Effective National Remedies
The European Court of Justice has emphasised that national Courts’ procedures must give effective remedies. They may impose time limits including time limits in which the challenge in relation to the process, the time limits must be reasonable.
States must allow for the grant of damages to aggrieved tenderers. Where it is not possible to re-open the contract, damages will be the appropriate remedy. These may relate to costs in participation or loss of profit if the claimant would have been awarded the contract but for the infringement.
There is a relatively high level of proof required to show that a person would have been awarded the contract. Where he shows that he would have had a real chance of winning the contract, he should at least be awarded the costs of the tender.
Persons will have a sufficient interest in challenging a decision such as where they have an interest in obtaining the contract, or otherwise who suffers harm or potential financial loss by the infringement.
Participation in the process will generally be required. If the entity has not participated, it would be difficult to show it has been harmed or is being harmed by the decision. There may be cases however where the awarding authorities have been discriminatory in their specifications and requirements, so that a person may suffer harm, notwithstanding that he, therefore, chose not to participate in the process.
A person may be denied a remedy where he does not take action at an initial stage when he could have taken action but later seeks to set aside the contract at the award stage. If there has been discrimination or other infringement, at a stage in the procedure, but the tenderer is not eliminated until a later stage, the aggrieved tenderer, should generally retain the right to challenge the decision, beyond the point of exclusion as it is only at that point that his interest has been harmed. However, a tenderer may not be precluded from challenging illegality affecting his interest by the expedient of being kept in the process.
The Remedies Directive requires States to introduce effective remedies and means of enforcement of Procurement Rules for service providers and suppliers who have been damaged by breach of the Rules. There must be an effective review of the decisions of awarding authorities. States must ensure that decisions taken by awarding authorities may be reviewed rapidly and effectively and may be enforced against where they have infringed procurement law.
There are separate Directives in respect of public sector remedies and utility remedies, with provisions in broadly similar terms. States are required to ensure an effective and rapid review of decisions taken by awarding authorities under procurement legislation. The method should be similar to national legal methods, without discrimination.
Individuals may take legal action against awarding authorities, State government and public bodies on the basis of breach of the Public Procurement Rules. Persons who have an interest in a particular contract or award, or who are at risk of being damaged or harmed by the alleged infringement must be entitled to invoke the remedies.
The Remedies Directive, in effect, allows for decentralised enforcement of the legislation. Remedies are in accordance with the relevant national legislation. The courts must balance the consequences of granting suspensory measures such as an injunction. The principle of proportionality applies. The adverse consequences must not exceed the benefits.
Interim measures must be provided, with view to rectifying alleged infringements causing further damage. The procedure must be suspended pending determination of the matter. This is by injunction in a common law jurisdiction.
Suspension need not be automatic. Courts may take account of harm likely to occur to others as well as the public interest. The advantages of grant of measures must not exceed their benefits.
The courts must have the power to set aside the award or decision by the authority. National courts may decide whether they set the contract aside or simply declare illegality and award damages. Most states allow for the contract to be set aside. This is potentially very disruptive, particularly where steps have been taken on foot of the award.
The national court may determine whether it should set aside the contract or declare it illegal and grant compensation. The rendering void of the contract will depend on the nature of the breach and circumstances. It may be possible for the contract to be severed of the unlawful elements. Some breaches of their nature may not affect the validity of the contract at all.
A civil enforcement application is made by way of judicial review to the court. Public law remedies of prohibition and mandamus are available, or unlawful state action.
In some cases, the nullity or invalidity may relate to part of the contract only. In these cases, the balance of the contract may remain viable and may remain.
Less serious procedural flaws are unlikely to lead to the annulment of the contract. However, fundamental and more serious breaches such as in relation to qualification and the application of award criteria are unlikely to be severed and the decision is likely to be invalidated.
The Directive requires an award by way of compensation to persons who have been wronged. Cases are typically be taken by the disappointed tenderers.
The successful tenderer may be entitled to compensation if he suffers losses by reason of the contract being ultimately set aside. If the illegality is known to the tenderer or is result of his actions or inactions, then compensation is unlikely and the contract is more likely to be set aside.
The level of damages will depend on whether the applicant can prove that its would have been awarded or likely to have been awarded the contract but for the breach. In this case, there may be damages for loss of profit. Where the applicant has not been invited to tender or would be unlikely to have been given the award, losses other than expenses may be more difficult to prove other than those in respect of the expenses of the tender.
The applicant may seek to prove that his application was the most economically advantageous. In this case, if successful, he is likely to have been awarded the tender and be in a position to show loss. If he has been unlawfully excluded from the process, his loss may be substantial.
The utilities sector remedies. Remedies Directive in respect of the utility sector allows for a conciliation procedure through the European Commission. The Commission requests the utility to state whether it is willing to participate in the procedure. If consent is given, a conciliator is proposed by the Commission from a list of independent persons. Conciliators seek to find an agreement. Either party may withdraw from the procedure at any time.
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