A recent REALaw.blog entry by Delia Lucía Martínez Lorenzo (2 Nov 2021) argued that the introduction of administrative simplification tools in the 2014 revision of the EU public procurement framework generated a paradigm shift whereby all public contracts tendered within the EU should be subjected to general principles (in particular, transparency and equal treatment). The key arguments of the piece were encapsulated in these paragraphs:
‘The inclusion of the mandatory use of electronic ESPD and eCertis repository makes a contract likely to automatically have a cross-border interest. The automatic determination of cross-border interest stems from the fact that digital tools enable a tenderer to be aware of the contract as well as to get through bureaucratic challenges and language barriers. This automatic determination of cross-border interest causes a paradigm change in how to apply EU public procurement law’ (emphasis in the original).
‘An automatic determination of the presence of cross-border interest entails that the general principles of EU public procurement law apply to the contract despite its low value. This results in a significant enlargement of European Law thus entering the realm of national sovereignty’ (emphasis in the original).
This led to proposing specific reforms to EU public procurement law for it to ‘catch up’ with technological developments and, in particular, to advocating for the reintroduction of a ‘Part B’ or ‘light-touch’ regime to address the perceived reduction in national sovereignty resulting from the claimed paradigm shift.
In this response, written in the spirit of constructive criticism and robust academic debate, I argue that the argument is fundamentally flawed and that there is no such paradigm shift. Other than rejecting the excessive claim that the use of the ESPD and eCertis is a meaningful way of digitising public procurement (which they are not), I submit that there are at least two reasons for this assessment.
The first one concerns the conflation of administrative and language barriers as the only relevant obstacles in the provision of cross-border goods and services, which removal would suffice to generate a ‘certain cross-border interest’. This argument not only misreads the CJEU case law on which it rests [Strong Segurança (C‑95/10, EU:C:2011:161)] but also ignores relevant more recent case law that creates a more nuanced (and complex) approach to the existence of EU law obligations in relation to the tendering of public contracts ‘of a certain cross-border interest’. The second reason is that the piece ignores the limited practical effects of the ESPD and eCertis in reducing the effective administrative burden, as well as their insufficiency in ensuring that cross-border tenderers have full and easy access to the procurement rules of a target EU jurisdiction, as evidenced in further CJEU case law dealing with the emergence of a protective principle of ‘symmetrical access’ to procurement and administrative law requirements by domestic and cross-border tenderers.
For these reasons, amongst others that could be formulated to address the point on sovereignty encroachment that would exceed the possibilities of this post, I argue that the reforms proposed in the original piece should simply be ignored. I develop each of these reasons in turn below.
Automatic cross-border interest derived from reduced (digital) administrative burdens?
On the basis of the 2011 Judgment in Strong Segurança (para 35), the piece proposed a ‘definition of cross-border interest as “an element capable to attract foreign operators despite the intrinsic burdens of cross-border procurement and intended to enable undertakings from another Member State to examine the contract notice and submit a tender”’ and, on that basis, it went on to claim that ‘the increased digitalisation of public procurement law renders cross-border interest automatically present’.
This is simply a non sequitur as the automatic existence of a cross-border interest cannot logically follow from the claimed reduction in administrative burden—and it is also a legally impermissible inference. Whilst it is true that a reduction in administrative burdens could render more contracts of a ‘certain cross-border interest’, this is not the only relevant factor, as very clearly established in CJEU case that the piece excessively simplifies [on which see also, in extenso, C Risvig Hamer (nee Hansen), Contracts Not Covered, or Not Fully Covered, by the Public Sector Directive (DJØF, 2012)].
On that point, it is useful to refer to the more recent 2018 Judgment in Oftalma Hospital (C‑65/17, EU:C:2018:263), where the CJEU recast its doctrine on the EU law obligations applicable to the tendering of contracts of a ‘certain cross-border interest’ not covered by the applicable procurement directives and expanded on the analysis also offered in 2016 in Tecnoedi Construzioni (C-318/15, EU:C:2016:747; on which see here). According to Oftalma Hospital
‘a conclusion that there is certain cross-border interest cannot be inferred hypothetically from certain factors which, considered in the abstract, could constitute evidence to that effect, but must be the positive outcome of a specific assessment of the circumstances of the contract at issue in the main proceedings. This means that it cannot be held that certain cross-border interest is established on the basis of factors that do not rule out its existence, but that such an interest must be considered as having been established when its cross-border nature is proved on the basis of objective and consistent factors (see, to that effect, […] Tecnoedi Costruzioni […] paragraph 22)’ (para 39, emphasis added).
‘the value of the contract at issue, in conjunction with the place where the work is to be carried out or the technical nature of the contract and the specific characteristics of the goods concerned, could constitute objective criteria capable of indicating the existence of certain cross-border interest. In that context, it is also possible to take account of the fact that complaints have been made by operators situated in Member States other than that of the contracting authority, provided that it is established that those complaints are real and not fictitious ([…] Tecnoedi Costruzioni […] paragraph 20 and the case-law cited). Moreover, the fact that, at the time of the award of the contract at issue in the main proceedings, similar health care services may previously have been provided by entities established in other Member States may also be taken into account’ (para 40, emphasis added).
The legal position that a ‘certain cross-border interest’ cannot be automatically or hypothetically established, and that there is a burden of proof to be discharged based on a case by case analysis of a set of business-related factors is also clear from e.g. the 2017 Order in Olympus Italia (C-486/17, EU:C:2017:899, on which see here).
To be sure, there are elements of digitalisation of public contracts that could significantly expand their certain cross-border interest, but they relate to the modes of delivery of the contractual object and, in particular, modes of remote delivery of services that increase the interest of providers located in other jurisdictions, in particular those with specific competitive advantages such as e.g. lower labour cost structures (as in Bundesdruckerei, C-549/13, EU:C:2014:2235). But, this is something that should also be assessed on a case-by-case basis, as even the digitalisation in the mode of provision could be unable to significantly reduce or exclude other barriers such as e.g. language, to the extent that automated translations cannot be used, for example, in the context of remote healthcare diagnostic services.
Therefore, as a matter of legal principle, but also common business sense, digitalisation—of the tender phase, or even of the contractual delivery—cannot be seen to automatically create a ‘certain cross-border interest’ in any public contract.
Omission of further case law running against the argument
In addition to the first reason, which in my view suffices to make the argument advanced by the original piece crumble, there is an additional reason to be found in the CJEU case law to reject the main claim.
Even if the argument that ESPD and eCertis—coupled with virtual company dossiers (VCD)—provided a significant digitalisation of the procurement process, they would in themselves be insufficient to effectively reduce the administrative burden faced by economic operators seeking to engage in cross-border tendering, as the specific documentary requirements of a tender are not the sole (or even primary) sources of administrative red tape. This is recognised in two CJEU Judgments concerned with the need to ensure an administrative ‘level playing field’ in the interaction between tender-specific and general regulatory requirements, which arguably give rise to the emergence of a protective principle of ‘symmetrical access’ to procurement and administrative law requirements by domestic and cross-border tenderers: Pizzo (C-27/15, EU:C:2016:404, on which see here) and Connexxion Taxi Services (C-171/15, EU:C:2016:948, on which see here).
In the 2016 Judgment in Pizzo, the CJEU was clear that ‘a condition governing the right to participate in a public procurement procedure which arises out of the interpretation of national law and the practice of an authority […] would be particularly disadvantageous for tenderers established in other Member States, inasmuch as their level of knowledge of national law and the interpretation thereof and of the practice of the national authorities cannot be compared to that of national tenderers’ (para 46). The same approach was followed in Connexxion Taxi Services, to the extent that the CJEU was concerned with the impact that disregarding the specific terms of the tender documentation and substituting them with general administrative law rules would have on ‘the economic operators from other Member States who are less familiar with the terms and detailed rules of application of the relevant national legislation’ (para 42). This was further upheld in the 2019 Judgment in Lavorgna (C‑309/18, EU:C:2019:350, para 20), for instance.
One can disagree with the CJEU’s approach in those cases. However, the fact that there is an information and regulatory asymmetry in cross-border tendering, that very much remains part of the current paradigm of approximation of EU public procurement (and administrative) law, is reflective of the also rather uncontroversial finding that there are administrative burdens that do not arise from tender-specific documentary requirements—which are the only ones addressed by the administrative simplification measures of the ESPD, eCertis and VCD.
Therefore, even taking the argument of the original piece at face value, it would be unpersuasive in its claim that ESPD, eCertis, and VCD-enabled digitalisation ‘reduces significantly administrative burdens and language limitations, thus allowing economic operators to engage with contracting authorities more easily’ (emphasis added). While there is a potential reduction of the regulatory burden, it is only incremental and certainly not comprehensive of all relevant administrative obstacles to cross-border tendering.
For the reasons above, the argument in the original piece that ‘the expansion in digitalisation has rendered cross-border interest automatically applicable, thus expanding the scope of EU law. Such expansion has the risk to minimise the sovereignty of national authorities, as their margin of discretion is reduced’ is fundamentally flawed. Given the incorrect and partial reading of the CJEU case law on which it relies—which seeks to extract a rather broad ‘general principle’ of cross-border interest that far exceeds the boundaries and the circumstances of the case/s that gave rise to it—as well as the extremely simplistic understanding of the regulatory barriers faced by economic operators seeking to tender cross-border for public contracts that it adopts, the analysis and the claims made in the reviewed blog post simply crumble and should be disregarded.
More generally, the original piece should serve as an example of the risks of decontextualising specific passages of CJEU Judgments and building theoretical claims based on a rather formal or literal reading of those decontextualised statements. Researching EU (economic) law requires a much richer and nuanced approach to the complexities (and internal contradictions) of CJEU case law, as well as a strong grounding on the practical effects of EU law and policy. Failing to do that can only generate poor scholarship, which always carries the risk of being subsequently used to justify unfounded legal interventions. EU law scholarship should take adequate care in the way it portrays and uses CJEU case law to make and support arguments, as not everyone (and certainly not busy policymakers) will take the time to go back to the original judgments to assess them in context.
Posted by Professor Albert Sanchez-Graells, Professor of Economic Law and Co-Director of the Centre for Global Law and Innovation, University of Bristol Law School (UK). The author is grateful to Dr Yseult Marique for helpful comments to an earlier draft.
Suggested citation: A Sanchez-Graells, ‘Beware of Paradigm Shifts: Response to Martínez Lorenzo’s ‘Cross-Border Interest and Digitalisation’ in EU Public Procurement Law’, REALaw.blog, available at https://realaw.blog/?p=742.