EU Public Procurement Law 2011 – Chapter 8, Enforcement (1)Anders Birkelund Nielsen

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Where are we?

• Aim and principles (chapter 1)• Contracting authorities (chapter 2)• Contracts subject to the Procurement Directive (chapter 3)• The Contract Documents (chapter 4)• The Procurement Procedures (chapter 5)• Selection of Participants (chapter 6)• Award of Orders and Conclusion of Contracts (chapter 7)• Non-economic criteria in the procurement procedures (chapter 4)• Enforcement (chapter 8)

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Enforcement (1)

Legislative context:• The Remedies Directive for Public Contracts (the ”old” remedies directive)

• Council Directive 89/665/EEC of 21 December 1989 on the coordination of the laws, regulations and administrative provisions relating to the application of review procedures to the award of public supply and public works contracts

• ”Whereas the existing arrangements at both national and Community levels for ensuring their [effective] application are not always adequate to ensure compliance with the relevant Community provisions particularly at a stage when infringements can be corrected” (2. recital of the preamble)

• Contains inter alia regulations on:• interim measures,• setting aside unlawful decisions, and• damages

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Enforcement (1)

Legislative context:• New Remedies Directive for Public Contracts

• Directive 2007/66/EC of 11 December 2007 amending Council Directives 89/665/EEC and 92/13/EEC with regard to improving the effectiveness of review procedures concerning the award of public contracts (the “Remedies Directive”)

• Should have been transposed into national law on 20 December 2009• Transposed into Danish law through The Danish Act on Enforcement of the

Public Procurement rules (“lov nr. 492 af 12. maj 2010 om hånd-hævelse af udbudsreglerne”) that entered into force on 1 July 2010

• Contains inter alia new regulations on• Standstill (was already transposed into Danish law)• Possibility to set time limits (”cut off dates”) for complaints• ”Ineffectiveness” Forced annulment of existing contracts in connection with

particularly gross violation of the rules on public procurement• Alternative sanctions

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Enforcement (1)

Legislative context:• The Act on Enforcement

• Replaces the Act on the Complaints board for Public Procurement (no. 415 of 31 May 2000) (as amended in 2001, 2003, 2006 and 2007)

• ”Real” Act, not merely an administrative order on transposition referring to the Directives

• Supplemented by the Executive Order on the Complaints Board (no. 602 of 26 June 2000)

• Selected (new) provisions• Sections 16 til 19 Ineffectiveness and (as an alternative) economic

sanctions

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Enforcement (1)

The Complaints Board for Public Procurement:• Part of the public administration (covered by administrative law)• Also a ”court” under article 234 of the EC treaty, enabling the Complaints Board

to submit preliminary references to the ECJ (C-275/98, Unitron Scandinavia)• Decisions by the Complaints Board cannot be brought/tried before other

administrative authorities or boards, but the decisions can be brought to the ordinary courts (time limit is 8 weeks from the decision, cf. Section 8 of the Act on Enforcement)

• The inquisitorial procedure applies to the Complaints Board

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Enforcement (1)

The Complaints Board for Public Procurement:• Consists of a chairman, eight deputy chairmen (all judges) and a number of

experts• The case handling resembles the normal case handling of civil cases (exchange

of pleadings and oral negotiation)• A case is handled by one chairman and two experts

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Enforcement (1)

The Complaints Board for Public Procurement:• Section 1 of the Act on Enforcement:

”Section 1. The Act applies to purchasing parties when entering into public contracts and contracts under the Utilities Directive.Subsection 2. Furthermore the Act applies to the enforcement of

1) EC law concerning the conclusion of public and utility services contracts,2) the Act on harmonization of procedures in connection with construction contracts and procurement etc. or rules based on this law, 3) the Act on public procurement in connection with public and publicly funded contracts or

Subsection 3. The Act also applies where other regulations in accordance with governing law grants access to submit complaints with the Complaints Board.”

• The old act said that it applied to “complaints filed against contracting authorities” i.e. contracting authorities were not authorized to independently file a case with the Complaints Board on the correct application of governing law

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Enforcement (1)

The Complaints Board for Public Procurement: • Powers of the Complaints Board

• Very comprehensive case law states that the Complaints Board is not authorized to decide on matters beyond the public procurement rules

• Disputes concerning concluded contracts are (normally) referred to the normal courts However, The Complaints Board is authorized to decide on other parts of Danish law provided that it is necessary in order to assess the public procurement process, cf. inter alia decision of 6 November 2008, Dansk Taxa Råd against Region Sjælland

• Time limits for complaints, cf. Section 7 of The Act on Enforcement• Prequalification 30 days from information (with short reasoning)• ”Ordinary complaints” 6 months from official notice of concluded contract• Award under framework agreement with new competition 30 days from information (with

short reasoning)• Award of framework agreement 12 months from information (with short reasoning)• Section 4-procedure (no call for tender) 30 days from off. notice concluded contract• The importance of C-406/08, Uniplex?

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Enforcement (1)

The Complaints Board for Public Procurement:• Section 6(1) of the Act on Enforcement:• ”A complaint can be filed with the Complaints Board by:

1. Anyone with a cause of action.2. The Danish Competition Authority.3. The organizations and public authorities granted an access to file a

complaint by The Minister for Economic and Business Affairs4. Organizations in other member states [that are equal to the organizations

mentioned under number 3.”

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Enforcement (1)

The Complaints Board for Public Procurement:• What is cause of action in relation to a complaint with the Complaints Board?

• Probably a requirement that the plaintiff has submitted a tender provided that this was possible, cf. C-230/02, Grossmann Air Service and Complaints Board decision of 20 August 2001, Thomsen against Blåvandshuk

• Complaints Board decision of 14 July 2005, Sammenslutningen nabofronten against Østkraft Produktion A/S: It was a requirement that the plaintiff (an association) had to be a legal entity and that the persons participating in the association had to be potential tenderers

• As a starting point there is no access to file a complaint unless one has a “direct economic interest in the decision of the Complaints Board on whether a works contract is or should have been subject to public procurement under the EU public procurement rules”. (Complaints Board decision of 15 January 1998, Miljøforeningen against Københavns Lufthavn)

• No cause of action if the project has been abandoned and compensation has been paid for submitting tenders (UfR 2004.3051 H, PAR against Videnskabsministeriet)

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Enforcement (1)

Alternatives to the Complaints Board:• The Danish Competition Authority

• Authorized in 1996 to submit cases to the Complaints Board• The Minister for Economic and Business Affairs simultaneously asked the

Danish Competition Authority to (i) submit cases at its own initiative and to (ii) try complaints regarding infringement of the EU procurement rules

• Not authorized to make decision within the area of public procurement (i.e. injunctions and prohibitions)

• As a starting point the Danish Competition Authority will only try public procurement cases where no contract has been signed

• Very informal case handling• Danish representative in ”Public Procurement Network”• The Danish Competition Authority is authorized to ”demand all information

which are deemed necessary in the evaluation of whether the rules […] are infringed” , cf. Section 25(1) of the Act on Enforcement

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Enforcement (1)

Alternatives to the Complaints Board:• The Commission

• ”The Commission may invoke the procedure for which this Article provides when, prior to a contract being concluded, it considers that a clear and manifest infringement of Community provisions in the field of public procurement has been committed during a contract award procedure” (article 3 of the Remedies Directive)

• Separate statutory authority to hear complaints• The procedure is primarily of relevance to foreign tenderers in DK or Danish

tenderers outside of Denmark• The Commission has not been granted any possibilities of enforcement - but is

authorized to try a case at the ECJ• In addition the Commission can issue a reprimand in case of general EU public

procurement related issues (e.g. issues concerning Danish procurement rules or case law) which is deemed in conflict with the EU rules or the case law of the EJC

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Enforcement (1)

Alternatives to the Complaints Board:• The ordinary courts

• ”The decisions of the Complaints Board can be tried at the courts no later than 8 weeks after a party have been notified of the decision” (Section 8(1) of the Act on Enforcement)

• Decisions of the Complaints Board that are not brought before the ordinary court within the time limit are final

• A complaint can also be tried directly at the ordinary courts (without trying it at the Complaints Board), unless a complaint is submitted during the standstill-period

• All cases regarding contracting entities’ compliance with the public procurement rules must be submitted to the Municipal Courts

• The Police• ”Infringements of the EU public Procurement directive are punishable by fine”

(BEK no. 937 of 2004, Section 7 (1))• Possibility to file a police report

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Enforcement (1)

Interim Measures:• The Remedies Directive prescribes that there must be access to ”interim

measures”, i.e. a possibility to order a contracting authority to stop the procurement procedure / the completion of decisions until the Complaints Board has decided on a case

• The Board of Complaints decides on questions of suspensive effect in a separate decision which is (in most cases) not published, cf. however the Complaints Boards decision of 16 October 2007, Kuwait Petroleum against Sønderborg Kommune

• For a long period of time - from the end of 2000 till the beginning of 2007 - the Board of Complaints did not grant suspensive effect to a single complaint.

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Enforcement (1)Interim Measures (supplementary remedies):• Standstill-period

• Section 3(1) of the Act on Enforcement:• Standstill-period of 10 calendar days calculated from the day after the day

the contracting authority sent the award decision electronically (15 calendar days if sent by snail mail)

• Automatic suspensive effect• Section 12(2) of the Act on Enforcement:

• If a complaint is filed in the standstill-period it automatically has suspensive effect until the Complaints Board has reached a decision on suspensive effect.

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Håndhævelse (1)

Interim Measures (supplementary remedies):• Request for suspensive effect

• Section 12(1) of the Act on Enforcement:“Where special reasons favor such decision, the Complaints Board may upon request decide that a complaint shall be given suspensive effect.”

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Enforcement (1)

Interim Measures:The Court of first instance, 31 January 2005, T-447/04, Capgemini against the

CommissionFacts:• Public procurement conducted by the Commission• Company complaints after not being awarded the contract• The company requested that the complaint was granted suspensive effect and

that the implementation of the contract was postponed• 17 November 2004: The Commission refused to postpone the implementation of

the contract• 18 November 2004: The Court ordered the Commission to postpone the

implementation of the contract• The case concerns the conditions for suspensive effect

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Enforcement (1)

Interim Measures:The Court of first instance, 31 January 2005, T-447/04, Capgemini against the CommissionThe Court (in its decision):• ”Under Article 104(2) of the Rules of Procedure an application for interim measures

must state the circumstances giving rise to urgency and the pleas of fact and law establishing a prima facie case (fumus boni juris) for the interim measures applied for. Those conditions are cumulative, so that an application for interim measures must be dismissed if any one of them is absent” (Par. 20)

• The Court dismissed the request due to the fact that• ”… the potential loss suffered by the applicant cannot be regarded as irreparable

once it can be the subject of subsequent financial compensation…” (Reasoning 98)• ”… the interim measures sought would therefore be justified only in exceptional

circumstances, that is to say if it appeared that, in the absence of such measures, the applicant would be in a situation likely to jeopardize its very existence or irremediably alter its position in the market…” (Par. 101)

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Enforcement (1)

Interim Measures:Complaints Board decision of 16 October 2007, Kuwait Petroleum against

Sønderborg KComplaints Board:• ”The Complaints Board must […] – in relation to each and every single claim laid

down by the plaintiff – evaluate on the material at hand at the time, whether1. »the complaint is sufficiently realistic« or if it – prima facie - seems to be a

lost cause (»Fumus boni juris«), and2. Whether the complaint is urgent, i.e. a necessity to grant the complaint

suspensive effect to avoid an irreparable loss for the plaintiff3. Finally, the Complaints Board must weigh the interests in the case at hand.”

• ”Provided that one of the three conditions is not fulfilled the Complaints Board cannot decide to grant the complaint suspensive effect. The decision on whether to grant suspensive effect or not is without prejudice to the final decision”

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Enforcement (1)

Interim Measures:Complaints Board decision of 16 October 2007, Kuwait Petroleum against

Sønderborg KComplaints Board (continued):• With respect to claims 1 and 4 the Complaints Board stated:

• ”It is […] presumed that the defendant has infringed the procurement rules as stated in claim no. 1. Due to the character and gravity of the infringement there is also sufficient basis to assume that the plaintiff’s claim no. 4 will be sustained. Hence, the first condition necessary to grant the complaint suspensive effect is met.”

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Enforcement (1)

Interim Measures:Complaints Board decision of 16 October 2007, Kuwait Petroleum against

Sønderborg KComplaints Board (continued):• With respect to claims 1 and 4 the Complaints Board continued:

• ”The plaintiff has reacted as soon as the infringement was evident and prior to the end of the stand still period regardless of the defendant’s allegation of the opposite without relevance that the defendant in its notice to the plaintiff has used the wording ”intends to enter into a contract” instead of ”decide to enter into a contract”. The second condition is also fulfilled.

• ”Finally, the interests of the defendant in entering into a contract cannot weigh out the plaintiff’s interest in a contract not being entered into before a final decision has been reached regarding the Complaint in the case at hand.

• ”The Complaints Board grants the complaint suspensive effect.”

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Enforcement (1)

Interim Measures:• Sum up of the three conditions to grant a complaint suspensive effect:

• Fumus boni juris: Is the infringement sufficiently clear (probable) and grave?• Urgency: Is it necessary to grant the complaint suspensive effect to avoid a

irreparable loss for the plaintiff? • Weighing of interests: Does the plaintiff’s interest in suspensive effect

outweigh the defendant’s/contracting authority’s interest in finalizing the procurement process?

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Enforcement (1)

Interim Measures:Complaints Board decision of 10 April 2008, MT Højgaard A/S against Slots- og

Ejendomsstyrelsen• In this decision the Complaints Board stated that the filing of a complaint 14 days

after the standstill-period ended was not an obstacle in relation to granting a complaint suspensive effect

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Enforcement (1)

Setting aside decisions:• The Remedies Directive prescribes that the member states must ensure the

possibility to “set aside or ensure the setting aside of decisions taken unlawfully” (the Remedies Directive art. 2, (1) (b))

• ”If a contracting authority has infringed [the procurement rules], the Complaints Board is entitled to set aside the authority’s unlawful decision […]”, cf. Section 13(1) if the Act on Enforcement

• Setting aside a decision is only seen in cases where the infringement of the public procurement rules could have affected the turnout of the competition.

• A decision to set aside a contracting authority’s decision is only “important” when the contracting authority has not already entered into a contract.

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Enforcement (1)Setting aside decisions:• It followed from the preparatory works to the old Complaints Boards Act that the

Complaints Board was not authorized to decide on the consequences of the Complaints Boards setting aside of a decision (in relation to the actual contract)

• The Complaints Board stated this opinion several times, e.g. in its decision of 18 June 2007, KPC Byg A/S against Odense Tekniske Skole.• ”The Complaints Board cannot decide which consequences the setting aside of the

decision on the procurement and the decision to enter into a contract with Hansson & Knudsen A/S is to have in the relationship between the defendant and Hansson & Knudsen A/S. This question must be dealt with either through negotiations or at the courts.”

• ”Nor can the Complaints Board order the defendant to carry out a new procurement procedure. As a contracting authority, the defendant is at liberty to – provided that the contract with Hansson & Knudsen is set aside – decide whether or not it wants to enter into a new contract and whether or not a new public procurement procedure will be carried out.”

• Assessment today:• If a contract has yet not been entered into?• It the contract has been entered into?

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Enforcement (1)

Setting aside decisions:• Cancellation of contracts

• New times!!!• ECJ Decision of 18 July 2007, C-503/04, Commission against Germany• The legislative context was altered with the new Remedies Directive and the

Act on Enforcement• “Ineffectiveness”

• Next class…

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Enforcement (1)

Check questions:1. Are contracting authorities allowed to file complaints/questions with the

Complaints Board? 2. Which alternative enforcement remedies exist (for a potential plaintiff) other than

the Complaints Board?3. What are the requirements to grant a complaint suspensive effect?4. What are the legal effects of a decision being set aside?