The much anticipated Commission non-paper which is meant to answer the most important questions arising from the CJEU judgements in the Kolin (C-652/22) and Qingdao (266/22) cases has finally been published last week. It’s available here;

https://webgate.ec.europa.eu/circabc-ewpp/d/d/workspace/SpacesStore/0e5f20cf-6e13-42e6-a132-7a78488ef6cb/file.bin

The non-paper addresses the most important questions arising from the Kolin and Qingdao judgements, but its answers present a mixed bag. In this blog post, I’d like to focus on the (in my view) most important answers and their implications for contracting authorities planning and conducting public procurement procedures, as well as for third-country economic operators, both when allowed to participate and when refused participation.

1. The Commission takes no responsibility for the accuracy of its IT tools for establishing which countries are third countries

The question of accuracy and reliability of the Commission’s online IT tools (such as the Procurement4Buyers tool) has been widely discussed in the past few months, and a common question was whether contracting authorities could rely on said IT tools to establish if an economic operator is from a third country, and whether a decision based on those IT tools would pass appeals scrutiny. It seems it cannot, as the Commission puts the sole responsibility in the hands of contracting authorities;

Notwithstanding the practical added value of the Commission tools listed below, it is the sole responsibility of the contracting authorities / entities in the EU to assess whether the bidder is established in a country that has or does not have an international agreement with a chapter on public procurement.

2. Kolin and Qingdao apply to below-thresholds procurement

The Commission separates the EU’s common commercial policy from the freedoms of the internal market to establish the fact that the rules on third-country economic operator participation established in the Kolin and Qingdao judgments apply to below-threshold procurement procedures;

The EU’s common commercial policy, which is at the core of the Court’s reasoning, is not subject to any threshold or the existence of a cross-border interest, unlike the freedoms of the internal market, which are the basis of the public procurement directives and apply only above certain thresholds. Therefore, the principles of the Kolin judgment apply to any public procurement procedure, independently of EU thresholds and the value of the tender.

I agree with this conclusion, and I find it the only possible one. An argument can be made that since Directive 2014/24 and 2014/25 should apply only to above-threshold contracts – Member States can freely allow them to participate and offer full legal protection in below-threshold contracts. But such an interpretation would again encroach on the EUs exclusive competence in trade with third countries. Furthermore, many Member States decided to expand the application of the same rules on above and below-threshold public procurement procedures. So, the national public procurement act transposing Directive 2014/24, 2014/25 and 2007/66 applies in the same way to below-threshold procedures, and I believe Kolin should apply to below-threshold public procurement procedures also. CJEU judgement in Leur-Bloem (C-28/95) confirms this – the CJEU states that when Member States, in regulating purely internal situations, adopt the same solutions as those adopted in Community law in order, in particular, to avoid discrimination against its own nationals or, as in the case before the national court, any distortion of competition, it is clearly in the Community interest that, in order to forestall future differences of interpretation, provisions or concepts taken from Community law should be interpreted uniformly, irrespective of the circumstances in which they are to apply.

3. The IPI can be used to fill in the legal gaps regarding consortia, sub-contractors and companies providing capacity; and when drafting score adjustments

The Kolin and Qingdao judgments left significant legal gaps with regard to the establishment of origin of consortia and sub-contractors. The Commission emphasizes the individual responsibility of each contracting authority to establish its origin, but suggests the possibility of using the relevant provision of the IPI;

In this respect, Article 3 of the International Procurement Instrument Regulation (‘IPI’) and point 1 of the IPI Guidelines, which refers to the determination of the origin of economic operators for the purposes of the application of that Regulation, may be used as an inspiration for determining the origin of economic operators.

This is a welcome suggestion that can help contracting authorities to resolve some of these issues. I wrote about it in detail here:

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=5021008

But, unfortunately, the IPI does not help with the biggest problem – subsidiaries of third-country economic operators established in Member States. Article 3 of the IPI seems to allow the participation of subsidiaries of third-country economic operators, established in a Member State under the laws of the Member State in public procurement procedures in the EU. Third-country economic operators can establish subsidiaries in Member States dedicated to doing business almost exclusively in those particular Member States. This way, the second part of Article 3(1) b(ii) of the IPI, establishing the need for ascertaining the dominant influence from abroad, may not kick in. So, a rewriting of Article 3 may be necessary so that the establishment of origin of a legal person must always take into account foreign influence.

The Commission also mentions Article 6(8) of the IPI as a possible model for establishing score adjustments if the contracting authority decides to implement them. However, it suggests that the decision to implement score adjustments may be specified in the procurement documentation, allowing the contracting authority to implement them without prior publication and mid-procedure. This stance is problematic, but it aligns with the Commission’s view on applying the principles of transparency and proportionality in other issues discussed below.

4. Unclear (questionable?) position on the possibility of implementation of conclusions from Kolin and Qingdao in national public procurement acts

The Commission appears to suggest that only existing national legislation that contains provisions on third-country economic operator access to the national procurement market (such as the 2021 amendments to the Romanian public procurement act, which were the main issue in the Qingdao case) must be amended to reflect the conclusions from the Kolin and Qingdao cases. A narrow interpretation of this position would mean that Member States cannot ‘legislate’ the general conclusions from the Kolin and Qingdao judgements into their national public procurement legislation. For instance, the amendments to the Croatian Rules on Procurement Documentation and Tenders in Public Procurement Procedures (a general act) from early 2025 would not be permitted because they ‘legislated’ some of the conclusions from the Kolin judgement. While amending a general act to implement the conclusions of the CJEU is a positive step, I believe that each Member State should ‘legislate’ conclusions from the Kolin and Qingdao judgements into their national Public Procurement Acts. This should not be considered a violation of the EU’s exclusive competence in this regard, as this both the Kolin and Qingdao judgements change the rules of participation in public procurement proceudres in such a substantial way that makes it neccessary to incorporate those conclusions in national legislation. Also, this would be a a good way to give contracting authorities more clarity and establish clearer participation rules.

5. The decision to exclude third-country economic operators does not have to be clearly indicated in the procurement documents – the principles of transparency and proportionality are not applicable

This is definitely the most problematic view of the Commission:

Contracting authorities may indicate in advance in the tender documents 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.

They may also decide not to make this known in advance. In the absence of any reference to this matter in the contract notice / tender specifications, the contracting authority / entity still has the possibility to accept or to reject a tender from an economic operator from a non-covered country at any moment during the procurement process.

This is closely connected to the Commission’s interpretation of Qingdao from answer 6.2., where the Commission emphasizes that economic operators from non-covered countries do not enjoy any rights deriving from EU public procurement law, including requirements for transparency and proportionality enshrined in EU law and transposed into the national legal order.

This is one of the unfortunate consequences of the Qingdao judgement, where the CJEU states that third-country economic operators admitted into a public procurement procedure are not protected by Article 18 of the Classical Directive – which means that the principles of transparency and proportionality – as established by EU public procurement law – do not apply to them. According to the Commission – this means that contracting authorities have the discretion to abandon even the minimum of transparency towards third-country economic operators – meaning they can ‘change the rules of the game’ – any time they want. This is a dangerous conclusion, because it opens the doors to other unproportionate discriminatory behaviour, but also undoubtably violates national transparency and proportionality principles and guarantees established in national administrative procedural and/or civil procedure acts. No contracting authority should follow this recommendation – the intent to exclude third-country economic operators should always be clearly stated in the procurement documentation.

6. Access to justice for third-country economic operators?

According to the Commission, the contracting authorities’ compliance with the rule of law towards third-country economic operators may only be ascertained under national legislation that does not transpose EU law. Furthermore, the Commission states that:

Nothing in the Kolin judgment relates to access to justice or to the right to a fair trial. Rather, the judgment concerns only the substantive rights of access to procurement procedures and remedies that economic operators may enjoy exclusively as a matter of national law. Economic operators from non-covered countries do not enjoy rights deriving from EU public procurement law, and in particular the remedies system based on the provisions of Directive 89/665/EEC and Directive 92/13/EEC, as amended by Directive 2007/66/EC and Directive 2014/23/EU, and transposed into national law. National review bodies may identify other national provisions that may apply in such cases. Accordingly, any possible issue of compliance with the ECHR would concern national law only and would be unrelated to any instance of implementation of EU law by a Member State.

So – third-country economic operators have access to justice and their right to a fair trial is not violated because – in principle – they have access to national appeal bodies and courts. The fact that they have a significantly reduced access to appeal grounds when compared to EU or economic operators from countries with reciprocal FTAs doesn’t reduce their right to access justice. This is a very reductive approach to one of the biggest problems of the Kolin and Qingdao judgements, and I am not sure that the European Court of Human Rights would agree that the fact that third-country economic operators have no access to EU law-based appeal grounds does not affect their right to a fair trial under the ECHR.

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