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A waste of a challenge
3 June 2010
The High Court has applied the recent European Court of Justice
ruling in Uniplex (UK) Limited v NHS Business Services
Authority (Case C-406/08) by dismissing a challenge to a
public procurement procedure after the defendant successfully
argued that the action had been brought outside the three month
time limit from when it knew (or ought to have known) that there
had been an apparent infringement of the EU procurement rules.
The facts of the case
In the case, Sita UK Ltd v Greater Manchester Waste Disposal
Authority, the contracting authority (GMWD) began a tender
procedure for a PFI project to provide waste disposal facilities
for Greater Manchester in 2006. Sita led a consortium which
submitted a bid, which was one of two bids to make it to the final
round. On 27 January 2007, GMWD announced that it had selected the
other final bidder, Viridor Laing (Greater Manchester) Limited, as
the preferred bidder and on 18 April 2008 announced that it
intended to enter into a contract with Viridor.
The contract was entered into on 8 April 2009 and Sita
subsequently went to court on 27 August 2009, claiming that
Viridor’s bid could not be said to be the most economically
advantageous bid because it had substantially changed in nature
between 2007 and 2009.
GMWD made an application for the claim to be struck out on the
basis that the statutory limitation period of three months
began to run on 8 April 2009 and that Sita was therefore out of
time.
Application of the Uniplex decision
The High Court considered three questions which it considered
needed clarifying before it could apply the ruling in Uniplex.
These were as follows:
i. Grounds for bringing
proceedings
The Uniplex judgment did not consider what grounds would trigger
the start of the limitation period. Sita tried to establish that
grounds included the infringement itself and some potential damage,
whilst GMWD argued that only knowledge of the infringement itself
was required.
The High Court agreed that the relevant grounds existed just in
the infringement. Its reasoning was that the date of the
infringement was relatively easy to identify, whereas the date on
which related losses might be identified was not.
ii. Level of knowledge required to bring
proceedings
Sita argued that it did not have sufficient knowledge on which
to base its claim until July 2009, because it was awaiting facts
demonstrating the breach as opposed to facts which simply indicated
an infringement.
GMWD cited the Advocate General’s opinion in Uniplex, which
stated that once a bidder had received the “essential reasons” for
being unsuccessful it could generally be assumed that they had
sufficient knowledge of an infringement to bring a claim.
The High Court rejected Sita’s argument, ruling that the
deciding factor was the point when the aggrieved bidder first knew
(or ought to have known) that it had a cause of action. It decided
that Sita had had enough information by April 2009 to begin
proceedings.
iii. Extension of time
The High Court accepted that GMWD had agreed to some extensions
of time whilst in the process of providing further information
requested. It therefore considered whether it should exercise its
discretion to extend the time limit.
In making that decision, the High Court considered the public
interest in scrutiny of GMWD’s conduct; an alleged lack of openness
on the part of GMWD; whether any prejudice would be caused to GMWD
if an extension was granted; and the requirement that Sita act
‘promptly’ in bringing proceedings.
The High Court noted that GMWD had not acted transparently in
disclosing information to Sita, but ultimately decided that the
first three factors did not carry sufficient weight to justify an
extension of time. It also ruled that the delay of a month and a
half between Sita receiving the further information from GMWD and
filing a claim did not satisfy the promptness requirement. And so
it concluded that an extension of time should not be allowed.
What does this mean for contracting
authorities?
This case is the first one to apply the Uniplex judgment in the
United Kingdom and should be welcomed by contracting authorities
because it provides important clarification.
In practical terms, the judgment reduces the risk posed after
the ruling in Uniplex whereby aggrieved bidders might make repeated
requests for clarification of the reasons for not being awarded a
contract. This is because it is clear from this case that knowledge
of the existence of an infringement, as opposed to knowledge of the
infringement and that any particular damage or loss has been
caused, is sufficient to trigger the start of the limitation
period.
The case also makes clear that whilst, following Uniplex,
contracting authorities are unable to argue that claims should be
struck out because they have not been brought sufficiently
promptly, the overall objective remains one of rapidity. Courts are
therefore still free to consider whether the claim was progressed
promptly when considering whether or not to exercise their
discretion and grant aggrieved bidders extensions of time for
bringing proceedings.
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