Judgment — ECLI:EU:C:2011:721
Date: 2011-11-10
Language of the case: Latvian
Court formation: Second Chamber
Subject matter: Right of establishment;Approximation of laws;Freedom to provide services
Procedure: Reference for a preliminary ruling
Origin: Latvia

Summary of the Judgment 1. Approximation of laws – Procurement procedures of entities operating in the water, energy, transport and postal services sectors – Directive 2004/17 – Field of application – Concession to operate a public service – Definition (European Parliament and Council No 2004/17, Art. 1(2)(d) and (3)) 2. Approximation of laws – Review procedures in respect of the award of public supply and public works contracts and of public contracts in the water, energy, transport and telecommunications sectors – Directives 89/665 and 92/13 (European Parliament and Council No 2007/66; Council Directive 92/13, Art. 2d(1)(b)) 1. A contract by which a contracting party, pursuant to the rules of public law and the terms of the contract which govern the provision of the services in question, does not bear a significant share of the risk run by the contracting authority is to be regarded as a ‘service contract’ within the meaning of Article 1(2)(d) of Directive 2004/17 coordinating the procurement procedures of entities operating in the water, energy, transport and postal services sectors. It is for the national court to assess whether the transaction at issue in the main proceedings must be regarded as a service concession or a public service contract, taking account of all the characteristics of that transaction. In that regard, it is clear from the comparison of the definitions of service contract and service concession, in Article 1(2)(a) and (d) and Article 1(3) of Directive 2004/17 respectively, that the difference between a service contract and a service concession lies in the consideration for the provision of services. A service contract involves consideration that is paid directly by the contracting authority to the service provider while, for a service concession, the consideration for the provision of services consists in the right to exploit the service, either alone, or together with payment. In the case of a contract for the supply of services, the fact that the supplier is not remunerated directly by the contracting authority, but is entitled to collect payment from third parties, meets the requirement of consideration laid down in Article 1(3)(b) of Directive 2004/17. Furthermore, the service concession implies that the service supplier takes the risk of operating the services in question. The absence of a transfer to the service provider of the risk connected with operating the service shows that the transaction concerned is a public service contract and not a service concession. While it is true that that risk may, at the outset, be very limited, for classification as a service concession it is necessary for the contracting authority to transfer to the concession holder all or, at least, a significant share of the risk which it faces. The risk linked to such an operation must be understood as the risk of exposure to the vagaries of the market, which may, in particular, consist in the risk of competition from other operators, the risk that supply of the services will not match demand, the risk that those liable will be unable to pay for the services provided, the risk that the costs of operating the services will not be met by revenue or yet the risk of liability for harm or damage resulting from an inadequacy of the service. By contrast, risks such as those linked to bad management or errors of judgment by the economic operator are not decisive for the purposes of classification as a public service contract or a service concession, those risks being inherent in every contract, whether it be a public service contract or a service concession. (see paras 41-42, 44-45, 48-49, 59, operative part 1) 2. Article 2d(1)(b) of Directive 92/13 coordinating the laws, regulations and administrative provisions relating to the application of Community rules on the procurement procedures of entities operating in the water, energy, transport and telecommunications sectors, as amended by Directive 2007/66, does not apply to public contracts concluded before the expiry of the period for transposition of Directive 2007/66. (see para. 67, operative part 2)