Press and Information Division

PRESS RELEASE NO 67/98

10 November 1998

Judgment of the Court of Justice in Case C-360/96

Gemeente Arnhem, Gemeente Rheden v BFI Holding BV

THE COURT OF JUSTICE CLARIFIES WHAT IS MEANT BY "A BODY GOVERNED BY PUBLIC LAW"

In the context of an action concerning the scope of the directive relating to the award of public service contracts, the Court of Justice found it necessary to specify what are the needs in the general interest, not having an industrial or commercial character. Only a body whose object is to meet such needs can be characterised as a body governed by public law.

BFI, an undertaking specialised in the collection and treatment of waste, objected before the Netherlands courts to the assignment to the public limited company ARA of the task of collecting refuse in the municipalities of Arnhem and Rheden. It submitted that the municipal authorities concerned should have awarded the contract in compliance with the procedures expressly prescribed by the Community directive relating to public service contracts. The Gerechtshof te Arnhem (Regional Court of Appeal, Arnhem), before which the case had come, decided to stay proceedings and ask the Court of Justice for an interpretation of the directive in question.

The directive determines the compulsory procedures with which the contesting authorities must comply in awarding public service contracts. However, these procedures are not applicable to certain contracts awarded to entities which are themselves contracting authorities. Among these, the directive expressly mentions "bodies governed by public law".

In order to determine whether the two Netherlands municipalities could rely on this exception with respect to the contracts concluded with ARA, the Court of Justice had to specify what were the conditions which had to be met in order for it to be possible for a company such as ARA to be characterised as a body governed by public law. In particular, it had to specify whether the tasks entrusted to ARA were designed to meet "needs in the general interest" within the meaning of the directive.

In so doing, the Court of Justice accepted that there is a distinction between needs in the general interest which have an industrial or commercial character and those which do not. Only bodies responsible for meeting the latter needs can be characterised as bodies governed by public law.

The Court of Justice went on to affirm that the further specification Ä in addition to "needs" being "in the general interest" Ä of "not having an industrial or commercial character" was not affected by the fact that private undertakings were also capable of meeting the same needs. An interpretation to the contrary would render meaningless the concept "body governed by public law", such is the difficulty in imagining any activities which by their nature could not be carried out by private undertakings. In particular, the removal and treatment of household refuse may be regarded by the public authorities as constituting needs in the general interest within the meaning of the directive, for reasons of public health and environmental protection.

Finally, referring to its case-law, the Court of Justice held that a company does not lose its status as a body governed by public law even if it also carries out activities having an industrial or commercial character, all the more so where those activities are carried out by a separate undertaking forming part of the one and same group. Furthermore, the existence or absence of needs in the general interest must be appraised objectively and not on the basis of the legal form of the provisions in which those needs are mentioned.