In Mauritius v CT Power Limited [2019] UKPC 27, the Privy Council quashed a decision of the Mauritian Supreme Court on the basis that the relevant public authority had acted in accordance with public law principles, as required, when negotiating a private law contract.
Key Points
- Public bodies are still expected to comply with public law principles when negotiating commercial agreements in the private law context. However, they enjoy a particularly wide degree of discretion and a successful judicial review challenge will likely require evidence of fraud, corruption or bad faith.
- Contract terms between a public authority and a private party cannot oust the judicial review jurisdiction of the Court, which exists to safeguard the public interest.
- It is not an abuse of process to bring judicial review proceedings and a civil claim for damages in respect of the same decision.
Background
CT Power had been working to construct a new electricity generating plant for Mauritius. Before commencing the project, CT Power was obliged to obtain an Environment Impact Assessment licence (the "EIA Licence") under the Environment Protection Act 2002. CT Power's initial application for the EIA Licence was rejected in 2011 but, following an appeal to the Environmental Appeal Tribunal, the licence was subsequently issued in 2013 subject to certain conditions. Condition 15 of the EIA Licence (the "Condition") required CT Power to provide proof of its financial capabilities for the duration of the project to the satisfaction of the Ministry of Finance.
Separately, it was a condition of CT Power's agreement with its eventual customer, the Central Electricity Board, that the agreement would only come into effect once CT Power had put in place a separate Implementation Agreement with the Ministry of Energy. This was to include a guarantee by the Government to ensure payment of the price due to CT Power from the Central Electricity Board for supplies of electricity. Despite negotiations between the Ministry of Energy and CT Power, the final terms of the Implementation Agreement were not agreed and it was never signed. Relevantly, clause 12.7 of the draft agreement sought to waive the Government's sovereign immunity and stated that the Government's acts in respect of the Implementation Agreement constituted private rather than public acts.
CT Power later applied for judicial review of the Ministry of Finance's decision that the Condition had not been satisfied and the Ministry of Energy's decision not to sign the Implementation Agreement. The Mauritian Supreme Court gave judgment in CT Power's favour in 2016. Both decisions were amenable to judicial review and, on this basis, both were found to be unreasonable, irrational and in breach of CT Power's legitimate expectation.
CT Power also issued a civil claim for damages in relation to the same decisions, claiming approximately £77.5m in respect of its wasted costs in relation to the project and for loss of profits.
The Ministry of Finance and the Ministry of Energy appealed to the Privy Council against the decision of the Supreme Court.
Judgment
The Privy Council quashed the Supreme Court's decision and allowed the appeal. Although it agreed that the decisions of the Ministry of Finance and the Ministry of Energy were amenable to judicial review, it found that the Ministries had acted lawfully and had not breached any legitimate expectation. Separately, the Privy Council did not consider that CT Power had carried out an abuse of process by bringing judicial review proceedings and issuing a civil claim for damages.
Abuse of process
The Privy Council did not consider it an abuse of process to bring both judicial review proceedings and a civil claim for damages in respect of the same decisions. CT Power was entitled to seek the Court's ruling on both claims – the timing of the cases was simply a matter of case management and it was within the Court's power to stay one set of proceedings if it deemed that this was necessary. In any event, there was no precise overlap between CT Power's judicial review claim and its damages claim in this instance.
Amenability to judicial review
The Privy Council agreed with the Supreme Court that both decisions were amenable to judicial review. The Ministry of Finance's decision that the Condition had not been satisfied fell within its public duty to ensure adherence with the EIA Licence, a regulatory instrument issued pursuant to the Environment Protection Act 2002.
The Ministry of Energy's decision as to whether or not to sign the Implementation Agreement was similarly within scope. Although it involved deciding whether to accept private law obligations in a commercial contract, the Privy Council considered that where the proposed party to a contract was a public authority, it was "not entirely free from constraints arising under public law" [64]. That being said, public bodies such as the Ministry of Energy had a particularly wide discretion when conducting commercial negotiations. The Privy Council reaffirmed its guidance from Mercury Energy Ltd v Electricity Corporation of New Zealand Ltd [1994] 1 WLR 521 (PC), which was that a public body's decision to enter into a commercial contract for goods or services would be unlikely to be the subject of judicial review in the absence of fraud, corruption or bad faith.
The Privy Council also rejected the argument that clause 12.7 of the Implementation Agreement meant that related decisions were not amenable to judicial review. On the facts, it was an unsigned waiver of sovereign immunity. It therefore never came into effect and, in any event, was irrelevant to the issue of judicial review. More broadly, the Privy Council held that a contract between a public authority and a private party could not remove the Court's judicial review jurisdiction, which existed to safeguard the public interest.
Legitimate expectation
Although the Ministry of Energy and the Ministry of Finance's decisions were amenable to judicial review, the Privy Council found them to be lawful. In both instances, the facts did not suggest that the relevant Ministry had provided CT Power with a legitimate expectation as to what decision it would make.
Comment
This case provides important guidance for those entering into commercial agreements with public authorities. Public authorities are still expected to act in accordance with public law principles but are afforded particularly wide discretion when conducting negotiations and entering into such agreements. Judicial review challenges where there is no fraud, corruption or bad faith are therefore unlikely to be successful.
This case also serves as a reminder that judicial review proceedings and a civil claim for damages can be brought in respect of the same facts. It is not an abuse of process to do so and the Court will consider how to manage the proceedings in terms of case management and timing.
