On 11 April 2024, AG Campos Sánchez-Bordona delivered his Opinion in NFŠ (C-28/23, EU:C:2024:306). The NFŠ Opinion could be very attention-grabbing in three respects. First, in addressing some facets of the definition of public works contracts that hold arising in litigation in relation to comparatively advanced actual property transactions. Second, in addressing the consequences of a State assist resolution on the evaluation of compliance with procurement regulation of the authorized construction used to implement the help bundle. Third, in addressing some limits on the ‘strategic’ use of cures by contracting authorities which have breached procurement regulation. Earlier than offering some feedback on the Opinion, I have to make two disclaimers.
The primary one is that, exceptionally, I’ve been concerned within the authorized proceedings earlier than the ECJ. On the request of NFŠ, I wrote an knowledgeable assertion addressing among the points raised by the case. I’m very happy to see that my very own authorized evaluation coincides with that of AG Campos Sánchez-Bordona, and I hope the Courtroom may even share it within the forthcoming Judgment.
Second, it’s value stressing that this isn’t a bread and butter procurement case and referring to the authorized construction could be cumbersome or complicated if not accomplished exactly. Sadly, this has occurred within the English translation of the AG Opinion, which is fairly poor in some areas. Particularly, essential paragraphs 81 and 96 are incorrectly translated and convey a complicated place. To keep away from these points, I rely alone translation of the Spanish and French variations of the Opinion (and spotlight it the place my very own translation deviates from the ECJ’s one by inserting the related elements in [square brackets and italics]).
Background
Briefly, the case arises from a dispute between the Slovak Authorities and NFŠ in relation to the Slovak nationwide soccer stadium. Regardless of having offered State assist for the development of the stadium, the State is now unwilling to buy it from NFŠ within the phrases of the help bundle. This has resulted in home litigation. The request from a preliminary reference emerges on this context.
In 2013, the Slovak Authorities entered right into a grant settlement with NFŠ to help the development of the nationwide soccer stadium in Bratislava. Nonetheless, building didn’t instantly proceed and the extent of monetary help was in want of evaluate. The grant settlement was revised in 2016 (the ‘grant settlement’). Along with the grant for the development of the stadium, the Slovak Authorities additionally granted NFŠ a unilateral put choice to promote the stadium to the State, beneath sure circumstances, throughout the 5 years following its completion (the ‘settlement to enter right into a future gross sales settlement’ or ‘AFSA’).
Slovakia notified this set of agreements to the European Fee as State assist. In 2017, the Fee declared these measures to be suitable with the inner market by Determination State Help SA.46530. The State assist Determination made it clear that the full quantity of assist comprised the direct grant plus the worth of the put choice, and that these modalities and that stage of assist have been justified in view of the necessity to present adequate monetary incentives to get the stadium developed. In relation to the put choice, the Fee said that ‘The choice given to the beneficiary permits it to promote the Stadium again to the State in case it needs to take action. Ought to the beneficiary determine to train the choice, the Stadium would develop into a property of the State’ (para 22). In relation to the duty to topic the development of the stadium to aggressive public procurement, the State assist Determination additionally explicitly said that ‘The development works financed by way of the grant … will probably be topic to a aggressive course of, respecting the relevant procurement guidelines’ (para 8).
NFŠ undertook the event of the stadium and awarded contracts for various elements of the works beneath aggressive tender procedures compliant with the Slovak transposition of EU regulation. All tenders have been marketed within the Official Journal of the European Union and within the Slovak official journal. As soon as the stadium was accomplished and in operation, NFŠ determined to train the put choice and known as on the Slovak Authorities to buy the stadium within the phrases foreseen in AFSA.
Merely put, with a purpose to attempt to keep away from the duty to buy the soccer stadium within the phrases set out in AFSA, the Slovak Authorities is arguing that the agreements are null and void as a result of, mixed and from the outset, the grant settlement and AFSA would have had the unavoidable impact of getting the stadium constructed and transferred to the State, and thus cowl up the unlawful direct award of a public works contract to NFŠ. This a part of the dispute considerations the definition of ‘public works contracts’ beneath Directive 2014/24/EU (part 1 under).
Relatedly, the Slovak Authorities states that regardless of containing specific references to the tendering of the development of the stadium, the State assist Determination can’t preempt a recent evaluation of the compliance of this authorized construction with EU procurement guidelines. Maybe surprisingly, this place has been supported by the European Fee, which denied that the specific point out of compliance with procurement regulation shaped an integral a part of its evaluation of the compatibility of the set of agreements with EU inside market regulation. This can be a essential problem and the end result of this case can present a lot wanted readability on the extent to which the Fee does, and certainly should, take procurement regulation into consideration within the evaluation of State assist measures that contain the award of public contracts. This a part of the dispute thus considerations the impact of State assist selections relating to help packages with a procurement component (part 2 under).
Lastly, it is usually essential within the case that the State seeks affirmation of the potential for having the ineffectiveness of the grant settlement and AFSA recognised ex tunc beneath home regulation, with out this being a breach of the Treatments Directive. This pertains to the ‘strategic’ use of procurement cures by contracting authorities which have breached procurement regulation (part 3 under).
The AG Opinion offers with these points and is attention-grabbing in all respects, however specifically the latter two, the place it breaks new floor.
1. Definition of a ‘public works contract’
The primary problem addressed within the AG Opinion considerations whether or not the grant settlement and AFSA create such a set of obligations on NFŠ as beneficiary of the help and developer of the stadium that, in actuality, they quantity to the unlawful direct award of a public works contract for the development of the stadium. There are three predominant points that require detailed consideration:
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whether or not the contractor had assumed a legally enforceable direct or oblique obligation to hold out the works;
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whether or not the works needs to be executed in accordance with the necessities specified by the contracting authority, which thus had decisive affect over the mission; and
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whether or not the contracting authority would get hold of a direct financial profit.
The AG Opinion supplies a useful abstract of the case regulation on these points (see paras 52-54) and extra steerage on how you can apply them within the case, elevating vital questions on whether or not these standards have been met—though the ultimate evaluation should be carried out by the referring courtroom.
Legally Enforceable Obligation
First, the Opinion stresses that it’s unclear that NFŠ was positioned beneath a legally enforceable obligation to construct and switch the stadium on account of the grant settlement and AFSA. Importantly, the AG distinguishes the existence of an enforceable obligation to hold out the works from the existence of authorized penalties from deciding not to take action. Because the Opinion makes clear, the easy existence of the agreements to subsidise the event of the stadium doesn’t ‘help the inference that the Slovak State would have any proper to take authorized motion towards NFŠ to compel it to construct the stadium ought to that endeavor finally determine not to take action. [A different issue is whether], in that occasion, NFŠ wouldn’t have obtained the grant, or would have misplaced it, or would [have been] obliged to pay it again. This in itself, nonetheless, has nothing to do with the efficiency of a works contract’ (para 59).
That is essential as a result of it units the brink at which a ‘dedication’ to hold out works turns into a legally enforceable obligation for the needs of EU public procurement regulation. It displays an understanding that there needs to be a proper (in precept) to require particular efficiency (efficiency in natura), not solely the existence of authorized penalties arising from a choice to not comply with by way of with such a dedication. That is additional supported in the truth that ‘the mere grant of a State subsidy involving the [disbursement] of public funds (within the current case, for the aim of establishing a stadium) doesn’t in itself quantity to the conclusion of a public works contract. As recital 4 of Directive 2014/24 states, “the Union guidelines on public procurement usually are not meant to cowl all types of disbursement of public funds, however solely these aimed on the acquisition of works, provides or providers for consideration by the use of a public contract”’ (para 48, underline emphasis within the unique).
The Opinion additional stresses that:
to ensure that there to be a real works contract, it’s important that the profitable tenderer ought to particularly tackle the duty to hold out the works forming the topic of the acquisition and that that obligation needs to be legally enforceable [in court]. The contracting authority … should purchase the [building] on which the works are carried out and, [where applicable], [be able to] take authorized motion [in court] to compel the tenderer awarded the contract to [transfer it], if it holds [legal title covering the encumbrance of the works for the purposes of public use] (para 60, underline emphasis within the unique).
This considerations the authorized enforceability of the put choice from the angle of the State. In that regard, it is going to be mandatory for the referring courtroom to ascertain ‘whether or not NFŠ, as soon as the sports activities infrastructure had been constructed, had a legally enforceable obligation to switch it to the Slovak State, which the latter might assert’ (para 61). The Opinion means that that is extremely implausible, provided that ‘all of the indications are that the settlement to enter right into a future gross sales settlement gave NFŠ the choice both to stay the proprietor of the stadium and proceed to function it (or assign its operation to 3rd events), or to switch it [to] the Slovak State, if [doing so suited that undertaking]’ (para 62).
Furthermore, and this can be a crucially attention-grabbing facet of the case, the Opinion stresses that the evaluation of the authorized enforceability of the put choice had already been the thing of study by the European Fee in its State assist resolution and that the Fee had confirmed that it enabled NFŠ ‘ (however doesn’t oblige it) to promote the infrastructure to the Slovak State if that endeavor needs to take action’ (para 63). This will probably be notably related in view of the consequences of the State assist Determination mentioned in part 2 under.
Specs by the Contracting Authority
A second problem of relevance within the case is that the help bundle required for the stadium to satisfy ‘UEFA Rules on the development of class 4 stadiums and people contained within the common Slovak guidelines on sports activities infrastructure initiatives’ (para 65). This raises the query whether or not the contracting authority might train ‘decisive affect over the development mission’ by requiring compliance with these necessities (ibid) and collaborating in a monitoring committee. The Opinion focuses on the fabric influence of these circumstances on the event of the mission.
Curiously, the Opinion stresses that ‘UEFA standards … encompass numerous necessary parameters in relation to the minimal structural necessities which a stadium should meet with a purpose to be labeled in a sure class. Nonetheless, these standards are amenable to quite a lot of architectural options that may be developed inside very broad margins {of professional} creativity’; and that ‘The design of soccer stadiums that adjust to the UEFA standards permits for an in depth vary of inventive options, each within the exterior configuration of the stadium and within the structuring of its inside facilities. These standards don’t … include the detailed technical options which a real proprietor of the work might impose on the tenderer awarded the contract’ (paras 66-67, reference omitted).
This a part of the Opinion is attention-grabbing within the context of drawing the boundaries between actual property transactions that will probably be caught or not by the procurement guidelines as a result of it involves develop the steerage provided by earlier case regulation (just lately C‑537/19, EU:C:2021:319) on the extent to which the specs should be sufficiently detailed to exceed the same old necessities of a tenant (C‑536/07, EU:C:2009:664). The additional clarification is, in my opinion, that the specs needs to be similar to to considerably constrain or predetermine architectural options within the design of the works.
Direct Financial Profit to the Contracting Authority
The Opinion immediately refers back to the case regulation on the necessity that ‘In a public works contract, the contracting authority receives a service consisting of the realisation of works which it seeks to acquire and which has a direct financial profit for it’ (para 52). In that regard, the Opinion stresses that it’s not adequate for the Slovak State to have an ‘curiosity (and subsequent oblique profit) … confined to the generic promotion of the nationwide sport’ (para 64). That is additionally essential as a result of it clarifies the brink of ‘directness’ and magnitude of the curiosity that should come up for a authorized transaction to be classed as a public contract.
2. Impact of State assist selections relating to help packages with a procurement component
Maybe probably the most attention-grabbing problem that the AG Opinion offers with is the extent to which a State assist Determination declaring a authorized construction with specific procurement implications suitable with the inner market pre-empts a separate evaluation of its compliance with EU public procurement regulation.
As talked about above, within the NFŠ case, the State assist notification had offered particulars on the grant settlement and AFSA, and made it specific that the beneficiary of the help would run public tenders for the aggressive award of contracts for the sponsored works. The Fee explicitly referred to this within the Determination, indicating that ‘The development works financed by way of the grant … will probably be topic to a aggressive course of, respecting the relevant procurement guidelines’.
As a place to begin, AG Campos stresses that, consequently, any evaluation of compliance with EU regulation can’t ignore ‘the concerns set out by the Fee in Determination SA.46530 in reference to the content material of the grant settlement and the settlement to enter right into a future gross sales settlement, the place it discovered that, by way of these agreements, the Slovak State had granted public assist suitable with the inner market’ (para 47).
In additional element, the AG stresses that ‘the Fee examined the grant settlement and the settlement to enter right into a future gross sales settlement. In Determination SA.46530, it evaluated the general public assist related to these agreements and declared it to be suitable with the inner market’ and that ‘A studying of paragraph 8 reveals that what mattered to the Fee was that the building of the stadium (which represents the very essence of a works contract, whether or not public or personal) needs to be [subjected to] a aggressive course of respecting the principles relevant to public contracts’ (para 72, reference omitted, and para 74, underline emphasis within the unique).
The AG harassed that the Fee confirmed that this was ‘an important situation for the compatibility of the help with the inner market’ (para 73). This led the AG to seek out that the State assist Determination had the impact of triggering the applying of the EU procurement guidelines by NFŠ, ‘which was put in a state of affairs analogous to that of a contracting authority’ (para 75) and, implicitly, that compliance with EU procurement regulation involved the contract/s for the works to be tendered by NFŠ, not the award of the State assist to NFŠ.
Crucially, AG Campos spelled out the implications of such consideration by the Fee of the procurement implications of the State assist bundle throughout the process for State assist management. In his view:
The Fee can actively intervene in defence of competitors the place public procurement doesn’t adjust to the principles laid down in, inter alia, Directive 2014/24 with a purpose to safeguard this goal [to ensure that “public procurement is opened up to competition”]. I don’t see any motive why it mustn’t accomplish that when confronted with an examination of the viability of State assist measures ensuing from agreements concluded by public authorities with personal entities.
Particularly, it’s my view that the Fee couldn’t have failed to look at whether or not the shape wherein the general public assist granted to NFŠ was structured masked the existence of a public contract which ought to have been put out to tender. To my thoughts, it did so implicitly, which explains paragraph 8 of its Determination SA.46530.
Briefly, Determination SA.46530 is predicated on the premiss that there was no obligation to switch possession of the stadium to the Slovak Republic. That assumption, to which I’ve already referred, can’t be known as into query by the referring courtroom, which should respect the Fee’s evaluation of the elements figuring out the existence of State assist (paras 77-79, underline emphasis within the unique, different emphasis added).
This units out two essential implications. The primary one, of comparatively extra restricted scope however essential sensible significance, is that as an implicit impact of the Fee’s monopoly of enforcement of the State assist guidelines, a earlier State assist resolution does preclude a recent evaluation of a authorized construction for the needs of its compliance with public procurement regulation. A nationwide courtroom known as upon to evaluate such authorized construction can’t name the Fee’s evaluation and should respect the Fee’s evaluation of the elements figuring out the existence of State assist. Within the NFŠ case, provided that the Fee had clearly assessed the put choice as fully discretionary for NFŠ, it’s not now doable for the referring courtroom to deviate from that evaluation and think about that it established an obligation legally enforceable by the Slovak Authorities. This carries the extra implication that the authorized construction can’t be classed as a public works contract for the needs of Directive 2014/24/EU.
Subsequently, on this level, the AG might have been clearer and made it specific that, even when the referring courtroom is in precept tasked with the clarification of the related circumstances and their authorized classification, on this case and given the prior binding evaluation of the Fee, it’s not doable to depend on the put choice beneath AFSA to class the authorized construction as a public works contract as a result of there was no legally binding obligation in regards to the switch of the stadium. Nonetheless, this conclusion is apparent from the joint studying of paras 63 and 79 of the Opinion.
The second implication is that, by the use of precept, there’s a common obligation for the Fee to evaluate the compatibility with the EU public procurement regulation of State assist measures which have procurement implications. I believe this can be a clarification of the present case regulation on the responsibility on the Fee to evaluate State assist measures for compliance with different units of EU inside market regulation and a really welcome improvement given the very shut connection between State assist and procurement, as evidenced amongst different sources within the Fee’s steerage on the notion of State assist.
3. ‘Strategic’ use of procurement cures by contracting authorities
A ultimate problem which can be very attention-grabbing is that the case supplies a really unusual set of circumstances whereby the identical authority that had granted State assist and accepted the legality of the authorized construction creating the put choice beneath which it will be buying the stadium is afterward (beneath totally different political circumstances) making an attempt to get out of its obligations and, in doing so, seeks to achieve help for its place from the principles on contractual ineffectiveness within the Treatments Directive—with any such effectiveness arising from its personal alleged circumvention of EU procurement regulation.
Of the remedy of this problem within the AG Opinion, I believe the next passages are notably related:
Directive 89/665 isn’t designed to guard the general public authorities from infringements which they themselves have dedicated, however to permit those that have been harmed by the actions of these contracting authorities to problem them.
Article 2nd of Directive 89/665 presupposes that an individual entitled to problem the conduct of the contracting authority has made use of the related evaluate process. If, on the finish of that evaluate, the physique adjudicating on it declares the contract in query to be ineffective, the provisions contained within the numerous paragraphs of that article will probably be triggered. As I’ve already stated, nonetheless, Directive 89/665 doesn’t make provision for the contracting authority to problem its personal selections.
[A different issue is whether] nationwide regulation supplies methods for a public authority (or an administrative evaluate physique) to evaluate the legality of its earlier selections. Such an eventuality is ruled not by Directive 89/665 however by the related provisions of nationwide regulation, in accordance with which it’s going to fall to be decided to what extent an exception could also be made to the traditional rule venire contra factum propium nulli conceditur (paras 88-90, reference omitted, emphasis added).
I believe this will haven’t wanted spelling out besides in a weird case similar to NFŠ. Nonetheless, I additionally assume that this clarification can have broader implications in relation to the (separate) pattern to acknowledge ‘subjective rights’ to contracting authorities beneath EU public procurement regulation (see eg in relation to exclusion selections in (C-66/22, EU:C:2023:1016; for dialogue see right here).
Ultimate ideas
I believe NFŠ will probably be an essential case and I very a lot hope that the Courtroom will comply with AG Campos on this case. I additionally hope that the clarification of the facets in regards to the impact of State assist selections and, extra importantly, the final responsibility for the Fee to evaluate compliance of State assist measures with EU public procurement regulation, will explicitly function within the judgment of the Courtroom. I additionally hope the remarks on the inaccessibility of procurement cures for the contracting authorities which have infringed EU procurement regulation will function within the judgment. All of this can present useful readability on points that needs to be uncontroversial beneath common EU regulation, however which appear to be inclined of fueling litigation at home stage.