CJEU (AG) ¦ Russia Procurement Ban Does Not Reach Below-Threshold Contracts, but Member States May Extend It

Advocate General: the Article 5k procurement ban stops at the EU thresholds

The prohibition on awarding public contracts to Russian nationals and Russia-based or Russia-controlled entities in Article 5k of Regulation (EU) No 833/2014 does not apply to contracts below the thresholds of the EU public procurement Directives, even where national law extends those Directives to smaller contracts. That is the central proposal of Advocate General Medina in her Opinion of 10 September 2026 in Case C-378/25 Smetna palata, a reference from a Bulgarian administrative court now before the Grand Chamber. She also proposes that contracting authorities remain free to apply the same exclusion of their own accord below the thresholds, and that a public body acting in good faith should not be penalised for doing so where the scope of the ban was unclear.

A mayor fined for applying Russia sanctions too widely

In December 2022, the mayor of a small Bulgarian municipality launched a tender for a waste collection vehicle under a financial lease, worth about EUR 145 000 net of VAT. The tender conditions listed, as a ground for exclusion, the circumstances set out in Article 5k of Regulation 833/2014. That provision, introduced in April 2022 in response to Russia’s war against Ukraine, prohibits awarding or continuing to perform public and concession contracts falling within the scope of the EU public procurement Directives with Russian nationals, persons established in Russia, entities more than 50 % owned by them, and anyone acting on their behalf or at their direction, including significant subcontractors and suppliers.

The contract was below the EUR 215 000 threshold of Directive 2014/24/EU for supply contracts awarded by sub-central authorities. Bulgaria, however, had chosen to apply the Directive’s rules to supply contracts from about EUR 139 000. After an audit, the Bulgarian Court of Auditors found that the mayor had unduly restricted access to the tender and fined him the equivalent of about EUR 3 500. The European Commission’s FAQ on procurement sanctions and the Bulgarian competition authority both took the view that Article 5k does not cover below-threshold contracts. The administrative court hearing the mayor’s appeal was not convinced and asked the Court of Justice to clarify.

Bastian Schwind-Wagner _Follow

"A municipal mayor was fined for being too careful with Russia sanctions, which says a lot about how uncertain the scope of the EU procurement ban still is. The Advocate General's answer is pragmatic: the EU ban itself stops at the EU thresholds, but nothing in EU law stops a contracting authority from applying the same exclusion to smaller contracts.

Her reading of the non-liability clause in Article 10 of Regulation 833/2014 may matter even more. Where the scope of a sanctions provision is genuinely unclear and an authority or company acts in good faith, it should not be penalised for erring on the side of caution, and that is a principle every sanctions compliance officer will welcome."

The wording is clear: only contracts within the Directives

On the first question, the Advocate General relies on the text. Article 5k applies to contracts “falling within the scope of the public procurement Directives”, and Directive 2014/24 applies only to contracts at or above its thresholds. Since the Bulgarian contract fell below the EU threshold, the EU prohibition did not apply.

The fact that Bulgaria lowered the thresholds in its national law does not change that. The Court has already accepted that Member States may extend the Directive’s rules to smaller contracts, but doing so is an independent choice made within national competence. In public procurement, the dividing line between EU and national competence is drawn by the economic scale of the contract: contracts above the thresholds matter for the internal market, while smaller ones remain the responsibility of the Member States. Article 5k cannot reach beyond the EU’s competence, so its scope cannot expand simply because a Member State has gold-plated the Directive.

The referring court worried that a literal reading would leave gaps in the sanctions regime. The Advocate General answers that contextual and purposive readings can resolve ambiguities but cannot override clear wording. They lead to the same result in any event: the aim of Article 5k is to cut off financial resources that help Russia continue its war, and that aim can be met by covering the contracts that are relevant to the internal market. The Commission’s FAQ, she adds, plays no role in the analysis, because only the Court can interpret the sanctions regulations.

National authorities may still exclude Russian bidders below the thresholds

The more far-reaching part of the Opinion concerns the third question: does Article 5k prevent a contracting authority from applying the same exclusion to a contract outside the EU’s remit? Here the Advocate General turns to the nature of EU competence over restrictive measures.

She distinguishes sectoral measures adopted under Article 215(1) TFEU, which restrict economic activities with a third country, from individual measures under Article 215(2) TFEU, such as asset freezes and travel bans on listed persons. The Common Foreign and Security Policy itself does not fit neatly into the Treaty categories of exclusive, shared or supporting competence. For sectoral measures, which range from export controls and import bans to financial and services restrictions, the type of competence must be assessed area by area. Article 5k concerns public procurement, an area of shared competence linked to the internal market, so it is an expression of shared competence.

The question then becomes whether Article 5k pre-empts national action. In her view, it does not. The Council did not fully harmonise the field, since it deliberately confined the ban to contracts covered by the Directives. A national exclusion that mirrors Article 5k does not hinder the aims of the EU sanctions; it serves them. And because the scope is identical, there is no conflict between EU and national rules. Member States are therefore free to adopt a similar prohibition for procurement within their competence, including by requiring tenderers to declare that none of the Article 5k circumstances applies, provided that nothing in the national measure hinders the aims of the EU restrictive measures.

She rejects three counter-arguments. Whether such an exclusion should be laid down by the legislature rather than by individual contracting authorities is a matter of national law. The Commission’s view that Member States may not add their own individual listings to the EU asset freeze lists concerns a different type of measure, which affects the free movement of capital and the single external border. And the statement in the recitals that uniform EU action was needed reflects a subsidiarity assessment for contracts within the EU’s remit, not a bar on national measures outside it.

Equal treatment and non-discrimination are not breached

Contracts below the thresholds still have to respect the Treaty principles of equal treatment, non-discrimination and transparency where they are of certain cross-border interest, which is for the national court to assess. Even then, the Advocate General sees no breach. The Council itself considered the aim of Article 5k sufficient to justify limiting those principles for contracts within EU competence, so it is hard to argue that an identical national exclusion pursuing the same aim violates them.

Russian operators, she notes, cannot claim equal treatment in EU procurement anyway, because Russia is not a party to the WTO Government Procurement Agreement or any other agreement guaranteeing reciprocal access. For EU-established entities owned or controlled from Russia, the exclusion is justified as a measure against circumvention, in line with the Court’s judgment of February 2026 in Opera Laboratori Fiorentini, which requires a fact-based inquiry into whether an undertaking actually acts on behalf of or at the direction of a Russian entity. Transparency was respected because the tender conditions stated the exclusion expressly.

Good faith and the non-liability clause

Finally, and although no question asked about it, the Advocate General invites the Court to address Article 10 of Regulation 833/2014. That provision excludes liability for natural and legal persons, including public bodies, who did not know and had no reasonable cause to suspect that their actions would infringe the Regulation. It would be the first time the Court interprets it.

One could argue that Article 10 does not help the mayor, because by applying the exclusion below the thresholds he was acting under national law, not under the Regulation. She disagrees: his error concerned the scope of Article 5k, so his liability should be assessed in light of Article 10. Where there are reasonable doubts about the scope of a provision of Regulation 833/2014, and the authority concerned can demonstrate good faith, Article 10 excludes its liability for wrongly applying a prohibition similar to Article 5k. The fact that the question has reached the Grand Chamber, she observes, shows how unclear the scope was.

What it means for contracting authorities and bidders

If the Court follows the Opinion, contracting authorities across the EU will know that Article 5k is mandatory only for contracts at or above the EU thresholds, but that they may lawfully extend the same exclusion and declaration requirement to smaller tenders. Bidders, and the banks and advisers supporting them, should therefore expect Russia-related exclusion clauses and ownership declarations even in low-value procurement, and should be prepared to document ownership and control down to the 50 % test and the “acting on behalf or at the direction of” standard.

For sanctions compliance more broadly, the Opinion offers two useful signals. First, sectoral sanctions do not automatically prevent Member States from going further in areas of shared competence, as long as national measures support rather than undermine the EU aims. Second, Article 10 may protect operators who take a cautious but good-faith view of an unclear provision. Neither point is settled until the Grand Chamber rules.

Dive deeper

• CURIA ¦ Case C-378/25 Smetna palata, Opinion of Advocate General Medina of 10 September 2026 ¦ Link