BAM PPP PGGM Infrastructure Cooperatie U.A. v National Treasury Management Agency

• Jurisdiction: Ireland
• Court: High Court
• Judge: Mr Justice Max Barrett
• Judgment Date: 01 December 2015
• Neutral Citation: [2015] IEHC 756
• Docket Number: Record No. 2015/176 JR
• Date: 01 December 2015

IN THE MATTER OF COUNCIL DIRECTIVE 2004/18/EC (AS AMENDED)

AND IN THE MATTER OF THE EUROPEAN COMMUNITIES (AWARD OF PUBLIC AUTHORITIES' CONTRACTS) REGULATIONS 2006 (S.I. 329 OF 2006)

AND IN THE MATTER OF COUNCIL DIRECTIVE 89/665/EEC (AS AMENDED)

AND IN THE MATTER OF THE EUROPEAN COMMUNITIES (PUBLIC AUTHORITIES' CONTRACTS) (REVIEW PROCEDURES) REGULATIONS 2010 (S.I. 130 OF 2010)

BETWEEN:

BAM PPP PGGM INFRASTRUCTURE COOPERATIE U.A.

Applicant

AND

NATIONAL TREASURY MANAGEMENT AGENCY AND MINISTER

FOR EDUCATION AND SKILLS

Respondents

[2015] IEHC 756

Barrett J.

Record No. 2015/176 JR

THE HIGH COURT

Local Government – Public Contracts – Council Directive 2004/18/EC (as amended) – European Communities (Award of Public Authorities Contracts) Regulations 2006 – Council Directive 89/665/EEC – European Communities (Public Authorities Contracts) (Review Procedures) Regulations 2010 – European Communities (Public Authorities' Contracts) (Review Procedures) (Amendment) Regulations 2015 – Lifting of automatic suspension on concluding contract – Interlocutory Injunction

Facts: Following the initiation of the judicial review proceedings by the plaintiff for setting aside the decision of the respondents of acceptance of the late tender, the respondents had now filed an application pursuant to European Communities (Public Authorities' Contracts) (Review Procedures) (Amendment) Regulations 2015 (the amending regulations) to lift the automatic prohibition on concluding contract in accordance with European Communities (Public Authorities Contracts) (Review Procedures) Regulations 2010.(the principal regulation). The applicant contended that Regulations of 2010 r/w Regulations 2015 must not be applied as it was incompatible with Directive 2007/66/EC of the European Parliament and of the Council, which require the continuance of stay on the concluding contract till the determination of the within proceedings.

Mr. Justice Max Barrett granted an order for lifting the automatic prohibition on the concluding contract subject to the condition that the respondents should give an undertaking as to the damages similar to when an injunctive relief was sought and granted. The Court held that the Directive of 2007 did not provide for an automatic suspension of concluding contract when there was not a review of a contract award but a review of an interim decision. The Court held that the reg. 8(1) and reg. 8(2) of the 2010 Regulations r/w the amending Regulations of 2015 provided that there might not be a conclusions of contract with any tenderer until the proceedings before the Court had been determined and the reg. 8(2A) of the said Regulations provided for the conclusion of contract only if it had been so ordered by the High Court. The Court observed that in an application for an interlocutory injunction, the Court must see whether there was a fair question to be tried and whether the losing party could be compensated by damages and where the balance of convenience lay. The Court found that though the plaintiff had raised the fair question, namely the acceptance of late tender, yet it could be compensated monetarily. The Court found that since the contract in question meant to benefit the society at large, it would not be appropriate to put any restrain on it. The Court opined that it would be appropriate under the reg. 8A(3) of the 2010 Regulations r/w the amending Regulations of 2015 to make the conclusion of contract dependent upon the fulfilment of certain pre-condition, which was to give an undertaking regarding quantum of damages as the respondents failed to provide the reasoning behind its decision to accept late tender in contravention of certain procedures.

JUDGMENT of Mr Justice Max Barrett delivered on 1st December, 2015.

PART 1: BACKGROUND.

1 This case concerns the tendering process for a contract to build part of the new DIT campus at Grangegorman,. On 27th March last, BAM commenced judicial review proceedings seeking, inter alia, an order setting aside the decision of the respondents to accept a late tender submitted by a consortium called “Eriugena”. This challenge was brought under the European Communities (Public Authorities' Contracts) (Review Procedures) Regulations 2010 (the “Principal Regulations”). As a consequence of BAM bringing this challenge, an automatic suspension arose by operation of law whereby the respondents are precluded from concluding the contract to build, pending a decision on BAM's challenge. At the start of this year, the Supreme Court, in OCS v. DAA [2015] IESC 6, indicated that the Principal Regulations did not permit a court to lift such a suspension. However, in the course of this year, new retroactive regulations, the European Communities (Public Authorities' Contracts) (Review Procedures) (Amendment) Regulations 2015 (the “Amending Regulations”) were adopted. The Amending Regulations introduce an entitlement for a contracting authority to apply to the High Court for an order to lift an automatic suspension arising. This judgment follows just such an application.

PART 2: AN IRISH SOLUTION TO AN IRISH PROBLEM?

i. Overview.

2 BAM contends (a) that the Principal Regulations, as amended by the Amending Regulations (together the “Amended Regulations”) must be dis-applied as incompatible with the “new” Remedies Directive(i.e. Directive 2007/66/EC of the European Parliament and of the Council of 11 December 2007 amending Council Directives 89/665/EEC and 92/13/EEC with regard to improving the effectiveness of review procedures concerning the award of public contracts (O.J. L335, 20.12.2007, 31)) (hereafter the “Directive of 2007”), because (b) the Directive of 2007requires that the automatic prohibition on concluding a contract should stay in place until the determination of the within proceedings. This contention, with respect, is wrong. It fails to have regard to the fact that the Directive of 2007does not provide for automatic prohibition on concluding a contract when there is not a review of a contract award but rather a review, as here, of an interim decision. If one looks to recital 4 of the Directive of 2007, it states that:

‘[W]eaknesses…noted [in the then EU-wide procurement régime] include in particular the absence of a period between the decision to award a contract and the conclusion of the contract in question. This sometimes results in contracting authorities and contracting entities who wish to make irreversible the consequences of the disputed award proceeding very quickly to the signature of the contract. In order to remedy this weakness…it is necessary to provide for a minimum standstill period during which the conclusion of the contract in question is suspended…’.

3 The purpose of this “standstill period” is explained as follows in recital 6 : ‘The standstill period should give the tenderers concerned sufficient time to examine the contract award decision and to assess whether it is appropriate to initiate a review procedure…’. These objectives are given effect by a new Article 2a inserted into the 1989 Remedies Directive (i.e. Council Directive of 21 December 1989 on the coordination of the laws, regulations and administrative provisions relating to the application of review procedures to the award of public supply and public works contracts (O.J. L395, 30.12.1989, 33)). It provides that: ‘The Member states shall ensure that the persons referred to in Article 1(3) have sufficient time for effective review of the contract award decisions taken by contracting authorities, by adopting the necessary provisions respecting the minimum conditions set out in paragraph 2 of this Article and in Article 2c [“Time limits for applying for review”]…’.This minimum standstill period has no application in the within proceedings because there has been no contract award decision thus far.

4 The Directive of 2007 also seeks to allow a review body sufficient time to hear an application to extend that standstill period without the contracting authority signing the contract, even if the minimum standstill period has elapsed. So, recital 12 of the Directive of 2007 states as follows:

‘Seeking review shortly before the end of the minimum standstill period should not have the effect of depriving the body responsible for review procedures of the minimum time needed to act, in particular to extend the standstill period for the conclusion of the contract.[1]It is thus necessary to provide for an independent minimum standstill period that should not end before the review body has taken a decision on the application[2]…. Member States may provide that this period shall end either when the review body has taken a decision on the application for interim measures…or when the review body has taken a decision on the application for interim measures, including on a further suspension of the conclusion of the contract or when the review body has taken a decision on the merits of the case, in particular on the application for the setting aside of an unlawful decision.[3]’

[1]The Directive's authors clearly mean to refer here to the extension of the minimum standstill period that arises when there has been a contract award decision, i.e. the period referred to in recital 4 (considered above).

[2] Recital 12 justifies an ‘independent’ minimum standstill period that lasts until there is a decision. The effect of this independent standstill period is to extend the initial standstill period. Even so, it is an independent, free-standing minimum standstill period of its own.

[3] The effect of this text is that if, e.g., a court decides to treat the hearing of an application for further suspension of the conclusion of a contract as in fact the hearing of the review proper, its decision at end-hearing will bring the free-standing second standstill period to an end.

5 Notably, the recitals to the Directive of 2007 say nothing about...