This month, the court published the transcript of an early hearing in the Cemex v Network Rail dispute. It makes difficult reading for those considering challenging, reinforcing the tight 7-day statutory timetable for serving the particulars of claim and emphasising that it is important to tightly limit disclosure requests at an early stage.
Cemex bid for a contract to manufacture and supply Network Rail with railway sleepers. It was unsuccessful, losing to PCM RAIL.ONE AG which bid on the basis of an innovative, and much cheaper, system of sleeper manufacture. Cemex challenged on the basis that the tender was "abnormally low", with the case seeming to boil down to the fact that Cemex felt that the system RAIL.ONE was planning to use wasn't suitable for Network Rail's requirements.
The application to extend time to serve the particulars
The timelines for serving the particulars of claim in procurement cases are extremely short – only 7 days from the issue of the claim form. Cemex argued that without disclosure it could not properly plead its case and so applied, on day 7, for an extension of time. Hearing the application after the summer break, Coulson J concluded that the course Cemex chose was "risky" and that it was "not the sort of application that this court should encourage". He refused the application, and it appears to have been the agreement of the Defendant that Cemex could have a short period after the hearing within which to file their Particulars that prevented the claim being fatally undermined by the decision to seek an application to extend time.
The key points Coulson J made were that:
- Cemex should not have needed extensive information to plead its case. It had a high level breakdown of the pricing of RAIL.ONE's bid and that was sufficient to plead an arguable case.
- Cemex should not have refused disclosure of documents into a confidentiality ring. It had been offered additional information, which it had refused because it was not happy that the confidentiality ring would not include two technical consultants, only lawyers. Coulson J felt that the documents should have been accepted, as only then could the lawyers know if they could understand them without help.
- Worryingly, he concludes that all procurement challenges are limited to whether the contracting authority has made a manifest error of some sort, which involves a very limited review by the court, and so extensive technical information was not required.
Coulson J's position in respect of number 3 appears to significantly undermine bidders' rights in challenges in the UK, and appears difficult to reconcile with EU law. A breach of the Treaty principles of equal treatment, non-discrimination and proportionality in particular, should not be judged on the same basis as a manifest error. An authority has no discretion in applying those Treaty principles – as Coulson J has concluded previously. It appears to follow, therefore that it is not the case that "at all times…in a procurement challenge, the issue is limited to whether the contracting authority has made a manifest error…". We assume therefore that his comments were intended to relate to the sort of claim in front of him.
The specific disclosure application
Coulson J suggests that it would have been preferable for Cemex to plead its case and use that pleading as the basis for an application for disclosure. Instead, it applied for specific disclosure only on the basis that it needed documents to plead its case – having conceded under pressure in the hearing that it did not need those documents and could plead without them, the application was left almost without purpose. The key points of the judge's decision were:
- It will be more difficult to get disclosure of highly confidential information, and that strong protections within the confidentiality ring are justified in such circumstances;
- Document requests must clearly tie into the issues that are being made in the case;
- It is not advisable to refuse documents offered into a narrow confidentiality ring – the judge looked very poorly on the position taken by Cemex. Instead, documents can be accepted and an application made to the court for experts to be admitted into the confidentiality ring, on appropriate terms, if it is not possible for the lawyers to understand the documents; and
- The difficult Supreme Court decision, which confirmed that damages were only available in procurement cases if the Frankovich conditions were met, did not change the extent to which the question of whether there was a serious issue to be tried should be tested at an automatic suspension hearing.
It remains difficult for bidders in the early stages of procurement disputes, and the courts show little sign of helping to alleviate some of the difficulties and pressures bidders face. That said, Cemex was a particularly extreme case – the judge seems to have taken against the route that Cemex chose, and it made the application very difficult from the off. A measured approach to seeking disclosure is likely to be met more favourably, and there is now fairly well accepted practice as to how such matters should be dealt with by parties, particularly in light of the TCC Guidance. Certainly our recent experiences are that it is usually possible to get some disclosure without needing to take the steps of seeking specific disclosure, albeit within the strict confines of the tight time limits for challenges.