ECJ confirms public tenders’ restrictions for companies from third countries with no procurement agreement with the EU

EU Member States may allow companies from countries that have not concluded an agreement guaranteeing equal and reciprocal access to public procurement (public procurement agreement) with the EU to participate in public tenders, provided there is no EU act excluding the relevant country. These bidders cannot benefit from equal treatment and other rights under the EU public procurement rules though, since these are not applicable in this case.

These are the findings of the EU's highest court in Case C-652/22 Kolin Inşaat Turizm Sanayi ve Ticaret, in response to a reference from the High Administrative Court in Croatia. An unsuccessful tenderer, Kolin Inșaat Turizm Sanayi ve Ticaret, a company established in Türkiye, challenged the award under the EU Public Procurement Directive for Utilities¹ (the Directive) of a public contract for the construction of railway infrastructure in Croatia.

• Access / participation in EU public tenders
• Equal treatment and other rights under the EU public procurement rules
• Conclusion

Access / participation in EU public tenders

The Court of Justice of the EU (CJEU) considers in this judgment that the question of access of non-EU economic operators to public procurement procedures in EU Member States falls within an area in which the EU has exclusive competence. That exclusive competence is confirmed by the EU Regulation on the International Procurement Instrument (IPI)². The IPI sets out inter alia measures of general application the European Commission (EC) may impose as regards the exclusion or restriction of access to public procurement procedures in the EU of third country economic operators with no public procurement agreement with the EU. Accordingly, as regards such access, EU Member States are not empowered to legislate or adopt legally binding acts of general application, including where the EU has not adopted applicable acts in that area.

Where no such EU act exists, it is for the contracting entity to assess, on a case-by-case basis, whether economic operators from third countries with no public procurement agreement with the EU should be admitted to a procedure for the award of a public contract under the Directive.

Equal treatment and other rights under the EU public procurement rules

The Directive sets out rules on the award of public contracts that meet certain thresholds by entities, so-called 'contracting entities', active in the water, energy, transport and postal sectors. It specifies that when such entities use public procurement to invite tenders to provide works, supplies or services, they must act in a transparent and proportionate manner and treat all applicants equally and not discriminate between them³. In addition, contracting entities must accord to economic operators of the signatories to the World Trade Organization Agreement on Government Procurement (GPA) and other public procurement agreements treatment no less favourable than the treatment accorded to EU economic operators⁴. In addition to the EU and the EU Member States, the rest of the signatories to the GPA are: Armenia, Aruba, Australia, Canada, China, Hong Kong, Iceland, Israel, Japan, Liechtenstein, Moldova, Montenegro, New Zealand, North Macedonia, Norway, Singapore, South Korea, Switzerland, Ukraine, UK, and USA.

The CJEU held that, however, operators from third countries that are not GPA signatories or have not concluded a public procurement agreement with the EU cannot rely on the provisions of the Directive, including the right to be treated equally to EU operators, and the right to challenge a contract award decision. Therefore, national authorities cannot require contracting entities to apply national provisions transposing the rules contained in the Directive to such economic operators that have been admitted to participate in public tenders.

Furthermore, contracting entities that have admitted such non-EU companies may include provisions in the tender documents for adjustment of their assessment and final decision pursuant to a comparison of these non-EU bids and those of EU companies.

Conclusion

To conclude, EU Member States may allow companies from third countries that have not concluded a public procurement agreement to participate in public tenders, as long as the EU has not adopted an act excluding bids from the relevant country. If such companies are admitted, the provisions of the EU public procurement directives do not apply. These include the right to equal treatment, the requirements of transparency and proportionality, and the right to challenge the award decision. Contracting entities that have admitted such non-EU companies may include provisions in the tender documents for adjustment of their assessment and final decision pursuant to a comparison of these non-EU bids and those of EU companies.

Non-EU suppliers need to be aware of these restrictions, to ensure that they can continue to supply to the EU public sector and to be able to take advantage of the increasing number of tender opportunities in the EU market.

Footnotes