ENERGYSOLUTIONS EU Ltd v NucLear Decommissioning Authority
| Jurisdiction | England & Wales |
| Judge | Lord Mance,Lord Neuberger,Lady Hale,Lord Sumption,Lord Carnwath |
| Judgment Date | 11 April 2017 |
| Neutral Citation | [2017] UKSC 34 |
| Date | 11 April 2017 |
| Court | Supreme Court |
[2017] UKSC 34
Lord Neuberger, President
Lady Hale, Deputy President
Lord Mance
Lord Sumption
Lord Carnwath
Appellant
Lord Pannick QC
Joseph Barrett
Rupert Paines
(Instructed by Burges Salmon LLP)
Respondent
John Howell QC
Andrew Hunter QC
Ewan West
(Instructed by Skadden, Arps, Slate, Meagher & Flom (UK) LLP)
Heard on 1 and 2 March 2017
(with whom Lord Neuberger, Lady Hale, Lord Sumption and Lord Carnwath agree)
This is an appeal on preliminary points of European Union and domestic law regarding the circumstances in which damages may be recoverable for failure to comply with the requirements of the Public Procurement Directive (Parliament and Council Directive 2004/18/EC on the coordination of procedures for the award of public works contracts, public supply contracts and public service contracts ( OJ 2004 L134, p114) ("the PP Directive")), as given effect in the United Kingdom by the Public Contracts Regulations 2006 (SI 2006/5) ("the 2006 Regulations").
As recited in the Statement of Facts and Issues, the appellant, the Nuclear Decommissioning Authority ("the NDA") is a non-departmental public body established under the Energy Act 2004 ("the EA 2004"), and is responsible for 17 nuclear sites and the associated civil nuclear assets and liabilities formerly owned by the UK Atomic Energy Authority and British Nuclear Fuels Ltd. Pursuant to its duties under the EA 2004, the appellant is responsible for ensuring that, once decommissioned, sites previously used for nuclear generation are made suitable to be used for other purposes. The respondent, ATK Energy EU Ltd ("ATK"), provides integrated waste management and decommissioning services for the nuclear industry.
ATK has pursued against the NDA a claim for damages for breaches of the NDA's obligations under the PP Directive and the 2006 Regulations in respect of the award of a contract for the decommissioning of 12 Magnox power stations, at Berkeley, Bradwell, Chapelcross, Dungeness A, Hinkley Point A, Hunterston A, Oldbury, Sizewell A, Trawsfynydd, Wylfa and two others. An agreement of compromise has been reached in respect of the claim, but the parties wish this judgment to be issued nonetheless. In short, Fraser J held, and it is for the purposes of the present appeal to be assumed, that the NDA failed to award the contract to the tenderer which submitted the most economically advantageous offer determined in accordance with the criteria which the NDA had itself specified, in breach of obligations under regulations 18(27) and 30(1) to (4) of the 2006 Regulations read against the background of the articles 29.1, 29.7 and 53 of the PP Directive. The NDA erroneously concluded that a consortium, known as CFP, had provided the most economically advantageous offer, awarding it a score of 86.48%. It awarded a consortium known as Reactor Site Solutions ("RSS"), of which ATK and another company, Bechtel, were members, a score of 85.42%. Fraser J [2016] EWHC 1988 (TCC)found (i) that CFP should have been disqualified from the competition for failing two threshold requirements, and (ii) that, in any event, RSS would have won the competition had the NDA not made "many manifest errors" (para 944) in its assessment of the tenders, but for which the NDA would have awarded RSS a score of 91.48% and CFP a score of only 85.56%.
The public procurement directives in effect prior to 2004, concerning works (Council Directive 71/305/EEC ( OJ 1971 L185, p5)) and supplies (Council Directive 77/62/EEC ( OJ 1977 L13, p1)), contained no enforcement provisions. Following the decision of the Court of Justice in Gebroeders Beentjes BV v State of the Netherlands (Case C-31/87) [1988] ECR I-4635, paras 38–44, that the provisions of these Directives were unconditional and sufficiently precise to be relied upon by persons before national courts, a further Directive was introduced, Council Directive 89/665/EEC ( OJ 1989 L395, p33) later amended by Council Directive 2007/66/EC ( OJ 2007 L335, p31) ("the 2007 Directive"), to provide effective remedies for economic operators, including the setting aside of awards and compensation. I will refer to Council Directive No 89/665/EEC, as so amended, as the Remedies Directive. Domestic effect was given to the Remedies Directive by amendment of the 2006 Regulations by the Public Contracts (Amendment) Regulations 2009 (SI 2009/2992) ("the 2009 Amendment Regulations"). The 2006 Regulations have since been superseded by the Public Contracts Regulations 2015 (SI 2015/102). Under regulation 118 thereof, the 2006 Regulations remain, however, applicable for the purposes of this case.
The scheme of the Remedies Directive, as implemented and as applicable on the facts of this case, was, in outline, as follows:
(a) Under article 2a(2) of the Remedies Directive, a standstill period of at least ten days was required, from the date of receipt of a telephone or letter communication to an economic operator (such as ATK) that it had not been awarded the contract; during the standstill period the relevant contracting authority (here the NDA) could not enter into the contract; as implemented domestically by regulations 32(1) and 32A(5) of the 2006 Regulations, the standstill period was fixed as exactly ten days from the date of such receipt.
(b) Under article 2c of the Remedies Directive, the United Kingdom was required to allow a period of at least ten days from any such communication for the economic operator to issue proceedings seeking a review of the authority's decision; it implemented this requirement under regulation 47D(2) by allowing 30 days beginning with the date on which the economic operator first knew or ought to have known that grounds for starting proceedings had arisen; this was coupled with a proviso under regulation 47D(3) that it did not require proceedings to be started before the end of a defined period, corresponding with that stated in article 2c. (Article 2f in fact required that domestic law allow a period of at least 30 days, from publication of a contract award notice or information given by the contracting authority about the conclusion of the contract, for challenges based on limited grounds of "ineffectiveness" identified in article 2d; this may, perhaps, have been an inspiration for the more general 30 day period in regulation 47D(2).)
(c) Under article 2(3) of the Remedies Directive, as implemented by regulation 47G, the authority, on becoming aware of the issue of a claim form relating to its decision to award the contract to CFP, was required to refrain from entering into the contract, if not already entered into, until court order or disposal of the proceedings.
In the present case, the NDA informed RSS by telephone and letter delivered on 31 March 2014 that RSS had been unsuccessful. It also informed all bidders that it would voluntarily observe an extended standstill period until 14 April 2014. RSS wrote letters on 6, 8 and 10 April 2014, by which it requested various information and ultimately asked for a further extended standstill period until 23 April 2014, saying that it might otherwise be forced to issue a claim by 14 April to protect its position. On 11 April 2014, the NDA refused to extend the standstill period, and on the same day RSS replied that this was "regrettable" and that it was actively considering commencing a claim, and urged the NDA not to enter into the contract. On 15 April the NDA repeated that it was unable to agree to refrain from taking steps to enter into the contract, explaining that delay would cause it to suffer significant additional cost. Later that day, the NDA entered into the contract with CFP and informed RSS accordingly. On 28 April 2014, and so within the 30 days referred to in para 5(b) above, ATK, though not Bechtel, issued the claim form beginning the present proceedings.
Preliminary issues ordered by Akenhead J on 10 October 2014 were decided by Edwards-Stuart J on 23 January 2015 ( [2015] PTSR 1106), leading to an appeal determined by the Court of Appeal (Lord Dyson MR, Tomlinson and Vos LJJ) by judgment dated 15 December 2015: [2016] PTSR 689. The shape of the arguments has changed, leading to a position where three main issues are now presented in the Statement of Facts and Issues as arising on this appeal. Slightly reformulated to reflect the submissions before the Supreme Court, they are:
(i)(a) whether the Remedies Directive only requires an award of damages to be made when any breach of the PP Directive is "sufficiently serious" and (b) whether the answer to this question is acte clair, so that it need not be referred to the Court of Justice?
(ii) whether regulation 47J(2)(c) of the 2006 Regulations confers a power to award damages in respect of any loss or damage suffered by an economic operator (a) in the case of any breach, or (b) only in the case of a "sufficiently serious" breach, of the Regulations?
(iii) whether (and, if so, when) an award of damages under regulation 47J(2)(c) of the 2006 Regulations may be refused on the ground that an economic operator, who issued a claim form in respect of a contract award decision within the 30 day time limit prescribed by regulation 47D of the 2006 Regulations, did not do so and inform the contracting authority that it had done so before the contracting authority entered into the contract?
Before Edwards-Stuart J issue (i) only appears to have arisen tangentially to an argument, which no longer directly arises, that damages were discretionary. So far as he addressed it, his answer appears to have been negative (para 86). Issue (ii), he answered: (a) Yes; (b) No (para 71). Issue (iii), he held,...
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