Is the Common Law Remedy of Breach of Contract available in the context of Procurement Law?

Summary: On 21 February 2017, Baker J delivered the High Court decision in BAM PPP Ireland Limited and Balfour Beatty Ireland Limited v National Roads Authority [2015] 724 P [1] which considers the interplay between European and common law in respect of procurement matters. Specifically, the case turned on whether the common law remedy of breach of contract remains available to litigants in the context of procurement law or whether the parties are confined to the judicial...

Summary:

On 21 February 2017, Baker J delivered the High Court decision in BAM PPP Ireland Limited and Balfour Beatty Ireland Limited v National Roads Authority [2015] 724 P [1] which considers the interplay between European and common law in respect of procurement matters. Specifically, the case turned on whether the common law remedy of breach of contract remains available to litigants in the context of procurement law or whether the parties are confined to the judicial review remedy provided for by the European Communities (Public Authorities Contracts) (Review Procedures) Regulations 2010 S.I. No. 130 of 2010, subsequently amended by S.I. 192 of 2015 (the “Regulations”). In this instance, breach of contract proceedings were brought in respect of a decision of a contracting authority in the course of a tender process. Baker J held that a breach of contract action is not permitted in light of the provisions of the Directive because:

• The effect of the Procurement Directives is to displace how a claim can be brought in these circumstances;
• While the common law right to claim for breach of contract is preserved, the remedy is preserved by European law.

Baker J focussed on the reasoning behind the Procurement Directives. Namely that efficiency, effectiveness, speed and finality are cornerstones of EU procurement policy and that accordingly, procurement disputes should always be resolved within the short timeframes of the procurement Directives. In the course of her judgment, Baker J also considered:

• Whether any contract existed between the parties and
• Whether disclosure of confidential information constitutes a decision of the contracting authority.

Both questions were answered in the affirmative.

Facts:

The Plaintiffs tendered for the award of a contract for the design, construction, operation and maintenance a motorway in Co. Galway. The Plaintiffs were originally identified as the preferred tenderer, however due to economic factors the project did not proceed. The tender was reactivated some months later (in April 2011) at which time a rival competitor was awarded the contract. The Plaintiffs case before Baker J was grounded in the fact that in the course of the process, the NRA had disclosed certain of the Plaintiffs’ confidential and commercially sensitive information (including pricing methodology) to their rival competitor. The Plaintiff alleged that this contributed to their rivals’ ability to win the tender. The Plaintiff brought breach of contract proceedings by way of plenary summons, claiming loss of opportunity by virtue of the disclosure of allegedly confidential information in the course of the tender process. The Plaintiff submitted that while the Regulations do provide a remedy for breach of procurement law, this does not mean that contractual rights as understood at common law for a claim of breach of contract do not arise. The Defendant argued that the claim was not one that could be brought by plenary action, as it was not brought within the strict time limits provided by Order 84A of the Rules of the Superior Courts. Order 84A is expressly applicable to all claims brought in relation to the Regulations, which allow for such an application to be brought within 30 days. This judgment refers to SIAC Construction Limited v National Roads Authority [2] and Dekra Éireann Teoranta v Minister for the Environment and Local Government [3], which put it beyond any doubt that Order 84A “reflects a policy that such reviews be taken effectively and as rapidly as possible” when dealing with the specialist area of procurement matters. Does a Contract exist? The ITT contained provisions expressly excluding contractual obligation and the creation of contractual rights or obligations. It is apparent from UK case law that in the public sector where competitive tenders are sought and responded to, a contract does come into existence whereby the public body agrees to consider all tenders fairly. As was confirmed in Blackpool and Flyde Aero Club Limited v Blackpool Borough Council [4] which stated “soliciting of tenders from selected parties where the invitation prescribes a “clear, orderly and familiar procedure, had the effect that the invitee had a contractual right and not just a mere expectation”. Justice Baker ultimately held that a narrowly drawn contract was created within the ITT as regards the contracting authority’s undertaking not to disclose confidential information only. Was the release of the confidential information a ‘decision’? Baker J referred to the Opinion of Advocate General Léger in the case of Commission v Spain [5]. Here, a ‘decision’ was described as ‘any act or measure’ that informs a decision. Given that interpretation and also having regard to the EU policy underpinning the Directive, she concluded that disclosure of confidential information qualifies as a ‘decision’. Potential Next Steps The next application to the Court in this matter may be to extend the period of 30 days for bringing a judicial review in the circumstances of this case. If such an extension were to be granted, this would affect the certainty of procurement matters being resolved with speed and finality, which are cornerstones of EU Policy in this regard. Pending any appeal or application, however, the key point to note is that the court has reaffirmed the position that all procurement challenges must be brought within 30 days of when the applicant knew or ought to have known of the decision of the contracting authority the subject of the challenge. McDowell Purcell regularly provides bespoke training for contracting authorities in relation to the conduct of a legally compliant and effective tender process. Please do not hesitate to contact us for assistance. Bibliography:  [1] *Judgment yet to be approved and may be subject to minor amendments [2] 2004 IEHC 128 [3] 2003 IESC 25 [4] 1990 IWLR 1195 [5] 15.5.2003 - Case C-214/00