual default interest at a rate of 17%), APHP requested that the interest due to the applicant company be reduced to the new statutory level. Its request was accepted by the Paris Administrative Court of Appeal in a judgment of 21 June 2001, which was upheld on 5 July 2004 by the Conseil d’Etat . The interest due was reduced from a rate of 17% to 11.5% (the new statutory interest rate of 9.5% plus two points). The judges held that this reduction was justified by compelling public-interest grounds. The new provisions were intended to bring the interest rate for late payment in respect of public procurement contracts closer to the market rates currently applicable for short-term business funding (the "interest rate for secured bonds" having lost all economic relevance on account of the vast changes in monetary conditions and the substantial decline in inflation).     Complaints, procedure and composition of the Court   Relying on Article 1 of Protocol No. 1 and Article 6 § 1 (right to a fair hearing), the applicant company complained that the new provisions on default interest had been retrospectively applied in proceedings which had already commenced.   The application was lodged with the European Court of Human Rights on 13 September 2004.   Judgment was given by a Chamber of seven judges, composed as follows:   Peer Lorenzen (Denmark), President , Renate Jaeger (Germany), Jean-Paul Costa (France), Karel Jungwiert (Czech Republic), Isabelle Berro-Lefèvre (Monaco), Mirjana Lazarova Trajkovska (“the former Yugoslav Republic of Macedonia”), Zdravka Kalaydjieva (Bulgaria), judges ,   and also Claudia Westerdiek, Section Registrar.     Decision of the Court   The Court noted firstly that the applicant company did not dispute the validity of the law in question for future cases. It further observed that the interference with the company’s right to payment of a debt (the contractual default interest) had been “in the public interest”.   The fact nevertheless remained that the rate of default interest had been set with retrospective effect. As the Court observed, it had held in a number of cases that the passing of legislation with retrospective effect was contrary to the Convention where such interference had the effect of resolving the substantive issue in dispute before the national courts, thus making it pointless to carry on with the litigation.   The Court considered, however, that the present case did not concern a situation of that kind. The legislative provision in question had not undermined the applicant company’s right to compensation for the loss sustained as a result of the delayed payment but had simply rectified, at a rate reasonably linked to inflation, a deviation resulting from the change in monetary conditions.   The new legislative provision had had the sole effect for the applicant company of determining the default interest payable to it at a rate reflecting the actual costs it had borne as a result of the delay in payment, without allowing it to benefit unduly from the very high rate of inflation that had existed at the time when it should have received payment of the principal sum (the inflation rate having decreased considerably between that date and the date on which it had been paid the principal sum together with default interest).   The measure in question had therefore not impaired the very essence of the applicant company’s right of property. The interference with its possessions had been proportionate and had not upset the fair balance between the demands of the general interest and the requirements of the protection of the individual’s fundamental rights.   The Court concluded unanimously that there had been no violation of Article 1 of Protocol No. 1. The complaint under Article 6 § 1 was not examined separately by the Court since it was largely the same as the complaint under Article 1 of Protocol No. 1.   *** The judgment is available only in French. This press release is a document produced by the Registry. It does not bind the Court. The judgments are available on its   website ( http://www.echr.coe.int ).     Press contacts Frédéric Dolt (tel: + 33 (0)3 90 21 53 39) or Stefano Piedimonte (tel: + 33 (0)3 90 21 42 04) Tracey Turner-Tretz (tel: + 33 (0)3 88 41 35 30) Kristina Pencheva-Malinowski (tel: + 33 (0)3 88 41 35 70) Céline Menu-Lange (tel: + 33 (0)3 90 21 58 77) Nina Salomon (tel: + 33 (0)3 90 21 49 79)   The European Court of Human Rights was set up in Strasbourg by the Council of Europe Member States in 1959 to deal with alleged violations of the 1950 European Convention on Human Rights. [1] Under Article 43 of the Convention, within three months from the date of a Chamber judgment, any party to the case may, in exceptional cases, request that the case be referred to the 17 ‑ member Grand Chamber of the Court. In that event, a panel of five judges considers whether the case raises a serious question affecting the interpretation or application of the Convention or its protocols, or a serious issue of general importance, in which case the Grand Chamber will deliver a final judgment. If no such question or issue arises, the panel will reject the request, at which point the judgment becomes final. Otherwise Chamber judgments become final on the expiry of the three-month period or earlier if the parties declare that they do not intend to make a request to refer.