On 27 March 2007 Advocate General Trstenjak found that the Commission was entitled to order a member state to annul a contract awarded in breach of the procurement rules if this results from a complaint. However, this right does not apply to actions raised by aggrieved third parties in a member state courts, given the terms of the Remedies Directive. In light of this apparent difference in remedies available, the Commission may see a rise in the number of complaints it receives. The ruling of the court is therefore awaited with interest.
In the current case an action was brought by the Commission following Germany's alleged failure to comply with an ECJ judgment which held that it had breached the public procurement rules by directly awarding two thirty year contracts for waste disposal. The Commission alleged that Germany had not complied with the ECJ judgment by failing to annul the contracts in question and therefore sought period penalty payments to be imposed on Germany.
Although the contracts have now been voluntarily terminated the case still proceeded.
On 27 March 2007, the Advocate General recommended that although periodic penalty payments should not be imposed, the ECJ should find that Germany was required annul the contracts in question. In particular, he found that a member state must undertake all measures necessary to rectify a contravention and rejected the argument that the other party to the contract had a legitimate expectation that it would not be annulled. He also found that an obligation to annul is necessary as a deterrent and that the annulment was proportionate in this case given the duration of the contract.
He also found that such a ruling does not contravene the current Remedies Directive which provides that remedies after contract conclusion may be restricted to damages. This is on the basis that the Remedies Directive only applies to individual legal protection in the member states, not the protection of the interest of the EU.
This implies that although the Commission may seek annulment of a contract awarded in contravention of the procurement rules, an aggrieved third party may not ask a national court to order annulment. This clearly creates a disparity and may encourage aggrieved parties to submit complaints to the Commission.
This case also comes at an interesting time, given the current Commission proposal to amend the Remedies Directives to allow third parties to request the relevant review body or court to set aside contracts when the obligation for a standstill period has not been implemented. Member states are currently considering this proposal although adoption of the proposal is not expected until late 2008.
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