The Irish High Court today declined to lift the automatic suspension of the award of a contract by the Dublin Airport Authority (DAA) for site services at Dublin Airport. The DAA was precluded from concluding the contract following the initiation by an unsuccessful tenderer, OCS, of High Court proceedings seeking review of the DAA's contract award decision. Mr. Justice Barrett in determining not to lift the automatic suspension ruled that the appropriate test to be applied by the Court in determining whether to lift the suspension was not the established test for injunctive relief set out by the House of Lords in the American Cyanamid case and adopted by the Irish Supreme Court in Campus Oil v Minister for Industry and Commerce. Instead, the Court ruled that the appropriate test was the test contained in the Remedies Regulations (transposing the Remedies Directive into Irish law) for considering whether to make interlocutory orders. The Court also determined that the burden of proof was on the DAA to satisfy the Court that the suspension must be lifted. The Court concluded that the negative consequences in lifting the suspension outweighed any benefits of such an order.
The proceedings relate to the proposed award of a contract for the provision of site services (including cleaning, porterage and portering, passenger accompaniment, security, passenger screening, queue management, etc.) at Dublin Airport. The value of the contract exceeds EU thresholds and is subject to the European Communities (Award of Contracts by Utility Undertakings) Regulations 2007 (SI No. 50 of 2007) which transpose the Utilities Directive (Directive 2004/17/EC) into Irish law. OCS is the incumbent service provider and was informed in 20 February 2014 of the decision to award the contract to Maybin Support Services (Ireland) Ltd. OCS brought an application for review of the contract award decision and asserted that the institution of the proceedings resulted in an automatic suspension which precluded the DAA from concluding the contract.
The DAA brought a preliminary application to have any automatic suspension lifted particularly in light of the failure of OCS to provide an undertaking in damages in respect of any loss that the DAA might suffer as a result of any automatic suspension remaining in place. The DAA argued that the test to be applied by the Court in determining whether to lift the automatic suspension was the well settled Campus Oil test which involves an assessment of the adequacy of damages and the balance of convenience. One of the key requirements of that test is the requirement for an applicant to provide an undertaking in damages. The Court in its comprehensive judgment noted the supremacy of EU law and the requirement on national courts to interpret national law in light of directives and to ensure the fulfilment of obligations arising from acts of the EU institutions. Having considered the applicable rules of statutory interpretation, the Court looked at the objective of the Utilities Remedies Directive (Directive 92/13/EEC as amended by Directive 2007/66/EC) which was to strengthen pre-contractual remedies for breach of procurement law. The Court concluded that an automatic suspension commenced immediately upon the initiation of proceedings and that it had jurisdiction to decide on the application to have the automatic suspension lifted. The burden of proof fell on the DAA to satisfy the Court that it should be lifted.
In deciding on the test to be applied to determine whether the suspension should be lifted, Barrett J. held that the application of Campus Oil principles would be inconsistent with European Union law. In particular, the Court noted that the Campus Oil principles would impose pre-conditions to the granting of relief which were not contemplated by the Utilities Remedies Directive. The requirement for a party benefiting from the suspension to provide an undertaking in damages would be contrary to the overall scheme contemplated by EU law and so absurd that the Court could not accept that lawmakers intended that such conditionality should pertain. The Court accordingly concluded the Campus Oil test should not be applied to the determination of the application.
Barrett J. concluded that the appropriate test was the test contained in Regulation 9(4) of the Utilities Remedies Regulations which flows directly from Article 2(4) the Utilities Remedies Directive. Regulation 9(4) provides that the Court may take into account "the probable consequences […] 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".In applying this test, the Court noted the negative consequences in lifting the suspension namely that:-
- OCS staff would transfer to the successful tenderer and might be placed at risk of redundancy;
- OCS might lose expertise and suffer in terms of its competitiveness;
- damages may not adequately compensate any loss in competitiveness; and
- the public interest lies in fair and transparent procurement processes and avoiding the burden of damages on the public purse on top of anything that would be paid to the successful tenderer.
The benefits in leaving the suspension in place were that the status quo would be maintained and that it avoided the possibility of DAA having to pay the successful tenderer to perform the contract and subsequently pay OCS damages which may have resulted in DAA having to increase airport charges. The Court noted that serious allegations had been made by OCS as regards the adequacy of the procurement process and that OCS had seen fit to incur the expense of litigating the matter. While not making any finding on the truth of those allegations, the Court was entitled to have regard to the fact of such allegations in deciding whether to lift the suspension. The Court concluded that the negative consequence of making an order to lift the suspension exceeded the benefits of such an order.
The judgment is groundbreaking in a number of respects. It is the first time that the Irish High Court has ruled on an application to lift an automatic suspension and the appropriate test to be applied in such an application. It is notable that the Court distinguished the UK case law on automatic suspension where the trend has primarily been to lift the automatic suspension. The Court noted that the comparable UK Remedies Regulations differ significantly from the Irish Regulations in that the UK Regulations effectively enjoin the application of the American Cyanamid principles by the UK courts. The Court noted that this is a position that is quite contrary to that which pertains under the Irish Regulations and a fact which the Court considers renders the Irish Regulations "a more faithful transposition of the applicable European Union provisions". The judgment is to be welcomed for providing clarity in relation to an important aspect of the procurement remedies regime in Ireland.