A recent court judgment ruled that bidders can no longer sue for a breach of general principles of European Union (EU) law in respect of the award of below-threshold contracts.
Background
In the case of Adferiad Recovery Ltd v Aneurin Bevan University Health Board, a claim was brought by Adferiad against Anueurin Bevan University Health Board (“AB University”) following an unsuccessful tender process.
Among other remedies, Adferiad sued for damages for (i) breach of the Public Contracts Regulations 2015 (“PCR 2015”); (ii) alleged breaches of the general principles of EU law; (iii) breaches of a tender process contract.
AB University applied for a summary judgment and/or strike out of the claim.
The grounds for AB University’s application were as follows. Firstly, that the procurement was for a below-threshold contract, and accordingly no claim could be brought under PCR 2015. Secondly, no action could be brought in domestic law post-Brexit in respect of a breach of general principles of EU law (as set out in the EU Treaty). Finally, AB University argued that no ‘tender process contract’ had arisen from the procurement process, and therefore there was no contract to be breached.
The High Court allowed the application on all grounds and struck out the claim on the basis that no ground of Adferiad’s claim had a reasonable prospect of success. Key points of interest to those subject to public procurement law are:
- The judgment set out that, for a number of reasons, established bidders can no longer sue in English law for breach of general principles of EU law governing the award of below-threshold contracts. Further, the judgment highlighted actions for breach of EU general principles are in fact precluded by Schedule 1 of the European Union (Withdrawal) Act 2015, and possibly by one of the many pieces of amending legislation issued last year in respect of the PCR 2015; and
- The judgment confirms that a tender process contract may only be considered to be implied where an objectively demonstrated intention to undertake the contractual obligations relied on is fully satisfied with in the procurement. Demonstrating such intention was noted by the Court as being a “crucial requirement”. The Court said that this requirement does not occur where a contracting authority, such as AB University, expressly states in the procurement documentation that there is no intention for a contract to arise. Given this is a fairly standard element in an ITT document, this gives some level of comfort to contracting authorities.
Comment
The judgment was relevant as it was the first procurement case to consider the application of EU Treaty principles in the UK following its exit from the European Union.
It may be a relief for contracting authorities to hear that claims for damages must now rest on a cause of action in domestic law and the general principles of EU law are no sufficient grounds for a cause of action in domestic law. Therefore, challenges to below-threshold procurements have a more limited scope for legal challenge.
Should you have any queries about public procurement law, please get in touch with a member of our Procurement Team.
