The CJEU gives wings to compensation claims for illegal exclusion in tender procedures
Published on 27th Jun 2024
Although such claims were already a reality in the Spanish legal system, the CJEU's judgement may encourage an increase in this type of claims
Public procurement is fertile ground for legal disputes, particularly when it comes to the exclusion of bidders in tender procedures. A recent case illustrates the interpretation of Directive 89/665/EEC 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, which could have repercussions for future tenders in the European Union.
In 2013, the Slovak Football Association decided to exclude a consortium, which included the company INGSTEEL, from a tender procedure for the remodelling and construction of sixteen football stadiums. The exclusion was based on the alleged lack of economic and financial capacity of the consortium, requirements set out in the tender notice. However, this decision was later annulled by the Slovak Supreme Court.
Despite the annulment of the exclusion, the tender procedure had already concluded with the contract being awarded to the remaining sole bidder. Faced with this situation, INGSTEEL requested compensation for damages suffered from the Bratislava II District Court, claiming the loss of the opportunity to participate in the tender procedure.
The court raised a preliminary question focused on determining whether the Directive on remedies in the field of public procurement contracts (Directive 89/665/EEC) opposes national regulations or practices that prevent compensation in such circumstances and, in particular, whether an illegally excluded bidder can be compensated for the loss of the opportunity to participate in the procurement procedure.
The response from the Court of Justice of the European Union was clear: the Directive opposes any national regulation or practice that, in principle, prevents compensation to a bidder illegally excluded from a public procurement procedure for the harm suffered as a result of the loss of the opportunity to participate in said procedure to obtain the award of the corresponding contract.
This pronouncement emphasizes that the damage is not limited to the non-award of the contract but also includes the harm derived from not being able to participate in the tender procedure. Therefore, the Directive opposes any national regulation or practice that prevents compensating an illegally excluded bidder for the loss of the opportunity to obtain a public contract.
Osborne Clarke Comment
While the Spanish legal system has sometimes recognized the right to compensation for loss of profits at 6% in terms of industrial profit, in favour of bidders who have filed claims for patrimonial liability arising from the annulment of exclusion resolutions, the CJEU's judgement may set a precedent that encourages bidders to more frequently challenge exclusions through contentious appeals, in order to bring a subsequent action for patrimonial responsibility.
