The Tank & Rast Judgment – Radical Expansion of Contract Modification Possibilities

CJEU Opens Door for Including Entirely New Services in Existing Contracts

Key Points

• Court of Justice of the EU (C-452/23) vastly expands interpretation of "unforeseen circumstances" for contract modifications

• Electric vehicle charging infrastructure could be added to 1990s contracts without new procurement

• Applies to both concessions and classic public contracts through identical provisions in the directives

• Previous in-house status and privatization does not prevent subsequent content modifications

• Judgment provides limited guidance, creating both opportunities and legal uncertainty

  
  

Core Issue: Radical Interpretation of "Unforeseen Circumstances"

In case C-452/23 (Fastned v. Die Autobahn GmbH), the Court of Justice has dramatically expanded the possibilities for modifying existing contracts. The case concerned German motorway concessions from 1996-1998 that were extended in 2022 to include the establishment and operation of high-power charging infrastructure for electric vehicles – technology that barely existed when the contracts were originally concluded.

The revolutionary aspect of the decision is the Court's acceptance of including an entirely new service category that:

1. Did not exist when the contracts were originally concluded

2. Represents a significant and attractive market in its own right

3. Could have been separately tendered

   
   

The Court's broad interpretation of "unforeseen circumstances" in Article 43(1)(c) of the Concessions Directive 2014/23/EU (and correspondingly Article 72(1)(c) of the Public Procurement Directive 2014/24/EU) gives contracting authorities far greater flexibility than previously assumed.

Relevance with Important Caveats

The judgment has direct relevance across the EU, but with important differences between concessions and classic procurement:

For concession contracts:

• Directly applicable through Article 43(1)(c) of Directive 2014/23/EU

• Well-suited for long-term concessions (25-40 years) where societal changes are inevitable

• Particularly relevant for sectors such as roads, energy, ports and other infrastructure concessions

  
  

For classic public contracts:

• Same legal principle exists in Article 72(1)(c) of Directive 2014/24/EU

• However, substantially shorter contract periods (typically 3-8 years) leave less room for "unforeseen circumstances"

• The time aspect is crucial: Shorter contracts mean contracting authorities should more easily foresee technological developments

• The Tank & Rast judgment's radical approach will likely be more difficult to apply to shorter contracts

  
  

The key difference: The judgment emphasizes the time aspect, as the modifications came 24 years after contract conclusion. For a standard 4-year service contract, the threshold for what constitutes "unforeseen circumstances" will be significantly higher. Courts will likely require stronger connections between the original service and additional services in contracts with shorter durations.

Nevertheless, the judgment opens up greater flexibility also in the classic sector, especially for longer contracts (e.g., framework agreements with 8-year durations or complex IT contracts).

Limited Reasoning with Limited Guidance

The Court provides surprisingly little concrete guidance for its broad interpretation. The reasoning mainly rests on:

1. Purpose considerations: Article 43(1)(c) is intended to provide "a certain degree of flexibility" to adapt contracts to changing circumstances

2. Protection of contract performance: Modifications should ensure "the proper performance" of the original contract

3. Time aspect: Long-term contracts (here 30-40 years) must anticipate significant societal changes

   
   

The judgment establishes that:

• Technological developments not commercially available at contract conclusion may constitute "unforeseen circumstances"

• Limited connection is required between original service and additional service

• Modifications must not alter the "overall nature" of the contract, but this limitation is interpreted very flexibly

  
  

Privatization Does Not Prevent Contract Modifications – But the Reverse Does Not Apply

A fascinating aspect of the case is that the concessionaire was originally a publicly owned in-house entity that was later privatized (in 1998). The judgment establishes that:

1. The Court does not assess whether the privatization itself was lawful, as any time limits for challenging this had expired

2. The previous in-house status does not prevent subsequent modifications to the contract content

3. This contrasts with the Lerici judgment (C-719/20) from 2022, which held that a new owner cannot automatically assume an in-house contract

   
   

This creates an important distinction between:

• Change of contractor (not permitted for former in-house contracts)

• Change of contract content (may be permitted even for former in-house contracts)

  
  

Alternatives When Contract Modification Is Not Permitted

If a similar contract modification had not been permitted, the following alternatives would have been available:

1. Separate Tendering:

   Organize a new competition for the new service (e.g., charging infrastructure).

   Advantage: Full market access for new actors.

   Disadvantage: Coordination problems between multiple suppliers in the same area.

   
   

2. Regulatory Measures:

   Introduce regulations requiring all relevant suppliers to include the new service as a public service obligation.

   Advantage: Avoids direct contract modification.

   Disadvantage: May face legal challenges as "regulatory expropriation."

   
   

3. Compensated Third-Party Access:

   Renegotiate contracts to allow third parties access in exchange for compensation to existing contractors.

   Advantage: Balances interests of multiple actors.

   Disadvantage: Complex pricing and risk of overcompensation.

   
   

4. Partial Expropriations:

   Expropriate limited parts of the concession area for new functionality.

   Advantage: Gives authorities direct control over selected areas.

   Disadvantage: Costly compensation claims and administratively demanding.

   
   

Practical Consequences and Challenges

The judgment has far-reaching consequences for contracting authorities and market players:

For contracting authorities:

• Significantly greater flexibility to adapt long-term contracts to new technology and changing societal needs

• Ability to modernize older contracts without complicated new procurement procedures

• However: Unclear guidance creates legal uncertainty about the limits of this flexibility

  
  

For market players:

• Existing suppliers may gain access to new lucrative markets without competition

• New players may be excluded from markets related to existing infrastructure

• Paradoxically: The longer a contract runs, the more "unforeseen" modifications become possible

  
  

Unanswered questions:

• How close must the connection be between original service and additional service?

• What specific standard applies for a "diligent contracting authority"?

• When is the "overall nature" of the contract actually changed?

• How should competition concerns be weighted in the assessment?

  
  

Most likely, future judgments will need to clarify these conditions further, but until then, contracting authorities have gained a powerful tool for modernizing existing contracts – with both opportunities and risks for distortion of competition.