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WG Independence-Efficiency > Meetings > Bucharest 2011 > The procurement of public contracts in EU law : some leading and recent ECJ decisions

The procurement of public contracts in EU law : some leading and recent ECJ decisions


Subject Case Paragraph No.

Limitation Periods Uniplex –v- NHS Business
Services Authority [1] – [2]

Commission of European
Communities –v- Ireland [3]

Equal Treatment and Liniakis –v- Municipality of
Transparency Alexandroupolis [4]

Tenderers’ Suitability Liniakis –v- Municipality of
And Contract Award : Alexandroupolis [5]
Separate Criteria

Commission –v- Greece [6]

Rights of Contracting Lefkosias –v- Prosforon [7]

The Remedy of Stadt Graz –v- Strabag AG [8]

Interim Measures Combinatie (etc.) –v- Provincie
Drenthe [9] – [10]

The Proactive Commission –v- Ireland
Commission Commission –v- France [11]

Termination of Hospital Ingenieure –v- Stadt [12]
Contract Award Wien
Process Federal Security Services –v- [13]
Northern Ireland Court Service

Changes to an The Pressetext Case [14] – [15]
Existing Contract

Wall –v- Frankfurt [16]

Relevant Contracts Helmut Muller [17]

Commission –v- Germany [18]

Hans Oymanns –v- AOK [19]

Auroux –v- Commune de [20]



Limitation Periods

Uniplex (UK) Limited –v- NHS Business Services Authority [1]

This is a decision of the ECJ under the first Remedies Directive [2] relating to the date from which the period for bringing proceedings begins to run in public procurement cases. The ECJ was concerned with Regulation 47(7)(b) of the Public Contracts Regulations 2006, which provides :

“‘Proceedings under this regulation must not be brought unless –

(b) those proceedings are brought promptly and in any event within three months from the date when grounds for the bringing of the proceedings first arose unless the Court considers that there is good reason for extending the period within which proceedings may be brought.’

The terms of Article 1/1 of the 1989 Directive simply required rapid and effective review of the decisions of contract award authorities. The ECJ ruled as follows :

(i) The limitation period in national law for the initiation of proceedings cannot begin until the date when the claimant knew, or ought to have known, of the alleged infringement of the relevant Community law provisions.

(ii) It is legitimate for Member States to impose limitation periods in their national laws. In order to satisfy the requirements of legal certainty, any limitation period must be “… sufficiently precise, clear and foreseeable to enable individuals to ascertain their rights and obligations”. [3] The principle of effectiveness must also be respected. This requires that national limitation periods “… must not render impossible or excessively difficult the exercise of any rights which the person concerned derives from Community law. [4] The “promptly” provision in the UK national law was unlawful, infringing Article 1(1) of the Directive, because of the uncertainty which it engendered.

The third question considered by the ECJ related to the discretion conferred on the national court to extend the period within which proceedings must be initiated. The ECJ determined this question as follows :

“[50] The answer to the second part of the second question is accordingly that Directive 89/665 requires the national court, by virtue of the discretion conferred on it, to extend the limitation period in such a manner as to ensure that the claimant has a period equivalent to that which it would have had if the period provided for by the applicable national legislation had run from the date on which the claimant knew, or ought to have known, of the infringement of the public procurement rules. If the national provisions do not lend themselves to an interpretation which accords with Directive 89/665, the national court must refrain from applying them, in order to apply Community law fully and to protect the rights conferred thereby on individuals.”

In the light of this judgment, it was incumbent on the UK to amend its national laws viz. the 2006 Regulations (as already amended). This exercise has culminated in the Public Procurement (Miscellaneous Amendments) Regulations 2011, in force from 1st October 2011. [5]

Commission of European Communities –v- Ireland [6]

In this case, the ECJ considered the limitation period in Irish law, contained in the following rule :

An application for the review of a decision for the award of a public contract should be made at the earliest opportunity and in any event within three months from the date when grounds for the application first arise unless the court considers that there is good reason for extending such period”.

Judgment was given on the same day as in Uniplex and, unsurprisingly, the ECJ held that this rule too was invalid. In essence, the invalidity was that the national legal rule lacked clarity and certainty, as a result of which candidates and tenderers were not fully informed of their rights in the matter of bringing proceedings and were unable to predict how the limitation period would be measured. Thus the principle of effectiveness was contravened. This was not redeemed by the court’s discretion to extend time. Accordingly, the complaint initiated by the Commission succeeded.

Equal Treatment and Transparency

Lianakis –v- Municipality of Alexandroupolis [7]

This case is an instructive illustration of the Community law requirements relating to contract award criteria in the context of the principles of equal treatment and transparency. The simple question was whether the contracting authority was entitled to make its award decision on the basis of weighting factors and sub-criteria not specified in the award criteria notified to potentially interested tendering parties. The ECJ answered this question in the negative. Its reasoning is expressed in the following passages :

“36. According to the case-law, Article 36(2), read in the light of the principle of equal treatment of economic operators set out in Article 3(2) of Directive 92/50 and of the ensuing obligation of transparency, requires that potential tenderers should be aware of all the elements to be taken into account by the contracting authority in identifying the economically most advantageous offer, and their relative importance, when they prepare their tenders (see, to that effect, in relation to public contracts in the water, energy, transport and telecommunications industries, Case C-87/94 Commission v Belgium [1996] ECR I-2043, paragraph 88 ; in relation to public works contracts, Case C-470/99 Universale-Bau andOthers [2002] ECR I-11617, paragraph 98 ; and, in relation to public service contracts, Case C-331/04 ATI EACand Others [2005] ECR I-10109, paragraph 24).
37. Potential tenderers must be in a position to ascertain the existence and scope of those elements when preparing their tenders (see, to that effect, in relation to public service contracts, Concordia Bus Finland, paragraph 62, and ATI EACand Others, paragraph 23).
38. Therefore, a contracting authority cannot apply weighting rules or sub-criteria in respect of the award criteria which it has not previously brought to the tenderers’ attention (see, by analogy, in relation to public works contracts, Universale-Bau and Others, paragraph 99).”
In short, the contracting authority had failed to observe the basic requirement of advance notification of award criteria to interested parties and the contract award process was vitiated in consequence. Properly analysed, it might be said that the dominant principle in the court’s reasoning was that of “transparency”. This analysis is based on the premise that the “playing field” was the same for all tenderers at the outset and, in principle, remained the same when the later changes in the process took effect.

Tenderers’ Suitability and Contract Award Criteria : The Separation

In Lianakis, the Greek Contracting Authority listed the following as Award Criteria  :

The bidder’s experience on projects during the previous three years.
The bidder’s manpower and equipment.
The bidder’s ability to complete the project by the deadline.

The essence of the ECJ’s ruling was that these were, in essence, selection criteria viz. criteria bearing on the bidder’s suitability – relating to financial standing and technical capability. However, they were improper award criteria , since the latter cannot be “… essentially linked to the tenderer’s ability to perform the contract in question”. [8]

Commission –v- Greece [9]

This recent decision of a chamber of the ECJ highlights the important distinctions between :

(a) Assessment of a tenderer’s suitability ; and

(b) Awarding the contract.

This case concerned the procurement of a Greek railway utility contract for engineering services. In the specification, the OJEU notice excluded non-Greek engineers if they had previously put forward qualifications falling under a different category from those required for this contract. In summary, the ECJ ruled that selection criteria and award criteria had been confused in the Notice and applied its Lianakis ruling verbatim . In this decision, the ECJ highlighted that these are distinct processes, governed by different rules. The suitability of tenderers is to be assessed by the contract award authority in accordance with the criteria of economic and financial standing and technical capability (the “qualitative selection” criteria) specified in Articles 30 and 31 of Directive 93/38. In contrast, the exercise of awarding the contract must be based on the criteria of either lowest price or economically most advantageous tender, specified in Article 34(1). Adoption of the economically most advantageous criterion in contract award processes is commonplace. A contract award authority can permissibly adopt award criteria which are consistent with this overarching criterion. However, any such criteria which touch on the ability of the tenderers to perform the contract will be invalid. In this case, the contract award authority included within its award criteria the experience and capacity of tenderers to ensure proper performance of the relevant contract. Such criteria were not harmonious with Article 34(1) of the Directive and were, therefore, invalid. As a result, the Contract Notice did not comply with Article 34(1)(a). [10]

Rights of Contracting Authorities ?

Lefkosias –v- Prosforon [11]

Cyprus is one of the EU Member States in which the review is conducted by an administrative body (the Public Procurement Review Body) and not a court. Under Cypriot law the jurisdiction of this body includes the determination of appeals against decisions made by contracting authorities in procurement matters. The Supreme Court of Cyprus sought a preliminary ruling on the question of whether the Remedies Directive requires Member States to provide contract authorities with a right to seek judicial review of the decisions of a non-judicial/administrative review body. The ECJ held that Article 2(8) of the Directive does not require this. In thus deciding, the court emphasized the words “community undertakings” in the recitals, the wording of Article 1(3) requiring review procedures at the suit of “any persons having or having had an interest in obtaining a public contract” and the power of intervention conferred by Article 3 on the Commission. Thus contract award authorities do not belong to the class of persons on whom the Directive confers a right of review. Of course, this does not preclude the national laws of Member States from making judicial review available to contracting authorities.

The Remedy of Damages

Stadt Graz –v- Strabag AG [12]

Under Austrian law (in summary), the right to damages for an infringement of procurement rules was available only where the breach arose as a result of the contracting authority’s fault. The Administrative Court annulled the initial decision of the review body, holding that the tender in question did not conform to the requirements of the contract notice. Subsequently, the review body declared the award of the contract to have been unlawful. The unsuccessful tenderer then brought proceedings claiming damages. The defence of the contracting authority was that the illegality could not be attributed to it. The case then proceeded through the Austrian legal process – the Administrative Court, the Court of Appeal and the Supreme Court, resulting in a referral to the ECJ for a preliminary ruling. The ECJ held that the relevant provision of Austrian national law was incompatible with the Remedies Directive. Specifically, the court held that the remedy of damages would constitute a procedural alternative to the remedy of setting aside an unlawful contract award decision only where it was not dependent on a finding that the contracting authority was at fault. The relevant Austrian law frustrated the requirement that review procedures be effective. This decision is unsurprising, having regard to the previous decision of the ECJ in Commission –v- Portugal . [13]

Remedies : Interim Measures

Combinatie (etc.) –v- Provincie Drenthe [14]

The ECJ considered and (sometimes with reformulation) answered a series of questions. As regards the first question, the ECJ noted that under the Netherlands’ legal system the civil courts generally had exclusive jurisdiction in disputes concerning the award of public contracts. Some jurisdiction is also exercisable by administrative courts, if a particular law so provides, in relation to discrete issues. The ECJ was satisfied that there was no risk of a civil court and administrative court having concurrent jurisdiction over the same public contract award dispute and, accordingly, no risk of differing courts reaching conflicting decisions in respect of the same procurement exercise. The second question considered by the court highlighted three specific aspects of the Netherlands’ review procedure : lawyers are not able to exchange views (presumably, pleadings), only written evidence is permitted and the conventional statutory rules on evidence do not apply. The ECJ – reasoning by reference to Articles 1/1 (effective and rapid review procedures) ; Article 2/1a (the need for interim measures) ; Article 2/2 (which contemplates that separate bodies could regulate/determine different aspects of review procedures) ; Article 2/3 (review procedures need not automatically suspend the contract award procedure in question) ; and Article 2/4 (which permits separate procedures for the determination of interim measures and the substantive claim) – held that the Netherlands’ national laws were compatible with the Remedies Directive.

The court further found no incompatibility in the Netherlands’ national laws whereby interim judgment does not lead to the final judicial determination and does not form part of the decision making process leading to the final determination. Finally, reformulating one of the questions referred, the ECJ ruled that there is no infringement of the Remedies Directive in circumstances where the national court of final decision makes a determination which conflicts with the decision of the interim measures body/court. While most commentators considered this decision of the ECJ predictable, [15] it was undoubtedly welcomed in those Member States whose laws provide for recourse to tribunals at the first stage to facilitate swift review. Of course, under the Amended Remedies Directive automatic suspension of the contract award procedure is now required of the national laws of Member States. The possibility that the decision of the substantive review court will, ultimately, differ from that of the interim measures court seems an inevitable consequence of the imperfections likely to be found in any judicial interim remedies process.

The Proactive Commission

The exercise of the Commission’s new interventionist powers under the two successive Remedies Directives are illustrated in (inter alia) Commission –v- Ireland [16] and, less recently, Commission –v- France . [17] To dwell on the details of the questions referred to and rulings made by the ECJ in the latter case is probably unhelpful, given the subsequent advent of the Amended Remedies Directive. At the stage when the Commission brought proceedings against France, its intervention was designed to ensure that the standstill principles (now rules) determined by the ECJ in Alcatel v Austria [18] were being given full effect in Member States. In short, the Commission’s case was based on the proposition that France was in breach of its then existing implied duties under Directives 89/665 and 92/13, as interpreted by the ECJ in Alcatel . The provision of French national law which the ECJ found offensive was that which prescribed a ten-day period for the contract award authority to respond to an applicant’s notice during which (a) the applicant could not commence proceedings and (b) the separate ten-day standstill period between notification of contract award and conclusion of the contract was not suspended. Viewed now through the prism of the Amended Remedies Directive, this provision of French law would be invalid.

Termination of Contract Award Process

Hospital Ingenieure –v- Stadt Wien [19]

Pursuant to this decision of the ECJ, where a contracting authority withdraws the invitation to tender for a public service contract, this must be vulnerable to a review procedure and be capable of being annulled where appropriate on the ground of infringement of any of the governing Community law rules. In thus holding, the court noted that the only provision in Directive 92/50 relating expressly to withdrawal was Article 12(2), which stipulated that candidates and tenderers must be informed of the reasons for this decision as soon as possible. Founding on Article 12(2), the court held that there is no implied obligation in the Directive requiring the contracting authority to pursue the award procedure to its conclusion. However, any termination decision is subject to the fundamental rules of Community law and in particular the right of establishment and the freedom to provide services. Moreover, any such decision must comply with the obligation of transparency which derives from the principle of equal treatment and the principle of non-discrimination on the ground of nationality.

The second question determined by the ECJ concerned the extent of national review of the legality of a withdrawal decision. The court held that national rules limiting the extent of the review of legality to a mere examination of whether the decision was arbitrary were incompatible with Directives 89/665 and 92/50. In thus holding, the court placed emphasis on the principle of effectiveness enshrined in Directive 89/665, ruling that this question was embraced fully by the latter. Finally, in answering the third question, the ECJ ruled that determination of the time to be taken into consideration for assessing the legality of a termination /withdrawal decision is a matter for national law, subject to the principles of equivalence and effectiveness. [20]

In the United Kingdom, the recent decision in Federal Security Services v Northern Ireland Court Service [21] illustrates the application of the Hospital Ingenieure principles. The ECJ has also held that it is not necessary to establish serious or exceptional circumstances in order to justify a procurement withdrawal decision : see Metalmeccanica –v- Ant Der Salzburger . [22] Finally, there is an instructive passage in Professor Arrowsmith’s textbook :

For various reasons a purchaser may wish to terminate an award procedure. It may decide to abandon the project altogether – for example because changed circumstances mean that the goods are no longer required, or because the offers received indicate that the project is too expensive. Alternatively it may decide to begin a new procedure – for example, if it thinks this might produce better results, or where it has made a mistake in the first procedure, such as omitting appropriate award criteria”. [23]

Changes to an Existing Contract

This issue arises subsequent to contract award and during the contractual term, when the parties wish to alter the contractual provisions e.g. concerning price, scope, quantities, duration, named subcontractors (etc). This is not uncommon during difficult economic times. The question which arises is whether this requires the initiation of a new contract award procedure by the public authority concerned.

The Pressetext Case [24]

This concerned a long running contract for press agency services between the Austrian Government and APA. The contracting parties altered their contract during its currency. These alterations entailed transferring the contract to an APA subsidiary ; converting the prices to Euro and rounding them down ; updating the price index under price review clauses ; increasing a rebate from 15% to 25% ; and waiving the right to terminate the contract for three years. In deciding this case, the ECJ applied the following two overarching tests :

(a) Pursuant to the amendments, were the contractual terms materially different in character from those contained in the original contract ;

(b) Did they demonstrate the intention of the parties to renegotiate the essential terms ?

The ECJ, firstly, reiterated the two governing tests :

“[34] In order to ensure transparency of procedures and equal treatment of tenderers, amendments to the provisions of a public contract during the currency of the contract constitute a new award of a contract within the meaning of Directive 92/50 when they are materially different in character from the original contract and, therefore, such as to demonstrate the intention of the parties to renegotiate the essential terms of that contract (see, to that effect, Case C-337/98 Commission v France [2000] ECR I-8377, paragraphs 44 and 46).
[35] An amendment to a public contract during its currency may be regarded as being material when it introduces conditions which, had they been part of the initial award procedure, would have allowed for the admission of tenderers other than those initially admitted or would have allowed for the acceptance of a tender other than the one initially accepted.
[36] Likewise, an amendment to the initial contract may be regarded as being material when it extends the scope of the contract considerably to encompass services not initially covered. This latter interpretation is confirmed in Article 11(3)(e) and (f) of Directive 92/50, which imposes, in respect of contracts concerning, either solely or for the most part, services listed in Annex I A thereto, restrictions on the extent to which contracting authorities may use the negotiated procedure for awarding services in addition to those covered by an initial contract.
[37] An amendment may also be regarded as being material when it changes the economic balance of the contract in favour of the contractor in a manner which was not provided for in the terms of the initial contract.

The court’s ruling is expressed in the following passages :

[40] As a rule, the substitution of a new contractual partner for the one to which the contracting authority had initially awarded the contract must be regarded as constituting a change to one of the essential terms of the public contract in question, unless that substitution was provided for in the terms of the initial contract, such as, by way of example, provision for sub-contracting...

[44] According to the information in the case-file, APA-OTS is a wholly-owned subsidiary of APA, APA has the power to instruct APA-OTS in the conduct and management of its business and the two companies are bound by a contract under which profit and loss are transferred to and assumed by APA. The case-file also shows that a person authorised to represent APA assured the contracting authority that, following the transfer of the OTS services, APA was jointly and severally liable with APA-OTS and that there would be no change in the overall performance experienced.
[45] Such an arrangement is, in essence, an internal reorganisation of the contractual partner, which does not modify in any fundamental manner the terms of the initial contract…
It follows that the answer to the first question must be that the terms ’awarding’ and ’awarded’, used in Articles 3(1), 8 and 9 of Directive 92/50, must be interpreted as not covering a situation, such as that in the main proceedings, where services supplied to the contracting authority by the initial service provider are transferred to another service provider established as a limited liability company, the sole shareholder of which is the initial service provider, controlling the new service provider and giving it instructions, provided that the initial service provider continues to assume responsibility for compliance with the contractual obligations…
[70] It follows that the answer to the second question must be that the terms ’awarding’ and ’awarded’, used in Articles 3(1) and 8 and 9 of Directive 92/50, must be interpreted as not covering an adjustment of the initial agreement to accommodate changed external circumstances, such as the conversion to euros of prices initially expressed in national currency, the minimal reduction in the prices in order to round them off, and the reference to a new price index where provision was made in the initial agreement to replace the price index fixed previously…
[88] Consequently, the answer to the third question must be that the terms ’awarding’ and ’awarded’, used Articles 3(1), 8 and 9 of Directive 92/50, must be interpreted as not covering a situation such as that at issue in the main proceedings, where a contracting authority, through the use of a supplemental agreement, agrees with the contractor, during the period of validity of a contract concluded with it for an indefinite period, to renew for a period of three years a waiver of the right to terminate the contract by notice, the waiver no longer being in force at the time of the amendment, and agrees with it to lay down higher rebates than those initially provided for in respect of certain volume-related prices within a specified area of supply ”. [25]
Wall –v- Frankfurt [26]
In bidding successfully for a concession contract, the bidder named Wall as a key subcontractor. Following the successful bid, the authority permitted the bidder to appoint a different subcontractor. Wall brought proceedings and the matter was referred to the ECJ, which held that the act of changing a subcontractor amounts to a material change, requiring a fresh process, if it constituted a “decisive factor” in the award decision. It did not matter that the contract terms themselves contemplated the possibility of such a change. The ECJ expressed its ruling in the following terms :
“[43] … where amendments to the provisions of a service concession contract are materially different in character from those on the basis of which the original concession contract was awarded, and are therefore such as to demonstrate the intention of the parties to renegotiate the essential terms of the contract, all necessary measures must be taken, in accordance with the national legal system of the Member State concerned, to restore the transparency of the procedure, which may extend to a new award procedure. If need be, a new award procedure should be organised in a manner appropriate to the specific features of the service concession involved, and should ensure that an undertaking located in another Member State has access to sufficient information on that concession before it is awarded.
In relation to a further question included in the national court’s reference, the ECJ ruled :
“[60] The answer to Question 5 is therefore that, where an undertaking which is the holder of a concession concludes a contract for services within the scope of a concession it has been awarded by a regional or local authority, the obligation of transparency deriving from Articles 43 EC and 49 EC and from the principles of equal treatment and non-discrimination on grounds of nationality does not apply if that undertaking was set up by the regional or local authority for the purpose of waste disposal and street cleaning but also operates in the market, belongs to that regional or local authority to the extent of a 51% holding, but decisions of shareholders can be taken only by a three-quarters majority of votes at a general meeting of the company, has only a quarter of the members of its supervisory board, including the chairman, appointed by the regional or local authority, and obtains more than half its turnover from bilateral contracts for waste disposal and street cleaning in the territory of that regional or local authority, which reimburses itself by means of municipal taxes on its residents. [27]
Relevant Contracts

Helmut Muller [28]

The German Federal Agency invited bids to purchase the site of an ex-army barracks. Certain private developers submitted their plans for the use of the site to the local authority. The relevant agency then sold the lands to the bidder whose plans the local authority preferred. Was this a public works contract or a simple sale of land ? In its ruling, the ECJ highlighted the definition of “public works contract” in Article 1(2)(b) of Directive 2004/18. The court reasoned as follows :

“[41] It should be noted at the outset that the sale to an undertaking, by a public authority, of undeveloped land or land which has already been built upon does not constitute a public works contract within the meaning of Article 1(2)(b) …

First, such a contract requires that the public authority has assume the position of purchaser and not seller. Second, the objective of such a contract must be the execution of works …

[54] … the concept of ‘public works contracts’’ within the meaning of Article 1(2)(b) … requires that the works which are the subject of the contract be carried out for the contracting authority’s immediate economic benefit ; it is not, however, necessary that the service should take the form of the acquisition of a material or physical object”.

The court then turned to consider the issue of urban planning powers :

“[55] … The question arises as to whether those conditions are satisfied where the purpose of the intended works is to fulfil an objective in the public interest, the achievement of which is incumbent on the contracting authority, such as the development or coherent planning of part of an urban district.
[56] In the Member States of the European Union, the execution of building projects, at least those of a certain size, is normally subject to prior authorisation by the public authority having urban-planning powers. That authority must assess, in the exercise of its regulatory powers, whether the execution of the works is in the public interest.
[57] However, it is not the purpose of the mere exercise of urban-planning powers, intended to give effect to the public interest, to obtain a contractual service or immediate economic benefit for the contracting authority, as is required under Article 1(2)(a) of Directive 2004/18.
[58] Consequently, the answer to the first and second questions is that the concept of ’public works contracts’, within the meaning of Article 1(2)(b) of Directive 2004/18, does not require that the works which are the subject of the contract be materially or physically carried out for the contracting authority, provided that they are carried out for that authority’s immediate economic benefit. The latter condition is not satisfied through the exercise by that contracting authority of regulatory urban-planning powers.”

Turning to the other questions raised in the reference, the court ruled further :

“[63] … the concept of ’public works contracts’, within the meaning of Article 1(2)(b) of Directive 2004/18, requires that the contractor assume a direct or indirect obligation to carry out the works which are the subject of the contract and that that obligation be legally enforceable in accordance with the procedural rules laid down by national law. “.

Next, the court ruled :

“[69] …the ’requirements specified by the contracting authority’, within the meaning of the third variant set out in Article 1(2)(b) of Directive 2004/18, cannot consist in the mere fact that a public authority examines certain building plans submitted to it or takes a decision in the exercise of its regulatory urban-planning powers.”.

In its answer to the next question, the court ruled that there was no pubic works concession within the meaning of Article 1(3) of the Directive. Finally, the court ruled as follows :

“[89] … in circumstances such as those of the case in the main proceedings, the provisions of Directive 2004/18 do not apply to a situation in which one public authority sells land to an undertaking, even though another public authority intends to award a works contract in respect of that land but has not yet formally decided to award that contract.”.

Commission –v- Germany [29]

In this case the City of Cologne awarded a contract to a private developer to construct four new exhibition halls, which the City would subsequently rent. This was classified as a lease under German law. The halls would be constructed according to detailed specifications prepared by the City. The ECJ held that this was a public works contract. In particular, it was immaterial that the City would ultimately own the buildings and make them available to others for exhibitions.

Hans Oymanns –v- AOK Rheinland/Hamburg [30]

In this case, the first question referred concerned the status of German statutory sickness insurance funds. The ECJ ruled that these were “bodies governed by public law” and, hence, contracting authorities within the embrace of Directive 2004/18. The ECJ recalled its jurisprudence to the effect that the three conditions specified in Article 1(9)(a), (b) and (c) of the Directive must be fulfilled cumulatively if an entity is to be considered a body governed by public law. It held that these conditions were fulfilled in this case :

“[49] The statutory sickness insurance funds at issue are legal persons governed by public law, they were established for the specific purpose of meeting needs relating to public health, which are needs in the general interest, and those needs do not have an industrial or commercial character inasmuch as the benefits are provided on a non-profit-making basis. It remains to be considered, therefore, whether at least one of the alternative conditions laid down in the three alternatives set out in letter (c) of the second subparagraph of Article 1(9) has been fulfilled in the present case and, first, the condition concerning their being financed, for the most part, by the State.

The court then reasoned that the protection of public health is a fundamental task of the State and that direct or indirect State financing was sufficient for the purposes of Article 1(9)(c). Its omnibus conclusion appears in the following passage :

“[59] … the first alternative of letter (c) of the second subparagraph of Article 1(9) of Directive 2004/18 must be interpreted as meaning that there is financing, for the most part, by the State when the activities of statutory sickness insurance funds are chiefly financed by contributions payable by members, which are imposed, calculated and collected according to rules of public law such as those in the main proceedings. Such sickness insurance funds are to be regarded as bodies governed by public law and therefore as contracting authorities for the purposes of the application of the rules in that directive.

Auroux –v- Commune de Roanne [31]

In this case, the Municipal Council of Roanne, exercising its powers under the Town Planning Code, executed a contract with another public authority for the construction of a new leisure centre. This was an urban regeneration measure. Pursuant to the contract, the public authority concerned would acquire the land and was to procure funding and commission the works, but would not itself execute the works. The municipality partly funded the works and specified the requirements. The ECJ ruled as follows :

“[47] … An agreement by which a first contracting authority entrusts a second contracting authority with the execution of a work constitutes a works contract within the meaning of Article 1(a) of the Directive, regardless of whether or not it is anticipated that the first contracting authority is or will become the owner of all or part of that work”.

In thus concluding, the ECJ emphasized the main purpose of the contract, highlighting that the various service elements provided for in the agreement – the acquisition of property, obtaining finances, engaging an architect and engineer and marketing the buildings – were simply features of the exercise of completing the works in question. [32]


[1] [2010] EUECJ C-406/08 and [2010] 2CMLR 47.

[2] Directive 89/665.

[3] See paragraph [39].

[4] See paragraph [40].

[5] SI 2011 No. 2053.

[6] [2010] PTSR I-403. Case C-456/08.

[7] Case C-532/06 and [2008] ECR I-251.

[8] Paragraph [].

[9] [2010] 2 CMLR3. Case C-199/07.

[10] See also Linakis –v- Dimos and Others, Case C-532/06, 24th January 2008, paragraphs [26] – [32].

[11] Case C-570/08 : Unreported, 21/10/10.

[12] [2011] 1 CMLR 26. Case C-314/09.

[13] Case C-275/03, 14th October 2004.

[14] Case C-568/08 : unreported, 9th December 2010.

[15] See Public Procurement Law Review 2011, “Case Comment” (David Magowan).

[16] See paragraph [29] above.

[17] Case C-327/08, unreported, 11th June 2009.

[18] [1999] ECR I-7671. Case C-81/98.

[19] [2004] 2 CMLR 16. Case C-92/00.

[20] See paragraphs [], supra.

[21] [2009] NIQB 15, paragraphs [39] and[42] especially.

[22] [1999] All ER(D) 1015, paragraphs [23] – [25].

[23] The Law of Public and Utilities Procurement (2nd Edition), paragraph 7.168.

[24] Case C-454/06

[25] [2008] ECR I-4401, emphasis added.

[26] Case C-91/08.

[27] [2010] EUECJ C-91/08 [Decision on 13th April 2010].

[28] [2010] EUECJ C-451/08.

[29] Case C-536/07.

[30] [2009] EUECJ C-300/07.

[31] [2007] ECR I-385, Case C-220/05.

[32] See paragraph [46].