Recent European scholarship on legal transplants reflects on the cross-linking effects of different institutions, legal principles, procedures, and tools in the so-called European Administrative Space, assessing the process and reactions that result from this phenomenon. From the point of view of legal methodology, many of these transplantations are conducted through the introduction of new legal concepts in national legal orders. These concepts could be created in a particular Member State or could be explicitly defined by the CJEU case-law or the secondary legislation. In either case, the problems arising from the implementation of legal transplants have much in common with the difficulties identified by the formation of concepts and the travelling concepts scholarly literature. These difficulties show us the complex background that underlies the formation of concepts and their adaptation through space and time, as well as the importance of structure and function of legal concepts for their assessment from a methodological point of view.
European public procurement law offers a considerable number of legal concepts that can be considered legal transplants since they are alien to Member States’ legal orders and traditions, e.g., ‘bodies governed by public law’ (article 2.1(4) of Directive 2014/24/EU), ‘transfer of competences’ (Case C-51/15, Remondis, EU:C:2016:985) or ‘public contracts’ (article 2.1(5) of Directive 2014/24/EU and among many others, recently, Case C-436/20, ASADE, EU:C:2022:559). Unlike other European concepts that travelled bottom-up from national legal orders to EU law, and then upside down to impact the legal systems of Member States, the contours of these concepts were outlined directly by European law-making and the ECJ. The abstraction process leading to the creation of these concepts was a distinct one. It was not driven by the search for common features in a complex legal reality with the aim of building concepts that would simplify and rationalize it. This concept formation process was neither under the influence of organicist theories, following the 19th-century German scholarship tradition (Begriffsjurisprudenz).
European public procurement concepts are shaped from a functional angle (an early example in Case C-31/87, Gebroeders Beentjes BV v State of the Netherlands EU:C:1988:422). Their definitions are aimed at implementing the principles of the internal market, drawing the line between the Market and the State. To achieve this goal, the level of abstraction of these concepts must be higher than that of national legal concepts. Also, they are permeated with economic elements. Issues arising from the introduction and implementation of these concepts by Member States are worth analysing. For this purpose, Spanish public procurement law provides a myriad of reactions to public procurement legal transplants that can be structured into three phases: resistance, acceptance, and back again, resistance.
Resistance due to misunderstanding of new legal concepts
Understanding the subjective and objective scope of EU Directives on public procurement law has been a challenge for Spanish lawmakers because of the new concepts that they included. After Spain acceded to the European Union in 1986, Directive 71/305/EEC (award of public works contracts) and Directive 77/62/EEC (award of public supply contracts) were transposed into national law. In the early 1990s, the incorrect transposition regarding the objective scope of both Directives was punished by the CJEU (Case C-71/92, Commission of the European Communities v Kingdom of Spain, EU:C:1993:890).
The approval of new Directives in 1992 (Directive 92/50/EEC, award of public service contracts) and 1993 (Directive 93/36/EEC, award of public supply contracts and Directive 93/37/EEC, award of public works contracts) led to the adoption in Spain of a new Act on Administrative Contracts in 1995 (Ley 13/1995). The new definition of ‘bodies governed by public law’ included in the Directives was copied verbatim in the new Law, but it referred only to public Administrations (State, Autonomous Regions, and local entities) and entities with public legal status under Spanish law (article 1.3). Spanish lawmakers assumed that the concept of ‘bodies governed by public law’ were equivalent to entities with public legal status, meaning that entities with private legal status, such as public trusts and public companies, remained outside the scope of public procurement provisions.
The pre-litigation procedure in Case C-283/00 (Commission of the European Communities v Kingdom of Spain, EU:C:2003:544) aptly exemplifies the misconstruction of these Directives. Spanish authorities stressed that public companies governed by rules of private law did not fall within the scope of EU secondary law because they did not meet the requirements of the non-industrial or commercial character of needs in the general interest. The CJEU noted their mistake since the ‘status as a body governed by private law does not constitute a criterion capable of excluding it from being classified as a contracting authority for the purposes of the Directive’ (paragraph 74). This case exemplifies the unaware resistance to a specific legal transplant because of the underlying clash between legal concepts. Organic classification of public entities according to their legal status or nature overlaps with European functional concepts resulting in temporary disorientation of the national legal community.
A similar process took place concerning horizontal cooperation (Case C-84/03, Commission of the European Communities v Kingdom of Spain, EU:C:2005:14). Spanish law excluded from its scope cooperation agreements concluded between the State, Autonomous Regions, local entities, their autonomous bodies, and any other public body, or between public bodies themselves. In line with its legal tradition, inter-administrative agreements (convenios) were the usual way public bodies related to each other. These agreements were not considered contracts for they are guided by general interest, consequently, they were provided for, indeed, by a different law. The CJEU states that, per the Directives, it suffices for the contract to be concluded between a local authority and a person legally distinct from it (paragraph 38). Consequently, Spanish law incorrectly transposed Directives 93/36/EEC and 93/37/EEC. Once again, difficulties in understanding the functional and economic orientation of new concepts explain the failing transposition of EU public procurement law.
Acceptance of the need to reform the internal legal order
The initial resistance of Spanish lawmakers to legal transplants such as ‘bodies governed by public law’ and ‘public contracts’ was followed by a wide acceptance of these concepts and the award rules linked to them. Not only were national laws reformed to fulfil EU law requirements, but so were the scope of European legal provisions expanded beyond European demands.
A good example of this transformation is posed by the concept of non-contracting authorities (ente del sector público que no es poder adjudicador) coined by Spanish lawmakers. Since 2007 (Ley 30/2007), the subjective scope of national public procurement provisions comprises public administrations, bodies governed by public law and other entities included in the public sector that do not meet the criteria defining bodies governed by public law – e.g., public companies with industrial or commercial character. These bodies are not contracting authorities according to EU Directives, but Spanish lawmakers considered that, as part of the public sector, their awarding of public contracts should be subject to public procurement general principles (open competition, equal treatment, transparency, and sound procedural management, among others). National Law provides that these bodies must approve self-binding internal guidelines to secure these general principles when awarding public contracts. As a result, some of these companies complain that their competitors can learn about their (legally prescribed) public purchasing strategy.
Another example concerns horizontal cooperation. To comply with the requirements of article 12.4 Directive 2014/24/EU, Spanish lawmakers reformed the provisions related to inter-administrative cooperation agreements (article 47 Act on the Legal System for the Public Sector – Ley 40/2015). In conformity with them, the conclusion of these agreements was only possible if their subject did not match the subject matter of a public contract (public works, public supply, and public services). These rules made horizontal cooperation practically impossible and were far tighter than European ones. Behind them, a national resistance to implementing functional legal concepts can be found.
And back again, resistance to implementing functional legal concepts
Although Spanish lawmakers have accepted the need to reform internal legal concepts to meet European requirements, the implementation of new functional concepts poses many problems. European public procurement concepts require a case-by-case assessment and the combined application of different criteria, that often have an economic background (e.g., public bodies governed by public law and public contracts between entities within the public sector). On the contrary, national legal concepts in this field was neither traditionally linked to economic knowledge, nor included different conditions in their structure. They were organic concepts, with a binary objective and subjective scope.
The abovementioned concepts are a good example of this trend: whether an entity is governed by public law or not; and whether an agreement has the subject matter of a public contract or not. Further analysis regarding the position of a body in the market and its links to contracting authorities or the aim and implementation of a cooperation agreement is foreign to Spanish lawmakers and the legal community as a whole. Particular attention must be paid to the judicial implementation of these concepts. Judges tend to strengthen this dichotomous conceptual tradition. In addition to the cases discussed, joint in-house procurement offers a good example of this resistance to accepting the functional nature of EU public procurement concepts.
Pursuant to article 12.3 Directive 2014/24/EU, a contracting authority may award a public contract to a legal person without applying the Directive if three conditions are fulfilled: ‘(a) the contracting authority exercises jointly with other contracting authorities a control over that legal person which is similar to that which they exercise over their own departments; (b) more than 80 % of the activities of that legal person are carried out in the performance of tasks entrusted to it by the controlling contracting authorities or by other legal persons controlled by the same contracting authorities; and (c) there is no direct private capital in the controlled legal person’ (with some exceptions linked to national legislative provisions). The implementation of the first condition has raised concerns regarding the real possibility of control exercised jointly by different public authorities. The CJEU has stated that in these cases ‘it is usually not possible for one of those authorities, unless it has a majority interest in that entity, to exercise decisive control over the decisions of the latter’ (Case C-324/07, Coditel Brabant SA, EU:C:2008:261). Each authority doesn’t have to have an individual power of control over the entity, but ‘the control exercised over that entity cannot be based solely on the controlling power of the public authority with a majority holding in the capital of the entity concerned’ (Cases C-182/11 and C-183/11, Econord SpA, EU:C:2012:758).
In line with CJEU case-law, article 12.3(2) Directive 2014/24/EU specifies the conditions of joint control. They refer to (a) representatives of all participating contracting authorities in the decision-making bodies of the controlled legal person; (b) the capacity of contracting authorities to jointly exert decisive influence over the strategic objectives and significant decisions of the controlled legal person; and (c) the alignment of the controlled legal person´s interests with them of the controlling contracting authorities. None of these requirements, transposed in article 32.4 Act on Public Contracts (Ley 9/2017), revolves around the shareholding of the controlled legal person. Nevertheless, recent Spanish case law pays particular attention to stake holding and analyses the individual control of each contracting authority as well as joint control of minority shareholders. If minority shareholders could not exert decisive influence, in terms of the Directive, the award of an in-house contract is excluded (e.g., Sentencia del Tribunal Superior de Justicia de Cataluña, Sala de lo Contencioso-Administrativo, Sección Quinta, nº 1921/2022).
Resistance to EU legal transplants in the field of public procurement in Spain has undergone several phases and has taken various forms. Underneath them beats the clash between different legal cultures, expressed in the formation of legal concepts. Lawmakers and legal operators, especially, the judiciary, have trouble understanding the scope of EU functional concepts, their structure and implementation requirements. That explains the search for simpler criteria, which often results in an incomplete or defective implementation of EU law.
Posted by Silvia Díez Sastre, Professor of Administrative law, Faculty of Law, Universidad Autónoma de Madrid.
Suggested citation: S Díez Sastre, “Legal transplants: resistance, acceptance and back again – an example from Spanish public procurement Law”, REALaw.blog available at https://wp.me/pcQ0x2-vK