C-45/87

OPINION OF MR DARMON — CASE 45/87

OPINION OF MR ADVOCATE GENERAL DARMON delivered o n 21 J u n e 1 9 8 8 *

Mr President, Institute for Industrial Research and Members of the Court, Standards. All asbestos cement water-mains are to have a bituminous coating internally and externally. Such coatings shall be applied at the factory by dipping'. Following a complaint by an Irish public works under- taking, Walls, one of whose very competi- tively priced tenders was rejected because it 1. In this action the Commission is asking envisaged the use of Spanish Uralita pipes the Court for a declaration that by allowing that did not have the certification required, the inclusion in the invitation to tender for a the Commission commenced the procedure public works contract concerning the supply provided for in Article 169 of the EEC of water for Dundalk of a clause providing Treaty. that the pipes to be used are to be certified as complying with an Irish standard and by refusing to consider a tender providing for the use of pipes not certified as complying with that standard, Ireland has failed to fulfil its obligations under Article 30 of the EEC Treaty and Article 10 of Council 3. It is necessary first of all to describe the Directive 71/305/EEC of 26 July 1971 legal background to the arguments which concerning the coordination of procedures will enable the Court to determine whether for the award of public works contracts Ireland has failed to fulfil certain of its obli- (hereinafter referred to as 'the directive'). 1 gations under Community law.

5. There is no doubt that the contract in 8. Neither the Commission nor Spain has question, which was one of a number of truly explained how, as a matter of law, the contracts for works designed to augment Member States could unilaterally, in the the Dundalk water supply, thus belonged to absence of any supporting legal provision, a category of contracts outside the scope of override the effect of Article 3 (5) of the the directive and that, from that point of directive and no previous judgments of the view, Ireland was not a priori obliged to Court have been cited in support of this comply with its provisions. It is contended, view. however, that Ireland voluntarily submitted itself to its application. 9. Certainly, one cannot ignore the need to protect the interests of contractors who might draw certain conclusions from publi- 6. Apparently, the publication of the notice cation of the notice in the Official Journal of of the contract in question in accordance the European Communities. However, it with the conditions laid down in the seems to me that, given the Community directive was initially linked to Ireland's legislature's very clear position as regards plan to seek Community finance for the the exclusion of certain contracts from the project. Its plan came to nothing but the scope of the directive, a qualification added Commission wishes the Court to declare by a decision of the Court to the effect that that once a Member State publishes, on its a Member State may voluntarily submit own initiative, a notice of an invitation to itself to the application of the provisions of tender in the form provided for in the the directive would have the disadvantage of directive, it must subsequently apply all the introducing ambiguity into the interpre- provisions of the directive, so that the tation of the provisions of a directive where apparent situation is complied with, as it there is none at present. In several of its were. judgments the Court has emphasized in this regard the necessity for Member States not to place economic operators in a position of uncertainty through contradictions in legis- 7. With regard to that argument, which has lation or regulations. 2 In my view, that been supported by Spain, I share the view of principle applies a fortiori to strictly Ireland that the perfectly clear wording of Community provisions and in the present the provisions excluding contracts relating circumstances prohibits the perfectly clear to the production, distribution, transmission meaning of Article 3 (5) of the directive or transportation of water from the scope of from being obscured. the directive must prevail. T o those provisions the Community legislature has 2 — See in particular the judgment of 4 April 1974 in Case added no qualification to the effect that 167/73 Commission v France [1974] ECR 359, and the judgment of 25 October 1979 in Case 159/78 Commission authorities awarding contracts may volun- v Italy[1979] ECR 3247.

10. For that reason I consider that in the somewhat greater detail. Invitations to present case the directive could not apply to tender for public works contract are the contract in question and consequently governed by Directive 71/305. That that it is unnecessary to consider how directive is based in particular on Article Ireland failed in this case to fulfil the obli- 59 (2) and Article 66 of the Treaty. A gations laid down therein. public works contract should therefore be regarded as a provision of services and any challenge to a clause in such a contract 11. It would therefore appear that Ireland's should be examined with reference to the conduct may be assessed only in the light of requirements of the freedom to provide the obligations arising under Article 30 of services. Each clause, whatever its subject- the Treaty. matter, is merely ancillary to the provision of the services. Therefore, in the case of obstacles covered by specific provisions of 12. Here again, Ireland considers that the the Treaty, as referred to in the judgment in provisions of Article 30 cannot apply to the Ianelli, Article 30 cannot be relied upon. facts referred to by the Commission and that its reliance on Article 30 has no sound basis. 15. For the sake of completeness it must be noted that ultimately that line of argument would necessarily lead to the conclusion 13. That view is based on an apparently that any attempt to find an infringement of simple line of argument. Ireland is being obligations arising under the Treaty would challenged on an issue concerning the be futile in the present case. Besides the non-conformity with Community law of fundamental impossibility of relying on the one aspect of the invitation to tender for a obligations laid down in Article 30, there is public works contract. Invitations to tender the effect of the special provision of the are governed by provisions which implement directive, 4which excludes from the scope of the articles of the Treaty relating to the the directive in particular public works freedom to provide services. Therefore, contracts relating to the supply of water. Ireland's conduct cannot, according to the Such contracts, being governed ratione case-law of the Court, be assessed with materiae by the rules of the Treaty relating reference to the provisions of the Treaty to the freedom to provide services, fall relating to the free movement of goods. outside the provisions of the directive Ireland relies in this connection on the implementing those Treaty rules by virtue of judgment of the Court of 22 March 1977 in an exception provided for in the directive. Ianelli v Meroni in which the Court stated that:

20. An even more convincing illustration of This clearly shows that Article 30 must give the 'attractive effect' of Article 30 is way only to provisions specifically covering afforded by the case-law of the Court 'measures impeding imports' in a given case. concerning the applicability of Article 30 to As Advocate General Sir Gordon Slynn operations covered by the provisions on observed in his Opinion in the case of Ciné- State aids. In its judgment in Ianelli, cited thèque SA, the provisions of the Treaty above, the Court ruled: relating to the freedom to provide services are all aimed at 'the aids referred to in Articles 92 and 93 of the Treaty do not as such fall within the field of application of the prohibition of 'eliminating measures which impose on the quantitative restrictions on imports and national of one Member State more measures having equivalent effect laid down rigorous rules, or put him in law or in fact by Article 30 but the aspects of aid which in an unfavourable position compared with are not necessary for the attainment of its the national of the Member State imposing object or for its proper functioning and the measure'. 6 which contravene this prohibition may for that reason be held to be incompatible with this provision'. 8 They do not therefore specifically cover measures impeding imports. From that point of view, there are consequently already 21. The possibility of applying Article 30 to grounds for doubting whether the fact that certain aspects of aid is expressed even more a service is provided means in principle that clearly in recent judgments. In the Article 30 is inapplicable to measures which, aforementioned judgment of 7 May 1985 in in the context of the provision of that Commission v France the Court pointed out service, would impede imports. that

22. In fact, the only cases in which the 25. The case-law of the Court, in the light Court has in the past considered that the of that judgment, therefore gives grounds application of certain provisions of the for considering that, although a public Treaty precludes reliance on Article 30 are works contract constitutes a provision of those concerning 'obstacles which are of a services, the materials used to perform it are fiscal nature or have equivalent effect', 11 covered by the provisions of Article 30. which corresponds closely to the above- mentioned passage from the Bergandi judgment. 12 26. In support of that view, which, I believe, simply takes account of the prin- ciples laid down in the judgments of the 23. It may therefore be deduced from the Court, I would like to put forward a case-law of the Court that the fact that a consideration prompted by the particular given situation is, as a whole, governed by legal factors of this case. In my opinion, certain provisions of the Treaty does not in Ireland's argument leads to a considerable all cases prevent a particular aspect of that weakening of the effectiveness of certain situation from giving rise to the application fundamental rules of the Treaty, those of Article 30. More precisely, the fact that a relating to the free movement of goods. To service is provided would not appear to say that all the aspects of a public works exclude an assessment of the compatibility contract are covered exclusively by the of certain aspects of the provision of that provisions of the Treaty concerning the service with Article 30. freedom to provide services when the directive implementing those provisions in the field of public works contracts excludes 24. That impression can only be reinforced from its scope contracts relating to energy by a reading of the judgment of 30 April and water would ultimately render the 1974 in Sacchi in which the Court ruled principle of free movement ineffective as that, although regards materials of considerable im- portance. I do not believe that such a situation could have been envisaged by the 'the transmission of television signals, authors of the Treaty. Nor can I imagine including those in the nature of adver- that the Community legislature, which drafted the directive, had the intention or 9 — Case 18/84 Commission v France, cited above, paragraph even the power to frustrate to some extent 10 — Case 103/84 Commission v Italy [1986] ECR 1759, the application of the fundamental paragraph 19. 11 — Case 74/76 Ianelli v Meroni, cited above, paragraph 9. 13 — Case 155/73 Sacchi [1974] ECR 409, paragraph 1 of the 12 — Case 252/86 Bergandi, citedabove, paragraph 33. operative part.

provisions of the Treaty on freedom of question of Clause 4.29 in so far as it movement in that way. provides that the pipes are to be certified as complying with Irish Standard Specification 188: 1975. The standard in question, IS 188, was adopted in 1975 by the Institute for Industrial Research and Standards (URS), a 27. I therefore consider that the interpre- multi-disciplinary technical body created in tation of the rules of the Treaty relating to Ireland by an Act of 1961 in order, in the free movement of goods and the particular, to lay down and publish freedom to provide services, as regards the standards and apply certification schemes. relation between their respective fields of From 1 January 1985 the latter two acti- application, must not entail the ineffec- vities were taken over by another body tiveness, with regard to major areas of acting on behalf of the URS, the National trade, of a fundamental provision which has Standards Authority of Ireland (NSAI). been recognized by the Court as having Compliance with a standard is usually direct effect 14 or the invalidity of a set of certified by a mark called the 'Irish Community rules. Standard Mark' and it is the issue by the NSAI of an 'Irish Standard Mark Licence' that authorizes a manufacturer to attach the mark to his products. 28. Incidentally, it may also be noted that certain provisions of the directive, for example Article 10, essentially implement the principle of the free movement of goods. This well illustrates that not all the aspects 31. According to a document dated 27 of a public works contract are covered October 1986 originating from the NSAI exclusively by the rules relating to the and annexed to Ireland's defence, the freedom to provide services. geometrical characteristics of IS 188 distinguish pipes manufactured according to that standard from other pipes which, like those of Uralita, comply with the specifi- cations of the international standard, ISO 29. I am therefore satisfied that there are 160; the physical and mechanical charac- no grounds for accepting Ireland's argument teristics are not therefore in question. More and that it is now necessary to consider the precisely, IS 188 refers to the Outside' conduct which the Commission regards as a diameter, including the wall of the pipes, breach of Ireland's obligations under Article whereas ISO 160 refers to the 'internal' 30 of the EEC Treaty. In other words, the diameter, not including the wall of the question is whether Ireland's conduct in this pipes. case meets the classic definition of a measure having equivalent effect given in the judgment in Dassonville. 15

to the EEC: Denmark, France, the Federal the requirement of conformity with a Republic of Germany, Greece, Italy, the national standard laid down in a Member Netherlands, Portugal, Spain and the State which, if not complied with, entails United Kingdom. As regards the United the inadmissibility of tenders, is likely to Kingdom, however, it must be noted that it obstruct the importation into that State of applies standard BS 486 which the Irish pipes manufactured in other Member States. authorities, and in particular the NSAI, That assessment is reinforced by the fact regard as equivalent to IS 188. that the approval procedure in Ireland for pipes manufactured in another Member State is not a mere procedural requirement. A manufacturer of pipes cannot obtain the licence authorizing him to attach the Irish Standard Mark certifying conformity with 33. Conformity with IS 188 was stipulated IS 188 unless he manufactures his products in the clause in question and if that in accordance with the specifications of that requirement was not met tenders were inad- standard, as is shown by the NSAI's refusal missible, as is quite clear from the answer to grant Uralita approval in December 1986. given by Ireland to the first question Consequently, pipes lawfully manufactured addressed to it by the Court. Ireland stated and marketed in a Member State and also that, in accordance with 'standard practice', complying with an international standard Dundalk Urban District Council's con- cannot be marketed in Ireland. In order to sulting engineer had rejected Walls' tender have access to the Irish market, manufac- based on the use of Uralita pipes at the end turers must modify their products. of a meeting from which it emerged that 'the proposed pipes were not in conformity with Clause 4.29 of the specifications' and those pipes 'were not examined at that stage'. Ireland explained to the Court that the 'standard practice' consisted in 'spec- 35. Consequently, in my view, the insertion ifying the standards according to which the in an invitation to tender for a public works materials must be made, . . . those contract of a clause requiring pipes to conditions [being] set out in specifications conform with a national standard such as IS before the invitation to tender is made. 188 indirectly, but undoubtedly, impedes When the tenders are then examined, the imports of pipes manufactured in other consulting engineer requires proof that the Member States. conditions are satisfied'.

from the NSAI to apply the Irish Standard 39. The subsidiary argument that com- Mark to their products to show that they pliance with IS 188 is required irrespective complied with IS 188. of the geographical origin of the materials can be dismissed in the light of that same case-law, according to which measures applicable without distinction to national and imported products may be prohibited 37. It may be countered, first, that under Article 30. Consequently, as Sir according to the Court's judgment of 20 Gordon Slynn stated in his Opinion in the May 1976 in De Peijper 16a practice may Cinéthèque case (cited above), a measure is also be covered by the prohibition laid in breach of Article 30 if, down in Article 30. But in reality Ireland's argument is that clauses in invitations to tender for public works contracts cannot, by definition, be regarded as relating to imports, and that a manufacturer's right to import its products into a Member State 'although not directed to importation as cannot be affected by the content of such such but covering both national goods and clauses. However, it is clear that there is imports, it requires a producer or distributor practically no opening for the sale of to take steps additional to those which he products such as pipes other than for use in would normally and lawfully take in the works, and essentially public works. marketing of his goods, which thereby Accordingly, the requirement of compliance render importation more difficult, so that with IS 188, which deters contractors from imports may be restricted and national providing in their tenders for the use of producers be given protection in practice'. materials not complying with that standard, impedes the importation of such materials, indirectly admittedly, yet virtually abso- lutely.

42. At this juncture it is necessary to bilities in materials. I would observe that in consider whether the requirement to comply this case the Dundalk Urban District with standard IS 188 is justified by Council made use of a procedure which 'mandatory requirements' within the enabled the advantages and shortcomings of meaning of the 'Cassis de Dijon' case-law. the tenders to be assessed from various points of view. The notice of invitation to tender published in the Official Journal of the European Communities stated that the contract would be awarded to the 43. Ireland argues essentially that 'the contractor who submitted the tender interest or value' which the standard serves 'adjudged to be the most economically to protect is 'a high standard and uniformity advantageous . . . in respect of price, period of design in such piping and a capacity to of completion, technical merit and running cope efficiently with Irish conditions and costs'. This clearly shows that use of an pre-existing services'. 17 award procedure which enables tenders to be assessed from various points of view is enough to protect the interests invoked by Ireland. 44. Does that constitute grounds for considering that the measure in question is justified because it serves a purpose which is in the general interest? 47. Accordingly, the requirement for the pipe to comply with IS 188 goes far beyond what is necessary in order to protect interests which could be safeguarded without taking a measure impeding imports, 45. Due regard being had to the technical in the normal course of an award procedure problems of compatibility between the water of the type to which I have just adverted, supply systems to be built and existing and which was indeed applicable in the case systems or between the piping used and at issue. accessories (fittings for example) it seems to me that such problems — assuming that they satisfy the test of the general interest laid down in the Court's case-law — do not warrant a measure which is as restrictive of 48. In the alternative, Ireland raises reasons imports as the requirement that the pipe which, in its view, justify, under Article 36 must comply with IS 188. of the EEC Treaty, the restriction on imports resulting from the measure in question. More specifically, Ireland claims in the first place that it was imperative for the protection of the health of the people of 46. Indeed, and this observation seems to Dundalk and the surrounding area that me to hold good for most of the technical there be no delay in improving their water objections raised in this case, the actual supply. award procedure itself, with its detailed perusal of tenders, is sufficient to enable any technical shortcomings of particular aspects of a tender and their economic ramifications to be assessed, and to identify incompati- 49. In order to assess that argument it must be observed that according to the case-law 17 — Defence, pp. 22 and 23. of the Court,

51. Ireland also contends that the requirements of standard IS 188 relative to 54. Without entering into a discussion of bitumen coating are based upon the need to the comparative merits of white and blue ensure the health and safety of persons asbestos, I consider that Ireland's argument using drinking water flowing through the cannot be accepted. In the first place, I pipes in question, since the bitumen coating would point out that the Commission ensures that there is no contact between the criticized Clause 4.29 only in so far as it water and the asbestos fibres of the concrete required the pipes to comply with IS 188 piping. and not because it specified the need for a bituminous coating. Secondly, the Irish Government's answer to the first question put by the Court in the written procedure, as seen in the light of the minutes — unof- 52. The Commission stated that only white ficial but not contested by Ireland — of the asbestos fibres were used in the manufacture meeting held on Tuesday 24 June 1986 19 at of the pipes and that, in contrast to blue which Dundalk Urban District Council's asbestos, white asbestos does not pose any consulting engineers rejected Walls's tender, health risk. It added that the bitumen establishes that the question whether or not coating was separately specified in the the Uralita pipes were coated with bitumen

18 — Case 104/75 De Peijper, cited above, paragraph 17. 19 — Annex III to the Commission's application.

OPINION OF MR DARMON — CASE 45/87

20 — Judgment of 27 March 1984 in Case 169/82 Commission v Italy[1984| ECR 1603. 57. The case-law of the Court affords a 21 — Judgment of 10 March 1987 in Case 199/85 Italy v number of illustrations of instances where Commission [1987] ECR 1039. Member States have been held to have 22 — Judgment of 26 May 1982 in Case 149/79 Commission v Belgium [1982] ECR 1845. failed to fulfil their obligations on account 23 — Judgment of 18 March 1986 in Case 85/85 Commission v of acts or omissions attributable to local Belgium[1986] ECR 1149. authorities. For example, Italy was held to 24 — Judgment of 24 November 1982 in Case 249/81 Commission v Ireland[1982] ECR 4005. have failed to fulfil its obligations because 25 — Judgment of 18 June 1975 in Case 94/74 IGAV v ENCC the region of Sicily adopted legislation [1975] ECR 699.

COMMISSION v IRELAND

26 — Judgment of 5 May 1970 in Case 77/69 [1970] ECR 237. 27 — Case 21/84 [1985] ECR 1355.

OPINION OF MR DARMON — CASE 45/87

orities are capable of isolated acts, which, as 'a national administration's treatment of a a general rule, cannot constitute failures to single undertaking may constitute a measure fulfil obligations under Article 30. incompatible with Article 30'. 29

64. In this case, however, the Court is 67. It appears to me to be possible to take a confronted with a very different situation. lead in this case from that relaxation of the The requirement of compliance with IS 188 requirements of consistency and generality. does indeed show the characteristics of As I have already stated, it can be consistency and generality in Ireland, as the considered that public works contracts of Irish Government admitted when it stated the type at issue afford the main commercial that this was 'in accordance with the usual outlet for asbestos cement pipes. It is not an practice followed in relation to public works everyday occurrence for sizeable contracts contracts in Ireland'. 28 Hence the inclusion to be put out to tender, and each such of the contested clause was not an isolated contract has major commercial conse- act, but constituted a specific manifestation quences in two respects. Each contract of a general practice and, in addition, represents in itself a commercial project for brought that practice to the attention of the manufacturers and, depending on the size Community institutions. of the contract, a barrier to imports erected with respect to a given contract may have significant consequences immediately. But it must be borne in mind that a barrier set up 65. It is for that reason that I consider that with respect to a particular contract also has it is possible to hold that there has been a implications for later contracts, and hence failure to fulfil obligations in this case, future commercial projects, in so far as in moreover, without really straining the terms the light of their first experience public of the Court's case-law. works contractors will tend not to provide for the use of imported material in their tenders.

tangible terms, to be completely alien to the 71. If that limb of the claim is separate from principles underlying the EEC. For as there and subsidiary to the claim concerning the are only two firms which have been granted inclusion of the contested clause, the Court the Irish Standard Mark Licence in respect should rule on it only if it holds that there of IS 188, namely an Irish firm, for all sizes has been no failure to fulfil obligations with of pipe, and a German firm, for a particular respect to the first limb. In that regard, the size of pipe, in most cases the Irish firm is failure to fulfil obligations appears to me to predestined to be the supplier of the pipes be sufficiently clear-cut as to make it before the tenders are even considered. unnecessary to consider that alternative limb of the claim, and I further take the view that if the Court were to hold that there has been no failure to fulfil obligations in 70. In its application the Commission asks respect of the first limb, it would have to the Court to declare that Ireland has failed reach the same conclusion for the same to fulfil its obligations by allowing the reasons as regards the second, since the inclusion of the contested clause in the same Community rules are alleged to have Dundalk contract 'and consequently been infringed in each case. refusing to consider (or rejecting without adequate justification)' a tender providing for the use of asbestos cement pipes manu- 72. If the second part of the Commission's factured to an alternative standard affording claim is in fact directed at the mere equivalent guarantees. It has not been implementation of the measure complained possible to determine as clearly as could be of in the first part, the Court may refer to wished from the Commission's answers to the solution adopted in its aforementioned the questions put by the Court both during judgment of 18 March 1986 in Commission the written procedure and at the hearing the v Belgium, 30 and hold that separate nature of the claim relating to the refusal to complaints are not involved and that consider the offer or its rejection without therefore a separate decision is not called adequate justification. for.