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Authorities exposed to damages claims for procurement rule breaches
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Authorities exposed to damages claims for procurement rule breaches

The Court of Appeal handed down its judgment on 15 December 2015 in the case of Energysolutions EU Ltd v Nuclear Decommissioning Authority [2015] EWCA Civ 1262.

In this blog, we comment and provide a basic summary of the case's issues and facts, and the Court of Appeal's judgement on those issues.

Comment
The Court of Appeal's ruling makes very clear that contracting authorities are not immune to a claim in damages for breach of the public procurement regime after the mandatory standstill period has expired. 
Issues

  1. Is Energysolutions entitled to any award of damages, having failed to start proceedings against the contracting authority within the ten-day standstill period?
  2. In these circumstances does the court have discretion not to make any award of damages?

Facts
The Claimant, Energysolutions, was a member of the consortium that was one of the last four tenderers for a major nuclear decommissioning contract.  On 31st March 2014, the Nuclear Decommissioning Authority (NDA) informed the consortium to inform it that its bid had been unsuccessful, and that the standstill period would end at midnight on 14th April 2014.

On 6th April 2014, the consortium wrote to the NDA expressing concerns about the adequacy of the procurement process, and seeking information. On 11th April 2014, the NDA responded to the consortium declining to extend the standstill period.  The consortium decided not to issue proceedings during the standstill period and instead wrote to the NDA reserving all its rights on the 14th April 2014.

Energysolutions brought proceedings (which it was entitled to do as one of the members of the consortium) to challenge the procurement procedure on 28 April 2014, outside the standstill period, alleging that it had suffered loss as a result of NDA's alleged breach of the Public Contracts Regulations 2006 (Regulations), which were in force at the time.

Case history
On 23 January 2015, the High Court handed down a judgment on two important preliminary issues in an action for damages for breach of the public procurement rules, which both parties then appealed. 

Judgement

  1. The Court of Appeal ruled that the standstill and court application regime is available as an option to the unsuccessful tenderer and there is no legal principle in English law allowing for a claimant to be deprived of its damages for failing to apply for interim discretionary relief.  Accordingly, where the claimant has a common law cause of action, such as a claim for breach of statutory duty, that claim entitles the claimant to damages to be determined and assessed on normal principles.
  2. The Court of Appeal concluded that the claim for damages under the Regulations is not discretionary.  NDA had sought to rely on the condition that a breach must be "sufficiently serious" (Case C-6/90 - Francovich v. Italy, as formulated in Joined cases C-46/93 and C-48/93 - Brasserie du Pêcheur S.A. v. Federal Republic of Germany, Regina v Secretary of State for Transport ex parte Factortame Limited).  However, the Court of Appeal ruled that national law will prevail for the benefit of those harmed by the relevant infringements where it provides a less restrictive remedy in damages than would be provided by the application of the Francovich conditions,

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