This article is an excerpt from The Art of Tendering: A Global Due Diligence Guide, which is available for purchase.
In its June 2005 decision in Koppensteiner GmbH v. Bundesimmobiliengesellschaft mbH, the European Court of Justice found that the Austrian government was subject to legal challenge under European law for cancelling a tendering process even if Austria’s domestic laws did not allow for the judicial review of cancellation decisions. The case involved a tendering process for a demolition contract. The government cancelled the process and re-tendered because all the original bids were too high. One of the original bidders challenged that decision, arguing that this amounted to a form of bid-shopping. The Austrian government maintained that its cancellation decisions were not subject to review by national courts:
The Austrian Government submits inter alia that as the contract in the case in the main proceedings was awarded, after the second contract award procedure, to an undertaking other than Koppensteiner and the demolition works have already been completed, the answer to the questions is no longer of any interest since Koppensteiner can now only obtain damages, which are in any event provided for by the BVergG. Moreover, the national court does not have jurisdiction to set aside the withdrawal decision and the answer to the questions will not assist it in resolving the dispute in the main proceedings.
The bidder appealed the issue to the European Court of Justice. While it agreed that Austrian law did not allow for the judicial review of the government cancellation decisions, the European Court of Justice ruled that the European Public Procurement Directive set a higher standard and made cancellation decisions subject to challenge and review by the courts under European law:
It follows that, where national law, even when it is interpreted in accordance with the requirements of Community law, does not make it possible for a tenderer to challenge a decision to withdraw an invitation to tender inasmuch as that decision infringes Community law and on that ground to apply for it to be set aside, that national law does not fulfil the requirements of Articles 1(1) and 2(l)(b) of Directive 89/665.
A national court before which a tenderer applies for a decision to withdraw an invitation to tender to be set aside inasmuch as that decision infringes Community law, and which cannot rule on the application under national law, is therefore faced with the question whether, and if so, under what circumstances, it is required under Community law to declare that such an application for annulment is admissible.
In other words, the European Court of Justice ruled that the Austrian court should disregard Austrian law, since that law did not meet the standards established under European procurement rules. Rather, the Austrian court should instead apply the European rules that allowed for the judicial review of government cancellation decisions.
As this case illustrates, where governments are subject to international tendering rules, their cancellation decisions may be subject to challenge under those international rules even when their domestic rules do not allow for similar challenges.
