China and Turkey find access to the EU public procurement market increasingly difficult
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In Poland, contractors from China and Turkey are winning more and more public contracts of increasing value, mainly in the infrastructure sector. As a result, two cases in Poland before the EU Court of Justice (C-266/22, C-266/22) are being watched with great interest to see whether contractors from these countries are entitled to rights under the public procurement directives (Nos. 2014/24 and 2014/25).
Does this mean the end for Chinese and Turkish procurement in the EU? In our view, no, although the situation is complicated.
Bird & Bird's Warsaw team - Tomasz Zalewski and Julita Hoffmann - is preparing a detailed analysis of the situation of Chinese and Turkish contractors in the Polish public procurement market regarding the two cases considered by the court. The article will be published in Rzeczpospolita in June.
In 2022, contractors from Turkey were ranked third place in terms of the highest value of public contracts won by foreign entities in Poland, worth over PLN 2.4 billion. Contractors from Spain and France took first and second places. Chinese contractors, in fifth place, were awarded contracts worth more than PLN 1 billion (China managed to increase the value of contracts in 2022 by 100% compared to 2021).
In case C-266/22, brought by a Chinese consortium member against the Romanian Railway Administration, the Advocate General did not assess the legality of excluding the Chinese, but whether they had the right to bring such an action before the court.
In case C- 652/22, brought by the Turkish contractor Kolin against the Croatian company HZ Infrastruktura, the Advocate General did not assess Strabag’s right to supplement its tender, but, as in the previous case, whether the Turkish contractor had the right to bring such an action at all.
If the court agrees with the Advocates General, this will mean that contractors from non-EU countries which have not concluded the relevant agreements with the EU will not be able to bring actions before the court. The court's case law shows that there is usually agreement between the Advocate General’s opinions and the court's judgment. Therefore, it is highly likely that the court will also find such applications by Chinese and Turkish contractors inadmissible.
Both Advocates General have concluded that Chinese and Turkish contractors do not have the right to make a preliminary reference to the Court of Justice because the Public Procurement Directives do not cover the possibility for them to participate in public procurement in the EU.
The European Commission went even further than the Advocates General in its position on these cases. In its view, contractors from third countries other than those referred to in Article 43 of Directive 2014/25 are not entitled to participate in public procurement procedures in the Union and may therefore be excluded from those procedures. This is in line with the Commission's communication, i.e. "Guidelines on the participation of third country tenderers in the Union public procurement market and the introduction of goods from third countries into that market."
The above cases raise another very important issue: Can Member States regulate the access of contractors from third countries, i.e. China and Turkey, on their own?
Further clarification is needed to assess whether the decision on access to contracts by third-country contractors is the so-called exclusive competence of the Union (common commercial policy) or a shared competence between the Union and the Member States (meaning that the Member States can exercise their competence to the extent that the Union has not exercised it).
In case C-652/22, the governments of countries, such as Croatia, Estonia, Austria, Denmark, France and Poland have expressed their views on this issue, and it follows that each country has a slightly different position. Poland, for example, considers that each country is free to regulate access to public procurement for contractors from third countries that have not concluded relevant agreements with the EU. Austria, Denmark and France, on the other hand, believe that this is an exclusive competence of the EU and that countries cannot regulate this themselves through legislation, but can take specific measures on a case-by-case basis.
The issue of Chinese and Turkish contractors participating in Poland and other EU countries is causing a lot of emotion with the emergence of the above mentioned cases in the Court of Justice. Indeed, the consequences of closing the market to Chinese and Turkish contractors would be very serious, ranging from excluding contractors to terminating contracts already concluded with these contractors. This therefore requires proactive analysis by all parties concerned, both contractors and contracting authorities.
