ECJ extends justiciability of procurement infringements: No need to review the Remedies Directive? (C-391/15)

In its Judgment of 5 April 2017 in Marina del Mediterráneo and Others, C-391/15, EU:C:2017:268, the European Court of Justice (ECJ) issued another preliminary ruling on the scope of the Remedies Directive. The case required clarification on the concrete type of decisions that interested tenderers can challenge under the Remedies Directive.

In particular, the case sought clarification on whether the review procedures mandated by Art 2(1), and applicable to "decisions taken by the contracting authorities" (as per Art 1(1) Remedies Directive), had to allow a tenderer to challenge a decision by which the contracting authority allowed another economic operator to submit a tender in a public procurement procedure. That is, whether the Remedies Directive created standing to challenge exclusion and selection decisions that concerned other tenderers.

This issue can be seen as controversial because there are two ways in which the analysis can be framed. Firstly, it can be considered that a decision not to exclude (or to select) a competing tenderer does not necessarily produce adverse legal effects for other tenderers--and, consequently, there are no subjective rights to be protected at this stage. Secondly, and to the contrary, it can be considered that a decision that determines the number of competing tenderers among which the contracting authority needs to choose the awardee of the contract produces legal effects on all tenderers involved--and, consequently, there can be (soft?) subjective rights meriting protection both in decisions to exclude (vis-a-vis the excluded tenderer) and not to exclude (vis-a-vis all other tenderers).

The first approach to this issue would be closer to a strict interpretation of the procedural rights implicit in the participation in a procurement process--ie that unless a decision makes it impossible for a tenderer to continue its participation in the tender, there is no decision for which revision it has a legitimate interest / legal standing. The second approach is probably closer to a substantive interpretation of those same procedural rights, as well as supportive of a system of private oversight of compliance with (EU) public procurement law through private actions, where challenges on the basis of the illegality of exclusion and selection decisions are easier to accommodate.

In Marina del Mediterráneo, the relevant Spanish rules followed the first approach, and determined that: "the following acts may be the subject of the application [for judicial review]: (a) Contract notices, specifications and contractual documents laying down the conditions which will govern the procurement procedure; (b) Preparatory acts adopted in the tendering procedure, provided that they decide, directly or indirectly, the award of the contract, make it impossible to continue the procedure or to put up a defence, or cause irreparable harm to legitimate rights or interests. Acts of the procurement board which decide to exclude tenderers will be considered preparatory acts which make it impossible to continue the procedure; (c) Award decisions adopted by the contracting authorities" (C-391/15, para 11, emphasis added).

Thus, under Spanish law, a decision to exclude a tenderer can be challenged 'there and then' by the excluded tenderer, but a decision not to exclude (or to select) that tenderer can only be challenged by other tenderers at the end of the procedure (ie during standstill) and only on the basis of the illegality of the decision to award the contract to that particular tenderer and/or any of the preparatory acts for that decision. 

Therefore, by challenging the Spanish rule, the preliminary reference fundamentally--but rather implicitly--concerned the extent to which Arts 1(1) and 2(1) of the Remedies Directive can be transposed/interpreted in a way that limits the procurement decisions open to (separate, immediate) review to those that negatively affect the subjective rights of a tenderer (in a narrow construction), or whether those provisions create a catch-all category that makes (virtually) all decisions taken by the contracting authority along the procurement processes susceptible of (separate and particularised) review.

That not absolutely all decisions need to be subjected to the review procedures of the Remedies Directive was suggested on the basis of Commission v Spain (C‑214/00, EU:C:2003:276, para 80), where the Commission challenged the same Spanish rule for failing to ‘allow review to be sought of all decisions adopted by the contracting authorities, including all procedural measures, during the procedure for the award of public contracts’, and the ECJ rejected that maximalist approach on the basis that ‘the Commission has not established that that legislation does not provide adequate judicial protection for individuals harmed by infringements of the relevant rules of [Union] law or of the national rules transposing that law’. This could be seen as a decision purely on the (lack of) evidence adduced by the Commission. However, even if a wider reading of the ECJ decision is adopted to the effect that there may be procurement decisions that do not harm individual rights in a manner that merits (separate, immediate) review, the boundaries of the categories of decisions covered by the Remedies Directive remained all but fuzzy, and the extent to which Arts 1(1) and 2(1) of the Remedies Directive had to be interpreted in a restrictive or an expansive way required clarification.

It is worth stressing that AG Bobek (Opinion of 8 September 2016, C-391/15, EU:C:2016:651) was convinced by the first approach outlined above (ie a restrictive interpretation of the Remedies Directive) because constructing the remedies system "in such a broad and rather limitless way would mean that every single decision, however marginal and ancillary, could be immediately attacked, and the award procedure effectively halted. Yet, ... a reasonable balance must be struck between the different interests at stake in public procurement procedures, namely, the right of access to court and judicial review to challenge aspects of the procedure, on the one hand, and effectiveness of the overall procedure and judicial expediency, on the other" (para 34, footnote ommitted). 

Therefore, in an Opinion that seemingly tried to avoid declaring the necessary justiciability of (every) exclusion and selection decision, invited the ECJ to declare that national procedural rules could avoid subjecting those decision to direct (and specific) review provided that: "(a) the national legislation does not hinder immediate review of preparatory acts that produce adverse legal effects on undertakings; and (b) a plea of illegality of preparatory acts that do not produce adverse legal effects on undertakings, such as a decision to admit a candidate to a tendering procedure, can be made in support of an action against the final decision awarding the contract taken on the basis of those preparatory acts" (para 67) . 

In short, the ECJ disagreed with AG Bobek and found that, where there are allegations that a decision allowing a tenderer to participate in a procurement procedure was adopted in breach of EU public procurement law or the national legislation transposing it, national rules must class such decision among the preparatory acts of a contracting authority which may be subject to an independent judicial review--or, in simpler terms, that exclusion and selection decisions concerning other tenderers are open to the review procedures of the Remedies Directive. the reasons given by the ECJ are primarily that:

[the] broad construction of the concept of a ‘decision’ taken by a contracting authority is confirmed by the fact that Article 1(1) of [the Remedies Directive] does not lay down any restriction with regard to the nature or content of the decisions it refers to. Moreover, a restrictive interpretation of that concept would be incompatible with the terms of Article 2(1)(a) of that directive which requires Member States to make provision for interim relief procedures in relation to any decision taken by the contracting authorities (para 27).

And that:

... although [the Remedies Directive] has not formally laid down the time from which the possibility of review, as provided for in Article 1(1), must be open, the objective of that directive, as referred to in the preceding paragraph, does not authorise Member States to make the exercise of the right to apply for review conditional on the fact that the public procurement procedure in question has formally reached a particular stage ...  the fact that the national legislation at issue ... requires, in all cases, a tenderer to wait for a decision awarding the contract in question before it may apply for a review of a decision allowing another tenderer to participate in that procurement procedure infringes the provisions of [the Remedies Directive] (paras 31 and 34).

In my view, even if there are issues of consistency with previous case law that may require some additional fine tuning, there is no question that the ECJ has taken a very expansive approach to the interpretation of the Remedies Directive on this occasion, and that the thrust of the Marina del Mediterráneo Judgment reflects a wide approach to the provision of procurement remedies.

This puts significant pressure on domestic review procedures to ensure that virtually all decisions taken by a contracting authority can be challenged, and that the challenge is available as soon as possible -- and definitely before the award of the contract because as expressed in the "first and second recitals, [the Remedies Directive] is intended to strengthen the existing mechanisms, both at national and EU levels, to ensure the effective application of the directives relating to public procurement, in particular at a stage when infringements can still be corrected" (para 30). This is particularly relevant in view of the (unnecessary) declaration by the ECJ that "Articles 1(1) and 2(1)(a) and (b) of [the Remedies Directive have direct effect" (para 41), which will provide robust legal foundation to challenges against existing domestic rules on access to review procedures.

This approach is bound to further judicialise public procurement oversight through expanded justiciability of (exclusion, but not only) decisions, and puts renewed pressure on the development of more robust procurement review procedures by the Member States--possibly requiring a reform of the Remedies Directives themselves, as I discuss at length in "'If It Ain't Broke, Don't Fix It'? EU Requirements of Administrative Oversight and Judicial Protection for Public Contracts",  in S Torricelli & F Folliot Lalliot (eds), Administrative oversight and judicial protection for public contracts (forthcoming). In my view, this is not necessarily a blueprint for desirable regulatory reform and more thought needs to go into the balance between public compliance oversight and private enforcement of the EU public procurement rules. However, it seems out of the question that legal reform will be necessary (in Spain and elsewhere) and, in my view, that the European Commission abandoned the revision of the Remedies Directives too quickly.