Fee’s Q&A on third nation entry to EU procurement post-Kolin/Qingdao — Tips on how to Crack a Nut – Cyber Tech

Within the aftermath of the CJEU’s Judgments in Kolin (C-652/22, EU:C:2024:910) and Qingdao (C-266/22, EU:C:2025:178), there was a lot anticipation a few steering doc being ready by the European Fee to deal with among the many, advanced, consequential points left open by the Court docket (see remark right here).

The Q&A-type steering doc was revealed by the Fee late final week. The doc has already been the article of study and deserved criticism, eg by Marko Turudić and Pedro Telles. They each touch upon most elements of the doc intimately, and make good factors.

On this publish, I deal with two points arising from the doc and hyperlink them to first ideas of procurement, in addition to the broader layers of regulation past the EU.

two Extraordinarily problematic assertions

Within the Q&A doc, the Fee makes two extraordinarily problematic assertions. First, on the extent of transparency to be afforded to selections on participation and, if relevant, differential remedy of third nation operators. Second, on the ‘severability’ of EU, nationwide (and worldwide) principles-based necessities.

Transparency necessities

The Q&A doc states as follows:

Contracting authorities might point out prematurely within the tender paperwork their choice to just accept or not participation of non-covered third nation financial operators and, in the event that they admit them, the preparations relevant to their tenders.

They could additionally determine to not make this identified prematurely. Within the absence of any reference to this matter within the contract discover / tender specs, the contracting authority / entity nonetheless has the chance to just accept or to reject a young from an financial operator from a non-covered nation at any second in the course of the procurement course of (reply to Q5.3, emphasis added).

‘Severability’ of authorized ideas by their ‘origin’

The Q&A doc additionally states that:

Financial operators from non-covered nations don’t get pleasure from any rights deriving from EU public procurement legislation, together with necessities for transparency and proportionality enshrined in EU legislation and transposed into the nationwide authorized order. It’s open to competent nationwide authorities to determine different nationwide provisions (not transposing EU public procurement legislation) on which such financial operators would possibly rely (reply to Q6.2).

And that, in guaranteeing compliance with the precept of the rule of legislation ‘Contracting authorities/ entities might base themselves on nationwide laws that doesn’t transpose EU legislation’ (reply to Q6.4) and, additional, that ‘any potential challenge of compliance with the ECHR would concern nationwide legislation solely and can be unrelated to any occasion of implementation of EU legislation by a Member State’ (reply to Q6.5, emphasis added).

General place

Mixed, this units out the mixed place that (i) contracting authorities could make selections based mostly on undisclosed standards at any level within the procurement course of and that (ii) any transparency, and many others necessities in relation to these standards or these selections can solely stem from home laws not transposing EU public procurement legislation / unrelated to any occasion of implementation of EU legislation.

The CJEU benchmark

A primary challenge is that, in my opinion, the Fee’s assertions solely partially comply with from the Kolin and Qingdao judgments. It’s thus value recalling what the CJEU stated. In Kolin, the Court docket established that:

‘Whereas it’s conceivable that the preparations for remedy of such operators ought to adjust to sure necessities, comparable to transparency or proportionality, an motion by a kind of operators looking for to complain that the contracting entity has infringed such necessities could be examined solely within the gentle of nationwide legislation and never of EU legislation’ (C-652/22, para 66).

In Qingdao, the Court docket acknowledged that:

‘Whereas it’s conceivable that these remedy preparations ought to adjust to sure ideas and necessities, such because the precept of safety of reliable expectations and of authorized certainty, an motion elevating a criticism that the contracting authority has infringed these ideas could be examined solely within the gentle of nationwide legislation and never of EU legislation’ (C-266/22, para 66).

another (much less questionable?) interpretation

As we are able to see, the CJEU didn’t set up any laborious boundary on the connection between the nationwide and EU legislation guidelines containing reference to the ideas of safety of reliable expectations and of authorized certainty, or (the necessities) of transparency and proportionality. The CJEU stated that the ideas as enshrined in EU legislation couldn’t be relied on. An alternate, home supply can be wanted. The CJEU was (virtually) clear in accepting that (it’s conceivable that) preparations for the remedy of third nation financial operators needed to adjust to transparency, proportionality and many others requirement, however not as a matter of EU legislation.

A modestly and sensibly artistic interpretation of the CJEU judgments would thus search to not exclude safety afforded by homonymous ideas and necessities, whether or not they’re enshrined in the very same home guidelines or not, so long as the applicability of the ideas had a justification in a authorized supply aside from EU legislation. This isn’t the identical as demanding that a completely separate (formulation of the) precept (to the identical impact) exists. It merely requires that there’s another supply of the requirement to abide by the given precept or requirement.

And there are at the least two such basic sources. First, the United Nations’ Conference In opposition to Corruption (UNCAC) affords one such supply in requiring that ‘Every State Social gathering …, in accordance with the elemental ideas of its authorized system, take[s] the required steps to determine applicable methods of procurement, based mostly on transparency, competitors and goal standards in decision-making, which are efficient, inter alia, in stopping corruption’, with a requirement for such methods to explicitly handle problems with transparency, institution prematurely of circumstances for participation, and entry to an efficient system of home evaluation’ (Artwork 9.1). Second, the ECHR offers the correct to honest trial (Artwork 6).

Such an strategy would have allowed some area for Member States to proceed complying with fundamental necessities of administrative legislation and procurement regulation whereas the mess created by the Kolin and Qingdao judgments will get sorted out by way of EU procurement laws. Any arguments that such plan of action would detract from the effet utile of EU legislation would appear destined to fail, on condition that the CJEU had already accepted that participation by third nation operators was potential and that equal remedy was additionally potential—simply not as a matter of EU legislation. The Kolin/Qingdao might have been bracketed as a difficulty of competence and the true effectiveness of the case legislation been pushed to the reform of the directives in a a lot much less disruptive method.

Conversely, the Fee’s excessive interpretation seeks to wipe out such area for manoeuvre in requiring that the supply of legislation demanding certainty, safety of reliable expectations, transparency or proportionality has nothing to do and is fully unrelated with the transposition of EU legislation. That is an not possible threshold to cross, as there might be no jurisdiction that has a set of procurement laws to implement EU legislation, one other one to adjust to UNCAC, one other one to adjust to the ECHR, and many others.

In actual fact, as EU procurement legislation is itself adjusted to these worldwide requirements and necessities, the transposition of the EU directives has been the mechanism to make sure compliance with all these layers of procurement regulation. It is a scenario that’s merely not possible to unbundle. Suggesting in any other case verges on the irresponsible, because it locations contracting authorities able to breach a wide selection of worldwide and home guidelines, in addition to creating important corruption dangers.

Corruption dangers

Setting challenge of authorized interpretation apart for a second, maybe probably the most problematic a part of the Q&A doc is the second paragraph of the reply to query 5.3, the place the Fee signifies that contracting authorities might ‘determine to not make [their decision to accept or not participation of non-covered third country economic operators and, if they admit them, the arrangements applicable to their tenders] identified prematurely. Within the absence of any reference to this matter within the contract discover / tender specs, the contracting authority / entity nonetheless has the chance to just accept or to reject a young from an financial operator from a non-covered nation at any second in the course of the procurement course of‘. Crucially, the European Fee forgot to open (or shut) the sentence with the all necessary caveat that that is (at finest) the place solely for the needs of EU legislation.

For my part, there isn’t a query {that a} contracting authority that determined to function on this method can be in breach of UNCAC and quite a lot of constitutional stage provisions (whatever the particular EU jurisdiction we wish to deal with).

And, extra importantly, a contracting authority that determined to behave on this method can be exposing itself to doubtlessly important corruption dangers. Lack of transparency and never formulating the factors to be utilized in procurement decision-making on the level of launching the process not solely reserves the contracting authority limitless discretion and thus triggers the chance of arbitrariness in decision-making. Extra problematically, it exposes key decision-makers to strain and to dangers of corruption — both by the ‘coated’ entities looking for to steer it to exclude the tender/s by the third nation operator/s, or by the latter looking for the other, or each.

the larger image

In the end, the Kolin/Qingdao saga and this Q&A present that we’re susceptible to shedding sight of the larger image. Procurement guidelines should not solely, and even primarily, about commerce liberalisation. They’re important instruments of fine governance and a supply of self-discipline and integrity within the expenditure of public funds. Given their significance, a number of layers of procurement regulation are overlaid and, whereas they fluctuate of their particulars, all of them share the identical core ideas and fundamentals. Searching for to deviate from these, or to restrict them to 1 and solely a kind of layers of regulation can merely not work.

It also needs to be clear that, as a matter of larger image, the inconvenience that typically comes from complying with the rule of legislation and different constitutional-level ensures ought to presumably create constraints and difficulties within the implementation and rollout of EU (widespread) coverage, because it does at nationwide stage. The Kolin/Qingdao saga and this Q&A can solely be learn as a prioritisation of the widespread business coverage over good administration and rule of legislation concerns. It doesn’t paint a reasonably image and it doesn’t sign a very robust dedication to one of many elementary values of the Union, to be frank.

The larger image is just too that the CJEU had (at the least) two methods of addressing these points. One can be to impose a full ban on participation by non-covered third nation operators. The opposite can be to have been extra accepting of the constraints of ‘policy-making by judgment’ and to have brazenly acknowledged that, as soon as a 3rd nation operator has not been excluded, authorized protections comply with. By setting such shaky foundations because the Kolin/Qingdao case legislation, the CJEU permits the European Fee to make unhelpful interventions comparable to this one. The opposite a part of the larger image is, as effectively, that the European Fee is prepared to take precisely zero dangers and that, on this excessive danger aversion, it may possibly come to exacerbate issues arising from the case legislation.