This article is an excerpt from the 2020 edition of The Art of Tendering: A Global Due Diligence Guide, which is available for purchase.
In its March 2019 decision in Idi Srl v. Agenzia Regionale Campana Difesa Suolo (Arcadis), the European Court of Justice ruled that Italian statutory provisions permitting the disqualification of an insolvent supplier were compliant with European Union procurement rules. The dispute involved a tendering process for project management services. As the Court summarized, the applicant had filed for bankruptcy protection and its disqualification from a bidding process by a purchasing institution was upheld by a trial court as complying with Italian tendering law:
By decision notified on 9 December 2014 (‘the exclusion decision’), Arcadis excluded the Consortium from the public procurement procedure. In that regard, Arcadis based its decision on the fact that, in accordance with Article 38(1) of the Public Procurement Code, the filing of an application by a company for admission to an arrangement with creditors precludes its participation in a public tendering procedure, except if, as distinct from the present case, the debtor has submitted with the application a plan for an arrangement as a going concern (concordato in continuità aziendale).
By judgment of 29 April 2015, the Tribunale amministrativo regionale per la Campania (Regional Administrative Court, Campania, Italy) dismissed the application for annulment brought by Idi against the exclusion decision. That court held that the filing of an application for an arrangement with creditors by TEI amounted to an admission that it was in a crisis situation, which justified the exclusion of the Consortium from any participation in public procurement procedures.
After an appeal of that trial decision was subsequently upheld by an Italian appeal court, the complainant appealed to the European Court of Justice to challenge the validity of the Italian law on the grounds that the Italian statute was inconsistent with European Union procurement rules. However, the European Court of Justice ultimately upheld the Italian law, finding that it was not unnecessarily restrictive since it did not automatically result in the disqualification of insolvent bidders, but included protocols governing whether they should be disqualified or could be permitted to proceed in a bidding process.
As this case illustrates, to defend a procurement decision, it may not be enough to simply prove that it was based on the valid enforcement of existing rules. Rather, in certain instances, the specific local rules that are relied on in making a procurement decision may themselves be subject to challenge to determine whether those local rules are compliant with more globally recognized open procurement standards.
