Everything remains as usual: No default necessary
European Court of Justice, Case C-314/09
The European Court of Justice (ECJ) ruled that the right to damages incurred as a result of an unlawful procurement decision cannot be dependent on establishing that the contracting authority was at fault, even if, under national law, there is a rebuttable presumption that the contracting authority was culpable and the grounds are limited on which the contracting authority can rely to seek to rebut the presumption of culpability.
The case’s facts were the following: The city of Graz announced an EU-wide invitation to tender by open procedure for the manufacture and supply of bituminous hot mix asphalt, in accordance with the Steiermärkischen Vergabegesetz (StVergG). After fourteen tenders were submitted, a construction undertaking received the supplement. Thereupon, the unsuccessful tenders brought review proceedings before the Vergabekontrollsenat des Landes Steiermark (the procurement review body of Land Steiermark) in which they stated that the supplement receiving construction undertaking did not possess a hot mix asphalt plant in Land Steiermark, which made it technically impossible for it to perform the contract at issue. They claimed that the supplement receiving construction undertaking should therefore be excluded. By decision of 10 June 1999, the Vergabekontrollsenat des Landes Steiermark dismissed the action in its entirety, including the applications for review proceedings and for the exclusion of supplement receiving construction undertaking from the contract. Thereupon, the city of Graz awarded the contract to the supplement receiving construction undertaking. That caused the unsuccessful tenders binging an action against the city of Graz before the ordinary courts for damages in the amount of EUR 300 000. But the Oberster Gerichtshof had doubts as to the conformity of Paragraph 115 (1) of the StVergG with Directive 89/665 and decided for this reason to stay the proceedings and to refer the following questions to the Court for a preliminary ruling.
The ECJ has ruled that, the right to damages for breach of the procurement rules is not conditional on establishing that the contracting authority was at fault. The Austrian rules limited the grounds on which the contracting authority could rely in seeking to rebut the presumption of fault. It was not entitled to rely on a lack of individual abilities as its liability is equated with that of an expert. There can be no limitations in national law on the right of an unsuccessful bidder to seek damages resulting from an unlawful contract award based on the culpability of the contracting authority, regardless of how such culpability is established.
The judgment will not have any consequences for German public procurement law. Because, German regulations are in line with the above directive, especially section 126 of German Act against restraints of competition (GWB). According to this law, the undertaking may demand compensation for the costs of preparing the tender or of participating in an award procedure, if the contracting entity violates a provision intended to protect undertakings, and if the undertaking would have had a real chance without this violation of being granted the award upon an assessment of the tenders.
Harald Nickel
advocate . tax lawyer
assistant professor for public procurement law (h_da)
