Opinion of the Advocate General — ECLI:EU:C:2020:850
Date: 2020-10-22
Language of the case: German
Subject matter: Public procurement in the European Union
Procedure: Action for failure to fulfil obligations - unfounded
Origin: Austria

summary of the latest regulatory requirements applicable to all office buildings and not just to the City of Vienna, (31) which would have had to be complied with in any event. – As regards the building permit, Wiener Wohnen, in its capacity as tenant, did not take part in the building permit application procedure, has no access to the planning permission file and is not able to produce any documents from that procedure. – It has been known since the outset that Wiener Wohnen was not the only tenant in the [‘Gate 2’] building. The fact that other persons have rented space in that building and continue to use it shows that the office space in question is available for rental, in accordance with standard models, by third parties directly on customary market terms, and not only, as the Commission submits, by those who sublet from Wiener Wohnen. – The term of the contract (25 years) reflects the reality of the property market. This is the only basis on which landlords are prepared to rent out large spaces at affordable prices. – For Wiener Wohnen, surrendering the right to terminate the contract was a minor issue, as the prospect of having to move 1 000 employees yet again was unacceptable, given the cost of doing so and the non-existence of suitable alternative sites. – It is simplistic to assume, as the Commission does, that a contractual term of 20 years is sufficient to write off the costs of construction, inasmuch as it fails to take into account the fact that the landlord is also responsible for all maintenance and repair works, and has to bear the financing costs and cover the management costs, etc. – The Commission appears to disregard the fact that a complex removal plan usually entails not only the supervision which the developer exercises over the project but also the supervision exercised by the tenant. 3. My assessment 57. In applying the Court’s case-law (in particular, that established in the judgment in Impresa Pizzarotti) to this case, we must determine, by analysing the arguments and evidence adduced, whether what we have here, in addition to the lease of an as yet unconstructed building, is also a public works contract which was in fact the main object of that contract. 58. In order to arrive at such a classification, it will fall to be established whether Wiener Wohnen exerted a ‘decisive influence’ over the plan for the works that was finally approved and over the subsequent execution of the building, and whether that property was built in response ‘to the requirements specified by the contracting authority’. (32) (a) Decisive influence exerted by Wiener Wohnen over the final plan and over the subsequent execution of the building works 59. At the time when the contract was concluded (25 May 2012), the landowner had not started any construction work. Neither did it have a permit to erect the building. (33) 60. To counter the assertion that the building was designed as a consequence of the conclusion of the contract, the Republic of Austria submits that Wiener Wohnen did not influence the building’s design and that the property had already been planned when the contract was signed. 61. If that were the case, one would logically have expected the Republic of Austria to produce the original architectural plan (and any building permit granted) setting out the specifications for the project and the date on which the plan was approved. That evidence, readily available to the defendant, would have shown that the full plan existed on 25 May 2012 and would have confirmed that what was built was consistent with that plan. 62. In the absence of such evidence, the objective factors which I shall set out below, and which are taken from the documents before the Court, steer me towards the view that that design was not final and that Wiener Wohnen’s wishes had a conclusive bearing on the eventual configuration of that design and on the construction of the building. 63. Even assuming it to be the case that, in May 2012, the landowner had an initial architectural plan, the fact remains that that plan underwent very significant modifications, on which Wiener Wohnen insisted as a condition of signing the contract or which, having been stipulated by Wiener Wohnen later, were captured in the construction of the building. 64. An examination of the ‘Description’ and ‘Supplement’ documents (34) (Annex 1.3 to the contract), taken together, shows that Wiener Wohnen not only imposed crucial conditions in relation to the design of the building but also had the power to decide (and did decide) what the final structure of that building would be. 65. Thus, clause 1.9 of the contract provided for an option for Wiener Wohnen to commission the construction of floors 6 and 8 of the B wing. That option was exercised on 25 October 2012. (35) 66. The same was true of the bridge connecting the two wings of the building. Wiener Wohnen had the option to connect A and B wings by means of a bridge, so as to give the building the structure of a closed system. 67. Those two extensions are unquestionably an important architectural addition affecting the structure of the property and, under the terms of the contract, (36) would not have been built if Wiener Wohnen had not made provision for them. The wishes of that public body were thus instrumental, inasmuch as the building was built in the form and with the characteristics which it wanted. 68. Furthermore, a comparison of the graphics for the project (photographs of models and plans) that were contained in the ‘Description’ with what was actually built immediately shows significant differences. In that document, the building’s A and B wings were the same height and there was no connecting bridge: it was Wiener Wohnen that was able, at its discretion, to alter those structural specifications for the building. 69. Thus, Wiener Wohnen had the ability to exert an influence (and did exert an influence) so decisive as to amend the initial plan of works by imposing the architectural changes which it considered desirable. 70. The same conclusion is supported by a reading of the market study which Wiener Wohnen commissioned (37) and on the basis of which the site for the construction of the ‘Gate 2’ building was selected. 71. That document (produced, as I have said, by the Republic of Austria) is not official but it does reflect how the undertaking to which Wiener Wohnen had turned for the purposes of selecting the site [of its head office] viewed the position of its client, that view having been based, of course, on the instructions and information which the latter had passed to it. 72. The ‘Management Summary’ in that document contains the following statements: – ‘The tenant [Wiener Wohnen] is still able to influence the planning of the project on the basis of the specifications required’. – ‘This criterion [A10] is used to evaluate the potential for influencing fundamental planning issues. Influence in this context means not only ensuring that account is taken of the tenant’s wishes as regards interior fixtures and fittings but also adherence to some basic planning assumptions such as access routes and exterior and interior amenities, the structure of the building (configuration of spaces, length of the facade and so on), the structure of ground floor areas, the utility supply and disposal system and the design of the building’s technical systems’ (paragraph 5.2.10). – ‘No definitive architectural solution has yet been established for the facade in this project … The building complex simply comprises two blocks (A and B) which can be joined by a bridge built for that purpose’. – ‘The tenant’s requirements with respect to basic matters concerning access routes and amenities, building structure and design may be effectively incorporated and taken into account given the planning status of the project’. 73. The foregoing factors confirm that Wiener Wohnen’s contractual position is not consistent with the typical position of a mere tenant but, rather, with that of an actual project owner who imposes his own solutions on the plans for the building and their execution. 74. In the ‘Supplement’ drafted by Wiener Wohnen, that body introduces a number of specifications for the project which are so detailed and, in one case, so significant as to go beyond what would normally be agreed between a landlord and a tenant. Contrary to what the Republic of Austria has stated, those specifications are not confined to ones strictly compulsory under town planning rules. 75. It is true, as the Republic of Austria submits, that, in the case of large property development that has yet to be built, the (future) tenant may negotiate with the owner in order to have the building adapted to some extent to suit his own purposes. In this case, however, the conditions imposed were so extensive and Wiener Wohnen’s role so significant as to go beyond the customary scope of the landlord-tenant relationship. 76. The conviction that Wiener Wohnen acted as a project owner is reinforced by the fact that it appointed its own operatives to supervise the execution of the project, in parallel with the owner. This too is a role that does not normally fall to the tenant of a property which has yet to be built, since it is not usual for a tenant to supervise a project which is not his own. 77. The Republic of Austria offers an explanation in this regard which I do not find convincing. It states that the purpose of that supervision was to ensure compliance with the deadlines for the building’s handover. It was for this reason, it goes on to say, that it engaged an external undertaking (SET Bauprojektierung GmbH) to identify any delays in good time for Wiener Wohnen to be able to respond. 78. The Republic of Austria states in its defence that SET Bauprojektierung GmbH was indeed entrusted with the task of ensuring compliance with deadlines, but it was also responsible for supervising the quality of the installation of fixtures and fittings by carrying out spot checks. This supervision took the form of monitoring [observance of] the quality and quantity [criteria] laid down in the ‘Description’ of the building and reporting regularly to Wiener Wohnen. (38) 79. Those functions go beyond a mere evaluation of compliance with the timetable for the works. What is more, in its own line of argument, the Republic of Austria, in emphasising the importance of the handover deadlines, mentions that the penalty for delay was EUR 30 000 per day. This, then, is compensation of a level high enough to offset the costs of any temporary solutions, should the owner not hand over the property on time. (b) Construction of the building in response ‘to the requirements specified by the contracting authority’ 80. The Commission had argued that, if that contract had not been signed, the building would not have been built. The Republic of Austria itself recognises that the conclusion of the contract was crucial to the construction of the property: ‘the fact that the property, the plans for which were complete and ready to be executed, had been let [was], ultimately, the trigger for its construction’. (39) 81. That recognition is an indication that the contracting authority’s property requirements effectively took precedence over the execution of the works. It alone might not be sufficient to confirm the failure to fulfil obligations of which the Republic of Austria is accused. There is also the fact, however, that the structural and other elements of the building were specifically adjusted to meet those requirements, as I have already highlighted. 82. In Annex C5 to the reply, the Commission produces a document issued by an undertaking (IC Group) which the building’s new purchaser (WestInvest Gesellschaft für Investmentfonds mbH) had commissioned to produce a report. That document states that ‘the planning and construction of the ‘Gate 2’ office building, situated at Guglgasse 2-4, 1030 Vienna, are entirely consistent with the requirements of the sole tenant, Wiener Wohnen’. (40) 83. The Republic of Austria confines itself, in the rejoinder, to diminishing the legal value of that document and to commenting that IC Group had no contractual relationship with Wiener Wohnen. This is an inadequate response given that the document in question shows that IC Group’s intervention ran from 15 January 2013 to 31 March 2015, and thus overlapped with Wiener Wohnen’s supervision of the project. 84. If IC Group was performing those same tasks, it was intimately acquainted with the project whose execution it was tasked with monitoring and was in a position to issue a reasoned opinion in that regard. 85. That said, it should be added that a public body such as Wiener Wohnen can, and indeed must (in order to serve the general interest that justifies its existence), have buildings that are suited to its needs. There is nothing unusual in this, and it is logical, for example, that, on the basis of those requirements, as reflected in the clauses of a set of tender specifications, it should opt for one of the properties putting themselves forward for selection. 86. What is open to criticism (and what, ultimately, the Commission criticises) is the fact that, in making that choice, Wiener Wohnen dispenses with the public tendering procedure which would enable it, with the benefit of all relevant guarantees and in the light of the bids submitted, to undertake a comparison of the tenders and select the one most favourable to the public interest. That is the very purpose of Directive 2004/18. (c) Other factors present (1) Term of the contract 87. In the Commission’s view, the long term of the contract (which is not open to ordinary termination until 2040) (41) is a further indication that this is more than a lease. The sum of the rents accumulated over a period of time could be regarded as deferred payment for the building works themselves. 88. That argument, however, would have called for an economic study taking into account the project’s write-off period and the costs to the owner of maintaining the building during the minimum contract term. In the absence of such data, that argument cannot be endorsed. (2) Use of the building 89. The fact that the ‘Gate 2’ building was intended to meet the requirements of Wiener Wohnen explains why that public body effectively occupied almost all of it, this being consistent with its intervention in the planning and construction of the property. 90. The Republic of Austria submits, as proof of the fact that it was not the only occupant of the property, that there were other tenants in some of its offices. 91. That argument, however, does not carry the force of conviction given that Wiener Wohnen, under powers expressly conferred on it by a clause in the contract, could transfer the use of its offices to departments within the City of Vienna or to legal persons in which the latter has a majority shareholding. (42) The only thing its argument demonstrates is that, taken as a whole, the building served to meet the public requirements of the City of Vienna, including those of its executive agencies or entities. 92. Its exclusive purpose as such is not detracted from by the presence in the property of a small office (158.45m2) rented out as an information centre to a union of municipal employees, or of other spaces (2 590.15m2) sublet to Wiener Wohnen Haus – & Außenbetreuung GmbH. (43) The space sublet to those organisations, which are linked to the principal tenant, represents only 9.1% of the property’s total floor space. (3) Building permit 93. The two parties had exchanged argument and evidence in relation to what the Republic of Austria, in its defence, called a ‘basic authorisation’ (to build). (44) 94. In response to the Commission’s insistence that a building permit had not been issued at the time when the contract was concluded, (45) the Republic of Austria did not put forward any robust argument, choosing instead to make some rather vague allegations that failed to clarify the point of fact raised. 95. In the reply, the Commission asked why the Republic of Austria had not produced the building permits, to which the Republic of Austria responded, in the rejoinder, by stating that Wiener Wohnen, in its capacity as tenant, was not a party to the procedure for granting building permits and was not able to access the [permit application] file or to produce documents from that procedure. 96. The Republic of Austria’s reply was, once again, unsatisfactory. Difficult as it is to accept that the town-planning authorities of the City of Vienna (to which Wiener Wohnen is ultimately answerable) would refuse to grant the Republic access, even retrospectively, to the town planning file, it is less believable still that that, faced with an action for failure to fulfil obligations before the Court of Justice, the Republic of Austria was unable to obtain (and produce) those documents. 97. It was for this reason that the Court, acting of its own motion, sent the Republic of Austria a question asking it to clarify these matters. As I have already said, (46) its reply demonstrates that, at the time when the contract was signed, a building permit had not even been applied for. (4) Principle of patere legem quam ipse fecisti in relation to the Austrian Government’s position 98. The Republic of Austria’s reaction to the letter of formal notice from the Commission was to recognise the alleged failure to fulfil obligations. This was a plausible reaction, given the information which had been set out in that letter. 99. That same confession was maintained in subsequent letters from the Republic of Austria. (47) It is true that the Republic of Austria is entitled to retract its previous position at a later stage because it considers this to be erroneous. To be credible, however, such a change of course would need a more robust justification than that given in the defence and the rejoinder. 100. The argument that its initial recognition of the failure to fulfil obligations was intended to facilitate dialogue with the Commission is not very convincing. The pre-litigation stages of the action for failure to fulfil obligations allow for a consensual solution that is not necessarily conditional upon an initial admission of guilt. 101. The principle of sincere cooperation between the Member States and the Commission serves to ensure that the Member States facilitate the achievement of the Commission’s tasks. Conduct whereby, after unequivocally and repeatedly admitting the alleged infringement, a Member State later changes its position but does not adequately explain why, is not in keeping with that principle. D. Summary 102. On the basis of an overall examination of the arguments of the parties and the evidence adduced, I am satisfied that the main object of the contract signed on 25 May 2012 by Vectigal Immobilien GmbH & Co KG and Wiener Wohnen was the construction of the ‘Gate 2’ building, in the planning and execution of which the public body intervened decisively in order to align it with its requirements. 103. In those circumstances, and in the light of the Court’s case-law interpreting Article 16(a) of Directive 2004/18, Wiener Wohnen’s actions should have been subject to the regulated procedure for the award of public works contracts, in accordance with Articles 2, 28 and 35(2) of that directive. V. Conclusion 104. For the foregoing reasons, I suggest that the Court uphold the action brought by the Commission and: – Declare that the Republic of Austria has failed to fulfil its obligations under Articles 2, 28 and 35(2) of 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, in so far as Stadt Wien-Wiener Wohnen made a direct award of the contract of 25 May 2012 relating to the office building located at Guglgasse 2-4, Vienna, without advertising it or subjecting it to a public tendering procedure. – Order the Republic of Austria to pay the costs. 1 Original language: Spanish. 2 Directive 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 (OJ 2004 L 134, p. 114). 3 The Mietvertrag (lease agreement; ‘the contract’ or ‘the contract at issue’) was signed by Vectigal Immobilien GmbH & Co KG, as landowner and landlord, and Stadt Wien (City of Vienna), represented by Wiener Wohnen, as tenant. Ownership of the building was subsequently (on 29 September 2014) transferred to WestInvest Gesellschaft für Investementfonds mbH, which was subrogated to the legal status of the former owner. 4 Federal Law on Public Procurement (‘BVergG 2006’). 5 Annex A6 to the application. In particular, recognition of the infringement was highlighted in paragraphs 2, 3 and 6 of that document. Paragraph 3 stated that both the Republic of Austria and the contracting authority regretted the infringement. 6 Annex A7 to the application. 7 Letters of 5 May, 13 September and 25 October 2017 (Annexes A8, A9 and A10 to the application). 8 In the judgment of 29 October 2009, Commission v Germany (C‑536/07, EU:C:2009:664, paragraph 54), the Court held that ‘[the] legal classification [of the contract] falls under Community law and the classification given under national law is irrelevant for that purpose. Likewise, the classification of a contract given by the contracting parties is not decisive either’. The Court ruled to the same effect in the judgment of 10 July 2014, Impresa Pizzarotti (C‑213/13, EU:C:2014:2067; ‘the judgment in Impresa Pizzarotti’, paragraph 40): ‘the question whether a transaction constitutes a public works contract for the purposes of EU legislation is one of EU law. The classification of the proposed contract as a ‘lease’, highlighted by Pizzarotti and the Italian Government, is not decisive in that regard’. 9 Judgment of 29 October 2009, Commission v Germany (C‑536/07, EU:C:2009:664, paragraph 55). 10 Judgment in Impresa Pizzarotti, paragraph 41. 11 Judgment of 25 March 2010, Helmut Müller (C‑451/08, EU:C:2010:168, paragraphs 48 to 51). 12 Directive of the European Parliament and of the Council of 26 February 2014 on public procurement and repealing Directive 2004/18 (OJ 2014 L 94, p. 65). 13 ‘The Union rules on public procurement are not intended to cover all forms of disbursement of public funds, but only those aimed at the acquisition of works, supplies or services for consideration by means of a public contract. It should be clarified that such acquisitions of works, supplies or services should be subject to this Directive whether they are implemented through purchase, leasing or other contractual forms. […] The notion of acquisition should be understood broadly in the sense of obtaining the benefits of the works, supplies or services in question, not necessarily requiring a transfer of ownership to the contracting authorities (no emphasis in the original). 14 Judgment in Impresa Pizzarotti, operative part. 15 Ibidem, paragraph 42 to 44, including the citation of paragraph 67 of the judgment of 25 March 2010, Helmut Müller (C‑451/08, EU:C:2010:168). 16 Ibidem, paragraphs 42 and 43, including a reference to the findings in the judgment of 29 October 2009, Commission v Austria (C‑536/07, EU:C:2009:664, paragraphs 55 and 56). 17 As was highlighted by Advocate General Wahl in his Opinion in Impresa Pizzarotti (C‑213/13, EU:C:2014:335, points 53 and 60). The Court did not endorse that proposition, however. 18 In paragraph 54 of its reply, the Commission cautions against such an extension: ‘The fact that Wiener Wohnen combined the two elements within a single contract shows the risks of an unlimited extension of the application of Article 16(a) of Directive 2004/18 to buildings which have yet to be constructed. The result of that practice would be that an excessive number of public works contracts, which are usually the most expensive, would benefit from an exclusion originally intended only for existing buildings and, as a result, might cost the taxpayer more’. 19 Judgment of 9 December 2010, Commission v Spain (C‑340/09, not published, EU:C:2010:758, paragraph 36). 20 Judgment of 18 October 2012, Commission v United Kingdom (C‑301/10, EU:C:2012:633, paragraph 71). 21 Ibidem, paragraph 72. 22 The annexes are entitled ‘Description of the building and its amenities’, of 16 May 2012 (the ‘Description’) and ‘Supplement to the description of the building and its amenities’, of 22 May 2012 (the ‘Supplement’). Also attached to the lease agreement were addenda of 25 October 2012 and of 16 and 17 September 2013. 23 The Commission cites by way of examples, in particular, a series of requirements relating to the facade, interior walls, floor construction and covering, ceilings, technical building systems, distribution points, floor heating, pumps, the toilet adjustment facility, waste water disposal, materials to be used for electronic devices, and general guidelines on electrical and fire protection systems. 24 Immovement, Inmobilien und Facility Management Consulting, GmbH (‘Immovement’). 25 They could be called ‘standard’ in the sense that each building includes, for example, a facade, interior walls, floors and sewage pipes. 26 https://www.austrian-standards.at/de/standardisierung/warum-standards/grundbegriffe/oenorm. 27 The Commission notes that a tenant would be interested, for example, in whether the piping works properly, not in the type of system chosen or whether, in the case of sealed systems, the drainage pipes are made of PE (polyethylene) or ABS (acrylonitrile-butadiene-styrene). 28 That article was published in the Austrian press on 22 September 2016 (Annex C3 to the application) and, as well as touching on the circumvention of the public procurement rules, stated that Wiener Wohnen was heavily involved in the planning and construction of the building. 29 As a body responsible for building social housing, Wiener Wohnen was in principle required to invest its economic resources in maintaining and improving the residential buildings it manages. 30 The Austrian Government points out that the Gewerkschaft der Gemeindebediensteten – Kunst, Medien, Sport, freie Berufe (Union of Municipal Employees – Art, Media, Sport and Liberal Professions), which does not operate under the authority of either Wiener Wohnen or the City of Vienna, used to and continues to rent space on the ground floor of the B wing and has its own information centre there. 31 The Republic of Austria is referring to the ‘schedule of conditions applicable to administrative buildings, drawn up by Department MA34’ (the department for managing construction and building in Vienna). 32 See points 21 to 31 of this Opinion, above. 33 In paragraph 8 of its written reply to the question from the Court, the Republic of Austria states that the application for a permit was lodged on 17 July 2012 and the permit was granted on 13 November 2012. 34 The cover of ‘the Supplement’ shows that Wiener Wohnen paid for that document to be produced. 35 First addendum to the contract (Annex A3 to the application). 36 Clauses 1.2 and 1.9. 37 Document produced by the Republic of Austria in response to the Commission’s reasoned opinion. 38 Defence, paragraph 27. 39 Ibidem, paragraph 46. This fact did not, in its view, mean that the building had been designed or constructed in accordance with the contracting authority’s requirements. 40 No emphasis in the original. 41 After various turns of events, the minimum term of 25 years was finally laid down in clause 2.4 of the second addendum to the lease agreement, of 17 September 2013 (Annex A4 to the application). 42 Clause 10.1.1 of the contract. 43 These figures are taken from the Republic of Austria’s written reply to the Court’s questions. 44 In paragraph 28 of the reply, the Republic of Austria concedes that the expression ‘basis authorisation’, which it uses in its defence, is not consistent with the authorisations provided for in the construction legislation of the Land Vienna. It goes on to say that a basic authorisation corresponds in fact to an initial building permit. 45 The Commission recalls that, in its defence (paragraph 41), the Republic of Austria had recognised that the existence of a building permit prior to the contract was one of the criteria for assessing whether the exclusion provided for in Article 16(a) of Directive 2004/18 was applicable (see point 50 of this Opinion). 46 See point 59 and footnote 23 of this Opinion. 47 See points 9 and 10 of this Opinion.