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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.

 

ACE Declaration
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