Sustainability Clauses under the Public Sector Directive: Sustainable Performance Contract Clauses

A recent publication by our new Post-Doctoral Fellow at PurpLE, Dr. Ezgi Uysal, explores the intersection of contract law, public procurement law, and sustainability. Her article titled “Sustainability Clauses in ‘Public’ Contracts”, published in the European Review of Contract Law, examines the extent to which the contractualization of sustainability can provide guidance for Sustainable Public Procurement (SPP) under the 2014 Public Procurement Directive and whether public procurement law offers solutions where contract law becomes unfit for accommodating sustainability.

Sustainability Clauses and Limits of Contract Law under European Contract Law

Drawing on the non-legislative codification of European Contract Law—primarily the DCFR and PECL—the paper first reviews the literature on the contractualization of sustainability through clauses that incorporate human rights, labor, and environmental standards. These are referred to as sustainability contractual clauses (SCCs) in business contracts. The paper identifies key challenges posed by the contractualization of sustainability under European contract law, including the incorporation of terms, the principle of privity, vague obligations, and the inadequacy of traditional contract law remedies.

Sustainability Clauses under European Public Contract Law

Following this analysis of SCCs, the paper examines how sustainability is contractualized in public contracts within the framework of European Public Contract Law, particularly in the context of SPP. Although a unified European public contract law does not exist in a strict sense, for the purposes of this paper, it refers to the rules provided by the Public Sector Directive concerning the award of public contracts. In this context, much of the existing research on SPP focuses on the award phase, examining different sustainability requirements and in which criteria they can be incorporated. However, the contractual nature of public procurement, as well as sustainability obligations, is often overlooked. To address this gap, the paper compares business contracts and public contracts with regard to the contractualization of sustainability. This comparison assesses whether the EU-level harmonization of public procurement law offers solutions to the legal challenges faced by SCCs in business contracts. The analysis reveals five key differences:

i. Freedom to/of Contract
ii. Incorporation of Terms
iii. Link to the Subject Matter
iv. Continuity of Contracts
v. (Threat of ) Public Enforcement

Sustainable Performance Contract Clauses (SPCC)

Building on these findings, the paper proposes the term Sustainable Performance Contract Clauses (SPCCs) for sustainability clauses in public contracts, distinguishing them from Sustainability Contractual Clauses (SCCs) in business contracts. The term SPCCs emphasizes the critical role of performance, both in the narrow sense (fulfillment of contractual obligations) and the broader sense (the requirement of the link to the subject matter of the contract). The paper argues that while a three-step enforcement approach—preventive monitoring, relational enforcement, and termination—is relevant for SCCs in business contracts, it is even more crucial for SPCCs in public procurement.

Abstract

Under the Public Sector Directive, public buyers are allowed to include sustainability considerations in their purchasing decisions within the limits of the principles of procurement. This framework allows criteria linked to the subject matter to be contractualised. Though different criteria are widely employed in public procurement within the umbrella of sustainable public procurement, the literature mostly focuses on stages leading to the contract award instead of considering the public contract as a document incorporating contractual obligations. On the other side, green and social commitments in (business) contracts are considerations that are not necessarily linked to the subject matter. Though their value is acknowledged, their enforcement proves to be challenging due to the restraints of contract law. By using European contract law as a reference point, this paper compares sustainability clauses in business contracts to sustainability clauses in public contracts – to determine whether the EU regime applicable to public contracts offers solutions to these hurdles.

Read the full article “Sustainability Clauses in ‘Public’ Contracts” in open access below.