Briefing: the Roanne judgement

The case

The 2007 ruling by the European Court of Justice in Auroux v Commune de Roanne concluded that a deal signed between the municipal council of Roanne and a developer for urban development, as far as the authority’s requirements went, was a public works contract and should have followed European public procurement rules.

The consequences

Councils have proceeded cautiously since the judgement was handed down. More particularly, it has had a detrimental effect on social housing development schemes, begging the question of whether the expensive procurement process and delays are what the European Court of Justice had in mind for social housing development contracts in the UK.

Whether the procurement rules apply will depend on whether the proposed arrangement is either (a) a public works contract, where a technical or functional requirement has been specified by the local authority, and to which the rules will apply, or (b) a contract for the acquisition of land, to which construction is incidental, and thus is excluded from the scope of the public procurement rules.

It is challenging to argue that the Roanne case does not apply to social housing regeneration projects where the council transfers its land to a housing association, with obligations on the association and/or contractor as to the nature of the development to be undertaken on the land and in respect of the long-term management of the land.

It is also difficult to argue that the construction is incidental to a social housing development and so outside the scope of the procurement regime. In addition, it is more than likely that a local authority will specify the works that a housing association and/or contractor is to undertake as a condition of the transfer of the land, and to not provide for such specification or to have minimal involvement in the project would be highly unusual.

The follow-on

However, there are a few legitimate arguments why Roanne ought not to apply to its full extent with regard to a social housing development.

These arguments involve distinguishing the Roanne case from a typical social housing development which, unlike Roanne, usually have very limited public realm and where generally the risk is transferred to the housing association and/or contractor. 

A further general point is that the Roanne contract was highly uncommercial, and there are doubts surrounding its economic viability. The difficulty with the case is that the terms and the scope of the case are very broad and not obviously limited to the facts of Roanne.

Some limited guidance has recently been issued by the UK Government, but this makes it clear that it is preliminary guidance only and further clarification will depend on the outcome of infraction proceedings currently before the European Commission.  It is to be hoped that this is available soon, to avoid social housing developments being weighed down by the burden of complying with the public procurement rules.

Avril Smith is a solicitor at Lawrence Graham Avril.Smith@lg-legal.com

Have your say

You must sign in to make a comment