Court of Justice of the European Communities (including Court of First Instance Decisions)

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Approximation of laws - Procedures for the award of public works contracts - Directives 71/304/EEC and 71/305/EEC - Registration of contractors - Application by a holding company not itself carrying out the works but availing itself, for the purpose of proving its standing and competence, of references relating to its subsidiaries - Whether permissible - Conditions - Assessment by the national court
(Council Directives 71/304 and 71/305)

Directive 71/304 concerning the abolition of restrictions on freedom to provide services in respect of public works contracts and on the award of public works contracts to contractors acting through agencies or branches and Directive 71/305 concerning the coordination of procedures for the award of public works contracts must be interpreted as meaning that they permit, for the purposes of the assessment of the criteria to be satisfied by a contractor when an application for registration by the dominant legal person of a group is being examined, account to be taken of companies belonging to that group, provided that the legal person in question establishes that it actually has available the resources of those companies which are necessary for carrying out the works.
In a disputed case, it is for the national court to assess, in the light of the factual and legal circumstances before it, whether such proof has been produced.

In Case C-389/92,
REFERENCE to the Court under Article 177 of the EEC Treaty by the Raad van State, Belgium, for a preliminary ruling in the proceedings pending before that court between
Ballast Nedam Groep NV
and
Belgian State
on the interpretation of Council Directive 71/304/EEC of 26 July 1971 concerning the abolition of restrictions on freedom to provide services in respect of public works contracts and on the award of public works contracts to contractors acting through agencies or branches (Official Journal, English Special Edition 1971 (II), p. 678) and Council Directive 71/305/EEC of 26 July 1971 concerning the coordination of procedures for the award of public works contracts (Official Journal, English Special Edition 1971 (II), p. 682),
THE COURT (Fifth Chamber),
composed of: J.C. Moitinho de Almeida, President of the Chamber, R. Joliet, G.C. Rodríguez Iglesias, F. Grévisse (Rapporteur) and M. Zuleeg, Judges,
Advocate General: C. Gulmann,
Registrar: D. Louterman-Hubeau, Principal Administrator,
after considering the written observations submitted on behalf of:
- Ballast Nedam Groep NV, the applicant in the main proceedings, by Marc Senelle, of the Brussels Bar,
- the Commission of the European Communities, by Hendrik van Lier, Legal Advisor, acting as Agent,
having regard to the Report for the Hearing,
after hearing the oral observations of the applicant in the main proceedings and the Commission at the hearing on 13 January 1994,
after hearing the Opinion of the Advocate General at the sitting on 24 February 1994,
gives the following
Judgment

1 By a judgment of 29 September 1992, which was received at the Court on 6 November 1992, the Raad van State, Belgium, referred to the Court for a preliminary ruling pursuant to Article 177 of the EEC Treaty a question concerning the interpretation of Council Directive 71/304/EEC of 26 July 1971 concerning the abolition of restrictions on freedom to provide services in respect of public works contracts and on the award of public works contracts to contractors acting through agencies or branches (Official Journal, English Special Edition 1971 (II), p. 678) and Council Directive 71/305/EEC of 26 July 1971 concerning the coordination of procedures for the award of public works contracts (Official Journal, English Special Edition 1971 (II), p. 682).
2 The question arose in the course of a dispute between Ballast Nedam Groep, a company governed by Netherlands law (hereinafter referred to as "BNG"), and the Belgian State concerning the non-renewal of BNG' s registration as a contractor.
3 In the course of a review of the position of registered contractors provided for by a Royal Decree of 9 August 1982 laying down measures for the application of a Decree-Law of 3 February 1947 organizing the registration of contractors, the Minister for Public Works decided in 1987 not to renew the registration hitherto granted to BNG. The Minister' s decision, which followed an adverse opinion by the Committee for the Registration of Contractors, was taken on the grounds that the company could not be regarded as a works contractor because, as a holding company, it did not itself execute works but, for the purpose of proving its standing and competence, referred to works carried out by its subsidiaries, which were separate legal persons.
4 BNG applied to the Raad van State for the annulment of both the Registration Committee' s opinion and the decision of the Minister for Public Works.
5 The Raad van State considered that the case turned on the interpretation of the Community directives concerning public works contracts and decided to refer the following question to the Court for a preliminary ruling:
"Do Directive 71/304/EEC of 26 July 1971 concerning the abolition of restrictions on freedom to provide services in respect of public works contracts and on the award of public works contracts to contractors acting through agencies or branches and Directive 71/305/EEC of 26 July 1971 concerning the coordination of procedures for the award of public works contracts, in particular Articles 1, 6, 21, 23 and 26, permit, in the event of the Belgian rules on the registration of contractors being applied to the dominant legal person within a 'group' governed by Netherlands law, in connection with the assessment of the criteria relating inter alia to technical competence which a contractor must satisfy, account to be taken only of that dominant legal person as a legal entity and not of the 'companies within the group' each of which, having its own legal personality, belongs to that 'group' ?"
6 Directives 71/304 and 71/305 are designed to ensure freedom to provide services in the field of public works contracts. Thus the first of those directives imposes a general duty on Member States to abolish restrictions on access to, participation in and the performance of public works contracts and the second directive provides for coordination of the procedures for the award of public works contracts (see the judgment in Case 76/81 Transporoute [1982] ECR 417, at paragraph 7).
7 In regard to such coordination, Title IV of Directive 71/305 has laid down a number of common rules on the participation of contractors in public works contracts. Amongst those rules are to be found in particular Article 21, which authorizes groups of contractors to submit tenders and Article 28 which, in connection with the drawing up of official lists of recognized contractors, refers to the criteria for qualitative selection defined by Articles 23 to 26, which also specify the manner in which undertakings may furnish proof that they satisfy those criteria (see the judgment in Transporoute, cited above, at paragraph 8).
8 The applicant in the main proceedings and the Commission maintain, in essence, that for the purposes of the assessment of the criteria which must be satisfied by a contractor when an application for registration submitted by the dominant legal person in a group governed by Netherlands law is being examined, those directives permit account to be taken of companies which, while each retaining its own legal personality, belong to the group.
9 In order to reply to the question raised by the national court, consideration must be given to whether a holding company may be precluded from participating in procedures for public works contracts on the ground that it does not itself carry out such works and, if that is not the case, under what conditions it may show that it has the necessary standing and competence to participate.
10 It is clear from the actual wording of Directive 71/304 that public works contracts may be awarded to persons covered by that directive who carry out the work through agencies or branches.
11 Article 21 of Directive 71/305, one of the common rules on participation in contract award procedures, expressly authorizes groups of contractors to submit tenders and the awarding authority may not require such groups to assume a specific legal form before the contract is awarded. Article 16(k) of Directive 71/305, which is one of the common rules for advertising tendering procedures, provides only that, in open procedures, the notice is to lay down the specific legal form which will, if necessary, be assumed by the group of contractors to whom the contract is awarded.
12 Finally, the sole purpose of the criteria for qualitative selection laid down in Articles 23 to 26 of Directive 71/305, to which Article 28 of that directive on official lists of recognized contractors refers, is to define the rules relating to the objective assessment of the standing and, in particular, technical knowledge and ability of contractors. Article 26(e) provides expressly that a statement of the technicians or technical divisions which the contractor can call upon for carrying out the work, whether or not they belong to the firm, may be furnished as proof of such technical knowledge or ability.
13 As the Commission rightly points out, it is clear from all those provisions that not only a natural or legal person who will himself carry out the works but also a person who will have the contract carried out through agencies or branches or will have recourse to technicians or outside technical divisions, or even a group of undertakings, whatever its legal form, may seek to be awarded public works contracts.
14 Moreover, it should be noted that Council Directive 89/440/EEC of 18 July 1989 amending Directive 71/305/EEC (Official Journal 1989 L 210, p. 1), in particular with the aim of defining more precisely what is meant by public works contracts, expressly stated in Article 1 that such contracts have as their object either the execution, or both the execution and design, of works or a work, or "the execution by whatever means of a work corresponding to the requirements specified by the contracting authority". That definition confirms that a contractor who has neither the intention nor the resources to carry out the works himself may participate in a procedure for the award of a public works contract.
15 Accordingly a holding company which does not itself execute works may not, because its subsidiaries which do carry out works are separate legal persons, be precluded on that ground from participation in public works contract procedures.
16 However, it is for the authorities awarding contracts, as Article 20 of Directive 71/305 specifies, to check the suitability of contractors in accordance with the criteria of economic and financial standing and of technical knowledge or ability referred to in Articles 25 to 28 of that directive.
17 When, in this connection, a company produces references relating to its subsidiaries in order to prove its economic and financial standing and technical knowledge and ability for the purpose of registration on the official list of recognized undertakings, it must establish that, whatever the nature of its legal link with those subsidiaries, it actually has available to it the resources of the latter which are necessary for carrying out the contracts. It is for the national court to assess, in the light of the factual and legal circumstances before it, whether such proof has been produced in the main proceedings.
18 The reply to the question referred to the Court for a preliminary ruling must therefore be that Council Directive 71/304/EEC of 26 July 1971 concerning the abolition of restrictions on freedom to provide services in respect of public works contracts and on the award of public works contracts to contractors acting through agencies or branches and Council Directive 71/305/EEC of 26 July 1971 concerning the coordination of procedures for the award of public works contracts must be interpreted as meaning that they permit, for the purposes of the assessment of the criteria to be satisfied by a contractor when an application for registration by the dominant legal person of a group is being examined, account to be taken of companies belonging to that group, provided that the legal person in question establishes that it actually has available the resources of those companies which are necessary for carrying out the works. It is for the national court to assess whether such proof has been produced in the main proceedings.

Costs
19 The costs incurred by the Commission of the European Communities, which has submitted observations to the Court, are not recoverable. Since these proceedings are, for the parties to the main proceedings, a step in the proceedings pending before the national court, the decision on costs is a matter for that court.

On those grounds,
THE COURT (Fifth Chamber),
in answer to the question referred to it by the Raad van State, Belgium, by judgment of 29 September 1992, hereby rules:
Council Directive 71/304/EEC of 26 July 1971 concerning the abolition of restrictions on freedom to provide services in respect of public works contracts and on the award of public works contracts to contractors acting through agencies or branches and Council Directive 71/305/EEC of 26 July 1971 concerning the coordination of procedures for the award of public works contracts must be interpreted as meaning that they permit, for the purposes of the assessment of the criteria to be satisfied by a contractor when an application for registration by the dominant legal person of a group is being examined, account to be taken of companies belonging to that group, provided that the legal person in question establishes that it actually has available the resources of those companies which are necessary for carrying out the works. It is for the national court to assess whether such proof has been produced in the main proceedings.