April’s case digest includes an ECJ decision relating to the standard set by EU law for the review of preparatory acts prior to a contract award, and the Supreme Court decision in Nuclear Decommissioning Authority v EnergySolutions regarding the circumstances in which damages may be recoverable for failure to comply with the requirements of Directive 2004/18/EC.
Please feel free to submit a comment below or send us an Ask query if you have any views on the cases covered, or think that we have missed a case that should be brought to the attention of public procurement practitioners.
ECJ ruling on whether national legislation on review of decisions made prior to contract award contravenes the Remedies Directive (Marina del Mediterráneo, SL,v Consejería de Obras Públicas y Vivienda de la Junta de Andalucía)
The European Court of Justice (ECJ) has handed down a ruling, on a question referred by a Spanish court, on the standard set by EU law for the review of preparatory acts prior to the award of the contract. Under the Spanish law, a decision by a contracting authority to admit a tenderer to a procedure could only be challenged in the context of an appeal against the decision awarding the contract and could not be challenged at an earlier time.
The ECJ ruled that the Spanish law breached the provisions of the Remedies Directive. The concept of a “decision” of a contracting authority has a broad meaning for the purposes of Article 1(1) of the Remedies Directive and includes a decision admitting a bidder in a tender procedure. Further, Article 1 of the Remedies Directive also obliges member states to ensure that decisions taken by contracting authorities can be the subject of effective remedies as soon as possible. The ECJ ruled that it is an infringement of the provisions of the Remedies Directive for national law to require, in all circumstances, a tenderer to await the award of the contract before it can challenge a decision admitting a tenderer to a tendering procedure.
The ECJ’s ruling differs from the opinion of the Advocate General, who held that the Spanish rules were compatible with the Remedies Directive, provided that the national legislation did not hinder immediate review of preparatory acts that produce adverse legal effects on undertakings and that a plea of illegality of preparatory acts that do not produce adverse legal effects on undertakings, such as a decision to admit a candidate to a tendering procedure, can be made in support of an action against the final decision awarding the contract taken on the basis of those preparatory acts.
Supreme Court decides that procurement damages are confined to serious breaches (Nuclear Decommissioning Authority v EnergySolutions EU Ltd (now called ATK Energy EU Ltd))
This was an appeal on preliminary points of EU and domestic law regarding the circumstances in which damages may be recoverable for failure to comply with the requirements of Directive 2004/18/EC, as given effect in the UK by the Public Contracts Regulations 2006 (SI 2006/5). For more information see Legal update, High Court finds failure to award contract in respect of most economically advantageous offer warrants award of damages.
The Supreme Court held that:
- It did not accept that EU law required a remedy in damages for any breach, whether serious or not, or that this issue should at least be referred to the ECJ.
- The Court of Appeal was wrong to hold that, even though EU law only required a remedy in damages for a serious breach, domestic law went further by requiring a remedy in damages for any breach, whether serious or not.
- It did not accept that there should be a trial as to whether an award of damages may in the circumstances of this case be refused to an economic operator.
It appears that the court has struck the right balance between the interests of bidders and contracting authorities. Whilst finding that damages would be confined to serious breaches, the court also held that an economic operator was entitled, in the face of what it viewed as (and later proved to have been) a breach of duty by the contracting authority, to leave it to the authority to take the risk of implementing its wrongful award decision.
TCC allows amendments to a consent order soon after it had been agreed (Bombardier Transportation UK Ltd v Merseytravel)
In proceedings challenging a public procurement exercise, the court granted the claimant’s application to vary the terms of a recently agreed consent order. The consent order provided for the establishment of a confidentiality ring in relation to confidential information, and the claimant sought to vary the conditions on which individuals could see the different types of information and documentation involved.
Coulson J rejected the defendant’s argument that it would be inappropriate to vary the order. The judge held that parties should not be prevented from seeking to vary the terms of consent orders if practical difficulties in complying with them subsequently became apparent. This was particularly so in procurement cases, where things moved fast and what may be anticipated as workable proved, in practice, to be anything but. Further, the schedule to the consent order expressly envisaged that there may be subsequent amendments to the schedule, and that an application might be made to court if such amendments could not be agreed.
The decision is of interest because it acknowledges that, while a good deal of effort and co-operation goes into agreeing a consent order containing detailed provisions for parties’ future conduct, it is not always possible to comply with the terms in practice.