A bidder unlawfully excluded from the procurement procedure may claim compensation for loss of opportunity – important CJEU ruling

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Table of Contents:

  1. What was the case about?
  2. What damage is subject to compensation?

On June 6, 2024, the Court of Justice of the European Union (CJEU) issued a ruling (CJEU judgment in case C-547/22 | INGSTEEL), stating that Article 2(1)(c) of Council Directive 89/665/EEC of December 21, 1989, on the coordination of the laws, regulations, and administrative provisions relating to the application of review procedures to the award of public supply and public works contracts, as amended by Directive 2007/66/EC of the European Parliament and of the Council of December 11, 2007, must be interpreted as precluding national provisions or practices that generally exclude the possibility for a bidder, who was unlawfully excluded from a public procurement procedure due to an unlawful decision of the contracting authority, to obtain compensation for the damage resulting from the loss of opportunity to participate in that procedure to win the contract. In other words, the CJEU ruled that an entity unlawfully excluded from a procedure can claim lost profits.

What was the case about?

In 2013, the Slovak Football Association excluded a consortium that included the company INGSTEEL from a public procurement procedure for works related to the reconstruction, modernization, and construction of 16 football stadiums. The consortium was excluded for not meeting the requirements of the procurement notice, particularly concerning its economic and financial situation. After the Slovak Supreme Court requested a preliminary ruling from the Court of Justice in this matter, the Supreme Court overturned the exclusion.

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Meanwhile, the public procurement procedure in question was concluded by awarding a framework agreement to the only remaining bidder. In these circumstances, INGSTEEL filed a lawsuit with the District Court in Bratislava for damages due to the exclusion of the consortium from the procedure. The court asked the CJEU whether the directive on review procedures in public procurement precludes Slovak national provisions or practices that seem to exclude the possibility for a bidder unlawfully excluded from a public procurement procedure to obtain compensation for the damage resulting from the loss of opportunity to participate in that procedure to win the contract.

What damage is subject to compensation?

According to the CJEU, under EU law, a company unlawfully excluded from a tender can claim compensation for the loss of opportunity to win the contract, even if national regulations state otherwise. Moreover, since the provision of Directive 89/665 is broadly formulated and does not distinguish between different categories of damage, it should be understood as covering all types of damage incurred by these entities, including damage resulting from the loss of opportunity to participate in the procurement procedure (lost profits).