Regulation 97 – Remedies where the contract has not been entered into

Commentary

Regulation 97 PCR2015 lists the remedies that can be provided by the Court where the contract has not been entered into. The remedies for situations where contracts have been entered into can be found in Regulation 98. However, this Regulation does not prejudice any other powers of the Court and, consequently, the available remedies can be broader if the claimant can resort to a different legal basis.

Under Regulation 97 PCR2015, where the contract has not yet been entered into and once the Court determines that a decision or action taken by a contracting authority was in breach of the duty owed in accordance with Regulation 89 or 90 PCR2015, ie that there has been a breach of the applicable rules and that the aggrieved party had active standing to claim for such breach; the Court may do one or more of the following: (a) order the setting aside of the decision or action concerned; (b) order the contracting authority to amend any document; (c) award damages to an economic operator which has suffered loss or damage as a consequence of the breach.

This set of remedies is clearly tailored towards correcting the infringement–either by setting it aside or having it modified–and providing the claimant with sufficient compensation for the loss or damage suffered as a consequence of the breach. Of these remedies, the one that tends to trigger more difficulties is the compensation for loss or damage (see Regulation 98). Although the Regulation clearly allows an award decision to be set aside, it still includes the payment of damages. This opens up the possibility to speculate on what this means. There could be three different scenarios.

  1. This may be conceived as allowing the court to set aside the decision and cumulatively awarding damages to the same economic operator, in case the grounds for awarding damages are present.
  2. The Regulation can also be conceived as allowing the court to award damages to other economic operators that have been disadvantaged in a procedure but were not going to win in any case. This seems unlikely as neither good faith nor pre-contractual liability are well established under the law of England and Wales, as far as we know.
  3. Finally, it may be that the drafting of this Regulation does allow for damages to be awarded in alternative to setting aside the decision.

However, an important point that can be easily overseen is that of the interconnection of the remedies. Given that Regulation 97 PCR2015 is exclusively concerned with cases where there is no issue of ineffectiveness of a contract and its effects, as well as the possibility to exclude them (see comment to Regulations 98 and ff), the proper interpretation of Regulation 97(2) PCR2015 is that the Court must always grant either a remedy under Regulation 97(2)(a) and set aside the decision or action concerned, or a remedy under Regulation 97(2)(b) and order the contracting authority to amend any document; and in either of the cases, where appropriate, it can additionally grant compensation for loss or damage. However, damages cannot be granted as a self-standing remedy under Regulation 97(2)(c) PCR2015 and claims exclusively for damages should be dismissed.

The reason for this interpretation lies in the ancillary nature of the compensation for loss or damage under the EU system of public procurement remedies, which has never been intended as a main remedy (see arguments here). In that regard, given that the contract has not yet been entered into, if the Court can eg set aside the challenged award decision and make the contracting authority go back to the procedural moment prior to the relevant breach of the duty owed to the claimant, there may well not be any (relevant) loss or damage to be compensated–other than legal costs, possibly. Hence, a systemic interpretation of Regulation 97 PCR2015 should restrict the award of compensation for loss or damages to very exceptional cases because, in the absence of contractual completion, the situation should be relatively easy to correct and claimant’s interests should be satisfied by retracting the tender to the moment prior to the infringement of the duty owed by the contracting authority.

A different (also difficult) claim would be for the economic operator to intend to have the award decision amended in its favour under Regulation 97(2)(b) PCR2015; for instance, where the claim is that the scores were improperly calculated and a proper application of the scoring rules should have resulted in such award. In these cases, the Court may well be reluctant to carry out any such sort of “amendment” of the document reflecting the award decision and rather refer the case back to the contracting authority for such recalculation.

However, nothing should oppose a direct finding that a contract should have been awarded to claimant if the Court has all necessary information to determine ipso facto that such would be the clear (unique) result of a proper application of the rules. Either way, where the Court is able to determine which bidder should have been awarded the contract, it should take all appropriate steps to ensure that the remedy used creates that result.

Last modified: December 6, 2016 by Pedro Telles

97.—(1) Paragraph (2) applies where—

(a)the Court is satisfied that a decision or action taken by a contracting authority was in breach of the duty owed in accordance with regulation 89 or 90; and

(b)the contract has not yet been entered into.

(2) In those circumstances, the Court may do one or more of the following—

(a)order the setting aside of the decision or action concerned;

(b)order the contracting authority to amend any document;

(c)award damages to an economic operator which has suffered loss or damage as a consequence of the breach.

(3) This regulation does not prejudice any other powers of the Court.