Three new cases (Indigo Services UK v Colchester Corporation, The Halo Trust v Secretary of State for International Development, and Exel Europe Ltd v University Hospitals Coventry and Warwickshire NHS Trust) have illustrated one of the new rules emanating from the 2007 Remedies Directive in action.
The amended Public Contracts Regulations 2006 (Regulation 47G.1) provide that when Court proceedings are issued over a procurement, the authority concerned is automatically prevented from entering into the contract until those proceedings are dealt with.
This innovation came from the Remedies Directive and was designed to promote the rights of challengers. Prior to this a claimant would have to apply for an injunction to stop the authority entering into the contract.
However, given the potential for abuse the new law (Regulation 47H.1(a)) also allows for an authority to apply to the Court to lift the automatic suspension if circumstances merit it. This effectively places the burden on the authority to apply for something akin to a reverse injunction if they wish to enter into the contract notwithstanding the Court action.
These new cases have confirmed that the tests the Court will apply will be those traditionally applied to injunctions (based on American Cyanamid), namely is there a serious issue to be tried, and does the balance of convenience lie in favour of granting or refusing interlocutory relief, or would damages be an adequate remedy?
The Courts concluded in Indigo and Exel that there were serious issues to be tried, namely allegations of various breaches of the Regulations. Had there been serious concerns that those allegations were time barred this might have been different, but that did not apply. In Halo Trust the Court did not believe there was a serious issue. This case concerned landmine clearance in Cambodia and the allegations against appeared to be more policybased than specific breaches of procurement law, and there was a likelihood of a time bar anyway.
The Courts nevertheless held that the balance of convenience in both Indigo and Exel lay in allowing the contracts to be entered into with the chosen winners pending resolution of the main proceedings. In both cases the Courts considered that the time that would necessarily be taken from the point of judging the interim order to final trial (at least six months) would be unfairly prejudicial on the authorities involved.
In Exel, the authority is an NHS Trust with urgent needs that cannot wait, and in Indigo the authority is a vocational college which cannot operate without someone performing basic cleaning services (the contract concerned). In Indigo it was also considered relevant that just extending the contract with Indigo, which had been the incumbent provider, would create a new breach of the Regulations of itself.
The Courts have therefore shown themselves willing to protect public authorities from challenges under the new rules causing undue difficulties for the continuation of public services. In so doing the Court is saying that damages are often an adequate remedy. The Court has taken time delays as a particularly important consideration.
With the old law, it required an exceptional case to secure an injunction preventing an authority from entering into a contract pending trial on the substance of the case. With the new law, it is too early to say that it will take an exceptional case for the Court to refuse an interim order allowing the authority to enter into the contract – particularly as this would run counter to the general intention of the Remedies Directive – but three successful actions by authorities at least suggests that the Court will tend to view these applications generously.