It seems that there are still some procurement exercises underway which were begun before the implementation of the Remedies Directive in 2009. A procurement by Merseyside Waste Disposal Authority (MWDA) was one of those procurements. Beginning in July 2006 and following a competitive dialogue procedure MWDA was only in a position to award its contract in August 2013. That contract was very substantial with a value of over £1 billion.
The losing bidder after this protracted process was Coventa and it took legal proceedings to prevent the award of the contract to the winning bidder.
Two questions arose:
- Did the automatic suspension provisions of the Remedies Directive apply to a procurement begun before the Directive was implemented? and
- If not, could the court award an injunction?
To cut a long but interesting story short, the Court concluded that the Remedies Directive did not apply and automatic suspension did not arise when proceedings were issued.
Having reached that decision the Court the had to consider whether or not to give Coventa the equivalent remedy by granting an injunction.
As readers will be aware the criteria for awarding an injunction were established in the American Cyanamid case. They involve looking at (1) whether there is a serious issue to be tried, (2) whether damages are an adequate remedy and (3) where the balance of convenience lies.
In this case it was acknowledged that there was a serious issue to be tried as something had clearly gone very wrong with the competitive dialogue procedure.
As to damages, the court is not averse to finding that they can be an adequate remedy even when the calculation is complicated and somewhat hypothetical but in this case there were so many allegations of breach and so many examples given of alleged miscommunication and confusion that it would be impossible to ascertain what damages arose as a result of which breach.
On the other hand, the potential damage to MWDA caused by a short further delay while the court investigated the procurement was easily quantifiable and could be dealt with by obtaining a cross undertaking in damages from Coventa.
On balance of convenience the Court took into account:
- the fact that if damages were awarded these would have to be met by the taxpayer who would effectively pay twice for the service (to the winning bidder for running the contract and to compensate Coventa);
- the fact that with an expedited trial in approximately 9 months the additional delay arising from an injunction was minimal in the context of the procurement overall;
- the fact that whilst there would be some environmental impact to the delay this was also small in the overall context of the time it had taken to procure the contract.
Accordingly, granting the injunction for what was a relatively short time in the context of the case involved the least risk of injustice.
This case is interesting because had the 2009 Regulations applied the Court would effectively have maintained the automatic suspension under Regulation 47G. This would have been the first time a Court in England & Wales would have been prepared to make such an order so it does give some insight into the thinking the Court may apply when considering an application under 47H.
However this case is very fact specific. It was critical that:
- there seemed at least to be a strong prima facie case that the procurement had gone wrong;
- Covanta were required to give a cross undertaking in damages; and
- The length of time an injunction might be in force was minimal by comparison with the length of time it had taken to complete the procurement.
Case reference: Covanta Energy Ltd v Merseyside Waste Disposal Authority [2013] EWHC 2922 (TCC)