Tuesday, September 19, 2017
In February of this year, the High Court held that the plaintiffs in an EU public procurement process were required to pursue their claim by way of proceedings initiated pursuant to Order 84A of the Rules of the Superior Courts (“RSC”). It was held that even if the claim is one for breach of contract as understood by domestic law, the procedure is one governed by Community law.
The plaintiffs acting collectively under the title BAM Balfour Beatty (“BAM”) tendered for the award of a public contract advertised by the defendant for the design, construction, operation and maintenance of the Gort to Tuam motorway. The defendant, the National Roads Authority (“NRA”), is a statutory body that is responsible for the construction of public roads in the state. BAM were identified as the preferred tenderer in 2010, however due to the financial crisis the project did not proceed. In 2011 when the process was reactivated a rival competitor was ultimately awarded the contract.
BAM claimed that commercially sensitive and confidential information was disclosed by the NRA to the rival competitor during the time between the two tender processes. BAM commenced proceedings by plenary summons claiming damages for breach of contract, negligence and breach of duty, including damages for loss of opportunity and loss of chance.
The NRA pleaded that the claim is not one that could be maintained by plenary action, as it was not brought by the procedures and within the time limits provided by Order 84A of the RSC. However, BAM claimed that the Remedies Directive (Remedies Directive (Directive 89/665/EC))which was transposed in Ireland by the European Communities Remedies Regulations (the “Remedies Regulations”) (European Communities (Public Authorities’ Contracts) (Review Procedures) Regulations 2010 (SI 130 of 2010) as amended by S.I. 192 of 2015) did not cover a claim at common law for breach of contract arising from the procurement process and therefore, they were not required to initiate proceedings under Order 84A.
However the court did not agree and held that BAM’s 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 “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.”
BAM argued that the disclosure of confidential information does not constitute a “decision” taken at any stage in the process, but arises by virtue of a breach of the contractual nexus created by the process. Justice Baker, relying on the Opinion of Advocate General Léger in the case of Commission v Spain, (Case C-214/00) adopted a broad definition of the concept ‘decision,’ which was described as ‘any act or measure’ that informs a decision. Justice Baker then concluded that the disclosure of confidential information qualifies as a ‘decision.’
BAM also argued that the claim is capable of being maintained by common law remedies as an action in contract. The central question in regard to how to characterise the plaintiffs claim is whether the Invitation to Tender (“ITT”) has contractual force.
The court held that Clause 2.3.1 of the ITT constituted an assumption by the NRA of a justifiable obligation to protect, and not unlawfully disclose, commercially sensitive information. Clause 2.3.1 states that “the Authority will treat all commercially sensitive information submitted by a Participant and/or discussed in the Dialogue Stage Two Process in the strictest commercial confidence.” What is excluded from the ITT is contractual force in relation to 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.
The court held that the ITT can however be understood as creating a contractual nexus between the parties, albeit the elements of that contract are elements with regard to the process and not the end result. However, Justice Baker was of the view that this did not answer the question of the characterisation of the claim and held that in considering whether proceedings are properly constituted the court must look at the substance and not the form of an action. The court held that although the claim is pleaded at common law the breach was derived from the procurement law Remedies Regulations. On this basis, the breach was properly characterised as breach of the rules, regulations, principles, and policies of Community procurement law generally.
Ultimately, the court held that a disappointed tenderer is not deprived of a remedy but must seek a remedy within the framework as established under Community law. This precludes the bringing of a claim other than by the mechanism provided by Order 84A of the RSC. In conclusion, the strict procedural requirements and time limits mandated by Order 84A of the RSC cannot be avoided by bringing an action for breach of contract at common law where the breach is derived from procurement obligations under the Remedies Regulations.
For more information, please contact our procurement team.