Category: damages

EnergySolutions EU Ltd (now ATK Energy EU Ltd) v Nuclear Decommissioning Authority [2017] UKSC 34

‘A company was unsuccessful in its bid in a tender process carried out by a public authority for a contract which fell within the ambit of Parliament and Council Directive 2004/18/EC (“the Public Procurement Directive”) and Council Directive 89/665/EEC , as amended, which provided for remedies for unsuccessful applicants (“the Remedies Directive”) and which had been given effect to in England and Wales by the Public Contracts Regulations 2006, as amended. The Regulations provided that, after notification of the contracting authority’s decision to award the contract, there would be a ten-day standstill period prior to the actual award of the contract during which time an unsuccessful bidder could issue proceedings to challenge the award. The issuing of proceedings would trigger automatic suspension of the contract award until the challenge was determined or otherwise disposed of, although the court had power to require a cross-undertaking from that party to cover the authority’s losses from not entering into the contract with its preferred bidder. Regulation 47D(2), as inserted, however, allowed for a period of 30 days for the issuing of any proceedings, with regulation 47J(2)(c), as inserted, making provision for an award of damages to the unsuccessful bidder if the court found a breach of duty after the contract had been entered into. The company, having been notified that it was an unsuccessful bidder, expressed its concerns with the procurement process but did not issue proceedings until after the expiry of the standstill period, albeit within the 30-day period. On a trial of preliminary issues, where the authority relied on Court of Justice authority which imposed minimum conditions for claims for breaches of an European Union law right, including that the breach had to be “sufficiently serious”, the judge stated that (i) there was nothing in the Remedies Directive which limited the company to recovery of damages on that basis, and (ii) ordinary principles of English law applied to any award of damages under the 2006 Regulations and so the Court of Justice’s rule would not limit the recovery of damages to “sufficiently serious” breaches of the 2006 Regulations. He declined to make any ruling on a third issue, whether the company’s failure to start proceedings within the standstill period and before the authority had entered into the contract meant that it was not entitled to damages, since it could have acted within the ten-day period to prevent the claimed loss from occurring by causing a suspension of the award of the contract to the successful bidder. On the authority’s appeal on the first two issues the Court of Appeal held that the minimum conditions for an award of damages for breach of an European Union law right had been established by the Court of Justice and so article 2(1)(c) of the Remedies Directive only called for an award of damages where the breach was sufficiently serious, but upheld the judge’s decision that there was no such constraint under the 2006 Regulations, and, on an appeal by the company on the third issue, accepted its submission that the judge ought to have decided as a matter of domestic law that it could not be deprived of damages simply because it had failed to avail itself of the opportunity under the 2006 Regulations to issue the proceedings in time to stop the contract being awarded. The authority appealed on the second and third issues, with the company arguing in relation to the first issue that damages could be awarded under article 2(1)(c) for any breach, whether serious or not. After the hearing the parties reached a settlement of the disputes between them in relation to liability and quantum but requested that the court hand down its judgment on the appeal in any event.’

WLR Daily, 11th April 2017

Source: www.iclr.co.uk