Powerteam Electrical Services Ltd v Electricity Supply Board
| Jurisdiction | Ireland |
| Judge | Ms. Justice Costello |
| Judgment Date | 12 February 2016 |
| Neutral Citation | [2016] IEHC 87 |
| Date | 12 February 2016 |
| Court | High Court |
| Docket Number | [2016 No. 43 JR] [2016 No. 7 COM] |
[2016] IEHC 87
THE HIGH COURT
COMMERICAL
Costello J.
[2016 No. 43 JR]
[2016 No. 7 COM]
European Union – Contract – Reg. 8 (1) (b) of the European Communities (Award of Contracts by Utility Undertakings) (Review Procedures) (Amendment) Regulations 2015 – Public procurement procedure – Interlocutory order – Balance of convenience Adequacy of damages – Public interest
Facts: Following the institution of the proceedings by the applicant seeking various declaratory reliefs under reg. 8 (1) (b) of the European Communities (Award of Contracts by Utility Undertakings) (Review Procedures) (Amendment) Regulations 2015 (‘Remedies Regulations’), the respondent had now filed the present application seeking an order to lift the automatic suspension on award of the contracts under reg. 8 (2) of the said Remedies Regulations. The respondent being the owner and distribution of electricity in the state contended that since the award of contract of repairing overhead power lines had been hindered by the suspension, the balance of convenience favoured in lifting that suspension. The respondent contended that the Court should apply the test set out in Campus Oil Ltd. v. Minister for Industry and Energy (No. 2) [1983] I.R. 88, namely, existence of bona fide issue, adequacy of damages and determination of balance of convenience while considering lifting of the suspension. The applicant contended that the Court should apply the test set out under reg. 9 (4) of the Remedies Regulations namely, consideration of probable consequences of lifting the suspension for all interests likely to be harmed, including the public interest and therefore, the Court should not lift the suspension.
Ms. Justice Costello granted an order for lifting the automatic suspension. The Court held that reg. 8A (1) of the Remedies Regulations conferred the jurisdiction to the Court to lift the suspension and reg. 8A (2) of the said Regulations set out the basis to exercise that jurisdiction. The Court held that under reg. 8A (2) (b) of the said Regulations, the onus of proof would primarily lay on the applicant as it was the notional moving party asking for the interlocutory injunction. The Court observed that the correct approach to decide an application for grant of interlocutory injunction was to apply the test laid down in Campus Oil case as the Court was conferred discretion to adopt its consideration under reg. 8A(2)(a) of the said Regulations. The Court held that in the present case, it was evident that the loss of tender competition would not cause any reputational or major financial loss to the applicant, thus, the loss of the applicant, if any, could be compensated monetarily. The Court found that the balance of convenience lay in favour of the respondent who was entrusted with carrying out the work of utmost public importance such as improving and maintaining the distribution and transmission system and thus, it was not feasible to suspend such works. The Court observed that even if the Court was to examine the present application under reg. 9 (4) of the said Regulations, the decision of the Court would be to lift the automatic suspension keeping in regard the interest of the successful tenderers, the generators of the renewable energy and the general public.
In these proceedings the applicant seeks various orders pursuant to the provisions of the European Communities (Award of Contracts by Utility Undertakings) (Review Procedures) Regulations 2010 (the ‘2010 Regulations’) as amended by the European Communities (Award of Contracts by Utility Undertakings) (Review Procedures) (Amendment) Regulations 2015 (the ‘2015 Regulations’)(‘the Remedies Regulations’). The Remedies Regulations give effect to Council Directive 92/13/EEC coordinating the laws, regulations and administrative provisions relating to the application of Community rules on the procurement procedures of entities operating in the water, energy, transport and telecommunication sectors, as amended by Directive 2007/66/EC 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 (the ‘Remedies Directive’).
The proceedings arise out of a tender competition run by the respondent for admission to a multi operator framework agreement for overhead lines works (the ‘Framework Agreement’). The intention underlying the Framework Agreement was to put in place a panel of contractors who would be available to undertake building, repair, maintenance and upgrade work on the respondent's extensive network of overhead lines for both transmission and distribution of electricity throughout the state. The applicant was an unsuccessful participant in the competition and it alleges that the competition was run and contracts awarded in breach of procurement law.
The Electricity Supply Board, the respondent, is the owner of the power and distribution systems for the supply of electricity within the state. It has huge network of overhead cables: 440kV, 220kV and 110 kV for transmission and 110kV, 38kV and 20kV distribution lines. There are approximately 7,000 kilometres of overhead transmission lines and 150,000 overhead distribution lines. Electric power is delivered over long distances from power plants to substations via the transmission lines. The distribution lines distribute the electricity typically from substations to residential and commercial customers. Each system requires installation, maintenance and upgrading. The licensed transmission system operator is EirGrid and the licensed distribution system operator is ESB Networks.
The respondent employs approximately 850 staff to work on the transmission and distribution networks. This is insufficient to meet all of the obligations of the respondent in relation to ongoing maintenance, repair, instillation and upgrading works and dealing with emergencies. For more than a decade, the respondent has relied upon contractors to supplement the work carried out by its own employees. Most recently the work was allocated on the basis of a Framework Agreement which was entered into in March, 2013. The applicant was one of the contractors in respect of the 2013 Framework Agreement. It and its predecessor have been a contractor for the respondent for 13 years.
The respondent engaged in a tendering process for a new Framework Agreement in 2014 but the respondent was obliged to abandon that process and thus no contractors were appointed pursuant to a new framework agreement in 2014. In order to fill the lacuna the respondent, with the consent of all existing contractors, extended the 2013 Framework Agreement up until 31st December, 2015.
In April, 2015 the respondent commenced a new public procurement procedure. On 21st April, 2015, it published a notice in the Official Journal of the European Union detailing the proposed procurement procedure for the award. The works were described as the building, upgrading and refurbishment of the transmission and distribution lines. While the detail of the procedure as advertised and followed by the respondent is the subject matter of these proceedings, it is not necessary to outline the facts and detail in this judgment, save to note that the applicant tendered for the award of the contract but on 21st December, 2015, was notified that it was unsuccessful.
In accordance with the requirements of the Remedies Directive and the Remedies Regulations, following the notification of a decision of the contracting entity on an award there is a standstill period before the contract may be awarded to the successful tenderer(s). In addition, unsuccessful tenderers are entitled to be informed of the reasons they were not selected. This is to ensure, inter alia, that any unsuccessful tenderer, referred to as an eligible person in the Remedies Regulations, may seek review of the contract award decision prior to the award of the contract.
The Remedies Regulations provide that the institution of proceedings pursuant to the Remedies Regulations seeking a review of a decision either in respect of the process or a contract award decision results in the immediate and automatic suspension of either the contract award process or the award of the contract, depending on the point in time in the process at which the proceedings are instituted. Pursuant to the 2015 Regulations, Regulation 8A, a respondent may bring an application to lift the automatic suspension and ask the court to make an order permitting it to conclude the contract. The respondent in this case has brought an application to lift the automatic suspension on the awarding of the contracts the subject of the procurement process to establish the Framework Agreement in order that it may proceed to place the contract with the successful tenderers.
Regulation 8 provides as follows:-
‘8. (1) An eligible person may apply to the Court—
(a) for interlocutory orders with the aim of correcting an alleged infringement or preventing further damage to an eligible person's interests concerned, including measures to suspend or to ensure the suspension of the procedure for the award of the contract concerned or the implementation of any decision taken by the contracting entity,
(b) for review of the contracting entity's decision to award the contract to a particular tenderer or candidate.
(2) If a person applies to the Court under paragraph (1), the contracting entity shall not conclude the contract until—
(a) the Court has determined the matter, or
(b) the Court gives leave to lift any suspension of a procedure, or
(c) the proceedings are...
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