No way out – High Court confirms unsuccessful tenderer cannot avoid the strict time limits under the Community Remedies Regime
BAM PPP Ireland Limited and Balfour Beatty Ireland Limited v National Roads Authority (21 February 2017)
The High Court has confirmed that a disappointed tenderer in an EU public procurement process in Ireland is required to seek a remedy within the framework established under Community law for review of public contracts. This precludes the bringing of a claim other than by the mechanism provided by Order 84A of the Rules of the Superior Courts, even where the claim is one for breach of contract as understood in domestic law.
In 2010, the plaintiffs, acting collectively under the title BAM Balfour Beatty, tendered for the contract for the design, construction, operation and maintenance of the Gort to Tuam motorway advertised by the National Roads Authority (NRA). BAM Balfour Beatty (BAM) was selected as the preferred tenderer. The project did not proceed due to the financial crisis and was reactivated in 2011. BAM claimed that in the time between the two processes, confidential information relating to the “relative overall standing” of its tender was disclosed to a rival competitor who was ultimately awarded the contract. BAM commenced proceedings by way of plenary summons claiming damages for breach of contract, negligence and breach of duty, including damages for loss of opportunity and loss of chance, arising from the disclosure of commercially sensitive and confidential information by the NRA in the course of the tender process. Notably, BAM would have been out of time to issue proceedings under Order 84A.
The NRA argued that the claim had not been properly brought as it was not brought pursuant to the procedures and within the time limits provided by Order 84A of the Rules of the Superior Courts (RSC). Order 84A is applicable to all claims brought in relation to contracts which are above EU procurement thresholds. The plaintiff's claim was that the European Communities (Public Authorities Contracts) (Review Procedures) Regulations 2010 (SI 130 of 2010) (as amended) (the Remedies Regulations) did not cover a claim at common law for breach of contract arising from the procurement process and that therefore, they were not required to initiate proceedings under Order 84A RSC.
Nature of the Claim
One of BAM's central arguments was that the Remedies Directive (Directive 89/665/EEC) implemented in Ireland by the Remedies Regulations, did not govern a claim at common law for breach of contract arising from the procurement process. The Court did not agree. Following an examination of the overriding principle of the European procurement remedies regime and the strict time limits required by Order 84A RSC, Justice Baker concluded that the plaintiffs’ claim was properly characterised as a claim under Regulation 8(1)(a) of the Remedies Regulations. Regulation 8(1)(a) provides that an eligible person may apply to the Court—
(a) for interlocutory orders with the aim of correcting an alleged infringement or preventing further damage to the eligible person’s interests, including measures to suspend or to ensure the suspension of the procedure for the award of the public contract concerned or the implementation of any decision taken by the contracting authority
Baker J adopted a broad definition of the concept of a “decision” (following the approach of Advocate General Léger in Commission v. Spain (Case C-214/00)), and was of the view that the subject matter of the dispute (i.e. the disclosure of information) did constitute a “decision” taken during the process.
The appropriateness of treating the claim as one in contract
The plaintiffs also argued that the claim was capable of being maintained as an action in contract under common law. This was on the basis that the Invitation to Tender (ITT) for the competition created legal relations between the two parties. The Court made several important findings on this point. Firstly, the Court found that the ITT did create a "contractual nexus" between the parties. Secondly, the Court stated that the NRA "arguably did" assume liability to engage the process in accordance with the provisions of the ITT and the elements of the contract related to the process and not the end result. The Court also seemed to accept that the ITT excluded (in various other clauses) contractual force in relation to other matters including the continuance of the competition, the award of the contract for the project to a competitor, and the creation of legal relations by means of any representation or matter of fact referred to in the document. However, the Court did hold that, on the basis of Clause 2.3.1 of the ITT, the NRA had assumed a liability to respect the confidentiality of commercially sensitive information. Justice Baker stated that Clause 2.3.1 constituted an assumption by the NRA of a "justiciable obligation" to protect, and not unlawfully disclose, commercially sensitive information. Furthermore, this liability was not excluded by the exclusionary clauses contained in the document by which contractual force was precluded in regard to the project.
The correct approach to characterisation
Even though the claim could be classed as a contractual claim, the Court was of the view that this did not answer the question of the characterisation of the claim for the purpose of determining the procedures for the commencement of the action. The Court looked at the substance and not the form of the action and the source of the rights which were alleged to have been breached. The Court reasoned that although the claim was pleaded at common law, the breach was derived from the 2006 Regulations. On this basis, the breach was properly characterised as "a breach of the rules, regulations, principles and policies of Community procurement law generally".
Different causes of action may be differently maintained
The Court also rejected the plaintiff's argument that different causes of action could be differently maintained and that therefore, the mere fact that a contract occurred against the backdrop of the procurement regulations did not mean that contractual rights at common law did not arise. As the claim for breach of confidentiality was directly echoed in Regulations 50(3) and (4) of the Public Contracts Regulations, the obligations of NRA derived from the Regulations.
The Court has confirmed that it is not possible for aggrieved tenderers to avoid the strict procedural requirements and time limits mandated by Order 84A RSC by bringing an action for breach of contract at common law where the breach is derived from procurement obligations under the Regulations. This decision reinforces the all-encompassing nature of Order 84A when it comes to procurement challenges. Contracting authorities should take note that while it may be possible to exclude liability in relation to the end result of a competition, procurement documents can create "justiciable obligations" in relation to the process. Although the decision refers to the procurement regulations of 2006 and 2007 (which have since been repealed and replaced by the European Communities (Award of Public Authority Contracts) Regulations 2016 and the European Communities (Award of Contracts by Utility Undertakings) Regulations 2016 respectively, the principles will continue to apply.
For further information, contact any member of the EU, Competition & Procurement Group at A&L Goodbody.
Date Published: 08 May 2017