In the Opinion in Kolin Inşaat Turizm Sanayi ve Ticaret (C-652/22, EU:C:2024:212, hereafter ‘Kolin’), Advocate General Collins has argued that only economic operators established in countries party to international agreements on public contracts that bind the EU may rely on the provisions of Directive 2014/25/EU. This would imply that economic operators established in other countries are not entitled to participate in a public contract award procedure governed by Directive 2014/25/EU and, consequently, are unable to rely on the provisions of that Directive before Member State courts. In my view, this interpretation is both protectionist and problematic. The ECJ should not follow it. In this blog I sketch the reasons for this view.
Limited (international law) obligation of equal treatment does not imply a general (EU) obligation to exclude or discriminate
The Kolin Opinion concerns the interpretation of Art 43 of Directive 2014/25/EU, which could be relevant to the interpretation of Art 25 of Directive 2014/24/EU (on which see A La Chimia, ‘Article 25’ in R Caranta and A Sanchez-Graells (eds), European Public Procurement. Commentary on Directive 2014/24/EU (Edward Elgar 2021) 274-286. Art 43 of Dir 2014/25/EU establishes that:
In so far as they are covered by Annexes 3, 4 and 5 and the General Notes to the European Union’s Appendix I to the GPA and by the other international agreements by which the Union is bound, contracting entities within the meaning of Article 4(1)(a) shall accord to the works, supplies, services and economic operators of the signatories to those agreements treatment no less favourable than the treatment accorded to the works, supplies, services and economic operators of the Union.
AG Collins considers that
It follows that economic operators from non-covered third-countries do not fall within the scope ratione personae of Directive 2014/25 ... Since the applicant is not entitled to participate in a procedure for the award of a public contract governed by Directive 2014/25, it cannot seek to rely on the provisions thereof before a Member State court. The referring court therefore cannot obtain a response to a reference for a preliminary ruling on the interpretation of those provisions, since any answer that the Court might give to its request would not have binding effect. That reason suffices to justify a finding that this reference for a preliminary ruling is inadmissible (para 33, emphases added).
This position implies a logical jump in the reasoning. While it is plain that only economic operators from covered third-countries have a legally enforceable right to participate in public tenders on equal terms, it is by no means clear that other economic operators must necessarily be excluded from participation. If that was the plain interpretation and implication of that provision (and Art 25 Dir 2014/24/EU), the Commission would not have needed to develop the International Procurement Instrument (IPI) to establish circumstances in which exclusion of economic operators from non-covered third countries can be mandated. Along the same lines, AG Rantos argued in the Opinion in CRRC Qingdao Sifang and Others (C-266/22, EU:C:2023:399, not available in English) that ‘Member States can grant less favourable treatment to economic operators from non-covered third parties’ (para 65, own translation from Spanish).
In fact, as the Opinion reflects, ‘[a]lmost all of the parties to the procedure before the Court take the view that Member States may regulate the participation of economic operators from third-countries in procedures for the award of public contracts’ (para 35). In particular, the Croatian government submitted ‘that EU law contains no general prohibition on the participation of economic operators from third-countries in procedures for the award of public contracts in the European Union’ and provided sound arguments in support of that, as the ‘Commission’s Guidance on the participation of third-country bidders confirms that proposition where it states that economic operators from third-countries may be excluded from these procedures, without requiring their exclusion’ (para 36). Those arguments are also aligned with AG Rantos’ CRRC Opinion (paras 72-74). Estonia also submitted there is no obligation under EU law to limit participation by economic operators from non-covered third parties (para 38). Denmark, France, and Austria also considered that there is no ban stemming from EU law, even if the Union has exclusive competence in relation to the common commercial policy (paras 39-40). This should have given the AG pause.
Instead, as suggested by the Commission, AG Collins seeks to support the Opinion’s logical jump in an additional legal argument based on the remit of the EU’s competence to regulate the participation of economic operators from third-countries in procurement procedures in the European Union. The key issue here is not whether the EU has an exclusive or a shared competence in procurement, but that AG Collins considers that
… by adopting Article 43 of Directive 2014/25, the European Union has exercised its competence in relation to economic operators established in a country party to the GPA or to another international agreement on the award of public contracts by which the European Union is bound. … economic operators established in Türkiye do not come within that category. Although the European Union has not exercised its exclusive competence to establish whether economic operators from non-covered third-countries may participate in such procedures, Member States may not rely on that fact in order to regain competence to act in that area (para 50, emphases added).
Since the European Union does not appear to have exercised its exclusive competence to determine access by economic operators from non-covered third-countries to procedures for the award of public contracts, Member States wishing to take steps to that end may inform the competent EU institutions of their proposed course of action with a view to obtaining the requisite authorisation. Nothing in the Court’s file indicates that Croatia has taken such a step. Second, unilateral action by Member States could undermine the European Union’s bargaining position in the context of its efforts to open, on a reciprocal basis, markets for public contracts in third countries. Third, it could interfere with the uniform application of EU law, since in such circumstances the application of Directive 2014/25 ratione personae could vary from one Member State to another. (para 52, emphases added).
In my view, AG Collins is conflating normative and positive analysis. It is clear that dissimilar approaches in the Member States undermine the Commission’s bargaining position—thus the need to bring in the IPI as well as other instruments such as the Foreign Subsidies Regulation (FSR)—and can lead an absence of uniformity in the application of the Directive. However, these are normative issues. From a positive standpoint, it is in my view incorrect to state that the EU has exercised its competence in relation to GPA and other covered third country operators through Article 43 of Directive 2014/25/EU or, for that matter, Article 25 of Directive 2014/24/EU. The exercise of the relevant competence concerns the entering into those international treaties, not the internal legislative measures put in place to promote their effectiveness.
To me, it is clear that the obligation to grant equal treatment to GPA and other covered economic operators stems from the GPA or the relevant international treaty, not the Directive. Art 43 Dir 2014/25/EU (and Art 25 Dir 2014/24/EU are mere reminders of the obligations under international law and cannot alter them. Their omission would not have made any difference in covered third country economic operators’ legal position. By the same token, their inclusion cannot serve to prejudice the position of non-covered third country economic operators. As above, the whole process leading to the IPI and FSR would have been entirely superfluous. In my view, the Kolin Opinion follows too closely the dangerously protectionist policy approach pushed by the Commission, and does so in a way that is not legally persuasive (or accurate, in my view).
‘Tolerance’ of third country economic operators’ participation must engage legal protection under the CFR
Moreover, the Kolin Opinion would open a very dangerous path in terms of rule of law and upholding the effectiveness of the Charter of Fundamental Rights, especially Articles 41 and 47—and allow contracting authorities two bites of the cherry in relation to tenders submitted by economic operators from non-covered third countries. Contracting authorities could ‘tolerate’ participation of non-covered third country economic operators to see if those are the ones providing the most economically advantageous offer and, if not, or if other (industrial policy) considerations kicked in, they could simply reject or set aside the tender. This would happen in a context of insufficient guarantees.
Even assuming there was an obligation to exclude under Art 43 of Directive 2014/28/EU or Art 25 of Directive 2014/24/EU, which there is not, contracting authorities would be bound by the duties under Art 41 CFR in relation to EU and covered third-country economic operators. The relevant duty would require an immediate exclusion of the not covered economic operators to protect the (in that case) participation rights of those covered. A contracting authority that had not carried out such exclusion could seek to benefit from the advantages provided by the third country economic operator in breach of its duties, which is not permissible.
Conversely, a contracting authority that had not discharged its duty to exclude would be allowed to still benefit from its inaction by discriminating against and eventually excluding at a later stage the tender of the third-country economic operator without the latter having legal recourse. This would also not be in line with the effectiveness of Arts 41 and 47 CFR and certainly not in line with the doctrine of legitimate expectations. Once an economic operator or tenderer is not excluded or rejected at the first opportunity, there is a positive and very specific representation made by the contracting authority that the economic operator and/or its tender is in the run for the contract. This must trigger legal protection—although the specific form is likely to depend on domestic administrative law.
In the case at hand, like in many other cases in daily practice, despite Kolin not being eligible for equal treatment under Art 43 of Directive 2014/24/EU—and thus not having an enforceable right to participate in the tender and to equal treatment within it deriving from international law—the contracting authority had ‘tolerated’ its participation. The Opinion is plain that, following the receipt of tenders, the contracting authority ‘concluded that 6 out of the 15 tenders submitted fulfilled the selection criteria. [Kolin], a company established in Türkiye, submitted one of the tenders selected’ (para 16). However, the Opinion does not grant Kolin any rights because of such tolerance.
Contrary to the view held by AG Collins, ‘The Austrian Government contends that, although, in principle, Directive 2014/25 does not apply to economic operators from non-covered third-countries, such operators may rely on that directive once a contracting authority has permitted their participation in a procedure for the award of a public contract award’ (para 26). I share this view. Crucially, this is not an issue the Opinion explicitly addresses. But this is the main reason why the ECJ should not follow the Opinion.