**Case C-264/03**

**Commission of the European Communities**

**v**

**French Republic**

(Failure of a Member State to fulfil obligations –– Public contracts –– Directive 92/50/EEC –– Procedures for the award of public service contracts –– Freedom to provide services –– Agency of delegated project contracting –– Persons to whom the task of delegated project contracting may be entrusted –– Exhaustive list of legal persons under French law)

Opinion of Advocate General Poiares Maduro delivered on 24 November 2004

Judgment of the Court (Third Chamber), 20 October 2005

Summary of the Judgment

1.     *Freedom to provide services – Procedures for the award of public service contracts – Contracts excluded from the scope of
Directive 92/50 – Obligation to comply with the fundamental rules of the Treaty*

*(Art. 49 EC; Council Directive 92/50)*

2.     *Freedom to provide services – Procedures for the award of public service contracts – Directive 92/50 – National legislation
permitting the project manager to delegate certain of its responsibilities – Task of agent reserved to exhaustively listed
legal persons under national law – Not permissible*

*(Art. 49 EC; Council Directive 92/50)*

1.     The provisions of the EC Treaty relating to freedom of movement are intended to apply to public contracts which are outside
the scope of Directive 92/50 relating to the coordination of procedures for the award of public service contracts. Although
certain contracts are excluded from the scope of Community directives in the field of public procurement, the contracting
authorities which conclude them are nevertheless bound to comply with the fundamental rules of the Treaty and the principle
of non-discrimination on grounds of nationality in particular. That is particularly the case in relation to public service
contracts the value of which does not reach the thresholds fixed by Directive 92/50. The mere fact that the Community legislature
considered that the strict special procedures laid down in the directives on public procurement are not appropriate in the
case of public contracts of small value does not mean that those contracts are excluded from the scope of Community law.

(see paras 32-33)

2.     A Member State which reserves the task of delegated project contracting to an exhaustive list of legal persons under national
law, by which the contracting authority may, by an agreement in writing and for remuneration, appoint an agent to fulfil,
in its name and on its behalf, all or any of certain of its responsibilities, fails to fulfil its obligations under Directive
92/50 relating to the coordination of procedures for the award of public service contracts, as amended by Directive 97/52,
and under Article 49 EC as regards public service contracts outside the scope of Directive 92/50.

(see paras 64, 71, operative part)

JUDGMENT OF THE COURT (Third Chamber)

20 October 2005 (*)

(Failure of a Member State to fulfil obligations – Public contracts – Directive 92/50/EEC – Procedures for the award of public service contracts – Freedom to provide services – Agency of delegated project contracting – Persons to whom the task of delegated project contracting may be entrusted – Exhaustive list of legal persons under French law)

In Case C-264/03,

ACTION under Article 226 EC for failure to fulfil obligations, brought on 17 June 2003,

**Commission of the European Communities,** represented by B. Stromsky, K. Wiedner and F. Simonetti, acting as Agents, with an address for service in Luxembourg,

applicant,

v

**French Republic,** represented by G. de Bergues and D. Petrausch, acting as Agents, with an address for service in Luxembourg,

defendant,

THE COURT (Third Chamber),

composed of A. Rosas (Rapporteur), President of the Chamber, J. Malenovský, J.‐P. Puissochet, A. Borg Barthet and U. Lõhmus,
Judges,

Advocate General: M. Poiares Maduro,

Registrar: K. Sztranc, Administrator,

having regard to the written procedure and further to the hearing on 7 October 2004,

after hearing the Opinion of the Advocate General at the sitting on 24 November 2004,

gives the following

**Judgment**

1       By its application, the Commission of the European Communities is seeking a declaration by the Court that, by reserving, in
Article 4 of Law No 85‐704 of 12 July 1985 on public project contracting and its relationship to private project management
(JORF of 13 July 1985, p. 7914), as amended by Law No 96‐987 of 14 November 1996 on the implementation of the urban revival
pact (JORF of 15 November 1996, p. 16656) (hereinafter ‘Law No 85-704’), the task of delegated project contracting to an exhaustive
list of legal persons under French law, the French Republic has failed to fulfil its obligations under 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) (hereinafter ‘Directive
92/50’), and, in particular, Articles 8 and 9 thereof, and under Article 49 EC.

**Legal framework**

*Community legislation*

2       Under Article 1(a) of Directive 92/50, ‘public service contracts’ means contracts for pecuniary interest concluded in writing
between a service provider and a contracting authority, to the exclusion of the contracts listed in Article 1(a)(i) to (ix).
Under Article 1(b) of that directive, ‘contracting authorities’ means ‘the State, regional or local authorities, bodies governed
by public law, associations formed by one or more of such authorities or bodies governed by public law’. Article 1(c) defines
‘service provider’ as ‘any natural or legal person, including a public body, which offers services’.

3       Article 3(2) of Directive 92/50 provides that contracting authorities are to ensure that there is no discrimination between
different service providers.

4       Under Article 6 of Directive 92/50, that directive ‘shall not apply to public service contracts awarded to an entity which
is itself a contracting authority within the meaning of Article 1(b) on the basis of an exclusive right which it enjoys pursuant
to a published law, regulation or administrative provision which is compatible with the Treaty’.

5       Article 7(1)(a) of Directive 92/50 provides that it applies to public service contracts where the estimated value net of value‐added
tax ‘is not less than [EUR] 200 000’.

6       Under Article 8 of Directive 92/50, contracts which have as their object services listed in Annex IA thereto must be awarded
in accordance with the provisions of Titles III to VI thereto, that is by a call for tenders and by being made the subject
of appropriate publicity.

7       Category 12 in Annex IA to Directive 92/50 covers ‘[a]rchitectural services; engineering services and integrated engineering
services; urban planning and landscape architectural services; related scientific and technical consulting services; technical
testing and analysis services’.

8       Under Article 9 of Directive 92/50, contracts which have as their object services listed in Annex IB thereto are to be awarded
in accordance with Articles 14 and 16 of that directive. Article 14 concerns common rules in the technical field and Article
16 notices of the results of award procedures.

9       Categories 21 and 27 in Annex IB to Directive 92/50 comprise ‘legal services’ and ‘other services’ respectively.

10     Article 10 of Directive 92/50 provides that ‘[c]ontracts which have as their object services listed in both Annexes IA and
IB shall be awarded in accordance with the provisions of Titles III to VI where the value of the services listed in Annex
IA is greater than the value of the services listed in Annex IB. Where this is not the case, they shall be awarded in accordance
with Articles 14 and 16’.

*National legislation*

11     The provisions of Law No 85‐704 apply, under Article 1 thereof, to the execution of all construction or infrastructure projects,
and to industrial plant intended for their exploitation where the contracting authorities are:

‘1.      The State or its public undertakings;

2.      Local authorities, their public undertakings, public undertakings for new town planning created under Article L. 321‐1 of
the Code de l’urbanisme (Town Planning Code), groups thereof and associations of different types of public undertaking, referred
to in Article L. 166-1 of the Code des communes (Municipal Code);

3.      The private bodies mentioned in Article L. 64 of the Code de la sécurité sociale (Social Security Code), and consortia and
federations thereof;

4.      The private bodies for low‐rent housing, mentioned in Article L. 411‐2 of the Code de la construction et de l’habitation (Building
and Housing Code), and public/private partnership companies, for rented accommodation subsidised by the State and provided
by such bodies and companies.’

12     Article 2 of that Law defines the contracting authority as:

‘... the legal person, mentioned in Article 1, for which the project is to be built. Since it is primarily responsible for
the project, it performs in that role a task in the public interest from which it may not resile.

...

The contracting authority defines in the planning brief the operation’s objectives and the needs which it must satisfy as
well as the social, town planning, architectural, functional, technical and economic constraints and requirements, and those
of its insertion into the landscape and environmental protection, relating to the execution and use of the project.

...’

13     Article 3 of that Law provides:

‘... the contracting authority may appoint an agent, on the terms set out in the agreement referred to in Article 5, to fulfil,
in its name and on its behalf, all or any of the following responsibilities of the contracting authority:

1.      Defining the administrative and technical terms according to which the project will be worked up and executed;

2.      Preparing for the selection of the project manager, signature of the project management contract, after approval of the choice
of the project manager by the contracting authority, and management of that contract;

3.      Approving the preliminary designs and agreements on the project;

4.      Preparing for the selection of the contractor, signature of the contract for the works, after approval of the choice of the
contractor by the contracting authority, and management of that contract;

5.      Paying the remuneration for the project management and the works;

6.      Acceptance of the works, and carrying out any measures relating to the aforementioned responsibilities.

The agent shall be under no obligation to the contracting authority other than for the proper performance of the responsibilities
for which that authority has made the agent personally responsible.

The agent shall represent the contracting authority as against third parties in the performance of the responsibilities entrusted
to him until the contracting authority certifies completion of his task under the terms set out in the agreement referred
to in Article 5. He may engage in legal proceedings.’

14     Under Article 4 of Law No 85-704:

‘The responsibilities specified in the preceding article may be entrusted, within the limits of their powers, only to:

(a)      The legal persons referred to in Article 1(1) and (2) of this Law, excepting public undertakings engaged in health and social
matters, which may act as agents only for other such undertakings;

(b)      Legal persons of which at least half the capital is held, directly or through an intermediary, by the legal persons referred
to in Article 1(1) and (2) and whose purpose is to render their assistance to the contracting authority, provided that they
are not acting as project manager or contractor on behalf of a third party;

(c)      The private bodies for low‐rent housing mentioned in Article L. 411‐2 of the Code de la construction et de l’habitation, but
only for other low‐rent housing bodies and for projects linked to a subsidised housing operation;

(d)      Local public/private partnership companies governed by Law No 83‐597 of 7 July 1983 on local public/private partnership companies;

(e)      Public undertakings created under Article L. 321‐1 of the Code de l’urbanisme as well as urban land associations approved
or formed automatically under Article L. 322‐1 et seq. of the Code de l’urbanisme;

(f)      Companies formed under Article 9 of Law No 51‐592 of 24 May 1951 concerning the Treasury special accounts for 1951, as amended
by Article 28 of Law No 62‐933 of 8 August 1962 supplementing the Law providing guidance concerning agriculture;

(g)      Any public or private person to which is entrusted the creation of a concerted development area or a housing development ...;

(h)      Companies which enter into the contract prescribed in Article L. 222‐1 of the Code de la construction et de l’habitation for
the execution of operations of urban restructuring of large estates and areas of rundown housing ... .

Those authorities, undertakings and bodies shall be subject to the provisions of this Law in the performance of the responsibilities
which, under this article, are entrusted to them by the contracting authority.

The rules for the award of contracts signed by the agent shall be the rules applicable to the contracting authority, subject
to any necessary adaptations made by decree to take account of the intervention of an agent.’

15     Article 5 of Law No 85-704 provides:

‘The relationship between the contracting authority and the legal persons referred to in Article 4 shall be governed by an
agreement, which shall be void unless it provides for:

(a)      The project which forms the subject‐matter of the agreement, the responsibilities entrusted to the agent, the terms under
which the contracting authority shall certify completion of the agent’s tasks, the detailed arrangements for the agent’s remuneration,
the penalties applicable to the agent in the event of breach of his obligations and the circumstances in which the agreement
may be terminated;

...’

**The pre-litigation procedure**

16     Since it considered that certain provisions of Law No 85‐704, and particularly those relating to the circumstances in which
a contracting authority may have recourse to an operations manager and entrust the performance of some of its responsibilities
to a delegated project contractor, were contrary, first, to the provisions of Directive 92/50 and, second, to those of Article
49 EC, the Commission, by letter of 25 July 2001, gave the French Republic formal notice to submit its observations.

17     By letter of 8 March 2002, the French authorities rejected the Commission’s complaints, save those relating to operations
management governed by Article 6 of Law No 85‐704. They admitted, in that regard, that the task of operations management is
a supply of services for the purposes of Community law and stated that it was thenceforth to be made subject to the new French
Code des marchés publics (Code on Public Procurement).

18     Unsatisfied by that answer, the Commission, on 27 June 2002, sent the French Republic a reasoned opinion, requesting it to
adopt the measures necessary to comply with the opinion within two months of its notification.

19     By letter of 14 October 2002, the French Republic informed the Commission that it adhered to the points of view set forth
in its letter of 8 March 2002.

20     Since it considered that the failure to fulfil obligations was persisting in relation to delegated project contracting, the
Commission decided to bring this action.

21     Since the lodgement of the application in this action, the French authorities have adopted Order No 2004‐566 of 17 June 2004
amending Law No 85‐704 (JORF of 19 June 2004, p. 11020), which amends that Law by allowing the agency of delegated project
contracting to be henceforth entrusted to any public or private person, thus removing the requirement that the agent be a
legal person under French law, subject however to compliance with certain rules on disqualification intended to prevent conflicts
of interest. According to the French Government, that amendment is not the result of this action and makes no difference to
the point of law which it is defending in this connection.

**The action**

*Arguments of the parties*

22     The Commission claims that, by reserving, in Article 4 of Law No 85‐704, the task of delegated project contracting to certain
exhaustively listed categories of legal persons under French law, the French Republic has failed to fulfil its obligations
under Directive 92/50 and, in particular, Articles 8 and 9 thereof, and under Article 49 EC.

23     According to the Commission*,* the agency of a delegated project contractor is a public service contract within the meaning of Article 1(a) of Directive
92/50. The tasks subject to the agency come within Category 12 in Annex IA to that directive, save for tasks of representation,
with the result that the provisions of Law No 85‐704 do not comply with Article 8 of that directive. As regards agencies exclusively
or principally covering tasks of representation, they fall under Annex IB to Directive 92/50, with the result that that law
does not comply with Article 9 of the same directive either.

24     In addition, the Commission asserts that, in relation to agencies of project contracting of a value lower than the thresholds
fixed by Directive 92/50, as well as agencies covering exclusively or principally the services mentioned in Annex IB thereto,
Article 4 of Law No 85‐704 constitutes a restriction on the principle of the freedom to provide services enshrined in Article
49 EC. Such a restriction can be justified neither by Articles 45 EC and 55 EC, since the tasks concerned do not include participation,
even on an occasional basis, in the exercise of public authority, nor by Articles 46 EC and 55 EC, since the grounds of public
policy, public safety and public health do not apply in the circumstances of this case.

25     The French Government contends that the agency agreement of delegated project contracting provided for by Law No 85-704 is
not a commercial contract and does not come within the scope of Directive 92/50. The agent participates in a task in the public
interest and cannot be regarded as being a service provider. The agent represents the contracting authority, which is, essentially,
the function of the agency. In that context, responsibilities are transferred to the agent, accompanied by a power to take
decisions. The function of representation is inseparable from all the actions carried out by the agent on behalf of the principal.
In exercising his powers, which are in effect those of a contracting authority, the agent is subject to the Community directives
relating to public procurement.

26     The French Government also relies on Case C-399/98 *Ordine degli Architetti and Others* [2001] ECR I‐5409 relating to the application of Council Directive 93/37/EEC of 14 June 1993 concerning the coordination
of procedures for the award of public works contracts (OJ 1993 L 199, p. 54). It follows from the Court’s reasoning in that
judgment, which is applicable by analogy to the facts of this case, that a contract for pecuniary interest, if it constitutes
a contract of agency, may fall outside the scope of the Community directives relating to public procurement. It is sufficient
that the agent is himself subject to the obligations arising from those directives. Law No 85‐704 makes contracts concluded
by the agent subject to the same obligations as they would be were they concluded by the contracting authority.

27     Since the agency agreement of delegated project contracting presents, according to the French Government, characteristics
such that it cannot be treated in the same way as a contract for the supply of services, Article 4 of Law No 85‐704 is not
contrary to Article 49 EC.

*Findings of the Court*

Preliminary observations

28     Article 3 of Law No 85‐704 provides that the contracting authority may appoint an agent, on the terms set out in the agreement
referred to in Article 5 of that law, to perform, in its name and on its behalf, all or any of certain of its responsibilities.
Article 4 of that law reserves the task of delegated project contracting to certain exhaustively listed categories of persons.
The French Government has not denied that those persons must, as the Commission claims, be legal persons under French law.

29     Admittedly, since the commencement of this action, the French authorities have amended Law No 85‐704 by allowing the agency
of delegated project contracting henceforth to be entrusted to any public or private person, thus abolishing the requirement
that the agent be a legal person under French law. It is appropriate none the less to point out that the question whether
a Member State has failed to fulfil its obligations must be determined with reference to the situation prevailing in the Member
State at the end of the period laid down in the reasoned opinion (see, among others, Case C‐63/02 *Commission* v *United Kingdom* [2003] ECR I-821, paragraph 11, and Case C‐313/03 *Commission* v *Italy*, not published in the ECR, paragraph 9). The Court cannot take account of any subsequent changes (see, among others, Case
C‐482/03 *Commission* v *Ireland*, not published in the ECR, paragraph 11, and Case C-341/02 *Commission* v *Germany*[2005] ECR I‐2733, paragraph 33).

30     In such circumstances, it is important to examine whether Article 4 of Law No 85‐704 complies, first, with the provisions
of Directive 92/50 and, second, with the principle of freedom to provide services enshrined in Article 49 EC.

31     So far as concerns the alleged infringement of Directive 92/50, it must be ascertained, first, whether, and if so to what
extent, the agency contract of delegated project contracting, as defined by Law No 85‐704, falls within the scope of that
directive. In that regard, it is appropriate to observe that that directive does not apply to contracts of a value below the
threshold fixed therein.

32     As regards the complaint alleging breach of Article 49 EC, it is appropriate to point out that the provisions of the EC Treaty
relating to freedom of movement are intended to apply to public contracts which are outside the scope of Directive 92/50.
Although certain contracts are excluded from the scope of Community directives in the field of public procurement, the contracting
authorities which conclude them are nevertheless bound to comply with the fundamental rules of the Treaty and the principle
of non-discrimination on grounds of nationality in particular (see, to that effect, Case C‐324/98 *Telaustria and Telefonadress* [2000] ECR I‐10745, paragraph 60; Case C‐92/00 *HI* [2002] ECR I‐5553, paragraph 47, and the order of 3 December 2001 in Case C‐59/00 *Vestergaard* [2001] ECR I‐9505, paragraph 20).

33     That is particularly the case in relation to public service contracts the value of which does not reach the thresholds fixed
by Directive 92/50. The mere fact that the Community legislature considered that the strict special procedures laid down in
the directives on public procurement are not appropriate in the case of public contracts of small value does not mean that
those contracts are excluded from the scope of Community law (see the order in *Vestergaard*, paragraph 19). Likewise, contracts outside the scope of Directive 92/50, such as concession agreements, continue to be subject
to the general rules of the Treaty (see, to that effect, Case C-231/03 *Coname* [2005] ECR I‐7287, paragraph 16).

34     Finally, it is appropriate to point out that, so far as any given Member State is concerned, activities which in that State
are connected, even occasionally, with the exercise of official authority do not come within the scope of Article 49 EC, by
virtue of the first paragraph of Article 45 EC and Article 55 EC.

The complaint alleging infringement of Directive 92/50

35     The expression ‘public service contracts’ is defined in Article 1(a) of Directive 92/50. That provision states that such contracts
are contracts for pecuniary interest concluded in writing between a service provider and a contracting authority.

36     In order to establish whether the agency agreement of delegated project contracting within the meaning of Law No 85‐704 falls
within the scope of Directive 92/50, it is necessary to examine whether the criteria established in Article 1(a) of that directive
are met. Since that provision makes no express reference to the law of the Member States for the purpose of determining its
meaning and scope, there is no need to inquire as to how French law categorises such agreements.

37     In the present case, it appears that the said criteria are met.

38     First of all, Article 5 of Law No 85‐704 provides that the relationship between, on the one hand, the contracting authority
and, on the other, the delegated project contractor is to be defined by an agreement, concluded between them in writing. Furthermore,
it is clear from the same provision that the delegated project contractor receives remuneration. Therefore, that agreement
may be regarded as a contract for pecuniary interest, concluded in writing.

39     Next, so far as concerns the expression ‘contracting authorities’, they are defined in Article 1(b) of Directive 92/50 as
‘the State, regional or local authorities, bodies governed by public law, associations formed by one or more of such authorities
or bodies governed by public law’.

40     Article 1 of Law No 85‐704 provides that the persons which can perform the functions of the contracting authority are the
State and its public undertakings, local authorities, their public undertakings, public undertakings for new town planning,
groups thereof and associations of different types of public undertaking. The private bodies mentioned in Article L. 64 of
the Code de la sécurité sociale may also conclude agency agreements of delegated project contracting under that law, as may
consortia and federations thereof, as well as private low‐rent housing bodies and public/private partnership companies, for
rented accommodation subsidised by the State and provided by such bodies and companies.

41     In this case, it is not disputed that those persons may be ‘contracting authorities’ within the meaning of Article 1(b) of
Directive 92/50.

42     Finally, Article 1(c) of Directive 92/50 defines ‘service provider’ as ‘any natural or legal person, including a public body,
which offers services’. Article 50 EC treats ‘services’ as such ‘where they are normally provided for remuneration, in so
far as they are not governed by the provisions relating to freedom of movement for goods, capital and persons’. The contracts
which have as their object services listed in Annex IA to Directive 92/50 are to be awarded in accordance with the provisions
of Titles III to VI and those listed in Annex IB in accordance with Articles 14 and 16 of that directive.

43     The persons which may be appointed to fulfil the responsibilities of the delegated project contractor are listed in Article
4 of Law No 85‐704. It is appropriate to observe that some of those persons may, themselves, be contracting authorities within
the meaning of Article 1(b) of Directive 92/50. While Article 6 of that directive excludes from its scope public service contracts
awarded to an entity which is itself a contracting authority on the basis of an exclusive right which it enjoys pursuant to
a published law, regulation or administrative provision, the fact remains that those conditions are not satisfied in the circumstances
of this case.

44     Persons eligible to be appointed to fulfil the responsibilities of the delegated project contractor may be regarded as ‘service
providers’, since the responsibilities entrusted to them, by the agency agreement of delegated project contracting, under
Article 3 of Law No 85‐704, correspond to the provision of services within the meaning of Community law.

45     In that regard, the argument developed by the French Government to establish that the agent does not provide services cannot
be accepted.

46     It is clear from Article 3 of Law No 85‐704, which lists the responsibilities which the contracting authority may appoint
an agent to fulfil, that the agency agreement of delegated project contracting is not only a contract by which the agent undertakes
to represent the contracting authority. Those responsibilities include various tasks corresponding, first, to providing technical
and administrative assistance and, second, to tasks the object of which is the representation of the contracting authority.

47     First of all, as regards the question whether the function of representation is, as the French Government contends, inseparable
from all the actions performed by the agent on behalf of the principal, it must be observed that it is perfectly feasible
to separate those different tasks. Indeed, the contracting authority may appoint an agent, under Article 3 of Law No 85‐704,
to fulfil all or any of the responsibilities listed in that provision. It is important also to state, as the Advocate General
correctly noted in point 37 of his Opinion, that there is nothing to prevent the possibility of those tasks being subject
to different rules.

48     Next, as regards the nature of those responsibilities, it is appropriate to observe that the question whether the agent contributes
to the performance of a task in the public interest is not decisive in determining whether or not he provides services. It
is not unusual, in the field of public procurement, for the contracting authority to entrust to a third party an economic
task intended to meet a public interest need. That statement is corroborated, in particular, by the fact that Directive 92/50
applies, with certain exceptions, to public service contracts awarded by contracting authorities in the field of defence.

49     Finally, it must be determined whether the agency agreement of delegated project contracting effects a transfer of official
authority, as the French Government argues. The examination of that question presupposes that the fulfilment of the responsibilities
in question involves, on the part of the contracting authority, direct participation in the exercise of official authority.

50     In that regard, the French Government has not asserted the existence of circumstances in which the contracting authority is
responsible for a structure for the ‘in‐house’ management of a public service within the meaning of the Court’s case‐law (see,
to that effect, Case C‐107/98 *Teckal* [1999] ECR I‐8121, paragraph 50, and *Coname*, paragraph 26). Indeed, there is no suggestion that the principal exercises over the agent a control similar to that which
it exercises over its own departments and that the agent carries out the essential part of its activities with the controlling
public authority or authorities (see, to that effect, Case C-26/03 *Stadt Halle and RPL Lochau* [2005] ECR I‐1, paragraph 49).

51     As regards tasks of administrative and technical assistance, such as defining the administrative and technical terms according
to which the project will be worked up and executed, they seem to be provisions of services within the meaning of Article
8 of, and Annex IA to, Directive 92/50 and the agent does not appear to participate in the exercise of official authority.

52     As for agency agreements of delegated project contracting the object of which is tasks involving a representation function,
it is important to point out at the outset that the fact that a service is provided in the performance of such an agreement
is not sufficient to exclude it from the scope of Directive 92/50. That statement is supported by the fact that, as the Commission
points out by way of example, agency agreements between a contracting authority and its lawyer come within the scope of Articles
14 and 16 of Directive 92/50, under Article 9 thereof and point 21 of Annex IB thereto.

53     Under Article 3 of Law No 85‐704, the agent may be entrusted with various tasks involving the function of representing the
contracting authority. Thus it is, particularly, as regards the signature of the project contracting agreement and the works
contract, as well as where the agent pays the service providers and chosen contractors their remuneration.

54     As the Advocate General correctly observes in point 41 of his Opinion, although the agent may be authorised to sign the project
contracting agreement and works contract on behalf of the contracting authority, he does not have sufficient autonomy in the
execution of its acts to enable it to be considered the beneficiary of a transfer of official authority. In fact, according
to Article 2 of Law No 85‐704, the contracting authority, which is primarily responsible for the project, performs in that
role a task in the public interest from which it may not resile. Furthermore, the agent may act only after the contracting
authority has given its approval. As regards the payment of remuneration to the service providers and contractors, it is financed
by the contracting authority, with the result that the agent has no room for manoeuvre in that field either. The agent confines
himself to advancing funds, which are reimbursed to him by the contracting authority.

55     In those circumstances, agency agreements of delegated project contracting the object of which is tasks involving a function
of representing the contracting authority fall within Article 9 of, and Annex IB to, Directive 92/50.

56     The reasoning followed by the Court in paragraph 100 of the judgment in *Ordine degli Architetti and Others*, relating to the application of Directive 93/37, is not such as to undermine that conclusion. The Court observed, as regards
compliance with that directive in cases concerning the execution of infrastructure works in circumstances such as were presented
to it, that it was not necessary for the municipal authorities themselves to apply the award‐of‐contract‐procedures laid down
by that provision. That directive was still given full effect as long as the national legislation allowed the municipal authorities
to require the developer holding the building permit to carry out the work contracted for in accordance with those procedures.

57     That assessment was made in the context of specific legislation in respect of town planning according to which the grant of
a building permit entailed the payment, by its holder, of a contribution to the infrastructure costs engendered by its project.
However, that developer could, by way of total or partial set‐off against the amount due, undertake to execute the infrastructure
works directly. On the latter hypothesis, the Court concluded that it was a public works contract within the meaning of Directive
93/37. Since the municipality had no power to choose who was to be made responsible for executing the infrastructure works,
since, by operation of law, that person is the owner of the land to be developed and the holder of the building permit, it
was possible to find that the award procedures could be applied, in place of the municipality, by the holder of the permit,
the only appropriate person, according to the law, to execute the works, as an alternative to the payment to the municipality
of a contribution to the infrastructure costs. That situation is different from the situation governed by Law No 85‐704, which
leaves to the contracting authority the choice of the agent and does not lay down prior obligations for which the latter’s
remuneration would be consideration.

58     In the light of the preceding considerations, it must be held that an agency agreement, as defined by Law No 85‐704, is a
public service contract within the meaning of Article 1(a) of Directive 92/50 and comes within the scope of the directive.

59     Therefore, it is necessary to examine whether Article 4 of Law No 85‐704, which reserves the role of agent to exhaustively
listed categories of legal persons under French law, complies with the provisions of Directive 92/50.

60     In that regard, it is important to recall that Directive 92/50 is intended to improve the access of service providers to procedures
for the award of contracts in order to eliminate practices that restrict competition in general and participation in contracts
by other Member States’ nationals in particular. Those principles are referred to in Article 3(2) of that directive which
prohibits discrimination between different service providers.

61     It must be held that Article 4 of Law No 85‐704 does not comply with the principle of equal treatment between different service
providers, in as much as that provision reserves the task of delegated project contracting to exhaustively listed categories
of legal persons under French law.

62     Furthermore, without it being necessary even to determine which services come within Annex IA to Directive 92/50 and which
come within Annex IB thereto, as well as, in that context, what effect the application of Article 10 thereof may have, it
is established that Law No 85‐704 prescribes no procedure for putting the choice of agent out to competition.

63     In those circumstances, the complaint alleging infringement of Directive 92/50 is well founded.

The complaint alleging breach of Article 49 EC

64     For public service contracts outside the scope of Directive 92/50, it remains to decide whether Article 4 of Law No 85‐704
complies with the principle, enshrined in Article 49 EC, of freedom to provide services.

65     It must be observed at the outset that, as stated in paragraphs 49 to 55 of this judgment, an agency agreement of delegated
project contracting, as defined by Law No 85‐704, does not confer on the agent tasks connected with the exercise of official
authority, for the tasks either of administrative or technical assistance or of representation which are entrusted to it.
As a result, the exception under Articles 45 EC and 55 EC does not apply in this case.

66     Article 49 EC prohibits restrictions on freedom to provide services within the European Community in respect of nationals
of Member States who are established in a State of the Community other than that of the person for whom the services are intended.
Furthermore, it is settled case‐law that that provision requires the elimination of any restriction, even if it applies to
national providers of services and to those of other Member States alike, when it is liable to prohibit or impede the activities
of a provider of services established in another Member State where he lawfully provides similar services (see, in particular,
Case C‐262/02 *Commission* v *France* [2004] ECR I‐6569, paragraph 22, and Case C‐429/02 *Bacardi* *France* [2004] ECR I-6613, paragraph 31 and the case‐law cited therein).

67     In particular, a Member State may not make the provision of services in its territory subject to compliance with all the conditions
required for establishment, thereby depriving of all practical effectiveness the provisions of the Treaty whose object is
to guarantee the freedom to provide services (see Case C-180/89 *Commission* v *Italy* [1991] ECR I‐709, paragraph 15).

68     In this case, it must be held that Article 4 of Law No 85‐704 is an obstacle to the freedom to provide services for the purposes
of Article 49 EC in that it leads to the reservation of the task of delegated project contracting to an exhaustive list of
legal persons under French law.

69     However, Article 46 EC, read in conjunction with Article 55 EC, allows restrictions on the freedom to provide services justified
by grounds of public policy, public security or public health. The examination of the case‐file has not however enabled any
such justification to be established.

70     In those circumstances, the complaint alleging breach of Article 49 EC is well founded.

71     Having regard to all the preceding considerations, it must be held that, by reserving, in Article 4 of Law No 85‐704, the
task of delegated project contracting to an exhaustive list of legal persons under French law, the French Republic has failed
to fulfil its obligations under Directive 92/50 and Article 49 EC.

**Costs**

72     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. Since the Commission has applied for an order for costs against the French Republic and since the latter has
been unsuccessful, it must be ordered to pay the costs.

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

**Declares that, by reserving, in Article 4 of Law No 85‐704 of 12 July 1985 on public project contracting and its relationship
to private project management, as amended by Law No 96‐987 of 14 November 1996 on the implementation of the urban revival
pact, the task of delegated project contracting to an exhaustive list of legal persons under French law, the French Republic
has failed to fulfil its obligations under Council Directive 92/50/EEC of 18 June 1992 relating to the coordination of procedures
for the award of public service contracts, as amended by European Parliament and Council Directive 97/52/EC of 13 October
1997, and under Article 49 EC.**

[Signatures]

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- Language of the case: French.