Source: https://eutopialaw.com/tag/albert-sanchez-graells/
Timestamp: 2019-04-23 00:33:18+00:00

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In its recent Judgment of 23 January 2015 in Energy Solutions EU Ltd v Nuclear Decommissioning Authority  EWHC 73 (TCC), the High Court ruled on a preliminary issue in a public procurement dispute and held that the review court has no discretion (not) to grant damages for losses resulting from a breach of the public procurement rules. In my view, the Energy Solutions v NDA Judgment should be criticised at least for two reasons: firstly, because it misinterprets the EU rules on public procurement remedies and their link with the general principle of State liability for breaches of EU law; and secondly, because it creates an analytical framework based on the commercial decisions of disappointed bidders that would result in excessive (strategic) claims for damages. Moreover, the Energy Solutions v NDA Judgment sheds light on an important shortcoming of the system of public procurement remedies that is perpetuated under the recently adopted Public Contracts Regulations 2015 (SI 2015/102). This comment addresses these issues in turn.
The dispute arises after Energy Solutions (as part of a bidding consortium, but that is not relevant for our purposes) was not chosen as the winning bidder in a tender for a nuclear waste management contract with the Nuclear Decommissioning Authority (NDA). After expressing its disagreement with the award decision and seeking additional information in the ensuing debriefing process, Energy Solutions eventually challenged the tender procedure within the 30-day limit applicable under reg.47D(2) of the applicable Public Contracts Regulations 2006 (SI 2006/5, as amended, primarily by SI2009/2992). By the time the challenge was effected, NDA had already entered into a contract with the winning bidder. Energy Solutions sought compensation for the damages it alleged to have suffered as a result of the improper conduct of the tender procedure.
NDA tried to bar the damages action by arguing that a failure to challenge the award decision within the 10-day standstill period provided for under reg.32(3) Public Contracts Regulations 2006 (which could have prevented it from entering into the contract) broke the causal link between any breach of the applicable procurement rules and the ensuing damages (which, If any, would then derive from the tardiness of the challenge). NDA basically claimed that having foregone the possibility to prevent the award of the contract to another tenderer by activating the suspension foreseen in reg. 47G Public Contracts Regulations 2006, Energy Solutions had also lost the possibility to seek damages compensation. In support of that position, NDA submitted that, under reg.47J(2)(c) Public Contracts Regulations 2006, the review court retained discretion (not) to award damages resulting from a breach of public procurement rules in circumstances such as those in the case (ie the lost opportunity of litigating within the standstill period).
submission that any award of damages is dependent on the level of gravity of the breach, or any other such factor, and thus dependent on an exercise of judicial “discretion” or judgment, or whether, absent any failure to mitigate its loss, having proved a breach of the [public procurement rules] a claimant is entitled to anything other than damages that should be assessed by reference to ordinary principles. It may well be that the claimant’s conduct will have been such that the court will be very reluctant to make any assumptions in its favour in relation to damages, but that is simply an aspect of the usual approach of the court to the assessment of damages (para 86).
In its judgment of 14 January 2015 in Eventech (C-518/13, EU:C:2015:9), the Court of Justice of the EU (CJEU) ruled on the preliminary question referred by the Court of Appeal (England and Wales) in the Addison Lee “taxis in bus lanes” case [as part of the challenge of the High Court’s decision in Eventech Ltd (R on the application of) v Parking Adjudicator (2012)  EWHC 1903 (Admin)]. The CJEU decided that allowing London taxis (black cabs) to use bus lanes while prohibiting private hire vehicles (PHVs) from doing so does not appear to involve State aid. While the Eventech judgment leaves a minimum scope for the Court of Appeals to find differently in view of the specific facts of the case and the parts of the file not referred to the CJEU, this is most likely the end of the dispute.
The decision comes at a time when the regulation of the taxi sector is under significant pressure due to the political and economic waves that sharing economy initiatives (such as Uber) create – or, in the words of AG Wahl in the Eventech Opinion, “taxis and PHVs are engaged in fierce competition with each other across Europe, and London is not the only city where conflicts have arisen” (EU:C:2014:2239, para 2). This is a sector where competition rules have always been difficult to enforce due to the heavy regulation to which it is subjected (OECD, Competition Roundtable on ‘Taxi Services: Competition and Regulation’, 2007). Some claim that it is a sector ripe for proper deregulation and liberalisation, while others claim the opposite [for recent discussion, see L Eskenazi, ‘The French Taxi Case: Where Competition Meets—and Overrides—Regulation’ (2014) Journal of European Competition Law & Practice, and Publicpolicy.ie, The Taxi Market in Ireland: To Regulate or Deregulate? (2014)]. The discussion on the State aid implications of certain privileges derived from such regulation in crisis, and particularly the privileged use of bus lanes, added one layer of complication that the CJEU seems to have been keen on taking off the table.
The legal dispute in front of the CJEU can be condensed to opposing views on whether allowing black cabs to use bus lanes while prohibiting PHVs from doing so infringed the prohibition in Article 107(1) TFEU. It can be further narrowed down to the two key issues of whether this policy involves a commitment of State resources and whether it confers on taxis a selective economic advantage. Both elements need to be present for the prohibition of Article 107(1) TFEU to apply. The CJEU found in the negative on both aspects and determined that the practice of permitting, “in order to establish a safe and efficient transport system, black cabs to use bus lanes on public roads during the hours when the traffic restrictions relating to those lanes are operational, while prohibiting minicabs from using those lanes, except in order to pick up and set down passengers who have pre-booked such vehicles, does not appear, though it is for the referring court to determine, to be such as to involve a commitment of State resources or to confer on black cabs a selective economic advantage for the purpose of Article 107(1) TFEU” (C-518/13, para 63).
In my view, the Eventech judgment is criticisable in both areas. It fails to address the issues of economic advantage and selectivity in a functional manner—not least because the analysis of the selectivity of the measure ultimately relies on an assessment of ‘equality’ or ‘comparability’ of the legal position of black cabs vis-à-vis PHVs that falls into a logic trap derived from the pre-existing regulation of black cabs. Moreover, the analysis of the element of transfer of State resources is very counterintuitive and seems to contradict both economic theory (particularly as the use of public goods is concerned) and the case law on access to essential facilities under private ownership.
In its Judgment of 7 November in case C-313/12 Romeo, the Court of Justice of the EU issued an important ruling concerned with the extension of the obligation to state reasons derived from Article 41(2)(c) of the Charter of Fundamental Rights of the EU in purely domestic situations.
In my view, the reasons offered by the CJEU to decline jurisdiction to respond to the questions referred by the Italian court show a poor understanding of (or a lack of willingness to give effect to) the changed nature of the Charter after the entry into force of the Treaty of Lisbon. As very clearly stated, ‘the EU Charter of Fundamental Rights is now legally binding, having the same status as primary EU law‘ [for discussion, see S Douglas-Scott, ‘The European Union and Human Rights after the Treaty of Lisbon’ (2011) Human Rights Law Review 11(4): 645-682].
In an interesting recent paper, Pablo Ibáñez Colomo conducts a very detailed statistical overview of State Aid Litigation before EU Courts (2004–2012) [Journal of European Competition Law & Practice (2013) doi: 10.1093/jeclap/lpt057]. One of his relevant findings is that the ‘private investor test’ and its application by the European Commission was one of the most litigated areas of EU State Aid law in that period and that ‘[a]nnulments were more likely where the ‘private investor test’ was raised as a ground‘.
In its Judgment of 24 October 2013 in Joined Cases C-214/12 P, C-215/12 P and C-223/12 P Land Burgenland v Commission, the Court of Justice of the EU has been confronted again with the test–this time in the mirror image of the ‘private vendor test’–and, on this occasion, has upheld the approach taken by the European Commission. In my opinion, there are several passages of the Judgment that bear stressing, particularly because the CJEU is backtracking from a much more economically oriented assessment of State aid that was (at least) suggested in Commission v EDF (C-124/10 P).
The decision was based, in particular, on a […] recommendation by HSBC [which] essentially states that, although on the basis of the proposed purchase price the decision should be made in favour of the Consortium, it was recommended that BB be sold to GRAWE, in view of the other selection criteria, namely the reliability of the purchase price payment, the continued operation of BB while avoiding the use of Ausfallhaftung [ie the Austrian performance guarantee system for public credit institutions], capital increases and transaction security (C-214/12 P at para 9).
Not surprisngly, the Consortium challenged the decision claiming that the Republic of Austria had infringed State aid rules during the privatisation of BB and stressing that, amongst other irregularities, the tender procedure had been unfair, untransparent and discriminatory towards it–which resulted in the sale of BB not to the highest bidder, namely the Consortium, but to GRAWE.
[This is an extended version of the comment previously posted on Albert’s personal blog http://howtocrackanut.blogspot.co.uk/2013/03/with-little-help-from-my-friends-ag.html].
According to the current rules on public procurement (mainly, Directive 2004/18) undertakings interested in tendering for a given contract may be subjected to certain personal, financial, professional and technical selection requirements. In order to ensure maximum possible participation in a given tender, the rules in articles 47(2) and 48(3) of Directive 2004/18 expressly indicate that ‘An economic operator may, where appropriate and for a particular contract, rely on the capacities of other entities, regardless of the legal nature of the links which it has with them’ (emphasis added).
‘[f]or works contracts, the tenderer may rely on the capacities of only one auxiliary undertaking for each qualification category. The invitation to tender may permit reliance on the capacity of more than one auxiliary undertaking on account of the value of the contract or the special nature of the services to be provided, subject to the prohibition on the shared use by the tenderer of the individual economic, financial, technical and organisation capacities […]’ (emphasis added).
A challenge was brought against the Italian provisions on the basis that the default rule that restricted the number of ‘auxiliary undertakings’ to one, save in exceptional circumstances, unduly limited the freedom of undertakings to rely on third parties when deciding to tender for public contracts. The competent Italian court submitted a reference for a preliminary ruling to the CJEU in order to clarify the compatibility of the domestic rules with those of the public procurement directive.
In his Opinion of 28 February 2013 in case C-94/12 Raggruppamento Temporaneo Imprese (‘RTI’), Advocate General Jääskinen has clearly indicated that the rules of arts 47(2) and 48(3) of Directive 2004/18 preclude national legislation which prohibits, except in special circumstances, reliance on the capacities of more than one auxiliary undertaking in order to fulfil the selection criteria concerning the economic and financial standing and/or technical and/or professional ability of an economic operator tendering for a contract as main contractor.
The tendency towards saturation and the risk of a bottleneck in the activities of the Court of Justice of the European Union (CJEU) are one the main concerns that prompted the recent changes in the rules of procedure of this institution (adopted on 25 September, published in the OJ and due to enter into force on the 1st of November).
“Faced with a constant rise in the number of cases brought before it, dominated by references for a preliminary ruling, the Court is adapting its rules of procedure to ensure that the particular features of those cases can more readily be taken into consideration, while at the same time strengthening its ability to dispose within a reasonable period of time of all the cases that are brought before it” (see press release here, emphasis added).
Indeed, references for a preliminary ruling account for more than 60% of the CJEU’s caseload and the hypertrophy of this mechanism for the consistent and harmonized interpretation and enforcement of EU Law risks leaving us with a CJEU without time and resources to effectively deal with any of its other duties under the Treaties.

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