On 6 June 2024, the Court of Justice of the European Union held that a tenderer unlawfully excluded must be able to seek compensation for losing the opportunity to continue in a procurement procedure and obtain the contract. A national rule excluding that category of loss altogether is contrary to Remedies Directive 89/665/EEC.
Position covered: 7 June 2024. This article concerns the judgment in Case C-547/22, INGSTEEL, ECLI:EU:C:2024:478. The CJEU interprets Article 2(1)(c) of Directive 89/665/EEC; the Slovak court must decide entitlement and amount in the main proceedings.
The contract had been awarded when the exclusion was annulled
A tendering consortium including INGSTEEL participated in a procedure for the reconstruction, modernisation and construction of 16 football stadiums. It was excluded for allegedly failing to satisfy requirements concerning economic and financial standing. Following an earlier preliminary ruling, the Slovak Supreme Court annulled the exclusion decisions.
By then, the procedure had ended with a framework agreement concluded with the sole tenderer left in the competition. INGSTEEL sought damages. The referring court asked whether national law could exclude compensation for the lost opportunity to continue participating and obtain the contract.
Loss of profit and loss of opportunity are distinct
The CJEU distinguishes loss caused by not obtaining the contract from loss of the opportunity to participate. Loss of profit assumes that the contract would have been awarded but for the infringement. Loss of opportunity instead concerns a genuine chance to continue competing for the award.
Article 2(1)(c) of the Remedies Directive uses broad terms in requiring damages for persons harmed by a public-procurement infringement. It does not distinguish between categories of loss. Loss of opportunity therefore cannot be excluded from compensation as a matter of principle.
Detailed conditions remain governed by national law
The judgment neither awards INGSTEEL a particular amount nor establishes automatic liability. In the absence of detailed Union rules, Member States determine the criteria for proving and assessing loss of opportunity. They must observe the Union principles of equivalence and effectiveness.
The claim still requires examination of matters including the procurement infringement, eligibility to participate, the further course of the procedure, a genuine chance of award, causation and quantum. A merely theoretical possibility is not necessarily enough; at the same time, evidential requirements must not make enforcement practically impossible or excessively difficult.
Documentation is decisive for review and compensation
Tenderers should preserve the procurement documents, qualification evidence, questions, bid versions, evaluation notices and deadlines in full. Where an exclusion is challenged, they should examine early whether the contract may be awarded during the proceedings and which interim measures may preserve participation.
Contracting authorities need a clear file covering qualification, clarification, exclusion and evaluation. An exclusion that is annulled may have financial consequences even where the original award can no longer be reversed. Cross-border consortia should address responsibility, lead roles, evidence and allocation of potential claims in their cooperation agreement.
Review points following exclusion of a tenderer
- Review the exclusion ground, notice, remedy deadline and competent body immediately.
- Preserve qualification and bid documents and evidence of the attainable procedural stage.
- Assess interim relief and the risk of an award being made in the meantime.
- Prove a genuine participation and award opportunity through facts and records.
- Quantify and explain loss of profit and loss of opportunity separately.
Related insights
- CJEU C-367/19: zero-price tender in a procurement procedure
- EU procurement instrument: new rules for third-country tenders
- EU foreign subsidies: FSR applies from July 2023
Official sources
- CJEU, judgment of 6 June 2024, C-547/22 – INGSTEEL, ECLI:EU:C:2024:478
- Court of Justice of the European Union, Press Release No 95/24 of 6 June 2024
- Directive 89/665/EEC on review procedures concerning public contracts
This article explains the judgment and the position under Union law as at 7 June 2024. Conditions, standard of proof, limitation and calculation of a damages claim depend on the applicable national law in each case, subject to Union-law requirements.