PurpLE team members Associate Professor Marta Andhov and Senior Researcher Michał Kania presented research on “The Doctrine of Culpa in Contrahendo in Public Procurement” during this year’s Global Revolution Conference at the University of Nottingham. The Global Revolution conferences have been held since 1997. The conferences attract public procurement representatives from academia and practice from all over the world. The views presented at the conference shape the academic discussion for the following years. Key presentations also shape policy trends in the area of public procurement, which are taken into account by international organisations and national governments.

Panel in Brief 

“Trust is a fragile thing. Easy to break, easy to lose, and one of the hardest things to ever get back” 

(English proverb) 

In the panel discussion titled “A Question of Trust and Cooperation,” the PurpLE team, alongside professor Kirsi-Maria Halonen from the University of Lapland, Comp_Eff_PP project and Janett Izatt, from Warwick Business School, delved into the role of trust in public procurement systems and the legal frameworks that support them. The panel was chaired by dr Anna Gorczynska from University of Lodz (Poland).

Trust between contracting authorities and contractors influences the quality and efficiency of public procurement and, therefore, becomes the subject of legal regulation also in the public procurement area. In particular, the panel addressed how trust influences the dynamics of public procurement processes, the willingness of companies to participate in public procurement procedures and appeal decisions, and which legal remedies are available when trust is compromised. PurpLE team presented their research on the application of the private law concept of Culpa in contrahendo doctrine within public procurement law in selected Member States, which emphasizes the necessity for good faith in negotiations.

Highlights from the PurpLE Team Presentation on “Culpa in Contrahendo Doctrine and Public Procurement Law” 

Marta and Michał set the stage by highlighting that public procurement processes grow increasingly complex due to the incorporation of sustainability concerns and advanced innovative technological solutions – which intensified the reliance on negotiated procedures. Negotiations under public procurement, like those under private law, can be problematic. When such negotiations fail, also sometimes because of bad faith of contracting authorities, economic operators often face significant financial losses. These losses relate to the costs of legal services, economic advice, loss of trade secrets or withdrawal from participation in other parallel proceedings, in which the company could be successful.

After clarifying what legal and economic challenge may occur, Marta and Michał discussed whether economic operators can seek damages under the private commercial law doctrine of Culpa in contrahendo, alongside the traditional public procurement law. Such doctrine entails liability for misconduct during contract negotiations and requires parties to negotiate in good faith. Therefore, Marta and Michał noted that application of Culpa in contrahendo may provide grounds for damages when no formal contract is concluded.

To explain the issue more vividly, they presented a hypothetical scenario in which the contracting authority engaged in negotiations in bad faith, aiming not to finalize a contract but rather to acquire the knowledge needed to carry out the project using its own resources. Subsequently, they analysed 1) what legal remedies are available for an economic operator under the Remedies Directive and private commercial law, 2) if damages can be awarded for a breach of the doctrine of Culpa in contrahendo without a breach of public procurement law, and 3) how is the doctrine of Culpa in contrahendo modified under public procurement law? To support their analysis, Marta and Michał looked into three different jurisdictions (Germany, Poland and Denmark). Finally, they concluded that while EU public procurement law provides a basis for damages claims related to the breach of public procurement law, in investigated Member States, there is also a room for integrating Culpa in contrahendo to enhance protection for economic operators. Nonetheless, the applicability of the doctrine of Culpa in contrahendo will vary according to the model of regulation of public contracts and its relation to the private (commercial) law.

In Germany, the regulation of the Public Procurement Act in § 181 (GWB) explicitly provides for the possibility of applying private law rules to damages actions for infringements at the award procedure stage. In Poland, on the other hand, the Public Procurement Act in Article 8 refers to the application of the provisions of the Civil Code only in cases that are not regulated in public procurement law. In both countries, it is accepted in both case law and doctrine that claims for damages can be brought based on the doctrine of Culpa in contrahendo. From a practical point of view, however, the standard of proof associated with bad faith on the part of the contracting authority may prove difficult. The situation is more complicated under Danish law, which does not explicitly provide for recourse to private (contract) law in public procurement cases. However, based on the legal culture and the concept of Nordic pragmatism, it is also possible in Denmark to point to the existence of additional protection for economic operators whose claims for damages in the award phase may be based on the doctrine of Culpa in contrahendo.

Acknowledgements

We express our gratitude to the organizers (University of Nottingham Public Procurement Research Group, Professor Annamaria La Chimia, and Peter Trepte) for bringing us together and to all participants for their insightful discussions. Special thanks to PhD students Arnel Saljic and Torkil Schrøder-Hansen for their contributions to this research and for co-authoring the presented paper.”Purchase Power – Sustainable Public Procurement through private Law Enforcement”/ PurpLE project has received funding from the  Carlsberg Foundation.