Transposition deadline for Directive 2014/24/EU is today, minefield ahead

Time flies by and certainly the time for Member States to transpose Directive 2014/24/EU (as well as Directive 2014/23/EU and Directive 2014/25/EU) ends today. This is particularly important as a significant number of Member States is yet to conclude their transpositions into national legal systems. It is not the case for the UK, but out of the top of my head it is certainly the case for Ireland (?), Italy, Netherlands, Portugal, Spain and Sweden.*

So, what does this mean for procurement practice in these (and other) Member States? It means three things: direct effect, indirect effect and state liability, all staples in any introductory EU law course. I will focus on the first as Albert has already covered indirect effect and state liability quite well on this blogpost.

Direct Effect

To protect the effectiveness of EU law, EU legislation may have direct effect under certain circumstances. One of the textbook scenarios is the lack of transposition of a Directive by Member States with the obligation to do so, which is precisely the situation we have with Directive 2014/24/EU.

Direct effect however does not imply however every single article in a untransposed Directive will magically be applicable, but only those provisions which comply with all the following conditions:

  1. To be precise;
  2. Clear;
  3. Unconditional;
  4. Do not call for additional measures;

The more detailed a provision is, the more likely it is for it to have direct effect. And boy, is Directive 2014/24/EU detailed. But the level of detail is just the start of our problems.

The minefield of direct effect in procurement

Direct effect is subject to some extra rules that may make it very difficult to know if it applies or not on any given situation. First, when it comes to Directives, direct effect is only vertical. That is it can only be used on a state-individual relationship and not to settle a relationship between two individuals, as that would constitute horizontal direct effect which Directives do not generate (Marshall v Southampton Health Authority (1986)). Second, even in vertical relationships, direct effect can only be invoked for the benefit of the individual (Pubblico Ministero v Ratti (1979)) and not the State.  

When it comes to procurement there are a few potential situations where identifying if direct effect is present may prove incredibly complex. For example, when it comes to grounds for exclusion under Article 57. Let's assume that a contracting authority decides to apply Article 57 to a procurement procedure, something that may well happen. In comparison with the previous grounds for exclusion these are wider and thus potentially cover more situations which could lead to economic operator A being excluded. Therefore, prima facie I do not think that the Ratti requirement - benefit for the individual - is actually fulfilled and therefore we would not have direct effect here.

But it gets more complicated. What about economic operator B which complies with all the requirements of Article 57. Can he invoke the direct effect of Article 57 to request the contracting authority to exclude economic operator A? I suspect no as economic operator B does not have a right to exclude a competitor and this would certainly have an horizontal element to it, even though it was being done via the contracting authority (triangular direct effect). This just shows however how messy direct effect can be in situations with multiple individuals each arguing (or not) for direct effect in their own relationship with the State.

Having said the above, as for Article 57 I do not think it generates direct effect. First, on an individual relationship basis it mostly leaves individuals worse off, therefore they will not invoke it, except perhaps for paragraph (6) which is a defense against exclusion. Second, because of paragraphs (2), (3), (4) and especially (7). All these paragraphs are not unconditional and imply additional measures from the State.

If all that was not enough to make your head spin, it may well be that Article 57 generates instead indirect effect, that is it carries an obligation for current legislation to be interpreted in accordance with the new provision, as long as it is not clearly contradictory. Better start reading Albert's post on that.

Fun times ahead.

 

* Hat tip to Heidi Karlander for the information on Sweden.