BEYOND THE DIRECTIVE

Nigel Giffin QC

11KBW Chambers

Bangor University procurement week

22 March 2013

WHERE DO PROCUREMENT LAW RIGHTS AND REMEDIES COME FROM?

• Most obviously, Directive 2004/18/EC and Public Contracts Regulations 2006

 

• But potentially also -

EU law – general principles derived from TFEUDomestic public lawLaw of contractLaw of tort

WHY DOES IT MATTER?

• Obligations under PCR, TFEU principles and implied contract in many ways similar

 • But they apply to different contracts

• And they lead to very different remedies regimes (procedures and relief)

WHAT ARE THE TFEU PRINCIPLES?

• Most obviously –

Non-discrimination Equality Transparency

 • Potentially also –

Proportionality Good administration Legal certainty Confidentiality And others?

BASIS FOR APPLYING THETFEU PRINCIPLES

• TFEU prohibits restrictions on freedom of establishment/freedom to provide services of nationals of member states

 • Award of a public contract to one undertaking inhibits freedom of

others to provide services

• To avoid restriction contrary to TFEU, must be done on basis which avoids discrimination

• Hence implied positive obligation to comply with general principles

WHICH CASES ARE COVERED?

• Part B services contracts (before expressly made subject to transparency/equality obligations in Directive) – C-532/03 Commission v Ireland

• Sub-threshold contracts – C-59/00 Vestergaard [2001] ECR I-9505

• Concession contracts – C-324/98 Teleaustria [2000] ECR I-10745; C-458/03 Parking Brixen [2006] 1 CMLR 3

For definition, see C-274/09 Privater Rettungsdienst Sadler and JBW Group Ltd v Ministry of Justice [2012] EWCA Civ 8

• At least some other economic opportunities

C-145/08 Club Hotel Loutraki [2010] 3 CMLR 33 – share sale and management agreement

C-203/08 Sporting Exchange Ltd [2010] 3 CMLR 41

 

 

KEY ISSUES ON GENERAL TFEU PRINCIPLES

• What exactly is authority obliged to do?

• What are limits to when TFEU principles apply?

• When is a contract of cross-border interest?

 

 

OBLIGATIONS UNDER TFEU

• Not required to follow detailed rules in Directive

AG in C-195/04 Commission v Finland

C-226/09 Commission v Ireland (disclosure of weightings)

C-95/10 Strong Seguranca SA (reliance on associated company)

• But some advertising and competition is required

• Explained in Commission’s Interpretive Communication (2006/C 179/02) – upheld in T-258/06 Commission v Germany

 

 

EXCEPTIONS TO TFEU OBLIGATIONS

• C-6/05 Medipac-Kazantzidis [2007] ECR I-4557

• Directive exceptions apply by analogy

• Probably also a broader public interest justification, though must be limited and proportionate

• Possibly also TFEU Article 106(2) in cases where Treaty obligations would obstruct performance of tasks in operation of services of general economic interest

• Query whether broader exceptions apply to Part B services under PCR

 

 

AG QUIDNET HOUNSLOW LLPv HOUNSLOW LBC [2012] EWHC 2639 (TCC) –LIMITS OF TFEU

• Council negotiating exclusively with one landowner (L) for town centre development agreement – claimant (Q) arguing it should have had chance to compete

• Development agreement assumed not to be a public works contract, because no obligation on developer to carry out works – a frequent technique

• Council’s agreement crucial to site assembly

• Q argued that transparency and equality obligations arose under TFEU Article 56

 

 

QUIDNET – COULSON J’s DECISION

• Not within Article 56 – L not providing services - only an agreement to agree terms of a long lease

• No obligation on L to carry out development/provide any services

• Construction etc for development would be services provided to L, not by it – no restriction on who could provide those services

• Not akin to concession where concessionaire put in shoes of authority and obliged to provide services but entitled to charge

• Too radical to suggest TFEU applies to grant of a lease

• Matter anyway wholly internal to UK (see next slide)

• If Article 56 had applied, obligations not met merely by council making known its intention to enter agreement with L

 

 

QUIDNET AND CROSS-BORDER INTEREST

• Land was in UK, and Q and L were UK undertakings

• No evidence that any non-UK undertaking interested in development

• Held therefore to be confined to UK, as in RI.SAN [1999] ECR I-5219

• Rejected conflicting approach in C-231/03 CoNaMe [2006] 1 CMLR 2 and Parking Brixen – enough that non-UK undertaking might be interested if advertised

• Doubtful that this is correct

 

 

PROCEDURE FOR A TFEU CLAIM

• Falls outside remedies provisions of PCR – they cover enforceable EU obligations, but not where contract outside PCR scope

• So how to enforce? – must be an effective remedy

• Judicial review proceedings in R (Virgin Trains Ltd) v Secretary of State for Transport – on basis that franchise was a concession

• In Quidnet, claim for breach of statutory duty under European Communities Act 1972

• Held in Phonographic Performance Ltd v DTI [2004] 1 WLR 2893 that ECA claim (rather than JR) not abuse of process where seeking Factortame damages

 

 

WHY DOES FORM OF PROCEDURE MATTER?

• Whether automatic suspension applies

• Time limit for claim – PCR 30 days – JR 3 months (promptness requirement contrary to EU law – C-406/08 Uniplex [2010] 2 CMLR 47) – breach of statutory duty 6 years!

• Held in Quidnet that relief could not be withheld on delay grounds if acted within limitation period

• Availability of damages – no special test under PCR – otherwise necessary to show grave and manifest breach

• Procedure – normally no cross-examination in JR – no automatic disclosure (though duty of candour) – permission required

 

 

JUDICIAL REVIEW FOR BREACH OF PCR?

 • Claims by economic operators –

Rejected in R (Cookson & Clegg) v MoD [2005] EWCA Civ 577

Possibility accepted in R (Hossack) v LSC [2011] EWCA Civ 788

Need should be rare – perhaps in a case such as Federal Security Services Ltd v PSNI [2009] NICh 3?

 • Claims by third parties –

R (Chandler) v Secretary of State for Children Schools and Families [2010] LGR 1 accepts possibility

R (Unison) v NHS Wiltshire PCT [2012] EWHC 624 (Admin) indicates very limited standing

JUDICIAL REVIEW TO ENFORCE OTHER OBLIGATIONS IN PROCUREMENT CONTEXT?

 • Public sector equality duty (Equality Act 2010 s 149)

 • Consultation on local authority best value arrangements under Local

Government Act 1999 s 3 – R (Nash) v Barnet LBC

• Best consideration under Local Government Act 1972 s 123

• Alleged defects in decision-making process e.g. R (De Whalley) v Norfolk CC [2011] EWHC 3739 (Admin)

• Does breach make contract void? – probably not – Charles Terence Estates Ltd v Cornwall Council [2013] 1 WLR 466

JUDICIAL REVIEW FOR BIDDERSWHERE OUTSIDE EU LAW?

 • Do contracting decisions have sufficient public law element?

 • Not usually – R (Menai Collect Ltd) v DCA [2006] EWHC 727 (Admin); R

(Gamesa Energy UK Ltd) v National Assembly for Wales [2006] EWHC 2167 (Admin)

• But sometimes – R (Law Society) v LSC [2008] QB 737

• Local Government Act 1988 injects sufficient statutory element in local authority cases – R (A) v B Council [2007] LGR 813

• Judicial review often exercised in cases re bidding for grants, exclusive licences etc e.g. Re Watters [2009] NIQB 71, R (Asha Foundation) v Millennium Commission [2003] EWCA Civ 88

CURRENT GOVERNMENT CONSULTATION

•  December 2012 - Judicial review: proposals for reform

• Para 51 proposes 30 day time limit for JR proceedings “based on decisions or actions within the ambit of the PCR” – would catch Unison - not Quidnet – what about Nash?

• Para 65 proposes amendment to CPR r.54.5 to make clear that JR claims to be brought within 3 months of first instance of grounds in cases where multiple decisions involved

CLAIMS IN CONTRACT (1)

• Implied contract idea developed in exceptional, pre-PCR circumstances – Blackpool & Fylde Aero Club [1990] 1 WLR 1195

• Some subsequent enthusiasm for idea that a contract to be implied generally – Harmon CFEM Facades v House of Commons (1999) 67 ConLR 1; Natural World Products Ltd v Arc21 [2008] LGR 49; Deane Public Works Ltd v Northern Ireland Water [2009] NICh 8

• Could apply in private procurements? – SES Contracting Ltd v UK Coal plc [2007] EWHC 161 (QB)

 

CLAIMS IN CONTRACT (2)

• More recent cases unenthusiastic

No scope to imply on top of statutory regime (J Varney & Sons Waste Management Ltd v Hertfordshire CC [2010] LGR 801)

Even in other cases, only a limited good faith obligation (JBW Group; cf. Re Sidey Ltd [2011] CSOH 194)

Could not use to obtain 6 year limitation period (Montpellier Estates Ltd v Leeds CC [2013] EWHC 166 (QB))

• Most tender documents now expressly exclude contract

 

CLAIMS IN TORT

• May be relevant especially in wasted costs claims

• Misrepresentation – implied continuing representation of intentions?

 • Misfeasance in public office

• Claim in deceit failed on facts in Montpellier Estates