An amendment for lime at the wrong site, but the case founders on who was allowed to litigate: IGRETEC’s action inadmissible
IGRETEC challenged the annulment that the Walloon Region, exercising its supervisory power, had pronounced over an amendment by which the inter-municipal company sought to extend a lime-supply contract for Montignies-sur-Sambre to the Viesville site, but the Council of State never reached that question: because two directors rather than the board of directors had taken the decision to litigate, the action was inadmissible.
What happened?
On 8 April 2011 a contract notice appeared in the Bulletin of Awards — and on 12 April 2011 in the Official Journal of the European Union — for the supply of magnesian quicklime for the wastewater treatment plant of Montignies-sur-Sambre, intended to lime the sludge with a view to its agricultural valorisation. The procedure was an open call for tenders. At the opening of bids on 6 June 2011 there was only one tenderer, the company Lhoist, to which IGRETEC awarded the contract on 14 June 2011 for 141,390 euros per year (excl. VAT). On 20 July 2011 the supervisory minister stated that the award required no supervisory measure and had become fully enforceable. On 24 April 2012 IGRETEC’s management committee decided, via an ‘amendment no. 1 to contract no. 2011/021’, to extend the object to the Viesville site, on the ground that the dewatered sludge from the Viesville plant had obtained an agricultural-valorisation permit and had to be limed to kill pathogens. The financial impact was an increase of 18.05% in the original contract amount. The minister extended the supervisory deadline and, on 13 June 2012, annulled the decision of 24 April 2012. His reasoning: an amendment must remain within the object of the contract, and under article 7 of the Royal Decree of 26 September 1996 the authority may unilaterally modify the contract ‘provided it does not alter its object’; since Viesville is not part of the Montignies-sur-Sambre plant, the original object was exceeded and there could be no amendment; nor were the strict conditions met for a complementary supply via negotiated procedure without publication (article 17, § 2, 3°, b) of the Act of 24 December 1993), so a new contract procedure should have been launched. IGRETEC sought the annulment of that supervisory decision. Before the Council of State, however, the Walloon Region argued that the action was inadmissible: under the statutes it is the board of directors that is competent to decide to go to court, whereas the decision to bring this action had been taken by two directors, Antoine Tanzili and Philippe Knaepen (decision of 18 July 2012). IGRETEC relied on article 20 of its statutes, which it said empowered two jointly acting directors to bind the company, and referred to judgment no. 216,834 of 13 December 2011. The Council did not follow that reading: the last paragraph of article 20 provides that ‘judicial actions, both as plaintiff and as defendant, are conducted in the name of the inter-municipal company by the board of directors’, and that term necessarily covers any jurisdictional action, including an annulment action before the Council of State. It would be surprising for the drafters of the statutes to have reserved actions before the courts to the board while leaving the seising of the Council of State to the initiative of two directors. As no decision of the board was produced, it was not established that the organ with the requisite capacity had decided to bring the action. The objection was well founded and the action inadmissible. The Council rejected the action and ordered IGRETEC to pay the costs, set at 175 euros. On the merits — whether the extension to Viesville fell within the object of the original contract — it did not rule.
Why does this matter?
The judgment is a reminder that a procedural battle can be lost before the substantive debate even begins. Whoever brings an annulment action in the name of a legal person — here an inter-municipal company — must be able to show that the organ with the statutory power to litigate took that decision; a double-signature clause allowing directors to bind the entity vis-à-vis third parties is not the same as the power to decide to sue. The Council reads the term ‘judicial actions’ broadly: it also covers an action before the Council of State, so the reservation in favour of the board applies in full. For procurement law, the underlying — but undecided — question remains instructive: an amendment to an ongoing contract may not exceed its object. Supplying lime for a treatment plant other than the original one was, according to the supervisory authority, exactly such an excess, and the exception for complementary supplies without a fresh publication applies only under strict conditions, not met here. That the Council did not have to answer that core question does not change the fact that the supervisory decision follows the classic reasoning: a new need at a new site in principle calls for a new procedure, not an amendment.
The lesson
When bringing an action in the name of a company, association or inter-municipal entity, make sure that the competent organ — usually the board of directors — actually took the decision to litigate, and attach that decision to your application; a signing power of a few directors will not do and may render your action inadmissible, however strong your merits. Read your statutes carefully: a double-signature clause that binds you towards third parties is not the same as the internal power to decide to go to court. On the merits, whether you are the authority or the contractor: do not use an amendment to extend a contract to a need or a site outside the original object. If you want to place complementary supplies with the same supplier without a new publication, first check whether the strict conditions are met; if not, a new contract procedure is the safe route. The supervisory authority can annul an amendment that exceeds the object.
Ask yourself
Before bringing an action in the name of a legal person, have you checked which organ is statutorily competent to decide to litigate, and do you have that decision to attach to your application? Do you realise that a double-signature clause binding you towards third parties is not the same as the power to decide to sue? Does your amendment stay within the object of the original contract, or does it extend to a new site or need that requires a new procedure? If you want to place complementary supplies with the same supplier without a new publication, have you checked whether the strict conditions of article 17, § 2, 3°, b) are met? And as an authority under supervision: would your modification withstand an annulment supervision that watches the boundary of the object?
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The Council of State (Raad van State / Conseil d'État) is Belgium's supreme administrative court. In disputes over public procurement — from contract awards to tenderer exclusions — the Council of State is the final arbiter. The rulings in this database are summarised by TenderWolf in plain language, with practical lessons for tenderers and contracting authorities. View all rulings →