It’s pleasure to host the views of Prof Roberto Caranta on the controversial Kolin case. Through the years, I’ve realized so much and developed my considering because of debates with Roberto. Once we agree, his views at all times have fascinating nuance and, once we disagree, his views supply sturdy mental problem for me. It is a case the place we’ve got fairly completely different views on the massive image, but additionally converging views on the challenges forward. I hope studying Roberto’s ideas and contrasting them with mine (right here) will assist push the controversy extra typically. Roberto’s views had been first revealed as an Op-Ed for EU Regulation Stay on 7 Nov 2024.
Commerce has been a vital part within the worldwide financial and authorized order constructed following the autumn of the Berlin Wall, but it surely can’t be taken as a right anymore. As lately indicated by D.L. Sloss, the ‘rules-based worldwide order confronts vital challenges, however it’s not unravelling—a minimum of, not but’. Just a few days in the past, the Centre for Worldwide Governance Innovation indicated that ‘The worldwide order is beneath pressure, propelled by the complicated interaction of quite a few developments and impacts. Converging components are redefining the contours of the worldwide system, necessitating vital adaptation by states.’ (Situations of Evolving International Order).
This Op-Ed relies on the belief that public procurement regulation is just not and can’t be insulated from these modifications – veritable seismic shifts – and from current coverage and normative actions taken by EU establishments. What was ‘traditionally’ the place of those self same establishments might certainly be passé.
The Court docket of Justice judgment in Kolin Inşaat Turizm Sanayi ve Ticaret (C-652/22) (‘Kolin’), which addresses for the primary time the authorized place of third nation financial operators wishing to bid for a procurement contract in one of many Member States, should for my part be learn on this altering context.
This assumption leads me to diverge on some factors from the evaluation of the Kolin judgment by Albert Sanchez-Graells.
Is the Court docket of Justice operating wild?
Earlier than going into the deserves of the judgment, just a few phrases are warranted in relation to Albert Sanchez-Graells’ assertion that the Court docket of Justice went out of its technique to ‘reply a query it had not been requested’. For my part, the Court docket of Justice didn’t reply a unique query however, following the Opinion of Advocate Normal Collins, declared the query inadmissible. With regards to this particular procedural facet – as is the case with different features – EU regulation follows the French method, contemplating questions of admissibility as moyens d’ordre public. As a consequence, as indicated by Lasok in his European Court docket Apply and Process, ‘The Court docket’s lack of jurisdiction is one thing which the Court docket should increase of its personal movement’.
The Advocate Normal having raised a problem of inadmissibility, in my view, the Court docket of Justice had no selection however to deal with it. Not that the Court docket of Justice has by no means been accused – in a roughly veiled approach – of operating wild. Up to now, nonetheless, the indictment focused the Court docket of Justice for its assumed energy grabbing to the detriment of the Member States. Simply consider Hjalte Rasmussen On Regulation and Coverage within the European Court docket of Justice. The competence of the EU with regards to worldwide commerce regulation is just not a lot disputed on this case, even when a number of the Member States engaged in arguments claiming some residual powers that had been so disparate as to level solely to a lot authorized uncertainty.
This uncertainty is additional compounded by a shift in coverage preferences at EU degree that was made manifest with the adoption of each the Worldwide Procurement Instrument (IPI) and the International Subsidies Regulation (FSR). Unnecessary to recall that this shift in coverage was referred to as for by the Council – i.e. the Member States. In 2019, it was certainly the Council deciding that ‘the EU should additionally safeguard its pursuits within the gentle of unfair practices of third nations, making full use of commerce defence devices and our public procurement guidelines, in addition to guaranteeing efficient reciprocity for public procurement with third nations’. The Council additionally referred to as ‘for resuming discussions on the EU’s worldwide procurement instrument’ (see right here). ‘Reciprocity’ is the important thing phrase within the current EU method to the worldwide dimension of public procurement markets.
After all, one may query the knowledge of this coverage shift. However an influence seize have to be excluded right here, and having a judgment on the matter can’t, in and of itself, be a foul factor. After all, the issue stands out as the high quality of the judgment, which could also be measured by the quantity and gravity of points {that a} judicial choice leaves open – or opens and leaves unanswered.
No EU rights for financial operators from third nations which aren’t social gathering to a commerce settlement with the EU
To evaluate whether or not financial operators from third nations not benefiting from reciprocal commerce agreements might take part in public procurement procedures in EU Member States, the reasoning of the Court docket of Justice first analyses the related authorized provisions in Directive 2014/25/EU, after which the competence regarding worldwide commerce (commerce in EU parlance rooted in a time when English was not dominant).
Based on the Court docket of Justice, Article 43 of Directive 2014/25/EU ‘displays’ the EU’s worldwide commitments to present equal participation rights to financial operators hailing from third nations benefiting from worldwide commitments signed by the EU (paragraph 43, referring to Recital 27 of the Directive). The Court docket’s reference is firstly to the GPA. This understanding is in step with the present literature (Annamaria La Chimia) and, as identified by Albert Sanchez-Graells, doesn’t add something to the already pre-existing worldwide obligations. Nevertheless, the Court docket of Justice reads extra into Directive 2014/25/EU. Based on the Court docket, within the absence of exclusion measures adopted by the EU, though the Directive doesn’t preclude third nation financial operators not benefiting from market entry rights
from being allowed to take part in a public procurement process ruled by Directive 2014/25, it does, nonetheless, preclude these financial operators from having the ability, within the context of their participation in such a process, to depend on that directive and thus to require that their tender be handled equally to these submitted by tenderers from Member States and by the tenderers from third nations referred to in Article 43 of that directive (para. 45).
Reasoning in any other case would certainly imply that the identical advantages mirrored in Article 43 can be accorded to financial operators from all third nations, no matter whether or not they’re lined by a global settlement (paras. 46 and 47). The reasoning is additional supported by reference to the IPI Regulation, which confirms that financial operators not benefiting from worldwide dedication could also be excluded for public procurement procedures within the EU (para. 49). This conclusion is hardly disputable. There can be no incentive for third nations to barter agreements to achieve reciprocal entry if participation was already allowed (Annamaria La Chimia).
To rebut the argument superior from a number of the Member States to the impact that Directive 2014/25/EU doesn’t stand in the best way of nationwide regulation in accordance entry to financial operators from all third nations, even these not sure by worldwide agreements, the Court docket of Justice widened the reasoning to incorporate the EU unique competence in issues of worldwide commerce. The Court docket held that solely the EU is competent to determine which financial operators have entry to the European procurement markets. These choices happen via the negotiation and conclusion of worldwide agreements. This unique competence of the EU is grounded on Article 3 TFEU, whereby Article 3(1)(e) lists ‘widespread industrial coverage’ among the many areas of EU unique competence. Article 3(2) additional signifies that ‘The Union shall even have unique competence for the conclusion of a global settlement when its conclusion is supplied for in a legislative act of the Union or is important to allow the Union to train its inside competence, or in as far as its conclusion might have an effect on widespread guidelines or alter their scope’. This coverage is additional articulated in Articles 206 and 207 TFEU. Based on the Court docket of Justice,
Any act of normal software particularly meant to find out the preparations beneath which financial operators from a 3rd nation might take part in public procurement procedures within the European Union is corresponding to to have direct and speedy results on commerce in items and providers between that third nation and the European Union, with the outcome that it falls throughout the unique competence of the European Union (…) (para. 57).
The Court docket once more refers back to the IPI Regulation to strengthen its conclusion in regards to the unique competence of the EU in relation to the adoption of ‘measures of normal software which may be taken with regard to financial operators of a 3rd nation which has not concluded a global settlement with the European Union’ (para. 59).
Right here once more the dearth of competence of the Member States to legislate on the matter can hardly be disputed, because the IPI provides the Fee, and the Fee alone, the ability to take measures to exclude participation of financial operators from particular third nations with a purpose to pressure their hand in negotiating reciprocal entry to the respective procurement markets.
An unavoidable limitation
Some critics argue that there’s incoherence within the reasoning of the Court docket of Justice the place it stops wanting merely declaring that financial operators of a 3rd nation which has not concluded a global settlement with the EU can’t take part in public procurement procedures within the Member States.
Certainly, the Court docket of Justice restricts the competence of the EU – and the correlative lack of competence of the Member States – to the adoption of ‘acts of normal software’ regarding participation in public procurement procedures in a minimum of three paragraphs of the judgment (paras. 57, 59 and 61). As a substitute, the Court docket of Justice concedes that particular person contracting authorities and entities might effectively enable the participation of third nation financial operators not benefiting from market entry agreements in particular person procurement procedures (e.g. paras. 45, 47 and 63 ff).
Right here once more it’s for my part uncertain whether or not the Court docket might have gone additional than it went. The potential participation in public procurement procedures of such financial operators is implied in each in Article 86 of Directive 2014/25/EU and within the IPI Regulation (paras. 58 and 59). The latter can be made moot if no participation in any respect was potential. It will make no sense to exclude them if they’d no risk to take part within the first place.
Moreover, beneath Article 2(1) TFEU, ‘When the Treaties confer on the Union unique competence in a selected space, solely the Union might legislate and undertake legally binding acts, the Member States having the ability to take action themselves provided that so empowered by the Union or for the implementation of Union acts’. This clearly applies to ‘acts of normal software’. The choice to permit participation in particular person procurement procedures is just not such an act and arguably doesn’t even quantity to a ‘legally binding choice’. There may be some similarity right here with the excellence between ‘regulation’ and ‘shopping for choice’ (or between ‘market regulator’ and ‘market participant’) that defines and limits the appliance of the US Commerce Clause within the space of public procurement as mentioned by Jason Czarnezki in his comparability of EU and US procurement regulation.
A complete exclusion is perhaps problematic in case no EU or different financial operator benefiting from the appropriate to market entry is on the market. Unavoidably, contracting authorities or entities are left to
assess whether or not financial operators of a 3rd nation which has not concluded a global settlement with the European Union guaranteeing equal and reciprocal entry to public procurement needs to be admitted to a public procurement process and, if it decides to confess them, whether or not provision needs to be made for an adjustment of the outcome arising from a comparability between the tenders submitted by these operators and people submitted by different operators (para. 63).
A patently insufficiently outlined regime
The place I can’t however facet with Albert Sanchez-Graells is in lamenting the gravely inadequate steering given by the Court docket of Justice regarding the guidelines relevant to these particular person circumstances of participation in public procurement of financial operators from third nations not benefiting from market entry.
The Court docket of Justice locations on particular person contracting authorities and entities the heavy burden of designating the regime relevant to that participation. The indication is in any case to deal with these financial operators otherwise. They might be excluded and if not, provisions is perhaps made ‘for an adjustment of the outcome’ of the award process (paragraph 63). The selection between outright exclusion and ‘adjustment’ is according to Article 6(6) of the IPI Regulation, indicating that the Fee might determine to ‘prohibit the entry of financial operators, items or providers from a 3rd nation to public procurement procedures by requiring contracting authorities or contracting entities to:
(a) impose a rating adjustment on tenders submitted by financial operators originating in that third nation; or
(b) exclude tenders submitted by financial operators originating in that third nation’.
It’s, nonetheless, unsure how delegating this energy to particular person contracting authorities and entities is perhaps coordinated with the competence the IPI Regulation vests within the Fee. The chance of dissonance and confusion is huge, and contracting authorities and entities must carefully watch IPI measures taken to ensure that they make the required changes or exclude the related financial operators because the case is perhaps.
Moreover, the contracting authorities and entities are empowered to replicate, within the procurement paperwork, ‘the target distinction between the authorized scenario of these operators, on the one hand, and that of financial operators of the European Union and of third nations which have concluded such an settlement with the European Union’ (para. 64). A lot in order that ‘nationwide provisions transposing Directive 2014/25’ can’t be utilized to these financial operators (para. 65). The identical is clearly true of nationwide provisions implementing the opposite public procurement and concessions directives. Ultimately, ‘Whereas it’s conceivable that the preparations for remedy of such operators ought to adjust to sure necessities, corresponding to transparency or proportionality, an motion by a type of operators looking for to complain that the contracting entity has infringed such necessities may be examined solely within the gentle of nationwide regulation and never of EU regulation’ (para. 66).
The issue right here is that in most Member States there aren’t any public procurement provisions completely different from these implementing EU regulation. Contracting authorities and entities are thus left in a normative vacuum. It’s true that in lots of Member States considerably completely different purely home provisions apply to contracts under the edge and never having a cross-border curiosity in addition to to different excluded contracts. Nevertheless, these guidelines are inclined to set various and lighter procedures. It’s largely inconceivable to handle an award process following two discrete units of guidelines relying on who’s the tenderer. The choice once more is between some type of choice, together with its drawbacks, or a discrete regime regarding qualification, e.g. by limiting acceptable references for earlier expertise to contracts awarded within the EU.
One other potential distinction is perhaps on cures. Some information – admittedly outdated information – signifies that in some Member States cures don’t apply to contracts under the thresholds or excluded contracts (see right here). One potential possibility is perhaps to increase this lack of cures to financial operators from third nations which haven’t concluded an settlement with the EU, however as was proven by Albert Sanchez Graells, this is only one of 4 choices, and probably not the one most used to date. Furthermore, it’s uncertain how this might be squared with the appropriate to a good trial and an efficient treatment flowing from Article 6 and 13 of the ECHR. As argued by Pedro Telles, the relevant regime of cures is thus left unclear.
Wanting ahead to the reform of the 2014 directives
For my part, the case might have hardly been determined otherwise. That mentioned, contracting authorities and entities are left in a authorized limbo. The Court docket of Justice clearly leaves the door open to future EU laws on the matter. Contracting authorities and entities might enable such participation solely ‘Within the absence of acts adopted by the European Union’ (para. 63).
Article 43 of Directive 2014/25/EU – and its corresponding provisions in different texts corresponding to Article 25 of Directive 2014/24/EU – wants being reformed to obviously replicate the truth that EU public procurement markets not solely have to be opened in some circumstances, however that they is perhaps closed as effectively.
One possibility is full closure. This, nonetheless, may depart us with out sellers in some circumstances and would severely curtail the margin of manoeuvre the Fee presently enjoys beneath the IPI Regulation. This leaves us with a provision that higher defines the ability of ‘adjustment’ of contracting authorities and entities. The modifications that result in the adoption of the Web Zero Business Act (NZIA) present a cautionary story. Article 19(2)(d) of the Fee Proposal supplied for changes linked to ‘the tender’s contribution to resilience, making an allowance for the proportion of the merchandise originating from a single supply of provide’. This method didn’t survive the trilogue. The usage of contract clauses for the outright limitation of provides from third nations has as a substitute been most well-liked in what has turn out to be Article 25 NZIA.
On the event of the reform, to keep away from financial operators not benefiting from a market entry regime dodging the bullet by merely opening a store in a single EU nation, extending the availability of Article 85(5) Directive 2014/25/EU throughout all of the directives is also thought of.
Within the meantime, a revision of the Steerage on the participation of third-country bidders and items within the EU procurement market can be welcome to assist struggling contracting authorities and entities.
