ECJ decides on HOAI old cases: Between private parties, the maximum and minimum rates of the old HOAI can still be applicable!

In its judgment of January 18, 2022 (Case C-261/20), the ECJ surprisingly ruled that the maximum and minimum rates of the old HOAI can continue to be taken into account by national courts in disputes between private individuals. Thus, the decision on the merits lies once again with the national courts. In favor of the unsuccessful party in such a legal dispute, the ECJ considers a claim for damages against the state for a violation of Union law to be possible.

Initial situation

The starting point was an appeal pending before the Federal Court of Justice (BGH) by a real estate company that wanted to ward off an increase in an engineer’s claim for remuneration – a so-called claim for an increase. The engineer requested an increase in his fee agreed in 2016 in accordance with the minimum rates under the old HOAI 2013.

The first two instances awarded the engineer the increased fee using the minimum rates. Finally, the engineering contract had been concluded between two private parties subject to the minimum and maximum rates pursuant to Section 7 HOAI 2013. The real estate company referred to the ECJ ruling of July 4, 2019 and argued that the minimum and maximum rates of the HOAI 2013 violated EU law and that the national courts had to observe the primacy of application of EU law also in legal disputes between private parties.

The question of the binding nature of the old minimum and maximum rates between private parties has so far been answered differently by national courts. KPMG Law had already reported on this: https://kpmg-law.de/mandanten-information/hoai-mindestsaetze-europarechtswidrig-und-nun/

The BGH had suspended the appeal proceedings by order of July 14, 2020 and referred the matter to the ECJ for a preliminary ruling (BGH, order of July 14, 2020, Case No. VII ZR 174/19).

The Advocate General at the ECJ Maciej Szpunar had argued in his opinion of July 15, 2021 against the application of the old maximum and minimum rates for architect and engineer contracts also between private parties. He based his considerations essentially on the freedom of contract deriving from the fundamental rights of the EU. We have presented more details on the final motions here: https://kpmg-law.de/newsservice/generalanwalt-beim-eugh-mindest-und-hoechstsaetze-der-hoai-auch-in-altfaellen-zwischen-privaten-nicht-mehr-anwendbar/

Decision of the ECJ of January 18, 2022

The ECJ takes a different view and comes to the following conclusion (para. 37):

“The referring court is therefore not required by European Union law alone to disapply Paragraph 7 of the HOAI, even if that provision is contrary to Article 15(1), (2)(g) and (3) of Directive 2006/123.”

It is true that, in principle, Union law takes precedence over the law of the Member States and that all Member State authorities are obliged to give full effect to the rules of the European Union (para. 25). However, the obligation of the national judge to refer to the content of a European directive when interpreting and applying the relevant provisions of national law finds its limits in the general principles of law and should not serve as a basis for an interpretation against formally valid national law (contra legem) (para. 28).

In this context, the nature and legal effects of European directives should also be taken into account (para. 31). A directive cannot itself create obligations for an individual, so that an appeal to the directive as such is not possible against him before the national court. Pursuant to Art. 288 para. 3 TFEU, a directive is only binding on the Member State to which it is addressed. For direct effect against private parties, the Union is limited to issuing regulations (para. 32).

It is noteworthy that the ECJ refers in its judgment over several pages, without being asked, to the possibility of claims for damages under EU law by the unsuccessful party against the member state (para. 41 et seq.). The private party affected by the minimum or maximum rates ultimately has no influence on the lack of legislative correction. If he is exposed to a higher claim for remuneration due to a delayed implementation, a claim for recourse against the member state is possible.

Significance for national legal practice

In preliminary ruling proceedings, the ECJ decides only on the interpretation of Union law. The final decision on whether the minimum and maximum rates under Section 7 HOAI 2013 will continue to be applied in old cases between private parties has been sent back to the national courts by the ECJ. For the time being, it remains to be seen how the BGH will deal with this ruling of the ECJ in the context of the pending appeal.

Most recently, however, the BGH had already indicated in its press release No. 59/2020 on the decision of May 14, 2020 (VII ZR 174/19) that it was inclined not to assume any direct effect of the Services Directive with the consequence that Section 7 HOAI 2013 can continue to be applied in ongoing court proceedings between private individuals. If the BGH so decides for the pending appeal, increase plaintiffs could continue to invoke the minimum rates of the HOAI 2013 and demand an increased remuneration claim.

For the unsuccessful defendant, the state liability claim referred to by the ECJ would remain. However, the prerequisites for such a claim would have to be determined separately in each individual case. The time at which the contract was concluded may also play a role here. In its judgment, the ECJ only referred to the principles of its case law on damages, but did not rule on them.