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05-02-2015

Supreme Court's landmark judgment in case of OCS v Dublin Airport Authority plc regarding automatic suspension under Remedies Regulations

The long-awaited judgment of the Supreme Court in the case of OCS One Complete Solution Limited v. The Dublin Airport Authority plc was finally delivered on 30 January 2015 by Mr Justice Clarke.  We reported on this case in our August 2014 Procurement E-Briefing following the ruling made by the Supreme Court on 31 July 2014. The judgment of 30 January 2015 provides the full reasoned decision of the Court.

The judgment explains the reasons for the decision made in July 2014 which, in short, determined that:

  • once legal proceedings are commenced by a complainant making an application to the High Court pursuant to the EC (Award of Contracts by Utility Undertakings) (Review Procedures) Regulations 2010 (the Remedies Regulations), the contracting authority is automatically precluded from concluding the contract with the preferred tenderer (even if proceedings are commenced outside the standstill period) and a specific application need not be brought; and
  • the Irish Courts do not have jurisdiction to lift this automatic suspension on application of the contracting authority concerned.

Automatic Suspension

On the first point, the Court provided a detailed analysis of Regulation 8 of the Remedies Regulations. It disregarded the UK case law on the matter of automatic suspension stating that the case law was of limited value given the differences between the Irish and UK implementing regulations. Instead it focused on the obligation of the Irish Courts to interpret the Remedies Regulations as far as possible in light of the purpose of the underlying Remedies Directive in order to achieve the result pursued by that Directive. The Court concluded that the commencement of legal proceedings gives rise to an automatic suspension of the entitlement of the contracting authority to conclude the contract concerned whether or not the challenge is brought within the standstill period and without the challenger having to bring a specific application for suspension before the Court. This clarifies that where (as was the case here) an aggrieved tenderer brings proceedings within the 30-day time limit, but outside of the 14/16 day standstill period, and the contract has not already been entered into by the contracting authority, this will have the automatic effect of precluding the authority from entering into the contract.

No Jurisdiction to Lift Automatic Suspension

On the second point, the Court considered whether the Remedies Regulations allow the Court to intervene to lift the suspension before the final determination of the application for review. The Court carefully considered the wording of the Remedies Directive and Regulation 8. It held that the reference in Regulation 8(2)(b) to the Court giving leave to lift any suspension of a procedure was related to the entitlement of the Court under Regulation 8(1)(a) to suspend an on-going procurement procedure and not an application to review the award decision itself. According to the Court, an application could be made to have an on-going procurement procedure suspended (for example, at the selection stage) and the authority could apply to have this suspension lifted. However, there is no similar right to seek the lifting of an automatic suspension of a decision to award a contract.

Criticism of Remedies Regulations

The Supreme Court was highly critical of the drafting in the Remedies Regulations, noting that the wording was not particularly clear.  Notwithstanding the poor drafting, it concluded that its interpretation of Regulation 8 was the only interpretation that could be made of the Remedies Regulations as a whole.  The Court noted that it is important that those charged with a review of the text of the Regulation should give urgent consideration to the issues raised by these proceedings.  The Court acknowledged that the Remedies Regulations as they stand may not meet the policy objectives of the State. It also recognised that while the current state of affairs persists there may be a need to ensure that procurement challenges are more actively managed and moved through the Courts in the shortest possible time.  At present, it can take anything up to two years for a case to be determined finally in the Courts.

Concluding Remarks

This is one of the more significant Irish procurement cases to have emerged in recent times and its implications are profound. A legal challenge to a contract award decision, if made before the contract is concluded, will result in an automatic suspension of the award process, which the Courts have no jurisdiction to lift under the current Remedies Regulations.

The current state of the law in Ireland may well encourage unsuccessful bidders, whether they have meritorious claims or not, to seek to frustrate the procurement process. In some cases, their hope might be that the process will not be able to withstand a delay and will be abandoned. There is no doubt that the Supreme Court’s decision places even more pressure on contracting authorities to ensure that their procurement procedures are compliant.

The lack of a mechanism in Ireland for lifting the automatic suspension seems undesirable from a public policy perspective and we must expect that the legislature will move shortly to address the shortcomings in the Remedies Regulations that have been highlighted in this case.

Please click here for the full judgment in this case.


For more information contact:

Peter Curran                                                                                                     
Partner                                                                                                    
Procurement Group                                                                           
Tel: +353 1 6644 990                                                                            
petercurran@eversheds.ie                                                            

Angelyn Rowan
Senior Associate
Procurement Group
Tel: +353 1 6644 270
angelynrowan@eversheds.ie

Disclaimer

This information is for guidance purposes only and should not be regarded as a substitute for taking legal advice. Please refer to the full terms and conditions on our website.

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