C-92/00

1. By order of 17 February 2000, lodged at the Registry of the Court on 10 March 2000, the Vergabenkontrollsenat (Commit- tee for the control of public service contracts) of the Land of Vienna (Austria) I I — Legal framework referred, under Article 234 EC, three ques- tions for a preliminary ruling on the poss- ible legal remedies applicable in respect of the procedures of a contracting authority which cancels an award procedure for a public contract. In particular, the national A — Community law court asks this Court, first, whether Article 2(1)(b) of Directive 89/665 2 requires the Member States to initiate review proceedings in respect of such pro- 2. Article 1(1) of Directive 89/665, as cedures in order to have them set aside. If amended by Article 41 of Directive 92/50, that question is answered affirmatively, provides: then the Vergabenkontrollsenat asks whether Directives 89/665 and 92/50 3 preclude the national court, before which review proceedings may be brought, from being necessarily limited to examining the arbitrary or sham nature of the contested 'The Member States shall take the measures cancellation of the award procedure (sec- necessary to ensure that, as regards contract award procedures falling within the scope of Directives 71/305/EEC, 77/62/EEC and 92/50/EEC, decisions taken 1 — Original language: Italian. 2 — Council Directive 89/665/EEC of 21 December 1989 on the by the contracting authorities may be coordination of the laws, regulations and administrative reviewed effectively and, in particular, as provisions relating to the application of review procedures to the award of public supply and public works contracts rapidly as possible in accordance with the (OJ 1989 L 395, p. 33; hereinafter 'Directive 89/665' or the conditions set out in the following Articles 'review directive'). 3 — Council Directive 92/50/EEC of 18 June 1992 relating to and, in particular, Article 2(7) on the the coordination of procedures for the award of public grounds that such decisions have infringed service contracts (OJ 1992 L 209, p. 1; hereinafter 'Direc- tive 92/50'). Community law in the field of public

The second paragraph of Article 2(6) pro- vides:

B — National law

'Furthermore, except where a decision must be set aside prior to the award of damages, 3. In Austria the relevant national law is a Member State may provide that, after the the Wiener Landesvergabegesetz (Viennese

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law on public procurement; hereinafter the (2) where all the tenders had to be 'WLVerG'). 4Paragraph 32 (entitled 'Cor- excluded. rection and withdrawal of an award pro- cedure') (2) (3) and (4) of that law provides that: 5

4. As regards the jurisdiction of the Ver¬ gabekontrollsenat, that is to say the court (1) events described in subparagraph 2 are which made the present reference, Para- not known until after the expiry of the graph 99 of the WLVerG provides that that period for submitting tenders, court is to have jurisdiction to review decisions of the contracting authority taken in the context of procedures for the award of public contracts. In particular, until such time as a contract is awarded, the Vergabe- kontrollsenat may adopt interim measures or or declare void decisions taken unlawfully by the contracting authority on the grounds laid down in Paragraph 101 of the 4 — LGBl. No 36/1995, in the version published in LGBl. WLVerG. In cases where the contract has No 30/1999. already been awarded, the Vergabekon- 5 — The translation of the national provisions is not an official version. trollsenat may declare that the contract has

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not been awarded to the best bidder owing a decision more favourable to the to a breach of the WLVerG and may applicant if the infringed provisions confirm, at the request of the contracting had been complied with.' authority, whether, had that breach not occurred, the contract would have been awarded to a bidder who had been passed over.

III — Facts and questions for a prelimi- nary ruling 5. Paragraph 101 of the WLVerG provides:

6. The City of Vienna, represented by the Magistrat der Stadt Wien — Wiener Kran- kenanstaltenverbund (hereinafter the 'City 'The Vergabekontrollsenat must set aside of Vienna' or the 'respondent'), in 1996 decisions of the awarding authority published an invitation to tender for the adopted in the course of a contract awar- 'implementation of project management for ding procedure: realisation of the overall catering-supply concept in the premises of the Viennese associated hospitals'. 6

light of the results of studies carried out by ings before the Vergabekontrollsenat seek- Humanomed in 1996, it had emerged that ing, in particular, the commencement of the project initially envisaged and put out review proceedings, an interim order, the to tender had to be developed in a decen- annulment of certain tender documents and tralised manner and it had therefore been of the withdrawal of the invitation to decided not to establish any central coor- tender on the ground that it was unlawful dinating body; consequently, it was no and discriminatory. longer necessary to allocate the contract covered by the invitation to tender. The same letter also stated that the withdrawal of the invitation to tender was clearly justified by supervening circumstances which, had they been known earlier, would have precluded the opening of the award procedure. 9. By decisions of 30 April and 10 June 1997, the Vergabekontrollsenat dismissed the action brought by HI. In particular, it declared the claim for the annulment of the withdrawal of the invitation to tender inadmissible on the grounds that, under Paragraph 101 of the WLVerG, such claims could be made only in respect of certain 8. HI did not share that opinion, contend- specific decisions, exhaustively listed, ing that the withdrawal was in fact due to adopted in the course of an award pro- the contracting authority's intention to cedure, and these did not include decisions favour the Austrian company Humanomed to withdraw an invitation to tender. to the detriment of a company, like itself, from another Member State. Besides sus- pecting that the City of Vienna was, either directly or indirectly (through municipal undertakings), a shareholder in Huma- nomed, HI questioned the fact that Huma- nomed had been closely involved in the preparatory work for the invitation to 10. However, on appeal brought by HI, the tender, which had subsequently been with- Verfassungsgerichtshof (Constitutional drawn, and had thus influenced the draft- Court) set aside the decision of the Ver- ing of the outline specifications of the gabekontrollsenat. In particular, it held project which was the subject of that that, for the purposes of such a ruling, it invitation to tender. That being the case, was first necessary to resolve whether a Humanomed, according to HI, should have withdrawal of an invitation to tender came been excluded from the invitation to tender within the scope of application of in compliance with the principle of equal Article 2(l)(b) of Directive 89/665 and, treatment between different tenderers; thus, since the Court of Justice had not yet had according to HI, the invitation to tender an opportunity to give a ruling on the was withdrawn precisely in order to avoid matter, the Vergabekontrollsenat should the necessity of excluding Humanomed, have referred to it the relevant question whilst at the same time continuing to for a preliminary ruling. Since the Vergabe- cooperate with that company. Accordingly, kontrollsenat had not done so, it had for all these reasons HI instituted proceed- infringed both Article 234 EC and Hi's

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2. Arguments of the parties initial proposal, that the aforementioned obligation on Member States be extended to the setting aside of all decisions taken in breach of Community and/or national rules on public contracts. However, despite requests by the Commission and by certain Member States, the draft was subsequently amended to limit the requirement to the 14. Of the parties submitting observations setting aside of decisions taken in breach of in the present proceedings, only the appli- Community law relating to public contracts cant in the main proceedings has proposed and national rules transposing that law. that this question be answered in the affirmative. The other parties, namely the Commission and the Austrian Government, as well as the national court, have proposed a negative response on the basis of reason- ing that I am now going to examine.

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the contracting authority is obliged to take, procedure by withdrawing the relevant under Directive 92/50, during an award invitation to tender is not covered by the procedure, while a decision of withdrawal directive and thus does not constitute a constitutes an act that terminates such a d e c i s i o n w i t h i n the m e a n i n g of procedure. 7 Article 2(1)(b) of Directive 89/665.

. . protection of the rights of any parties based on serious grounds'. 8 However, harmed, thereby precluding the possibility those supporting that argument contend of having the decision to award the that if the contracting authority is not contract set aside. It therefore does not required to award a contract, that confirms see why, as far as decisions to withdraw an that the decision to terminate an award invitation to tender are concerned, the interested parties should be offered any greater protection. It contends that the only 7 — It is claimed that that interpretation is also supported by the obligation the national legislature must judgment in Case C-81/98 Alcatel Austria [1999] ECR I-7671 which held that all decisions taken during an award meet in such a case is to guarantee the procedure up to the time when the contract is concluded etween the contracting authority and the successful right of the tenderers to seek damages

On the of public interest or because of a reappraisal of the feasibility of the planned works (lack of adequate resources, one hand, there are the remedies provided changes in the state of the art in a particular technological for by national law in the event of a breach sector, and so forth)' (paragraph 13). On the discretion of the contracting authorities, see also, in more genera] terms, of national provisions; on the other hand, inter alia, Case C-56/77 Agence européene d'Interims they may avail themselves of the remedies [1978] ECR 2215, paragraph 20; Case T-19/95 Adia interim v Commission [1996] ECR II-321, paragraph 49; guaranteed by Directive 89/665 where the Case T-203/96 Embassy Limousines & Services v Parlia- ment [1998] ECR II-4239, paragraph 54; Case T-145/98 contracting authority has published a new ADT Projekt v Commission [2000] ECR II-387, paragraph invitation to tender without complying 147; and Case T-139/99 AICS v Parliament [2000] ECR II-2849, paragraph 39. with Community directives.

3. Assessment 20. In particular, for our present purposes, I note that the directives in question have a specific aim which is expressly stated in the directives themselves and repeatedly stressed in Community case-law. That aim is to guarantee equal treatment between tenderers and transparency at every stage of the award procedure, 9whilst imposing an obligation on Member States, as in the case of the directive here in question, to provide appropriate remedies at national level in order to ensure effective compliance with

As is well known, these directives have established a body of rules designed to give effect, in this sector too, to the freedom of establishment and freedom to provide services by guaran- teeing all Community traders the right to participate in public calls to tender under conditions of absolute equality and total transparency. As in other sectors, the necessity to achieve that goal also in relation to public contracts required legis- lation that went beyond a mere ban on 9 — See, in particular, Case C-87/94 Commission v Belgium [1996] ECR I-2043 in which the Court held 'the procedure discrimination on grounds of nationality to for comparing tenderers therefore had to comply at every embrace every eventuality that might lead, stage with both the principle of the equal treatment of tenderers and the principle of transparency' (paragraph 54); in any way whatever, to differences in the Embassy Limousines Sc Services, cited above, paragraph 85; Joined Cases T-191/96 and T-106/97 CAS Succhi di frutta v conditions governing access to and partici- Commission [1999] ECR II -3181, paragraph 72, and ADT pation in an activity. Thus, there has also Projekt, cited above, paragraph 164. 10 — I note that the first three recitals of Directive 89/665 been a gradual movement away from a expressly provide, first, that the scope of the directive is more limited set of rules, such as those laid precisely to obviate the lack, in the directives on public contracts, of specific provisions that guarantee their down by the first directives on public effective application; second, the need to reinforce the national and Community control mechanisms which did supply and public works contracts, towards not always allow the Community provisions to be a more specific, incisive and, above all, respected; third, the need to provide for a 'substantial increase' in the guarantees of transparency and non-dis- tendentially global set of rules, such as crimination, requiring the Member States to introduce effective and rapid remedies to review infringements of those which have come about by degrees Communiry and national legislation. and which, in their main outlines, may now 11 —Council Directive of 26 July 1971 concerning the coor- be considered almost complete. dination of procedures for the award of public works contracts (OJ 1971 L 185, p.5).

of the principle of equal treatment of their scope or impair their effectiveness, 13 tenderers, the duty to observe that principle but, above all, to be read in the light of lies at very heart of the directive'. 12 their stated function of guaranteeing full and effective observance of the superior principles of equality of treatment and transparency. In particular, the review directive must be interpreted, in strict compliance with the aims of this directive and of the entire system, as meaning that its aim is to ensure at all levels effective observance of the substantive directives and of the principles underlying them so that, over and above the cases expressly provided for, it cannot be implicitly assumed or inferred, in relation to the procedures covered by those directives, that there are limits to the judicial safeguards which leave stages or phases of those

In the same vein, see Case C-87/94 Commission v Belgium, 'Bus Wallons' ment explained above. [1996] ECR I-2043, paragraph 51. The Commission has also recently noted that 'the Court's case-law holds that, even if Member States remain free under the Treaty to lay down the substantive and procedural rules, they must respect all the relevant provisions of Community law, and particularly the prohibitions deriving from the principles enshrined in the Treaty by specifying in particular that the public procurement directives were intended to "facilitate the attainment within the Community of freedom of 22. Coming now to consider the specific establishment and freedom to provide services" and "to ensure the effectiveness of the rights conferred by the question before us in the light of the Treaty in the field of public works and public supply contracts"' (see the Commission interpretative communi- cation on concessions (for public contracts) under Com- munity law (OJ 2000 C 121, paragraph 3, which refers to Case 198/85 Commission v Italy [1987] ECR 1039 and 13 — Among the numerous recent cases, see Case C-434/97 Case C-71/92 Commission v Spain [1993] ECR v-5923). Commission v France [2000] ECR I-1129, paragraph 21, Accordingly, on that basis, it has confirmed, particularly where further references are made and Case C-437/97 with reference to concessions, that although they are not EKW and Wein & Co. [2000] ECR I-1157, paragraph 41, defined by the Treaty and are practically ignored by the where further references are made. In the same vein, see public contract directives, this does not mean that the opinion of Advocate General Mischo in Alcatel Austria 'concessions are not subject to the rules and principles of (paragraph 40, with specific reference to Article 1 of

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preceding discussion, the negative reply of a decision to withdraw or cancel it. In proposed by the above argument seems any case, as the Court held in Alcatel highly debatable and, as far as the Com- Austria, the article does not provide for any mission is concerned, I would even say 'restriction with regard to the nature and surprising when account is taken of its content' of the decisions that have infringed traditional approach in this matter. 15 In Community law on public contracts or the any event, I do not think the argument in relevant national implementing provisions question stands up to critical analysis. (paragraph 35).

15 — I merely note, for example, that in the Green Paper on Public Contracts in the European Union of 27 November 1996 (COM(96) 583 fin.), the Commission maintained that, even in regard to situations that do fall within the scope of the directives (contracts below the thresholds, concessions or similar contracts), the principles of non- discrimination, equality of treatment and transparency apply (see point 3.24). Thus 'contracting authorities or contracting entities have, when awarding public contracts ..., engaged in behaviour or taken decisions incompatible with Community law, even if the rule or 25. Thus, on the basis of a textual analysis prohibition to be complied with is not expressly laid down alone, the directive not only fails to provide in the Directives' (point 3.29). Also see, in the same vein, the Communication on public contracts in the European Union of II March 1998 (COM(1998) 143 fin.) and, in particular, the abovementioned interpretative Communi- cation on concessions under the Community law on public 16 — See, in the same vein, paragraphs 32 and 33 of Alcatel contracts. Austria.

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I even from the perspective of the logic of the would observe, however, first of all, that system it is not clear why, as HI observes, the assumption on which that argument is of the two main methods of concluding a based, according to which only procedures tendering procedure, namely awarding a and decisions for which specific rules are contract and withdrawing it, only the first laid down in the substantive directives method should be subject to control, whilst should be subject to the review directive, the second is not. And that is so even if by remains to be substantiated. It is equally chance the decision to award the contract legitimate, and even more consistent with were to be taken in a totally arbitrary the principles and logic of the system, as I fashion or for the sole purpose of favouring have pointed out several times, to argue a certain tenderer, and even if the tendering that the first directive covers all the stages procedure were repeated several times until and phases of the award procedures which the tenderer who was hypothetically are covered by the substantive directives, favoured was successful.

It seems obvious to me that such an obligation to 26. However, as noted above, those who provide reasons is not of little consequence support the argument in question insist for our present purposes because stating the

28. Nor, for the purposes of the present argument, can the aforementioned objec- tion be raised that, since the contracting authority has wide discretion to withdraw a tendering procedure, tenderers have no right to claim that the procedure be con- cluded with the award of a contract. If, apart from the aforementioned obligation to provide reasons, procedural and sub- 29. Before concluding with this point, I stantive conditions governing withdrawal must still give my opinion on certain are not laid down, that does not mean that arguments put forward respectively by the the relevant measures fall outside the Austrian Government and the Commission review directive or that the power vested in favour of a negative reply to the question under consideration. 17 —See Case C-17/99 France v Commission [2001] ECR I-2481, paragraph 35, where other references are given. I also fully endorse the comments of Advocate General 18 — As Advocate General Saggio observed in the abovemen- Saggio, in his Opinion in Fracasso and Leitschutz, where tioned Opinion in Fracacsso and Leitschutz 'the power to he stated that 'the obligation to state the reasons for which withdraw the administrative notice announcing a tender- the contracting authority decided not to award the ing procedure ... [does] not imply that that power to adopt contract or to recommence the procedure, referred to in self-protective measures of that kind is absolute and not Article 8(2) of the Directive [Council Directive 93/37/EEC amenable to any judicial review'. It cannot therefore of 14 June 1993 concerning the coordination of pro- engender 'an arbitrary or unfair' act or invoke 'any cedures for the award of public works contracts (OJ 1993 infringement of the Directive or of other provisions or L 199, p. 54), a provision analogous to Article 12(2) of principles of Community law'. Article 8(2) of Directive Directive 92/50) must be seen for what it is. It allows the 93/37 (corresponding to Article 12 of Directive 92/50) is legality of the administrative decision to be reviewed, at 'without doubt intended to prevent the contracting auth- least in cases where the decision cancelling the procedure ority from freeing itself of a potential contracting party in appears inappropriate or contrary to other provisions of an entirely arbitrary manner or in disregard of fundamen- Community law' (point 17). tal principles of Community law' (points 13 to 18).

19 — As Advocate General Mischo pointed out in his Opinion in that case 'the effectiveness of the review directive, and in 32. For its part, the Commission initially particular its objective, set out in Article 1(1), of estab- contends that any tenderer harmed by an lishing rapid and effective review procedures, would be compromised if it were open to a Member State to widen unlawful decision to withdraw an invi- the limitation provided for in Article 2(6) to such an extent that the most important decision of the contracting tation to tender would in any event have authority, namely the award of the contract, would available the remedies provided for by the systematically be covered by the limitation, and would thus be removed from the full protection established by laws of the Member States where national Article 2(1). The objective of reinforcing remedies which is laid down by the review directive requires that the provisions are infringed. I do not know if possibility left open to the Member States to limit them such a prospect is likely to console those should be regarded as an exception and so be interpreted restrictively' (points 39 to 40). It obviously goes without affected. However, it certainly does not saying that such observations, although directed at decisions to award contracts, also apply in full to pro- meet the stated requirements and frankly it cedures to withdraw an invitation to tender. sounds rather odd coming from an institu-

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tion which for years has been insisting that down by the judgment setting aside the the directives on contracts be effectively decision. 20 implemented and has proposed more than one directive (such as, for instance, Direc- tive 89/665) aimed precisely at reinforcing that guarantee at Community level, remov- ing it from the disparities and deficiencies of the national legislation. 34. Accordingly, in light of the foregoing observations, I consider that the reply to the first question for a preliminary ruling should be that Article 2(1)(b) of Directive 89/655 requires that the decision by the contracting authority to withdraw the invi- tation to tender for a contract for services may be examined and possibly set aside under a review procedure.

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36. In effect, this is a somewhat convoluted have said above concerning the discretion question which not even the grounds of the enjoyed by the contracting authority in the order for reference help to clarify, probably matter, and the limits resulting from it, in also because this reflects problems and this and all like cases, on the level of concerns specific to the Austrian legal judicial review. Community case-law has system. However, as far as I understand repeatedly stressed that, given the nature of it, the Vergabekontrollsenat is disposed to the power enjoyed by those authorities, give a negative reply, in other words seek- review by the courts must be limited to ing to limit judicial review to the decision checking that the rules governing the pro- to withdraw an invitation to tender, whilst cedure and statement of reasons are com- HI takes the opposite view, arguing that it plied with, that the facts are correct and cannot be inferred from Directive 89/665 that there is no manifest error of assessment that an action to set aside a decision of or misuse of powers. 21 However, beyond withdrawal must be limited solely to that limitation, directly connected, I repeat, examination of whether the contested to the nature of the power exercised in the measure was arbitrary or sham. On the present case, remains the fact that the contrary, in its opinion, a decision of national authorities will still always be withdrawal should be subject to full judi- obliged to respect the relevant Community cial review. Finally, for its part, the Com- and national provisions and, above all, the mission, after repeating that withdrawal principles of equality of treatment and measures are excluded from Directive transparency repeatedly referred to; there- 89/665, merely notes that, if an action is fore, judicial review must also be extended brought before a national court challenging to those aspects. the lawfulness of a withdrawal of a tender, that court can verify whether the grounds for such a withdrawal are compatible with the national and, possibly, the Community provisions.

C — On the third question for a prelimi- purpose of considering the lawful nature of nary ruling a decision of withdrawal. I believe that is due to the nature of the directive itself which is not intended to harmonise legis- lation, but merely to coordinate existing 39. By this question also, submitted in the procedures. Thus, its aim is not to create a alternative in the event of an affirmative comprehensive legal framework on the reply to the first question, the Austrian subject, but merely to lay down the necess- court asks finally what is the relevant ary rules to ensure that the substantive moment for assessing whether the decision directives are fully and effectively applied. of the contracting authority to withdraw It is to the individual national legal systems the invitation to tender is lawful. that one must look for specification of the detailed rules and procedures, in com- pliance, of course, with the rules and principles laid down in the directive, for the exercise of the protection provided for in it. As the Court has recently held, 'it is 40. In stating its reasons for that question, for the domestic legal system of each the Vergabekontrollsenat notes that Direc- Member State to designate the courts and tive 89/665 contains no indication on the tribunals having jurisdiction and to lay matter and that in its opinion there are two down the detailed procedural rules govern- possible solutions: the moment at which the ing actions for safeguarding rights which decision is taken by the contracting autho- individuals derive from Community law'. 22 rity or the moment at which the decision is taken by the review body. In favour of the first solution is the fact that the decision of withdrawal is the subject of the application for review, whilst in favour of the second interpretation is the principle of the direc- tive's effectiveness, which is intended to guarantee the existence of 'effective and rapid remedies'. However, HI contends that reference should be made to the moment when the decision is given on the 42. Accordingly, in reply to the third ques- contested act whilst the Commission con- tion for a preliminary ruling, I consider that tends that, since the withdrawal of an the Court should inform the national court invitation to tender is governed not by that, without prejudice to the effectiveness Community law but by the applicable and timeliness of the safeguards guaranteed national law, it is on the basis of the latter by the principles and provisions of Com- that the solution to the third question for a munity law, the relevant moment in time preliminary ruling will depend. for the purpose of assessing the lawfulness of a decision taken by a contracting auth- ority to withdraw an invitation to tender is to be determined on the basis of the applicable national law. 41. For my part, I would observe that Directive 89/665 makes no provision con- 22 — Case C-231/96 Edis [1998] ECR I-4951, paragraph 19, cerning the determining moment for the where further references are given.

(3) Without prejudice to the effectiveness and timeliness of the safeguards guaranteed by the principles and provisions of Community law, the relevant moment in time for the purpose of assessing the lawfulness of a decision taken by a contracting authority to withdraw an invitation to tender is to be determined on the basis of the applicable national law.

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