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Remedies - a further twist
3 March 2010
No sooner had the Remedies Directive been implemented than the
European Court of Justice (ECJ) ruled that the provisions in
relation to the three month time limit for challenging a
procurement decision lack certainty and are therefore incompatible
with European law.
The Public Contracts Regulations 2006 state that procurement
challenges must be brought "promptly and in any event
within three months from the date when grounds for bringing
proceedings first arose, unless the Court considers that there is a
good reason for extending the period within which proceedings may
be brought".
The case in question, Uniplex(UK) Limited v NHS Business
Services Authority (Case C-406/08), considered two matters
which related to the limitation period. The first was the question
of when the three month time limit for bringing a claim
actually begins to run and the second was whether the requirement
to bring proceedings ‘promptly’ was sufficient to be compatible
with the EU principles of legal certainty and effectiveness.
When does the clock start ticking and how fast does it
tick?
Before the decision in Uniplex, the test for
determining whether a claim had been brought in time was as
described in Holleran v Severn Trent Water [2004] EWHC
2508. In Holleran, the trial judge held that the
clock began "when the grounds first arose", i.e. the
date of the infringement. He also held that there was a public
interest in proceedings being brought 'promptly' on the basis that
a speedy review of complaints was essential to an effective
procurement process.
In Uniplex the ECJ effectively overuled
Holleran ruling that:
- The time limit for bringing legal proceedings should run from
the date on which the complainant became aware (or ought to have
known) of the alleged breach
- The requirement to bring proceedings 'promptly' granted courts
too much discretion to dismiss cases even before the end of
the three month period, where they were not satisfied that the
proceedings had been bought with sufficient promptness. The court
held that this discretion breached the principles of legal
certainty and effectiveness and therefore was not compatible with
EU law
The ECJ has recently considered the same issue in relation to an
action brought against the Irish Government by the European
Commission. The Irish Superior Court Rules state that challenges to
procurement awards must be made, "at the earliest opportunity
or at any event within three months".
In a decision which supports the ruling in Uniplex (and
was heard on the same day) the ECJ held that the Irish wording was
too uncertain because it left tenderers and candidates in doubt as
to the precise length of the limitation period and accordingly
prevented them from being able to effectively exercise their right
to review public procurement decisions.
So, what is the correct test?
Following Uniplex, the test appears to be as follows:
- The time limit for bringing proceedings begins to run only from
the date on which the complainant knew, or ought to have known, of
the infringement of the rules applicable to that procurement. In
practice the court in Uniplex indicated that it was likely a
complainant could only come to an 'informed view' once they had
been given full details of why they had not won the contract
- The court has a duty to extend the period for bringing
proceedings where it is necessary to ensure that the complainant
has three months from the date on which they knew or ought to
have known, of the infringement, rather than the date on which the
infringement actually occurred (if different)
- In the absence of an amendment to the Public Contracts
Regulations 2006 the courts should avoid applying the 'promptly'
requirement
Implications
It is likely the new test will give aggrieved bidders greater
opportunity to bring cases which, at first glance, might appear to
be out of time. This may result in increased costs for defendants
as there is a greater risk that limitation will become a
preliminary issue to many proceedings.
There is a possibility that failed bidders may seek repeated
clarifications as to the reasons why they did not win a tender, in
order to extend the period for bringing a claim as long as
possible. This may result in an increased administrative burden on
contracting authorities.
Contracting authorities are no longer able to argue that a case
should be dismissed because it has not been brought promptly, and
should be aware that the courts may extend time-limits so as to
ensure that complainants really do have a full three
months.
It is likely we may see further amendments to the Public
Contracts Regulations in the future as the judgment makes clear
that member states should ensure that any limitation periods are
precise, clear and foreseeable.
How can contracting reduce the risk of a challenge
following this judgment?
As more budget cuts loom on the horizon, the last thing any
public body wants is the cost, not to mention the publicity,
associated with a protracted procurement challenge that may end up
slow to come to an end. These quick pointers may help to minimise
the risk of a challenge:
- Ensuring that records of correspondence including all telephone
calls, letters and emails and notes of any face to face meetings
are kept so that there is a clear audit trail. These should be kept
until you are satisfied under point 2 that there is no risk of a
challenge.
- Ensuring that full written reasons are offered to any
unsuccessful bidders as soon as they have been informed that they
have been unsuccessful. Making sure that if a face to face meeting
is organised in order to feedback to an unsuccessful bidder
comprehensive notes are taken. Doing this should improve the audit
trail and give contracting authorities a greater level of certainty
as to when their potential liability to any unsuccessful bidders
would end.
- Ensuring that all unsuccessful bidders are informed of the
award decision at the same time, to keep the process as simple as
possible (and prevent the need for any extension of the standstill
period).
If you would like advice on how you can reduce the risks
associated with procurement challenges from unsuccessful bidders we
would be happy to assist you.
talk to us
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