Lowest bidder, wrong court: the Haute École Léonard de Vinci itself pointed Energys to the Council of State, which declines jurisdiction — but the college pays the costs
Energys had submitted the lowest tender, 1,227,705.34 euros, for the HVAC lot of the Haute École Léonard de Vinci’s new engineering school, saw its tender rejected and the contract go to Imtech Project, and went to the Council of State because the notification expressly referred to it — but a non-profit association born of private initiative is not an administrative authority when it awards a public contract, so the application was dismissed, with costs against the college for its incorrect statement.
What happened?
The non-profit association Haute École Léonard de Vinci put out a works contract for building a new site for an engineering school, involving renovation and new construction. The notice appeared on 22 October 2009 in the Official Journal of the European Union and on 30 October 2009 in the Belgian Bulletin des Adjudications; the procedure was an open tender (adjudication publique). Five tenders were received for lot 4, heating, ventilation and air conditioning. At the opening on 14 December 2009 Energys was cheapest at 1,227,705.34 euros excluding VAT, followed by Imtech Project (1,264,860.27 euros), Delta Thermic (1,345,530.00 euros), Axima Contracting (1,347,015.32 euros) and ETI (1,495,210.00 euros). The college nevertheless considered Energys’ tender non-compliant, rejected it on 1 April 2010 and awarded the lot to Imtech Project. Energys only received the decision by letter of 28 May 2010. At the foot of that letter was a legal notice: a fifteen-day standstill period to bring summary or extreme-urgency proceedings, and the addition that ‘an action for annulment may be brought before the Council of State within 60 days’. On 22 July 2010 Energys lodged an action for annulment of the rejection and the award. It knew that the Council of State had held in judgment no. 125.889 of 2 December 2003 that this very college was not an administrative authority, but argued that the case law had moved on. It cited judgment no. 200.245 of 29 January 2010 on the Société wallonne des aéroports (SOWAER) and a Court of Cassation judgment of 10 September 2009 on the National Chamber of Bailiffs, and pointed out that the college had presented itself as an authority by naming only the Council of State as the court of appeal. In the alternative it stressed that the college is recognised and subsidised by the French Community, provides a public service, awards diplomas that bind third parties, and that procurement law gives a contracting authority unilateral powers. The college objected that the Council lacked jurisdiction. The Council started from the Court of Cassation’s case law of 1997 and 2002: an institution created or recognised by the public authorities and entrusted with a public service is an administrative authority insofar as its functioning is determined and controlled by the authorities and it can take decisions binding on third parties. Its articles of association, published in the Belgian Official Gazette on 4 July 2005, showed that the college is a federative non-profit association set up on the initiative of six other associations each running a higher-education institution: ECAM, the École normale catholique du Brabant wallon, Parnasse-Deux Alice, the Institut libre Marie Haps, the Institut Paul Lambin and the Institut supérieur d’enseignement infirmier. It was thus born of private initiative. It does perform a public service under the supervision of the French Community, through government commissioners, and when it awards recognised diplomas it takes decisions binding on third parties. But when it awards a contract to one contractor rather than another, it imposes no obligation on anyone. The fact that procurement law applied to the contract changed nothing: under its article 4 that law also applies to certain private-law entities, and which law governs a dispute and which court decides it are two different questions. A contracting authority’s unilateral powers during performance affect only the contractor, not third parties. The case law cited did not help Energys either. The Chamber of Bailiffs was created by statute and the question there was whether a public-law body fell outside the category because of its link with the judiciary; SOWAER was created under statute by the Walloon Region and wholly owned by it. The Council then drew a clear distinction. Legal persons created by the public authorities to provide a public service, even in private-law form, are part of the administration and are administrative authorities even without power to bind third parties. Legal persons born of private initiative and merely recognised or supervised by the authorities are administrative authorities only when they unilaterally take decisions binding on third parties. The college fell into the second category and so was not an administrative authority when awarding a contract. The Council lacked jurisdiction and dismissed the application. But because the college had wrongly stated in its notification that an action for annulment lay before the Council of State, the Council ordered it to pay the costs of 175 euros.
Why does this matter?
The judgment addresses a question that comes before all others: which court should an unsuccessful bidder go to? The fact that a contracting entity must apply procurement law does not mean that the Council of State has jurisdiction. The law determines which rules apply; article 14 of the coordinated laws determines whether the Council can annul a decision, and it can do so only for an administrative authority. The distinction the Council draws here is clear and was applied repeatedly afterwards. A legal person created by the public authorities, even as a company or non-profit association, is an administrative authority. A legal person born of private initiative and merely recognised, subsidised or supervised by the authorities — the classic case of subsidised free (denominational) education, but also of many care and welfare institutions — is one only for decisions binding on third parties, such as awarding diplomas, and therefore not for awarding a contract. For such entities the ordinary courts are the proper forum. This has concrete consequences: a bidder who starts before the wrong court loses time, and in award disputes time is often everything, because the standstill expires and the contract is concluded. Under the remedies law of 17 June 2013 too, the administrative-authority criterion remained decisive for the Council of State’s jurisdiction. The second lesson lies in the costs. The college won on jurisdiction but still paid, because it had wrongly referred to the Council of State in its notification. An incorrect statement of remedies does not create jurisdiction where there is none, but it does carry a price for whoever made it.
The lesson
For bidders: before starting proceedings, establish who the contracting entity is in law. If it is a municipality, an agency or a company created by the public authorities, the Council of State is in principle competent. If it is a non-profit association or other private-law body born of private initiative — a free college, school, hospital or care institution —, that is as a rule not the case for an award decision and you must go to the ordinary courts, usually in summary proceedings. Do not rely blindly on the statement of remedies in the notification: it does not bind the court. When in doubt, check whether the Council has already ruled on the same contracting entity; here there was already a 2003 judgment on this very college. For contracting entities with a private-law background: name the correct court in your notifications. An incorrect reference can leave you with the costs of proceedings even if you win, and it sends a bidder down a wrong path that may later be held against you.
Ask yourself
Do you know whether the contracting entity was created by the public authorities, or was born of private initiative and is merely recognised or subsidised by them? Have you checked whether the Council of State has already ruled on its jurisdiction regarding the same contracting entity? As a bidder: do you have a plan B before the ordinary courts in case the Council of State declines jurisdiction? As a private-law contracting entity: do your standard letters refer to the competent court, or do they copy a formula that applies to public authorities? Are you confusing ‘procurement law applies’ with ‘the Council of State has jurisdiction’?
About this database
The Council of State (Raad van State / Conseil d'État) is Belgium's supreme administrative court. In disputes over public procurement — from contract awards to tenderer exclusions — the Council of State is the final arbiter. The rulings in this database are summarised by TenderWolf in plain language, with practical lessons for tenderers and contracting authorities. View all rulings →