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Judgement of ECJ: minimum and maximum rates of fees for architects and engineers (HOAI) are not compatible with EU law

This is a Press Statement issued by the Bundesarchitektenkammer – BAK (Federal Chamber of German Architects)

 

In its judgement of 4/7/2019, the European Court of Justice (ECJ) determined that the minimum and maximum rates of fees for architects and engineers (HOAI) are not compatible with EU law. This was despite the court confirming that minimum rates can help to ensure the high quality of planning services. However, the German regulation does not pursue this objective in a coherent and systematic manner, since planning services can also be provided by service providers without the latter having to provide proof of their professional aptitude. The ECJ does not consider the binding nature of the maximum rates to be necessary, since the German Federal Government has not sufficiently substantiated that a non-binding framework for pricing is not sufficient to guarantee consumer protection.

In the run-up to the ruling, the Federal Chamber of German Architects (BAK), the Federal Chamber of Engineers (BingK) and the organisation regrouping architects´ and engineers` associations for the HOAI  (AHO) had initially been able to persuade the German Federal Government to uphold the HOAI and to defend the binding minimum and maximum rates before the ECJ, and through that alone they were maintained for almost half a decade longer. Throughout the entire procedure, the BAK together with BIngK and AHO supported the German Federal Government with comprehensive legal and empirical-economic expert reports. The ACE, private builder associations and the BFB (German liberal professions) were also involved in providing political and presentation support. Unfortunately, all of these efforts have not been successful.

The obligation to comply with binding minimum and maximum rates must indeed be abolished as soon as possible due to the judgement. However, the HOAI can remain otherwise unchanged, since neither the performance plans nor the fee rates were the subject of the proceedings.

The judgement will undoubtedly have serious consequences. The BAK is therefore intensively examining which conclusions can be drawn from the ruling, in particular whether the “incoherence” objected to by the ECJ could be counteracted by restricting planning authorisation to architects and engineers. It is working with the BIngK and the AHO to minimise the impact of the ruling. These include proposals for the modification of the HOAI, to ensure that architects and engineers can continue to benefit from the usual, tried and tested fee structure. It is proposed that in the absence of any other express agreement, it is assumed that the average rates are considered to have been agreed. Unless otherwise agreed, the amount of remuneration must be commensurate with the nature and extent of the assignment and the performance of the architect. In the case of a dispute, the court of appeal (e.g. civil court or public procurement tribunal) should also be obliged to obtain an expert opinion from a chamber of architects or engineers.

Immediately after the ECJ ruling, the profession was provided with comprehensive information and support materials to minimise the uncertainty caused by the ruling, in particular with regard to its impact on existing and future contracts.

 

For further information on the ruling please visit the explanatory page.

 

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ACE issues declaration in support of Germany on tariffs

In June 2015, the European Commission launched an infringement procedure against Germany on the grounds that the German minimum compulsory tariffs for architects and engineers (Honorarordnung für Architekten und Ingenieure – HOAI) would allegedly violate the Services Directive by preventing professionals from other Member States from establishing and providing their services freely in Germany.

On 28 February 2019, the Advocate General of the European Court of Justice (ECJ), Maciej Szpunar, released his opinion which considered the minimum and maximum tariffs as unlawful. The tariffs were said to hinder cross border activities, because engineering and architecture firms could not enter the market and establish their own prices. Furthermore, he claimed that Germany had not proved that the independent statutory fee-scales for architects and engineers were suitable and necessary for quality assurance and consumer protection. Therefore, he proposed that the Court uphold the Commission’s decision.

The leading German associations of architects and engineers, together with the Federal Government, strongly advocated maintaining the minimum and maximum tariffs and commissioned several advisory opinions. All studies commissioned in this context proved that there is no evidence to suggest that cross border activities are negatively affected by the presence of fee-scales. On the contrary, quality cannot be guaranteed where there is price dumping of architectural and engineering services. Moreover, the most economically advantageous tender, rather than cheapest price, has been recognised as a principle of the latest version of the Public Procurement Directive. Therefore, ACE finds it incomprehensible that the Advocate General did not follow the conclusive arguments given by the German government. ACE is strongly convinced that the minimum and maximum tariffs serve the common interest by:

  • Protecting customer’s rights through transparency of fees and related services for everyone, certainty of design costs, competition based on quality rather than price, higher quality and more positive results along with lower risks of dispute, amongst other benefits.
  • Supporting cross-border activities by providing helpful descriptions of services and guidelines for providing these services. Insufficient language skills and knowledge of building regulations or relocation issues are the main reasons for not moving to another country.
  • Continuing to ensure that courts have a basis on which to make awards during litigation, while public bodies have reference points that can be used when drawing up budgets for public works.

ACE still maintains that the HOAI does not constitute an obstacle to cross-border establishment and provision of architectural and engineering services in Europe, nor has the abolition of compulsory fee-scales in other Member States led to an increase in cross-border establishment in the past.

The Kamra tal-Periti is a member of the Architects’ Council of Europe.

 

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Commission takes further action to ensure professionals can fully benefit from the Single Market

Yesterday, the Commission has taken further steps in infringement procedures against 26 Member States to ensure the full implementation of EU rules on the recognition of professional qualifications.

Only a well-functioning Single Market can deliver its full potential for citizens and businesses around Europe. In line with the Single Market Communication of 22 November 2018, the Commission is today taking further enforcement action to ensure that all Member States fully respect EU rules on the recognition of professional qualifications.

Professionals in the EU Single Market can move across borders and practice their occupation or provide services in another Member States. The EU has put rules in place to make it easier for professionals, such as doctors or architects, to have their professional qualifications recognised in another Member State. The Professional Qualifications Directive (Directive 2013/55/EU) was modernised in 2013 and had to be transposed into national law by 18 January 2016.

The Commission is today sending reasoned opinions to 24 Member States (Austria, Belgium, Bulgaria, Croatia, Cyprus, Denmark, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Luxembourg, Malta, the Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden and the United Kingdom) and complementary letters of formal notice to 2 Member States (Estonia and Latvia) regarding the non-compliance of their national legislation and legal practice with EU rules on the recognition of professional qualifications (Directive 2005/36/EC as amended by Directive 2013/55/EU).

The reasoned opinions and supplementary letters of formal notice cover issues crucial for the functioning of the Professional Qualifications Directive, in particular:

  • European professional card: Austria, Belgium, Bulgaria, Croatia, Cyprus, Denmark, Finland, France, Hungary, Italy, Portugal, Romania, Slovakia, Slovenia and Sweden;
  • alert mechanism: Austria, Belgium, Croatia, Denmark, Estonia, France, Germany, Latvia, Malta, Portugal, Romania, Slovakia, Slovenia, Spain and Sweden;
  • possibility to have partial access to a professional activity: Austria, Belgium, Croatia, Denmark, Estonia, France, Germany, Hungary, Latvia, Malta, Poland, Slovakia, Slovenia and Sweden;
  • proportionality of language requirements: Belgium, Bulgaria, Croatia, Germany, Poland, Romania and Slovakia;
  • setting up of assistance centres: France, Hungary, Italy and Portugal;
  • transparency and proportionality of regulatory obstacles: Austria, Belgium, Bulgaria, Croatia, Cyprus, Denmark, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Luxembourg, Malta, the Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden and the United Kingdom.

These issues were also mentioned in a Communication from January 2017 on reform recommendations for regulation in professional services.

All Member States concerned have now two months to respond to the arguments put forward by the Commission. Without a satisfactory response, the Commission may decide to address a reasoned opinion to Estonia and Latvia, and to refer the other 24 Member States to the Court of Justice of the EU.

Background

With the EU rules on the recognition of professional qualifications (Directive 2005/36/EC as amended by Directive 2013/55/EU) the EU has put in place a modern system for the recognition of professional qualifications and experience across the EU. It promotes automatic recognition of professional qualifications in EU countries, making it easier for professionals to provide their services around Europe, whilst guaranteeing an improved level of protection for consumers and citizens.

The Directive applies in general to regulated professions such as nurses, doctors, pharmacists or architects. Exceptions are professions governed by specific EU directives such as auditors, insurance intermediaries, air traffic controllers, lawyers and commercial agents. The Directive also sets rules for
temporary mobility, establishment in another EU country, various systems of recognition of qualifications, and checks for knowledge of languages and professional academic titles.

These rules are complemented by the European professional card (EPC), an electronic certificate available since January 2016 for five professions (general care nurses, physiotherapists, pharmacists, real estate agents and mountain guides). To ensure that EU patients and consumers are adequately
protected, the Commission has also introduced an Alert Mechanism. The Member State that receives professionals from other EU countries is responsible for checking their qualifications or fitness to practice and, in cases of justified doubt, contacting the Member State that issued the diploma.

To facilitate and speed up this exchange of information between Member States, the Commission has put into place the electronic Internal Market Information System (IMI).

For More Information

 

This is a press release published by the European Commission on 07/03/2019