LexInter | May 7, 2014 | 0 Comments


Reading of March 30, 1916
Having regard to the summary request and the ampliative memorandum presented for the “Compagnie générale lighting de Bordeaux”, a public limited company, whose head office is in Bordeaux, rue de Condé, n ° 5, acting prosecution and due diligence of its directors and administrators in exercise, the said request and the said memorandum recorded at the litigation secretariat of the Council of State on September 1 and 29, 1915 and tending that the Council should annul an order dated July 30, 1915 by which the prefecture council of the department de la Gironde rejected its request to have it held that it is entitled to an increase in the price fixed by its concession contract for the gas supplied by it to the city and to individuals and to have the city of Bordeaux condemned to pay him compensation; Considering the law of 28 pluviôse year VIII;
On the objections of inadmissibility opposed by the city of Bordeaux: Considering that the conclusions of the applicant company tended before the prefecture council as they tend before the Council of State to have the city of Bordeaux condemned to bear the aggravation of charges resulting from the increase in the price of coal; that, therefore, as regards a difficulty relating to the execution of the contract, it is right that by application of the law of 28 pluviôse year VIII, the applicant company brought these conclusions in first instance before the prefecture council and appeal to the Council of State;
Basically: Considering that in principle the concession contract regulates in a definitive way until its expiry, the respective obligations of the concessionaire and the grantor; that the concessionaire is required to perform the service provided under the conditions specified in the treaty and is remunerated by the collection from users of the taxes stipulated therein; that the variation in the price of raw materials due to economic circumstances constitutes a market hazard which may, depending on the case be favorable or unfavorable to the concessionaire and remains at its own risk, each party being deemed to have taken this hazard into account in the calculations and forecasts it made before committing;
certainly exceeds the extreme limits of the increases that may have been envisaged by the parties when signing the concession contract; that, as a result of the combination of the above-mentioned circumstances, the economy of the contract is absolutely upset. That the company is thus founded to maintain that it can not be held to ensure only conditions envisaged at the origin, the operation of the service as long as will last the abnormal situation above recalled;
Considering that it follows from the foregoing that if the company is wrong to claim that it cannot be required to bear any increase in the price of coal beyond 28 francs per tonne, this figure having, according to it, been considered as corresponding to the maximum price of gas provided for on the market, it would be quite excessive to admit that there is reason for the pure and simple application of the specifications as if we were in the presence of a ordinary business hazard; that it is important, on the contrary, to seek, in order to put an end to temporary difficulties, a solution which takes into account at the same time the general interest, which requires the continuation of the service by the company using all its means of production,That to this end, it should be decided, on the one hand, that the company is required to provide the service conceded and, on the other hand, that it must bear only during this transitional period, the share of onerous consequences of the above-mentioned force majeure situation that the reasonable interpretation of the contract allows to be borne; that it is therefore necessary, by canceling the contested decree, to send the parties back to the prefecture council to which it will belong, if they do not manage to agree on the special conditions under which the company may continue the service, to determine, taking into account all the facts of the case, the amount of compensation to which the company is entitled by reason of the extra-contractual circumstances in which it will have to provide the service during the period considered;
DECIDES:Article 1: The aforementioned decree of the prefecture council of the Gironde department dated July 30, 1915 is canceled.Article 2: The General Company of Lighting of Bordeaux and the city of Bordeaux are referred to the Prefecture Council to proceed, if they do not agree amicably on the special conditions under which the Company will continue its service, to the fixing of the compensation to which the company is entitled by reason of the extracontractual circumstances in which it will have had to provide the service conceded.

Article 3: The city of Bordeaux is ordered to pay all the costs of first instance and appeal. Article 4: Shipping … Interior.


Analysis by the Council of State

By the decision of the General Lighting Company of Bordeaux , the Council of State identified the theory of unforeseeability, which makes it possible to ensure the durability of administrative contracts in the event of a temporary upheaval in their economy, due to events that the parties could not foresee.

The general lighting company of Bordeaux was seeking to get the city of Bordeaux to bear the additional cost resulting for it from the very strong increase in the price of coal, multiplied by five between the signing of the lighting concession and the year 1916; in fact, because of the war, most of the coal-producing regions were occupied by Germany and transport by sea had become more and more difficult. On this occasion, the Council of State ruled that in principle the concession contract definitively regulates the obligations of the concessionaire and the concessionaire and that the variation in the price of raw materials due to economic circumstances constitutes a market hazard that must be assumed by the concessionaire. However, when the economy of the contract is completely upset, as in the present case where the increase in the cost of gas production due to the price of coal exceeded the extreme limits of what could have been envisaged by the parties, the concessionaire cannot be required to ensure the operation of the service under the conditions originally planned. It was appropriate, to put an end to temporary difficulties, to seek a solution which takes into account the general interest, requiring the continuation of the service, but also particular circumstances. Also, the Council of State decided that the company remained bound to ensure the service but that it had the right to be compensated for the pecuniary consequences of the situation of force majeure which exceeded the normal economic hazard.

Subsequent case law specified the conditions for the application of the theory of unforeseeability. First, the events affecting the performance of the contract must be unpredictable. These may be economic circumstances, natural phenomena or measures taken by the public authorities, but in all cases they must thwart the forecasts which could reasonably have been made at the time of the conclusion of the contract. Second, they must be external to the parties; in particular, if they are due to the contracting administration, it is the theory of the act of the prince and not that of unforeseeability that will come into play. Third, they must bring about an upheaval in the economics of the contract. Certainly, they must not obstruct the execution of the contract because they would then be irresistible and would exempt the co-contracting party from its obligations; but it should not be a simple loss of earnings.

As the unforeseen is not a case of force majeure, the co-contracting party must continue to perform the contract; he would be making a mistake by interrupting his services. In return, he has the right to be compensated, if not all, at least most of the extra-contractual charge, that is to say the amount of the deficit caused by the performance of the contract during the period. during which there was upheaval by unforeseeable circumstances. Two scenarios can then occur: either the contractual balance is reestablished, by the disappearance of unforeseeable circumstances or due to new arrangements between the parties, or the disruption of the economy of the contract turns out to be final, and the unforeseen event then turns into a case of force majeure justifying the termination of the contract. It is interesting to note that the theory of unforeseeability has led the administration and its co-contracting parties to introduce revision clauses into their contracts which allow adaptation to changes in the economic and financial situation, thus giving a subsidiary character to the game of unpredictability.

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