Questions on automatic suspension answered by Irish Courts

Questions on automatic suspension answered by Irish Courts

Most public procurement practitioners are now very familiar with the Remedies Directives introduced in 2010 and their implications on the award of contracts and challenges brought by unsuccessful tenderers. However until now certain questions had remained surrounding the concept of automatic suspension as introduced by the Directives. On the 30 May 2014, Mr. Justice Barrett gave a judgment in the matter of OSC One Complete Solution Limited v The Dublin Airport Authority plc which relates to the proposed award of a contract for the provision of site services at Dublin Airport. OCS is the incumbent service provider and brought an application for review of the decision to award the contract to Maybin Support Services (Ireland) Ltd. In its judgment the Court addressed these questions which we have summarised below:

Q: Does the issuing of proceedings by the challenging party result in an automatic suspension which precludes the Contracting Authority from entering into the contract the subject of the challenge?

A: Yes. The ability of the Contracting Authority to award its contract is automatically suspended on an Application under Regulation 8(1) of the Remedies Directive being made.

Q: How long does an automatic suspension last and can it be lifted under an interim application by a Contacting Authority?

A: The Court held that the suspension may be lifted before the full and final determination of the application for review of the award decision.  The Court held that a Contracting Authority may be permitted to conclude a contract when the High Court makes a decision on a related application for an interim measure such as the application in question to lift the automatic suspension.

Q: If the suspension can be lifted, which party bears the burden of proof and what is the appropriate test to determine whether the automatic suspension should be lifted?

A: The burden falls on the moving party i.e. the party seeking to have the suspension lifted to satisfy the Court that the suspension should be lifted.

The Court found that the correct test to be applied is set out in  Regulation 9 (4) of the Remedies Regulations which provides that:

"When considering whether to make an interim or interlocutory order, 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."

Therefore, in order to have the automatic suspension lifted, the applicant must satisfy the Court that the negative consequences of lifting the automatic suspension do not exceed the benefit of such order.

In this case the Court concluded that there were four distinct negative consequences which outweighed the purported benefit of lifting the automatic suspension.  These consequences were as follows:

1. Staff would have to be transferred from one party to another, which the Judge described as a "troublesome process" and one that might place the transferred staff at risk of redundancy;
2. The challenging party might lose expertise and also suffer in terms of its competitiveness;
3. It was possible that by virtue of any such loss and competitiveness, damages would not adequately compensate the challenging party for losing out on the tender; and
4. The need, from a public interest perspective, for a fair and transparent process and in avoiding the burden of damages on the public purse.

In this case the Court therefore did not grant the order to lift the automatic suspension. 

The answer to this final question, in particular, provides badly needed guidance as to the requirements to be met by Contracting Authorities when seeking to lift an automatic suspension. To date, the practice has been to follow our Northern Irish and UK counterparts on this issue and to apply, what is often referred to as the Campus Oil Rules. These are rules to be applied when seeking interlocutory reliefs generally. However, the Court in this case felt it was incorrect to apply these rules when seeking an order under the Remedies Directive for a number of reasons. In particular, the Court felt that two rules in Campus Oil:- 

(i) That damages are not an adequate remedy ; and

(ii) The requirement for an applicant to provide an undertaking in damages in order to benefit from the continuation of the suspension;

constituted additional pre-conditions not contemplated by EU Law and would be inconsistent with same.

While clarity in the area of procurement law is always to be welcomed, it is arguable that the finding above will encourage more challenges as the possibility of having to give an undertaking as to damages has been removed.

If you have any queries on the above or would like to discuss any of the issues in more detail, please contact Louise Forrest or Mona Costelloe.