(Freedom to provide services Public works contracts Qualitative criteria Professional quality Grounds for exclusion Proof of due payment of taxes and social security contributions Requirement that contractors be registered in national territory Application of the registration requirement also to foreign tenderers Recognition of certificates issued by the authorities of the country of origin Directive 93/37/EEC)
- Like the Rüffert case, (2) these preliminary-ruling proceedings concern the social components of public procurement law. They raise the question of the means by which the authorities of the Member State in which a public works contract is to be awarded may verify whether the building contractors party to the public procurement procedure fulfil their obligations relating to the payment of taxes and social security contributions.
- The background to this case is formed by the procurement law section of the refurbishment and renovation of the famous Berlaymont Building in Brussels in which the European Commission has its principal administrative headquarters. (3) A consortium whose member companies were not all registered in Belgium for tax purposes was among those party to the procedure for awarding the work. However, at that time such registration for tax purposes was provided for in Belgian procurement law and was also one of the tender conditions in the present case. It served primarily to ensure that tenderers for public works contracts had duly fulfilled, and would duly fulfil, their obligations relating to the payment of taxes and social security contributions.
- The Court is asked to clarify whether such a registration requirement can be applied also to tenderers established in other Member States or whether the contracting authority must be content with the submission of certificates issued by the authorities of the land of origin attesting to the due payment of taxes and social security contributions.
II Legal framework
A EU law background
- The EU law background to this case is defined by Council Directive 93/37/EEC of 14 June 1993 concerning the coordination of procedures for the award of public works contracts (4) now no longer in force , in particular by Articles 24 to 29 thereof concerning the qualitative criteria (Title IV, Chapter 2, of Directive 93/37).
- Article 24 of Directive 93/37 was worded as follows:
'Any contractor may be excluded from participation in the contract who:
...
(e) has not fulfilled obligations relating to the payment of social security contributions in accordance with the legal provisions of the country in which he is established or with those of the country of the contracting authority;
(f) has not fulfilled obligations relating to the payment of taxes in accordance with the legal provisions of the country in which he is established or those of the country of the contracting authority;
...
Where the contracting authority requires of the contractor proof that none of the cases quoted in (a), (b), (c), (e) or (f) applies to him, it shall accept as sufficient evidence:
...
for points (e) or (f), a certificate issued by the competent authority in the Member State concerned.
...'
- Article 28 of Directive 93/37 provided:
'Within the limits of Articles 24 to 27, the contracting authority may invite the contractor to supplement the certificates and documents submitted or to clarify them.'
- Article 29 of Directive 93/37 contained the following rules:
'(1) Member States who have official lists of recognised contractors must adapt them to the provisions of Article 24(a) to (d) and (g) and of Articles 25, 26 and 27.
(2) Contractors registered in the official lists may, for each contract, submit to the contracting authority a certificate of registration issued by the competent authority. This certificate shall state the reference which enabled them to be registered in the list and the classification given in this list.
(3) Certified registration in the official lists by the competent bodies shall, for the contracting authorities of other Member States, constitute a presumption of suitability for works corresponding to the contractor's classification only as regards Articles 24(a) to (d) and (g), 25, 26(b) and (c) and 27(b) and (d).
Information which can be deduced from registration in official lists may not be questioned. However, with regard to the payment of social security contributions, an additional certificate may be required of any registered contractor whenever a contract is offered.
The contracting authorities of other Member States shall apply the above provisions only in favour of contractors who are established in the country holding the official list.
(4) For the registration of contractors of other Member States in an official list, no further proofs and statements may be required other than those requested of nationals and, in any event, only those provided for under Articles 24 to 27.
(5) Member States holding an official list shall communicate to other Member States the address of the body to which requests for registration may be made.'
- Since the award procedure at issue was carried out before 31 January 2006, Directive 2004/18/EC (5) is of no relevance to the present case.
- In addition, reference should be made to the provisions on freedom to provide services. However, contrary to what is taken as a basis in the order for reference and some of the documents submitted to the Court, recourse in that regard must be had not to Articles 49 and 50 EC, but to Articles 59 and 60 of the EC Treaty. (6) That is because the facts in the main proceedings took place before 1 May 1999, the date on which the Amsterdam Treaty entered into force. (7)
B National law
The Royal Decree of 1977
- As regards Belgian law, the Royal Decree of 22 April 1977 concerning public works, supply and service contracts (8) is relevant. Section 2 of this decree, which is headed 'Drawing up the tender' contains an Article 15 which provides, in extract, as follows:
'...
(3) A Belgian tenderer which employs staff to whom the Law of 27 June 1969 amending the Decree-Law of 28 December 1944 on social security for workers applies must, for his tender to be regarded as valid, attach thereto a certificate of the National Social Security Office stating that he has paid social security and subsistence protection contributions or present such a certificate to the administration before the opening of tenders ...
(4) A foreign tenderer must, for his tender to be regarded as valid, attach thereto or present to the administration before the opening of tenders:
(a) a certificate issued by the competent authority stating that the tenderer has complied with its obligations relating to the payment of social security contributions in accordance with the legal provisions of the country in which it is established ...
...
(7) A tenderer must, for his tender to be regarded as valid, be registered as a contractor pursuant to Article 299bis of the Income Tax Code and Article 30bis of the Law of 27 June 1969 amending the Decree-Law of 28 December 1944 on social security for workers.'
The Royal Decree of 1978
- The detailed rules on registration for tax purposes provided for in Article 15(7) of the Royal Decree of 1977 are laid down in the Royal Decree of 5 October 1978. (9) Section 1 of this decree lays down the 'Conditions to be satisfied in order to be registered as a contractor' and contains an Article 2 which provides as follows:
'Registration as a contractor ... shall be granted only to contractors which satisfy the following conditions:
...
2. in respect of an activity within the meaning of Article 1, they must be registered in the companies' register or professional register in accordance with the requirements laid down in the legal provisions of the Member State in which they are established;
...
7. where a company is involved, the directors, managers or persons empowered to enter into obligations on behalf of the company may not include any persons who are prohibited for performing such tasks under Royal Decree No 22 of 24 October 1934 referred to in subparagraph 6;
...
10. they may not have committed, during the five year period preceding the application for registration, any repeated or serious infringements relating to tax obligations ...;
11. they may not, at the time of registration, be in arrears with the payment of taxes, contributions to be levied by the National Social Security Office or contributions levied by the Subsistence Protection Fund or on its behalf; ...;
12. they must possess sufficient financial, administrative and technical resources to ensure fulfilment of their tax and social security obligations.'
- Under Article 8 of the Royal Decree of 1978, in order to register as a contractor it is necessary to submit an application to the Chairman of the Registration Committee (10) of the province in which the applicant has its principal place of business. In the case of applicants which are not established in Belgium, the committee of the province in which the construction site in question is situated is to be competent.
- Article 10 of the Royal Decree of 1978 provides as follows:
'(1) For it not to be inadmissible, the following documents must be attached to the application:
...
3. from each applicant: a copy of the entry in the professional register on the conditions laid down in the legal provisions of the country in which it is established ...
...
5. from a [foreign] applicant: certificates issued by the competent authority in the Member State concerned stating and confirming that it is not in arrears with the payment of taxes or social security contributions in that Member State.
...
(2) The registration committee within the meaning of Section 4 below can require the applicant to provide further documents or information which it deems necessary to determine whether or not the conditions laid down in Article 2(1) have been fulfilled.
...'
- The composition of the registration committee is governed by Article 16 of the Royal Decree of 1978:
'(1) Each registration committee shall be composed of nine members which We shall appointed in accordance with the procedures set out below:
1. three official members shall be appointed at the proposal of, respectively,
(a) the Minister for Social Security;
(b) the Minister for Finance;
(c) the Minister for Employment and Work;
2. three members shall be appointed at the proposal of the organisations representing employers in the construction industry;
3. three members shall be appointed at the proposal of the organisations representing employees in the construction industry;
...
(2) Each committee shall be chaired by one of the officials within the meaning of Article 1(1)(a) and (b) who shall be appointed by Us for this purpose at the proposal of the two ministers referred to therein ...'
III Facts and main proceedings
- The Berlaymont Building was constructed between 1963 and 1967 on land in Brussels acquired by the Belgian State in 1960 and has served ever since as the principal administrative headquarters of the European Commission. (11) However, between 1992 and 2004 the Commission was unable to use the building as it had to be renovated and have its asbestos removed from it.
- On 18 September 1990 Berlaymont 2000 SA, (12) a limited company incorporated under Belgium law, was set up for the purpose of this refurbishment and renovation work. Three credit institutions had a holding in the company in addition to Régie des Bâtiments, (13) a Belgian legal person established under public law. Berlaymont 2000's responsibilities included drawing up the relevant conditions, a programme of work, and the budget for the construction work necessary for the refurbishment and renovation. The company was granted permission to build on the Berlaymont site.
- On 23 December 1994 Berlaymont 2000 invited tenders for the refurbishment and renovation work on the Berlaymont Building, (14) the value of which was estimated at around BEF 1.4 billion. (15) In respect of this invitation to tender special conditions were drawn up and a contract notice was published in the Official Journal of the European Communities. (16) Article 1.G of the special conditions stated: 'As regards the works which form the subject-matter of the present contract, the contractor must be registered in Belgium.'
- An amendment to the award notice appeared in the Official Journal (17) on 16 February 1995; it provided additional information, inter alia with regard to the registration requirement on tenderers. In particular Article 1.G of the special conditions was reworded as follows:
'As regards the works which form the subject-matter of the present contract, the contractor must furnish proof that it is regarded as having fulfilled its obligations relating to social security contributions, tax and VAT; this proof must be contained in a 'registration'.
The application for registration is to be made in accordance with the [Royal Decree of 1978].
As regards the validity of the tender (at the time it is submitted), it will be sufficient for a copy of the application for registration to be attached to the tender. No decision to award the contract will be taken before the competent authority has ruled on the application (for registration).'
Finally, the amendment notice stated:
'In its tender, the tenderer will confirm that it has taken account of this amendment notice No 1, failing which its tender will be void.'
- 16 March 1995 was set as the time-limit for submitting tenders.
- The Belgium-registered undertaking Bâtiments et Ponts Construction SA (BPC) and the German undertaking WIG Industrieinstandhaltung GmbH (WIG), which did not hold a registration in Belgium at that time, established the consortium BPC-WIG in order to participate in the Berlaymont tender proceedings. WIG subsequently traded under the name Thyssenkrupp Industrieservice GmbH; during the preliminary-ruling proceedings before the Court it changed its name for a second time to WISAG Produktionsservice GmbH (WISAG).
- On 16 March 1995 the BPC-WIG consortium submitted a tender for the Berlaymont construction contract. It did not attach to this tender confirmation of either its own registration or that of its member undertaking WIG in Belgium. The applications for registration in Belgium were not submitted until after the expiry of the time-limit for submitting tenders for the Berlaymont contract, that is to say by BPC-WIG on 28 April 1995 and by WIG on 3 May 1995. These registrations were not granted until July 1995, which was after the Berlaymont contract was awarded. (18)
- However, a certificate issued by the German tax authorities (19) dated 4 August 1994 and a certificate issued by the German social security body (20) dated 3 February 1995 were attached to the tender submitted by BPC-WIG. They showed that the German tax administration had no objections to WIG's participation in a public works contract; for its part, the German social security administration confirmed that all social security contributions had always been paid punctually by WIG.
- On 20 June 2005 the board of directors of Berlaymont 2000 awarded the contract to a rival consortium. BPC and WIG brought administrative proceedings against this decision before the Belgian Council of State. (21) On 10 March 1999 the Council of State dismissed the proceedings brought by them on the grounds that WIG could not demonstrate registration in Belgium at the time the tender was submitted and had not submitted a relevant application, and therefore BPC-WIG was ineligible as a contractor from the outset. (22)
- In parallel with the administrative proceedings before the Belgian Council of State BPC and WIG brought before the Tribunal de première instance de Bruxelles (23) on 18 June 1996 a civil action for damages for the detriment caused to them by their exclusion from the award procedure. By judgment of 5 November 2002 that action was dismissed as inadmissible since at the time they participated in the invitation to tender the applicants had failed to furnish the required proof of their registration in Belgium, and thus failed to submit a valid tender, and consequently had no legal interest in bringing an action for damages.
- On 15 April 2003 BPC and WIG brought an appeal against the judgment of the Tribunal de première instance de Bruxelles before the Cour d'appel de Bruxelles (24) which, however, upheld the decision at first instance by judgment of 14 March 2007. (25) As grounds, the Cour d'appel pointed out that the applicants had not attached to the tender any proof that a registration application had been made by WIG and BPC-WIG. Although the certificates issued by the German tax and social security authorities in respect of WIG were also necessary for participation in the award procedure for other reasons, they could not have substituted for registration in Belgium, which was also necessary. Since the applicants had thus failed to satisfy an essential procedural requirement, their tender was invalid and that justified their immediate exclusion from the award procedure.
- In consequence of an appeal on a point of law brought by BPC and WIG on 28 September 2007, the civil action is now pending before the Belgian Court of Cassation, the referring court. (26)
IV Order for reference and procedure before the Court
- By judgment of 22 January 2009, received at the Court on 18 February 2009, the Belgian Court of Cassation stayed its proceedings and referred the following questions to the Court for a preliminary ruling:
'(1) Is the obligation to hold a registration in order to be awarded a public contract in Belgium, such as that imposed by Article 1.G of the special conditions applicable in the present case, contrary to the principle of freedom of movement within the European Union and to the second paragraph of Article 24 of Directive 93/37/EEC, of 14 June 1993 concerning the coordination of procedures for the award of public works contracts, if it had to be interpreted as permitting the Belgian contracting authority to exclude from the tender procedure a foreign contractor who does not hold a registration but has produced equivalent certificates from his national authorities?
(2) Is it contrary to the principle of freedom of movement within the European Union and to the second paragraph of Article 24 of Directive 93/37 to grant a Belgian contracting authority the power to require foreign tenderers to submit to a Belgian authority the committee for the registration of contractors for assessment of the validity of the certificates which have been issued to them by the tax and social security authorities of their State, attesting that they have fulfilled the obligations imposed on them relating to tax and social security?'
- In the proceedings before the Court, in addition to BPC and WIG as the applicants and Berlaymont 2000 as the defendant in the main proceedings, the Kingdom of Belgium and the European Commission made written and oral observations. (27) The Czech Republic also took part in the written procedure.
V Assessment
A Admissibility of the request for a preliminary ruling
- The Commission expresses doubts in two respects as to the admissibility of the request for a preliminary ruling, which Berlaymont 2000 shared at the hearing before the Court. Firstly, the order for reference does not contain the necessary information concerning the factual and legislative context of the dispute in the main proceedings, and, secondly, the Court of Cassation does not comment on the reasons which led it to make a reference to the Court.
- According to case-law, if the Court is to be in a position to give helpful answers to the questions referred to it, it is necessary for the national court to define the factual and legislative context of the questions it asks or, at the very least, to explain the factual circumstances on which those questions are based. (28) Furthermore, it is essential that the national court should give at the very least some explanation of the reasons for the choice of the provisions of European law of which it requests an interpretation and on the link it establishes between those provisions and the national legislation applicable to the dispute.(29) In this context it should be borne in mind that the information provided in orders for reference must not only be such as to enable the Court to reply usefully but must also enable the governments of the Member States and other interested parties to submit observations pursuant to Article 23 of the Statute of the Court of Justice. (30)
- The order for reference from the Belgian Court of Cassation is certainly not a textbook example of a request for a preliminary ruling. It lacks structure and a clear and complete account of the facts, the legal framework and the referring court's considerations on the relevance of its questions. Our Court's Information Note on references from national courts for a preliminary ruling (31) would appear to have been disregarded in the present case.
- None the less, the deficiencies in the order for reference are not so serious as to render inadmissible the request for a preliminary ruling.
- Firstly, as regards the factual and legislative context, although the Court of Cassation does not provide a specific account of the facts in the main proceedings and makes very few observations on the provisions of national and European law which it considers to be relevant, a reading of the order for reference shows what is at issue in the main proceedings and the context in which the questions have arisen. The relevant explanations are evident in particular from the lengthy section in which the Court of Cassation quotes verbatim from the grounds of the Cour d'appel judgment which is contested before it; if they are read with a degree of indulgence the most important elements of the factual and legislative context of the main proceedings can be reconstructed. The technique of referring to the judgment of the court below can probably be explained by the role of the Court of Cassation as a court of judicial review.
- Furthermore, the parties to the main proceedings made additional comments in their written and oral statements which made it easier for the Court to understand the context in which the questions were referred. At the same time, the observations made by these parties show that the information in the order for reference enabled them themselves effectively to adopt a position on those questions. (32)
- Secondly, as regards the relevance of the questions referred, although the referring court provides no separate information thereon, this deficiency does not warrant a declaration that the request for a preliminary ruling is admissible. In relation to questions which national courts refer to it for a preliminary ruling, the Court presumes, according to constant case-law, that they are relevant. (33) It considers that this presumption may be rebutted only in exceptional cases, where it is quite obvious that the interpretation which is sought of the provisions of Community law referred to in the questions bears no relation to the actual facts of the main action or to its purpose; (34) therefore, in other words the lack of relevance must be obvious.
- However, it cannot be concluded in the present case that the questions referred are obviously irrelevant to the resolution of the dispute in the main proceedings. On the contrary, this resolution depends crucially on the Court's answers to the questions. By their appeal on a point of law the applicants in the main proceedings allege that there has been an infringement of Directive 93/37 and Articles 49 and 50 EC. A glance at the passages of the Cour d'appel judgment cited in the order for reference shows that the entire national dispute revolves around the interpretation of those provisions of European Union law.
- Finally, the Commission further alleges that the referring court made no observations on the applicability of Directive 93/37. However, in the case of construction work on a scale such as that covered by the Berlaymont contract, it seems obvious to me that the subject-matter in question falls within the scope of the provisions of European Union law on the award of public works contracts. Moreover, the parties to the proceedings agree on this point.
- Altogether, I see no adequate grounds for declaring inadmissible the present request for a preliminary ruling.
B Substantive assessment of the questions referred
- The Belgian rules on the registration of contractors in force (35) at the time the Berlaymont contract was granted are to be considered in the light of European Union law in two respects. Firstly, it is asked whether it is compatible with Directive 93/37 and the 'principle of freedom of movement' for registration for tax purposes in national territory to be made a prerequisite also for foreign contractors taking part in award procedures. Secondly, the issue is whether it infringes the abovementioned provisions of European Union law to entrust examination of tax and social security certificates from other Member States to an authority other than the contracting authority.
- The opinions of the parties to the proceedings are divided on these two issues: whilst the applicants in the main proceedings, the Czech Government and the Commission consider that provisions such as those at issue in this case are incompatible with the requirements of European Union law, the defendant in the main proceedings and the Belgian Government take the opposite view. However, in that respect the Belgian Government limits its observations to the second question referred. (36)
1. Compatibility of a registration requirement with European Union law (first question referred)
- By its first question the referring court essentially seeks to ascertain whether a requirement relating to registration for tax purposes laid down in national law and the tendering conditions can be relied on also as against contractors from other Member States as a condition for their participation in procedures for the award of public contacts. The Court is requested to consider this question with regard to the 'principle of freedom of movement within the European Union' and to the second paragraph of Article 24 of Directive 93/37.
- In this case only the provisions on freedom to provide services (Article 59 and 60 of the EC Treaty) (37) are to be taken into account among the fundamental freedoms of the European single market.
- However, it should be noted that, in a field which has been exhaustively harmonised at European Union level, a national measure must be assessed in the light of the provisions of that harmonising measure and not of those of primary law. (38) Although Directive 93/37 does not lay down comprehensive rules of European Union law in relation to public works contracts, but aims simply to coordinate national procedures for the award of such contracts, (39) the first paragraph of Article 24 of Directive 93/37 at issue in this case specifically contains, in connection with the contractors' professional quality, an exhaustive list of possible reasons why a participant may be excluded from the award procedure. (40)
- Therefore, with regard to the professional qualitative criteria Directive 93/37 provides within its scope for exhaustive harmonisation. Consequently, the first question must be considered solely with regard to Directive 93/37, but its provisions must be interpreted and applied so as to render them consistent with the fundamental freedom to provide services which it serves to realise. (41)
- It should first be noted that registration for tax purposes under the Royal Decree of 1978 should not be confused with registration in an official list of recognised contractors within the meaning of Article 29 of Directive 93/37. The parties to the proceedings agree that the registration requirement at issue in this case does not fall within the scope of Article 29. In any event, Article 29 would not be capable of justifying a mandatory registration requirement such as that in Belgium. The provision is merely intended to make it easier for foreign building contractors to take part in award procedures by providing for recognition of their registration in the lists of eligible contractors held in the relevant countries of origin. (42)
- Nor is the fact that a contractor has failed to register for tax purposes in national territory included among the grounds for exclusion laid down expressly in the first paragraph of Article 24 of Directive 93/37. (43)
- However, it remains to be examined whether the registration procedure at issue in this case ultimately constitutes a procedure for the application of one of the exclusion criteria listed in the first paragraph of Article 24 of Directive 93/37. It is conceivable that this registration serves officially to determine and certify the professional quality of contractors for the purposes of Article 24, in particular their reliability with regard to the payment of taxes and social security contributions in the Member States in which the service is provided (subparagraphs (e) and (f) of the first paragraph of Article 24). (44) Not least Article 2(1)(10) and (11) of the Royal Decree of 1978, which appears to refer to the fulfilment of tax and social security obligations in Belgium, militates in favour of this view. (45)
- The request for a preliminary ruling is not, however, explicit as regards the subject-matter and purposes of the registration procedure and the observations by the parties to the proceedings before the Court do not give a clear picture in this regard. It will therefore be for the referring court, which alone has jurisdiction to interpret national law, (46) to make the necessary findings on the subject-matter and purposes of the registration procedure.
- In the event that a registration procedure such as that provided for in the Royal Decree of 1978 does in fact prove to be a procedure to determine and certify the reliability of contractors, it is in principle consistent with the objectives of Directive 93/37, which include equal treatment of all tenderers (47) and establishment of the conditions for effective and undistorted competition amongst them. (48)
- To precisely that end, the first paragraph of Article 24 of Directive 93/37 permits contractors who have not fulfilled obligations relating to the payment of social security contributions or taxes, or otherwise lack the professional quality to participate in the contract, in particular professional honesty, solvency and economic and financial capacity, to be excluded from participation in it. (49) Their exclusion is intended to prevent distortions of competition: it is necessary to avoid 'black sheep', who do not pay their taxes and social security contributions, for example, submitting, ultimately at the public's expense, more favourable tenders than their competitors and thus obtaining contracts by unfair methods, particular since those contracts are normally funded by taxes.
- Article 24 of Directive 93/37 is, however, based on the idea that the reliability of tenderers can be assessed in the award procedure itself and there is no need for any preventative control in a separate procedure ahead of the award procedure. This provision expresses a fundamental value inherent in the freedom to provide services: A system of preventative control on contractors by a prior authorisation or registration procedure renders the provision of services less attractive and is justified only where subsequent control must be regarded as being too late to be genuinely effective and to enable it to achieve the aim pursued. (50)
- Accordingly, registration of contractors can be made a prerequisite for their admission to award procedures only where it does not in fact prove to be a prior control and either complicate or delay the participation of the contractors in question in that award procedure, and where it does not impose additional administrative costs on them. (51)
- It is for the referring court to examine whether or not the registration procedure provided for in Belgian law, which is at issue in this case, satisfies these requirements. According to the information before the Court, that procedure at least entails no additional administrative costs and merely requires the submission of documents which had to be available in any event under the first and second paragraphs of Article 24 of Directive 93/37. Furthermore, the registration procedure in the present case does not result in any loss of time since it was expressly provided that the mere submission of an application for registration was sufficient to submit a tender in the Berlaymont award procedure and no award would be made until the registration procedure had been concluded (see Article 1.G of the special conditions, as amended). (52)
- Therefore, on closer examination the registration procedure in the present case does not necessarily constitute a preventative authorisation procedure prior to the award procedure. Instead, the assessment of the foreign contractors' reliability with regard to tax and social security contributions could be carried out in parallel with the award procedure, without entailing any additional time and costs. In these circumstances there are no fundamental doubts as to the compatibility of this registration procedure with Article 24 of Directive 93/37 and the values of the freedom to provide services which lie behind it.
- Nor does anything to the contrary follow from the judgment in Commission v Belgium. (53) Although the infringement proceedings at that time had as their subject-matter provisions of Belgian law which also related to the registration of building contractors for tax purposes which is at issue in this case, in that case the Court did not examine the registration requirement per se in terms of its compatibility with European Union law, (54) but merely the substantial tax and social security disadvantages which Belgian law placed on building contractors and their contracting authorities for failure to register. (55) The present case does not raise such problems.
- The Commission also objects that the assessment of a contractor as part of the registration procedure goes, in terms of its scope, beyond what is permitted under the first paragraph of Article 24 of Directive 93/37. In that respect it refers to Article 2(1) of the Royal Decree of 1978, or more specifically to subparagraphs (7) and (12) thereof.
- That objection is not convincing in my view. Although it is true that subparagraphs (7) and (12) of Article 2(1) of the Royal Decree of 1978 have no verbatim equivalent in the first paragraph of Article 24 of Directive 93/37, both provisions pursue the same objective as that underlying the first paragraph of Article 24, namely to determine the reliability of contractors.
- For example, the first provision (Article 2(1)(7) of the Royal Decree of 1978) permits registration to be denied to companies whose management is prohibited from carrying on a commercial activity on account of a previous bankruptcy or criminal conviction. This provision has the same objective as subparagraphs (a) to (d) of the first paragraph of Article 24 of Directive 93/37: the aim is to ensure that only contractors whose solvency and professional honesty is not questionable on account of previous misdemeanours take part in award procedures. Naturally, that also means that the management of a company must provide a complete guarantee of professional honesty, otherwise it would be easy to circumvent the criterion relating to professional quality by founding a company.
- The second provision (Article 2(1)(12) of the Royal Decree of 1978) permits registration to be denied to contractors who do not possess sufficient financial, administrative and technical resources to ensure fulfilment of their tax and social security obligations. Subparagraphs (e) and (f) of the first paragraph of Article 24 of Directive 93/37 have no other purpose. Although the provisions of the directive deal, in terms of their wording, only with establishing any tax or social security negligence of a contractor in the past, subparagraphs (e) and (f) of the first paragraph of Article 24 of Directive 93/37 seek, in terms of their sense and purpose, to make it possible to pursue precisely the objective sought by Article 2(1)(12) of the Royal Decree of 1978: the aim is to predict whether or not a participant in a procedure for the award of a public works contract can be expected to pay his taxes and social security contributions in accordance with his statutory obligations. If this question cannot be answered in the affirmative, it must be feared that there will be the abovementioned distortion of competition in the award procedure. (56)
- Finally, some of the parties to the proceedings (57) submit that the examination to which a contractor is subject as part of the registration procedure goes beyond what is necessary and is therefore disproportionate. The Belgian authorities had to be content with certificates issued by the competent authorities of a contractor's country of origin, such as those produced by WIG in the present case.
- This objection also falls short. Subparagraphs (e) and (f) of the first paragraph of Article 24 of Directive 93/37 expressly permit controls on the reliability of a contractor with regard to the payment of tax and social security contributions, not only in respect of his country of origin but also in respect of the country of the contracting authority, that is to say the Member State in which the contractor would like to tender for a public works contract.
- As the Czech Government points out, the implication is that contractors can operate as service providers in several Member States. Accordingly, the same contractor may have failed to fulfil his tax or social security obligations in several Member States, and not only in his country of origin. Therefore, the mere submission of clearance certificates from his country of origin does not permit any definitive conclusion to be reached as to his reliability with regard to the payment of tax and social security contributions. The Commission also acknowledged this fact at the hearing.
- Consequently, it must be possible for the authorities in the country of the contracting authority to subject contractors to a separate examination for fulfilment of obligations in relation to tax and social security contributions in national territory. Accordingly, the second indent of the second paragraph of Article 24 of Directive 93/37 unlike the first indent permits not only the examination of certificates from the country of origin, but also the examination generally of certificates 'issued by the competent authority in the Member State concerned'.
- To summarise, therefore:
The freedom to provide services and Directive 93/37 do not preclude a requirement, laid down in national law or tender conditions, relating to the registration for tax purposes of contractors from other Member States as a condition for their participation in a procedure for the award of public contracts, provided that the registration procedure
does not complicate or delay the participation of those contractors in an award procedure and does not impose additional administrative costs on them, and
is limited, in terms of its subject-matter, to establishing and certifying the professional quality and reliability of those contractors for the purpose of the first paragraph of Article 24 of Directive 93/37.
2. Compatibility with European Union law of the examination of foreign proof by an authority other than the contracting authority (second question referred)
- By its second question the referring court essentially seeks to ascertain whether foreign contractors can be obliged, as a condition for their participation in an award procedure, to submit certificates issued by the authorities of their country of origin attesting to the due payment of taxes and social security contributions to an authority other than the contracting authority in the present case the registration committee for an assessment of their validity. The Court is again asked to examine this question having regard to the 'principle of freedom of movement within the European Union' and to the second paragraph of Article 24 of Directive 93/37.
- As mentioned above, (58) the answer to this question turns solely on Directive 93/37, which, however, must for its part be interpreted and applied solely in the light of the principles relating to the freedom to provide services.
- On closer inspection, the question gives rise to two problems which I will consider in turn. First, it is necessary to establish whether examination of certificates within the meaning of the second paragraph of Article 24 of Directive 93/37 may be given over to an authority other than the contracting authority (see section (a) immediately below). Secondly, it is necessary to determine to what this examination may extend (see section (b) below).
(a) The possibility of giving the examination of certificates over to an authority other than the contracting authority
- In the provisions of Directive 93/37 on the qualitative criteria it is assumed a matter of course that the examination thereof will be carried by the contracting authority itself. For example, the second paragraph of Article 24 of the directive refers to the proof that the contracting authority can require from the contractor and a similar wording is used in related provisions such as Article 26(2) and (3) and Article 27(2). Furthermore, under Article 28 of the directive the contracting authority may invite the contractor to supplement the certificates and documents submitted or to clarify them.
- However, none of this rules out the possibility of national provisions giving the examination of certain qualitative criteria over to a specialised authority at national, regional or local level or of the contracting authority calling in such an authority in a particular case on its own initiative. This may be appropriate not only where it is necessary to assess particularly complex questions concerning the financial and economic standing and technical capacity of a contractor in relation to a particular public contract (Articles 26 and 27 of Directive 93/37) but also where, for example, the burden on contracting authorities can be eased by the centralised examination of contractors' professional quality (Article 24 of Directive 93/37).
- Bodies such as the Belgian registration committees are such specialised authorities. They examine centrally the professional quality of contractors who may wish to participate in award procedures. They can thus relieve the burden on the contracting authority and also ensure a certain uniformity in the assessment of contractors.
- However, where specialised authorities such as registration committees deal with the examination of the professional quality of contractors with regard to their participation in award procedures, there must be an assurance that the contractors concerned are not disadvantaged as a result.
On the one hand, this means that contractors may not have their participation in an award procedure complicated or delayed and that they may not be burdened with additional administrative costs. (59)
On the other, the specialised authority itself must provide a guarantee that it will examine the contractors' qualification in conformity with the requirements of the relevant procurement directives and the principles relating to freedom to provide services which lie behind them.
- As regards the first point, although in the present case the registration committee was not given a time-limit to rule on an application for registration, the conditions relating to the Berlaymont invitation to tender did ensure that the undertakings concerned would not be disadvantaged as a result: as mentioned above, mere proof that registration had been applied for was sufficient for the submission of a tender and Berlaymont 2000 had, as the contracting authority, undertaken not to award the contract before the registration procedure had been concluded (Article 1.G of the special conditions, as amended). (60)
- However, the second point, that is to say guaranteeing the registration committee's compliance with the requirements of European Union law, is more problematic.
- In this connection the Commission rightly pointed to the rules on the composition of the Belgian registration committees. The majority of the members are appointed at the proposal of the employers and employees of the local construction industry at the level of a Belgian province (Article 16(1) of the Royal Decree of 1978). Although a member appointed by the State chairs the registration committee (Article 16(2) of the decree), there is no assurance that the member appointed by the State will be able to prevent decisions contrary to European Union law by exercising a right of veto, for example.
- Even if it is assumed that their respective members have the best of intentions, this composition and working method of the registration committees gives an appearance of partiality. (61) Foreign undertakings faced with the requirement of having their qualification assessed and determined by representatives of their potential competitors and their employees could be seriously deterred from taking part in procedures for the award of public works contracts in Belgium.
- Contrary to the view of the Belgian Government, this appearance of partiality cannot be dispelled solely by the fact that the registration committees' decisions are reasoned and may be challenged in the courts. If a foreign contractor requires registration to take part in a particular award procedure, as WIG and BPC-WIG did in relation to the Berlaymont contract, he cannot be expected to go to court to obtain such registration with the considerable time and costs that that entails. In any event, a judgment granting the remedy sought would normally come too late to enable the contractor to take part in the award procedure.
- Therefore, overall the registration committees do not provide, by their composition and working method as provided for in the Royal Decree of 1978, a sufficient guarantee of compliance with the requirements of European Union law. The determination of the professional qualification of contractors from other Member States pursuant to Article 24 of Directive 93/37 with regard to their participation in award procedures cannot be given over to such authorities.
(b) Scope of the examination of certificates from the country of origin
- It is still necessary to consider what scope the examination of tax and social security clearance certificates issued in the country of origin, such as those produced by WIG in the present case, may have. In the wording of its question the referring court speaks of the registration committees assessing the 'validity' of foreign certificates without, however, specifying precisely what is meant by that.
- The parties to the proceedings disagree as to the precise extent of the Belgian registration committees' powers of assessment. Whilst Berlaymont 2000 considers that these powers are consistent with Directive 93/37, the Commission considers that they are clearly more extensive than Directive 93/37 allows. In this respect the Commission points to Article 10(2) of the Royal Decree of 1978, under which the registration committee may require the applicant to provide further documents or information which it deems necessary to determine whether or not the conditions for registration have been fulfilled.
- In this respect it should be noted that the powers of a public authority entrusted with the assessment of contractors' professional qualifications with regard to their participation in award procedures must be interpreted and applied so as to render them consistent with the requirements of European Union law. Under Article 28 of Directive 93/37, a contractor may be invited to supplement the certificates and documents submitted or to clarify them only 'within the limits of Articles 24 to 27'. In so far as national law is to allow Belgian registration committees to require from the contractor information and documents which are not provided for in Directive 93/37, no use may be made of such a power as against a contractor from another Member State.(62)
- Under the second indent of the second paragraph of Article 24 of Directive 93/37, the contracting authority (or other authority to which assessment of professional qualification may have been given over) is also to 'accept as sufficient evidence' of a contractor's reliability with regard to the payment of taxes and social security contributions a certificate issued by the competent authority in the Member State concerned.
- The stringent wording 'accept as sufficient evidence' indicates that there is to be no specific margin of discretion where such a certificate is submitted to the contracting authority in the Member State in which the award procedure is being conducted. Consequently, the contracting authority or other authority entrusted with the assessment is barred from carrying out substantive checks on the accuracy of what the authority of the country of origin is certifying.
- This is confirmed when one looks at the values relating to the freedom to provide services underlying Directive 93/37 which, as is known, must be taken into account in interpreting and applying this directive. It is incompatible in principle with the freedom to provide services to make a provider subject to restrictions for safeguarding the public interest in so far as that interest is already safeguarded by the rules to which the provider is subject in the Member State where he is established. (63) The authorities of the country of origin have examined whether a contractor has duly paid his taxes and social security contributions in his country of origin when they issue their certificate; accordingly, the freedom to provide services, which Article 24 of Directive 93/37 serves to implement, prohibits the same issue that is to say reliability in terms of tax and social security contributions in the country of origin from being re-examined substantively by the authorities of the host Member State.
- Ultimately, therefore, the contracting authority or authority entrusted with the determination of contractors' reliability, must restrict itself to examining whether a certificate originating from the country of origin is in date, whether it is genuine, and whether or not it was issued by an authority which is clearly not competent to do so. More than such a summary examination may not be carried out because the authorities of the host Member State are not entitled to assess detailed matters concerning competence or the procedure for issuing such certificates in the contractor's country of origin.
- Naturally, this does not effect the power of the authorities of the host Member State to examine whether the relevant contractor has met in their country the Member State in which the service is to be provided his obligations relating to the payment of taxes and social security contributions, and to predict whether he can also meet these obligations in relation to forthcoming public contracts.
- To summarise:
The second indent of the second paragraph of Article 24 of Directive 93/37 does not prohibit foreign contractors from being required, as a condition for their participation in an award procedure, to submit certificates concerning the due payment of taxes and social security contributions issued by the authorities of their country of origin to an authority other than the contracting authority for examination, provided that that authority
offers, in terms of its composition and working method, a sufficient guarantee of compliance with the requirements of European Union law, and
restricts itself, in a summary examination, to ensuring that the relevant certificate is in date, that it is genuine, and that it was not issued by an authority which is clearly not competent to do so.
In so far as national law allows this authority to require from the contractor information and documents which are not provided for in Directive 93/37, no use may be made of such a power as against a contractor from another Member State.
VI Conclusion
- On the basis of the above considerations, I propose that the Court should answer the questions referred by the Belgian Cour de cassation as follows:
(1) The freedom to provide services and Council Directive 93/37/EEC of 14 June 1993 concerning the coordination of procedures for the award of public works contracts do not preclude a requirement, laid down in national law or tender conditions, relating to the registration for tax purposes of contractors from other Member States as a condition for their participation in a procedure for the award of public contracts, provided that the registration procedure
does not complicate or delay the participation of those contractors in an award procedure and does not impose additional administrative costs on them, and
is limited, in terms of its subject-matter, to establishing and certifying the professional quality and reliability of those contractors for the purpose of the first paragraph of Article 24 of Directive 93/37.
(2) The second indent of the second paragraph of Article 24 of Directive 93/37 does not prohibit foreign contractors from being required, as a condition for their participation in an award procedure, to submit certificates concerning the due payment of taxes and social security contributions issued by the authorities of their country of origin to an authority other than the contracting authority for examination, provided that that authority
offers, in terms of its composition and working method, a sufficient guarantee of compliance with the requirements of European Union law, and
restricts itself, in a summary examination, to ensuring that the relevant certificate is in date, that it is genuine, and that it was not issued by an authority which is clearly not competent to do so.
In so far as national law allows this authority to require from the contractor information and documents which are not provided for in Directive 93/37, no use may be made of such a power as against a contractor from another Member State.
1 Original language: German.
2 Case C-346/06 [2008] ECR I-1989; that case related to whether contractors party to procedures for the award of public works contracts can be required to pay the wage provided for in the collective agreement in force at the place where the building services are performed.
3 The name 'Berlaymont' has its origins in an Augustinian convent. An approximately two-hectare park, together with the convent of the 'Ladies of Berlaymont' (Dames du Berlaymont), previously occupied the site of the present Commission building.
4 OJ 1993 L 199, p. 54, hereinafter: 'Directive 93/37'.
5 Directive of the European Parliament and of the Council of 31 March 2004 on the coordination of procedures for the award of public works contracts, public supply contracts and public service contracts (OJ 2004 L 134, p. 114, and corrigenda OJ 2004 L 351, p. 44).
6 Treaty establishing the European Community, as amended by the Maastricht Treaty.
7 The provisions on freedom to provide services are now contained in Articles 56 and 57 TFEU, the wording of which is almost identical.
8 Published in Moniteur belge of 26 July 1977, p. 9539 ('Royal Decree of 1977'). The relevant provisions were in force until 23 February 1997.
9 Published in Moniteur belge of 7 October 1978, p. 11707 ('Royal Decree of 1978'). The decree was in force in the version relevant to this case until 1 August 1996.
10 Commission d'enregistrement.
11 At that time: Commission of the European Communities.
12 Hereinafter: 'Berlaymont 2000'.
13 Building management.
14 Hereinafter also: 'Berlaymont invitation to tender'.
15 That is equivalent to approximately EUR 34.7 million.
16 OJ 1994 S 247, p. 107.
17 OJ 1995 S 32, p. 13.
18 WIG was registered on 24 July 1995 and BPC-WIG on 28 July 1995.
19 Finanzamt Köln-Mitte.
20 'Clearance certificate' issued by AOK-Bundesverband.
21 Conseil d'État.
22 Judgment No 79.191 of the Fourth Chamber of the Belgian Council of State.
23 Brussels Court of First Instance, file reference 1996/7808/A.
24 Brussels Court of Appeal.
25 Judgment No 2007/2058.
26 Cour de cassation.
27 Belgium's observations were limited to the second question.
28 Joined Cases C-320/90 to C-322/90 Telemarsicabruzzo and Others [1993] ECR I-393, paragraph 6; Case C-134/03 Viacom Outdoor [2005] ECR I-1167, paragraph 22; Joined Cases C-453/03, C-11/04, C-12/04 and C-194/04 ABNA and Others [2005] ECR I-10423, paragraph 45; and Case C-42/07 Liga Portuguesa de Futebol Profissional and Bwin International ('Liga Portuguesa') [2009] ECR I-0000, paragraph 40.
29 Order in Case C-167/94 Grau Gomis and Others [1995] ECR I-1023, paragraph 9; ABNA and Others, cited in footnote 28, paragraph 46; and Liga Portuguesa, cited in footnote 28, paragraph 40.
30 Joined Cases 141/81 to 143/81 Holdijk and Others [1982] ECR 1299, paragraph 6; Case C-303/05 Advocaten voor de Wereld [2007] ECR I-3633, paragraph 20; and the order in Case C-9/98 Agostini [1998] ECR I-4261, paragraph 5.
31 At that time the Information Note applied in the version published in OJ 2005, C 143, p. 1. The version of the Information Note which now applies is published in OJ 2009, C 297, p. 1. The current edition is also available on the Court website http://curia.europa.eu under Court of Justice / Procedure.
32 To the same effect, Case C-345/06 Heinrich [2009] ECR I-0000, paragraph 35, and Liga Portuguesa, cited in footnote 28, paragraphs 41 and 42.
33 Case C-355/97 Beck and Bergdorf [1999] ECR I-4977, paragraph 22; Case C-333/07 Régie Networks [2008] ECR I-10807, paragraph 46; and Case C-478/07 Budějovický Budvar [2009] ECR I-0000, paragraph 63.
34 Case C-212/06 Gouvernement de la Communauté française and Gouvernement wallon [2008] ECR I-1683, paragraph 29; see also the case-law cited in footnote 33.
35 According to the information provided by the Commission, which the Belgian Government confirmed at the hearing before the Court, the registration requirement was terminated by Royal Decree of 31 July 2008 amending certain royal decrees implementing the Law of 24 December 1993 on public procurement and certain contracts for works, supplies and services (Moniteur belge of 18 August 2008, p. 43572).
36 This is probably because a registration requirement such as that which forms the subject-matter of the first question no longer applies in Belgium (see footnote 35).
37 Now Articles 56 and 57 TFEU.
38 Case C-324/99 DaimlerChrysler [2001] ECR I-9897, paragraph 32; Case C-210/03 Swedish Match [2004] ECR I-11893, paragraph 81; and Case C-569/07 HSBC Holdings and Vidacos Nominees [2009] ECR I-0000, paragraph 26.
39 Joined Cases C-285/99 and C-286/99 Lombardini and Mantovani [2001] ECR I-9233, paragraph 33; Case C-470/99 Universale-Bau and Others [2002] ECR I-11617, paragraph 88; and Case C-213/07 Michaniki [2008] ECR I-9999, paragraph 38.
40 Michaniki, cited in footnote 39, paragraph 43; to the same effect, Joined Cases C-226/04 and C-228/04 La Cascina and Others [2006] ECR I-1347, paragraph 22, and Case C-538/07 Assitur [2009] ECR I-0000, paragraph 20, both concerning Article 29 of Council Directive 92/50/EEC of 18 June 1992 relating to the coordination of procedures for the award of public service contracts (OJ 1992 L 209, p. 1), the contents of which are the same.
41 The Court has consistently held that the provisions of European law concerning public procurement serve, inter alia, to realise freedom to provide services (see Case C-44/96 Mannesmann Anlagenbau Austria and Others [1998] ECR I-73, paragraph 43; Michaniki, cited in footnote 39, paragraph 39; and Case C-480/06 Commission v Germany [2009] ECR I-0000, paragraph 47); it has also consistently held that the provisions of secondary law must be interpreted and applied so as to render them consistent with primary law (see Case 218/82 Commission v Council [1983] ECR 4063, paragraph 15; Case C-305/05 Ordre des barreaux francophones et germanophone and Others [2007] ECR I-5305, paragraph 28; and Joined Cases C-402/07 and C-432/07 Sturgeon and Others [2009] ECR I-0000, paragraph 48).
42 To this effect, Case 76/81 Transporoute et travaux ('Transporoute') [1982] ECR 417, paragraphs 12 and 13, on Article 28 of Council Directive 71/305/EEC of 26 July 1971 concerning the coordination of procedures for the award of public works contracts (OJ, English Special Edition 1971 (II), p. 682), a predecessor directive to Directive 93/37.
43 See Transporoute, cited in footnote 42, paragraph 15, and Case C-225/98 Commission v France [2000] ECR I-7445, paragraph 87, both of which relate to Directive 71/305.
44 Similarly, Transporoute, cited in footnote 42, paragraph 10, in which the Court examined briefly whether the establishment permit at issue in that case could be used to assess the financial and economic standing of undertakings with regard to their participation in public contracts, a criterion permitted under Directive 71/305.
45 The wording of Article 2(1)(11) of the Royal Decree of 1978, where reference is made to the contributions to be levied by the (Belgian) National Social Security Office and the contributions to the (Belgian) Subsistence Protection Fund, is particularly significant in this regard. On the other hand, the fulfilment of tax and social security obligations in the country of origin forms the subject-matter of Article 15(4)(a) of the Royal Decree of 1977.
46 See, instead of many cases, Case C-107/98 Teckal [1999] ECR I-8121, paragraph 33; Case C-58/98 Corsten [2000] ECR I-7919, paragraph 24; and Joined Cases C-378/07 to C-380/07 Angelidaki and Others [2009] ECR I-0000, paragraph 48.
47 Michaniki, cited in footnote 39, paragraphs 44, 45, 47, 55 and 63, with further references.
48 Michaniki, cited in footnote 39, paragraphs 39, 53, 60 and 63, with further references.
49 Michaniki, cited in footnote 39, paragraph 41; to the same effect, Transporoute, cited in footnote 42, paragraph 9, and La Cascina, cited in footnote 40, paragraph 21.
50 Case C-390/99 Canal Satélite Digital [2002] ECR I-607, paragraph 39;
51 To that effect, Corsten, cited in footnote 46, paragraphs 47 and 48, and Case C-215/01 Schnitzer [2003] ECR I-14847, paragraphs 36 and 37, both concerning the requirement relating to entry in the skilled trades register of the Member State in which the service is provided.
52 The present case differs in this respect from Corsten, cited in footnote 46, and Schnitzer, cited in footnote 51, in which the requirement relating to entry in the German skilled trades register gave rise to considerable delays in the provision of cross-border services.
53 Case C-433/04 Commission v Belgium [2006] ECR I-10653.
54 Commission v Belgium, cited in footnote 53, paragraphs 13 and 14.
55 In the event of failure to register, provision was made for, one, withholding of a sum equivalent to 15% of the price charged, and, two, joint liability to the principal for any tax debts of the contractor at the rate of 35% of the price of the work to be carried out (Commission v Belgium, cited in footnote 53, paragraphs 30 and 31).
56 See point 49 above.
57 The applicants in the main proceedings, the Czech Government and the Commission.
58 See points 43 and 44 above.
59 See my comments on the first question, in particular point 52.
60 See point 18 above.
61 As regards the requirement relating to the impartial conduct of an authorisation procedure see, for example, Case C-385/99 Müller-Fauré and van Riet [2003] ECR I-4509, paragraph 85; concerns about the participation of potential competitors in a public body's authorisations are expressed, for example, in Case C-49/07 MOTOE [2008] ECR I-4863, paragraphs 51 and 52, and Case C-169/07 Hartlauer [2009] ECR I-0000, paragraph 69; see also Case C-506/04 Wilson [2006] ECR I-8613, paragraphs 54 to 58, concerning the participation of potential competitors in professional disciplinary and administrative appeals committees.
62 As regards the applicability to national authorities of the primacy of European Union law, see Case 103/88 Costanzo [1989] ECR 1839, paragraphs 29 to 33, and Case C-341/08 Petersen [2010] ECR I-0000, paragraph 80.
63 Case 279/80 Webb [1981] ECR 3305, paragraph 17; Canal Satélite Digital, cited in footnote 50, paragraph 38; and Commission v Belgium, cited in footnote 53, paragraph 37.
