Report for the Hearing in Case C-71/92
I — Facts and procedure
In Spain the transposition into national law of Council Directive 71/305/EEC of 26 July 1971 concerning the coordination of procedures for the award of public works contracts (hereinafter ‘Directive 71/305’) and Council Directive 77/62/EEC of 21 December 1976 coordinating procedures for the award of public supply contracts (hereinafter ‘Directive 77/62’) was effected by Royal Legislative Decree 931/1986 of 2 May 1986 amending the Law on State contracts (Ley de Contratos dcl Estado, hereinafter ‘the LCE’) to bring it into line with the directives of the European Economic Community (BOE No 114 of 13 May 1986, p. 16920) and by Royal Decree 2528/1986 of 28 November 1986, amending the General Regulation on the award of State contracts (Reglamento General de Contratación del Estado, hereinafter ‘the RGCE’) to bring it into line with the Royal Legislative Decree 931/1986 of 2 May 1986 and the directives of the European Economic Community (BOE No 297 of 12 December 1986, p. 40546).
An examination of the measures adopted for the transposition into Spanish law of Directives 71/305 and 77/62, carried out by the Commission's officers together with the Spanish authorities from 1987, related not only to the aforementioned instruments but also to other national provisions capable of affecting the system of public procurement in Spain, such as the amended text of the local regulations (Royal Legislative Decree 781/1986 of 18 April 1986, BOE Nos 96 and 97 of 22 and 23 April 1986), the Law of 24 November 1939 on the organization and protection of national industry (Jefatura del Estado, BOE of 15 December 1939, hereinafter ‘the Law of 24 November 1939’) and Royal Decree 946/1978, of 14 April 1978 on a procedure for evaluating and monitoring pharmaceutical services (BOE No 108 of 8 May 1978, hereinafter ‘Royal Decree 946/1978’).
By letter of 19 December 1990, the Commission, in pursuance of Article 169 of the EEC Treaty, gave the Spanish Government formal notice to submit within two months its observations on various aspects of the said Spanish legislation which it deemed to be contrary, as the case may be, to Articles 30 or 59 of the EEC Treaty and/or Directive 71/305 or 77/62.
The Commission regarded as unsatisfactory the observations submitted by the Spanish Government in answer to that formal notice and to its reasoned opinion of 23 September 1991, in which it had asked the government to take the measures necessary to comply with that opinion within two months of receiving it, and accordingly brought this action before the Court of Justice by application lodged at the Court Registry on 6 March 1992.
Upon hearing the report of the Judge-Rapporteur and the views of the Advocate General, the Court decided to open the oral procedure without any preparatory inquiry. It did however invite the parties to reply in writing to certain questions, which they did within the time allowed.
II — Forms of order sought by the parties
The Commission, the applicant, claims that the Court should:
i) declare that: the Kingdom of Spain has failed to fulfil its obligations under Articles 30 and 59 of the EEC Treaty and Council Directives 71/305/EEC of 26 July 1971 and 77/62/EEC of 21 December 1976;
by maintaining in force certain provisions constituting an exclusion from the field of application of the legislation on public procurement (Article 2, points 3 and 8, and Article 29 bis, paragraph 1, points 1 and 3, of the LCE and Article 2, points 3 and 8, and Article 93 ter of the RGCE);
by maintaining in force certain provisions allowing the award of privately negotiated contracts (Article 37, paragraph 1, points 1, 2, 7 and 8, and Article 87, paragraph 4, points 1, 2 and 5, of the LCE; Articles 117 and 247 of the RGCE and Article 120 of the amended text of the local regulations);
by maintaining in force certain provisions relating to the rules on participation and criteria for qualitative selection (Article 24, paragraph 1, point 1; Article 25, paragraph 1, points 1 and 3; Article 284, paragraph 5; Article 287, paragraph 2; Article 312, paragraph 2; Article 320, paragraph 3, point 5 and Article 341 of the RGCE);
by maintaining in force certain rules in the technical field (Article 244 of the RGCE); and
by maintaining in force certain provisions regarding award criteria (Law of 24 November 1939 on the organization and protection of national industry and Article 11 of Royal Decree 946/1978 of 14 April 1978 on pharmaceutical services),
ii) order the Kingdom of Spain to pay the costs.
The Kingdom of Spam, the defendant, contends that the Court should:
i) dismiss the application;
ii) order the Commission to pay the costs.
III — Submissions and arguments of the parties
A — The LCE, the RGCE and the amended text of the local regulations
(a) The scope of the rules
(i) 1. Article 2, point 3, of the LCE, repeated in Article 2, point 3, of the RGCE, provides:
‘Notwithstanding the provisions of the preceding article, this Law shall not apply to the following contracts and legal measures of the administrative authorities:
(...)
3. Transactions effected by the administrative authorities with individuals as regards goods or rights, trade in which is governed (“mediatizado”) by legal provisions, or products which are “intervenidos”, “estancados” or “prohibidos”’.
2. In the first place the Commission observes that it requested the Spanish authorities to provide it with references to the rules referred to in Article 2, point 3, of the LCE and to inform it of the scope of each of the concepts referred to therein (‘trade ... governed by legal provisions’ and products which were ‘intervenidos’, ‘estancados’ or ‘prohibidos’). The Spanish authorities did not comply with that request but merely reported certain examples of contracts excluded under that provision (such as those concerning drugs, postage stamps, stamped paper, tobacco, electricity and gas), and the Commission accordingly concluded that the general nature of the exclusion in question gave rise to legal uncertainty affecting all persons subject to the Community legal system. It refers in this context to the case-law of the Court on the subject of the transposition of directives into domestic law, according to which the Member States are to implement directives in a way which fully meets the requirements, sought by the directives, of clarity and certainty in legal situations (see in particular the judgment in Case 102/79 Commission v Belgium [1980] ECR 1473 at paragraph 11), which implies that national measures of transposition are to be worded unequivocally so as to give the persons concerned a clear and precise understanding of their rights and obligations (sec in particular the judgment in Case C-119/89 Commission v Spain [1991] ECR I-641 at paragraph 10). Unequivocal wording of the provisions transposing directives is all the more necessary when provisions allowing certain exclusions from the scope of a directive arc at issue, as here. Under the case-law of the Court any provision involving an exclusion must avoid a legally ambiguous situation arising from its general nature (see the judgment in Case 247/85 Commission v Belgium [1987] ECR 3029 at paragraphs 16 and 41) and must logically meet precisely the scope of criteria and conditions laid down by the directive itself as regards the circumstances in which the derogation may be granted (see in particular the judgments in Case 252/85 Commission v France [1988] ECR 2243 at paragraph 11 and in Case C-339/87 Commission v Netherlands [1990] ECR I-851 at paragraph 15). Irrespective of those preliminary considerations, the Commission takes the view that the provision in question, inasmuch as it lays down a general exclusion from the scope of the LCE and consequently from that of Directive 77/62, for public supply contracts relating to products in which trade is governed (‘mediatizado’) by a Law, is prohibited or is the subject of an ‘intervención’ or an ‘estancamiento’, is contrary to Directive 77/62. According to the Commission, that directive applies to all public supply contracts, defined according to Article 1(a), which are initiated by a contracting authority, as defined in Article 1(b), with the exception of those envisaged in Articles 2(2) and 3. The Commission refers to the ninth recital to Directive 77/62, according to which ‘provision must be made for exceptional cases where measures concerning the coordination of procedures may not necessarily be applied, but such cases must be expressly limited’ and contends that accordingly only exclusions expressly laid down by the directive are authorized. Hence, irrespective of the exact scope of Article 2, point 3, of the LCE, it is incompatible with Directive 77/62, which contains no exclusion ratione matériáé, that is, defined as a function of the type of or legal system for the product concerned. As regards the argument based by the Spanish authorities on Articles 36 and 223 of the Treaty, the Commission admits that the existence of exhaustive and restrictive commercial rules in a given sector may perceptibly hinder procedures for awarding public contracts in so far as they are binding on the awarding authority inasmuch as they lay down the legal conditions of supply. According to the Commission, however, it does not follow that the rules on public procurement are not to be applied in such a situation. On the contrary, it is precisely in order to allow them to be applied that the exclusions from the field of application of Directive 77/62 are not based on the type of product or the legal system of supply but the legal status of the awarding authority and its competitive situation on the market. The Commission adds that if the Spanish authorities' argument were to be accepted, 90% of public supply contracts would not come within the field of application of Directive 77/62, because it would be difficult to find a sector of trade in which there were no national rules restricting trade in a product which might be regarded as perfectly compatible with Community law, in particular under Article 36 of the Treaty. Finally the Commission denies that the exclusions set out in Article 2, point 3, of the LCE could be justified by Article 6(1 )(b) of Directive 77/62 under which authorities awarding contracts may award their supply contracts without applying the open or restricted procedures envisaged in Article 4(1) and (2) ‘when, for technical or artistic reasons, or for reasons connected with protection of exclusive rights, the goods supplied may be manufactured or delivered only by a particular supplier’. The Commission points out that under Article 4(3) of Directive 77/62, ‘contracts awarded in the cases referred to in Article 6 shall be subject to the provisions of Article 7 only’ relating to common rules in the technical field and accordingly takes the view that Article 6(1 )(b) on privately negotiated contracts cannot justify a total exclusion from the field of application of the directive. Furthermore, Article 6(1 )(b), as a derogation from the directive's rules on transparency and a fortiori as a rule of total exclusion as seen by the Spanish Government, must be strictly interpreted. Article 2, point 3, of the LCE does not comply with either of the two conditions laid down by that provision, namely that the goods may be supplied only by a particular supplier and that their supply must be characterized by their special technical or artistic nature or by the existence of exclusive rights, and even if, in a given case, both conditions were met, the supply in question would not be excluded from the field of application of the directive but would have to be the subject of a privately negotiated contract.
3. The Spanish Government contends that Article 2, point 3, of the LCE constitutes a reference provision which cannot be applied in isolation without a legislative addition giving il a real content and which is thus void and has no practical effect until another separate Law is added to it. The Spanish Government therefore denies that that provision can constitute an clement of legal uncertainty. On the contrary, its purpose is to contribute to legal certainty by aiming at an objective limitation of cases of exclusion from the LCE and by requiring that such exclusions shall be formally cast in the form of a Law. It in no way authorizes Spanish authorities awarding contracts to exclude on their own authority a given category of products from the field of application of the LCE but requires, for that to be done, the existence of a provision having the formal status of a Law and providing in mandatory terms that trade in such products is to be ‘mediatizado, intervenido, estancado’ or ‘prohibido’. Moreover since that reference provision is couched in general terms, it is possible to assess its validity only in the abstract, and not in terms of the specific applications of the provision in the relevant special provisions. The Spanish Government adds that the ultimate justification for all the specific cases excluded from the field of application of the LCE by the application of that reference provision lies in the restrictions which in such cases the Law imposes on the marketing of the products which arc subject to restrictions or prohibitions based on other Community rules and normally taking the form of the grant of special or exclusive rights of a public nature (Articles 36, 90(2) and 223 of the Treaty). The legal restrictions on trade in certain products, introduced by the Law for the protection of special or exclusive rights by means of ‘mediatización’, ‘intervención’, ‘estancamiento’ or ‘prohibición’ are, moreover, fully covered by Article 6(1 )(b) of Directive 77/62 in so far as their effect is to make access to public procurement so difficult that contracts may be awarded only to a given supplier. According to the Spanish Government it follows from Article 4(3) of Directive 77/62 that the cases referred to in Article 6 constitute cases of absolute exclusion, with a single exception, that envisaged by Article 7, relating to the order of preference of technical rules. It adds that in any case the exclusion of one of the categories of contracts referred to in Article 6 of the legislation governing public procurement cannot constitute a failure to fulfil obligations distinct from and independent of the failure to transpose the order of preference of technical rules also alleged by the Commission.
(ii) 1. Article 2, point 8, of the LCE, repeated in Article 2, point 8, of the RGCE, excludes from its field of application:
‘8. Contracts for which a Law lays down an express exception’.
2. According to the Commission, that provision constitutes another general exclusion, which applies this time unambiguously to both Directive 77/62 and Directive 71/305 and which is therefore contrary to both directives. The Commission states, on the one hand, that during the pre-litigation procedure the Spanish authorities specified neither the laws nor the types of public contracts covered by that provision and, on the other hand, that all the exclusions exhaustively laid down by the directives were excluded by an express provision of the LCE or the RGCE. The Spanish rules therefore left the door open to other exclusions not envisaged by the directives and thus created legal uncertainty, as has, moreover, been confirmed in practice.
3. According to the Spanish Government that is also a reference provision which should be considered in the light of its own wording rather than of the use, good or bad, which is made of it by the special provisions pertaining thereto. By requiring that the exclusion of certain contracts from the field of application of the LCE should be effected by a Law, and expressly, that provision, contrary to the Commission's contention, helps to guarantee legal protection for traders and to strengthen legal certainty.
(iii) 1. Article 29 bis, paragraph 1, points 1 and 3, of the LCE, repeated in Article 93 ter of the RGCE, exempts from the obligation to publish in the Official Journal of the European Communities, laid down in Article 12 of Directive 71/305, contracts, of whatever amount, concerning:
‘1. industrial installations of the mechanical, electrical or energy-producing variety, with the exception of any part of such installations which comes within the province of building or civil engineering;
(...)
3. excavation, shaft-sinking, dredging and waste disposal works carried out in connection with the extraction of minerals (mining and quarrying industries).’
2. The Commission states, on the one hand, that Directive 71/305 contains no exclusion of the type envisaged in Article 29 bis, paragraph 1, of the LCE. It is true that the exclusion of certain contracts from the field of application of Directive 71/305 is consistent with the provision that ‘measures concerning the coordination of procedures may not necessarily be applied’, as indicated in the seventh recital to that directive, but, as appears from the same recital, the directive expressly limits such cases, so that no exclusion not mentioned in the operative part may be accepted. Moreover, Directive 71/305 does not envisage the possibility of considering certain contracts as ‘public works contracts’ for the purpose of imposing on them all the obligations arising from the directive except that relating to publication of the invitation to tender in the Official Journal of the European Communities, which is fundamental for the transparency of procedures for the award of contracts at Community level. The Commission thinks, on the other hand, that such an exclusion cannot be justified on the basis of Council Directive 71/304/EEC of 26 July 1971 concerning the abolition of restrictions on freedom to provide services in respect of public works contracts and on the award of public works contracts to contractors acting through agencies or branches (OJ, English Special Edition 1971 (II), p. 678). The reference made by Article 1(a) of Directive 71/305 to Article 2 of Directive 71/304/EEC must be understood as relating exclusively to paragraph 1 of that article, which defines the field of application, and not to paragraph 2, which sets out the exceptions. Directive 71/304/EEC refers in fact to the fundamental principle of freedom to provide services, that is, to Article 59 of the Treaty, and not to the provisions of Directive 71/305 on transparency, and it would be inconceivable for a directive reaffirming the abolition of restrictions on freedom to provide services, laid down by Article 59 of the Treaty, to restrict the field of application of a directive harmonizing laws, which describes exhaustively the public works contracts to which its system applies. Moreover, since the expiry of the transitional period, the direct applicability of Article 59, as established by the Court, has deprived Article 2(2) of Directive 71/304/EEC of any effect, since any restrictions which it might imply on the freedom to provide services must in any event be compatible with Article 59 et seq. of the Treaty.
3. The Spanish Government contends, in the first place, that the fact that, since the expiry of the transitional period, Article 2 of Directive 71/304/EEC has no longer had any effect but a purely interpretative value does not mean that, if reference is made to it by a provision giving it full effect, such as Article 1(a) of Directive 71/305, it cannot resume its legislative force within the framework of that directive. The Spanish Government next expresses the view that it is clear from the wording of Article 1(a) of Directive 71/305 that it refers to Article 2 of Directive 71/304/EEC in its entirety and that moreover it would be logical that, when the definition of the field of application of a provision takes effect not only affirmatively but also negatively, by way of exclusions, the reference made to it should relate to both aspects. Finally, according to the Spanish Government, it is impossible to base any argument on the seventh recital to Directive 71/305. In fact the definition of the very concept of ‘public works contracts’ comes before that of contracts which, by way of exception, may be exempted, in whole or in part, from the provisions of Directive 71/305. It is therefore only once the concept of ‘public works contracts’ has been defined by reference to Article 2 of Directive 71/304/EEC that Directive 71/305 can exhaustively lay down what contracts thus defined are not subject to the system which it establishes.
(b) The provisions relating to privately negotiated contracts
1. Article 37, paragraph 1, of the ĹCE provides that privately negotiated contracts are justified only: Those various provisions are repeated in Article 117 of the RGCE. Provisions similar to those of points 1 and 2 are to be found, as regards privately negotiated supply contracts, in Article 87, paragraph 4, points 1 and 2, of the LCE. A provision comparable to point 7 is to be found, as regards supply contracts, in Article 87, paragraph 4, point 5, of the LCE, supplemented as follows: The provisions relating to supply contracts are repeated in Article 247 of the RGCE. Moreover, Article 120, paragraph 1, of the amended local regulations sets out, in points 1, 2 and 6, similar cases in which privately negotiated contracts may be awarded.
‘1. for works for which it is not possible to give preference to competitive tendering or for which, on technical or exceptional grounds, it is not appropriate to give preference to competitive tendering;
2. in cases of recognized urgency resulting from pressing needs requiring prompt execution which it is impossible to effect within the framework of the emergency procedure governed by Article 26 of this Law and after the agreement of the authority awarding contracts;(...)
7. where the tenderer does not fulfil the conditions necessary for formalizing the contract (“formalización”), provided that the procedure for private negotiation complies with the basic conditions and that the price does not exceed those which were the subject of the call for tenders;
8. for works intended as the completion of works for which the contracts have been terminated on the conditions set out in the preceding paragraph, without prejudice to the application, where appropriate, of the provisions of point 2 of this article (urgency).’
‘... unless the administrative authorities decide to issue a fresh call for tenders on conditions defined case by case’.
2. The Commission takes the view that Article 9 of Directive 71/305 and Article 6 of Directive 77/62 list exhaustively the circumstances in which privately negotiated contracts may be awarded. It refers in that respect to the judgment of the Court in Case 199/85 Commission v Italy [1987] ECR 1039 at paragraph 14, from which it may be seen that the provisions of those two articles must be interpreted strictly as derogations from a fundamental right conferred by the Treaty. Neither the two grounds contained in point 1 nor those contained in points 7 and 8 of Article 37, paragraph 1, of the LCE and in the corresponding provisions relating to supply contracts in the RGCE and the amended local regulations appear in the directives in question. The Commission further states that Article 37, paragraph 1, point 1, of the LCE allows the awarding authority to determine at its discretion the circumstances which make it impossible to put a contract out to tender or inappropriate to give preference to competitive tendering for exceptional reasons, but does not specify what those reasons may be. As regards point 7 of Article 37, paragraph 1, the Commission claims that, when it is impossible to formalize the contract for reasons attributable to the tenderer, the awarding authority must open a new procedure and can have recourse to privately negotiated contracts only on grounds of urgency, which are however to be determined case by case. The fact that, as regards supply contracts, Article 87, paragraph 4, point 5, of the LCE expressly provides for the possibility of issuing a fresh invitation to tender would, moreover, seem to prove that the reason given makes no sense. Similar considerations apply as regards point 8 of Article 37, paragraph 1, of the LCE. The Commission adds that the termination of a contract cannot in general be regarded as a reason for awarding a privately negotiated contract on grounds of urgency, though that would not mean that urgency could not be relied upon in special cases. The Commission then expresses the view that the drafting of Article 37, paragraph 1, point 2, of the LCE and of the corresponding provisions on supply contracts in the RGCE and the amended local regulations is too loose. According to Article 9(d) of Directive 71/305 and Article 6(d) of Directive 77/62, the award of privately negotiated contracts for reasons of urgency is subject to certain cumulative conditions and is only possible ‘in so far as is strictly necessary’, that is to say, ‘for reasons of extreme urgency’ brought about by events unforeseen, or unforeseeable, by the authorities awarding contracts and ‘the time-limit laid down in’ other ... procedures ... ‘cannot be kept’. Hence, for recourse to the procedure of private negotiation to be permitted it is not in general sufficient for the urgency to be merely ‘recognized’ by the awarding authority. Furthermore, for there to be ‘extreme urgency’, it is not sufficient that there should be ‘pressing needs’, which might merely be the result in particular of an increase in the volume of work in the awarding authority's sphere of activity. Moreover the requirement of legal certainty means that, if the text of the Law does not specify the condition relating to the unforeseen or unforeseeable nature of the events bringing about the urgency, the solution does not lie in making an interpretation according to case-law, as the Spanish Government seems to be suggesting. The Commission finally states that it cannot accept that a mere amendment of the LCE and the RCGE can compensate, with a sufficient degree of legal certainty, for the infringements of Community law contained in the amended local regulations. The legal uncertainty of the situation can be remedied only if the provisions incompatible with Community law are expressly repealed.
3. The Spanish Government states that the new Law which is being prepared envisages the substitution of point 1 of Article 37, paragraph 1, and Article 87, paragraph 4, of the LCE by a form of words almost identical to that of Directives 71/305 and 77/62. It adds, however, that in a case such as this, in which an abstract provision is at issue, it is not appropriate to apply, as it stands, the case-law resulting from the aforesaid Case 199/85 Commission v Italy, in which specific conduct was at issue. In the case of a provision of law which is difficult to amend it is necessary to exhaust the reasonable possibilities of interpreting it in accordance with the provision of Community law with which it is being compared and to declare it incompatible with that provision only when it is impossible or unduly complicated to interpret it in accordance therewith. Point 1 does not allow the awarding authority any discretion and its terms are very similar to those of Article 6(1 )(b) of Directive 77/62 and to those of the analogous provisions of Article 9(b) of Directive 71/305. As regards the cases of urgency, the Spanish Government contends that all the conditions laid down in the relevant provisions of the two directives are to be found in point 2 of Article 37, paragraph 1, and Article 87, paragraph 4, of the LCE. On the one hand, the concept of ‘pressing needs’ has the same meaning as that of ‘extreme urgency’, since both of them cover the idea of a need to be met without the least delay. On the other hand it may be seen from the case-law of the Spanish Constitutional Court that the ‘unforeseeable’ nature of events is, in Spanish law, an element inseparable from the concept of urgency. Finally the condition with regard to the impossibility of keeping to the required time-limits by other procedures is expressly met by the contested provisions, since they lay down the condition that prompt execution cannot be effected by means of the emergency procedure. The Spanish Government adds that, what is more, Article 37, paragraph 1, point 2, and Article 87, paragraph 4, point 2, of the LCE require, by way of extra guarantee, that the urgency must be recognized by the awarding authority, which is to record the reason in the file, thus facilitating review by the courts. Next the Spanish Government gives its opinion that when the ‘formalización’ of the contract proves impossible, as provided for in Article 37, paragraph 1, point 7, and Article 87, paragraph 4, point 5, of the LCE, a situation of extreme urgency arises within the meaning of the directives, since it will not generally be possible, by following normal procedures, to make up for the periods for compliance which have already elapsed. Nevertheless, Article 87, paragraph 4, point 5, of the LCE provides expressly for the possibility of a fresh call for tenders. Moreover, by providing that the private negotiation procedure is to be in conformity with the basic conditions of the initial call for tenders and that the final award cannot be at prices exceeding those of the tender initially accepted, the provisions at issue impose very strict limits, which do not appear in the directives, on recourse to the private negotiation procedure. The Spanish Government finally indicates that, without prejudice to the application of the rules relating to cases of urgency, it is proposed to delete the provision of Article 37, paragraph 1, point 8, of the LCE, which relates to a situation which cannot be based on such a clear justification as the two previous provisions. It is of the opinion that it is not necessary to modify the amended local regulations since the award of privately negotiated contracts by local bodies is directly governed by the relevant articles of the LCE and the RGCE which, under the first of the final provisions of the Royal Decrees adopted to bring them into line with the Community directives, have the force of basic legislation.
(c) The rules for participation and the criteria for qualitative selection
(i) 1. Article 24, paragraph 1, point 1, of the RGCE requires foreign undertakings, for the award of public works or supply contracts with the administrative authorities to: Article 25, paragraph 1, point 1, of the RGCE provides that the personality of undertakings shall be demonstrated: Article 25, paragraph 1, point 3, adds:
‘1. Have full capacity to enter into contracts and to assume obligations in accordance with the law of their country.’
‘1. If the undertaking is a legal person, by means of the production of the memorandum of association or modification thereof, duly entered in the trade register. For individual contractors production of the national identity document or, as the case may be, of the document legally serving as a substitute therefor, is mandatory.’
‘3. Foreign undertakings shall produce an official translation of their memorandum of association into Spanish or, as the case may be, into the language of the autonomous community in which the principal office of the awarding authority is situated, together with a certificate issued by the Spanish Embassy in the country in question, certifying that according to the legislation of that country the undertaking has the capacity to enter into contracts or to assume obligations.’
2. The Commission claims, in the first place, that there is no requirement in Articles 23 to 27 of Directive 71/305 or Articles 20 to 24 of Directive 77/62 that such evidence be produced and that there is therefore no justification for excluding an undertaking which docs not comply with such a requirement from participation in a tendering procedure. It takes the view in particular that as regards good standing, proof of legal personality and the capacity of undertakings to enter into contracts and to assume obligations, the list of documents which the authorities awarding contracts may require from tenderers on the basis of the articles in question is complete and more than sufficient and is therefore exhaustive. Should proof of enrolment in the professional or trade register of the country of origin, envisaged in Article 24 of Directive 71/305 and Article 21 of Directive 77/62, not suffice to prove that the undertaking in question has the capacity to enter into contracts and to assume obligations or has a duly constituted legal personality, the authorities awarding contracts have sufficient means to verify the point by demanding documents permitting the undertakings to prove that they are not in any of the situations justifying their exclusion under Article 23 of Directive 71/305 or Article 20 of Directive 77/62. The Commission refers in this context to the considerations put forward by the Court in its judgment in Case 76/81 Transporoute [1982] ECR 417. Finally it points out that Article 24 of Directive 71/305, which refers only to six national professional or trade registers, has been supplemented by the Acts of Accession of 1972, 1979 and 1985 and that Article 21 of Directive 77/62, which still refers only to the registers of nine Member States, may easily be applied by analogy as regards the other three Member States. Secondly the Commission considers that, in so far as they apply to public works contracts, the provisions of Article 25, paragraph 1, points 1 and 3, of the RGCE are also contrary to Article 59 of the Treaty. The requirements laid down in point 3 apply exclusively to tenderers from other Member States and therefore constitute discrimination based on nationality which cannot be justified by any consideration of public interest. Moreover the evidential requirements laid down in point 1, whilst applicable without distinction, are not justified either, because any objective of public interest is guaranteed by the legislation of the Member States of origin and in particular by the provisions relating to the enrolment of undertakings in the professional or trade register. Furthermore, all the conditions required, in principle, to prove legal personality and the capacity to enter into contracts are sufficiently satisfied by proof of enrolment in the professional or trade register in the country of origin, which is a less expensive method for the foreign undertaking and constitutes a lesser restriction on freedom to provide services whilst achieving the same result.
3. The Spanish Government contends that the requirement set out in Article 24, paragraph 1, point 1, of the RGCE is nothing other than a requirement as to legal personality and that in terms of time and of the logical order of succession of the conditions for the award of contracts, it comes before the requirement of economic, financial and technical capacity to which the directives refer. It cannot therefore be contrary thereto unless Community tenderers are to be exempted from the condition of legal personality and unless it is to be permissible for contracts to be awarded to undertakings which, being incapable of assuming rights and obligations, have no liability. The same considerations apply to Article 25, paragraph 1, of the RGCE, which merely lays down ways of providing evidence of legal personality. As regards point 3 of Article 25, paragraph 1, the Spanish Government points out that it intends, when the forthcoming amendment of the RGCE takes place, to abolish the requirement of a certificate drawn up by the Spanish Embassy certifying that the undertaking tendering has legal personality. The need for a translation of the memoranda of association of companies submitting tenders and, in general, all documents relating to the invitation to tender, arises because it is impossible to require all the authorities awarding contracts to know the various languages used in the Community or to have translators and interpreters at their disposal. Finally the Spanish Government stresses the limits of the directives' requirements with regard to enrolment in the professional or trade register, which are the result of the fact that Article 24 of Directive 71/305 refers only to six Member States and that Article 21 of Directive 77/62 also fails to mention all the Member States and, moreover, for some of them, allows enrolment in the professional or trade register to be replaced by a declaration by those concerned. The fact that Directive 89/440/EEC of 18 July 1989 (OJ 1989 L 210, p. 1) and Directive 88/295/EEC of 22 March 1988 (OJ 1988 L 127, p. 1) have supplemented those provisions as regards the other Member States is irrelevant since the transposition of those directives is not at issue in these proceedings.
(ii) 1. Article 284, Paragraph 5, of the RGCE, which concerns contractors and is applied by extension to suppliers by virtue of Article 109 of the LCE, provides that:
‘in order to avail themselves of the provisions of paragraph 3 of this article’ (that is to say, to avail themselves of the right to prove their qualifications by means other than classification) ‘non-Spanish contractors of the Member States of the European Economic Community must prove by means of a certificate issued by the Advisory Committee for Public Contracts that they arc not classified or that they have not been the subject of a classification which has been suspended or cancelled.’
2. According to the Commission Directive 71/305 does not envisage any requirement for tenderers from other Member States who wish to prove their qualifications by means other than classification in Spain to produce such a ‘negative’ certificate and the requirement must therefore be regarded as contrary thereto. Contractors from other Member States may either submit the certificate of classification or provide the authorities awarding contracts with other evidence. If such contractors opt for that procedure the authorities awarding contracts cannot require other conditions or additional certificates and must restrict themselves to the checks on suitability laid down by the directive. The Commission further claims that the requirement imposed on tenderers from other Member States to submit the certificate in question is also contrary to Article 59 of the Treaty, just as is the classification requirement itself, since it represents an administrative burden in the awarding authority's Member State which deprives of practical effect the right to prove qualifications by means other than classification.
3. The Spanish Government states, on the one hand, that that provision is solely and exclusively applicable in relation to public works contracts and not to public supply contracts, for which no system of classification is laid down. It contends, on the other hand, that its purpose is to avoid fraudulent practices with regard to the classification system, whereby a foreign undertaking of Community origin may evade the effects of a suspension or cancellation of a prior classification by the convenient expedient offered by the possibility of establishing qualifications by means other than classification. It is not difficult to comply with the formality required for that purpose and it cannot be regarded as disproportionate or not objectively required.
(iii) 1. Article 287, paragraph 2, of the RGCE, concerning classification of works contractors provides:
‘For that purpose preference shall be given to an assessment of the personal, material and financial means permanently available to undertakings on the national territory.’
2. The Commission takes the view that that condition for classification is contrary to Directive 71/305 and is discriminatory with regard to contractors from other Member States. On the one hand Article 28(4) of Directive 71/305 does not allow proofs and declarations to be required other than those provided for in Articles 23 to 26, which contain none of the requirements imposed by the RGCE. It is true that Article 26(c) and (d), to which the Spanish Government refers, allow the means available to undertakings for the execution of the works to be taken into consideration, but entirely irrespective of the territory in which they are located. On the other hand, even if they are applied without distinction, the requirements imposed by the RGCE constitute above all an obstacle for undertakings which are not established in Spain and are thus contrary to Article 59 of the Treaty, since national undertakings automatically have personal, material and financial means permanently available to them on the national territory.
3. According to the Spanish Government, Article 287, paragraph 2 of the RGCE is a provision with no specific effect, since it does not specify in what the preference to which it refers is to consist. If, nevertheless, it had some slight effect, it would not be difficult to justify it by Article 26(c) and (d) of Directive 71/305 which allows account to be taken of the equipment and manpower ‘available’ for carrying out the contract, since the presence of such means on the territory in which the contract is to be performed involves a greater ‘availability’, no matter how small. The Spanish Government adds that in any event, since that provision serves no purpose and is ineffective, it intends to repeal it.
(iv) 1. Article 312, paragraph 2, of the RGCE provides that certificates or documents of a similar type issued by the Member States of the European Economic Community to their contractors, in conjunction with the first, second, third, fourth, fifth, ninth and tenth subparagraphs of Article 23 and the second and third subparagraphs of Article 287 bis of the RGCE, constitute, for the various authorities awarding contracts, a presumption of suitability.
2. According to the Commission, it may be seen from a comparison of that provision with the first subparagraph of Article 28(3) of Directive 71/305 that Article 312, paragraph 2, of the RGCE does not take account, as regards the probative effect in Spain of certificates of classification issued by another Member State, of the provisions of Article 26(b) and (d) of Directive 71/305, which are repeated in Article 287 ter of the RGCE.
3. The Spanish Government states that that omission is a mere clerical error due to the rapidity and complexity of the transposition procedure and that it will be corrected at the time of the forthcoming revision of the LCE.
(v) 1. Article 320, paragraph 3, point 5, of the RGCE provides that
‘The technical ability of suppliers may be proved in one or more of the following ways:
(...)
5) by certificates issued by official Spanish quality control institutes or agencies attesting conformity of goods clearly identified by reference to certain specifications or standards.’
2. The Commission claims, on the one hand, that that provision is contrary to Article 23(l)(e) of Directive 77/62, which does, it is true, permit the requirement that a quality certificate be produced, but not that it should be drawn up by a body of the awarding authority's Member State. The Commission states, on the other hand, that the provision in question constitutes a measure having an effect equivalent to a quantitative restriction within the meaning of Article 30 of the Treaty, and that there is no justification for the obligation to produce a national certificate for supplies.
3. According to the Spanish Government, that is a mere clerical error which might be remedied if the provision in question is not interpreted literally. In any event a solution to the problem is to be sought by an amendment of the relevant article of the LCE so that, by virtue of the order of precedence of provisions of law, there will be an automatic derogation from that provision.
(vi) 1. Article 341 of the RGCE allows the government, in accordance with the fourth of the LCE's final provisions, to exempt undertakings which have obtained a given classification from the Ministry of Finance from providing provisional security in the case of tenders for works contracts. That possibility was provided by Royal Decree 1883/1979 of 1 June 1979, which authorizes authorities awarding contracts to include in the tender specifications a clause providing exemption from the obligation to provide provisional security, and by an order of 23 October 1979 including the same exemption in the tender specifications of the Ministry of Public Works and Town Planning and its independent bodies.
2. The Commission maintains that the opportunity to tender without being classified is a right of the contractor and that the exercise of that right cannot be obstructed on the basis of the reasons given by the Spanish authorities such as, for example, the fact that classified contractors ‘are, in a way, known to the administrative authorities’. The exemption from providing provisional security granted to contractors who have obtained classification constitutes a financial incentive to be classified and deprives of any practical effect a contractor's right to tender without being classified. It is consequently contrary to Directive 71/305 and to Article 59 of the Treaty. The Commission adds that it sees no difficulties in extending the exemption from provisional security to tenderers who prove their qualifications by means other than classification. Effective sanctions may be found in subparagraphs (d) and (g) of the first paragraph of Article 23 of Directive 71/305, which permit the exclusion from participation in contracts of any contractor who has been guilty of grave professional misconduct or serious misrepresentation.
3. According to the Spanish Government, the formality of classification, which it is mandatory to follow for public contracts of a value exceeding PTA 20 million, and the provisional security, which is intended to ensure the proper completion of contracts, are two types of guarantee which are perfectly in line with Article 16(i) of Directive 71/305, which requires authorities awarding contracts to include in notices of open procedures ‘information about deposits and any other guarantees, whatever their form, which may be required by the authorities awarding contracts’. Non-Spanish undertakings from a Member State of the Community may provide both types of security in conditions identical to those applicable to Spanish undertakings; they may, in the same way as Spanish undertakings, be relieved of the obligation to provide provisional security. In the event of nonperformance of the contract the authority awarding contracts may either suspend the classification or regard the provisional security as forfeit. Such effective sanctions would not exist on the supposition, which the Commission apparently has in mind, that non-Spanish undertakings from a Member State of the Community, which have established their economic, financial or technical qualifications by a means other than classification, were also exempted from the obligation to provide provisional security.
(d) Certain rules in the technical field
1. Article 244, paragraph 2, of the RGCE reads as follows:
‘Technical specifications may be defined by reference to national or international standards.
Unless the subject of the call for tenders so requires, technical specifications shall not mention goods of a specific make or source or of a particular process, capable of favouring or eliminating certain tenderers. Where the authority awarding contracts cannot give a description of the subject of the invitation to tender by means of other specifications which are sufficiently precise and intelligible to those concerned, it may refer to trade marks, patents or types, provided that such an indication is accompanied by the words “or equivalent”.
(...)’
2. The Commission stresses in the first place that Article 244, paragraph 2, of the RGCE did not transpose the order of preference laid down in Article 7(1) of Directive 77/62. The fact that Article 7 has in the meantime been amended by Directive 88/295/EEC of 22 March 1988 cannot in any case justify the failure to transpose Directive 77/62 within the period prescribed, namely by 1 January 1986. In any event, Directive 88/295/EEC ought itself to have been transposed into Spanish law by 1 March 1992 at the latest, that is, before these proceedings were brought. The Commission contends in the second place that Article 244, paragraph 2, of the RGCE is contrary to Article 7(2) of Directive 77/62, which expressly prescribes that not only the indication of trade marks, patents or types but also that of specific origin or production be accompanied by the words ‘or equivalent’.
3. The Spanish Government points out first of all the scale and complexity of the task facing the Spanish authorities at the time of the transposition of Directives 71/305 and 77/62 into Spanish law. It next states that those two directives were substantially amended by Directives 89/440/EEC and 88/295/EEC. It notes in particular that extra time was allowed for the Kingdom of Spain to transpose Directive 88/295/EEC pursuant to the second subparagraph of Article 20 thereof. Regard being had to those circumstances, to require the adaptation of Spanish legislation to the provisions of Directive 77/62 or the early transposition of those of Directive 88/295/EEC at the very time when that transposition was being studied and effected would not be in accordance with Article 5 of the Treaty, which requires that the fulfilment by the Member States of their obligations arising out of the Treaty be facilitated as far as possible. As regards the wording of Article 244, paragraph 2, of the RGCE, it is even more restrictive than that of the corresponding Community provision inasmuch as, in its present form, it does not authorize the indication of specific origin or production, even accompanied by the words ‘or equivalent’.
B — The Law of 24 November 1939
1. Article 10 of the Law of 24 November 1939 was worded as follows: By virtue of the second subparagraph of that article, the Ministry of Industry and Trade might, by way of exception, authorize purchases abroad on the basis of a report from the technical branches of the Directorate General for Industry for one of the reasons set out in the report. Article 11 provided that: Both those articles were repealed by the second repeal provision of the Finance Law 46/1985 of 27 December 1985. However, Article 12, paragraph 1, and Article 14, paragraph 1, of the Law of 24 November 1939 still provide as follows:
‘For all works, installations, services and purchases in general, of whatever nature, effected with funds emanating from the State, the provinces, the municipalities, agencies and delegations of the Movement, monopolies, undertakings with special rights to provide public services or enjoying an advantage or protection of an administrative, economic or financial nature, articles of Spanish manufacture, proof whereof shall be provided by the relevant national production certificate issued by the Ministry of Industry and Trade, shall be exclusively used.’
‘In all concessions, contracts, specifications and requests drawn up by the authorities, entities, bodies and undertakings referred to in the preceding article the requirement to observe the provisions contained in that article shall be expressly set out.’
The undue use of foreign articles in unauthorized cases shall entail the liability of the heads of State centres, corporations, bodies and undertakings, together with that of the officials taking delivery of the works or articles and that of the persons authorizing the expenditure or the delivery.
(...)
The importation of raw materials, machines, tools, industrial products and by-products shall be subject to the condition that there is no possibility of national supply or of the substitution of other similar goods, for which purpose the Directorate-General of Trade and Customs Policy may rely on information contained in technical advice provided by the Directorate-General of Industry.
(...)’.
2. The Commission states first that the Law of 24 November 1939 is still being mentioned in general terms in certain notices of invitation to tender. Moreover the reference to national preference still appears in Article 17 of the general administrative specifications for the award of State works contracts (Royal Decree 3854/1970 of 31 December 1970). The Commission next claims that the obligation of authorities awarding contracts to take account of the origin of the supply when awarding the contract, as follows from Article 12, paragraph 1, and Article 14, paragraph 1, of the Law of 24 November 1939 is contrary to Article 25 of Directive 77/62 and constitutes a restriction on imports from other Member States which is prohibited by Article 30 of the Treaty. Finally it expresses the view that, in so far as the national preference in question applies also to works contracts, the said general administrative specifications and the Law of 24 November 1939 are contrary to Article 29 of Directive 71/305 and to Article 59 of the Treaty.
3. The Spanish Government points out that there is a draft Law derogating from the Law of 24 November 1939 by means of an ad hoc provision with the appropriate precedence, in the form of a derogation from a Law on industry. Meanwhile the Law of 24 November 1939 is being applied less and less, as its validity has been challenged in the courts on numerous occasions.
C — Royal Decree 946/1978
1. Article 11 of Royal Decree 946/1978 provides as follows:
‘Supply of pharmaceutical products by social security establishments.
1. The acquisition and selection of medicinal products required by social security for administrative authorities in establishments shall be effected in accordance with strict scientific and economic criteria and preference shall be given: 1.1. to medicinal products incorporating raw material resulting from research carried out in Spain or manufactured in Spain or both; 1.2. to medicinal products manufactured by laboratories carrying out research on raw materials in Spain or manufacturing such raw materials in Spain; 1.3. to medicinal products manufactured by laboratories using raw materials manufactured in Spain; 1.4. to less costly medicinal products (...).’
2. The Commission takes the view that medicinal products, as constituent parts of tenders relating to public supply contracts, must have free movement between the Member States, and any measure having an effect equivalent to a quantitative restriction is prohibited with the exception of those justified on grounds listed in Article 36 of the Treaty or for some overriding necessity. The Spanish origin of the raw material of medicinal products, the Spanish nationality or the establishment in Spain of the laboratories carrying out research on or manufacturing the raw material and the fact that the laboratories use a Spanish raw material arc criteria for the selection of public supply tenders which would make it impossible to import into Spain medicinal products or raw materials from other Member States, except in very rare cases. Article 11 of Royal Decree 946/1978 is therefore incompatible with Article 30 of the Treaty. It follows, moreover, from Article 25(1 )(b) of Directive 77/62 on criteria for the award of public contracts that the criteria defining the constituent parts of the tenders must be objective, equally applicable to all tenders and strictly related to the subject of the con tract. The criteria mentioned in Article 11 of Royal Decree 946/1978 obviously bear no relation, direct or indirect, to the characteristics of quality or purpose of the proprietary medicinal product and their selection represents a manifest subjective discrimination based on origin, so that that provision must be regarded as being also contrary to Directive 77/62.
3. The Spanish Government states that a provision repealing Article 11 of Royal Decree 946/1978 appears in the draft Royal Decree laying down the rules for the selection of medicinal products for financing by the national health system, a draft coming within the first phase of the timetable laid down for the transposition of the directives on medicinal products for human use.
IV — Answers to questions put by the Court
1. In reply to two questions put by the Court, the Commission confirmed that it did not regard Article 284, paragraph 5, and Article 287, paragraph 2, of the RGCE, which are in its view contrary to Directive 71/305 and Article 59 of the Treaty, as being also contrary to the provisions of Directive 77/62, since their application by extension to public supply contracts, envisaged in Article 109 of the LCE and Article 320 of the RGCE respectively, have not taken effect.
2. In reply to a question from the Court, the Spanish Government indicated that the delay in the drafting and adoption of the draft Law reforming Spanish legislation on State contracts is due to the scale and complexity of the draft itself. On the one hand it is not a matter of a specific amendment or a mere partial incorporation of precise Community rules into the system of the old Law, but of a comprehensive reform embodying a fresh spirit and envisaging solutions to new problems which have become apparent since the Law which is to be amended came into force. On the other hand it is necessary to identify the principles which must make up the essential common denominator applicable to all public authorities, since the legislature is required under the constitution to prepare the basic legislation governing public authority contracts.
F. A. Schockweiler
Judge-Rapporteur
1 Language of the case: Spanish.