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

(Failure of a Member State to fulfil obligations Public procurement Articles 43 EC and 49 EC Emergency ambulance services)

In Case C-532/03,

ACTION under Article 226 EC for failure to fulfil obligations, brought on 19 December 2003,

Commission of the European Communities, represented by K. Wiedner and X. Lewis, acting as Agents, assisted by J. Flynn QC, with an address for service in Luxembourg,

applicant,

Ireland, represented by D. O'Hagan, acting as Agent, assisted by A. Collins SC, E. Regan, Barrister at law, and C. O'Toole, Barrister, with an address for service in Luxembourg,

defendant,

supported by:

Kingdom of the Netherlands, represented by H.G. Sevenster, C. Wissels and P. van Ginneken, acting as Agents,

intervener,

composed of V. Skouris, President, P. Jann, C.W.A. Timmermans, A. Rosas, K. Lenaerts, G. Arestis (Rapporteur) and U. Lõhmus, Presidents of Chambers, J.N. Cunha Rodrigues, R. Silva de Lapuerta, J. Makarczyk, M. Ilešič, J. Malenovský and J. Klučka, Judges,

Advocate General: C. Stix-Hackl,

Registrar: K. Sztranc-Sławiczek, Administrator,

having regard to the written procedure and further to the hearing on 4 April 2006,

after hearing the Opinion of the Advocate General at the sitting on 14 September 2006,

gives the following

1. By its application, the Commission of the European Communities asks the Court of Justice to declare that, in permitting Dublin City Council ('DCC'), successor to the Dublin Corporation Fire Brigade, to provide emergency ambulance services without the Eastern Regional Health Authority ('the Authority'), previously known as the Eastern Health Board, having undertaken any prior advertising, Ireland has failed to fulfil its obligations under Articles 43 EC and 49 EC and the general principles of Community law.

Legal context

Community legislation

2. The provisions governing the award of public service contracts are contained in Council Directive 92/50/EEC of 18 June 1992 relating to the coordination of procedures for the award of public service contracts (OJ 1992 L 209, p. 1), as amended by European Parliament and Council Directive 97/52/EC of 13 October 1997 (OJ 1997 L 328; p. 1; 'Directive 92/50'). Article 1(a) of Directive 92/50 provides in particular that public service contracts are contracts for pecuniary interest concluded in writing between a service provider and a contracting authority.

National legislation

3. Section 65(1) of the Health Act 1953, as applicable in 1999, which applies to the present dispute ('the Health Act'), provides:

'(1) A health board may, subject to any general directions given by the Minister and on such terms and conditions as it sees fit to impose, give assistance in any one or more of the following ways to any body which provides or proposes to provide a service similar or ancillary to a service that the health board may provide:

(a) by contributing to the expenses incurred by the body'.

4. Section 57 of the Health Act 1970 provides:

'A health board may make arrangements for providing ambulances or other means of transport for the conveyance of patients ...'

5. Under section 25 of the Fire Services Act 1981:

'A fire authority may carry out or assist in any operations of an emergency nature, whether or not a risk of fire is involved, and a fire authority may accordingly make such provision for the rescue or safeguarding of persons and protection of property as it considers necessary for the purposes of that function.'

6. Section 9(1)(a) of the 1981 Act provides that 'the council of a county' is the fire authority for the purposes of the Act.

Facts and pre-litigation procedure

7. DCC, which is responsible for the fire service in Dublin, provides emergency ambulance services in part of the area served by the Authority, inter alia in the city of Dublin. It provided that service as a health authority until 1960, then as a local authority through its permanent fire brigade service.
8. Pursuant to section 65 of the Health Act and in order to contribute financially to the provision of emergency ambulance services, the East Coast Area Health Board a board responsible for health matters that is separate from the Authority and which performs its functions as delegated by the Authority makes annual payments to DCC, the final amount of which is determined following negotiations between DCC and the East Coast Area Health Board and which represents part of DCC's expenditure on the provision of the services in question.
9. In June 1998, the Eastern Health Board and the Dublin Corporation Fire Brigade drew up a draft agreement on the provision of emergency ambulance services. At the beginning of 2003, that is, as at the end of the period laid down in the reasoned opinion, that draft agreement included the financing arrangements between those two bodies and constituted an overview of the management of the public expenditure relating to that draft agreement.
10. The draft agreement gave rise to a complaint to the Commission in which it was claimed that the draft agreement should have been the subject of prior advertising in accordance with the requirements of Directive 92/50. Correspondence was initiated between the Commission and the Irish authorities with a view to establishing whether there was a contract to which such an advertising requirement would have applied.
11. Having concluded that the provision of emergency ambulance services to the Authority on the basis of an agreement made without any prior advertising was inconsistent with Articles 43 EC and 49 EC, the Commission initiated the infringement procedure laid down in Article 226 EC.
12. After giving Ireland formal notice to submit its observations, the Commission issued a reasoned opinion on 17 December 2002, requesting Ireland to take the necessary steps to comply with that opinion within a period of two months from its receipt.
13. Taking the view that Ireland's response to the reasoned opinion was unsatisfactory, the Commission decided to bring the present action.

The action

Arguments of the parties

14. The Commission claims that the arrangements under which emergency ambulance services are provided by DCC by agreement with the Authority without there having been any prior advertising constitutes a breach of Articles 43 EC and 49 EC and of the general principles of Community law.
15. According to the Commission, in the absence of a written contract, the provision of such services falls outside the scope of Directive 92/50. However, those arrangements should be considered in the light of the fundamental freedoms and the general principles of Community law, which include the principle of transparency.
16. Referring to the judgment in Joined Cases 27/86 to 29/86 CEI and Bellini [1987] ECR 3347, the Commission claims that Community law applies in full to situations which are not covered by the public procurement directives. It submits further that, according to paragraphs 60 to 62 of the judgment in Case C-324/98 Telaustria and Telefonadress [2000] ECR I-10745, compliance with the rules of the EC Treaty relating to the fundamental freedoms in general, and with the principle of non-discrimination on the ground of nationality in particular, implies, notably, an obligation of transparency which allows the services market to be opened up to competition and the impartiality of procurement procedures to be reviewed.
17. The Commission takes the view in this regard that the foregoing considerations apply to the provision of emergency ambulance services. It claims that DCC provides such services for remuneration at the behest of the Authority. The Authority takes an active role in ensuring that the services provided meet its requirements and in controlling the amount to be paid in respect of those services. The Commission notes also that the Authority's financial contribution appears to cover almost all of DCC's expenditure on the provision of those services.
18. Ireland contests the alleged failure to fulfil its obligations.
19. At the hearing, Ireland explained that the present dispute relates to the mobile emergency medical service, which must be provided as a public service. It contends that the Commission has not established that DCC provides emergency ambulance services at the behest of the Authority, or demonstrated that the arrangement between the Authority and DCC constitutes an award of a 'public contract'.
20. As regards the funding of those services, Ireland contends that the Authority's participation is undertaken in the exercise of its functions, in accordance with the provisions of the Health Act, and that its financial contribution covers only part of DCC's expenditure. In the present case, there is no fixed price and the Authority endeavours to control or limit the amount which it is empowered by law to pay to DCC towards the cost of those services.
21. Ireland maintains that section 25 of the Fire Services Act 1981 specifically confers on DCC statutory powers to provide emergency ambulance services. DCC, it argues, has provided such services in its capacity as a local authority which, under national law, is also the fire authority.
22. Ireland submits that the fact that the emergency ambulance and fire brigade services are concentrated in one public body is an advantage in terms of health and public safety, since all members of the combined ambulance and fire brigade services receive emergency medical training.
23. Furthermore, Ireland notes that, according to the Court's judgment in Case 263/86 Humbel and Edel [1988] ECR 5365, those services, which fall within Annex 1 B to Directive 92/50, are not services normally provided for remuneration and, as such, are not covered by Articles 43 EC and 49 EC.
24. As regards possible discrimination on the ground of nationality, Ireland submits that its national law does not prohibit providers of emergency ambulance services from other Member States from establishing themselves or providing services in Ireland.
25. Ireland takes the view that the Commission has failed to identify any directly or indirectly discriminatory provision in the Fire Services Act 1981 or in the Health Acts. In the present case, Ireland relies on the judgment in Case C-70/95 Sodemare and Others [1997] ECR I-3395, in which the Court held that it was not contrary to the principle of equal treatment to reserve participation in the social welfare system of providing old people's homes to non-profit-making private operators.
26. Ireland submits further that Articles 43 EC and 49 EC are inapplicable as the services in question are 'services of general economic interest' and that the level of their public funding is strictly limited to that which is necessary to cover the actual cost of those services.
27. The Kingdom of the Netherlands, which was granted leave to intervene in support of the form of order sought by Ireland by order of the President of the Court of 15 June 2004, submits that the principle of transparency does not apply in a situation in which there is no connecting factor with the internal market, in the present case, the freedom to provide services. As a subsidiary point, the Netherlands claims that, even if the Court were to rule that the principle of transparency must be applied if Directive 92/50 is not applicable, it is for the Member States to define what constitutes a 'sufficient degree of advertising'.

Findings of the Court

28. As a preliminary point, it must be noted that, as is apparent from the form of order sought in the application initiating proceedings, the present action for failure to fulfil obligations does not concern the application of Directive 92/50, but relates to the issue as to whether the provision by DCC, without prior advertising, of emergency ambulance services is contrary to the fundamental rules of the Treaty and, in particular, to the freedom of establishment and the freedom to provide services enshrined in Articles 43 EC and 49 EC respectively.
29. It follows from the case-law of the Court that, without prejudice to the obligation of the Member States, under Article 10 EC, to facilitate the achievement of the Commission's tasks, which consist in particular, pursuant to Article 211 EC, in ensuring that the provisions of the Treaty and the measures taken by the institutions pursuant thereto are applied (Case C-494/01 Commission v Ireland [2005] ECR I-3331, paragraph 42), in an action for failure to fulfil obligations it is incumbent upon the Commission to prove the allegation that the obligation has not been fulfilled. It is the Commission's responsibility to place before the Court the information needed to enable the Court to establish that the obligation has not been fulfilled, and in so doing the Commission may not rely on any presumption (see, in particular, Case 96/81 Commission v Netherlands [1982] ECR 1791, paragraph 6; Case C-404/00 Commission v Spain [2003] ECR I-6695, paragraph 26; and Case C-135/05 Commission v Italy [2007] ECR I-0000, paragraph 26).
30. The Commission claims that the maintenance of an agreement between DCC and the Authority, without any prior advertising, constitutes a breach of the rules of the Treaty and thereby of the general principles of Community law, in particular the principle of transparency.
31. In support of its case, the Commission takes the view that, even in the absence of a written contract detailing the terms of the services to be provided by DCC, the correspondence attached to a letter of 19 September 2002 shows that the scope of those services and the basis on which they are to be remunerated were considered by the parties and formalised in a draft agreement drawn up in June 1998. In particular, in a letter of 15 January 1999 attached to the letter of 19 September 2002, DCC's Finance Officer stated that the negotiations on the funding of the emergency ambulance service had resulted, in June 1998, in an agreement determining future charges by DCC to the Authority.
32. The Commission submits that it seems that DCC and the Authority agreed to enter into a service-level agreement and that a contract was drafted to that end. Therefore, according to the Commission, DCC provides emergency ambulance services at the behest of the Authority and for remuneration.
33. In that respect, it is apparent from the documents before the Court that national legislation empowers both the Authority and DCC to carry out emergency ambulance services. Under section 25 of the Fire Services Act 1981, a fire authority may carry out or assist in any operations of an emergency nature, whether or not a risk of fire is involved, and may accordingly make such provision for the rescue or safeguarding of persons and protection of property as it considers necessary for the purposes of that function. Thus, under section 9 of that Act, a local authority such as DCC is the responsible fire authority.
34. Between 1899 and 1960, DCC provided emergency ambulance services in its capacity as a health authority. It subsequently acted in its capacity as a local authority and, under section 25 of the Fire Services Act 1981, provided those services through its permanent fire brigade service.
35. Consequently, it is conceivable that DCC provides such services to the public in the exercise of its own powers derived directly from statute, and applying its own funds, although it is paid a contribution by the Authority for that purpose, covering part of the costs of those services.
36. In that regard, as follows from the case-law cited in paragraph 29 of this judgment, it is, in the present case, incumbent upon the Commission to place before the Court the information needed to enable the Court to establish that a public contract has been awarded, and in so doing the Commission may not rely on any presumption in that regard.
37. However, neither the Commission's arguments nor the documents produced demonstrate that there has been an award of a public contract, since it is conceivable that DCC provides emergency ambulance services in the exercise of its own powers derived directly from statute. Moreover, the mere fact that, as between two public bodies, funding arrangements exist in respect of such services does not imply that the provision of the services concerned constitutes an award of a public contract which would need to be assessed in the light of the fundamental rules of the Treaty.
38. Since the Commission has not proved that Ireland has failed to fulfil its obligations under the Treaty, the action must be dismissed.

Costs

39. Under Article 69(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party's pleadings. Since Ireland has applied for the Commission to be ordered to pay the costs and the latter has been unsuccessful, the Commission must be ordered to pay the costs.

On those grounds, the Court (Grand Chamber) hereby:

1. Dismisses the action;

2. Orders the Commission of the European Communities to pay the costs.

[Signatures]

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* Language of the case: English.