C-76/81

T H E MINISTER OF PUBLIC WORKS, Grand Duchy of Luxembourg,

on the interpretation of Council Directive 71/304 of 26 July 1971 concerning the abolition of restrictions on freedom to provide services in respect of public works contracts and on the award of public works contracts to con- tractors acting through agencies or branches, and Council Directive 71/305, of the same date, concerning the coordination of procedures for the award of public works contracts (Official Journal, English Special Edition 1971 (II), p. 678 and p. 682),

THE COURT

composed of : G. Bosco, President of the First Chamber, acting as President, A. Touffait (President of the Third Chamber), P. Pescatore, Lord Mackenzie Stuart, A. O'Keeffe, T. Koopmans, U. Everling, A. Chloros and F. Grévisse, Judges,

Advocate General: G. Reischl Registrar: A. Van Houtte

gives the following

In response to a notice of invitation to Transporoute sought to have the tender issued on 2 March 1979 by the decision annulled by the Comité du Administration des Ponts et Chaussées Contentieux du Conseil d'État [Judicial [Bridges and Highways Authority] of Committee of the State Council]. In the Grand Duchy of Luxembourg support of its application it pleaded concerning a section of the Arlon infringement of the provisions of Council motorway SA Transporoute et Travaux Directive 71/305, in particular Articles (hereinafter referred to as "Trans- 24 and 29 (5) thereof. Article 24 provides poroute"), a company incorporated that: under Belgian law, submitted the lowest tender. "Any contractor wishing to take part in a public works contract may be The tender was rejected by the Minister requested to prove his enrolment in the of Public Works of the Grand Duchy of professional or trade register under the Luxembourg for the following reasons: conditions laid down by the laws of the Community country in which he is 1. Transporoute was not in possession of established: in Belgium, the registre du the Government establishment permit commerce — Handeisregister; in provided for in Article 1 of the Germany, the Handelsregister and the Réglement Grand-Ducal [Grand- Handwerksrolle; in France, the registre du Ducal Regulation] of 6 November commerce and the répertoire des metiers; 1974 on (1) the drawing up of a list in Italy, the Registro della Camera di of the general specifications applicable commercio, industria, agricoltura e arti- to public works and supply contracts gianato and the Registro delle commissioni for the State; (2) the determination of provinciali per l'artigianato; in Luxem- the powers and modus operandi of the bourg, the registre aux firmes and the rôle adjudication panel for tenders de la Chambre des métiers; in the (Mémorial [Gazette] A, 1974 p. 1660 Netherlands, the Handelsregister. " et seq.)

If the documents relating to the contract provide for its award at the lowest price The judgment making the reference was tendered, the authority awarding lodged at the Court Registry on 7 April contracts must justify to the Advisory 1981. Committee set up by the Council Decision of 26 July 1971 the rejection of tenders which it considers to be too The plaintiff in the main action having low." been declared insolvent by the Tribunal de Commerce [Commercial Court], Brussels, on 30 April 1981, its liquidators In the course of those proceedings, by were given leave to continue the main judgment of 11 March 1981, the Comité action by an interlocutory order of the du Contentieux of the Conseil d'État of Comité du Contentieux dated 21 the Grand Duchy of Luxembourg October 1981. referred the following questions to the Court of Justice for a preliminary ruling: Pursuant to Article 20 of the Protocol on the Statute of the Court of Justice of the " 1 . Is it contrary to the provisions EEC observations were submitted by the of Directives 71/304/EEC and liquidators of SA Transporoute et 71/305/EEC of 26 July 1971, in Travaux, the company in liquidation, particular those of Article 24 of represented by Y. Hannequart of the Directive 71/305, for the authority Liège Bar; by the defendant in the main awarding the contract to require as a action, represented by J. Welter of the condition for the award of a public Luxembourg Bar; by the Commission of works contract to a tenderer the European Communities, represented established in another Member State by R. Wägenbaur, Legal Adviser, acting that in addition to being properly as Agent; by the Government of the enrolled in the professional or trade Italian Republic, represented by its register of the country in which he Agent, A. Squillante, and by G. Ferri, is established the tenderer must be State Advocate; and by the Belgian in possession of an establishment Government, represented by its Agent, permit issued by the Government of W. Collins, Director of Administration. the Member State in which the contract is awarded? On hearing the report of the Judge- 2. Do the provisions of Article 29 (5) Rapporteur and the views of the of Directive 71/305/EEC require Advocate General the Court decided to the authority awardig the contract to open the oral procedure without any request the tenderer whose tenders, preparatory inquiry.

A — Observations submitted by the plaintiff in the main action The defendant in the main action points out that the contested national provision does not distinguish between tenderers on the basis of their nationality. The The plaintiff in the main action considers "establishment permit", which is that the requirement of a "Government governed by the rules laid down in the establishment permit" under the rules in Law of 2 June 1962 establishing the force in the Grand Duchy imposes on requirements for admission to and the undertakings from other Member States exercise of certain professions and trades a condition over and above those laid and those relating to the establishment down in Articles 23 to 26 of Directive and operation of undertakings (Con- 71/305. This constitutes an infringement solidated text of 1 November 1975, of Article 28 (4) of that directive, Mémorial [Gazette] A 1975 p. 1521 et according to which only the conditions seq.), is intended to guarantee a sound provided for under Articles 23 to 26 may basis for the activities for which it is be imposed. required by making the grant of a permit subject to proof of the qualifications and good standing of those who obtain it. As those provisions are, according to That requirement complies with Article 3 the plaintiff, directly and immediately of Directive 71/304. More particularly, it applicable the national court is bound, in does not constitute an obstacle for view of the fact that they take nationals from the other Member States. precedence over national law, to give to The permit is issued on a simple written them full effect by refraining, where request accompanied by documents necessary, from applying conflicting showing proof of professional or trade provisions of national law. qualifications (copies of degree certi- ficates and course diplomas) and good standing in the profession or trade (extract from judicial records and As regards Article 29 (5) of Directive attestations as to integrity). If the 71/305, a literal interpretation of that application is made on behalf of a provision leaves no room for doubt. company the documents must relate to Before rejecting tenders which are those who run it. In addition an abnormally low the authority awarding administrative charge of LFR 500 is the contracts must request the tenderer payable. to furnish the necessary explanations. Failure to comply with that obligation means that the decision of the The time required for obtaining such a contracting authority contains a defect of permit is from two to three weeks and substance for which that authority is may be reduced in cases of urgency. It is liable. In any event the Belgian Conseil possible, moreover, to submit an advance d'État [State Council] held that this was application, and in any case where public so in a judgment of 27 June 1980 (No works contracts are concerned the

As regards the first question, the The purpose of Directive 71/305 is to Commission discusses in turn whether bring about the harmonization only of the requirement of a "Government the basic rules concerning public works establishment permit" is compatible with contracts. the general scheme of Directive 71/305, whether that requirement may be Procedure, including any requirements considered to be a "restriction" within as to permits, remains the concern of the the meaning of Article 59 of the Treaty individual Member State. That is and Directive 71/304 and, lastly, the expressly confirmed by Article 2 of the effect which should be given to Articles directive which states that "in awarding 24 and 28 of Directive 71/305 in the public works contracts, the authorities context of the proceedings pending awarding contracts shall apply their before the Luxembourg Conseil d'État. national procedures adapted to the provisions of this Directive". On the subject of the compatibility of the permit requirement with Directive Furthermore, the establishment permit 71/305 the Commission takes the view constitutes the equivalent of the list of that the requirement is additional to recognized contractors referred to in those mentioned in the directive, whereas

TRANSPOROUTE v MINISTER OF PUBLIC WORKS

both the general logic of Articles 20 to purpose of that article is to bring about 28 and certain indications in the text, some measure of coordination between especially in Articles 20, 23 and 27, the national provisions concerning indicate that the list of forms of proof "official lists of recognized contractors" (documents, statements etc.) which and that such lists are to constitute, for undertakings may be required to furnish the authorities of other Member States is an exhaustive one. It therefore awarding contracts, a presumption of concludes that the Government establish- suitability in relation to certain criteria ment permit required by the Luxembourg for selection on a qualitative basis Minister of Public Works is incompatible contained in Article 23 of the directive, with the provisions of Directive 71/305. which broadly corresponds to what is known as the "good standing" of an undertaking.

Lastly, the Commission's opinion as to In conclusion the Commission suggests the scope of Articles 24 and 28 of that the Court reply to the questions Directive 71/305 is that Article 24 is referred to it as follows: intended to enable the authorities in the country where the service is provided to ensure that the undertaking is enrolled on the professional or trade register in 1. Directive 71/305/EEC must be the country in which it is established, interpreted as meaning that it is and is not relevant in the context of this incompatible with the directive to case. In the case of Article 28, however, require a contractor established in the Commission points out that the another Member State to produce, in

JUDGMENT OF 10. 2. 1982 — CASE 76/81

order to be admitted to participate in E — Observations submitted by the public works contracts, a certificate or Italian Government other document not provided for by the directive.

The Belgian Government's view on the As to the second question, the Italian first question is that, although it is not Government considers that Article 29 (5) aware of the precise scope of the of Directive 71/305 imposes on the auth- Government establishment permit pro- orities awarding contracts a duty to vided for under Luxembourg legislation, request explanations from any tenderer if such a permit is intended to constitute who submits an abnormally low tender evidence of enrolment on the trade before the tender is rejected. register it is contrary to Article 24 of Directive 71/305. Similary, if it is intended to provide evidence of technical ability, it is contrary to Article 26 of the directive. If, by contrast, it is intended to establish the undertaking's economic and III — Oral p r o c e d u r e financial standing, it might perhaps be considered to be one of the "other" references mentioned in Article 25 of the directive. At the sitting on 17 November 1981 oral argument was presented by the followings: Y. Hannequart, of the Liège Bar, for SA Transporoute et Travaux; As to the second question, the Belgian Jean Welter, of the Luxembourg Bar, for Government is of the opinion that Article the Minister of Public Works of the 29 (5) of Directive 71/305 makes it the Grand Duchy of Luxembourg; G. Ferri, duty of the administration to seek expla- Avvocato dello Stato [State Advocate], nations from tenderers where prices are for the Government of the Italian not normal. Republic; and R. Wägenbaur, Legal

TRANSPOROUTE v MINISTER OF PUBLIC WORKS

4 Transporoute brought an action before the Conseil d'État for the annulment of the decision. In support of its application it contended inter alia that the

JUDGMENT OF 10. 2. 1982 — CASE 76/81

reasons given for rejecting its tender amounted to an infringement of Council Directive 71/305, in particular Articles 24 and 29 (5) thereof.

5 Considering that the dispute thus raised questions concerning the interpret- ation of Community law, the Conseil d'État referred to the Court for a preliminary ruling two questions concerning the interpretation of Council Directives 71/304 and 71/305.

First question

6 The first question asks whether it is contrary to the provisions of Council Directives 71/304 and 71/305, in particular those of Article 24 of Directive 71/305, for the authority awarding the contract to require as a condition for the award of a public works contract to a tenderer established in another Member State that in addition to being properly enrolled in the professional or trade register of the country in which he is established the tenderer must be in possession of an establishment permit issued by the Government of the Member State in which the contract is awarded.

1 1 The Luxembourg Government submits, however, that the grant of an establishment permit is equivalent to registration of the contractor in question in a list of recognized contractors within the meaning of Article 28 of Directive 71/305 and therefore complies with the terms of that provision.

1 2 It should be pointed out, in reply to that argument, that even if the establishment permit may be equated with registration in an official list of recognized contractors within the meaning of Article 28 of Directive 71/305, there is nothing in that provision to justify the inference that registration in such a list in the State awarding the contract may be required of contractors established in other Member States.

13 On the contrary, Article 28 (3) entitles contractors registered in an official list in any Member State whatever to use such registration, within the limits laid down in that provision, as an alternative means of proving before the authority of another Member State awarding contracts that they satisfy the qualitative criteria listed in Articles 23 to 26 of Directive 71/305.

1 4 It should be noted that the result of that interpretation of Directive 71/305 is in conformity with the scheme of the Treaty provisions concerning the provision of services. T o make the provision of services in one Member State

JUDGMENT OF 10. 2. 1982 — CASE 76/81

by a contractor established in another Member State conditional upon the possession of an establishment permit in the first State would be to deprive Article 59 of the Treaty of all effectiveness, the purpose of that article being precisely to abolish restrictions on the freedom to provide services by persons who are not established in the State in which the service is to be provided.

TRANSPOROUTE v MINISTER OF PUBLIC WORKS

contracts, could not be achieved if it were left to that authority to judge whether or not it was appropriate to seek explanations.

18 The reply to the second question must therefore be that when in the opinion of the authority awarding a public works contract a tenderer's offer is obviously abnormally low in relation to the transaction Article 29 (5) of Directive 71/305 requires the authority to seek from the tenderer, before coming to a decision as to the award of the contract, an explanation of his prices or to inform the tenderer which of his tenders appear to be abnormal, and to allow him a reasonable time within which to submit further details.

Costs

19 The costs incurred by the Government of the Kingdom of Belgium, the Government of the Italian Republic and the Commission of the European Communities, which have submitted observations to the Court, are not recoverable. As the proceedings are, in so far as the parties to the main action are concerned, in the nature of a step in the action before the national court, the decision as to costs is a matter for that court.

On those grounds,

Koopmans Everling Chloros Grévisse

Delivered in o p e n c o u r t in L u x e m b o u r g on 10 F e b r u a r y 1982.

P. H e i m G. B o s c o President of the First Chamber, Registrar Acting as President

O P I N I O N OF MR ADVOCATE GENERAL REISCHL D E L I V E R E D O N 13 J A N U A R Y 1982 1

Mr President, "Transporoute"), a company established Members of the Court, in Belgium, which apparently submitted the lowest tender. The contract was awarded by decision of the Ministre des Travaux Publics [Minister of Public In March 1979 the Luxembourg Works] of 7 June 1979, not to Trans- Administration des Ponts et Chaussées poroute, but to a consortium led by a [Bridges and Highways Authority] issued Luxembourg contractor, on the ground a notice of invitation to tender that its tender was the economically most concerning works to be carried out on advantageous one. the motorway to Arlon. Among the undertakings participating in this "open" procedure within the meaning of Council Directive 71/305 was SA Transporoute Transporoute contested this decision et Travaux (hereinafter referred to as in proceedings which it brought before 1 — Translated from the German.