Introduction
The distinction between the public and the private law shapes the summa divisio1 of particular European legal orders. The Greek Legislator recognizes this distinction and diachronically includes rules that regulate either the public sphere or the relationships between private actors. Nonetheless, sometimes the distinction between public and private law can be somewhat cloudy. Public procurement field is no exception.
Public procurement in the Greek legal framework is, in principle, governed by legislation specific to its category, which are mostly rules of public law – most correctly, public order rules. However, in the event that disputes arising from the contract are not resolved administratively in the context of filing an appeal before the relevant independent authority2, then the Administrative Court of Appeal has jurisdiction according to the Law 4412/20163. During judicial settlement, certain provisions of private-civil law are also applied, as far as necessary, mostly in a corrective manner and under the light of public interest.
The most common cases of application of CC provisions to public contracts concern the bona fide and fair dealing performance of contracts (Articles 200, 288, 388), negotiation liability (Articles 197 and 198) and unjust enrichment (Articles 904 et seq.).
In the following paragraphs we will provide a presentation on the fine lines of the relationship between the civil law and the public procurement law- a coexistence that we will argue that maybe seems paradox but still is unavoidable. It is notable that CC general clauses like the above mentioned can only be used only if there is no other form of protection established by the law4.
The application of bona fide and fair dealing
In Greek administrative law, any unforeseen difficulties at the stage of performance of a public contract are addressed using the general principles of good faith and equity, as expressed by law in Articles 200, 288 and 388 of the CC. A prerequisite for the application of these provisions is that in these particular cases no other protection is provided by law for the parties in the performance of their obligations. As mentioned, these provisions are complementary to the agreed clauses, but also corrigendum to them.
Thus, contractual clauses are not invoked in order to automatically exclude the application of those provisions of the CC, but in order to determine whether, in the light of what has been agreed, further unforeseeable circumstances have arisen which justify the court’s corrective intervention5.
Articles 388, 200 and 288 are usually used together in the legal reasoning of the courts applying to the refugium of the civil law. According to the provision of Article 3886 of the CC, if, taking into account good faith and fair dealing, the facts which formed the basis of the conclusion of an administrative contract have changed after its conclusion by extraordinary and unforeseeable reasons, and due to the existence of those reasons the performance of the service, also in view of the consideration, has become excessively burdensome, the court may make the performance to the appropriate measure by way of deviation from what has been agreed, or decide to terminate the contract in whole or in so far as it has not yet been performed. It is worth mentioned that article 388 is often being used as a vehicle for the court to terminate the contract by judicial means.
Moreover, in accordance with Articles 2007 and 2888 CC (sometimes read in conjunto with Article 173 of the CC), the competent court may intervene in corrective matters to the contract and determine, even by means of derogation from what has been agreed, a contractual outcome that is required by good faith and fair dealing,
According to the relevant case law, there are two basic conditions for the application of the above provisions:
a) the existence of unforeseen circumstances, otherwise exceptional and unforeseeable (external to the parties, unforeseeable), subsequent to the conclusion of the contract9 and
b) the excessively onerous burden on one of the parties (to an extent exceeding the risk that could be assumed on the basis of good faith and business ethics)10.
The most frequent cases in which the application of the above provisions arises are the case of execution of new works in a public works, the fixing of new prices for new works, the revision of prices, the forfeiture of a letter of guarantee etc11.
Most characteristic cases
To start with, even the Public Procurement Law (L.4412/2016) demands that the Civil Code general clauses are to be used complementarily when judging upon relevant issues. In this sense, the Court of Auditors held that the competent court may intervene by way of a remedy, even in derogation from what has been agreed, where this is required by good faith and the circumstances of the case, and good faith and fair dealing12.
Nevertheless, the case law is quite strict as regards the application of the principle of good faith, in particular because of the existence of specific provisions, but also of explicit contractual terms regulating these issues. Public procurement law is mostly governed by public order rules and by the relevant of administrative nature rules, in the sense that the civil law clauses are being used by the Court in a more or less reluctant way.
On this manner, the Council of State held that the contractor’s claim for compensation for changes unilaterally made to the terms of execution of the project, without complying with the relevant conditions, cannot be based on the provisions of Article 288 of the CC given that the modification of essential terms of the contract during the stage of its performance would have the consequence, in violation of the principle of equal treatment of tenderers, of an impermissible ex post reversal of the terms on the basis of which competition was developed and the tenderers submitted their offers13.
Similarly, the issue of approval of RES, which included urgent additional works, was judged as being regulated under the scope and by the provisions of the relevant substantive laws and accordingly that did not leave the scope of application of the provisions of Articles 200 and 288 CC14.
On the other side, according to CoS15, provisions referring to a revision of the prices may be interpreted with supplementary application of the general principles of Articles 200 and 288 of the CC, as the purpose of the review is better served, in order not only to protect the contracting parties but also the public interest.
Another lenient form of application of good faith can be found in the judgment 5291/2015 of the same Court, by which it was held that the “additional works” required during the execution of the contract for the reconstruction of vehicles of the army were carried out in good faith by the applicant, while the execution of those had also been agreed by the Hellenic General Staff with positive actions, therefore payment was due16.
It is worth mentioned that a very typical case of application of the above mentioned general civil law clauses is the uprising of the prices included in the contract due to the inflation17. Another instance that Courts usually accept the application of these clauses, especially 388 CC, is the case of currency devaluation18.
Responsibility arising from negotiations
According to Articles 197 and 198 of the CC, in the negotiations for the conclusion of a contract, the parties must mutually behave in accordance with good faith and fair dealing. Followingly, whoever during the negotiations of the contract culpably causes damage to the other party is obliged to compensate for it, in order to remedy the damage, even if the contract has not yet been concluded19.
As it follows, in the case of the drawing up of a valid contract, the liability referred to above, which, although arising from the law, has in substance as foundation the contract per se, consists in compensation for the damage caused by culpable conduct contrary to the good faith and fair dealing at the stage of negotiations for the conclusion of the contract.
CoS early held that articles 197 and 198 express general principles of law and that should analogically be applied also on the field of public contracts20. The only difference is that, in this case, the application of those clauses will happen take place under the light of public interest21.
Prerequisite in order for this form of liability to be established is that the result of the conduct on stake is that the one or the other party was deceived as to the real causes of his will. The above kind of liability usually arises in cases of errors and inaccuracies of a public works design or discrepancies between the contract documents with the prerequisite that the specific inaccuracy influenced and shaped the productive causes of the tenderers’ will. A very characteristic case is the inaccuracy of the budget of the contract which appears after the signing of it22.
Unjust enrichment
Any infringement of rules originating by the law or the administrative procedure of a public contract shall result in defects affecting the validity of the contract. In these cases, when the private policyholder, despite having fulfilled his obligation, cannot satisfy his claims under the contract, due to its invalidity, the claim for unjust enrichment acts as a safeguard (Articles 90423 et seq. CC).
Αccording to Article 904 para. 1 CC “whoever became richer without from the property or at the expense of another has the obligation to return the benefit. This obligation arises in particular in the case of a benefit in vain or a benefit for a cause which did not follow or which has expired, or an unlawful or immoral cause’. According to Article 908(a) of the same Code, ‘the recipient must return the thing received or the consideration received, if any’.
It is important to mention that an action for unjust enrichment is conditional on the invalidity of the contract. Usually, a claim for unjust enrichment is raised in an ancillary action under a public contract (e.g. a lawsuit for payment of invoices issued under a supply contract with the State, local authorities, or public legal entities, or for the payment of approved public works bills). A usual judicial end on such cases is that the suit is rejected on the ground that there is no void contract24.
A very common case of usage of the 904 articles concerns construction contracts for public works. As it follows from the provisions of the law25, when the need arises to carry out additional works, which are necessary due to unforeseen circumstances, a contract shall be concluded with the contractor of the project. However, it is provided that the total amount of the total amount of such additional works may not exceed 50 % of the amount of the original contract. If it is agreed to carry out a larger than the agreed percentage, the contract in question is prohibited by law and therefore invalid, and if more than the permitted amount is exceeded of the original project cost, the contractor proceeds with the additional work, he is not entitled to receive the corresponding contractual consideration. It has been argued that the contractor has the option to claim the amount corresponding to the additional works only on the basis of the principles of unjust enrichment since a supplementary contract due to the excess of 50% is considered to be a supplementary contract in itself.
Conclusion
Public procurement law is far from alien to civil law. Even in cases where the public contract is concluded between a private individual and the State or a legal entity which in principo is not governed by private but by public law, the provisions of the general principles of CC continue to play an important role on the interpretation of the validity or content of the administrative contracts, vocalizing the theoretical idea that that the ‘administrative’ contract does not cease to be – in the end of the day- still a contract.
However, contracting authorities operating under the public law rules, do not enjoy the contractual freedom that a private actor does, but are subject primarily to the principle of legality. And that leads as to the assumption that even in the event that public contract is still a contract, its contractual character can be easily disputed by its public interest characteristics26.
Finally, there are opinions supporting that the intervention of the judge using the relevant Civil Code clauses would increase the solvency of the State as contracting authority. The reason for this is that the execution but also shaping of the contract wouldn’t be explicitly dependent on rigid normative clauses but on the general private law contractual clauses that would increase transparency and would treat the tenderers as equal parties of the contractual relationship27.
Footnotes:
1 Pavlopoulos, P. (1979), The historical origin of the distinction of the law in public and private law, Public and Administrative law Inspection.
2 In Greek Legal Framework the relevant authority is the Single Authority for Public Contracts (SAPC).
3 As amended by the Law 4782/2021, for the transposition of the Directives 2014/23-24-25 (EU).
4 Raikos, D. (2019), Public Procurement law.
5 Kallikaki, K., Judge of the Administrative Court of Appeal, Seminar of 15.10.2018 on the Application of Civil Law Clauses on the field of Public Contracts.
6 According to the letter of 388 CC: If the circumstances on which the parties based the conclusion of a bilateral contract, in particular in good faith and in accordance with honest practices, have subsequently changed for reasons which were exceptional and unforeseeable, and the debtor’s performance has been affected by that change, in view of the consideration, has become excessively onerous, the court may, at its discretion, at the request of the debtor, reduce it to the extent appropriate and order the termination of the contract in its entirety or of that part of the contract which has not yet been performed.
7 According to 200 CC: Contracts shall be interpreted as required in good faith, having regard to the fair dealing.
8 According to 288 CC: The debtor has an obligation to perform the provision as required in good faith, taking into account fair dealing.
9 CoS 1582/2009
10 CoS 3124/2015
11 Kallikaki, K. (2018), supra fn. 3.
12 Court of Auditors 1363/2002
13 Council of State (CoS) 749/2016
14 CoS 1597/2016
15 CoS 1093/2005
16 See for a further analysis on the relevant case law, Kallikaki, K. supra fn .3.
17 CoS 1136/1999.
18 Supreme Court 1138/1990.
19 Articles 197, 198 of the CC.
20 Cos 3233/1998.
21 Mouzouraki, P. (2006), The application of civil law clauses to the administrative contracts, Ant. Sakkoulas Publications.
22 Athens Administrative Court of Appeal, Judgment 245/1987
23 According the article 904 CC: Anyone who has become wealthy without lawful cause from the property or to the detriment of another has a duty to return the benefit. This obligation arises in particular in the case of an undue benefit or a benefit for a cause that did not follow or expire or a cause that was unlawful or immoral.
24 See Cos 1293/2013 and Kallikaki, K. (2018), supra fn. 3.
25 Law no. 1418/1984, article 8.
26 Mouzouraki, P. (2006), supra fn. 22.
27 Pelecanos, G. The public interest and the protection of the contractor through the application of the clauses of the CC in public contracts, Theory and Practice of Administrative Law Journal.