As a result of weaknesses in the Member States’ review mechanisms in the field of public procurement – especially in order to combat illegal direct award of contracts – new rules were introduced by the new Remedies Directive in order for the Member States to implement. According to the new rules a contract resulting from an illegal direct award should be considered ineffective. In Denmark ineffectiveness means that the rights and obligations of the parties under the contract should cease to be enforced and performed and the contract should be terminated. The precise consequences resulting from a contract being considered ineffective should be determined by the Member States but neither the Danish law, case law or other well known legislative terms contribute to a better understanding of the details of the new term. In Denmark the illegal directly awarded contract will be considered ineffective ex nunc. Under certain circumstances the contract can be considered ineffective ex tunc or from a certain time in the future. Only when the exceptional circumstances of the case concerned require certain overriding reasons relating to a general interest to be respected, is it possible not to have the contract jeopardised or to have some or all of its temporal effects recognised. If some or all of the contract is not declared ineffective, alternative penalties should be provided as well. In Denmark an alternative penalty is a fine or an economic sanction. The magnitude of the sanctions will be calculated according to the contract value, how much is left of the contract and the seriousness of the offense. It is difficult to say how the new sanction affects the contracting authorities not to commit illegal direct awards. If the contract is considered ineffective ex tunc every time, the contracts would never be made. This means that both inefficient and efficient illegal direct awards would be deterred. If the contract is considered ineffective ex nunc, the deterrence effect will diminish and even more so when they are only sanctioned with a probability. There is no saying whether the contracting authorities will be deterred efficiently. However, the sanction will give tenderers an incentive to bring suit because they will get an opportunity to win the contract. According to the economic theory the optimal fine will deter efficiently when the magnitude is set equal to the net harm to everybody else but the offender, divided by the probability of sanctioning. Even though it will deter contracting authorities from inefficient and only inefficient illegal direct awards it will not provide the tenderers with an incentive to bring suit.
|Educations||MSc in Commercial Law, (Graduate Programme) Final Thesis|
|Number of pages||124|