OCS v DAA Appeal: Supreme Court Judgment on Automatic Suspension - 30 January 2015

Summary:
On 30 January 2015, Mr Justice Frank Clarke issued a detailed judgment outlining the reasons for the Supreme Court's dismissal of an appeal by Dublin Airport Authority ("DAA") against the High Court judgment of 30 May 2014 on a refusal to lift an automatic suspension. Mr Justice Max Barrett in the High Court had refused to lift the automatic suspension that arose on the initiation of proceedings by an unsuccessful bidder, One Complete Solutions Ltd (OCS), in a tender process for site services run by the DAA. On 30 July 2014, the Supreme Court dismissed the DAA's appeal and indicated that its judgment would follow.

Background:
In April 2014, OCS issued High Court proceedings seeking review of DAA's contract award decision to award a contract for site services to Momentum Support.  DAA subsequently brought an application seeking confirmation that they could proceed to award the contract to Momentum Support. The High Court found that the DAA was prevented from concluding the contract following the initiation of proceedings and declined to lift the so-called "automatic suspension" (see summary of the High Court case - High Court Declines to Lift Automatic Suspension). The DAA appealed that decision to the Supreme Court.

On appeal, the Supreme Court reached two substantive conclusions. First, it confirmed that an automatic suspension arises on initiation of proceedings (provided a contract has not yet been signed) preventing a contracting authority from concluding the contract until the substantive issue has been determined by the Court or the case has been settled. Secondly, the Court agreed with OCS that Irish courts do not have jurisdiction under the Irish Remedies Regulations to lift the automatic suspension on an application from a contracting authority.

Judgment Analysis:
The Supreme Court analysed the relevant legal framework which included both EU law (Directive 92/13/EEC or the so-called "Utilities Remedies Directive") and the Irish implementing Regulations (SI 131 of 2010 or the so-called " Remedies Regulations") focusing in particular on Regulation 8. The Court noted that the UK case law which was relied upon by the DAA was of limited value due to a significant difference between the UK and Irish Regulations in relation to automatic suspension. In particular, the UK Regulations mandate the UK courts to apply principles equivalent to those used in interlocutory injunction proceedings in the public procurement field. There is no such provision in the Irish Remedies Regulations. The Supreme Court emphasised the duty of the Irish Courts to interpret the Regulations in accordance with the obligations of the State arising from the relevant Directive so as to achieve the underlying objective of the Directive. The Court considered that the wording of Regulation 8(2) was straightforward in that it imposed an automatic suspension provided that there is an application ongoing either under Regulation 8(1) or Regulation 8(2). The Court did not agree with the DAA which argued that an affected party needed to bring a specific application before the court for suspension or to seek an order providing for the continuance of the automatic suspension beyond the standstill period. The suspension arises automatically on the initiation of proceedings. That position remains irrespective of whether the challenge is brought inside or outside the standstill period.

In relation to whether the Court has power to lift the automatic suspension, the Supreme Court analysed the specific wording of Regulation 8(2) and Article 2 of the Utilities Remedies Directive. The Court considered that there were three possible outcomes in seeking to interpret the Directive i.e. (i) that the Directive does not contemplate in any case the possibility of lifting the suspension; (ii) that the Directive requires that a contracting entity have the possibility of having the suspension lifted or (iii) that the Directive gives discretion to a Member State whether or not to provide for a lifting of the suspension. The Court focussed on an interpretation of the meaning of "interim measures" in Article 2(3) and 2(4) of the Directive i.e.:

“3. When a body of first instance, which is independent of the contracting entity, reviews a contract award decision, Member States shall ensure that the contracting entity cannot conclude the contract before the review body has made a decision on the application either for interim measures or for review. The suspension shall end no earlier than the expiry of the standstill period referred to in Article 2a(2) and Article 2d(4) and (5). […]

4. Member States may provide that the body responsible for review procedures may take into account the probable consequences of interim measures for all interests likely to be harmed, as well as the public interest, and may decide not to grant such measures when their negative consequences could exceed their benefits”

Having regard to the interpretation of "interim measures" in the context of public procurement in the CJEU's judgment and the opinion of the Advocate General in Commission v. Spain (Case C-214/00), the Court concluded that "interim measures" may refer to measures designed to interfere in the course of the process as opposed to a "review" which is designed, after the process has been completed, to challenge the ultimate outcome of the process. Accordingly as the case involved an application for review (as opposed to an application for interim measures), a proper construction of the Irish Regulations was that there was no jurisdiction to lift the automatic suspension. The Court also considered that this interpretation was not contrary to the Utilities Remedies Directive as that Directive does not require a Member State to have in place measures which permit the Court to lift the automatic suspension.

Commentary:
While the judgment is helpful in clarifying the situation that applies in relation to the automatic suspension under the Irish Remedies Regulations, it raises some interesting issues. The question of whether or not the Remedies Directive actually prevents the lifting of an automatic suspension while a review procedure is ongoing is unresolved. The Court noted that the UK regime permits the lifting of the suspension and that there may be some relevance to the fact that no challenge has been brought as to whether that regime is contrary to the Remedies Directive. However, the Court noted that the absence of any such challenge cannot be decisive and the UK regime is consistent with a view that Member States have discretion as to whether or not to provide for a lifting of the suspension. It is also notable that while the case was concerned with an application for review of a contract award decision under Regulation 8(1)(b), the Court confirmed that the automatic suspension also applies to Regulation 8(1)(a) applications (i.e. where a candidate or tenderer has applied for interlocutory orders during the course of the tender procedure).In the latter applications however there is jurisdiction to have the procurement procedure suspended and subsequently lifted. The Court was critical of the drafting of the Irish Remedies in this context and the Court requested that those charged with a review of the text of the Regulation give urgent consideration to the issues raised by the proceedings.

For further information please contact a member of our EU, Competition & Procurement Team.

Date published: 20 March 2015