On 25 March 2010, the European Court of Justice gave its ruling in the Müller case (C-451/08) clarifying the circumstances in which public authorities may be entering into public works contracts under the procurement rules. The case concerned the disposal of land by a German public body, the Bundesanstalt. The local authority examined the purchaser’s development proposals under its urban planning powers and consented to the sale. The parties drew up a building plan for the area, but the purchaser was not subject to any contractual obligations to carry out the development. The central issue before the Court was whether the arrangements amounted to a public works contract which should have been put out to tender under the EU procurement rules. The key points from the ECJ’s judgment are as follows:
- a works contract only arises where a public authority is receiving a “direct economic benefit”;
- an authority is not receiving a “direct economic benefit” merely when it exercises its planning powers to grant planning consent;
- the EU procurement rules are not triggered unless there are legally enforceable obligations on the developer.
Müller case commentary:
To read a longer article on this case and its implications please click here.