The Commission's Q&A on Kolin and Qingdao leaves many questions unanswered
The European Commission put out last week a non-paper on the interpretation and application of the Kolin and Qingdao cases for economic operators coming from third countries. This is a fairly cautious document and probably the most the Commission can do at the moment and in this Q&A format. It is divided into six sections and all deserve a couple of comments at least
Coverage
On coverage the Commission concludes, correctly, that the restrictions created by Kolin and Qingdao also apply to contracts below-thresholds. This is despite a judge from the CJEU answering a question of mine in this regard as being preposterous since Kolin was about the application of the Directives and as such any effects constrained to the same contracts.
Well for the Commission, that is not the case as I argued last year when Kolin came out. This is because the Court decided to build the whole legal argumentation around the idea of the common commercial policy and it being an exclusive competence of the Union, ergo member States cannot legislate in this matter. Accepting that the effects from Kolin were restricted to above thresholds only would mean that an exclusive competence was not that exclusive and that member States could freely legislate about for these lower value contracts. Paradoxically, at least in theory, we could have ended up with a legal framework more amenable to third country participation in contracts below thresholds than above them. It would make no sense. In the absence of any sort of de minimis exclusion that can only come from legislation, for now these contracts are indeed covered.
One of the practical problems faced by contracting authorities is knowing which agreements the EU has entered into provide economic operators with the right to participate in public procurement within the EU. The Commission points to the Commission IT tool...before pulling an eCertis on everyone and stating that "[n]otwithstanding the practical added value of the Commission tools listed below, it is the sole responsibility of the contracting authorities / entities in the EU to assess whether the bidder is established in a country that has or, does not have, an international agreement with a chapter on public procurement." Once again, as with eCertis the Commission creates a tool and then refuses to imbue it with the appropriate level of legal certainty its use should provide. In short, contracting authorities can use it but they are on their own in case the tool is incorrect. In its answer the Commission also adds that "[f]or an overview of all international agreements in which the Union may have procurement commitments, please visit: https://policy.trade.ec.europa.eu/eu-trade-relationships-country-and-region/negotiations-and-agreements_en." (Emphasis mine) Frankly, this is not appropriate and the legal certainty problem created by Kolin remains unsolved.
Consortia
For consortia, sub-contractors and companies providing capacity the Commission suggests - gingerly - that Article 3 of the International Procurement Instrument Regulation (IPI) "may be used as an inspiration for determining the origin of economic operators." Inspiration, eh? One would imagine procurers would look for legal commands and legal certainty when making key decisions on their procurement processes, but apparently inspiration will have to do. Either the Commission sees Article 3 of the IPI as appropriate or not. It should state so and not offer it as inspiration.
Legislating on access/treatment
In this section, the Commission once again suggests the IPI Art. 10 as a source of inspiration on what legal protection bidders from third countries may have in national legislation. This IPI Art. 10 states that "[t]o ensure the legal protection of economic operators having or having had an interest in obtaining a particular contract falling under the scope of this Regulation, Directives 89/665/EEC and 92/13/EEC shall apply accordingly." The Commission states that in accordance with para 66 of Kolin, any legal protection available must come from national law and not EU law.
There is a self-evident problem with the Commission's view here and a second one that might be less obvious. The self-evident is that the protection afforded by the IPI is based on EU law since it refers explicitly to the Remedies Directives. So how can Art 10 be useful if the recourse it offers is based on EU law and the Court stated any remedies could not come from EU law and national law only?
The second problem is not of the Commission's making but the Court instead with its insistence in segregating EU law from national law, so that any remedies and legal protections afforded must come from national law only. Well, since Directives are not directly applicable they are implemented by national laws. It is this national law that gives effect to them and the end product is a mixture of EU and national law. That is why the transposition details vary from member State to member State and in case of non-compliance enforcement actions can be brought against the member States for the national law that does not comply with EU law. If national law was EU law, then we would probably not need direct or indirect effect for Directives either. Yet, they do exist as constraints on national law.
This is a problem that appears throughout the Commission's Q&A and that I can illustrate quite clearly with an example from Portugal. In Kolin the Court really hammered the point of equal treatment not being available to bidders coming from third countries. In para 66 it recognised some principles such as transparency or proportionality might apply if they have a national basis. Here's what the Portuguese Contracts Code (art 1-A) states on principles:
"In the formation and performance of public contracts, the general principles arising from the Constitution, the Treaties of the European Union and the Code of Administrative Procedure must be respected, in particular the principles of legality, the pursuit of the public interest, impartiality, proportionality, good faith, the protection of legitimate expectations, sustainability and accountability, as well as the principles of competition, publicity and transparency, equal treatment and non-discrimination."
So, are these principles EU law, national law or both? I suspect other member States will have similar issues in discerning if a given principle and the basket of rights associated with it are to be classified as national or European.
Equal treatment is a fun one in Portugal since it is technically included twice in that art 1-A. It comes at the end in its "European formulation" and earlier on with impartiality. At least in Portugal even if we excluded the last few principles as being "tainted" with EU law, the rest would be applicable as purely national principles. This, despite them being stated in a law that transposes the procurement Directives.
Treatment of third country bidders
In this section, the Commission starts with a mistake. When it mentions that contracting authorities can admit tenderers from third countries it refers to para 63 of the Qingdao case claiming it states that Yes, the Court acknowledged at para 63 of the Qingdao judgment that "this is permissible, as long as this occurs on the basis of national law, not Union law or transposition thereof." (emphasis mine) Well, para 63 is moot on the issue of what are the grounds for admission and certainly does not refer to the tranposition of EU law.
This is a section whereby the Commission doubles down on the idea that transposing laws cannot be applied to third country bidders. The comments made in the preceding point should be enough to understand where I am on this one.
The Commission also answers the question of what can (or should) be done after bidders from third countries have been admitted, namely if they have to be discriminated against and how. The comments here are not unreasonable (it is optional, IPI once again is an example) but whole premise is. We have spent over 50 years drilling down the need to guarantee equal treatment for anyone participating in the procedure and to stamp down on the discriminatory impulses contracting authorities have just to have the Court come and say how good that is as an idea and that it should (or could) be applied to some tenderers. It makes no sense.
Rights of third country bidders
The final section of the Q&A handles the thorny problem of what rights can third country bidders benefit from, since they are not supposed to benefit from the rights conferred by EU law as per para 65 of Kolin. The Portuguese example from section 3 above illustrates the difficulties this creates in terms of the rights conferred, but it does not cover remedies.
What remedies are available for third country bidders is extremely problematic since the remedies systems that might have existed in the member States were adapted to transpose the corresponding Directives. Ergo, if those national remedies systems existed at some point they are now 'European remedies' and as such not available. Effectively this can mean that there may be no other means of redress for third country bidders since national systems have been designed to allow redress on public procurement cases to be made in specific ways because of the Remedies Directives. They may simply not have any other legal standing due to the way the system was configured to root all redress via the mechanisms imposed by the Remedies Directives.
The Commission suggests that to solve the legal redress issue for third country bidders "[h]owever, it might, in some cases, provide access to a national civil or administrative legal remedy that does not constitute transposition of the EU public procurement directives." In this the Commission ends up ignoring the exclusive competence of the Union trap because such access obviously can only be provided...in national legislation! While this legislation would not be transposing the Directives it would go against the Court's view that the commercial policy exclusive competence of the Union extends not only to the admission of bidders but also the treatment of said bidders once they've been admitted.
The same can be said about the question on how should compliance with that basic, basic principle of rule of law be ensured: "[c]ontracting authorities/ entities may base themselves on national legislation that does not transpose EU law." Well, once more either we have an exclusive competence of the Union at play constraining the behaviour of national legislators or we do not. Unfortunately we need to take the arguments of the Court to their logical conclusion, otherwise the Court had no business in extending the exclusive competence argument to what happens after admission.
In conclusion, we are in a mess and this Q&A from the Commission can only alleviate somewhat the issues created by the Court in Kolin and Qingdao. I saw somewhere and do not remember the context that Kolin was an invitation by the Court to the EU institutions to legislate in this area. I agree that legislation is the only way forward to solve this mess so what I would have expected from the Commission by now is an acknowledgement that such legislation is forthcoming. I hope they are not planning to roll it in with the revision of the Directives, leaving us in limbo for another 4-5 years.