Opinion of Mr Advocate General Lenz delivered on 25 April 1989. - Fratelli Costanzo SpA v Comune di Milano. - Reference for a preliminary ruling: Tribunale amministrativo regionale della Lombardia - Italy. - Public works contracts - Abnormally low tenders - Direct effect of directives in relation to administrative authorities. - Case 103/88.

European Court reports 1989 Page 01839
Swedish special edition Page 00083
Finnish special edition Page 00095

Opinion of the Advocate-General


Mr President,

Members of the Court,

A - Facts of the case

1 . The proceedings for a preliminary ruling on which I shall give my views today are concerned with the interpretation and effect of Council Directive 71/305 of 26 July 1971 concerning the coordination of procedures for the award of public works contracts . ( 1 ) The court submitting the questions, the Tribunale amministrativo regionale per la Lombardia, wishes essentially to establish the content and scope of Article 29(5 ) of Directive 71/305, and to ascertain whether it is directly applicable and whether national administrative authorities are entitled - or indeed obliged - to apply Article 29(5 ) even in the face of conflicting national law .

2 . The questions submitted to this court are relevant to the decision on a dispute between Fratelli Costanzo SpA and the Comune di Milano ( Municipality of Milan ) in which the plaintiff contests the procedure for the award of the contract for the modernization of the "G . Meazza Stadium" in preparation for the 1990 World Cup for football . In accordance with Article 24(a)(2 ) of Law No 584 of 8 August 1977, implementing Directive 71/305, the criterion for the award was that of the lowest priced bid, subject to the admission of supplementary bids . Under a transitional arrangement introduced by decree law, intended to accelerate procedures for the award of public works contracts during a two-year period, ( 2 ) the invitation to tender allowed for the automatic exclusion of abnormally low tenders, determined on a purely arithmetical basis . Through the application of that temporary special rule the plaintiff was excluded from the tendering procedure . The plaintiff was the only tenderer whose bid was less than the basic amount of LIT 82 043 643 386 . The contract was won by a consortium ( Ing . Lodigiani S.p.A .) whose tender exceeded the set figure by 9.85 %.

3 . Subsequently the validity of Article 4 of the Decree Law - the legal basis for the accelerated procedure - was disputed and it was not converted into statute . However, administrative measures adopted under the Decree Law were declared definitive .

4 . The plaintiff argues inter alia that the criteria whose application led to its elimination are incompatible with Article 29(5 ) of Directive 71/305 . The national court has put a series of questions to this court concerning the interpretation of that Directive . It also wishes to know whether the defendant municipal authority was "empowered, or obliged, to disregard the domestic provisions which conflicted with the ... Community provision ...".

5 . Reference is made to the Report for the Hearing for a fuller account of the facts of the case and the submissions of the parties .

B - Opinion

6 . Although the questions submitted by the national court were considered in the written procedure to be inadmissible in part, it must be accepted that the request addressed to the Court was legitimate . At most, there may be some doubt as to the admissibility of the questions in so far as they ask whether national law is compatible with Community law . The Court has consistently held that it is not its duty to examine whether national law is compatible with Community law . In such cases the Court regularly reformulates the questions and lays down the guiding criteria on the basis of which the national court may resolve for itself the issue of compatibility .

7 . Whenever questions on the interpretation of Community law are unclear the Court has taken upon itself the task of establishing the relevant issue of Community law and answering the national court accordingly .

8 . The questions referred to the Court should be arranged in a logical order as follows : first, the criteria for the interpretation of Article 29(5 ) of Directive 71/305 must be defined, on the basis of which the compatibility of national legal measures with Community law can be assessed by the national court . Only in the event of their being found to be incompatible does the question arise whether the provision in the Directive is directly applicable . If it is, consideration must be given to the extent to which State bodies - specifically, the administrative authorities of the Member States - are entitled and obliged to give effect to Community law .

9 . Question A of the reference for a preliminary ruling asks, in effect, to what extent the legislative content of Article 29(5 ) of Directive 71/305 must be incorporated in the national provision implementing it . The terms used are somewhat confused, inasmuch as they distinguish between the "provisions as to results" and the "provisions as to form and methods" of a directive . That distinction is an oblique reference to the definition of a directive contained in Article 189 of the EEC Treaty, according to which a directive is binding, as to the result to be achieved, upon each Member State to which it is addressed, but leaves to the national authorities the choice of form and methods . The formulation itself shows that it is inappropriate to distinguish within a directive between provisions as to results and provisions as to form and methods, since by definition a directive is silent as to the form and methods of transposition .

10 . The extent to which a Member State is obliged to incorporate the provisions of a directive without amendments or, conversely, is permitted to depart from them must be determined by the interpretation of the provision at issue . The basis must be the wording of the provision, and the purpose and objectives of the Directive must be ascertained . Article 29(5 ) of Directive 71/305, which is at issue here, is worded as follows :

"If, for a given contract, tenders are obviously abnormally low in relation to the transaction, the authority awarding contracts shall examine the details of the tenders before deciding to whom it will award the contract . The result of this examination shall be taken into account .

For this purpose it shall request the tenderer to furnish the necessary explanations and, where appropriate, it shall indicate which parts it finds unacceptable .

If the documents relating to the contract provide for its award at the lowest price tendered, the authority awarding contracts must justify to the Advisory Committee set up by the Council Decision of 26 July 1971 the rejection of tenders which it considers to be too low ."

11 . Article 29 of Directive 71/305 enumerates the criteria for the award of a contract and lays down the procedure to be followed in each case . The enumeration of the criteria governing the award and the establishment of the procedure to be observed give transparency to what is done and at the same time represent an element of legal certainty . It is precisely the standardization of procedure which that article seeks to achieve that gives potential tenderers a clearer view of the conditions to which they submit when taking part in the tendering procedure . Thus Article 29(5 ) not only requires the awarding authority to examine tenders which are obviously abnormally low in relation to the transaction, and states how that must be done, but also provides a procedural guarantee for the tenderer concerned . He cannot be disqualified on account of an obviously abnormally low tender until an official procedure to examine it has been conducted . ( 3 )

12 . A similar procedural guarantee is contained in the obligation, set out in the last sentence of Article 29(5 ), to state the reasons for the rejection of a tender considered to be too low if the criterion chosen for the award of the contract is that of the lowest price tendered . The commencement, conduct and conclusion of the examination procedure are laid down in binding terms . They constitute a kind of a common minimum standard .

13 . As a rule it is not possible to depart from such "binding" provisions of directives on account of exceptional circumstances or particular urgency unless the directive itself recognizes exceptions of that kind .

14 . By contrast, Article 29(5 ) does not indicate precisely what is to be understood by an "obviously abnormally low tender"; no specific procedure is laid down for determining such a tender . Here there is undoubtedly room for specific provisions in the implementing measures of the Member States . For the same reason it is not absolutely essential for the terms to be reproduced verbatim in the implementing measure . It is more important to emphasize the exceptional nature of the low tender, such that it raises doubts whether the tender is a genuine one . The investigation and, where appropriate, elimination of those doubts is the purpose of the examination procedure . The imbalance between the transaction and the tender is what characterizes the situation envisaged, and this must be reflected in the implementing measure .

15 . Whilst the procedure for designating a tender as being obviously abnormally low is left open, once its abnormality has been affirmed the examination procedure must be initiated . Automatic disqualification would be incompatible with that rule . If an implementing measure meets the criteria set out above, discrepancies in the terms used, such as "abnormally low tenders" instead of "obviously abnormally low tenders" do not make the measure inconsistent with Community law ( Question C(a ) and ( b ) ).

16 . It remains to be determined ( Question B - 1 ) whether a national measure enacted for the implementation of a directive may subsequently be amended by the legislature of the Member State concerned . The first point is that in formal terms a national implementing measure is entirely the same as the autonomous legislation of a Member State . A priori, therefore, it may be amended in just the same way as any other national legal measure . However, in so far as the national legislature was bound by the substance of a directive when adopting the implementing provisions in the first place, the same must necessarily apply to subsequent amendments .

17 . In areas in which the national legislature enjoys some discretion it may certainly introduce subsequent amendments . It is, indeed, in accordance with Community law to introduce improvements by reference to Community provisions where the need arises . Provisions which run counter to the provisions and objectives of a directive are not permitted .

18 . The form to be taken by amendments which are acceptable in substance is determined by national law alone ( Question B - 2 ). Since in formal terms this is autonomous national legislation, procedural principles governing the Community legislative process cannot be transposed to the legal system of a Member State as a supplementary condition of validity . The requirement under Article 190 of the EEC Treaty to state the reasons on which Community acts are based therefore has no bearing on the adoption of national legal provisions .

19 . In Question D of the reference to the Court the Tribunale amministrativo asks whether the municipal authority was bound by Community provisions, in the event that the Court should find the Italian legislation in question to be inconsistent with Article 29(5 ) of Directive 71/305 . Since, as I have already pointed out, it is not for the Court of Justice but for the national court to resolve this point, on the basis of the criteria set out by the Court of Justice, any further discussion must proceed on the assumption that the national implementing measures are incompatible with the Directive .

20 . In determining whether and to what extent the national administrative authorities are bound by Community provisions in the event of inconsistency between Community and national law, a distinction must first be drawn according to the legal nature of the relevant Community measures .

21 . Community regulations, which have general application and are binding in their entirety and directly applicable in all Member States(second paragraph of Article 189 of the EEC Treaty ), partake without qualification of the primacy of Community law and thus have priority over conflicting national law . This is a hierarchy of legal rules established a priori . The application of a regulation must reflect the primacy of Community law .

22 . The effect of a directive calls for a more modulated approach . Since a directive, containing instructions to adopt certain measures, is addressed to the Member State, it does not, in the first instance, give rise to rights or obligations on the part of individuals . The Court has held that exceptions from that rule are possible only where the Member State has failed to comply, or has complied incorrectly, with its obligation under Community law to implement the directive . ( 4 )

23 . The judgments of the Court do not seek to put in question the legal nature of directives but amount to sanctioning the unlawful conduct of a Member State, in the interests of Community citizens . The case-law on the direct applicability of directives is not intended to secure comprehensive observance of the directive otherwise than through its implementation in national law, as is clear from the fact that the provisions of a directive which impose obligations on individuals cannot be directly applicable .

24 . Before a provision of a directive can be directly applicable it must therefore meet specific requirements . In the absence of implementing measures adopted within the prescribed period, individuals may rely upon "the provisions of a directive (( which )) appear, as far as their subject-matter is concerned, to be unconditional and sufficiently precise ... as against any national provision which is incompatible with the directive or in so far as the provisions define rights which individuals are able to assert against the State ". ( 4 ) Where the Community legislature seeks to vest rights in the individual through national law and the obligation of the Member State to grant those rights has become definitive - following the expiry of the prescribed period, for example - the Member State' s failure to act can no longer work to the detriment of the individual .

25 . The situation must be viewed differently if the Member State has already adopted an implementing provision . A distinction must be drawn here between correct and incorrect implementation . If the implementation is correct, the individual will be governed solely by the national measure, ( 5 ) with the result that there will be no possibility of relying upon the directive . ( 6 ) It is therefore not possible to invoke the directive even if the national measure departs, within the permitted limits, from the content of the directive . Incorrect implementation may consist in a legal measure incompatible with the directive ab initio or a subsequent change in the legal situation which only later causes it to be incompatible . In such circumstances the Member States' obligation under Articles 189 and 5 of the EEC Treaty to implement directives fully and accurately continues to subsist or is revived, as the case may be . In such cases, too, the Court of Justice has allowed individuals to rely on the directive . ( 7 ) It should be noted in this connection that the subsequent amendment of the legal situation constitutes a separate act contrary to Community law . For their part, State authorities may not rely against individuals on action by the Member State which is contrary to Community law . ( 8 )

26 . On the assumption that the relevant Italian legal provisions are incompatible with Article 29(5 ) of Directive 71/305, the question arises whether that article is directly applicable . The question whether the administrative authorities are required to take account of it has already received an affirmative answer . The Court has ruled, in its judgment in Case 31/87, ( 9 ) that Article 29 of Directive 71/305 may in principle have direct effect . Although the Court did not give that ruling with express reference to Article 29(5 ) of Directive 71/305, it must be equally valid in respect of that provision : the examination procedure to be commenced in the event of an imbalance between a transaction and a tender which is obviously abnormally low is not subject to any other condition and is laid down in detail . The provision is therefore unconditional and sufficiently precise . Its application does not necessarily presuppose the adoption of further legal measures .

27 . Lastly, Article 29(5 ) of Directive 71/305 is of such a nature as to create rights for individuals . As the Court ruled in the Transporoute ( 10 ) judgment, and confirmed in Case 31/87, ( 11 ) "the aim of the provision ... is to protect tenderers against arbitrariness on the part of the authority awarding contracts ". That aim could not be achieved if it were left to that authority to judge whether or not it was appropriate to seek explanations . The obligation to examine the tender, which has the effect of a procedural guarantee, may be construed as a right vesting in the tenderer who submits an obviously abnormally low tender .

28 . In order to answer the question whether administrative authorities may be entitled, or indeed obliged, to refrain from applying national law which contravenes Community law ( inasmuch as it is incompatible with a directive ), it must first be recalled that :

( i ) Community law forms part of the national legal system; ( 12 )

( ii ) Community law takes precedence over the law of the Member States; and

( iii ) all State authorities are, as a matter of principle, obliged to conduct themselves in accordance with Community law .

29 . The obligation to apply Community law thus also concerns State authorities . When the State as a whole is prohibited from relying against individuals on provisions derogating from the directive which were introduced or maintained in disregard of obligations under Community law, the State authorities are also materially affected . ( 13 ) This comprehensive duty to act in accordance with Community law finds expression in Article 5 of the EEC Treaty .

30 . In previous cases where a national of a Member State has pleaded the direct applicability of the provisions of a directive, the Court has always proceeded on the assumption that he does so in proceedings before the national courts, and that those courts must observe the directly applicable measures as valid Community law . ( 14 )

31 . However that may be, the individual must also have the right to rely on a directly applicable directive in dealings with State administrative authorities . If he succeeds, then the authorities of the Member State have acted in accordance with Community law . From the point of view of Community law there is then no need to bring proceedings before a court of law . Thus the matter does not necessarily have to come before a court . Applied to the present case, this means that if the Comune di Milano had adhered to the procedure under Article 29(5 ) and had taken account of the outcome when making its decision, from the point of view of Community law there would have been no need for proceedings before a court of law .

32 . Such proceedings are required only if the individual has invoked the directly applicable directive unsuccessfully in his dealings with the authorities . In such a case it is the duty of the courts to safeguard the individual' s position with regard to Community law .

33 . From the point of view of the individual it is essential that he should be able to rely on the directly applicable measures . If need be he must take the matter to court, and in doing so may avail himself of the full range of national legal remedies, as if he were basing his case on national law alone . However, the possibilities for relying on a directly applicable provision of a directive do not go so far as to create new procedures for the protection of legal interests . ( 15 )

34 . Since the Court has held in another context that the system of legal protection established by the Treaty, as set out in particular in Article 177, implies "that it must be possible for every type of action provided for by national law to be available before the national courts for the purpose of ensuring observance of Community provisions having direct effect, on the same conditions concerning admissibility and procedure as would apply were it a question of ensuring observance of national law", ( 16 ) it may legitimately be said to represent a form of guarantee of legal redress serving to give effect to directly applicable Community law .

35 . From the point of view of the administrative authorities, on the other hand, a distinction should be drawn according to whether the authorities are in doubt as to the consistency of the national provision with Community law or the dispute has already been the subject of a judicial ruling . In that regard we must base ourselves on established case-law, whereby an individual may rely on such provisions in court proceedings . If he may do so before the courts he must also be accorded the right to do so in dealings with the administrative authorities, so as to ensure that those authorities are fully informed of the individual' s basic position in the matter to be resolved . If, however, the individual has the right to present his arguments to the administrative authorities, then those authorities must be given the right to agree with them . It would indeed be absurd to prevent the authorities from making a decision consistent with Community law, as they are ultimately obliged to do .

36 . The sole question is whether it is possible to oblige them under Community law to do so . In my view it is not possible, because it is not open to the administrative authorities to refer the matter to the Court of Justice and obtain a ruling on the direct applicability of the relevant provision of the directive . If it applies the directly applicable provisions of a directive and disregards conflicting national law, it does so at its own risk and without the endorsement of the Court . In my opinion they are entitled to act in this manner but are not obliged to do so, because the Treaty does not afford it the requisite legal protection for doing so .

37 . That conclusion also resolves the problem raised during the oral procedure by the representative of the Commission, namely whether the Commission has two opportunities to bring an action against a Member State which has not given effect to a directive - first on account of failure to implement it and secondly for failure to apply it . In so far as the administrative authorities are not, I submit, obliged to apply directly a provision in a directive, there is no possibility of bringing an action against a Member State . This is where it differs from a regulation . The administrative authorities of the Member States are not merely entitled but positively obliged to apply a regulation, even in the face of conflicting national law . In doing so they enjoy the protection of Article 189 of the EEC Treaty : the binding nature and direct applicability of a regulation are beyond doubt . The application of provisions of that kind falls within the normal duties of all administrative authorities .

38 . The counter-arguments, which basically rely on the thesis that the differences between a directive and a regulation have been effaced, do not refute my view, in so far as administrative authorities are not also obliged to observe directly applicable directives . In that regard, the fact that an authority has no legal means of referring the matter to the Court directly for a preliminary ruling does not represent a problem . It will apply the directly applicable provision of the directive only if it is convinced that its applicability is, in the specific circumstances of the case, beyond doubt . In that event it acts as a body giving effect to Community law . For the rest, the duty of the legislature to amend national law is unaffected, since only proper implementation can create the obligation for the administrative authority to give effect to a legal situation consistent with the directive .

39 . The circumstances are similar in the event of a prior judicial ruling . Once the conflict of rules has been resolved in abstracto the administrative authorities cannot be prevented from applying the directly applicable measures in concreto, especially since they are no longer entitled to rely against an individual on the measures contrary to Community law . ( 17 ) The matter need not necessarily have been resolved by a national court but may instead have been settled by the Court of Justice in previous proceedings for a preliminary ruling . Although preliminary rulings do not formally have effect erga omnes, the Court has held in respect of rulings concerning the validity of Community provisions in proceedings under Article 177 of the EEC Treaty that a judgment, although addressed only to the national court which has requested it, is sufficient reason for any other national court to regard the act in question as void for the purposes of a judgment which it has to give . The Court of Justice bases its decision on the requirements of a uniform application of Community law and the need for legal certainty . ( 18 ) An individual must also have the right to rely on a directive in dealings with administrative authorities, and those authorities must be entitled to comply with his request .

40 . Subject to those stringent conditions, a directly applicable provision of a directive may be given the same effect as other provisions of Community law having general application . Since, in those circumstances, the conflict of rules is settled by their abstract hierarchical relationship no further judicial proceedings are needed .

41 . In view of the fact that Article 29(5 ) of Directive 71/305 has been held in a preliminary ruling to be directly applicable, ( 19 ) it may be inferred for the purpose of answering the questions now before the Court that the administrative authorities were entitled to apply Article 29(5 ) of Directive 71/305 directly . It is true that the judgment referred to was not delivered until after the authority had made its decision . ( 20 )

42 . Nevertheless, the illegality of a procedure for the automatic exclusion of an "obviously abnormally low tender" had already been established by the Court . ( 21 ) In substantive law there were therefore cogent grounds for the authority concerned to refrain from applying a legal measure requiring exclusion on a purely arithmetical basis .

43 . Although it is therefore possible to infer justification under Community law for refraining to apply the national legal measures in question, no obligation to do so can be derived from the above considerations . Whenever serious doubts remain as to the applicability of Community law, the administrative authorities must have the opportunity of seeking guidance . Even the courts are at liberty to submit further questions to the Court of Justice for clarification following an earlier preliminary ruling . Indeed, they are entitled to do so whether the earlier ruling relates to another legal dispute or even to the same legal proceedings .


44 . In so far as the parties to the main action are concerned, the proceedings are in the nature of a step in the proceedings before the national court . The decision on costs is therefore a matter for that court . The costs incurred by the Spanish and Italian Governments and by the Commission are not recoverable .

C - Conclusion

45 . ( 1 ) The examination procedure required by Article 29(5 ) of Regulation No 71/305/EEC when tenders are "obviously abnormally low" is indispensable and must therefore be incorporated in national implementing measures ( Question A ). The precise definition of an "obviously abnormally low" tender, on the other hand, is for the national legislature to determine ( Question C ).

( 2 ) In principle, every Member State is entitled to amend the measures adopted to give effect to a directive, provided that the provisions remain, in substance, within the limits laid down by the directive . The form and methods by which amendments are made are governed by national law alone ( Question B ).

( 3 ) In the event that national implementing provisions are incompatible with the directive, the administrative authorities are entitled - and, once the content and scope of the measures have been clarified in judicial proceedings, obliged - to refrain from applying national law . However, if the authority is in doubt as to the legal position it is quite at liberty to seek clarification from the courts, and in doing so may use any means available under national law ( Question D ).

(*) Original language : German .

( 1)1 OJ, English Special Edition 1971 ( II ), p . 682 .

( 2 ) Article 4 of Decree Laws Nos 206 of 25 May 1987, 302 of 27 July 1987 and 393 of 25 September 1987 .

( 3 ) See the judgment of 10 February 1982 in Case 76/81 Transporoute v Minister for Public Works (( 1982 )) ECR 417, at paragraph 18 .

( 4 ) See, for example, the judgment of 6 May 1980 in Case 102/79 Commission v Belgium (( 1980 )) ECR 1473, at paragraph 12; and the judgment of 20 September 1988 in Case 31/87 Beentjes v Netherlands (( 1988 )) ECR 4635, at paragraph 40 .

( 4)5 Judgment of 19 January 1982 in Case 8/81 Becker v Finanzamt Muenster-Innenstadt (( 1982 )) ECR 53, at paragraph 25 .

( 5)6 Judgment of 15 July 1982 in Case 270/81 Felicitas Rickmers-Linie v Finanzamt fuer Verkehrssteuern (( 1982 )) ECR 2771, at paragraph 14, and Case 8/81, supra, at paragraph 19 .

( 6)7 This does not affect the possibility of interpreting an implementing provision on the basis of the directive .

( 7)8 See the judgment in Case 102/79, supra, at paragraph 12 .

( 8)9 See the judgment of 13 February 1985 in Case 5/84 Direct Cosmetics v Commissioners of Customs and Excise (( 1985 )) ECR 617, at paragraph 37 et seq .

( 9)10 Cited above, at paragraph 44 .

( 10)11 Judgment in Case 76/81, cited above, at paragraph 17 .

( 11)12 Cited above, at paragraph 42 .

( 12)13 See the judgment in Case 8/81, cited above, at paragraph 23 .

( 13)14 See the judgment in Case 5/84, cited above, at paragraphs 37 and 38 .

( 14)15 See for example the judgment in Case 8/81, cited above, at paragraph23 .

( 15)16 See the judgment of 7 July 1981 in Case 150/80 Rewe v Hauptzollamt Kiel (( 1981 )) ECR 1805, at paragraph 31 et seq .

( 16)17 See judgment in Case 158/80, cited above, at paragraph 46 .

( 17)18 See the judgment in Case 5/84, cited above, at paragraphs 37 and 38 .

( 18)19 Judgment of 13 May 1981 in Case 66/80 International Chemical Corporation v Amministrazione delle Finanze dello Stato (( 1981 )) ECR 1191 .

( 19)20 See judgment in Case 31/87, cited above .

( 20)21 The judgment in Case 31/87 was given on 20 September 1988, the contested decision on 24 July 1987 ( reference to the Court dated 16 December 1987; first paragraph under heading "Facts of the case ").

( 21)22 Judgment in Case 76/81, cited above .