Council of State, section V, 2 May 2025, n. 3721, Italy
Article(s) in Directive 2014/24/EU: Art. 25 Directive 2014/24/EU, and Art. 43 Directive 2014/25/EU
Topic: WTO Agreement on Government Procurement (GPA)
Member State: IT
Court/rev. board: Council of State
1. IMPLEMENTATION / RELEVANT NATIONAL LEGISLATION
This case illustrates, in the Italian national context, the logic behind Directives 2014/24/EU, Art. 25, and 2014/25/EU, Art. 43. In particular, the Council of State clarifies the importance and the value of multilateral or bilateral agreements such as the GPA, in the sense that their ratification is a guarantee of reciprocity and equal treatment of economic operators under the Directives. These two principles do not apply in the absence of a bilateral or multilateral agreement, but this does not imply that an economic operator or its auxiliary company cannot have access to the European procurement market, which is possible but not guaranteed[1]. This judgment, in addition to consolidating the recent judicial precedents[2], has some peculiarities. In fact, it goes beyond the ruling of the CJEU that clarifies that
“In the absence of acts adopted by the European Union, 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 to a public procurement procedure and, if it decides to admit them, 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”[3]
The Italian judgment refers to the need for a motivation for the exclusion of the undertaking from a third country not signatory of the GPA, not about setting adjustments when comparing offers from operators that can rely on the Directives and others that cannot. Moreover, in connecting this ruling to the recent CJEU judgment, the perspective lies on the fact that if, on the one hand, the European public procurement market cannot be seen as a limitless open one[4], on the other hand, there is some space for the inclusion of third countries economic operators that are not under the application of the Directives but that satisfy the core principles of the European public procurement market. Considering the limits expressed by Art. 25 of Directive 2014/24/EU, and Art. 43 of Directive 2014/25/EU, this ruling shows that the scope and extension of the recent EU jurisprudence have to be applied also to auxiliary companies[5]. As consequence, the European procurement market reveals the characteristics of an inclusive market, in which there are limits, principles and preferences in order to verify the respect and the protection of the internal values (fair competition, sustainability, worker rights). In that sense have to be seen the motivation of the exclusion of an undertaking coming from a third country not signatory of the GPA. It has to be read also in the sense that an EU company can operate through a third non signatory company, but a process of verification of the requirements has to be put in place, as there is no possibility for an automatic exclusion.
[1] See point 59 of Case C‑266/22
[2] – only the Union can establish a general ban on participation for economic operators from countries that are not signatories to the GPA;
– in the absence of such EU rules, the contracting authority may exclude such operators only if this is clearly indicated in the tender documents;
– failure to comply with the principles of legal certainty, transparency, and reliance (known as clare loqui) renders exclusions based on supervening or ambiguous grounds unlawful, See ItaliaAppalti, https://www.italiappalti.it/leggiarticolo.php?id=5601
[3] Case C-652/22, point 63
[4] The contribution of Italian national case law regarding third-country access to European Union public procurement dates back well before the Kolin ruling precedent: it was addressed in the Elettrify Limited case, examined by the Second Section of the Piedmont Regional Administrative Court and decided by ruling no. 1110 of 3 December 2021, according to which ‘economic operators from third countries that do not have any agreement providing for the opening of the EU procurement market or whose goods, services and works are not covered by such an agreement do not have guaranteed access to procurement procedures in the EU and may be excluded’ and in the Karsan Otomotiv case – Sardinian Regional Administrative Court, Section I, 2 November 2021, no. 737, in which, as in the Koiln judgment, a Turkish company, Karsan Otomotiv, participated in the tender procedure and was excluded on the grounds that Turkey was not a member of the European Union, nor a signatory to the GPA or other bilateral or multilateral international agreements, see S. Francario, La partecipazione alle gare d’appalto pubblico degli operatori economici extra comunitari, in Amministrativamente, 3/2022
[5] Nor does the fact that it is the auxiliary undertaking and not the assisted undertaking that is involved affect this conclusion, given that the former cannot be considered a third party with respect to the contract, since it is required to undertake, not only towards the assisted undertaking but also towards the contracting authority, to make available to the competitor the resources that it lacks, so that this commitment ultimately constitutes a prerequisite for the legitimacy of the award decision (Article 104, paragraph 7, Legislative Decree 36/2023), Council of State, sez. V, 2/5/2025, n. 3721, p. 12
2. FACTS
The appellant company is seeking to overturn the ruling that rejected its appeal against its exclusion from the European tender.
The subject of the dispute is the exclusion of the appellant company from the open electronic tender procedure for lot 1 relating to the purchase of new factory-built M3 category, class I, electric buses less than 7 metres in length “due to failure to meet the participation requirements set out in the tender specifications”.
In its exclusion decision, the contracting authority considered that the fact that the auxiliary company of the firm that participated to the tender was based in the People’s Republic of China, a third country that is not a signatory to the Agreement on Government Procurement (GPA) contained in Annex IV to the WTO Agreement, precluded its participation in the tender, while in court it justified the exclusion on the grounds that the tender in question was reserved, from the outset, to operators based in the EU only, in view of the supply covered by the contract.
Moreover, some procedural points have been highlighted by the appellant, in the sense that the first judge did not rule on the claim for damages that the appellant company allegedly suffered as a result of the unlawful activity of the contracting authority.
3. JUDGMENT
The court of first instance ruled that the supranational and national regulatory framework, as interpreted by case law, prevents companies from countries that are not signatories to the GPA from participating in public tenders, either directly or indirectly through the use of an auxiliary company from a country that is not a signatory to the GPA. The Council of State considers that the exclusion of the appellant company for having used a company based in the People’s Republic of China is not legitimate.
Citing the most relevant and recent jurisprudence of the CJEU, the Council of State highlights also that, for the appellant, the first decision is wrong in affirming that the juridical international and national framework is against the participation of firms of Countries not signatory of the GPA agreement at public tenders. In fact, for the appellant, neither in the EU Directives, nor in the CJEU jurisprudence, a norm can be found that prohibits the participation of firms coming from Countries that had not signed the GPA. In that sense, it is not correct to affirm the existence of an automatic exclusion through the Art. 69 of the Italian Public Contracts Code, which is the Italian transposition of Art. 25 of Directive 2014/24/EU and 43 of Directive 2014/25/EU.
The principles recently set out by the CJEU in its judgment of 22 October 2024, C-652/22, reiterated and further clarified by the judgment of 13 March 2025, C-266/22 establish that access by such foreign companies to the EU public procurement market, far from being prohibited by law, is permitted even though not guaranteed, so that the contracting authority may, giving reasons, exclude such companies from the tender. The fact that the object of the dispute is the status of the auxiliary undertaking and not the one that participated to the tender does not affect this conclusion, given that the former cannot be considered a third party to the procurement contract, as it must also commit itself to the contracting authority. This part is innovative in setting the position of an extra-GPA economic operator that it is not appealing to an EU domestic Court to benefit from Directive 2014/24/EU, but linked to the European one that is utilizing it as an auxiliary. The auxiliary company, in fact, cannot be considered a third party with respect to the procurement contract, as it must undertake not only towards the assisted company, but also towards the contracting authority, to make available to the competitor the resources that it lacks, so that this commitment ultimately constitutes a prerequisite for the legitimacy of the award decision.
In the case at hand, the Council of State puts at the same juridical level the main firm (that is Italian and it is the appellant) and its auxiliary one, that is a Chinese company that cannot benefit from the directive application (not part of the GPA):
“In the case in question, the Court considers that while it is true that an economic operator – or its auxiliary – located in a country that is not a signatory to the GPA may certainly be excluded by the individual contracting authority, this cannot occur, contrary to the ruling of the court of first instance, by virtue of a general provision of either EU or national origin. In fact, in light of the aforementioned judgments of the Court of Justice and the literal wording of Article 69 of Legislative Decree No. 36/2023, in the opinion of the Court, it cannot be interpreted, contrary to the contracting authority’s argument and the by the court of first instance on the basis of case law established under the previous codes, as allowing non-EU economic operators to participate in public tenders only on condition of reciprocity”[1]
These principles can be extracted from the aforementioned CJEU jurisprudence and deduced from the European Commission’s guidelines on the participation of third-country tenderers and goods in the EU procurement market[2], explaining that the access by such foreign companies to the EU public procurement market, far from being prohibited by law, is permitted but not guaranteed, so that the contracting authority may, giving reasons, exclude such companies from the tender.
[1] See page 11 of the judgment under comment
[2] The 2019 guidelines – C(2019) 5494 final- focus especially on protecting the quality standards of European public procurement, which are expressed, in particular, in environmental and social protection requirements.
