The planned construction of the new second nuclear reactor unit of the Krško nuclear power plant (i.e. JEK2) represents the largest infrastructure project in the history of independent Slovenia. Several different suppliers are bidding for the construction of JEK2, raising important questions in terms of public procurement, among which the key issue is whether the security exception could be applied to the construction of JEK2.
1. Security exception according the ZJN-3
Public Procurement Act (“ZJN-3”)[1] provides for a number of exemptions which allow contracting authorities not to carry out procurement procedures when interests beyond the objectives of transparency and competition are at stake. One of the key exceptions is the so-called security exception (also known as secrecy exemption).
Article 20(2)(d) of the ZJN-3 stipulates that the ZJN-3 shall not apply to the procurement of goods, services or constructions in the field of defence and security, if the implementation of public procurement procedures or design contests would result in the communication of information the disclosure of which would be contrary to the “essential security interests of the Republic of Slovenia” (“RS”). The security exception applies to public procurement where the security aspect is crucial, in particular for sensitive procurement related to the confidentiality of information and the security interests of the country.
The security interests of the country are of paramount importance and any disclosure of information that could jeopardize them must be prevented. If a public contract contains such sensitive information, a security exception may be applied, which means that the public procurement is not subject to the obligations laid down in the ZJN-3. In this case, the contracting authority has the option to carry out the procedure without publication, to restrict competition to pre-selected tenderers and to conduct the procedure in secret.
1.1. Security interests of the Republic of Slovenia
The ZJN-3 does not define the concept of “security interest”, which is one of the most flexible legal and political concepts and allows for a wide interpretation. The security interests of a country can generally be understood as the national interest in ensuring the highest possible level of security for its citizens and institutions.[2] According to the case law of the CJEU, the term “security interest” corresponds to the terms “public security” and “national security”.[3]
The national security interests of the Republic of Slovenia are defined in the Resolution on the National Security Strategy of the Republic of Slovenia (“ReSNV-2”),[4] which constitutes the fundamental document for the development and guidance of national security. The ReSNV-2 defines the national interests and national security objectives, which are based on the core values of Slovenian society, as enshrined in the Constitution of the Republic of Slovenia, and which contribute to the welfare and progress of the country and its citizens.
The ReSNV-2 highlights the restriction of access to energy as a threat to the national interests of the Republic of Slovenia, which may lead to political, social and economic instability. The ReSNV-2 also warns of global changes in the supply-demand balance of energy resources and fluctuations in their prices, which may further increase the phenomena of isolationism and protectionism.[5]
The Republic of Slovenia is heavily dependent on energy imports, which poses a key challenge to its national security. A stable and sufficient supply of energy resources will certainly remain a priority for the country in the future. Global instabilities and unreliable supply channels can cause supply disturbances, and an energy crisis would pose a major threat to the security interests of the Republic of Slovenia, given its open and export-oriented economy.[6]
To safeguard its security interests in the field of energy supply, the RS is committed to promoting the use of alternative energy sources, the search for new sources and their diversification. The RS will achieve a sufficient supply of key energy resources through diversification of supply sources, increased use of local renewable energy sources and the transition to alternative sources. More specifically, the ReSNV-2 expresses support for the (peaceful) use of nuclear energy.[7]
Strengthening the nuclear energy capacity of the RS is thus identified as one of the key strategic security interests.
1.2. Information the disclosure of which would be contrary to the security interests of the country
The ZJN-3 does not define when information is so sensitive that its disclosure could harm the security interests of the Republic of Slovenia, while the Classified Information Act (“ZTP”)[8] specifies when certain information is deemed to be confidential.
Article 5 of the ZTP defines classified information as information the disclosure of which could have adverse consequences for the security of the country or its political and economic interests. This includes information on systems, devices, projects and plans vital to the national interest, and information related to scientific, research, technological, economic and financial affairs.
Article 13 of the ZTP categorises classified information into four levels of classification, depending on the possible adverse consequences of its disclosure:
- top secret information the disclosure of which would threaten or irreparably harm the vital interests of the Republic of Slovenia;
- secret information the disclosure of which could seriously harm the security or interests of the Republic of Slovenia;
- confidential information the disclosure of which could harm the security or interests of the Republic of Slovenia, and
- restricted information the disclosure of which could harm the operation or performance of the duties of an authority.[9]
It is clear from this classification that only information classified as 1 to 3 would be likely to endanger the security interests of the Republic of Slovenia. The disclosure of information classified as restricted would harm only the individual authority and not the Republic of Slovenia as a whole, and therefore the disclosure of such information would not harm the essential security interests of the RS.
2. Security exception under EU law
2.1. Article 346(1)(a) of the TFEU
The possibility to apply the security exception is also provided for in the Treaty on the Functioning of the European Union (“TFEU”).[10] Article 346(1)(a) of the TFEU provides that the provisions of primary EU law do not exclude the application of a rule under which no Member State is obliged to supply information the disclosure of which it considers contrary to the “essential interests of its security”.
The security exception in Article 346(1)(a) of the TFEU allows Member States to circumvent not only public procurement rules but also other provisions of EU law. This means that the conduct of a Member State in such cases cannot be considered as a breach of public procurement rules and EU law.
2.2. Article 24(2) of Directive 2014/25/EU
The application of the security exception in public procurement in the energy sector is laid down in Directive 2014/25/EU of the European Parliament and of the Council of 26 February 2014 on procurement by entities operating in the water, energy, transport and postal services sectors (“Directive 2014/25/EU”).[11]
Article 24(2) of Directive 2014/25/EU provides for an exception for cases where the “essential security interests” of a Member State cannot be guaranteed by “less intrusive measures”, such as requirements aimed at protecting the confidentiality of information which the contracting entity makes available in a contract award procedure. The security exception in Article 24(2) of Directive 2014/25/EU allows Member States to exclude certain public contracts from the application of the procedures laid down in Directive 2014/25/EU. In order to rely on the security exception provided for in Directive 2014/25/EU, the following conditions must be met:
- The protected public interests refer to the “security interests” of the Member State.
- These interests are “essential”.
- The Member State “considers” the application of the provisions of Directive 2014/25 contrary to the essential interests of its security.
- The protection of such interests cannot be guaranteed by “less intrusive measures”.
Furthermore, Article 24(2) of Directive 2014/25/EU refers to Article 346(1)(a) of the TFEU that allows a Member State to exclude the application of the rules of the Directive where disclosure of the information could compromise the “essential interests of its security”. This means that the public procurement rules of Directive 2014/25/EU do not apply if their application would oblige a Member State to disclose information which it considers to be security-sensitive and the disclosure of which it considers would be contrary to the “essential interests of its security”.
2.3. The essential security interest through the case law of the Court of Justice of the European Union
The legal concept of essential security interest is mainly fed by the case law of the CJEU. The objective of preserving national security is to protect the essential functions of the Member State and the fundamental interests of society, which includes preventing and penalizing activities that may seriously destabilize constitutional, political, economic or social structures and directly endanger society, the population or the State.[12]
Each Member State must identify the specific public interests that constitute its essential security interests.[13] This concept covers the security of institutions and of the population against significant threats arising from internal (e.g. organised crime, riots, etc.) or external circumstances (e.g. intelligence activities, cyber warfare, etc.).[14]
3. The security exception in the JEK2 project
The second nuclear reactor unit of the Krško nuclear power plant (JEK2) represents a strategic investment for achieving Slovenia’s energy self-sufficiency and will supply the country with electricity for at least 60 years.[15] The small size of Slovenia’s electricity system makes its importance even greater, as JEK2 is expected to generate two-thirds of Slovenia’s electricity after the shutdown of the first reactor unit.[16] A stable energy supply is essential, particularly as consumption is expected to double by 2050. [17]
The fact that a large part of Slovenia’s electricity will be generated by a single power plant (i.e. JEK2) makes it crucial to ensure its security. Nuclear power plants such as JEK2 are particularly vulnerable to sabotage, terrorist and cyber-attacks and accidents, so their safety systems must be impeccable. The disclosure of sensitive information related to JEK2 could seriously compromise the security of the country. This increases the justification to apply the security exception for the construction of JEK2, as open procurement procedures would not be able to ensure sufficient security. In an open procedure, confidential information would be accessible to a wide range of entities, which is precisely what the security exception prevents by allowing the protection of sensitive information and preventing potential threats to critical infrastructure.
Given the importance of JEK2, which is projected to be the largest source of electricity in Slovenia and will ensure stable, weather-independent electricity production, the fulfilment of the conditions for the application of the security exception should not be questioned.
Extended version of this article is published in Pravna Praksa: https://shorturl.at/MITYJ
[1] Public Procurement Act (Slo. Zakon o javnem naročanju, Official Gazette of the Republic of Slovenia, No. 91/15, as amended – “ZJN-3”).
[2] Cf. Prezelj, I.: Konceptualizacija nacionalnih varnostnih interesov, Teorija in praksa, vol. 39, no. 4/2022, pp. 621 and 622.
[3] See Opinion of Advocate General Emiliou delivered on 2 March 2023. European Commission v Republic of Poland. Case C-601/21, par. 48, and Judgment of the Court of Justice of the EU in Case C-601/21, European Commission v Republic of Poland, 7 September 2023, par. 78.
[4] Resolution on the National Security Strategy of the Republic of Slovenia (Official Gazette of the Republic of Slovenia, No. 59/19, “ReSNV-2”).
[5] Cf. Chapter 4.14. of the ReSNV-2.
[6] Ibidem.
[7] See Chapter 5.14. of the ReSNV-2.
[8] Classified Information Act (Slo. Zakon o tajnih podatkih, Official Gazette of the Republic of Slovenia, No. 50/06, as amended – “ZTP”).
[9] The term “authorities” is defined in Article 1(2) of the ZTP as state authorities, local community authorities, bearers of public authority and other authorities, companies and organisations that, in carrying out their statutory duties, obtain or have at their disposal the classified information.
[10] OJ C 326, 26.10.2012, pp. 47–390.
[11] OJ L EU 94, 28.3.2014, pp. 243–374.
[12] See Judgment of the Court of Justice of the EU in Case C-601/21, European Commission v Republic of Poland, 7 September 2023, par. 79; and Judgment of the Court of Justice of the EU in Case C-140/20 G. D. v The Commissioner of the Garda Síochána and others of 5 April 2022, par. 61.
[13] See Judgment of the Court of Justice of the EU in Case C-187/16, European Commission v Republic of Austria of 20 March 2018, par. 75; and Judgment of the Court of Justice of the EU in Case C-252/01, European Commission v Belgium of 16 October 2003, par. 30.
[14] Cf. Opinion of Advocate General Emiliou delivered on 2 March 2023. European Commission v Republic of Poland. Case C-601/21, par. 50.
[15] More about the JEK2 project at URL: <https://jek2.si/o-projektu/> (5 September 2024).
[16] Strategy for the Development of the Energy and Climate System of Slovenia until 2050, available at URL:
https://www.sazu.si/uploads/files/SzR/27.5.22/predstavitev2022_final.pdf (5 September 2024).
[17] See https://www.rtvslo.si/okolje/zeleni-petek/poraba-elektricne-energije-se-bo-do-leta-2050-podvojila-je-jek2-res-edina-resitev-za-zeleni-prehod/660201 (5 September 2024).
