Article 71 - Determining the scope of coverage for third-country covered economic operators, goods, services or works

Article 71 establishes a barebones set of rules on how to determine the scope of coverage for third country economic operators, goods, services and works. It is composes of two main elements: an online tool to be developed by the Commission (paras 1 and 3) and an obligation for public buyers to apply the rules on coverage. Marko's entry for this article is here.

The online tool

The online tool is to me the most important part of this article. The Commission is mandated ("shall") develop and keep updated an online tool with the EU's commitments arising from international agreements from Article 70. You may think this is simply an evolution of ROSA (Rules of Origin Self-Assessment) tool and that is true to an extent since it will cover the origin of economic operators as well. But the critical point of this tool is that the Commission is noew binding itself to it.

Currently the answer to the first question on the FAQ for Access2Markets reads:

The reports obtained from this database are not official documents. Care has been taken to ensure the accuracy of the information contained within the database, but no responsibility can be accepted by the European Commission or the data providers for any inadvertent errors or omissions. By proceeding and viewing the data you are agreeing to these terms.

Like eCertis the current ROSA has the nature of a 'reference tool' which is extremely problematic. Tools like these are only really useful if they carry with them the legal certainty that the information can be relied upon. In short, they do not have a cannonical nature and contracting authorities (and economic operators) rely on it at their own risk. This lack of legal certainty is a point I have highlighted as an eCertis shortcoming for many years.

The new online tool on the other hand carries the obligation for the Commission to keep it updated with the Union acts (including decisions) that affect third country operators as well as the measures imposed on covered and non-covered economic operators, goods, services and works from Articles 72 and 75.

Obligations for public buyers

If the obligation above was not clear enough to understand the difference between the recent past and the future, paragraph (2) clarifies it to us. Public buyers must determine for each procurement procedure the status of economic operators, goods, services and works for the purposes of applying Article 70.

However, public buyers are to do so "on the basis of the applicable international agreements as reflected in the online tool referred to in paragraph 1 for the parameters entered." In short, the Public Procurement Act is instructing public buyers to use and thus rely on the online tool that is to be set up by the Commission. There can be no confusion about the nature of such tool.

Having said that, this means in practice that contracting authorities public buyers will have to come up to speed reasonably quickly with international trade rules and obligations, something that probably passed under the radar thus far. This is of particular importance for rules of origin for goods and services. It is not that these are new rules (they definitely aren't) but in their procurement workflow public buyers will have to factor this extra analytical step.

What means of redress are there?

One of the things that needs to be taken into account when looking at this Chapter on European Preferences is that the means of redress if something goes wrong. Here we need to look at two different hypothesis or scenarios. One, the tool containing wrong information. Two, the public buyer making a mistake in interpreting or applying the data contained in the tool.

Regarding he first, as the Commission is responsible for the information contained in the tool, any case must be brought against it. So let's imagine a situation whereby a public buyer excludes an economic operator from a third country because the tool wrongly indicated said third country was not covered for the purposes of Article 70. The contracting authority has done nothing wrong by relying on information that turns out to be incorrect so any damages would have to be ascertained to the Commission instead. Fundamentally, it would be no different from a national public body making a similar mistake for example for issuing a necessary certificate with the incorrect information for instance.

Nonetheless, this would be of zero value for the economic operator in the context of a given procurement procedure since the contracting authority would be allowed to proceed with the exclusion. An alternative here would be instead to bring a case against the exclusion using the national remedies system since the principle of good administration would be better served with the correction of the mistake within the procedure than ignoring the fault altogether at the procedural level.

The problem with the second avenue (and perhaps the first) lies with the interpretation that Kolin has barred economic operators from non-covered third countries of relying on remedies arising from EU law. This means our hypothetical economic operator is left without means of redress, leaving it in a catch 22 situation:the Commission tool treats it (wrongly) as a non-covered economic operator and there is nothing it can formally do about it. Even art 47 of the Charter of Fundamental Rights might not help here since prima facie EU law is explicitly not guaranteeing its rights and freedoms.

I disagree with this interpretation of para 66 of Kolin which extends the judgment implications to remedies and not just substantive law, but am well aware of being in the minority here. Regardless, it is important to flag this risk and the legal uncertainty it generates.

The second scenario (that of a public buyer mistake) is more straightforward. Such an exclusion can be challenged using the normal remedies system, since the public buyer does not have the power to establish by itself if an economic operator should be covered or not. As such, a case could only be dismissed if the remedies body concluded the economic operator was treated correctly as a non-covered economic operator.

What this means in practice, however, is that European Preferences significantly opens up the scope for challenges since contracting authorities will have to make decisions about admission of economic operators and apply rules of origin on goods, services and works that they are not used to. Each and every decision of this nature carries with it the risk of a legal challenge. If one assumes an incentive for self-preservation, my guess is that public buyers will try to avoid deploying the rules of this chapter to reduce the scope for potential legal challenges.