The Supreme Court has finally handed down its long awaited judgement in the Energy Solutions v NDA case, and the decision has potentially wide ranging implications for organisations or businesses wishing to challenge a tender process run by a public body.
This was a case arising out of a tender process run by the Nuclear Decommissioning Authority (NDA) for the decommissioning of 12 power stations in the UK. Energy Solutions (now ATK) submitted a bid but came second when the bids were scored and was therefore unsuccessful. ATK subsequently issued proceedings to challenge the outcome of the procurement and claimed damages from the NDA for breaches of the Public Contracts Regulations 2006 (‘the Regulations’) and the EU Directives which the Regulations made into domestic law.
In an earlier decision, the Court agreed that the process run by the NDA did breach the Regulations. This point was not appealed. The key issue for the Supreme Court was whether damages for breach of the Regulations were available as of right to ATK, or whether a breach of the Regulations had to be ‘sufficiently serious’ in order to warrant an award of damages.
NDA argued that under EU law (the Francovich Conditions), a member state was only liable if:-
(1) the rule of law infringed was intended to confer rights on individuals,
(2) the breach was sufficiently serious, and
(3) there was a direct causal link between the breach of the obligation and the damage sustained by the injured party.
NDA argued that UK domestic law went further than these conditions and that the right to damages was unconditional where a breach of the Regulations was established.
The Supreme Court unanimously held that the UK domestic law on the right to damages does not go further than EU law, and therefore damages are only available when the Francovich Conditions are satisfied and a breach of the Regulations is ‘sufficiently serious’. However, the Court did not give any guidance as to what would constitute a ‘sufficiently serious’ breach of the Regulations so as to merit an award of damages.
This leaves us with some uncertainty as to how the requirement of a breach being ‘sufficiently serious’ will be interpreted; it is likely to be highly dependent on the facts in each individual case. Given that claims under the Regulations (and the Public Contracts Regulations 2015) must be brought 30 days from when the bidding party knew or ought to have known that there were grounds for challenging the process, this decision makes it all the more essential that you obtain specialist legal advice on the merits of any claim as soon as you are aware of any potential issue.
Our procurement experts can help you by reviewing the merits of any potential claim in the light of this decision and advising you on the options going forward. Therefore if you find yourself in a situation where something has gone awry in a public procurement procedure please get in touch with us as soon as possible.
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This blog post was written by Kate Canning. For further information, please contact:
Kate Canning, solicitor, Commercial Dispute Resolution
T: 0121 234 0266