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12 Int'l Bus. Law. 382 (1984)
Interpretation of Article 132 of the LOME II Convention: Arbitration or Court Proceedings?

handle is hein.journals/ibl12 and id is 384 raw text is: .382 Arbitration I INTERPRETATION OF ARTICLE 132 OF THE LOME II CONVENTION Arbitration or Court Proceedings? LINDA S SPEDDING LL.M, Solicitor, London A THE QUESTION Difficulties of interpretation of the various language texts have arisen periodically in the development of the Community legal order, with different degrees of practical reper- cussions. Very recently, however, acute practical difficulties have arisen in the interpretation of Article 132 of the LOME H Convention, which may have major impact for, in this context, British contractors and their legal advisers regarding con- tract tenders generally. That the subject is so topical is evident in that there are several cases pending cur- rently before the Court of Justice in Luxembourg on this point. The im- plications may be analysed by refer- ring to the very recent decision in Case 126/83 Societe STS Consorzio ('the STS Judgment') that has just been rendered. The basic question to be answered is - can one, in the light of all the texts, interpret Article 132, together with the Joint Declaration - Annex XHI to the Convention, as meaning that only ICC conciliation and arbitration rules can be used to settle any dispute arising between the au- thorities of an ACP State (defined in 'C' below) (%he Employer') and any natural person, company or firm ex- ercising the occupation of contractor, supplier or provider of services ('an undertaking') on the occasion of i) the tender procedure followed by the employer, prior to the award of the contract, once the under- taking has signed and submitted its tender form, in particular when that form contains the con- dition 'unless and until a formal agreement is prepared and ex- ecuted this tender and' (the undertaking's) 'written accept- ance thereof shall constitute a binding contract between' the undertaking and the employer; ii) the award of the contract; iii) the performance of the contract? In other words, are the unsuccess- ful tenderers (as well as the success- ful one) bound to seek their remedies only by arbitration in accordance with the ICC Rules of Conciliation and Arbitration? B INFERENCES DRAWN FROM THE STS JUDGMENT Advisers and clients should take account of the inferences to be drawn. The case involved - A construction project in an ACP State - A financing agreement between the EEC and the ACP State in respect of the project - Procedure for tendering and award of contract in Title VII of LOME H Convention which lays down the various responsibilities of the Commission and the ACP State. - An unsuccessful tenderer con- testing the award of the contract by the ACP State before the Court of Justice instead of before an arbitral tribunal under Article 132 of LOME 11 or before the national courts or tribunals of the ACP State concerned. - The tenderers' arguments for bypassing arbitration and the national courts which include: i) LOME H is an integral part of the Community legal order. ii) The Commission can only re- lease finance for a project when it is satisfied that the ACP State's proposal for placing a contract fulfils the conditions laid down in LOME II. Thus it is really the Commission which, by giving or refusing approval, awards the contract and-*not the ACP State. iii) Article 132 arbitration applies only to successful tenderers who have become contracting parties. The court in paragraph 16 of its reasoning concludes that when the Commission grants or refuses approval this is only in respect of the presence or absence of the precondi- tions for Community finance. Such grant or refusal of approval is not intended to undermine, nor could it result in undermining, the principle whereby the contracts in question re- main national contracts which only the ACP States are responsible for preparing, negotiating and con- cluding. In paragraph 17 the court points out that respect for the sovereignty of the ACP States and the responsibili- ties reserved to them by LOME II prevent the Commission's agents from dealing directly, in place of the ACP States, with tenderers or under- takings awarded contracts financed by the EDF. Such action would con- stitute, in effect, an intervention in the domain reserved entirely for the authorities of these States. In paragraph 18 the court states that, for their part, tenderers or con- tractors awarded the contracts in question remain barred from the ex- clusive relationships which evolve in this subject between the Commission and the ACP States. These undertak- ings can neither be considered as the addressees of the acts or decisions of the Commission's representatives taken in the course of the procedure for the placing or the performance of the contracts, nor claim that these acts or decisions concern them direct- ly in the sense of the provision of Article 173 paragraph 2 of the EEC Treaty: AND BY IMPLICATION INTERNATIONAL BUSINESS LAWYER October 1984