Kolin Case (C-652/22): A Brief Analysis

The recent CJEU decision in Kolin case (C-652/22) sparked a strong interest and initiated a spirited debate amongst practitioners in public procurement sphere, by setting a surprising precedent that has redefined the earlier opinions on complex issues regarding the participation of economic operators established in non-covered third-countries (For the purposes of this text, the term non-covered third countries pertains to third countries that are not members of EU and have not concluded an international agreement with EU regulating the access to the public procurement market) on EU public procurement market, particularly with respect to the availability of remedies for these economic operators.

• The case originated from a public procurement process initiated in Croatia by HŽ Infrastruktura d.o.o., a state-owned company responsible for the renovation, maintenance, and construction of railway infrastructure. The preferred bid came from an EU-based consortium but was subsequently contested by Kolin Inşaat Turizm Sanayi ve Ticaret AȘ, a Turkish company, claiming that in this particular instance, the equal treatment principle was breached and that the contracting entity should not have accepted any additional amendments or clarifications regarding the technical and professional ability of the selected tenderer.
• Following the legal remedies filed by Kolin, the case was ultimately brought before the High Administrative Court of the Republic of Croatia (Visoki upravni sud Republike Hrvatske), which decided to refer a list of preliminary questions to CJEU, requesting interpretation of EU legislation, particularly with respect to Articles 36 and 76 of Directive 2014/24. In substance, the High Administrative Court requested an interpretation as to whether the contracting entity is permitted to take into account documents provided by the tenderer after the expiry of the time limit for the submission of bids, where those documents were not included in the original bid and demonstrate circumstances that the tenderer did not indicate in the original bid.
• The CJEU Decision dated 22 October 2024 was predominately rendered on the basis of the opinion of Advocate General Collins from March 2024 and ruled the request for a preliminary ruling made by the High Administrative Court as inadmissible.

The decision of the CJEU was based on two particularly significant interpretations:

• The first interpretation of CJEU is based on the understanding that the economic operators from non-covered third-countries cannot rely on the provisions of EU public procurement legislation in legal remedies filed against the decisions and procedures of the contracting entity. In this respect, the CJEU mostly focused on the analysis of the provision of Article 43 of the Directive 2014/25, stating that the right of equal treatment applies only to economic operators from EU and third countries which have regulated the public procurement subject matter with EU, with that treatment not being conferred to economic operators from non-covered third-countries.
• The other significant interpretation claimed by the CJEU in Kolin case is based on the unequivocal stance that the matters concerning the participation of economic operators from third countries in EU public procurement processes falls within the scope of the common commercial policy and is as such within the exclusive competence of the EU. As a result, member states are not permitted to regulate these matters on a broad scale by adopting national legislation individually and independently of EU institutions.

The decision marks a dramatic shift, further suggesting that the EU institutions will likely adopt a more restrictive stance toward non-EU economic operators in the future, while simultaneously underscoring the potential for additional protectionist measures within the public procurement sector of the single internal market. Furthermore, such a decision could result in major short-term disruptions, particularly with regard to the procurement of construction works for large infrastructure projects, given a recent notable presence of economic operators from non-covered third-countries in that sector.

Even though the first impressions have not been fully settled and the CJEU decision is still being closely examined, it would seem appropriate to offer the following preliminary conclusions:

The access to EU public procurement procedures for economic operators from non-covered third-countries is still not prohibited on a general level

Future participation will depend on the contracting entities, who should determine on a case-by-case basis whether to exclude such tenderers or to permit their access under specific conditions. Economic operators from non-covered third-countries will, however, have a limited ability to avail themselves of legal remedies should their access to public procurement procedures be permitted by the contracting entity, as such operators will not be able to rely on the EU public procurement directives.

Since the Kolin decision, the degree of legal ambiguity for economic operators from non-covered third-countries has grown

It remains unclear from the Kolin decision whether economic operators from non-covered third-countries are unreservedly denied the ability to invoke on EU provisions as part of their legal remedies. Certain sections of the decision would corroborate this conclusion, but it would also seem that the CJEU has partially deviated from this approach by stating that (p. 66) it is conceivable that the arrangements for treatment of such operators should comply with certain requirements, such as transparency or proportionality, with both concepts (of transparency and proportionality) being developed within the framework of EU legislation. The future case law from the CJEU will undoubtedly need to provide more clarification on this issue, with the first clarifications being possible in the upcoming decision in the QINGDAO SIFANG case (C-266/22).

Member states have a significantly limited ability to regulate the access of economic operators from non-covered third-countries by national legislation

Even though the CJEU decided to exclude the application of EU public procurement legislation in favour of economic operators from non-covered third-countries, a principal possibility of applying national legislation to such economic operators was left open. However, the CJEU simultaneously also declared that the EU has exclusive competence over public procurement, meaning that the member states are not allowed to adopt “parallel” national legislation on public procurement for situations in which their contracting entities would permit access to economic operators from non-covered third-countries (as this would violate the exclusive competence of EU). Accordingly, it would appear that the economic operators from non-covered third-countries will only be able to invoke on general concepts and institutes of national law in their legal remedies going forward, which are typically applied to all legal proceedings (an example of such grounds of appeal would be calculation errors, unreasonableness of the decision, wrongly established facts, etc.).

It remains unclear who will be regarded as an economic operator from a non-covered third-country in the context of Kolin case

On this matter, the CJEU provided no explicit guidance. There is no question that economic operators from non-covered third-countries are covered by the Kolin decision. The potential impact of the decision on economic operators incorporated and registered in the EU but controlled by economic operators incorporated and registered outside the EU does however remain unclear. Furthermore, the treatment of consortiums comprising of a few (but not all) non-EU members has not been determined. Lastly, whether EU economic operators will be able to rely on the abilities of non-EU economic operators in their bids is also unclear.

Thus far, it appears that the Kolin decision has not resulted in any additional responsibilities for contracting entities nor with new rights for EU-based economic operators

CJEU has explicitly stated that it is for the contracting entity to assess whether economic operators of a third country which has not concluded an international agreement with the European Union guaranteeing equal and reciprocal access to public procurement should be admitted and, whether provision should be made for an adjustment of the result arising from a comparison between the tenders submitted by those operators and those submitted by other operators (p. 63). Without a doubt, the cited part of the decision further strengthens the position of the contracting entity and recognizes their initiative to address these matters on a case-by-case basis. The contracting entities may therefore choose to exclude such economic operators or regulate the adjustments of the results. Thus far, there is no indication that this aspect of the CJEU decision should be interpreted as imposing a new responsibility on contracting entities to always do so going forward. As a result, it could be argued that the economic operators from non-covered third-counties are not granted the same treatment de iure as their counterparts from EU. For the time being, though, it appears that contracting entities may still de facto treat these economic operators in their public procurement procedures in the same manner as EU-based economic operators, should they so choose (as long as their access is admitted, and they do not regulate an adjustment of results). The distinction will only be made if a non-EU economic operator files legal remedies; in that case, such operator will only be permitted to refer to general rules and regulations from national legislation and will not be protected by EU public procurement legislation. Should this interpretation hold true, the economic operators from EU will not be able to contest the procedures and decisions of the contracting entity based on claims that the entity was required to bar the admittance of economic operators from non-covered third-countries or that it had to regulate the adjustments of the results.