Important Developments In Public And Utilities Procurement Law And Remedies

Author:Mr Pat Mc Govern and Peter Curran
Profession:Arthur Cox

A number of important changes in Public Procurement Law in the Republic of Ireland and Northern Ireland came into force in 2010.


These spring mainly from the new 'Procurement Remedies Directive' 2007/66/EC which was required to be transposed into national law by 20 December 2009. That date was met in Northern Ireland where the Public Contracts (Amendment) Regulations 2009 and the Utilities Contracts (Amendment) Regulations 2009 were both published in November 2009. In the Republic of Ireland, the European Communities (Public Authorities Contracts) (Review Procedures) Regulations 2010, and the European Communities (Award of Contracts by Utility Undertakings) (Review Procedures) Regulations 2010 were both made by the Minister for Finance for the same purpose on 25 March 2010.

The new 'Remedies' regime is intended to improve the effectiveness of those procedures governing the judicial review of contracts awarded by public authorities and regulated utilities (to which existing procurement laws apply) and introduce a greater level of consistency between the laws of Member States in this regard.

Although the need for greater commonality of remedies is desirable, a certain amount of discretion was afforded to Member States to implement the new rules as they saw fit in their own jurisdictions and hence there are still some differences between national laws on the subject.

One particularly important difference between the new Regulations in the Republic of Ireland and those in Northern Ireland (and England and Wales) is that in the Republic of Ireland, the new laws apply to "decisions taken, after the coming into operation of [the Regulations], by contracting authorities in relation to the award of reviewable public contracts, regardless of when the relevant contract award procedure commenced", whereas the new legislation in Northern Ireland provides that nothing therein "affects any contract award procedure commenced before 20 December 2009". Thus, in the Republic, the new Remedies Regulations apply to any decisions taken on or after 20 December 2009 in relation to a contract award procedure commenced before, on or after 20 December 2009, whereas in Northern Ireland the new Regulations only apply where a contract award procedure has commenced on or after 20 December 2009.

The main features of the new 'Remedies' regime are:

the creation of a new legal remedy of 'ineffectiveness' for the most serious breaches of Procurement Law. Previously, in circumstances where an awarding authority had entered into a contract, an aggrieved tenderer alleging a breach of the procurement rules was limited to seeking an award of damages or injunctive relief (or, in certain circumstances, a declaration of voidness at the discretion of the Court). Under the new Regulations, the Courts, for the first time, are required to declare concluded contracts to be ineffective (from the date of such declaration) where certain serious breaches are found to have occurred. This is a mandatory remedy, save in exceptional cases where alternative sanctions or penalties may be applied by the Court; enhanced provisions in relation to the 'standstill period' including a preclusion on concluding a contract during that period and the possible availability of the remedy of ineffectiveness if the contract is concluded during that period; important changes to rules on the information to be dis seminated (and how that should be effected) to candi dates (at pre-qualification stage) and tenderers (post- qualification) including in relation to de-briefing; a requirement for notification of reasons at the date of notifying either a decision to eliminate a candidate or the decision to award a contract (preceding the stand still period); the automatic suspension of the contract award procedure when an unsuccessful candidate or tenderer initiates a High Court challenge in relation to that procedure. The new Regulations prescribe that the contracting or awarding authority will be precluded from concluding a contract until the High Court has made a decision on the application either for interim measures or judicial review or until the Court has lifted the suspension at its discretion; the possibility of other remedies being imposed by the Courts for serious breaches of procurement law (e.g. financial penalties and contract shortening); and important changes to time limits for notices and for initiating legal proceedings (now to be considered in the light of two decisions by the Court of Justice of the European Union on 28 January 2010). The Remedy of Ineffectiveness

The new laws have introduced the possibility of aggrieved tenderers applying to the Courts for a declaration that a concluded contract is ineffective. This is a radical change. Previously, once a contract had been concluded, the remedy generally available to a complainant was an award of damages and/or, in appropriate cases, injunctive relief (although in certain circumstances there could also be a declaration of voidness at the discretion of the Court).

Clearly, a declaration of ineffectiveness is a severe consequence for both the awarding authority and the successful tenderer, and any possibility of such a declaration being made will lead to some uncertainty, even after contract award. However, this remedy is only mandatory in situations where the most serious breaches of Procurement Law have occurred.

It is also important to point out that any ineffectiveness is prospective, meaning that it applies only to obligations that have yet to be performed under the contract. Obligations that have arisen prior to the declaration need not necessarily be affected.

Unless, in the Court's opinion, there are overriding reasons relating to...

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