A preliminary ruling from the European Court of Justice concerning periods set in national regulation during which damages proceedings must be commenced

On 26th of November 2015 European Court of Justice gave out a new preliminary ruling on time limits set in national procurement regulation relating to periods in which procurement procedure related damages claims have to be commenced with the appropriate national authorities. The request for this preliminary ruling came from Austria. The national laws of Austria state, that an action for a declaration of unlawfulness must be brought within six months of the day following the date of the award of the contract. National legislation of Austria also states, that a claim for damages connected with the unlawful award of a public contract is admissible only if first has been declared that the public procurement procedure, carried out without prior publication of a contract notice or a call for competition, was unlawful. An administrative court in Austria was concerned that their national six month time limit for damages claims might conflict with the procurement directives 89/665/EEC and 2007/66/EC or the general EU-law principles of effectiveness and equivalence.

First the ECJ analyzed if the national legislation of Austria was in accordance with the procurement directives. The court stated, that time limits and set periods are justified in procurement procedures by the need to ensure over time the legal certainty of decisions taken by contracting authorities and contracting entities. According to the procurement directives, member states are allowed to set limitation periods for applications to have a contract declared ineffective, the limitation period must however be at least six months following the date of the conclusion of the contract. Time limits for all other actions related to procurements are to be set at national level. The procurement directives in themselves also do not preclude provisions of national law under which claims for damages are only admissible if there has been a prior finding of an infringement of procurement law. The ECJ did not find the national limitation periods for damages claims in Austria to infringe in themselves with the procurement directives. Next the Court moved on to investigate the accordance of these national time limits with the general union law principle of effectiveness.

According to the principle of effectiveness, national regulation must not render practically impossible or excessively difficult the exercise of rights conferred by EU law. The European Court of Justice found the national limitation periods in Austria to be against this principle. As the time perioid during which a party might claim for damages started from the day following the conclusion of contract and it did not take into consideration if the party with a possible interest for damages actually had the required information on the unlawfulness of the procurement procedure, it made the exercise of procurement procedure rights conferred by the EU-law practically impossible in some circumstances. The court concluded with the following ruling:

“European Union law, in particular the principle of effectiveness, precludes national legislation which makes bringing an action for damages in respect of the infringement of a rule of public procurement law subject to a prior finding that the public procurement procedure for the contract in question was unlawful because of the lack of prior publication of a contract notice, where the action for a declaration of unlawfulness is subject to a six-month limitation period which starts to run on the day after the date of the award of the public contract in question, irrespective of whether or not the applicant in that action was in a position to know of the unlawfulness affecting the decision of the awarding authority.