On 28 January 2010, the European Court of Justice (ECJ) handed down a judgment on a reference from the High Court of England and Wales for a preliminary ruling in relation to the limitation period for challenging public procurement decisions. Under the EU Remedies Directive (Directive 89/665), Member States are required to take measures necessary to ensure that decisions taken by contracting authorities under the procurement directives may be reviewed effectively and as rapidly as possible. Under the UK Public Contracts Regulations 2006 (PCR), proceedings against procurement decisions must be “brought promptly and in any event within three months from the date when grounds for the bringing of the proceedings first arose unless the Court considers that there is good reason for extending the period within which proceedings may be brought.”
The UK High Court action concerned a tender decision for the award of a framework agreement for the supply of medical equipment to the National Health Service (NHS). One of the losing tenderers, Uniplex, was informed on 28 November 2007 that its tender had been unsuccessful. On 28 January 2008, Uniplex sent NHS a letter before action alleging various breaches of the public procurement rules. Uniplex then began proceedings in the High Court on 12 March 2008. The High Court stayed proceedings to refer questions to the ECJ, asking whether the limitation period provided for in the PCR runs from the date of infringement, or the date on which the claimant knew, or ought to have known, of the infringement. The ECJ decided that a tenderer is not in a position to effectively bring proceedings at the stage of simply learning that its tender has been rejected. The mere fact of rejection does not provide sufficient information to enable the tenderer to establish whether there has been any infringement. The rejected tenderer can only come to an informed view as to infringement once it has been informed of the reasons for rejection. As a result, the ECJ found that the objectives of Directive 89/665 can only be realised if the period for bringing proceedings starts to run from the date on which the claimant knew, or ought to have known, of the alleged infringement, rather than the date on which the infringement took place.
This is a significant public procurement decision which should work to extend the period of time that will be afforded to unsuccessful tenderers when seeking to bring proceedings against the contracting authority in a procurement dispute. Until now, English courts have generally considered the date on which the infringing act occurred to be the relevant starting date for the application of the time limitation. With this decision, the relevant start date will most likely be the date on which the contracting authority informs appropriately, the unsuccessful tenderer of the reasons for its decision. In most every case, any infringement of the public procurement rules would have taken place by this point, thus the tenderer is given more time to assess its position and decide whether to mount a challenge for infringement. In its decision, the ECJ rightly outlines the importance of imposing limitation periods on actions against procurement decisions and requiring tenderers to challenge decisions promptly. Thus maintaining the objective of timeliness. The Court also goes on to say, however, that the objective of timeliness will be subject to the requirements of legal certainty and the principle of effectiveness. Limitation periods are ferociously defended by the EU and UK courts alike. In some circumstances limitations are sacrosanct, with the courts often citing the principle of legal certainty to defend a slavish adherence to time limits (even in cases where to do so seems manifestly unfair). This is especially so in the area of public procurement, where the need to procure the goods or services and have them delivered/performed is usually time critical and socio-economically important. This decision may just signal a shift in the court’s thinking — away from the strict imposition of time limits to maintain certainty, good order and commercial progress, and towards protecting the rights of the tenderer who, quite obviously, can only properly challenge an infringement of the public procurement rules where it is aware that one has taken place. Not before time, it could be suggested.