The Ex Ante and Ex Post Application of the Teckal Criteria for in-House Awards
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166 | The Ex Ante and Ex Post Application of the Teckal Criteria for in-house Awards
The Ex Ante and Ex Post Application of the
Teckal Criteria for In-house Awards
Ammar Al-Tabbaa*
This paper considers whether the conditions for the application of the in-house or Teckal ex-
emption must be satisfied only at the time of contract award or throughout the duration of
the contract. It examines whether it is desirable and appropriate for the principle estab-
lished in the CJEU's judgment in Case C-573/07 Sea v Ponte Nossa (Sea), in which the Court
found that the prohibition on private participation in the controlled entity must be adhered
to not only at the time of award but also throughout the term of the contract, to be extend-
ed by analogy to the control and activities requirements of the in-house exemption. It argues
that such extension is both not justified in principle and problematic in practice, and that
legal certainty is best achieved by restricting the principle established in Sea to the private
participation criterion.
1. Introduction
The partial codification in Directive 2014/24/EU (the
Directive) of the CJEU's caselaw in relation to the in-
house exemption (also known as the Teckal exemp-
tion) has raised a number of difficult issues, not least
concerning the status of those judgments which are
not reflected in the wording of Article 12.1 Of partic-
ular interest for the purposes of this paper is Case
C-573/o7 Sea, which established that the introduc-
tion of private participation in the controlled entity
at any point during the term of the contract would
'constitute the alteration ofa fundamental condition
of the contract, which would require the contract to
be put out for competitive tender.2 The European
Commission has since suggested in a Staff Working
Paper that private participation in this context should
be taken to refer to participation by way of equity on-
ly (i.e. not loans, or at least not standard, non-con-
vertible loans), and this clarification was reflected in
the final adopted text of Article 12(1)(C).
In its Non-Paper relating to Cluster 1o of the pro-
posed reforms to Directive 2004/18/EU, the European
Commission had argued in favour of including a pro-
vision in what is now Article 12 of the Directive that,
'the exclusions [...] shall cease to apply from the mo-
ment any private participation takes place, with the
effect that ongoing contracts need to be opened to
competition through regular procurement proce-
dures, specifically to give effect to the Sea judgment.'
Following negotiations with the Member States, this
proposition was not reflected in the version of Arti-
cle 12 actually adopted, from which it may be inferred
that at least some of the Member States had difficul-
ty with it. What is fairly clear is that the principle of
ex post application of the Teckal conditions has the
potential, if not carefully circumscribed, to introduce
a degree of legal uncertainty in this area which is best
avoided if the exemption is to remain usable in prac-
tice. This paper will first consider the basis for the
general proposition that the Teckal criteria apply ex
ante, and examine the scope of the historic excep-
tions to this principle, leading up to the position as
articulated in Sea. It will then discuss the merits of
applying the activities test on an ex post basis, giv-
ing particular focus to the specific purpose of that
test and its close relationship with the State aid rules.
Finally, it will consider the application of an ex post
approach to the control test, before putting forward
some practical recommendations on how the law in
this area should best move forward.
Ammar AI-Tabbaa is a partner at gunnercooke Ip, London.
DOL: 10.21552/epppl/201 6/3/6
1 C-107/98 Teckal [1999] ECLI-562.
2 C-573/07 Sea [2009] ECLI-532, [53].
3 European Commission, Staff Working Paper concerning the
application of EU procurement law to relations between contract-
ing authorities ('public-public cooperation'), SEC(2011) 1169
final, 4 October 2011, para 3.2.1.
4 Proposal for a Directive of the European Parliament and of the
Council on public procurement - Cluster 10: Scope, document of
the Council 2011/0438 (COD) of 27 April 2012 (9315/12), page
37.
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The Ex Ante and Ex Post Application of the Teckal Criteria for in-House Awards
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