Control over the general interest motives justifying the termination of an administrative contract: what are the practical consequences?

Among the powers conferred on the public authority in the implementation of administrative contracts, the right unilaterally to terminate them on grounds of public interest is probably the most emblematic and the least discussed. In a simplified way, but close to reality, one could long say that the administration had the right freely to terminate its relations with any provider, for any reason other than a contractual breach by the latter. Of course, this power implied in return, for the contractor set aside, the right to obtain full compensation for its loss, including missed profit. But this financial protection has helped mute almost any debate before the administrative judge on the validity of the motive itself, as disputes were confined to purely compensatory litigation.


This balance was unsettled by the decision rendered by the Conseil d’Etat on 21 March 2011 in the so-called “Beziers II” case (no. 304.806). Since then, in addition to the traditional approach, the administrative courts admit that the other party may, if it so wishes and acts within a period of two months, challenge the decision to terminate and request the continuation of contractual relations.


The Conseil d’Etat was quick to apply this new case law – but negatively, by validating the termination of a land occupation contract for reasons relating to better financial terms (23 May 2011, no. 328.525). It subsequently had the opportunity to apply it positively, rejecting the motives drawn from the desire to take back the management of a public service and from the deterioration of relations with the other party (4 June 2014, no. 368.895). But it did so in the specific context of a long-term agreement concluded between public entities, in which, in particular, the contracting partner was also defending positions of general interest. In a similar context, the Administrative Court of Appeal of Douai (2 May 2013, no. 12DA01577) ordered the resumption of a land occupation agreement relating to an antenna owned by Orange, which had been terminated because of works that did not justify such a measure, all the less as the antenna was itself linked to the general interest attached to a good mobile telephony service.


More recently, following a claim filed by a service provider, the Administrative Court of Strasbourg ruled that a municipality could not validly terminate a consultancy contract on the grounds that the new municipal team had a new approach for a project launched by the previous team (13 June 2018, no. 1603336). But the case was only about damages. A decision by the Administrative Court of Cergy-Pontoise of 18 July 2018 (no. 1507487) found that the French State had no grounds of general interest justifying the termination of the contract relating to the establishment and the management of the service for the eco-tax for lorries. But again, the case was about a claim for damages, brought here by a second-line contractor, who had links not directly with the State but with Ecomouv.


The courts’ attention is therefore gradually shifting to assessing the public interest in the context of contractual terminations. But we are far from private contractors rushing to seize the apparent potentialities of the “Béziers II” case law.


There are three causes to this situation.


First, case law has long been marked by a broad acceptance of the general interest. And there is no particular reason to anticipate a tightening of this jurisprudential approach – even if this does not prevent, on a case by case basis, decisions that are unfavorable to the public authority.


Second, many companies will not wish to seek resumption of the contract, as it can appear difficult commercially and in practice to impose on a client a relation that it does not want anymore. The contractor will generally opt for a compensation claim, as the rules for calculating it are satisfactory.


Lastly, unless one obtains an interim order for the continuance of the contract, the timeframe of court proceedings often exceeds the period during which it would have applied, had it not been terminated. Thus, when the judge examines the claim, it may be too late to order the resumption of the contractual relations, since these would have already ended anyway (Conseil d’Etat, 18 December 2015, no. 373.255).


In this context one understands why, despite the evolution in case-law, the protection that contractors should find in the judicial control over the reasons of general interest invoked by the administration remains largely theoretical.