Smart Mobile Ltd v Commission for Communications Regulation

• Jurisdiction: Ireland
• Judge: Mr. Justice Kelly,MR. JUSTICE P. KELLY
• Judgment Date: 31 October 2006
• Neutral Citation: [2006] IEHC 82,[2006] IEHC 338
• Court: High Court
• Date: 31 October 2006

[2006] IEHC 338

THE HIGH COURT

COMMERCIAL

[No. 702P/2006]

SMART MOBILE LTD v COMMISSION FOR COMMUNICATIONS REGULATION & EIRCOM LTD

BETWEEN

SMART MOBILE LIMITED

PLAINTIFF

and

COMMISSION FOR COMMUNICATIONS REGULATION

FIRST DEFENDANT

AND BY ORDER OF THE COURT EIRCOM LIMTED

SECOND DEFENDANT

COMMUNICATIONS REGULATION ACT 2002 S12

EUROPEAN COMMUNITIES (ELECTRONIC COMMUNICATIONS NETWORKS & SERVICES) (AUTHORISATION) REGS 2003 SI 306/2003 REG 9(4)

EUROPEAN COMMUNITIES (ELECTRONIC COMMUNICATIONS NETWORKS & SERVICES) (FRAMEWORK) REGS 2003 SI 307/2003

WIRELESS TELEGRAPHY (THIRD GENERATION & GSM MOBILE TELEPHONY LICENCE) REGS 2002 SI 345/2002

WIRELESS TELEGRAPHY (THIRD GENERATION & GSM LICENCE) (AMDT) REGS 2002 SI 340/2003

TV3 v INDEPENDENT RADIO & TELEVISION COMMISSION (IRTC) 1994 2 IR 439

RADIO LIMERICK ONE LTD v INDEPENDENT RADIO & TELEVISION COMMISSION (IRTC) 1997 2 IR 291 1997 2 ILRM 1

DUNNES STORES (IRL) CO & HEFFERNAN v RYAN & MIN ENTERPRISE 2002 2 IR 60

MEENAN v COMMISSION TO INQUIRE INTO CHILD ABUSE 2003 3 IR 283

INTERNATIONAL FISHING VESSELS LTD v MIN FOR MARINE (NO 2) 1991 2 IR 93

R v CHIEF CONSTABLE OF NORTH WALES POLICE EX PARTE EVANS 1982 1 WLR 1155

O'KEEFFE v BORD PLEANALA 1993 1 IR 39

ASHFORD CASTLE LTD v SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION (SIPTU) UNREP CLARKE 21.6.2006 2006 IEHC 201

SIAC CONSTRUCTION v MAYO CO COUNCIL 2002 3 IR 148 2002 2 ILRM 401

COMMISSION OF THE EUROPEAN COMMUNITIES v KINGDOM OF BELGIUM 1996 ECR I-2043

FYFFES PLC v DCC PLC & ORS UNREP LAFFOY 22.12.2005 2005 IEHC 477

WISNIEWISKI v CENTRAL MANCHESTER HEALTH AUTHORITY 1998 LLOYDS MED 223

Abstract:

Commercial law - Contract law - Telecommunications law - 3G licence - Right to negotiate - Comreg decision - Curial deference - Proportionality & rationality - Public law and private law relief - Declaratory relief - Conduct of Smart - Obligations on tenderer - Whether Smart entitled to declaration of concluded contract - Whether bonds adequate - Whether Smart trying to engineer extension of time - Communications Regulations Act 2002

Facts: The plaintiff sought to challenge a decision of the defendant that it would not be awarded a licence to operate 3G mobile phone licences in the State. The plaintiff had initially won the competition for the licence and had sought an extension of time to furnish the financial guarantee. No executed performance bonds were presented to the defendant in time. The plaintiff sought inter alia a declaration that there existed a concluded contract between the plaintiff and the defendant for a 3G mobile telecommunications licence, the defendant having selected the plaintiff as successful tender. The plaintiff alleged that the defendant was obliged to give the plaintiff a reasonable period of time to comply with the terms and conditions of the licence competition.

Held by Kelly J., in dismissing the action of the plaintiff, that the plaintiff had not been in a position to furnish executed bonds in a form acceptable to the defendant by the deadline for which the plaintiff alone bore responsibility. The period stipulated by the defendant had been a reasonable one. The plaintiff was attempting to engineer a situation where the defendant would feel compelled to offer an extension of time. No breach of principles of non-discrimination, transparency or proportionality were detectable in the approach of the defendant. The defendant had done all that it could have to assist the plaintiff. The Court would not usurp the function of the defendant.

Reporter: E.F.

1 JUDGMENT of Mr. Justice Kelly delivered on the 31st day of October, 2006

The Challenge

2 In these proceedings the plaintiff (Smart) challenges a decision of the first defendant (ComReg). That decision was communicated by a letter from ComReg's senior legal advisor to Smart's solicitors dated 13th February, 2006.

3 That letter made it clear that Smart would not be awarded a licence, which it had sought, to operate 3G mobile phones within the State. The reasons given for that decision were the failure on the part of Smart to meet the terms of the tender process in which it had engaged and, in particular, its failure to provide a performance bond in a form acceptable to ComReg within the extended time scale of that tender process.

4 In order to made sense of all of this it is necessary to set out in some detail the background against which the decision which is challenged came to be made.

Smart and Its Personnel

5 Smart is a limited company which carries on business at the Citywest Business Campus in Dublin. Its chief executive officer is Mr. Oisin Fanning. He did not give evidence in the trial although he was a participant in many of the discussions in respect of which testimony was forthcoming. Mr. Ciaran Casey is the chief operations manager of Smart. He was one of the two in-house witnesses who gave evidence for Smart. The other was Mr. Iarla Flynn who holds the post of head of regulatory affairs at Smart Telecom Plc. with which Smart is associated.

ComReg and Its Personnel

6 ComReg was established pursuant to the Communications Regulation Act, 2002. It is the statutory body with responsibility for the regulation of the telecommunications industry within the State. It consists of three commissioners who are assisted by technical, legal and administrative staff. Only one of the commissioners, Mr. John Doherty, gave evidence. Two members of the staff of ComReg also gave evidence. One was Mr. Mark Hughes, who is a solicitor. He joined ComReg in May, 2005. His work involves giving legal advice to ComReg in respect of inter alia telecommunications regulation. Prior to joining ComReg he developed particular expertise in corporate finance, commercial and regulation law.

7 The other in-house witness for ComReg was Mr. Jim Connolly. He is a radio spectrum engineer and was the senior manager responsible for spectrum management within ComReg.

Eircom Limited

8 The second defendant (Eircom) was joined as a defendant to these proceedings by an order made on 3rd April, 2006. It was joined to deal with any issues of public law affecting it which might fall for determination in the action. How this came about will be made clear later in this judgment. In the event, the only issues which fell for consideration were issues of public law since on the first day of trial Smart abandoned its private law claims. Eircom did not call any witnesses.

Huawei and B.T.

9 Although not parties to this litigation these two entities will feature throughout this judgment.

10 Huawei (Huawei) is a Chinese company. It supplies telecommunication network equipment including 3G networks. It has supplied Smart with equipment in the past.

11 B.T. Ireland (B.T.) is a company which is heavily involved in the telecommunications industry and the construction of 3G networks.

12 Smart selected both of these companies as it partners in the venture the subject of this action.

3G Mobile Phones

13 3G refers to "third generation" mobile telephone technology. This technology permits the transfer of much more data than its predecessors which were known as first and second generation technology. First and second generation technology was capable of voice telephony and the transmission of small amounts of data such as short text messages. Because of improvements in technology, a 3G mobile telecommunications operator can provide many more services. A much broader range of content than heretofore is now possible. 3G technology allows an operator to provide facilities whereby mobile phones have direct access to the internet. These new services and content can include such things as the viewing of television programmes, video conferencing and the downloading of music from the internet.

3G Licensing

14 The office of the Director of Telecommunications Regulation (ODTR) was the predecessor of ComReg. In 2001 ODTR launched a competition for the award of four licences to provide 3G mobile services in Ireland.

15 It decided to divide these licences up into two categories. One was known as category A and the other, category B. It decided to offer one A licence and three B licences.

16 The party to whom the A licence was awarded undertook more onerous obligations with regard to the construction of infrastructure and the achievement of demographic coverage than the holder of a B licence. However, the A licence involved the payment of a lower spectrum access fee.

17 The B licences carried less onerous roll-out and coverage requirements but had significantly higher spectrum access fees.

18 As a result of the 2001 competition the A licence was granted to Hutchison 3G Ireland, which was a new entrant to the Irish market.

19 Two B licences were awarded. One went to Vodafone Ireland (Vodafone) and the other to O2 (O2). The one remaining B licence is the subject of these proceedings.

20 At the conclusion of the 2001 competition ComReg decided not to award the remaining B 3G licence immediately. Rather it decided to wait and see how market conditions would develop.

Eircom's Approach

21 In June 2005 Eircom wrote to ComReg and applied for the issue of the third B licence to provide 3G mobile telephony services in the State.

22 ComReg responded swiftly. Just one week after this request from Eircom it issued a memorandum which had as its object the provision of information to all interested parties about the licensing process for the third 3G B mobile telecommunications licence which remained.

The Memorandum

23 ComReg's memorandum invited applications for the remaining B licence. It stipulated that if there was more than one applicant the selection of the successful one would be carried out by way of an open tender using the comparative evaluation or "beauty contest" method. This...