Participation in public contract

April 1st, 2019

Case C-101/18, Idi v Arcadis, CJEU Judgment on 28 March 2019, concerns the exclusion of Idi from participating in a tendering procedure for a public services contract.

Article 45 of Directive 2004/18, headed “Personal situation of the candidate or tenderer”, provided in paragraph 2:

“Any economic operator may be excluded from participation in a contract where that economic operator:

a.  is bankrupt or is being wound up, where his affairs are being administered by the court, where he has entered into an arrangement with creditors, where he has suspended business activities or is in any analogous situation arising from a similar procedure under national laws and regulations;

b. is the subject of proceedings for a declaration of bankruptcy, for an order for compulsory winding up or administration by the court or of an arrangement with creditors or of any other similar proceedings under national laws and regulations;

Member States shall specify, in accordance with their national law and having regard for Community law, the implementing conditions for this paragraph.”

Article 57 of Directive 2014/24, headed “Exclusions from the scope”, provided:

“Contracting authorities may exclude or may be required by Member States to exclude from participation in a procurement procedure any economic operator in any of the following situations:

b. the economic operator is bankrupt, subject to insolvency or winding-up procedures, where its assets are being administered by a liquidator or by a court, where it is in an arrangement with creditors, where its business activities are suspended, or where it is in any analogous situation arising from a similar procedure provided for under national laws or regulations;

..

By a notice of 24 July 2013, Arcadis launched a call for tenders for the award of a public services contract for project management, evaluation and accounting, assistance with inspection, as well as coordination of safety and health matters. The estimated value of this service contract was EUR 1 028 096.59.

By decision notified on 9 December 2014 (“the exclusion decision”), Arcadis excluded the Consortium from the public procurement procedure. In that regard, Arcadis based its decision on the filing of an application by a company for admission to an arrangement with creditors.

The Consiglio di Stato referred the following questions to the CJEU for a preliminary ruling:

  1. Is it compatible with Article 45(2)(a) and (b) of Directive 2004/18 … to regard a debtor that has merely made a request to the competent judicial body to enter into an arrangement with creditors as being “the subject of proceedings”?
  2. Is it compatible with the abovementioned provision to regard a debtor’s declaration that it is in a state of insolvency and wishes to submit a preliminary request to enter into an arrangement with creditors as grounds for excluding that debtor from a public tendering procedure, thereby interpreting broadly the term “the subject of proceedings”.”

The CJEU said:-

“33. Since an economic operator may be excluded from public procurement procedures either on the basis of Article 45(2), first subparagraph, point (a), or Article 45(2), first subparagraph, point (b) of Directive 2004/18, it must be held that, having regard to the circumstances which characterise the case in the main proceedings, only the latter provision is relevant.

34. In those circumstances, by its two questions, which should be examined together, the referring court essentially asks whether Article 45(2), first subparagraph, point (b) of Directive 2004/18 must be interpreted as precluding national legislation, such as that at issue in the main proceedings, which allows for the exclusion from a public procurement procedure of an economic operator who, at the date of the exclusion decision, has filed an application for admission to an arrangement with creditors, while reserving the right to submit a plan that provides for the continuation of the business.

35. According to settled case-law, as regards public contracts falling within the scope of Directive 2004/18, Article 45(2) thereof leaves the application of the seven grounds for excluding candidates from participation in a contract, relating to their professional honesty, solvency and reliability, to the determination of the Member States, as evidenced by the phrase ‘may be excluded from participation in a contract’, which appears at the beginning of that provision (judgment of 14 December 2016, Connexxion Taxi Services, C‑171/15, EU:C:2016:948, paragraph 28).

36. More specifically, in order to guarantee the solvency of the party entering into the contract with the contracting authority, Article 45(2), first subparagraph, point (b), of that directive permits, allows for the exclusion from participation in a public contract of any economic operator who is the subject of an arrangement with creditors.

37. Under Article 45(2), second subparagraph, of that directive, the Member States are to specify, in accordance with their national law and having regard for EU law, the implementing conditions for that paragraph. It follows that the concepts in Article 45(2), first paragraph, including the expression ‘entered into an arrangement with creditors’ may be specified and explained in national law, provided that that is done with regard for EU law (see, to that effect, judgment of 4 May 2017, Esaprojekt, C‑387/14, EU:C:2017:338, paragraph 74 and the case-law cited).”

“45. Article 45(2) of Directive 2004/18 does not provide for uniform application at EU level of the grounds of exclusion it mentions, since the Member States may choose not to apply those grounds of exclusion at all or to incorporate them into national law with varying degrees of rigour according to legal, economic or social considerations prevailing at national level. In that context, Member States have the power to make the criteria laid down in Article 45(2) less onerous or more flexible (judgment of 14 December 2016, Connexxion Taxi Services, C‑171/15, EU:C:2016:948, paragraph 29 and the case-law cited).

46. In that case, the Member State concerned is entitled to determine the conditions under which the optional grounds for exclusion do not apply (see, to that effect, judgment of 20 December 2017, Impresa di Costruzioni Ing. E Mantovani and Guerrato, C‑178/16, EU:C:2017:1000, paragraph 41).

47. As the Italian Government observed, the fact that an economic operator is the subject of an arrangement with creditors pursuant to Article 45(2), first subparagraph, point (b) of Directive 2004/18, does not, however, prevent the relevant national legislation from authorising that economic operator to participate in public procurement procedures, under the conditions defined by that legislation.

48. It is equally consistent with EU law and specifically the principle of equality in public procurement procedures for national legislation to exclude from participation in a public contract an economic operator who has submitted an application for ‘blank arrangement’ or to include it.

49. Furthermore, the situation in which that operator has not yet, on the date on which the exclusion decision is made, committed itself to enter into an arrangement with creditors as a going concern is not comparable, in terms of its financial stability, to the situation of an economic operator which undertakes to continue its economic activity on that date.

50. In the light of all the foregoing, the answer to the questions referred is that Article 45(2), first subparagraph, point (b) of Directive 2004/18 must be interpreted as not precluding national legislation, such as that at issue in the main proceedings, which allows the exclusion from a public procurement procedure of an economic operator who, at the date of the exclusion decision, has filed an application for an arrangement with creditors, while reserving the right to present a plan which provides for the continuation of the business.”

Comments are closed.