C-328/96

OPINION OF MR ALBER — CASE C-328/96

OPINION OF ADVOCATE GENERAL ALBER delivered on 19 January 1999 *

A — Introduction munity law since they infringed, inter alia, the advertising rules, the obligation to inform unsuccessful tenderers and the rules on specifications, and drew the Austrian Government's attention to those findings by letter of 12 April 1995. Some time later, 1. The present proceedings for failure to as a response to that letter, the Commission fulfil obligations under the Treaty concern received notification of a Vergabegesetz the assessment under Community law of (Law on the Award of Contracts) published the award of a series of works contracts in by the Land of Lower Austria on 31 May connection with a large project to construct 1995, which itself gave cause for objection government and administrative buildings since it contained an exemption clause for and a cultural centre forming part of a plan the 'St Polten Land Administrative and to base the government of the Land of Cultural Centre' project (the so-called 'Lex Lower Austria at St Polten. St Polten') and thereby, in practice, exclu- ded the project from the application of the law.

the exemption clause in the Vergabegesetz 6. The Austrian authorities' willingness to would be repealed and that the contracting adapt their award practices did not go far authority, the Niederösterreichische Land- enough for the Commission, with the result eshauptstadt-Planungsgesellschaft mbH that, by letter of formal notice of (hereinafter 'Nöplan'), would modify its 15 December 1995, it initiated proceedings practices relating to the award of contracts. for failure to fulfil obligations under the Treaty. In that letter of formal notice, the Commission argued that the Austrian authorities had undertaken to intercede with the responsible decision-making bodies in order to ensure compliance with 4. The Commission hoped that, as a result Community law from the end of January of the discussions, the Austrian authorities 1996 onwards. 3 In the letter of formal would take immediate action by ensuring notice the Commission stated, inter alia, that that it was extending its complaints 'speci- fically to include those lots for which the contract has already been awarded but where the tendering procedure was not in conformity with Community law'. It requested the Republic of Austria 'to ensure — the award procedures still to be initi- that Community law is complied with in ated would be carried out correctly, the contracting procedures still outstand- ing' and 'to suspend the legal effects or prevent the completion of contracts already awarded in contravention of Community law, to defer pending award decisions until such time as compliance with Community — the procedures already initiated but not law is secured, and to ensure that the yet concluded by the award of con- Lower Austrian Vergabegesetz and the tracts would be corrected, and AAVB are amended without delay'. 4 In the letter of formal notice of 15 December 1995, the Commission laid down a period of one week for the submission of observa- tions.

had decided 'that Nöplan must apply the 9. In the meantime, the Nöplan award EU directives with immediate effect'. 5 committee had decided, at a meeting on Finally, it is again stressed 'that, notwith- 6 February 1996, to suspend all pending standing additional costs and scheduling procedures and to invite tenders for and disruptions, the EC directives must be award, in conformity with Community law, applied with immediate effect to all invita- the contracts still to be awarded. Subse- tions to tender'. 6 quently, the defects complained of in regard to the Vergabegesetz were remedied and the AAVB were brought into conformity with Community law. Since then, the contract- ing practices followed have been manifestly in accordance with Community law. 8. In its reasoned opinion of 21 February 1996, the Commission pointed out that the contracting authorities of the Land of Lower Austria were 'under an obligation resulting directly from the directly applic- able Community legislation to comply with the requirements thereof in the absence of transposition in conformity with Commu- 10. Nevertheless, on 3 October 1996, the nity law'. 7The Commission also consid- Commission brought an action for failure ered that the Austrian Government's reply to fulfil obligations under the Treaty, which to the letter of formal notice was inade- was registered at the Court on 7 October quate. In that reply it could find no 1996, seeking a declaration that the Repub- acknowledgement of an obligation to act lic of Austria had failed to fulfil its in respect of pending procedures, 'since the obligations under Community law in observations concerning the obligation to awarding contracts, which were concluded advertise ... relate only to the future'. The before 6 February 1996 but which, on Commission pointed out that it had asked 7 March 1996, that is, at the time of expiry the Austrian Government 'to send it a list of the period laid down in the reasoned of the contracts for which an award opinion of 21 February 1996, had not yet procedure has already been initiated or will been performed or could reasonably have be advertised in the future, and to give it been cancelled. In essence, the Commission details of the values of those orders'. It alleges that the Republic of Austria made stressed: 'To date no satisfactory list has no effort to cancel the contracts awarded been sent'. Finally, it requested the Austrian after the bilateral meeting of 28 November authorities 'to take all appropriate steps to 1995, that is, when it was aware of the put an end to the infringements problems with respect to Community law. described'. 8For that purpose it prescribed a period of two weeks from notification of the opinion.

12. The Commission claims that the Court under Council Directives 93/37/EEC of should: 14 June 1993 and 89/665/EEC of 21 December 1989 and under Arti- cle 30 of the EC Treaty in connection with the construction of a new admin- istrative and cultural centre for the 1. Declare that the Republic of Austria Land of Lower Austria at St Polten in has failed to fulfil its obligations under awarding contracts, which were con- Council Directives 93/37/EEC of cluded before 6 February 1996 but 14 June 1993 9 and 89/665/EEC of which, on 7 March 1996, had not yet 21 December 1989 10 and under Arti- been performed or could reasonably cle 30 of the EC Treaty in connection have been cancelled; with the construction of a new admin- istrative and cultural centre for the Land of Lower Austria at St Polten in awarding contracts which were con- cluded before 6 February 1996 but which, on 7 March 1996, had not yet 2. Order the European Commission to been performed or could reasonably pay the costs. have been cancelled;

2. Order the Republic of Austria to pay 14. I will come back to the arguments of the costs. the parties in the course of the legal assessment.

13. The Republic of Austria claims that the Court should:

B — Opinion

1. Dismiss as inadmissible (if appropriate, as unfounded) the European Commis- sion's action of 7 October 1996 for a declaration that the Republic of Aus- tria has failed to fulfil its obligations I. Admissibility

9 — Directive concerning the coordination of procedures for the award of public works contracts (cited in footnote 1). 10 — Directive on the coordination of the laws, regulations and 15. The Austrian Government considers administrative provisions relating to the application of the action inadmissible on a number of review procedures to the award of public supply and public works contracts (cited in footnote 2). grounds.

The Austrian Government asserts that the subject-matter of the proceedings, as indi- 17. The question is therefore whether the cated by the form of order sought by the complaint of failure to cancel contracts action, renders the action inadmissible. It awarded before 6 February 1996 constitu- argues that the Court has consistently held tes a new and thus inadmissible plea. In this that the subject-matter of proceedings for regard, the pre-litigation procedure and the failure to fulfil obligations under the Treaty form of order sought by the action must be is delimited by the pre-litigation procedure. examined in the light of the actual course of It is determined by the Commission's events. reasoned opinion.

The be cancelled, on which the form of order request for the immediate bringing of the sought is decisively based, is therefore award practices into conformity with Com- inadmissible. munity law 1 1is to be found in the letter of formal notice. Elsewhere, the Commission extends its complaints 'specifically to 16. It must be conceded to the Austrian include those lots for which the contract Government that the Court has consistently has already been awarded but the tendering held that the subject-matter of proceedings procedure was not in conformity with for failure to fulfil obligations is defined by Community law'. 12 Finally, the Commis- the pre-litigation procedure and the form of sion requests the Republic of Austria 'to order sought by the action. At the same ensure that Community law is complied time, the application may not contain any with in the award procedures still out- complaints which are fundamentally differ- standing. It further requests the Republic of ent or new as compared with those dis- Austria to suspend the legal effects or cussed in the pre-litigation procedure. That prevent the completion of contracts already approach can be explained by reference to awarded in contravention of Community the structure of proceedings for failure to law [and] to defer pending award decisions fulfil obligations under the Treaty, which until such time as compliance with Com- gives the parties an opportunity to reach an munity law is secured, .

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19. Those words clearly express not only 21. Moreover, neither the reasoned opinion the Commission's requirement that further nor the actual course of events suggested conduct contrary to Community law be that the request to intervene in award prevented with immediate effect, but also procedures already being implemented, the demand that award decisions taken in which had already been made in the letter contravention of Community law be denied of formal notice, had been complied with. operative effect. However, the latter It may be assumed from this that the demand can only imply retaking such Austrian Government understood the decisions subsequently in a manner consis- Commission's request in the sense tent with Community law. An obligation to described here. In its reply of 22 March cancel award decisions already taken must 1996, it devoted over three-and-a-half therefore be inferred from the Commis- pages to commenting on these issues, under sion's request as formulated in the letter of the heading 'The contracts already awar- formal notice. ded'. 16 Any allegation of a breach of the principle of a fair hearing, which could be inferred from the objection to admissibility, is therefore also without foundation.

16 — See the Austrian Government's reply of 22 March 1996, at 14 — See the reasoned opinion, at point 16, paragraph 4. Chapter IV. 15 — See the reasoned opinion, at point 16, paragraph 6; 17 — Judgment in Case C-247/89 Commission v Portugal emphasis added. [1991] ECR I-3659.

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at the beginning of December. An assurance only the periods prescribed in the docu- that those contracts would be awarded ments served on the Member State can be with due regard for Community law and binding. A Member State cannot act on that pre-existing infringements would be 'hearsay' in the context of a formal pre- remedied therefore had to be obtained from litigation procedure. There can therefore be the Austrian Government as quickly as no question of regarding the period possible. between learning of the Commission's intentions through the press and formal service of the opinion as preparation time. 34. The Austrian Government's reply to the letter of formal notice allowed doubts to subsist as to its willingness to correct all the 36. Beyond the purely legal assessment, I infringements complained of. Nor did it also consider it bad form to publish a press send the promised list with the calculation release about the imminent dispatch of a of the value of contracts still to be awarded. reasoned opinion in Treaty infringement The Commission had to assume that, even proceedings against a Member State when at the beginning of 1996, a significant the document in question is not served on volume of contracts was still due to be the Member State concerned until almost awarded and had to prevent the creation of four weeks later. The Commission could a fait accompli. Nor did the complaints in have allowed a longer period by dispatch- the reasoned opinion refer only to the past. ing the reasoned opinion at an earlier date. The Commission definitely had in view the Earlier dispatch would have been possible situation existing at the time of expiry of under the circumstances. the period laid down in the reasoned opinion. Finally, the Austrian Government had learned prematurely of the Commis- sion's intentions through the press, so that it may not rely on the unreasonableness of 37. For the remainder of the examination, the periods. therefore, it must be assumed that only the periods prescribed in the pre-litigation documents are relevant.

39. What mattered to the Commission, 42. With regard to the circumstances at the however, was that the Austrian Govern- time of the adoption of the reasoned ment should realise and formally acknowl- opinion, it is striking that it was only after edge that the situation was contrary to the formal decision to dispatch the rea- Community law so that, on the one hand, soned opinion had become known in the further awards of contracts could be pre- press that the award committee, on 6 Feb- vented and, on the other, the contracts ruary 1996, took the decision, inter alia, to awarded in contravention of Community suspend current award procedures. The law could, as far as possible, be cancelled. Commission therefore had reason to sup- pose that the Austrian authorities were creating a fait accompli and that urgency was required. Viewed in that way, the short period of two weeks laid down in the 40. In response to the letter of formal reasoned opinion also seems reasonable. notice of 15 December 1995 the Austrian Government also gave an assurance, within the period of one week, that it would, 'with immediate effect', 19 apply the Community directives to the contracts still to be awar- ded. In reality, however, the authorities continued to award the contracts still out- standing. The award committee's decision 43. The possibility of applying for interim to suspend the current procedures, which legal protection, to which attention was had been expected earlier, was not taken drawn in both pre-litigation documents and until 6 February 1996. which was also raised at the hearing, must also be viewed in this context. Under Article 186 of the Treaty, the Court may prescribe necessary interim measures only in cases already pending before it. How- 41. In view of the urgency of stopping ever, an action under Article 169 of the further awards of contracts, at least for the Treaty may be brought only after the pre- time being, the period of one week was litigation procedure has been concluded. reasonable in this case. Indeed, the Austrian Where there is increased danger in any delay, the Commission must therefore bring the pre-litigation procedure to a rapid 19 — The Austrian Government's reply of 22 December 1995, conclusion in order, as far as possible, to pp. 2 and 7. prevent irreparable infringements.

44. That situation may be regarded as a but it fails to provide a definition of weakness of the system, but it can be reasonableness. The form of order sought remedied only by amendment of the rele- is therefore too imprecise to form the basis vant legal bases. Nor do the possibilities of an obligation to act resulting from provided for by Directive 89/665 20 offer a Article 171 of the Treaty, thus rendering satisfactory solution as a way out of the the action as such inadmissible. dilemma. The directive applies primarily to the relationship between the tenderer and the contracting authority. Moreover, the possibilities afforded to the Commission in Article 3 of the directive are not suited to all situations and in any case do not limit 47. The Commission takes the view that the Commission's authority to initiate pro- the Court is not required to rule on what is ceedings for failure to fulfil obligations and what is not to be regarded, in specific under the Treaty. terms, as reasonable in a Member State. That is the task of the national courts applying national law. Observations on the question of reasonableness are therefore irrelevant from the outset in the context of 45. In the light of all the foregoing con- these proceedings before the Court. siderations, the periods prescribed by the Commission in the pre-litigation procedure must be regarded as reasonable under the circumstances. 48. On this point, the Commission's view must be endorsed without qualification. It is neither the task of the Commission nor 4. The clear and precise nature of the form that of the Court to investigate the possi- of order sought by the action bilities for cancelling contracts concluded in the field of public procurement. On the contrary, an instruction — whether from the Commission or the Court — to cancel a 46. The Austrian Government expresses contract under a Member State's legal rule legal reservations about the phrase 'con- to be specified would constitute an ultra tracts, which were concluded before 6 Feb- vires act by the Community institutions vis- ruary 1996 but which, on 7 March 1996, à-vis that Member State's authorities. That had not yet been performed or could freedom of the Member State to choose the reasonably have been cancelled' in the form form and the means must necessarily also of order sought by the action. By using the find expression in a request by the Com- expression 'could reasonably have been mission to put an end to a situation cancelled', the Commission shows that it, contrary to the Treaty. This relative lack too, does not think that there is an of precision as regards the steps to be taken unlimited obligation to cancel contracts, is therefore, in the final analysis, a mani- festation of the division of powers between the Community and the Member State. The 20 — See the Directive on the coordination of the laws, wording at issue defines the objective of regulations and administrative provisions relating to the unwinding contracts awarded in contra- application of review procedures to the award of public supply and public works contracts (cited in footnote 2). vention of Community law within the

51. The Commission points out, firstly, that Austria has been required to comply 5. Legal interest in bringing proceedings with the provisions of Community law, including the legislation on the award of contracts, since its accession to the EEA Agreement with effect from 1 January 1994 and, a fortiori, since the date of its 49. The question concerning the legal inter- accession to the European Union, that is est in bringing the present action represents 1 January 1995. an objection to admissibility which, while not expressly raised by the Austrian Gov- ernment, nevertheless follows implicitly from the objections to admissibility which are raised by it. When the Austrian Gov- ernment asserts that the infringements 52. It alleges that, in the case of the concerned are by their very nature irrepar- contracts awarded in the period from able, it is indeed questionable whether any 27 November 1995 to 6 February 1996, interest is served by an abstract finding of which had a total value of more than failure to fulfil obligations under the ATS 360 000 000, Austria infringed sev- Treaty. The Austrian Government's view, eral provisions of Community law. Thus, that the denunciation of a Member State is Articles 8, 10(6), 11(6) and (11), 12 and 30 neither the subject-matter nor the purpose of Directive 93/37, Article 30 of the Treaty of Treaty infringement proceedings, must and Articles 1(1) and (3) and 2(l)(c) of be endorsed. Directive 89/665 were infringed. The Com- mission sets out the alleged infringements in detail. There is, it argues, no justification under Community law for the conduct engaged in during the period in question, 50. In order to assess the legal interest in which was aimed at 'getting the contracts bringing proceedings, it is important to home and dry'. ascertain whether the Commission's request is directed towards an objectively impossible act or whether there are ways and means of complying with the Commis- sion's requirements, on the basis that the material time is the end of the period laid down in the reasoned opinion. The issue 53. As evidenced by the Austrian Govern- thus identified is ultimately a question to be ment's reply to the reasoned opinion, the answered in the examination of the merits Austrian authorities consciously acted 'at of the action. The answer to the question their own risk'. Modification of the award concerning the legal interest in bringing practices would not, unlike amendment of proceedings must therefore await an exam- the Vergabegesetz, have necessitated any ination of the merits of the action. time-consuming procedures, a fact proved

55. Moreover, it submits, the Commission 57. The Commission replies that its powers shows that even it does not assume that under Article 169 of the Treaty are separate there is an absolute obligation to cancel from the procedure under Directive 89/665. contracts. In any case, the principle of the The Court has already found to that effect protection of legitimate expectations pre- elsewhere. 2 2 With regard to Nöplan's role, cludes such an obligation. The legitimate it observes that it has indisputably been expectations of parties to a contract are unanimously assumed that Nöplan is to be worthy of protection and take precedence regarded as the extension of the Land of over the Commission's application. Finally, Lower Austria in its function as a contract- the practical effect of Directive 93/37, in ing authority. the form of equal conditions of competi- tion, can no longer be ensured even by the cancellation of contracts. The initially suc- cessful tenderers had made arrangements giving them clear advantages over their competitors. Cancelling the contracts con- cerned would have entailed stopping the construction work and therefore, in the 58. For reasons of methodology, it is final analysis, have been impossible for that appropriate to begin the examination with reason also. the last-mentioned legal reservations expressed by the Austrian Government.

21 — Final cleaning of the Lower Austrian Land government building, public-address system for the shopping centre, 22 — Judgment in Case C-359/93 Commission ν Netherlands planting in the grove, etc. [1995] ECR I-157, at paragraphs 13 and 14.

Article 6(1) and (3) provide: '... Although the value of the contract for the building services control system, for which tenders were invited only on a regional basis, is approximately ATS 26 - million, that is, below the threshold value laid down in the directive, the provisions of '1. The provisions of this Directive shall the directive are applicable to such a apply to public works contracts whose contract pursuant to the second sentence estimated value net of VAT is not less than of Article 6(3) (threshold value exceeded ECU 5 000 000. 24 when lots are aggregated)'. 2 5

62. That legal assessment, that is to say the finding that the contract is subject to Community law, is correct and also applies

23 — See the reasoned opinion, at point 13. 24 — ECU 1 is equivalent to ATS 13.7789 (as at 1.12.1998). 25 — See the reasoned opinion, at point 13.

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to other contracts forming part of the eral meeting and finance committee) are project as a whole. Apart from its reference appointed by the owners . . . ' . 26 to the legal status of Nöplan, the Austrian Government has not otherwise adduced before the Court any facts which might preclude the applicability of the relevant directives.

'... The N ö Landeshauptstadt Planungsge- sellschaft mbH (Nöplan) was established as a private-law partnership for the purpose of 65. Article 1(b) of Directive 93/37 defines carrying out all planning measures neces- contracting authorities as: 'the State, regio- sary in connection with the construction of nal or local authorities, bodies governed by the capital of the Land of Lower Austria, St Polten. Its ownership is 5 1 % in the hands of the Land of Lower Austria, 10% 26 — See the letter of 12 May 1995 from the Austrian Govern- ment to the Commission, at Annex 3 to the application. in the hands of the city of St Polten and The Austrian Government's reply of 22 December 1995 to 39% in the hands of the NO HYPO the Commission's letter of formal notice states: 'With regard to point 8 Leasinggesellschaft mbH. The award of Nöplan is not only a partnership established for the exclusive purpose of carrying out all the planning measures contracts with a value exceeding ATS 2 - necessary in connection with establishing St Polten as the million requires the approval of the award Land capital of Lower Austria. On the contrary, its activities also include, in addition to the construction committee. The award committee is schemes involved in that, a multitude of other schemes, including private residential and industrial and commercial appointed by the Land Government of construction projects, for which Nöplan has to compete Lower Austria. The members of the other commercially.' The purpose of the partnership has not been raised further organs of Nöplan (supervisory board, gen- as an issue before the Court.

67. The question as to which body is liable, in the final analysis, to meet any claims for compensation made by tenderers is one which must be assessed according to the law of the Member State concerned. In any — financed, for the most part, by the event, it is the Member State which is liable State, or regional or local authorities, in relation to the Community. 30 Since there or other bodies governed by public law, or subject to management supervision by those bodies, or having an admin- 27 — Cited above, at point 63. istrative, managerial or supervisory 28 — See the judgment in Case C-44/96 Mannesmann Anlagen- board, more than half of whose mem- bau Austria [1998] ECR I-73, at paragraph 21. 29 — See the judgment in Case C-44/96, cited in footnote 28, at bers are appointed by the State, regio- paragraph 29. nal or local authorities or by other 30 — See most recently to that effect the judgment in Case C-353/96 Commission ν Ireland [1998] ECR I-8565, at bodies governed by public law; paragraph 23.

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is thus no doubt about where liability in in form or in substance, its powers in principle lies under Community law gov­ Treaty infringement proceedings, which in erning the award of contracts, the issue to principle are wide-ranging. be resolved by the Court boils down to the legal and factual preconditions for the existence of an obligation to cancel con­ tracts already concluded.

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over a period of over six weeks. In so far as also be assessed against that background. the contracts concluded during that period The Commission's demand that the con- were valid and not yet performed on tracts be cancelled was made only with 3 March 1996, the infringement subsisted regard to those contracts which were and the Commission was entitled to require concluded at the contracting authority's cancellation of the contracts. That demand own risk in the knowledge that they were does not seem unreasonable, moreover, possibly contrary to Community law. The since the Austrian authorities expressly Member State could have avoided such a acted 'at their own risk'. 33 Acting 'at one's demand if it had, without delay, taken own risk' can hardly mean creating a fait steps, in the form of a decision such as that accompli to which no penalty can be adopted on 6 February 1996, in order to attached. prevent a fait accompli.

80. Although the foregoing considerations are valid with respect to alleged cases of de 78. The argument based on the initial facto impossibility, the consequences of de impossibility of cancelling the contracts jure impossibility are still uncertain. The concerned because of the urgency of con- assessment under Community law comes tinuing with the construction work must up against a limitation here. As the Com- mission rightly states, and as has already been touched upon in the examination of 33 — See order of the President of the Court of Justice in Case admissibility, any cancellation of contracts C-87/94 R Commission v Belgium [1994] ECR 1-1395, at paragraph 34, on which the Austrian Government falls within the competence of the Member expressly relies. State. The legal bases and extent of any 34 — See the judgment in Case 39/72 Commission v Italy [1973] ECR 101, at paragraph 10; see also the Advocate General's cancellations are governed by national law Opinion in Case C-247/89 Commission v Portugal [1991] ECR 1-3670, at point 36; see also the order in Case and therefore cannot be established bind- C-87/94 R, cited in footnote 33, at paragraph 40. ingly here.

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the examination of admissibility. Since it Costs may be assumed that an abstract obligation to act existed but that the Austrian Gov- ernment has consistently disputed it, a legal interest in bringing proceedings must, for that reason alone, be acknowledged. More- over, a declaratory judgment in the present 87. In accordance with Article 69(2) of the proceedings may play a part in any litiga- Rules of Procedure, the unsuccessful party tion concerning any claims for damages, so is to be ordered to pay the costs. Since the that for that reason also a legal interest in Austrian Government has been unsuccess- bringing these proceedings must be ful in its arguments and submissions, it acknowledged. must be ordered to pay the costs.

C — Conclusion

88. In the light of the foregoing I propose that the Court:

(1) Declare that, in connection with the construction of a new administrative and cultural centre for the Land of Lower Austria at St Polten, the Republic of Austria has failed to fulfil its obligations under Council Directive 93/37/EEC of 14 June 1993 and Council Directive 89/665/EEC of 21 December 1989 and under Article 30 of the EC Treaty in awarding contracts which were awarded after the initiation of proceedings for failure to fulfil obligations under the Treaty and before 6 February 1996 but which, on 7 March 1996, had not yet been performed or could reasonably have been cancelled.