The concept of a body governed by public law has been the subject of much debate in the field of public procurement for quite some time.
The Court of Midden-Nederland and the Arnhem-Leeuwarden Court of Appeal, for instance, have both ruled that NS Stations, a division of the NS group, engaged in managing and operating railway stations, is a body governed by public law within the meaning of the Aanbestedingswet 2012 (Public Procurement Act 2012). NS Stations is therefore required to put certain contracts out to tender on the market.
But much is still unclear.
According to the European Commission, housing corporations, for instance, are bodies governed by public law that are subject to tendering requirements, but in the Dutch government’s opinion that is not the case. The courts have not yet ruled on this question.
In 2014, the Court of Zeeland-West Brabant classified health insurers as bodies governed by public law and therefore as entities subject to tendering requirements, but the Court of Appeal of Den Bosch did not share that opinion. Last year, the Court of The Hague found in preliminary relief proceedings that healthcare administration offices, in light of the special role they play on the market, must in any event comply with the public procurement principles on the grounds of reasonableness and fairness. The question whether or not they constitute bodies governed by public law is not relevant in this respect.
The European Court of Justice recently gave new impetus to the debate. It gave practical guides to the Italian court to help it determine whether the Italian Football Association (Federazione Italiana Giuoco Calcio or FIGC) constitutes a body governed by public law. So plenty of food for thought. Leyla Bozkurt and Tess Heystee have therefore written an article for the Nederland Tijdschrift voor Europees Recht (Dutch European Law Journal), in which they address the debate on the definition of a body governed by public law.
What is a body governed by public law?
Briefly stated, a body governed by public law is very similar to a government institution. Bodies governed by public law are therefore subject to tendering requirements. This follows from Article 1.1 of the Public Procurement Act, in which a body governed by public law is classified as a contracting authority. Specifically, a body governed by public law is an entity that:
- has been established for the specific purpose of meeting needs in the general interest, not having an industrial or commercial character; and
- has legal personality; and
- is greatly dependent on the government because:
- it is financed, for the most part, by the authorities; or
- is subject to management supervision by those authorities; or
- has an administrative, managerial or supervisory board, more than half of whose members are appointed by the authorities.
Requirements 1 to 3 are cumulative (meaning that all three of the requirements must be met); the criteria in 3(a) to (c) are alternative (meaning that it suffices to meet one of the three). Another principle is that the term “body governed by public law” must be given a functional interpretation, meaning that the body’s actual function is the most important factor, not its formal classification. The decisive factor is not what the body is (under national law), but rather what it does.
The aforesaid requirements at first sight seem somewhat abstract: what do they mean exactly? We refer to the article that we will be publishing soon. It will appear on our website after being published.
Tendering requirements for sports associations?
In response to the European Court of Justice’s judgment regarding the Italian Football Association, we ourselves had already written a blog about the possible classification of the KNVB, the Dutch Football Association, as a body governed by public law. In the Dutch European Law Journal, however, we have addressed this issue in more detail, also consulting the KNVB’s articles of association and paying attention to the NOC*NSF, the KNVB’s umbrella organisation. Is it possible that, contrary to the blog, the KNVB is a body governed by public law after all? Moreover, 77 sports associations operate in the Netherlands: should they perhaps (also) be classified as bodies governed by public law?
We furthermore identified the trend referred to in the introduction above: a growing number of bodies no longer come under public procurement law. Also bodies that appear to be of a private-law nature may nevertheless be subject to tendering requirements. Lawyers who generally have little to do with public procurement law should bear in mind that not only traditional public bodies, such as municipalities, provinces, water boards and the central government, are subject to tendering requirements: a great many bodies of which it seems unlikely at first sight may nevertheless be subject to tendering rules.
Curious to read the entire article? Keep an eye on our website. To be continued!
