European Union: Court Confirms Advance Effects Of The New Procurement Directives

The effects of the "Effet utile" principle

As sufficiently known by practitioners of public procurement law, the transition pe-riod for the new Directives on public procurement law 2014/23/EU, 2014/24/EU and 2014/25/EU ("the Directives"), which entered into force in March 2014, will predominantly elapse on 18 April 2016. As the purpose of the transition period is to provide the Member States with sufficient time to adjust the national rules to the new directives, Member States cannot be accused of not transposing the Directives before the transposition deadline has expired (C-212/04, para 102). However, it follows from the "effet utile" principle that during the transposition period, Member States must refrain from taking any measures liable to seriously compromise the result prescribed (C-129/06). Moreover when national courts apply domestic law, they are bound to interpret it, as far as possible, in the light of the wording and the purpose of the directive (joined cases C-397/01 to C403/01). In other words - even if the transposition law has not expired, national courts shall interpret the national law in conformity with the community law. However, taking into account the general principles of law, particularly those of legal certainty and non-retroactivity, this obligation cannot serve as basis for an interpretation of the applicable national law contra legend (C-212/04).

From the principles outlined above, it can be deduced that a provision of a directive may have effects prior to the expiration of the transposition date if

  • the provision at hand is sufficiently precise and clear;
  • the directive does not leave the Member States any leeway in  implementing the respective provision and thus obliges the Member State to transpose the specific provision;
  • and the applicable national legislation does not explicitly preclude the respective provision of the directive.

The decision of the LVwG

The fact that certain provisions of the new Directives have advance effects has re-cently been confirmed by the Administrative Court of Lower Austria ("LVwG ") and the Higher Regional Court ("Oberlandesgericht") of Düsseldorf, Germany.

The case in question in Austria concerned the award of a service contract for mo-bile communication services. The LVwG concluded in its decision of 14 May 2015 (LVwG-AV-194/002-2015) that art 26 (4) of the new public sector Directive stipu-lating the grounds for choosing the negotiated procedure with a notice ("competitive procedure with negotiation) shall serve as the basis for interpretation of the Austrian Procurement Act in relation to the choice of the negotiated procedure. In this context, it has to be noted that art 26 (4) covers many other situations for applying the negotiated procedure which are not covered by grounds stipulated in the directive 2004/18/EU (and, accordingly, not in the Austrian Procurement Act). By applying the "effet utile" principle, the LVwG ruled that the provision of the Austrian Procurement Act subjecting the choice of the negotiated procedure must be interpreted in the light of art 26 (4) of the Directive. More precisely, the Court concluded that the application of the negotiated procedure was admissible, as the technical specifications could not be established with sufficient precision with ref-erence to a technical standard according to the Directives art 26 (4)(a)(iv).

Almost six month before the ruling of the LVwG, the Oberlandesgericht Düsseldorf concluded that art 67 shall have an advance effect and serve as the basis for the interpretation of stricter national rules in place at that time: Hence, award criteria shall (already) be considered to be linked to the subject matter of the contract where they relate to the works, supplies or services to be provided under the con-tract in any respect and at any stage of their life cycle (art 67 (3)).

Consequences

Following the "effet utile" principle and the corresponding jurisprudence, it is clear that certain provisions of the Directives are (by the way of interpretation) indirectly applicable in the Member States – even if the Directives have not been transposed yet and the respective deadline has not expired. This seems to be the case at least for art 26 (4) and art 67 of the directive 2014/24/EU.

  • Advance effect of the new in-house rules: Considering requirements for an advance effect (sufficiently precise provisions, mandatory transposition of the Member States, and no conflicting national provision), such an "advance effect" may also be contributed to the new rules on in-house exemptions. Art 12 of the new public sector directive significantly extends the situations covered by in-house exemptions by including inter alia bottom-up situations procurements between sister companies. Both the wording of the respective provision "[...] shall fall outside the scope of this Directive [...]" (outlining that Member States are obliged to provide for this exemption) and the sufficient certainty and definiteness of art 12 of the Directive indicate a respective "advance effect" providing contracting authorities the ability to utilize the extended scope of in-house procurement prior to its transposition into national law.
  • Advance effect of the Concession Directive: The same applies to conces-sions. According to the Concession Directive (2014/23/EU), concessions shall inter alia be awarded in the course of formal award procedures complying with the principles of equal treatment, non-discrimination and transparency and be limited in time (Art 18). Therefore, contracting authorities are well advised not to (directly) award long-term concessions prior to the transposition of the new Concession Directive, but rather to follow the rules determined in the new Directive.

Conclusion

As such, even if the full effect of the new Directives is not felt until 2016, contract-ing authorities and bidders should consider certain mandatory rules and provisions set out in the new Directives when applying existing regimes. Depending on the national rules in place, certain mandatory and sufficiently precise provisions of the new Directives -- such as the in-house exemptions, the rules on the choice of pro-cedures or the rules on awarding concessions -- might have advance effects.

This article was edited by and first appeared on www.internationallawoffice.com.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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