Regulaton & Policy
Irish Court Explains Why Contract Suspension Must Stand, Ignores UK Case Law

The long-awaited judgement of the Irish Supreme Court in the case of OCS One Complete Solution Ltd v The Dublin Airport Authority plc was finally delivered on 30 January 2015 by Mr Justice Clarke, and leading law firm Eversheds have produced a brief on the case which is available here (on registration). The ruling, relating to contract suspension after a supplier challenge, was actually made by the Supreme Court in July 2014, but the recent judgement provides the full reasoned decision of the court.

In some previous cases, where a disappointed bidder has challenged a procurement decision, the courts have allowed the award of contract to stand. The view has been that even if the challenge was later upheld, the aggrieved bidder could be compensated through damages rather than having another chance to bid for the contract. The courts have also taken into account the disruption to the contracting authority (or the recipients of the service) if contract award were delayed.

However, in this case, the Irish Supreme Court has decided not to follow this route. It ruled that the contract award should be suspended whilst the complaint from OCS was investigated. That meant the court disregarded the UK case law around automatic suspension stating that “the case law was of limited value given the differences between the Irish and UK implementing regulations.”

It looked rather at the obligation of the Irish Courts to interpret the Remedies Regulations in a manner that reflected the intent behind that Directive. The Court concluded that the commencement of legal proceedings should lead to an automatic suspension of the rights of the contracting authority to go ahead with the contract award.

In this case, the complaint was made within the 30-day period but outside the standstill period; the Court ruled that this did not affect the need to suspend the contract award. And the Court considered that it did not have the jurisdiction to lift the automatic suspension. It could have lifted a suspension of a procurement process (if it was still underway); but not the suspension of contract award.

This is an important decision and will provide case law that will be noted in different countries, although given the Irish Court ignored UK case law, clearly other countries may ignore this! But by relating the decision to the intent of the Directive, it seems to be suggesting other courts should perhaps do the same. But in Ireland at least, as Eversheds says:

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.

When suppliers do challenge award decisions, in most cases they would like to see the award suspended whether their claims have much foundation or not. The prospect of damages may be attractive as well, but most are looking to keep alive their chances of actually winning the contract, or even cause the whole process to be abandoned. The Court noted challenges need to be handled by the courts more quickly given this situation, and also that this was not a very satisfactory state of affairs and “may not meet the policy objectives of the State”. So it also suggested that the Remedies Regulations need to be changed to “address these shortcomings.”

So this ruling will give suppliers hope and probably increase the attractiveness of challenging for disappointed and aggrieved bidding firms, in Ireland at least and maybe further afield too. That is not good news for contracting authorities and procurement people of course. But all the more reason to run effective and compliant procurement processes in the first place!

First Voice

  1. Reta Blod says:

    Oh dear! Of course it’s right that suppliers can challenge if a procurement authority does not run an effective and complaint process. But too often, suppliers challenge eevn if they have lost ‘fairly’. The consequences of a challenge, if this Irish ruling pertains, is that the contract award is automatically suspended, regardless of the merits of the challenge. That has serious consequences for the contracting authority, the winning bidder, and the users of the service that the contract was providing. Those are very serious consequences. What’s if any is the downside for the supplier making the challenge? Can they be sued later, if their challenge is rejected (by the courts)? If not, why not? And If not, this is a charter for disgruntled suppliers to raise frivolous challenges with impunity. Agreeing with the Irish court, the Remedies directive does indeed need correcting.