​The UK Government’s decision to sell the Green Investment Bank Plc (the GIB) to a consortium led by Macquarie should not be subject to judicial review, the High Court has ruled in R (SDC LLP) v Secretary of State for Business, Energy and Industrial Strategy [2017] EWHC 771 (Admin). While there was a sufficient public element for the Government’s decision to be amenable to judicial review, the challenge brought by an unsuccessful bidder was dismissed as it was both too late, and did not contain allegations which constituted breaches of public law. The ruling reinforces that there are limits to when a commercial decision taken by a public body is judicially reviewable. Allen & Overy acted for the Macquarie consortium.

Background

The GIB is a public limited company, which currently has the Secretary of State for Business, Energy and Industrial Strategy (the Secretary of State) as sole shareholder. It was formed to promote and accelerate investment into the UK’s “green economy” and to act in accordance with certain statutory “green purposes”.

In June 2015, the Secretary of State announced his intention to privatise the GIB, and the sale was formally launched in March 2016. By the final stage of the sale process, two rival bidders remained: a consortium led by Sustainable Development Capital LLP (the claimant) and a consortium led by Macquarie (the Macquarie Consortium).

The Secretary of State set out certain minimum requirements that bids should meet, but retained a wide discretion to conduct the sale.

Following various rounds of submissions and bids, on 27 September 2016 the Secretary of State decided to appoint the Macquarie Consortium as preferred bidder and to offer it a period of exclusivity to finalise negotiations. This decision was communicated to the claimant on 30 September 2016 or, by the latest, 10 October 2016. The claimant challenged the decision. The timing of the challenge became an issue in dispute as the claimant:

  • entered into pre-action correspondence with the government’s lawyers on 2 November 2016; and
  • applied for permission to bring a judicial review claim on 19 December 2016.

The challenge

The claimant’s main argument was that only it should have been awarded preferred bidder status as its bid was ‘compliant’ with the sale process, whereas the Macquarie Consortium’s bid was not. The claimant argued in the alternative that if neither bid was ‘compliant’, then both the claimant and the Macquarie Consortium should have been offered exclusivity and the Secretary of State had acted unlawfully or unfairly in not doing so.

The court decided that the decision was, in theory, amenable to judicial review because the GIB is a publicly-owned asset, that it was to be sold as a matter of government policy, and that its sale had to be reported to Parliament. However, the court went on to make clear that there are high procedural and substantive hurdles to success in such a challenge.

Claim must be made promptly

The court held that the claimant should be refused permission as the judicial review claim had not been brought promptly. It had unduly delayed in issuing its claim, particularly where the claimant appreciated the urgency in concluding the sale process and the potential impact of the proceedings on the Secretary of State and the Macquarie Consortium. A judicial review claim form must be filed “promptly…and in any event not later than 3 months after the grounds to make the claim first arose” (emphasis added).1 Given the circumstances, following the pre-action protocol was no excuse for the weeks of delay in commencing proceedings. Accordingly, even though the claim was issued within three months of the alleged grounds to make the claim arising, it had not been filed “promptly”.

No breaches of public law

Lewis J noted that the courts have previously indicated that complaints about tendering exercises are themselves unlikely to involve allegations of breach of any applicable principle of public law. Simply attaching public law labels (such as "irrationality" or a breach of a "duty to act fairly") is unlikely to give rise to public law challenges if the claim actually does nothing more than challenge the commercial judgment of a public body to prefer one bidder over another. The Secretary of State retained a wide discretion to refuse to accept any or all offers, and to determine the process by which the sale was conducted. Furthermore, the claimant had not demonstrated any arguable public law error on the part of the Secretary of State.

Finally it was held that, even if permission had been granted and any public law error identified, the court would still have refused to grant any remedy as a matter of discretion under ss31(6) and (7) of the Senior Courts Act 1981, because of the claimant’s delay in applying for judicial review.

Comment

This case reiterates the importance of a potential claimant in judicial review proceedings acting promptly and the stark consequences of getting this wrong. A claimant cannot simply work to the three-month period in CPR 54.5 as a long-stop that will always be accepted by the court – real consideration must be given to what ‘prompt’ means in the particular circumstances. The decision also underlines the need to identify allegations of public law illegality at an early stage in a dispute; it is not sufficient simply to allege that the public body’s decision was wrong.

From the public body’s perspective, the decision follows a line of authority where the courts have been willing to entertain public law review of sales of publicly-owned assets. While these may at first sight appear wholly commercial decisions, the courts are prepared to act as a check on the public body’s powers where there is a sufficient public law element for the decision to be amenable to judicial review. Nevertheless, subsequently demonstrating a public law breach can be a high hurdle, particularly where the public body retains a wide discretion to manage the relevant process.