EU Court: Tenderers Can Claim for Lost Opportunity

The Court of Justice of the European Union has confirmed that a tenderer who has been unlawfully excluded from a tender process may be able to claim damages for loss of opportunity. This ruling strengthens the legal remedies available to tenderers across Member States. Our Public Procurement team explores the decision’s implications and what it means for procurement challenges going forward.

What you need to know

• The case[1] arose from the unlawful exclusion of a tenderer in Slovakia.
• The Court of Justice of the European Union (CJEU) found that national rules excluding compensation for loss of opportunity are incompatible with EU law.
• The Remedies Directive requires Member States to provide for the award of damages to persons harmed by a breach of EU procurement law. This includes compensation resulting from the loss of opportunity to participate in a procurement process.

The Slovak Football Association excluded a consortium from a public procurement process for the reconstruction, modernisation and construction of 16 football stadiums. This exclusion was ultimately held to be unlawful. However, in the meantime, the only remaining tenderer in the process was awarded the framework agreement. The excluded consortium brought an action seeking damages for the loss suffered as a result of its unlawful exclusion from the process.

What type of damages are available?

The Remedies Directive[2] is worded in broad terms. It provides that Member States must ensure that damages are awarded to persons harmed by a breach of EU law governing the award of public contracts.

The objective of the Remedies Directive is to ensure that Member States provide adequate procedures to challenge breaches of EU procurement law. These procedures must allow not only for the annulment of unlawful decisions, but also for compensation for those harmed by those infringements.

The CJEU noted that the Directive does not exclude any type of harm from its scope. It therefore covers any type of damages suffered. This includes both the loss of profit itself and damages arising from the loss of opportunity to participate in the contract award procedure.

When does the right to compensation arise?

Individuals harmed by a breach of EU law have a right to compensation if the following three conditions are met:

1. The breached rule was intended to confer rights on the individual
2. The breach of that rule is sufficiently serious, and
3. There is a direct causal link between the breach and the damage suffered by the individual.

Compensation for loss or damage caused by infringements of EU law must be proportionate to the harm suffered. In other words, it should fully make good the loss or damage sustained.

What does this mean in practice?

The CJEU ruled that the Remedies Directive does not allow national laws or court practices to automatically rule out compensation for loss of opportunity. In other words, countries cannot have rules that, in principle, prevent someone from claiming damages if they were unfairly denied the chance to take part in a public procurement process. The CJEU emphasised that the Directive requires Member States to ensure that effective remedies are available to parties harmed by breaches of EU public procurement law. This includes the right to claim compensation for any type of damage, and is not limited to loss of profit alone.

The judgment does not outline the method for calculating damages. Instead, it leaves it to Member States to establish the criteria, as long as these align with EU law principles. Notably, the CJEU warns that national standards, such as Slovakia’s requirement for a “highly probable” profit loss, should not create barriers that prevent compensation for lost opportunities.

Conclusion

This ruling marks a significant development in EU procurement law as it strengthens the legal remedies available to tenderers. It confirms that tenderers who are unlawfully excluded can claim compensation not only for loss of profits, but also for the loss of opportunity to participate in the tender process.. It will be interesting to see how the Irish courts will interpret the concept of loss of opportunity and quantify the damages resulting from it.

For more information, please contact a member of our Public Procurement team.

The content of this article is provided for information purposes only and does not constitute legal or other advice.

[1] C-547/22 Ingsteel

[2] (Directive 89/665)