Joined Cases C‑145/08 and C‑149/08

In Case C-145/08, the competent interministerial committee decided to privatise Elliniko Kazino Parnithas AE (‘EKP’), a subsidiary of Ellinika Touristika Akinita AE (‘ETA’), an undertaking wholly owned by the Greek State. The contract notice published in October 2001 provided for an initial preselection stage to determine which tenderers met the conditions set out in that notice.

The national court asked whether Directive 89/665 applied to the present case, given that its application presupposed that one of the directives on public contracts referred to in Art. 1 of Directive 89/665 was applicable. The classification of the transaction at issue in the main proceedings by the national court was that that transaction was a mixed contract.

It followed from the case-law of the Court that, in the case of a mixed contract, the different aspects of which were, in accordance with the contract notice, inseparably linked and formed an indivisible whole, the transaction at issue must be examined as a whole for the purposes of its legal classification and must be assessed on the basis of the rules which governed the aspect which constituted the main object or predominant feature of the contract (see Case C3/88 Commission v Italy [1989]; Case C331/92 Gestión Hotelera Internacional [1994]; Case C220/05 Auroux and Others [2007]; Case C412/04 Commission v Italy [2008]; and Case C536/07 Commission v Germany [2009]).

The Court held that that conclusion was valid irrespective of whether or not the aspect constituting the main object of a mixed contract fell within the scope of the directives on public contracts.

The Court held that the different aspects of the mixed contract at issue in the main proceedings constituted an indivisible whole, of which the aspect relating to the transfer of shares constituted the main object. It furthermore held that the transfer of shares to a tenderer in the context of a privatisation of a public undertaking did not fall within the scope of the directives on public contracts.

The Court held that a mixed contract of which the main object was the acquisition by an undertaking of 49% of the capital of a public undertaking and the ancillary object, indivisibly linked with that main object, was the supply of services and the performance of works did not, as a whole, fell within the scope of the directives on public contracts.

Case C149/08
In Case C149/08, the national court wished to know, in essence, whether Directive 89/665 precluded a national rule, as interpreted by that court, under which only all members of a tendering consortium might bring an action against a decision of a contracting authority to award a contract, such that the members of that consortium, individually, were deprived not only of the possibility of having a decision of the contracting authority annulled, but also of the possibility of seeking compensation for individual damage suffered as a result of irregularities in the contract award procedure in question.

The applicant in the main proceedings submitted that, by the application of the contested national rules, it was prevented not only from seeking annulment of ESR’s allegedly unlawful decision, which led to its exclusion from the procedure at issue in the main proceedings, but also from seeking damages for the loss caused by that decision. Thus it was deprived of its right to effective judicial protection.

The Court reiterated that the principle of effective judicial protection was a general principle of European Union law (see, to that effect, Case C432/05 Unibet [2007], on which I wrote this post). It also reiterated that, in the absence of Community rules governing the matter, it was for each Member State to designate the courts and tribunals having jurisdiction and to lay down the detailed procedural rules governing actions for safeguarding rights which individuals derived from European Union law. Those detailed procedural rules must, however, be no less favourable than those governing similar domestic actions (principle of equivalence) and must not render practically impossible or excessively difficult the exercise of rights conferred by European Union law (principle of effectiveness) (see, to that effect, Case C268/06 Impact [2008], on which I wrote this post).

The Court held that, so far as concerned public contracts, an area covered by European Union law, those two types of jurisdiction, that was to say, on the one hand, the jurisdiction to annul or found the invalidity of an administrative act and, on the other, the jurisdiction to award compensation for the loss suffered, were, in the national law at issue in the main proceedings, held by two different courts.

Thus, in the area of public contracts, the combination of Art. 5(2) of Law 2522/1997, which made the award of damages subject to the prior annulment of the allegedly unlawful act, and Art. 47(1) of Presidential Decree 18/1989, in accordance with which only all members of a consortium had locus standi to seek annulment of an act forming part of a procedure for the award of a public contract, meant that it was impossible for any member of a consortium, acting individually, not only to seek annulment of the act adversely affecting it but also to apply to the competent court to obtain compensation for any damage it had suffered individually, whereas that did not appear to be impossible in other areas, by virtue of the rules of domestic law applicable to applications for compensation for loss caused by an unlawful act of a public authority.

By the application of the contested national rules, a tenderer such as the applicant in the main proceedings was deprived of any opportunity to claim, before the competent court, compensation for any damage it had suffered by reason of a breach of European Union law by an administrative act likely to have influenced the conduct and even the outcome of a public procurement procedure. Such a tenderer was thus deprived of effective judicial protection of the rights in that area of the law which it had under European Union law.

The Court therefore concluded that European Union law, in particular the right to effective judicial protection, precluded a national rule, such as that at issue in the main proceedings, interpreted as meaning that the members of a temporary association, tenderer in a public procurement procedure, were deprived of the possibility of seeking, individually, compensation for the loss which they suffered individually as a result of a decision adopted by an authority, other than the contracting authority, involved in that procedure in accordance with the applicable national rules, which was such as to influence the conduct of that procedure.