Review proceedings

Relevant authorities

Which authorities may rule on review applications? Is it possible to appeal against review decisions and, if so, how?

In Norway, applications for review may be brought before the ordinary courts and the KOFA. In addition, it is possible to bring cases before the ESA in Brussels.

In implementing the EU/EEA Remedies Directives, the ordinary courts have been chosen as the national review mechanism. Decisions taken by the District Court (first instance) may be appealed to the Appeal Court and then to the Supreme Court.

In addition, since 2003, it has been possible to complain to the KOFA, the decisions of which are normally only advisory and not legally binding on the contracting authority and are therefore not subject to appeal (with the exception of appeals to the chair of the board of summary decisions taken by the secretariat to reject complaints as unfounded or unfit for review by the board, for example, because of the need to hear witnesses). The KOFA may also impose administrative penalties in the case of illegal direct awards of contract in breach of the procurement rules of up to 15 per cent of the contract value. Such decisions are binding and could be appealed to the ordinary courts.

In the case of an alleged breach of the EEA Agreement, it is also possible to lodge a complaint with the ESA in Brussels. The ESA may bring proceedings before the EFTA Court. In light of ECJ case law (joined cases C-20/01 and C-28/01, Commission v Germany) and the infringement policy adopted by the Commission, the ESA announced in July 2011 that, in principle, it intends to pursue infringement cases as long as the contract concerned continues to produce effects and the state concerned has not taken suitable corrective measures to rectify the breach. Decisions by the ESA may be appealed to the EFTA Court.

In July 2016, the ESA delivered a reasoned opinion to Norway for breach of EEA rules on public procurement in connection with the award of a contract for the construction and operation of an underground parking facility in the Municipality of Kristiansand. The ESA considered that the subject matter of the contract was a ‘works concession’, while Norway maintained that it constituted a ‘service concession’, and thus at the time outside the scope of the previous legislation implementing the previous directives. On 15 March 2017, the ESA decided to bring Norway before the EFTA Court. On 21 March 2018, the EFTA Court ruled (Case E-4/17) that the main object of the contract was public works and that it constituted a public works concession within the meaning of Directive 2004/18/EC. The EFTA Court held that Norway had failed to publish an EEA-wide contract notice, use common procurement vocabulary (CPV) codes correctly and respect the minimum time limit for the submission of applications in an award procedure.

Although not specifically provided for in the legislation, it is always possible to submit a complaint to the contracting authority itself. Some contracting authorities have a policy of granting the complainant a new possibility to bring the case to a complaint body (preferably the KOFA) if it upholds its decision.

Timeframe and admissibility requirements

How long do administrative or judicial proceedings for the review of procurement decisions generally take?

An application for interim measures before the ordinary courts will normally be handled quickly, between two and six weeks. Claims for damages before the District Court shall normally be heard within six months. Judgments may be appealed to the Appeal Courts and to the Supreme Court.

In cases before the KOFA, if the contracting authority is willing to suspend the signing of the contract until a decision has been taken, or if interim measures are in place, the case will be given priority and be handled by KOFA in an expedited procedure. Statistics show that on average, priority cases took two months (63 days) in 2018, and other cases took eleven months (330 days). In illegal direct award cases, a priority case is normally handled quickly (in 2017 in 35 days, no such case in 2018), and 15 other cases in 253 days on average.

What are the admissibility requirements?

In the case of a request for interim measures (which cannot be awarded after the contract has been signed), the applicant must show probability that an infringement has taken place, and the necessity to avoid irreparable damage. Ordinary court fees apply.

A complaint to the KOFA must be filed within six months after the contract in question was signed. A fee of 8,000 kroner has to be paid. In cases of an alleged illegal direct award, anyone may bring a complaint, the fee is 1,000 kroner, and there is a two-year time limit to bring the case before the KOFA.

What are the time limits in which applications for review of a procurement decision must be made?

The ordinary courts enforce the procurement rules. After the contract has been signed, interim measures cannot be awarded. In other words, an application for interim measures must normally be lodged with the court before the end of the standstill period.

The general rule is that an application for sanctions (ie, ineffectiveness, fines and the shortening of contract) must be filed with the court within two years of the conclusion of the contract.

It is possible to obtain a 30-day time limit if the contracting authority has informed the bidders and candidates concerned of the decision to award the contract or, in the case of a direct award, has published a contract award notice justifying the direct award.

A contracting authority may, in the restricted procedure or negotiations with prior notice, in respect of decisions to reject an application from an interested bidder, fix a deadline of at least 15 days to seek interim measures.

The statute of limitations (normally three years) applies to an application for damages.

A complaint to the KOFA must be filed within six months after the contract in question was signed. The time limit is two years for complaints alleging an illegal direct award.

The above-mentioned deadlines of 30 days and two years shall be suspended if a complaint is submitted to the KOFA, leaving a new 30-day time limit after the KOFA has taken its decision.

Suspensive effect

Does an application for review have an automatic suspensive effect blocking the continuation of the procurement procedure or the conclusion of the contract?

In line with the Remedies Directive 2007/66/EC, it follows from the implementing provisions that the right of the contracting authority to conclude a contract is automatically suspended when an application for interim measures is filed during the standstill period. This is an innovation in Norwegian law, compared with applications for interim measures in general. The automatic suspension applies only to the extent required by the Remedies Directive (ie, contracts above EU thresholds).

With regard to procurements not covered by the Remedies Directive, the court may, following an application for interim measures, order suspension of the procedure and the conclusion of the contract.

The KOFA will always ask the contracting authority whether it is willing to suspend signing of the contract until it has reached a decision, in which case the review proceedings will be given priority.

Approximately what percentage of applications for the lifting of an automatic suspension are successful in a typical year?

Such statistics are not available.

Disadvantaged bidders

Is it customary for disadvantaged bidders to file review applications?

The number of lawsuits filed with the ordinary courts in procurement cases has always been low, but the number is increasing, in particular due to implementation of the Remedies Directive 2007/66/EC in 2012.

The ESA normally receives three to five complaints against Norway every year; there was a record high of 10 complaints in 2004, and only one in 2006, probably due to the establishment of the KOFA. In 2018 the ESA received one complaint against Norway.

The KOFA began operating in 2003. The number of complaints was high at the start, with 268-287 complaints per year in 2003-2005. It then dropped to 158 and 155 in 2006 and 2007, respectively, probably due to the raising of the national threshold from 200,000 to 500,000 kroner. It then increased from 224 in 2008 to a record high of 396 in 2010, before falling back to 331 in 2011. In 2012, due to a fee increase in July, the number dropped to 234, and down to 143 in 2013, slowly increasing again to 194 in 2016. Although the national threshold was raised to 1.1 million kroner as of 1 January 2017, the number of complaints kept steady at 192. In 2018, when the threshold was adjusted to 1.3 million kroner, the number of complaints dropped to 138, an all-time low.

Violations of procurement law

If a violation of procurement law is established in review proceedings, can disadvantaged bidders claim damages?

The Public Procurement Act provides specifically that anyone who has suffered loss as a consequence of an infringement of the procurement rules is entitled to damages. The claim for damages must be filed before the District Court (court of first instance). In case of a material infringement, the bidder who should have been awarded the contract, had it not been for the infringement, is entitled to compensation for loss of contract (loss of profit, or ‘positive contract interest’). Alternatively, a bidder may be entitled to compensation for costs incurred in preparing the bid and participating in the tender procedure (‘negative contract interest’), if they are able to prove that it would not have participated had it known that the contracting authority would infringe the rules. In principle, all bidders who have submitted bids may be entitled to such compensation (except the bidder who should have been awarded the contract and is entitled to compensation for loss of profit). Even a supplier who has not submitted a bid owing to an infringement during the procedure (eg, incorrect notice) may claim damages for costs incurred in taking necessary measures to try to halt the procedure and have the infringement corrected.

The KOFA may in its decision express its opinion on whether conditions for claiming damages are met. If the complainant does not succeed in obtaining damages from the contracting authority on this basis, the complainant may file a lawsuit before the ordinary courts, and may refer to the decision as evidence, but the court may reach another conclusion.

In Case E-16/16 (Fosen-Linjen AS vs AtB AS), the EFTA Court answered questions from Frostating Court of Appeal on the conditions for the award of damages. In its advisory opinion of 31 October 2017, the EFTA Court found that the gravity of a breach of the EEA rules on public contracts is irrelevant for the award of damages. A simple breach of public procurement law is in itself sufficient to trigger the liability of the contracting authority to compensate the person harmed for the damage incurred, provided that the other conditions for the award of damages are met including, in particular, the existence of a causal link. However, on 2 March 2018, Frostating Court of Appeal (LF-2015-18742) chose not to rely on the advisory opinion, arguing, among other things, that the EFTA Court ideally could have made a deeper analysis of the differences between the ECJ judgments in C-314/09 Strabag and C-568/08 Combinatie Spijker.

Finding that Norwegian case law aligns well with ECJ case law, Frostating upheld the view by the Supreme Court in Nucleus (HR-2000-1135) that a ‘material’ error must have been committed in order to obtain damages for positive contract interest. In this case, despite a material error, because the contracting authority for that reason was obliged to cancel the tender procedure, Fosen-Linjen was not entitled to be awarded the contract and consequently had no right to damages for the loss of profit (positive contract interest).

Frostating found no basis for compensation for ‘loss of chance’ (see question 45). However, the conditions for damages for the negative contract interest (competition costs) were met.

The judgment has been appealed to the Supreme Court which decided to request a new advisory opinion. The EFTA Court will hear the case (E-07/18) on 13 May.

May a concluded contract be cancelled or terminated following a review application of an unsuccessful bidder if the procurement procedure that led to its conclusion violated procurement law?

The decision to award a contract can be annulled as unlawful by the courts, and the contracting authority itself may also reverse such a decision, but not after the contract has been concluded.

The new ineffectiveness sanction applies only for contracts covered by the Remedies Directive 2007/66/EC, namely contracts above EU/EEA thresholds. The court is empowered to decide on ineffectiveness (ie, retroactive cancellation of all contractual obligations (ex tunc)) or to limit the scope of the cancellation to those obligations that still are to be performed (ex nunc), in which case the court in addition must impose a fine amounting to a maximum of 15 per cent of the estimated value of the contract in question. However, retroactive cancellation is limited to those cases where the subject matter of the contract can be returned in substantially the same condition and quantity.

In a case concerning wintertime road maintenance (TSENJ-2015-85663), the court found that the contract was only advertised in Doffin and not in TED as it should have been, since the value of the services exceeded the EEA threshold, and consequently it constituted an illegal direct award. In addition, according to the notice the contract terminated after season 2017/2018, while the signed contract terminated after season 2018/2019. The court decided to cancel the services still to be performed (ex nunc), and imposed a fine of 200,000 kroner, approximately 5.4 per cent of the value of the contract already performed.

For contracts below EU/EEA thresholds, but above the national threshold, the court shall shorten the duration of the contract in the event of an illegal direct award, impose a fine or combine the two penalties, and may decide such sanctions in the case of infringements affecting the outcome in addition to non-respect of the standstill period.

Relevant statistics on these remedies are not available.

Typical costs

What are the typical costs of making an application for the review of a procurement decision?

Ordinary court fees apply in cases before the courts. Normally, lawyers represent parties. Legal costs may vary considerably. The main rule is that the losing party must cover the costs of the other party. The impression is that the costs for each party in an interim measures case typically vary between 50,000 and 200,000 kroner. In a recent case where the complainant’s bid to the road authorities had been rejected because it was delivered to the wrong address, parties’ costs before the District Court reportedly totalled 1.4 million kroner.

When filing a complaint to the KOFA, a fee of 8,000 kroner must be paid. It will be repaid if the KOFA finds that the contracting authority has committed a breach that could affect the outcome of the competition. In cases of an alleged illegal direct award, anyone may bring a complaint and the fee is 1,000 kroner. If the KOFA concludes that an illegal direct award has taken place, the fee shall be repaid. If lawyers represent the parties, the costs are normally much lower than in court cases (ie, owing to the written procedure). The parties cover their own costs.