Author: Dr. Ezgi Uysal

1. INTRODUCTION

In this blog post, the author analyses Advocate General (AG) Sánchez-Bordona’s Opinion on Case C-82/24 delivered on 6 February 2025, which concerns Article 2 of Directive 2004/18 (Article 18 of Directive 2014/24) on principles of awarding contracts and its role in the application of provisions of national law to the procurement contract by analogy. In his Opinion, the AG concludes that though principles of procurement do not preclude a clause in a public contract referring to provisions of civil code where the contract remains silent, extending contractual obligations in a way that could not be foreseen by a reasonably well-informed and normally diligent contractor is incompatible with the said principles. In this context, the question referred to the Court of Justice of the EU (CJEU) concerns the intersection of public procurement law and contract law.

The blog post first examines the facts of the case, and the question referred to the CJEU by the Polish court. It then analyses the application of principles of procurement to contract performance as regulated under Directive 2004/18, as well as to contract interpretation pursuant to the Opinion of the AG. In the following section, the author shares her reflections. The last section concludes the blog post.

2. FACTS OF THE CASE

On 1 August 2008, the applicant Polish contracting authority and the consortium led by Veolia Water concluded a contract for the implementation of the modernisation and expansion of the thermal treatment sewage sludge project, which included the construction of a sewage sludge thermal plant encompassing two recuperators. The contract included a warranty card -starting from the work completion and lasting 36 months- which provided that Polish law, including the Polish Civil Code, will apply if a matter is not regulated in the contract.

On 26 September 2014, the contracting authority reported that Recuperator No. 2 had failed. It was replaced under warranty and started working again on 22 February 2016. Then, on 3 March 2015, Recuperator No. 1 also failed. It was also replaced under warranty and became operational on 28 April 2016. Later, on 27 November 2018, both recuperators failed again. The contracting authority asked for them to be repaired or replaced under warranty, but the contractors said the warranty had already expired, so they were no longer responsible. The disagreement between the contracting parties led to legal proceedings. While the contracting authority seeks payment of contractual penalties and compensation for improper performance, Veolia seeks payment for the amounts collected under the bank guarantees.

During the legal proceedings, the contracting parties raised the following points: The contracting authority is of the opinion that the last failure of the recuperators falls under the scope of the warranty. The main argument raised by the contracting authority (applicant) is that the relevant provision of the Polish Civil Code on the contracts of sale should also apply to the existing contractual relationship with necessary changes. Under this provision, the warranty period runs anew in case of replacement or repair. Since the recuperators were replaced on 22 February 2016 and 28 April 2016, the 36-month warranty period runs anew.

Veolia is of the opinion that when the last failure of the recuperators was notified, the subject matter was no longer covered by the warranty. Emphasising that warranty terms are governed with the contract in a comprehensive manner which does not provide a renewal for warranty; Veolia opposes the application of the relevant provision of the Polish Civil Code concerning the contract of sale to the contract in question as neither the contract itself nor the contract notice included any provision on the matter. The application of the said provision by analogy would breach the principles of transparency and equal treatment as it is not a requirement arising from the tender documents or applicable national law, but from the interpretation of the law. Against this background, the Regional Court in Warsaw decided to refer a preliminary question to the CJEU.

3. THE QUESTION REFERRED TO THE CJEU

The national court asked the CJEU whether the principles of procurement under Article 2 of Directive 2004/18 preclude an interpretation of national law that would allow the public contract to include an obligation not expressly provided in the contract documents but arising from the provision of national law applicable by analogy. In short, the national courts asked whether principles of procurement preclude the application of a provision of the Civil Code to the contract not directly, but through analogy.

4. OPINION OF THE ADVOCATE GENERAL CAMPOS SÁNCHEZ-BORDONA

In light of the question raised, in its Opinion, the AG proposed that the Court should reply to the Regional Court in Warsaw that though Article 2 of the Directive 2004/18 must be interpreted as not precluding the inclusion in a public contract of a clause referring to provisions of national civil code, the principles provided in Article 2 are not compatible with an interpretation of the said clause in a way that could not have been foreseen by a reasonable well-informed and normally diligent contractor which is for the national court to determine.

4.1 Directive 2004/18 and Contract Performance

AG Sánchez-Bordona starts the analysis by investigating the application of Article 2 of Directive 2004/18 on principles of procurement to an incident that takes place in contract performance. In this context, the complication arises not only from the fact that Directive 2004/18 concerns the coordination of the procedures for the award of public contracts, but also from its Article 2 regulating principles of awarding contracts.¹ That being said, the AG notes that though differently from Directive 2014/24, Directive 2004/18 does not have a specific chapter on contract performance, it nevertheless includes references to contract performance, mainly subcontracting (Article 25) and conditions for performance of contracts (Article 26).² Additionally, even in the absence of a specific provision regulating modifications to contracts during their term, Directive 2004/18 has been already interpreted by the CJEU in a way that precludes material amendments without a new procedure.³

The AG proposes that the application of Directive 2004/18 to the dispute at hand may arise from the following presumptions: (i) the interpretation of the contract to imply obligations not explicitly provided constitutes contract modification, (ii) contract documents were incompatible with principles of award contracts during and (iii) warranty card is a contract performance condition.⁴ Focusing on the last premise, the AG establishes that there is no obstacle to recognising the warranty card as a condition for the performance of the contract under Article 26 of Directive 2004/18.⁵ As a result, the question would be whether the said condition for performance is compatible with principles of non-discrimination, equal treatment and transparency.⁶ Relying on CJEU case law on Directive 2014/24, AG submits that under Directive 2004/18, the principles of procurement are not confined to the stage of the award of a contract but are to be complied with at every stage of the life cycle of a public contract.⁷ As a preliminary observation before answering the question, AG states that an interpretation of Article 2 of Directive 2004/18 can be given in this context as it also extends to contract performance.⁸

4.2 Contract Interpretation under the Shadow of the Principle of Transparency

Before discussing whether the interpretation of a contract clause complies with Directive 2004/18, the AG notes that it is for the national court to interpret the contract considering the wording of the clauses, the intention of the parties and the national law applicable.⁹ In this context, there were two options for the referring court: (i) the warranty card regulated the period exhaustively and the renewal is not possible or (ii) the warranty period is renewed as a result of the referral to the Civil Code.¹⁰ Had the national court accepted the first option, there would be no request for a preliminary ruling to begin with; this indicates that the national court does not rule out the application of the Civil Code by analogy, as alleged by the contracting authority.¹¹ As a result, this interpretation by the national court is also the underlying premise that the AG reflects on.¹²

By taking the interpretation of the national court as a starting point, the AG starts its analysis from the principle of transparency and its dual roles: (i) to provide publicity to ensure competition and impartiality of the procedure and (ii) to ensure all reasonably informed tenderers exercising ordinary care can understand and interpret conditions the same way.¹³ The latter seems to be the most important aspect where the AG investigates whether the contractors were in a position to know what they were committing to with regard to the terms of the warranty card as interpreted by the contracting authority.¹⁴

Referring to Court’s finding in Case C‑27/15 Pizzo ¹⁵ -which provided that exclusion due to an interpretation of the national law which participants in the award procedure (especially in the case of foreign operators) could not reasonably foresee was not acceptable and established that the principle of equal treatment and obligation of transparency were not complied with-  the AG argues that if his arguments concerning the application of the principles of procurement to contract performance are accepted, the reasoning in Pizzo can also be extended to contract performance.¹⁶ As a result, according to the AG, what should be assessed by the referring court is whether the discussed interpretation of the warranty card was reasonably foreseeable by a diligent operator.¹⁷ The answer to this depends on whether attention is paid to the strict and literal terms of the warranty or the subjective factors regarding the operator, as well as the contractual and legislative context.¹⁸ Regardless of the method chosen, the AG provides that the answer is to be determined based on the knowledge of the operators of national law and the level of legal certainty that should be provided to economic operators in public procurement.¹⁹

In this context, as the duration of the guarantee period is a relevant factor in the preparation of tenders, unless provided with the specifications and other contract documents, economic operators from other Member States would be disadvantaged if they face an interpretation of the contract that they could not reasonably have foreseen.²⁰ Transparency and legal certainty are only upheld when all interested economic operators understand the terms of the contract, content and scope.²¹ Though it is not logical for a contracting authority to specify all applicable legislation, this does not mean that contractual obligations that are not foreseeable should, nevertheless, be applicable.²² It is for the national court to determine whether such an interpretation of warranty allowing the application of the guarantee provisions concerning contracts of sale was acceptable.²³

The AG’s answer to the question referred to is that while the principles incorporated in Article 2 of the Directive 2004/18 do not preclude referrals to the national civil code for matters where the contract is silent, these principles are not compatible with an interpretation leading to an extension of the guarantee period which could not have been foreseen by a reasonably well informed and normally diligent contractor, which is for the national court to determine.²⁴

5. ANALYSIS

At first glance, the Opinion seems aligned with the previous Court rulings, which establish that rules arising from the applicable law cannot be considered incorporated in the tender documents in a way that disadvantages economic operators from other Member States in the contract award phase.²⁵ However, this conclusion is built on an assumption that was not thoroughly elaborated -namely, that the principles of procurement fully extend to the life-cycle of a public contract. It needs to be noted that even Directive 2014/24, which explicitly regulates contract performance under a specific chapter, does so only insofar as performance matters (ie performance conditions, subcontracting, modification and termination) relate to, impact or constitute a contract award.

Though the AG suggests that the warranty card is a contract performance condition under Article 26 of Directive 2004/18, the fact that principles of procurement apply to performance conditions -eg they should not be discriminatory- does not necessarily mean those principles under Directive 2004/18 also apply to whether the contracting parties intended to incorporate the relevant provision of the Civil Code into their contract as a performance condition based on the interpretation of the warranty card. The key issue is not whether an obligation is legal under the Directive as a contract performance condition but whether a provision determining the scope of obligation is even incorporated into the contract in the first place. AG’s finding that the warranty card is a contract performance condition does not, in itself, justify applying principles of procurement to the question of whether the parties intended to extend the period of warranty based on the interpretation of the contract.

Any assessment of whether the contracting authority’s interpretation disadvantages economic operators from other Member States—and whether this is precluded by EU law—should follow only if the national court first accepts that interpretation under national law, not the other way around. Even in that case, it is doubtful that the subsequent assessment falls within the scope of Directive 2004/18.

6. CONCLUSION

The AG Opinion is thought-provoking as it touches upon matters such as the application of public procurement principles to contract performance and the impact of public procurement law on the application and interpretation of contract law. The dispute concerns the central questions of the PurpLE project as the intersection of contract law and public procurement law is at the cornerstone both of the dispute and the project. Though the dispute before the national court is intriguing, in this context, it is important to emphasise that due to the nature of the preliminary reference procedure, an answer will be given by the CJEU to the extent the matter is a question of EU law. As a result, in principle, the answer will not provide a comprehensive analysis of the relationship between contract law and public procurement law, which is subject to national law within the limits of the EU law. Nevertheless, CJEU’s answer on the application of principles of procurement to aspects not explicitly harmonised by the Public Procurement Directives will bring significant ramifications.

In this context, if the Court agrees with the AG’s view that principles of procurement in Article 2 of Directive 2004/18 (and Article 18 of Directive 2014/24) apply to the interpretation, incorporation and implication of terms, then not only the application of contract law rules by analogy but also the application of implied contract terms or application of default rules of contract law to the extent not explicitly regulated by the contract may risk being not reasonably foreseeable by a diligent operator from another member state in case a contract is silent in a matter. If the Court disagrees with the AG’s view and holds that Article 2 of the Directive 2004/18 is not relevant to the dispute at hand as the secondary legislation merely harmonizes the rules on the award of public contracts and not the interpretation of public contracts, the question for the Court would be whether such application of Polish Civil Code to the public contract as alleged by the contracting authority precluded by any other EU law on the basis that it puts economic operators from other member states at a disadvantaged position.

REFERENCES

1. Opinion of Advocate General Campos Sánchez-Bordona delivered on 6 February 2025 on Case C-82/24 Veolia Water Technologies and Others [2025] ECLI:EU:C:2025:66 para 36.
2. Ibid paras 37-39.
3. Ibid para 40, see also Case C-549/14 Finn Frogne A/S v Rigspolitiet ved Center for Beredskabskommunikation [2016] ECLI:EU:C:2016:634.
4. Opinion of AG Campos Sánchez-Bordona on Case C-82/24 Veolia Water para 41.
5.  Ibid paras 42-47.
6. Ibid para 48.
7. Ibid paras 49-50. See also Case C-63/18 Vitali SpA v Autostrade per l’Italia SpA [2019] ECLI:EU:C:2019:787 para 39; Case C-927/19 ‘Klaipėdos regiono atliekų tvarkymo centras’ v UAB [2021] ECLI:EU:C:2021:700 para 90; Case C- 295/20 UAB „Sanresa“ v Aplinkos apsaugos departamentas prie Aplinkos ministerijos [2021] ECLI:EU:C:2021:556 para 63.
8. Opinion of AG Campos Sánchez-Bordona on Case C-82/24 Veolia Water para 53.
9. Ibid paras 56-57.
10. Ibid para 58.
11. Ibid paras 59-61.
12. Ibid para 62.
13. Ibid paras 63-64.
14. Ibid para 65.
15. Case C-27/15 Pippo Pizzo v CRGT Srl [2016] ECLI:EU:C:2016:404 para 51.
16. Opinion of AG Campos Sánchez-Bordona on Case C-82/24 Veolia Water paras 66 -70.
17. Ibid para 71.
18. Ibid para 72.
19. Ibid para 73.
20. Ibid paras 74-75.
21. Ibid para 76.
22. Ibid paras 77-78.
23. Ibid para 79.
24. Ibid para 81.
25. See Case C-27/15 Pizzo; Case C-309/18 Lavorgna Srl v Comune di Montelanico and Others [2019] ECLI:EU:C:2019:350, Case C-295/20 Sanresa; Case C-403/21 NV Consruct [2023] ECLI:EU:C:2023:47.