On 21 February 2008, the European Court of Justice ruled on a case Commission -v- Italy (C-412/04) striking down a provision in Italian legislation which excludes from the procurement rules the direct award of works contracts to the holder of a building permit or development plan, where the cost is deductible from urbanisation taxes. The Court took the view that such contracts are subject to the procurement rules. The Court closely followed its reasoning in the Roanne judgment (C-220/05). In particular, the Court stressed that when considering whether a contracting authority is entering into a "works" contract, it is necessary to consider the main object in light of the context of the arrangement between the parties. This can have significant implications when considering the application of the procurement rules in relation to land development arrangements. In the case of "mixed contracts" involving works and services, a contract may not be categorised as a "works" contract simply in order to take advantage of the higher threshold where in fact the main object is services. The Court also reaffirmed the principle under EC law that works contracts below the threshold are still subject to some form of advertising and competitive tendering.
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ECJ ruling in land development case
- Nabarro LLP
- Cyrus Mehta, Rachel Bickler
- European Union, Italy
- March 12 2008
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