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Procurement e-briefing - August 2014

  • Ireland
  • General

07-08-2014


Supreme Court issues Ruling on Automatic Suspension

The Supreme Court handed down its judgment in the case of OCS One Complete Solution Limited v. The Dublin Airport Authority Plc on 31 July 2014. The case concerned an appeal of a High Court judgment of Mr Justice Barrett on 30 May 2014, where an application by the DAA to have an automatic suspension lifted was refused.

Background

OCS One Complete Solution Limited (“OCS”), the incumbent provider of site services to the DAA, was unsuccessful in a tender procedure for the provision of site services to the DAA for the next five years. Under the relevant Remedies Regulations, OCS initiated proceedings against the DAA seeking a review of the DAA’s decision to award a contract to the successful tenderer, Maybin Support Services (Ireland) Limited (“Maybin”).

Once OCS brought the application for review, it asserted that the institution of the proceedings resulted in an automatic suspension, which precluded the DAA from concluding the contract with Maybin. DAA brought an application to have any automatic suspension lifted, particularly in light of the OCS’s continuing failure to provide an undertaking in damages.

1.1 The High Court declined to lift the suspension. In its judgment, the High Court set out the test that would apply in determining whether or not to lift a suspension. In doing so it distinguished the UK case law on the issue, noting that the comparable UK Remedies Regulations differ significantly from the Irish Remedies Regulations. The High Court held that the appropriate test was that contained in Regulation 9(4) of the Remedies Regulations which provides that the Court may take into account:

"the probable consequences of interim measures for all interests likely to be harmed, as well as the public interest, and may decide not to make such an order when its negative consequences could exceed its benefits". 

The judgment was welcomed by those involved in public procurement, as it provided clarity as to how automatic suspension would be dealt with in the Irish Courts.

Supreme Court

The DAA appealed the High Court judgment to the Supreme Court and a preliminary ruling was delivered on 31 July 2014. A judgment setting out the full reasoning of the Supreme Court is to follow, however, its principal conclusions are as follows:

  • Once an application is made to Court under the Remedies Regulations seeking the review of the decision of the contracting authority an automatic suspension applies and, provided the contracting authority has not already lawfully concluded the contract, it is precluded from doing so, notwithstanding the expiry of the standstill period;
  • the Irish Courts do not have jurisdiction to lift an automatic suspension on appeal by a contracting authority under the Remedies Regulations until the Court has heard the case in full, or it is discontinued or disposed of. Mr Justice Clarke stated in his judgment that:

“The Regulation does not confer on the court a jurisdiction to entertain an application by a contracting entity concerned to be permitted to conclude the relevant contract prior to the determination of the application for review.” 

  • since the Courts do not have jurisdiction to lift an automatic suspension until the Court has heard the case in full, the question of what test should apply in the circumstances does not arise.

The Supreme Court therefore dismissed the DAA’s appeal. As a result the DAA cannot conclude the contract until the substantive case has been decided or the case is discontinued or otherwise disposed of.

In Conclusion

The Supreme Court judgment provides further clarity on the rules concerning automatic suspension and will be seen as a welcome development by disgruntled tenderers seeking to challenge a contracting authority’s decision.

Incumbent service providers, who may have the opportunity to continue in situ supplying the services pending the outcome of the substantive case, will not run the risk of the automatic suspension being lifted in advance of the full hearing of the case.

Furthermore, an applicant seeking the review of the contacting authority’s decision will not be required to furnish an undertaking in damages pending the outcome of the substantive case, which would be the norm in the traditional test for interlocutory injunctive relief.

It will be interesting to review the reasoning of the Supreme Court following the publication of its full judgment and we will furnish an updated e-briefing once this is made available.

For further information contact

Angelyn Rowan
Senior Associate
Projects and Construction
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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