Judgment;Summary — ECLI:EU:C:2025:4
Date: 2025-01-09
Language of the case: Czech
Court formation: Third Chamber
Subject matter: Right of establishment;Approximation of laws;Freedom to provide services
Procedure: Reference for a preliminary ruling
Origin: Czechia

Summary C-578/23 – 1 
Case C-578/23 
Summary of the request for a preliminary ruling pursuant to Article 98(1) of 
the Rules of Procedure of the Court of Justice 
Date lodged:  
19 September 2023 
Referring court:  
Nejvyšší správní soud (Supreme Administrative Court) (Czech 
Republic) 
Date of the decision to refer:  
12 September 2023 
Applicant: 
Česká republika – Generální finanční ředitelství (Czech Republic – 
General Tax Directorate) 
Defendant:  
Úřad pro ochranu hospodářské soutěže (Office for the protection of 
competition) 
  
Subject matter of the main proceedings 
The subject matter of the dispute is whether the conditions for the award of a 
public contract by negotiated procedure without prior publication were fulfilled 
and, inter alia, whether the legal predecessor of the applicant, 1 at the time of the 
conclusion of the contract for system integration into the ADIS information 
system (‘the original contract’), was aware of the future need for basic servicing 
of the ADIS information system (‘the ADIS IS’) and whether it should have 
reasonably expected such a need, or whether it anticipated the need to award 
follow-up contracts. 
 
1 Czech Republic – Ministry of Finance. The applicant was established in 2013 as an independent 
organisational unit of the State and, as regards matters of tax administration, succeeded the 
Ministry of Finance, to which, however, it remains subordinate. 
EN 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-578/23 
 
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Subject matter of the request 
The referring court is uncertain whether, when assessing the substantive condition 
for a negotiated procedure without prior publication, it is necessary to take 
account of the factual circumstances and the legal situation at the time the original 
contract was concluded. 
Question referred for a preliminary ruling 
‘Are the factual circumstances and legal situation in which the contract for the 
original performance, on which the follow-on public contracts are based, was 
concluded to be taken into account in assessing whether the substantive condition 
for the use of the negotiated procedure without prior publication has been 
fulfilled, that is to say, whether or not the contracting authority has created a state 
of exclusivity by its action, for the purposes of Article 31(1)(b) [of Directive 
2004/18]?’ 2 
Provisions of European Union law relied on 
Article 28 of Directive 2004/18 (Public procurement procedures). 
Article 31(1)(b) of Directive 2004/18 (Negotiated procedures without prior 
publication). 
Provisions of national law relied on 
Under Paragraph 21(2) of Zákon č. 137/2006 Sb., o veřejných zakázkách (Law 
No 137/2006 on public contracts) (‘Law on public contracts’), the contracting 
authority may award a public contract in an open or restricted procedure and, 
under certain conditions, in a negotiated procedure with prior publication or a 
negotiated procedure without prior publication. 
Under Paragraph 23(4)(a) of the Law on public contracts, the contracting authority 
may award a public contract by negotiated procedure without prior publication 
also when the public contract may only be performed by a particular supplier for 
technical or artistic reasons, for the reason of protection of exclusive rights, or for 
reasons arising from specific legislation. 
 
2 Directive 2004/18/EC of the European Parliament and of the Council of 31 March 2004 on the 
coordination of procedures for the award of public works contracts, public supply contracts and 
public service contracts (‘Directive 2004/18’). 
CZECH REPUBLIC – GENERÁLNÍ FINANČNÍ ŘEDITELSTVÍ 
 
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Succinct presentation of the facts and procedure in the main proceedings 
1 The applicant’s predecessor in law concluded the original contract with IBM 
World Trade Europe/Middle East/Africa Corporation on 29 June 1992. On the 
basis of that contract, the ADIS IS was created, which remains the key 
information system for tax administration in the Czech Republic. 
2 On 1 March 2016, the applicant initiated a negotiated procedure without prior 
publication pursuant to Paragraph 23(4)(a) of the Law on public contracts and 
awarded the public contract ‘Basic post-warranty servicing of the ADIS 
application in 2016’ on 20 May 2016. It did so on the basis of an expert report and 
legal opinion, for technical reasons 3 and to protect the copyright of IBM Česká 
republika, spol. s r.o. (‘the supplier’) 4 in the ADIS IS source code. The subject 
matter of the performance was basic post-warranty maintenance of the ADIS IS. 
On 20 May 2016, the applicant concluded a contract with the supplier for public 
contract work. The price for the public contract amounted to CZK 33 294 389, 
excluding VAT. 
3 On 9 October 2017, the defendant decided that the applicant had committed an 
offence as the conditions for the possibility of using the negotiated procedure 
without prior publication pursuant to Paragraph 23(4)(a) of the Law on public 
contracts had not been fulfilled. The applicant had failed to demonstrate that the 
public contract could, for technical reasons, only have been performed by the 
supplier approached. At the same time, in the view of the applicant, the need to 
protect [the supplier’s] exclusive rights was caused by the previous action of the 
applicant’s predecessor in law. 
4 The applicant lodged an appeal against that decision, which was dismissed by the 
chairman of the defendant. He concurred with the defendant’s conclusions and 
added that it was not a technical impossibility for another supplier to perform the 
subject matter of the contract, but a factual consequence of the exclusivity 5 of the 
supplier’s copyrights which did not allow the use of a negotiated procedure 
without prior publication. 
5 The applicant brought an action against the decision of the defendant’s chairman 
before the Krajský Soud v Brně (Regional Court, Brno) (‘the Krajský soud’), 
which dismissed the action. In the view of the Krajský soud, it is possible, by way 
of exception, to award a public contract in a negotiated procedure without prior 
 
3 Without a link to the core and other modules, the independent functioning of the modules and 
the management and development thereof is not possible; the modules cannot be separated; the 
subject matter of the public contract affects current modules; the ADIS IS has been developed 
by the supplier who is the owner of the licence rights and familiar with the ADIS IS; technical 
continuity and development of the ADIS IS are required. 
4 Its sole shareholder in 1992 was IBM World Trade Europe/Middle East/Africa Corporation. 
5 The state of exclusivity is defined in the order for references as ‘the necessity for a contract to 
be performed only by a particular supplier’. 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-578/23 
 
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publication where there are grounds for doing so under Paragraph 23(4)(a) of the 
Law on public contracts (formal condition), but which the contracting authority 
could not have foreseen and which are not attributable to it (substantive 
condition). 
6 The Krajský soud considered it relevant that the applicant’s predecessor in law, by 
its action in concluding the original contract, had created a state of exclusivity as 
regards the supplier’s proprietary copyright. At the same time, it noted that the 
ADIS IS is not an information system which is expected to have a short lifetime. 
In addition, the field of taxation is concerned, which is objectively subject to 
constant change. The need for follow-up technical support must therefore have 
been obvious. 
7 In the view of the Krajský soud, the applicant failed to demonstrate that there was 
only one possible supplier at the time of the conclusion of the original contract 
and further stated that the conditions for the subsequent award had to be assessed 
in the light of the applicable legislation at the time of that award. 
8 The applicant lodged an appeal on a point of law against the judgment of the 
Krajský soud before the referring court. 
The essential arguments of the parties in the main proceedings 
9 The applicant claims that the supplier was the only possible supplier at the time of 
the conclusion of the original contract who was able to provide the required 
performance (supplying servers with its operating system and providing servicing 
and remote monitoring). The applicant’s predecessor could not reasonably have 
foreseen at the time of the conclusion of the original contract that there would be a 
need in the future to provide additional activities necessary for the continued 
operation of the ADIS IS. The applicant did not itself create a state of exclusivity. 
Nor, in the view of the applicant, did its predecessor in law. 
10 The applicant sought to end its dependence on the supplier since it did not have 
access to all the source code of the ADIS IS. However, in 2015 the supplier told 
the applicant that it was not considering transferring the copyright in the ADIS IS. 
At the time of the conclusion of the original contract, it was not even possible to 
obtain a full assignment of the copyright in ADIS as some of the components were 
used commercially worldwide by the supplier and its partners.  
11 At the time the original contract was concluded, there was no legislation 
governing copyright and public procurement. The legal situation at the time the 
original contract was concluded is central to the assessment of the applicant’s 
subsequent action. 
12 If the applicant were now to carry out a procurement procedure for the supply of a 
new information system, it would devalue the funds invested in the ADIS IS and 
CZECH REPUBLIC – GENERÁLNÍ FINANČNÍ ŘEDITELSTVÍ 
 
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would thus run the risk of that action being designated uneconomic and 
ineffectual. 
13 The defendant contends that, on the basis of the exclusivity of the original 1992 
contract, the applicant developed the ADIS IS exclusively by way of a negotiated 
procedure without prior publication until at least the end of 2019 and that the 
expert report does not demonstrate that the successful tenderer was the only 
possible supplier of the system for technical reasons. 
14 It was not established in the administrative proceedings whether a state of 
exclusivity actually exists in connection with the reason of protecting exclusive 
rights. It was sufficient to consider whether a potential state of exclusivity had 
been caused. 
15 It is clear from the wording of the original contract that the subject matter of the 
performance is implementation of a tax administration system in three phases. 
Under the original contract, only the first phase was to be implemented. The ADIS 
IS was therefore expected to operate long term. 
Analysis of the question referred 
16 The referring court first examines the substantive requirement of the 
abovementioned negotiated procedure without prior publication. According to the 
referring court, it is clear from the national case-law of the Nejvyšší správní soud 
that ‘the negotiated procedure without prior publication may be used if the 
reasons for its use are objective, and thus outside the control of contracting 
authority’s control,’ 6 and that ‘it may be inferred unequivocally from the 
conditions laid down in Article 31 of Directive [2004/18] and also 
Paragraph 23(4) of the Law [on public contracts] that a “state of exclusivity” 
(that is to say the necessity for the contract to be performed only by a particular 
supplier) cannot be created by the contracting authority itself’. 7 
17 It also pointed out that recital 50 of Directive 2014/24/EU of the European 
Parliament and of the Council of 26 February 2014 on public procurement and 
repealing Directive 2004/18/EC states that ‘… Exclusivity can also arise from 
other reasons, but only situations of objective exclusivity can justify the use of the 
negotiated procedure without publication, where the situation of exclusivity has 
not been created by the contracting authority itself with a view to the future 
procurement procedure.’ Article 32(2)(b) of that directive provides that the 
negotiated procedure without prior publication may be used for public contracts, 
inter alia, in the case of the protection of exclusive rights, when ‘no reasonable 
 
6 Judgment of the Nejvyšší správní soud of 11 January 2013, Ref. No. 5 Afs 43/2012-54, 
No 2790/2013 Sb. NSS, Ministerstvo zemědělství. 
7 Judgment of the Nejvyšší správní soud of 12 May 2016, Ref. No. 1 As 256/2015-95, 
No 3436/2016 Sb. NSS, Dopravní podnik hl. m. Prahy. 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-578/23 
 
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alternative or substitute exists’ and when ‘the absence of competition is not the 
result of an artificial narrowing down of the parameters of the procurement’. 
Although the period for implementing that directive had not yet expired when the 
tendering procedure was initiated, the referring court assumes that this was merely 
an explicit expression of an existing rule. 8 
18 Although the Court of Justice has not yet considered in its case-law whether it is 
necessary, for the use of the negotiated procedure without prior publication, that 
the reason for which a public contract needs to be awarded only to a particular 
economic operator pursuant to Article 31(1)(b) of Directive 2004/18 is not 
imputable to the contracting authority, the referring court considers the 
interpretation of EU law in that respect to be acte clair. 
19 However, the referring court has doubts as to whether, when assessing that 
substantive condition, it is necessary to take account of the factual circumstances 
and legal situation at the time when the contracting authority is claimed to have 
created a state of exclusivity. In the present case, the question is therefore whether 
the applicant’s predecessor in law, by establishing the proprietary copyrights in 
the original ADIS IS contract in 1992, caused a state of exclusivity in favour of 
the supplier which precludes use of the negotiated procedure without prior 
publication for the follow-on contract in 2016 (that is to say 24 years later). 
20 As regards the factual circumstances and the legal situation at the time of the 
conclusion of the original contract, the Czech Republic (or the Czech and Slovak 
Federal Republic) was not a member of the European Union (or the European 
Economic Community) at that time. Furthermore, there was no relevant national 
legislation on public procurement, merely brief rules on the award of public 
contracts laid down by the government, which were in force as from 1 July 1992, 
that is to say a relatively long time after the negotiations for the conclusion of the 
original contract had begun. The first comprehensive legislation was laid down by 
Zákon č. 199/1994 Sb., o zadávání veřejných zakázek (Law No 199/1994 on the 
award of public contracts), with effect from 1 January 1995. As regards the 
licence conditions governing the ADIS IS, Zákon č. 35/1965 Sb., o dílech 
literárních, vědeckých a uměleckých (autorský zákon) (Law No 35/1965 on 
literary, scientific and artistic work (Law on copyright)), in the version in force 
until 31 December 1993, applied at the time the original contract was concluded. 
In that respect, the applicant’s assertion that there was no legislation governing 
copyright is unfounded, although it cannot be ignored that the experience of 
concluding contracts concerning copyright for complex systems such as the ADIS 
IS was very different at that time. 
21 Thus, at the time of the conclusion of the original contract the applicant’s 
predecessor in law could legitimately have assumed that the subsequent 
performance could be awarded to the same supplier without the need to ensure 
 
8 The referring court refers, for example, to recital 51 of Directive 2014/23/EU of the European 
Parliament and of the Council of 26 February 2014 on the award of concession contracts. 
CZECH REPUBLIC – GENERÁLNÍ FINANČNÍ ŘEDITELSTVÍ 
 
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that other suppliers could also tender for the performance required. In the view of 
the applicant, at the time of the conclusion of the original contract, the supplier 
was the only possible supplier and therefore it did not have automatically to 
presume that other suppliers would also be capable of providing the subsequent 
performance. 
22 In the view of the referring court, in relation to the question submitted for a 
preliminary ruling, there appears to be a contradiction in national case-law. 
23 In its judgment of 30 November 2021, Ref. No. 3 As 60/2020-64, Statutární město 
Brno, the Nejvyšší správní soud concluded that it is necessary to assess the 
creation of exclusivity in the light of the time when such a relationship came 
about, the relevant legislation (including the fact that the Czech Republic was not 
a member of the EU at the time), and commercial practices at that time. In the 
present case, the contracting authority is claimed to have created the state of 
exclusivity in 1998 by laying down the licensing conditions in the contract for 
work on the information system. That view is supported by the fact that, if the 
fault of the contracting authority in awarding the original contract were 
fundamental to fulfilment of the substantive aspect, it would be difficult to apply 
retroactively the current legislation on public procurement by negotiated 
procedure without prior publication. In that context, the principle of non-
retroactivity and legal certainty must also be taken into consideration. A further 
reason for taking account of the factual circumstances and legal situation at the 
time the original contract was awarded is that the contracting authority would, at 
the same time, have been obliged to use one of the more open forms of tendering 
procedure, even though, for technical reasons or to protect exclusive rights which 
originated when there was no relevant legislation, only one particular supplier 
could have provided the performance. 
24 However, in its judgment of 12 March 2020, Ref. No. 10 As 372/2019-56, 
Ministerstvo financí, the Nejvyšší správní soud came to the opposite conclusion 
that ‘a reasonable view of the contracting environment would preclude’ 
acceptance of a state of exclusivity lasting “forever” (for several decades) merely 
because new, emerging contracts follow on from contracts concluded “a long time 
ago”’. In the present case, too, the contracting authority is claimed to have created 
a state of exclusivity by concluding an contract for an information system in 1995. 
That view is supported by the fact that, according to the Court of Justice, the 
exceptions which allow the use of the negotiated procedure without prior 
publication must be interpreted restrictively. The applicant awarded the follow-on 
public contract under the Law on public contracts and Directive 2004/18. It was 
therefore subject to the requirement that it had not caused the state of exclusivity 
by its own action. From 1992 to 2016, the applicant (or its predecessor in law) 
could either have negotiated a new contractual arrangement for copyrights, and 
thus awarded the public contracts in one of the more open forms of tendering 
procedure, or it could have started to procure a new information system even at 
the cost of temporarily increased expenditure, but which could have led to long-
term savings. Therefore, the situation at the time the original contract was 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-578/23 
 
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concluded cannot be relied on if the state of exclusivity continued after the 
relevant legislation on public procurement was adopted. In determining whether 
the negotiated procedure without prior publication is applicable, account must be 
taken of the point in time at which the decision was adopted to award the contract 
in that form. 9 
25 The referring court does not believe that any of the various interpretations can be 
considered clear, credible and, beyond reasonable doubt obviously more 
compelling than others. In addition, the referring court considers that resolving the 
issue of whether, when assessing the substantive condition, account must be taken 
the factual circumstances and the legal situation at the time when the contracting 
authority is claimed to have caused the state of exclusivity, which has not yet been 
resolved in the case-law of the Court of Justice, is essential not only in respect of 
the case under consideration here, but also in respect of similar cases concerning 
other contracting authorities. 
 
9 Judgment of the Court of Justice of 5 October 2000, Commission v France, C-337/98, 
EU:C:2000:543, paragraph 37.