UK Government's Position Paper on CJEU jurisdiction: A Short List of Tricky Issues

Earlier today, the UK Government has published its position paper on the jurisdiction of the CJEU post-Brexit: Enforcement and dispute resolution - a future partnership paper (23 August 2017). The paper has been received as constructive by eg David Allen Green and Prof Armstrong, and Prof Peers has stressed on twitter that there is a clash of redlines despite the effort the paper makes to distinguish issues of enforcement (of individual rights) and dispute resolution (between the UK and the EU). I am sure I have already missed some useful reactions and that the commentary on the position paper will keep piling up in the coming hours.

With this post, I only intend to highlight some of the tricky issues that I have identified on first reading of the paper. They are presented in the same order of the relevant paragraphs of the paper where they first appear, but this does not necessarily reflect their level of trickiness.

1. The way the position in EU is depicted may be too simplistic, in particular concerning the acceptance of international dispute resolution agreements. For example, paragraph 20 refers to the Association Agreements with Ukraine and Moldova as instances where the EU has accepted submission to binding (international) arbitration mechanisms.
   
   However, taking the EU-Ukraine Agreement as example, the arbitration mechanism is limited due to the need to ensure CJEU supremacy when it comes to interpretation of EU law. In that regard, Art 322(2) clearly establishes that '[w]here a dispute raises a question of interpretation of a provision of EU law [relating to regulatory approximation contained in Chapter 3 (Technical Barriers to Trade), Chapter 4 (Sanitary and Phytosanitary Measures), Chapter 5 (Customs and Trade Facilitation), Chapter 6 (Establishment, Trade in Services and Electronic Commerce), Chapter 8 (Public Procurement) or Chapter 10 (Competition), or which otherwise imposes upon a Party an obligation defined by reference to a provision of EU law], the arbitration panel shall not decide the question, but request the Court of Justice of the European Union to give a ruling on the question. In such cases, the deadlines applying to the rulings of the arbitration panel shall be suspended until the Court of Justice of the European Union has given its ruling. The ruling of the Court of Justice of the European Union shall be binding on the arbitration panel'. Given that these are matters that would be at the core of an EU-UK agreement, the extent to which agreeing on binding internal arbitration would circumvent (direct) CJEU jurisdiction to interpret EU law and identical provisions can be questioned.
   
   This is however presented in very soft terms in the position paper. In relation with the EU-Moldova Agreement, and under the heading 'Provision for voluntary references to CJEU for interpretation', the position paper indicates that '[t]his approach can apply in respect of both judicial and political dispute resolution models. For example, Article 403 of the EU Moldova Association Agreement requires that an arbitration panel established to resolve disputes shall, where the dispute concerns interpretation of EU law, refer the question to the CJEU and be bound by its interpretation' (para 56, emphasis added); and that 'In the case of the Moldova Association Agreement, the responsibility to make a reference rests with the arbitration panel ... These examples do not involve one party to the agreement deciding, unilaterally, to seek a binding interpretation of the agreement from the CJEU' (para 58). While this is *technically* correct, it is also presented in a misleading way because should an arbitration panel not seek the CJEU's interpretation, whcih it is required to do so, the final award would clearly not be enforceable. Ultimately, in my view, the restrictions derived from the need to ensure the CJEU's position as sole interpreter of EU law create a much harder and relevant restriction on the design of international arbitration or other dispute resolution mechanisms than the image that evaporates from the position paper.
   
   In fairness, this is somehow recognised in para 38 of today's position paper: 'there are limitations to the matters on which the EU can subject itself to the binding decisions of a quasi-judicial or judicial authority, like an arbitration panel. The arbitration panel cannot adjudicate on matters of interpretation of EU law so as to bind the EU and its Member States'. However, this is not followed by a view on how to resolve this limitation, should the future EU-UK agreement be subjected to international arbitration--maybe this is just aimed at creating space for negotiations, but a clearer position of the UK Government on the acceptance (or not) of a reference mechanism to the CJEU as part of arbitration-based dispute resolution mechanisms will be needed sooner rather than later and the answer seems constrained to a binary yes/no ...
    
2. Whether the EU would accept to the creation of another, parallel court, like the EFTA Court can be highly questioned. The assumption in para 21 that the EFTA court is a 'model' that can be replicated seems to me difficult to accept. In my opinion, the only way of benefiting from that solution would be for the UK to become a member of the European Economic Area (which the UK Government does not want to pursue), or else for the EFTA Court to be reformed to expand its jurisdiction to the EEA + UK (which seems unlikely). In my opinion, the creation of another institution with EFTA Court features but with jurisdiction only for the EU-UK relationship does not seem plausible.
   
   This has a major effect on the viability of post-Brexit coordination of UK and CJEU case law as discussed in paras 46-51 of the position paper because, as is clear from all the examples in that section, the mechanisms for mutual coordination of jurisprudence have so far only been accepted within the scope of the EEA (+ Switzerland). Outside of the scope of the EEA / EFTA Court jurisdiction, it seems difficult to see the EU accepting this type of mechanisms, which are the historical result of a different time of the European integration process. Moreover, the UK government seems to point at differential approaches to case law coordination when it indicates that 'extent to which this approach may be valuable depends on the extent to which there is agreement that divergence should be avoided in specific areas' (para 51). It seems difficult to accept that the EU can tolerate divergence in any areas that are considered of relevance in the context of the future EU-UK relationship (and those not relevant, are likely to be or end up outside of the framework).
    
3. The position that 'in both the UK and the EU, individuals and businesses will be able to enforce rights and obligations within the internal legal orders of the UK and the EU respectively, including through access to the highest courts within those legal orders. This would be the case in respect of both the Withdrawal Agreement, including an agreement on citizens’ rights, and the future partnership' (para 23) seems to simplistic to me. First, because this is precisely one of the redlines of the EU's negotiating position, which has indicated that there has to be a 'possibility of administrative or court proceedings to be initiated post-exit for facts that have occurred before the withdrawal date' (para 16 of EU negotiating guidelines), which implies the need to preserve CJEU intervention for the interpretation of the relevant EU law provisions as they applied at the time of the material facts. Second, because litigation is likely to raise complex issues of conflict of laws that can hardly be addressed unilaterally by either of the legal systems.
   
   As recognised in yesterday's position paper on cross-border civil and commercial litigation: 'Ending the direct jurisdiction of the CJEU in the UK will not weaken the rights of individuals, nor call into question the UK’s commitment to complying with its obligations under international agreements; where appropriate, the UK and the EU will need to ensure future civil judicial cooperation takes into account regional legal arrangements, including the fact that the CJEU will remain the ultimate arbiter of EU law within the EU' (para 20, emphasis added). The same will, of course, happen in every other dimension of legal relationships and, consequently, the same mechanism to 'take account of the position of the CJEU' will need to be extended universally. In my view, this is far away from the streamlined assumption that litigation will be contained in either of the jurisdictions.
   
   Interestingly and confusingly, para 24 of today's position paper takes a different approach and stresses that 'Ending the direct jurisdiction of the CJEU in the UK will not weaken the rights of individuals, nor call into question the UK’s commitment to complying with its obligations under international agreements. The UK’s commitment to the rule of law has been built over centuries, and reaffirmed time and again by effective, independent courts. That commitment to the rule of law means that anyone seeking redress within the UK’s legal systems will know they will be judged by clear rules applied in accordance with the law by the UK’s expert, independent and internationally respected judiciary.' The extent to which both position papers are in contradiction, or the extent to which the UK government can seriously aim to create CJEU-friendly mechanisms for civil and commercial matters and simultaneously CJEU-avoiding mechanisms for eg public law seems to me to be prone to provoke more than a few headaches for anyone trying to solve the puzzle.
    

Overall, I think that the conclusion in the position paper that 'there are a number of additional means [not involving the direct jurisdiction of the CJEU] by which the EU has entered into agreements which offer assurance of effective enforcement and dispute resolution and, where appropriate, avoidance of divergence, without necessitating the direct jurisdiction of the CJEU over a third party' (para 67) may be overstated and that the position paper, while more flexible than could have been expected, still seems to head full steam ahead for a clash with the unique position of the CJEU in interpreting EU law and preserving individual (citizens') rights. Time will tell.

New Paper on Extraterritoriality of EU Procurement Rules

I am presenting a paper on the extraterritoriality of EU public procurement rules at the research workshop "Extraterritoriality of EU Law & Human Rights after Lisbon: Scope and Boundaries", held at the Sussex European Institute on 13 & 14 July 2017.

The paper is entitled "An Ever-Changing Scope? The Expansive Boundaries of EU Public Procurement Rules, Extraterritoriality and the Court of Justice", and is available at SSRN: https://ssrn.com/abstract=3000256.

As the abstract indicates:

This paper looks at how the EU public procurement rules have shown a tendency to permanently expand their scope of application, both within and outside the EU. Inside the EU, the expansion has primarily resulted from blurred coverage boundaries and a creeping application outside their explicit scope. Outside the EU, the extraterritoriality has concerned scenarios such as the applicability of EU financial rules to procurement carried out as part of the EU’s external action in other areas (such as common foreign and security policy), or the regulatory transfer (or ‘export’) of EU procurement rules as part of trade deals—notably, the EU-Canada CETA, but also the EU-Ukraine DCFTA.

Concentrating solely on the ‘external’ dimension of the expansive scope of EU public procurement rules, in trying to explore some of the impacts of the extraterritorial effects of EU public procurement law on the legal and regulatory systems of third countries, this paper focuses on the implications that this expansion and extraterritoriality can have in terms of jurisdiction of the Court of Justice, as well as in terms of difficulties for the coordination of remedies systems in the area of public procurement. The paper concludes that the extraterritorial expansiveness of the EU’s public procurement rules is creating areas of potential legal uncertainty that deserve further analysis. Given the highly speculative nature of those scenarios at this stage, however, the paper does not attempt to provide any specific answers or tentative solutions to the issues it raises.

I intend to review the paper after the workshop and will appreciate any additional feedback that helps me improve it so, if you have the time and inclination to read the paper, please email me any comments to a.sanchez-graells@bristol.ac.uk, or feel free to post them in the comments section. Thank you in advance for any input.

GC case law round up: Three relatively recent public procurement judgments (T-700/14; T-74/15; T-441/15)

After some months of having them sitting on my desk, and now that teaching obligations at the University of Bristol Law School subside a bit, it is about time to comment on three relatively recent Judgments of the General Court (GC) of the Court of Justice of the European Union (CJEU) in the area of public procurement. Of the three cases, two concern abnormally low tenders and the other  a tricky point about the scope of the CJEU's jurisdiction in the context of framework agreements--which creates some fuzziness in the delineation of private/public law dimensions of public procurement by the EU Institutions. Anecdotally, two of the cases involve European Dynamics, and two of them are available in French but not in English.

Abnormally low tenders (I): Substantive Aspects

Judgment of 26 January 2017, TV1 v Commission, T-700/14, not published, EU:T:2017:35. This tender concerned the provision of integrated audiovisual production, dissemination and archiving services for the European Commission in the context of the Europe by Satellite programme and was, thus, regulated by the Financial Regulation (version of 2012).

The procedure for the award of the contract foresaw three technical quality criteria in addition to the price criterion. It established that only offers that achieved a minimum score of 60% under each technical quality criterion and an overall score of at least 70% on their overall technical quality would be considered for award. It also determined that the overall score of a given tender would be calculated as follows: the ratio between the lowest priced offer and the price of a given offer would be multiplied by 40, and this would be added to the total (technical) quality score (over 100) multiplied by 60 (para 4, own translation from French). In other words, the award criteria relied on 60% of the points given to an absolute evaluation of technical quality and 40% of the points given to a relative evaluation of the prices offered by different tenderers. Given the relative assessment of the price component, this type of evaluation method is prone to challenges based on the treatment of seemingly abnormally low tenders.

Indeed, amongst other legal grounds, the award of the contract was challenged on this basis; the incumbent provider and disappointed tenderer, TV1, argued that the Commission had infringed Art 110(2) Financial Regulation, in conjunction with Art 151 of its Implementing Regulation and the general duty of good administration by not proceeding to a detailed assessment (and rejection) of the seemingly abnormally low offer submitted by the successful tenderer. The GC will eventually reject the complaint in its entirety. In my opinion, some parts of the reasoning of the GC deserve closer attention.

After reproducing consolidated case law on the interpretation of these provisions and the circumstances under which a contracting authority may (or should) have doubts about the viability of a seemingly abnormal tender (paras 32-42), as well as on the broad discretion enjoyed by the contracting authority and the limited review in which the court should engage (para 44), the GC proceeds to analyse the different arguments raised by TV1 against the Commission's decision. In particular, it is interesting to note that the GC dismisses arguments put forward by TV1 concerning the duty the Commission should have had to identify the winning offer as seemingly abnormally low on the basis of the fact that (i) it was 40% lower than the maximum annual budget allowed by the Commission in the tender documents and (ii) it was 11% lower than TV1's offer.

(i) Interestingly, the reasoning of the GC concerning the irrelevance of the fact that the winning tender was 40% below the maximum budget set by the Commission (and that the challengers' offer was itself 32% below maximum budget) rests on the inaccuracy of the budget set by the Commission. Apparently, when setting the maximum budget, the Commission had failed to take into account sharp reductions in the cost of providing the services now (re)tendered (para 49). Thus, the GC was satisfied that the discrepancy between maximum budget and actual offers was a result of the Commission's inaccurate budgeting rather that of abnormal low prices included in the offers. Logically, this makes sense and it could have well been the case. It does, however, raise important concerns about the accuracy and usefulness of budgeting for public contracts under the Financial Regulations--but that is probably a discussion to be had some other time.

(ii) The reasoning of the GC concerning the 11% discrepancy between the lowest (winning) tender and the next (challenger) tender is also interesting. As a matter of general consideration, the GC stresses that "[a]n offer may be cheaper than another without being abnormally low" (para 58) and that "[t]his also applies to a situation in which the tender price of the successful tenderer is lower than that of the tender of the incumbent provider. Otherwise, the incumbent provider could systematically question the reliability of the cheaper offers of the other tenderers, even if they are not abnormally low, but only economically more advantageous" (para 59, own translation from French). In that connection, it is important to stress that the GC sets aside as insufficient reasons to trigger an in-depth assessment of the challenger's offer as apparently abnormally low, the claims brought forward by TV1 that it had to make significant investments when it was first awarded the contract now (re)tendered, and that an expert should be appointed to check that the winning tenderer "should have incurred expenses comparable to those which the [incumbent] had had to bear several years previously in order to be able to supply the services covered by the earlier contract" (para 67, own translation from French). This is interesting because it avoids an analysis of sunk costs that could, otherwise, advantage the incumbent [for related analysis, see A Sanchez-Graells, Public Procurement and the EU Competition Rules, 2nd edn (Oxford, Hart, 2015) 412 ff].

Overall, then, the GC's assessment of the reasons adduced by TV1 to justify the existence of an obligation on the part of the Commission to engage in an in-depth investigation of the winning tender as apparently abnormally low is sound and should be welcome.

Abnormally low tenders (II): Procedural Aspects

Judgment of 2 February 2017,  European Dynamics Luxembourg and Evropaïki Dynamiki v Commission, T-74/15, not published, EU:T:2017:55. In this case, the tendered contract concerned the provision of IT services relating to off-site information systems development, studies and support. The tender was for the conclusion of a framework agreement which would operate on the basis of mini-competitions.

The challenge brought by European Dynamics concerned the rejection of two specific requests for quotations as a result of two such mini-competitions. One of the challenges concerned an allegation that the chosen quotation was abnormally low, and the legal basis on which it is founded concerns a failure to provide reasons for a dismissal of the claim that the winning quotation was not abnormally low (ie a breach of Arts 113(2) of the Financial Regulation and Art 161(2) of its Implementing Regulation, as cited above). Thus, in this case, the challenge is not based primarily on the dismissal of reasons adduced to create or justify an appearance of abnormality in a tender, but rather on the absence of motivation for that result.

The GC thus takes a very different approach in this case and, rather than concentrating on the elements under which the discretion of the contracting authority is assessed in relation to its determination of whether a tender is seemingly abnormally low or not (as above), on this occasion the GC concentrates on the duty to give reasons as the main check and balance of such discretion, as well as a necessary procedural step in order to preserve the procedural rights of tenderers for public contracts (paras 35-41). From this perspective, the GC stresses that

In the present case, it is apparent ... that the applicants expressly requested clarification from the Commission in order to demonstrate that the price offered by the successful tenderer was not abnormally low ... the Commission confirmed that its [debriefing] letter ... contained its reply in that regard. So far as concerns the nature of the tender selected [in the specific mini-competition] it is apparent from the last page of that letter that the Commission merely stated, in a single sentence, that ‘“the winning offer” of the IPT tender did not fall under the case of “abnormally low” offers.’ (para 45, emphasis added).

The legal issue in front of the GC was, consequently, whether such brief dismissal of the allegation brought forward by European Dynamics sufficed to meet the relevant threshold for the purposes of the duty to provide reasons. As could be expected, the GC does not offer a positive answer. It stresses that

... the single sentence in the letter ... stating that the tender was not abnormally low does not fulfil the duties assigned to the obligation to state reasons, that is, the reasons must be disclosed clearly and unequivocally so as, on the one hand, to make the persons concerned aware of the reasons for the measure and thereby enable them to defend their rights and, on the other, to enable the Court to exercise its power of review. It cannot be accepted that a contracting authority should explain the not abnormally low nature of a tender merely by stating that such was considered not to be the case (para 47, emphasis added).

The GC does not stop there and goes to the extra length of consolidating the substantive standard applicable to the reasons that should be given in order to discharge this duty vis-a-vis a claim concerning the abnormally low nature of a tender. The consolidation of the standard is rather formulaic and may be seen to follow too closely the specific aspects which the Financial Regulation sets out to be possible cause for the abnormality of low values in a tender (eg non-compliance with employment and social law), but it can be a generally useful benchmark in that it clarifies that

... requiring the contracting authority to present the grounds on the basis of which an offer was not considered to be abnormally low does not require it to disclose precise information on the technical and financial aspects of that tender, such as the prices offered or the resources that the successful bidder proposes to use in order to provide the services that it offers. In order to provide a sufficient statement of reasons for that aspect of the selected tender, the contracting authority must set out the reasoning on the basis of which, on the one hand, it concluded that, because of its principally financial characteristics, such an offer complied with the national legislation of the country in which the services were to be carried out in respect of the remuneration of staff, contribution to the social security scheme and compliance with occupational safety and health standards and, on the other, it determined that the proposed price included all the costs arising from the technical aspects of the selected tender ... Accordingly, the Commission’s argument that the tenders in the present case had not raised any doubts that they were not abnormally low and that there was therefore no other information which it could have provided to the applicants must be rejected. (para 49, references omitted and emphasis added).

This comes to clarify that, even if the contracting authority does not think that there is a need to engage in an in-depth assessment of the (winning) tender to determine if it is abnormally low, it must at all times be in a position to provide the reasons why it did not think that was the case. Overall, this seems adequate, although it continues a line of case law that tends to create a significant burden at debriefing stage and that can trigger significant concerns of excessive transparency of commercially-sensitive information between competitors, as the GC's relatively open-ended requirement in para 49 of the Judgment may be difficult to square with the contracting authority's obligation not to disclose information in a way that could alter competition [on that, generally, see A Sanchez-Graells, "The Difficult Balance between Transparency and Competition in Public Procurement: Some Recent Trends in the Case Law of the European Courts and a Look at the New Directives" (2013). University of Leicester School of Law Research Paper No. 13-11]. 

A Tricky Jurisdictional Point

Judgment of 17 February 2017, European Dynamics Luxembourg and Others v EMA, T-441/15, not published, EU:T:2017:104. The tender in this case concerned the provision of IT services through a framework agreement that included a cascade mechanism for the allocation of call-off contracts within the framework (for a reference to previous litigation concerning this type of mechanism, see here). European Dynamics was awarded the second-tier framework agreement. At the relevant time, EMA asked European Dynamics for CVs of its candidates for the position of project manager for a given contract. EMA rejected all 5 candidates presented by European Dynamics, and this triggered the challenge.

From a jurisdictional perspective, the difficulty in this case was to determine whether EMA's rejection of the candidates put forward by European Dynamics was a decision of an EU Institution challengeable before the CJEU (GC) under its competence as per Art 263 TFEU. In that regard, the GC stressed that "[i]t must be borne in mind that, under Article 263 TFEU, the [Court] only reviews the legality of acts adopted by the institutions intended to produce legal effects vis-à-vis third parties, significantly by altering their legal position" (para 18, own translation from French). The key question was thus whether EMA's rejection of European Dynamic candidates fell within this jurisdictional framework. 

The GC distinguished this case from the previous analysis in Evropaïki Dynamiki v Commission (OLAF), T-498/11, EU:T:2014:831 (for discussion see here) on the basis that, "[t]he present case differs from [case T-498/11] in that [in the previous instance,] the specific contracts had not yet been awarded but had to be awarded on the basis of 'mini-competitions' between the selected 'framework contractors' ... [whereas] in the present case, as regards the implementation of a multiple framework contract with cascade allocation, the specific contract has already been allocated according to the position of the economic operators in the cascade, without the need for any further competition between those [economic operators]. Therefore, if the first economic operator is unable to provide the required service or not interested in doing so, the second best operator will be contacted. If the latter is unable to provide the required service or is not interested, then the third best operator will be contacted" (para 24, own translation from French).

Without any additional reasoning, the GC concludes that "the claim for annulment must be declared inadmissible in so far as it is based on Article 263 TFEU" (para 27), on the (implicit) basis that EMA's decision to reject European Dynamic's candidates falls strictly within a pre-established contractual relationship. In the specific case, the CJEU's jurisdiction is saved by the existence of a compromissory clause compatible with Art 272 TFEU in the framework agreement signed between EMA and European Dynamics (para 20), as well as due to the fact that EMA did not challenge the reclassification of the claim for annulment as a contractual claim (para 16). However, it is easy to see how the approach adopted by the GC could have left the claim in limbo -- and possibly time-barred ... -- had it not been by EMA's willingness to deal with the claim in a principled and open manner. Moreover, even if the GC's strictly literal interpretation was right (of which I am not convinced), there would be normative issues concerning the different treatment of functionally identical decisions depending on the type of framework agreement that European Institutions chose to conclude.

Overall, I would suggest that this case should work as a cautionary tale and that the scope of the jurisdiction of the CJEU (GC) to review acts of the European Institutions that, despite taking part within a contractual setting still carry (sufficient) connotations of the exercise of a public power (something the GC only lightly touched upon in this Judgment, at para [22]), requires some rethinking.

#CJEU confirms that #IPlaw violations belong to the sphere of the outstanding contractual relationship (Systran, C-103/11-P)

In its Judgment of 18 April 2013 in case C-103/11-P Commission v Systran SA, Systran Luxembourg SA (Systran), the CJEU has broadly followed the Opinion of AG Cruz Villalon and confirmed that, when confronted with liability claims, EU Courts must first determine whether there exists a genuine contractual context, linked to the subject-matter of the dispute, between the claimant and the defending EU institution. In that regard, according to the CJEU, if a preliminary analysis of those matters shows that it is necessary to interpret the content of one or more contracts concluded between the parties in question in order to establish whether the applicant’s claims are well founded, EU Courts are required at that point to halt their examination of the dispute and declare that they have no jurisdiction (press release). 

As anticipated here, this finding seems to have deep implications in the debate concerning the vis atractiva of contractual relationships when one of the parties subsequently engages in tortious behavior (in the case, for breach of IP rigths) and, consequently, the Systran Judgment deserves some careful thought. 

As the CJEU has clearly set out in Systran:

63 [...] when hearing an action for compensation, the Community Courts must, before ruling on the substance of the dispute, as a preliminary issue determine their jurisdiction by carrying out an analysis to establish the character of the liability invoked and thus the very nature of the dispute in question.

64 In doing that, those Courts cannot base their reasoning simply on the rules alleged by the parties.

65 In that regard, [...] the Court of Justice has already held that the mere invocation of legal rules not flowing from a contract relevant in the case, but which are binding on the parties, cannot have the consequence of altering the contractual nature of the dispute and thus removing it from the jurisdiction of the competent court. If it were otherwise, the nature of the dispute and, consequently, the competent court, could be changed at the whim of the rules invoked by the parties, which would go against the rules on the jurisdiction of the various courts ratione materiae (Guigard v Commission, paragraph 43).

66 However, the Community Courts are required to verify whether the action for compensation before them has as its subject-matter a claim for damages based objectively and overall on rights and obligations of a contractual nature or of a non-contractual nature. For those purposes, as the Advocate General has pointed out in points 49 and 50 of his Opinion, those Courts must examine, on an analysis of the various matters in the file, such as, for example, the rule of law allegedly infringed, the nature of the damage claimed, the conduct complained of and the legal relations between the parties in question, whether there exists between them a genuine contractual context, linked to the subject-matter of the dispute, the in-depth examination of which proves to be indispensable for the resolution of the said action.

67 If a preliminary analysis of those matters shows that it is necessary to interpret the content of one or more contracts concluded between the parties in question in order to establish whether the applicant’s claims are well founded, those courts are required at that point to halt their examination of the dispute and declare that they have no jurisdiction to rule thereon in the absence of an arbitration clause in the said contracts. In such circumstances, examination of the action for compensation directed against the Community would imply the assessment of rights and obligations of a contractual nature which, pursuant to Article 240 EC, cannot be removed from the jurisdiction of the national courts (C-103/11-P, paras 63 to 67, emphasis added).

More specifically, when analyzing the application of these principles by the General Court in the appealed decision, the CJEU stressed that

It is true [...] that it is not sufficient to allege simply any contractual relationship with the applicant or obligations of contractual origin not envisaging the conduct in dispute in order to be able to change the nature of the dispute by giving it a contractual basis. However, the fact remains that where, having regard to the content of the action for compensation against the Community, the interpretation of one or more contracts concluded between the parties in question appears to be indispensable in order to establish the legality or otherwise of the conduct by the institutions which is complained of, the dispute falls outside the jurisdiction of the Community Courts (C-103/11-P, para 80, emphasis added).

A summary reading of Systran indicates that, when the parties hold a previous or ongoing contractual relationship (which merits interpretation), claims for damages (due to breach of IPR-rights, or otherwise) should in principle be analysed within the sphere of those contracts and, only if no sufficient connection is found to the prior contractual bound, a 'purely' tortious claim will be allowed. Such a principle, which is developed in view of jurisdictional concerns, may have very significant substantive implications for contract and tort law in the EU (which precise delimitation seems to be permanently under debate)--unless the Systran Judgment is confined to a matter of procedural law (which, in my opinion, would be the wrong thing to do).

The general approach in Systran would imply that EU Courts retain jurisdiction for damages claims only in the absence of any (meaningful, sufficiently close) contractual relationship between the claimant and the defending EU institution (which, for instance, would leave them completely lacking of jurisdiction in the area of damages resulting from public procurement and the execution of the ensuing public contracts). 

It would also imply, more generally, that as a matter of EU Law, there is a principle of contractual absorption (vis atractiva contractus) that would extend the sphere of the contract, ie its scope (and, possibly, its effectiveness), to the damages inflicted by one party to the other due to tortious behaviour that may exceed the specific provisions of the contract (ie beyond strict breaches of contractual obligations). As a result of such vis atractiva--and given the different regulation of contractual and non-contractual claims in each of the Member States--different rules can apply to issues such as limitation periods, liquidated damages, penalty clauses, arbitration agreements, etc. 

And, in any case, given the difficulty in drawing a clear dividing line between contract and other areas of private law, the issue seems far from being finally sorted out, despite the creation of this type of rules of priority of contract law over non-contractual obligations, such as the one expressly included in the Draft Common Frame of Reference (VI.–1:103):

Should it, however, in fact come to a conflict between the values of contract law and non-contractual liability law in any particular case, whereby contract law denies liability which would subsist according to the provisions on noncontractual liability, then it is for the rules of contract law to assert priority if that is to be claimed in accord with the objective of the contract law rules. That is again the case if an application of the law on non-contractual liability in parallel with the corresponding contract law provision would deprive the latter of its effect. The contract law rule has priority so far as contract law actually claims it, whether expressly or merely by implication from the nature of things. Where contract law makes no such demand for the subsidiarity of non-contractual liability law, sub-paragraph (c) has no application and the principle of free concurrence of actions governs.

Therefore, the recognition (or not) of a general principle of the vis atractiva of contracts as a matter of EU law (in Systran) seems most relevant and deserves some further work in the future--particularly in view of the interrelationship between issues of substance and procedure (jurisdiction), which the CJEU has, as a matter of principle, prioritised in favour of contract law (and which also seems the default preferred option in the DCFR 2008).