Commission v Austria (Law relating to undertakings) [2004] EUECJ C-212/02 (24 June 2004)

Judgment By an application lodged at the Registry of the Court on 5 June 2002, the Commission of the European Communities brought an action under Article 226 EC for a declaration that, inasmuch as the Landesvergabegesetze (regional public procurement laws) of the Länder of Salzburg, Styria, Lower Austria and Carinthia do not in all cases provide for a review procedure whereby an unsuccessful tenderer may have an award decision set aside, the Republic of Austria has failed to fulfil its obligations under Article 2(1)(a) and (b) of Council Directive 89/665/EEC of 21 December 1989 on the coordination of the laws, regulations and administrative provisions relating to the application of review procedures to the award of public supply and public works contracts (OJ 1989 L 395, p. 33) and of Council Directive 92/13/EEC of 25 February 1992 coordinating the laws, regulations and administrative provisions relating to the application of Community rules on the procurement procedures of entities operating in the water, energy, transport and telecommunications sectors (OJ 1991 L 76, p. 14). Legal framework Community legislation Article 1(3) of Directive 89/665 provides that: -�The Member States shall ensure that the review procedures are available, under detailed rules which the Member States may establish, at least to any person having or having had an interest in obtaining a particular public supply or public works contract and who has been or risks being harmed by an alleged infringement. In particular, the Member States may require that the person seeking the review must have previously notified the contracting authority of the alleged infringement and of his intention to seek review.-� In addition, Article 2(1)(a) and (b) of Directive 89/665 states that Member States are to ensure that the measures which they adopt include, for cases where a dispute arises in respect of award of a public contract, provision for the powers to: -�(a) take, at the earliest opportunity and by way of interlocutory procedures, interim measures with the aim of correcting the alleged infringement or preventing further damage to the interests concerned, including measures to suspend or to ensure the suspension of the procedure for the award of a public contract or the implementation of any decision taken by the contracting authority; (b) either set aside or ensure the setting aside of decisions taken unlawfully, including the removal of discriminatory technical, economic or financial specifications in the invitation to tender, the contract documents or in any other document relating to the contract award procedure-�. Article 1(3) and Article 2(1)(a) and (b) of Directive 92/13 contain essentially the same provisions. National legislation The Bundesvergabegesetz 2002 (Federal Procurement Law of 2002), which was published on 28 June 2002 (BGBl. I, 2002/99), lays down, inter alia, a definition of the award decision, an obligation to communicate that decision to tenderers and a suspension period during which the awarding authority cannot validly award the contract to a tenderer. The Bundesvergabegesetz 2002 states that the rules concerning contract awards must be the same for the Federal State, the Länder and the communes. At the Federal level, the Bundesvergabegesetz 2002 entered into force on 1 September 2002. For the Länder, the equivalent legislation -� namely, the Landesvergabegesetze -� is as follows: -� Styria: the Supplementary Law (LGB1. 2002/41) entered into force on 16 March 2002 and was notified to the Commission on 1 July 2002. -� Lower Austria: the Supplementary Law (LGB1. 7200-5) entered into force on 31 January 2002 and the parties agree that it was notified to the Commission. -� Carinthia: the Supplementary Law was adopted on 23 May 2002 and is expected to enter into force in October 2002. -� Salzburg: the equivalent provisions were to be introduced upon the entry into force in that Land of the Federal Law on 1 January 2003. Before the entry into force of those laws, a Circular from the Austrian Federal Chancellery stated that there should be a period between the award decision and the conclusion of the contract and an obligation on awarding authorities to communicate award decisions to all tenderers. Pre-litigation procedure The Commission, since it considered that the Austrian authorities had not satisfied the conditions laid down by the EC Treaty for the purpose of correctly transposing Directives 89/665 and 92/13 on the review procedures available to unsuccessful tenderers against award decisions, gave the Austrian Government notice by letter of 22 November 1999 to submit its observations within two months. The latter sent its response on 8 February 2000, stating that it acknowledged most of the complaints put forward by the Commission but pointing out that, in the meantime, the Federal legislation had been amended and new laws had been adopted at the level of the Länder. On 18 July 2001, the Commission delivered a reasoned opinion in which it asked the Republic of Austria to adopt the measures necessary to comply with that opinion within two months of its notification. The Commission took into account the legislative amendments which had been made at Federal or regional level and retained only the complaints which in its opinion were still relevant. The Austrian Government responded to the reasoned opinion by letter of 26 September 2001, stating that legislative amendments had meanwhile been made in the Länder of Burgenland and Tyrol. The Commission nevertheless took the view that Directives 89/665 and 92/13 had not been wholly transposed into Austrian law at the end of the two-month period laid down in the reasoned opinion, which ended on 26 September 2001. No review procedure whereby an unsuccessful tenderer may have the award decision set aside before the conclusion of the contract awarded was provided for in the Landesvergabegesetze for the Länder of Salzburg, Styria, Lower Austria and Carinthia. The Commission accordingly decided to bring the present action. Substance Arguments of the parties The Commission bases its action for failure to fulfil obligations on the position adopted by the Court in Case C-81/98 Alcatel Austria and Others [1999] ECR I-7671 , paragraph 43. The Court took the view that the provisions of Article 2(1)(a) and (b) of Directive 89/665 require Member States to provide in all cases a review procedure whereby an applicant may have set aside the contracting authority-�s decision prior to the conclusion of the contract as to the tenderer in a tender procedure with which it will conclude the contract. That right of review for tenderers is independent of the possibility for them to bring an action for damages once the contract has been concluded. The Commission states that the Austrian system makes it impossible to contest the award decision for two reasons. First, the award decision and the conclusion of the contract occur at the same time, depriving interested parties of any possible review in order to have an unlawful award decision set aside or to prevent the contract from being concluded. Secondly, the decision of the contracting authority notified to the person to whom the contract is awarded may, as a general rule, not be contested as unsuccessful tenderers are not persons to whom that decision is addressed. The effect of the applicable national legislation is therefore to preclude the possibility of an action to have the award decision set aside. Such a situation is incompatible with the requirements of the Community law in question. The relevant provisions of the directive must be implemented with unquestionable binding force and the specificity, precision and clarity necessary to satisfy the requirements of legal certainty (Case 168/85 Commission v Italy [1986] ECR 2945, paragraphs 11 and 13; Case C-433/93 Commission v Germany [1995] ECR I-2303 , paragraph 18; and Case C-225/97 Commission v France [1999] ECR I-3011, paragraph 37). The Austrian Government maintains, as its principal argument, that there is no prohibition on communicating the award decision to tenderers in the Länder. There is therefore no obligation, for the purpose of complying with the Community legislation, to adopt specific provisions requiring the communication of the award decision. It refers to paragraph 49 of Alcatel Austria and Others , cited above, which states that it is necessary to consider whether national provisions cannot be interpreted in a manner consistent with Directive 89/665. The Austrian Government contends that in the absence of explicit legislation in the Länder, contracting authorities and supervising bodies have latitude to fill possible gaps in the procedure by means of interpretation. It infers from this that national provisions which do not preclude compliant implementation constitute adequate transposition of the Directive, so that no action need be taken by the legislature. Nevertheless, the Austrian Government accepts that, following Alcatel Austria and Others , the Federal Chancellery adopted a Circular intended to ensure, until legal provisions had been adopted, a procedure in compliance with that which follows from that judgment when awarding public contracts. In addition, it maintains that that Circular could serve as a basis for decrees by the Governments of the Länder of Salzburg and Carinthia. While the Austrian Government recognises that that Circular and the decrees issued by the Länder are not binding in nature, it nevertheless considers that they create obligations for the authorities since the rules are interpreted solely within the framework of existing Community law and in no case against the law, thereby ensuring adequate transposition of the Directive. Findings of the Court The provisions of Directives 89/665 and 92/13, which are intended to protect tenderers against arbitrary decisions by the contracting authority, seek to reinforce existing arrangements for ensuring effective application of Community directives on the award of public contracts, in particular at the stage where infringements can still be rectified ( Commission v Germany , paragraph 23). Such protection cannot be effective if the tenderer is not able to rely on those rules against the contracting authority. Complete legal protection presupposes, first, an obligation to inform tenderers of the award decision. Legislation relating to access to administrative documents which merely requires that tenderers be informed only as regards decisions which directly affect them cannot offset the failure to require that all tenderers be informed of the contract award decision prior to conclusion of the contract, so that a genuine possibility to bring an action is available to them. The fact that such information is not prohibited does not release the Republic of Austria from its obligation to adopt legal provisions for the purpose of complying with the requirement to give practical effect to Directives 89/665 and 92/13. That Member State cannot claim to have ensured proper implementation of those directives by maintaining that nothing prevents the contracting authority from publishing award decisions some time before the conclusion of the contract. Such a power would in effect allow the contracting authority to decide whether or not to inform tenderers of the award decision, whereas those directives are intended to protect tenderers against arbitrary action on the part of the contracting authority. Complete legal protection also requires that it be possible for the unsuccessful tenderer to examine in sufficient time the validity of the award decision. Given the requirement that the Directive have practical effect, a reasonable period must elapse between the time when the award decision is communicated to unsuccessful tenderers and the conclusion of the contract in order, in particular, to allow an application to be made for interim measures prior to the conclusion of the contract. The Republic of Austria was therefore required to put in place appropriate procedures to enable unlawful decisions to be set aside and, in accordance with Articles 1(3) of Directives 89/665 and 92/13, to ensure that review procedures are available at least to any person having an interest in obtaining a public contract. That effectiveness depends not only on the existence of a sufficiently long interval in which tenderers may react to the award decision but also on the obligation to keep tenderers informed of the award decision. The Federal Circular subsequent to Alcatel Austria and Others invoked by the Austrian Government cannot be considered adequate transposition, even if its content might have influenced certain decrees issued in two Länder, since those decrees were issued after the time-limit laid down in the reasoned opinion. Since circulars are administrative practices which by their nature are alterable at will by the authorities and are not given the appropriate publicity, they cannot be regarded as constituting the proper fulfilment of Treaty obligations or as an adequate means to remedy, if necessary, the incompatibility of national legislative provisions with Community law ( Commission v Italy , paragraphs 11 and 13; Commission v Germany , paragraph 18; and Commission v France , paragraph 37). Those circulars are merely provisional in nature, as the Austrian Government admitted in its observations on the Commission-�s reasoned opinion and letter of formal notice. Transposition of a directive in a national legal order requires the definitive elimination of incompatibility through binding national provisions which have the same legal value as those which must be amended (see to that effect Case C-152/00 Commission v France [2002] ECR I-6973, paragraph 19). The Member State must establish a specific legal framework in the area in question, since the implementation of Community Directives must be ensured by adequate measures of implementation (Case C-339/87 Commission v Netherlands [1990] ECR I-851 ). Finally, while the Austrian Government states that amending laws have since taken effect, it is clear from its statements that they entered into force after the period of two months laid down in the reasoned opinion. The question whether a Member State has failed to fulfil its obligations must be determined by reference to the situation in the Member State at the end of the period laid down in the reasoned opinion. The Court cannot take account of any subsequent changes (Case C-147/00 Commission v France [2001] ECR I-2387 , paragraph 26, and Case C-354/99 Commission v Ireland [2001] ECR I-7657 , paragraph 45). Consequently, it must be held that, inasmuch as the Landesvergabegesetze (regional public procurement laws) of the Länder of Salzburg, Styria, Lower Austria and Carinthia do not in all cases provide for a review procedure whereby an unsuccessful tenderer may have an award decision set aside, the Republic of Austria has failed to fulfil its obligations under Article 2(1)(a) and (b) of Council Directive 89/665 and of Council Directive 92/13. Costs Under Article 69(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party-�s pleadings. Since the Commission has asked that the Republic of Austria be ordered to pay the costs and the latter has been unsuccessful, it must be ordered to pay the costs. On those grounds, THE COURT (Second Chamber) hereby: 1. Declares that inasmuch as the Landesvergabegesetze (regional public procurement laws) of the Länder of Salzburg, Styria, Lower Austria and Carinthia do not in all cases provide for a review procedure whereby an unsuccessful tenderer may have an award decision set aside, the Republic of Austria has failed to fulfil its obligations under Article 2(1)(a) and (b) of Council Directive 89/665/EEC of 21 December 1989 on the coordination of the laws, regulations and administrative provisions relating to the application of review procedures to the award of public supply and public works contracts and of Council Directive 92/13/EEC of 25 February 1992 coordinating the laws, regulations and administrative provisions relating to the application of Community rules on the procurement procedures of entities operating in the water, energy, transport and telecommunications sectors; 2. Orders the Republic of Austria to pay the costs. Timmermans Puissochet Schintgen Macken Colneric Delivered in open court in Luxembourg on 24 June 2004. R. Grass C. W. A. Timmermans Registrar President of the Second Chamber -� Language of the case: German. BAILII: Copyright Policy | Disclaimers | Privacy Policy | Feedback | Donate to BAILII