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Developments in the EU public procurement law have attributed a new level of significance to the principle of proportionality. While the public and utilities procurement directives of 2004 did not refer to proportionality as a general principle, the growing body of the CJEU case law has nevertheless developed and often relied on that principle in public procurement matters.
This has led to direct incorporation of proportionality among the other principles listed in the new, 2014 directives.
In the case of Estonia, the Public Procurement Review Board,
the body liable for review of public and utilities procurement cases in the first instance, has witnessed a somewhat surprising show of cases that challenge the terms of penalty clauses in public contracts and often focus on the principle of proportionality, either in combination of the principles of transparency or equal treatment or on its own.
Based on the study of such review cases as well as a selected 100 uncontested public contracts, this article firstly aims to give recommendations for drafting penalty clauses in public contracts.
Secondly, the article outlines the interaction between the EU public procurement law and the national private law in situations such as potentially disproportional (unreasonable) penalty clauses that can simultaneously be challenged relying either on public procurement review options or private law remedies. The fact that private law remedies address and can be applied to the issues of drafting, interpreting or enforcing penalty clauses, has led to conflicting approaches with regard to the possible hierarchy or choice between such private and public law
remedies.
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