Energysolutions Eu Ltd v Nuclear Decommissioning Authority
| Jurisdiction | England & Wales |
| Judge | Lord Justice Vos,Lord Justice Tomlinson,The Master of the Rolls |
| Judgment Date | 15 December 2015 |
| Neutral Citation | [2015] EWCA Civ 1262 |
| Docket Number | Case Nos: A1/2015/0468 & 0586 |
| Court | Court of Appeal (Civil Division) |
| Date | 15 December 2015 |
[2015] EWCA Civ 1262
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
MR JUSTICE EDWARDS-STUART
Case Numbers HT-2014-000053 and HT-2014-000094
Royal Courts of Justice
Strand, London, WC2A 2LL
The Master of the Rolls
Lord Justice Tomlinson
and
Lord Justice Vos
Case Nos: A1/2015/0468 & 0586
Mr John Howell QC and Mr Ewan West (instructed by Freshfields Bruckhaus Deringer LLP) for Energy Solutions EU Limited
Mr Nigel Giffin QC and Mr Joseph Barrett (instructed by Burgess Salmon LLP) for the Nuclear Decommissioning Authority
Hearing dates: 26 th and 27 th October 2015
Introduction
The Claimant, Energy Solutions EU Limited ("Energy Solutions"), was a member of the consortium that was one of the last 4 tenderers for a major nuclear decommissioning contract (the "Contract") procured by the Defendant, the Nuclear Decommissioning Authority (the "NDA"). The NDA is a non-departmental public body established under the Energy Act 2004 with responsibility for 17 nuclear sites in the UK. The bidding consortium in question was called "Reactor Site Solutions" (the "RSS consortium") and comprised Energy Solutions and Bechtel Management Company Limited ("Bechtel"). On 31 st March 2014, the NDA informed the RSS consortium that its bid had been unsuccessful, and that the Contract was to be awarded to another consortium called "Cavendish Fluor Partnership" ("CFP"). The NDA also informed the RSS consortium that the standstill period provided for under regulation 32A of the Public Contracts Regulations 2006 (SI 2006 No. 5) (the "Regulations") would end at midnight on 14 th April 2014.
On 6 th April 2014, the RSS consortium wrote to the NDA expressing concerns about the adequacy of the procurement process, and seeking information. On 11 th April 2014, the NDA responded to the RSS consortium declining to extend the standstill period and referring to the very significant cost that would be suffered by the NDA if there were any delay to the programme. It was open to the RSS consortium and to Energy Solutions as one of the members of the RSS consortium to issue proceedings against the NDA under regulation 47C of the Regulations, and to notify the NDA that they had done so, before the end of the standstill period and before the Contract was entered into between the NDA and CFP. Had the RSS consortium done these things, the NDA would have been required to refrain from entering into the Contract under regulation 47G(1) of the Regulations. In fact, however, the RSS consortium decided not to do them and instead wrote to the NDA reserving all its rights on the 14 th April 2014.
The Contract between the NDA and CFP was entered into on 15 th April 2014. On 28 th April 2014, Energy Solutions issued its original claim form claiming damages from the NDA of approximately £100 million in respect of the loss of profits that it would have earned had the Contract been awarded to the RSS consortium. The damages were sought for breach of the obligations in regulations 18(27) and 30(1)(a) to award the Contract to the most economically advantageous tenderer, and were, therefore, claimed under the provisions of regulations 47A-C and 47J, to the details of which I shall return. The parties agreed that the effect of regulation 47G was not, in these circumstances, to impose any automatic suspension on the Contract.
Against this relatively straightforward background, two preliminary issues were tried by Edwards-Stuart J. Energy Solutions appeals the judge's conclusion that it was inappropriate without a trial to decide whether or not it should be deprived of its damages because it had refrained from issuing legal proceedings before the Contract had been entered into and thereby deprived itself of the opportunity of maintaining the suspension of the making of the Contract pending the determination of the dispute. Energy Solutions argues that the judge ought to have decided as a matter of domestic law that it could not be deprived of damages simply because it failed to avail itself of the opportunity under the Regulations to issue the proceedings in time so as to maintain the suspension. The NDA argues that the judge was right to hold that it was not possible to decide this question as a preliminary issue, but that it needed to be decided at trial after evidence had been provided.
The second issue that the judge decided concerned the principles applicable to the award of damages to an unsuccessful tenderer under Regulation 47J. The NDA contends that such an award is subject to the 3 conditions applicable to awards of damages in EU law explained by the Court of Justice of the European Union ("CJEU") in Francovich v. Italy ( C-6/90) [1991] ECR I-5357, as formulated by the CJEU in Brasserie du Pêcheur S.A. v. Federal Republic of Germany, Regina v Secretary of State for Transport ex parte Factortame Limited (Joined cases C-46/93 and C-48/93) [1996] Q.B. 404 (the " Brasserie du Pêcheur" case) (the " Francovich conditions"), namely that (i) the rule of law infringed must be intended to confer rights on individuals, (ii) the breach must be sufficiently serious, and (iii) there must be a direct causal link between the breach of the obligation and the damage sustained by the injured party. Conversely, Energy Solutions contends that the judge was right to hold that ordinary English law principles were applicable to such awards of damages, and that once a breach of the Regulations was established the award of damages was not discretionary.
The precise terms of the preliminary issues that the judge determined
As so often happens, the precise formulation of the preliminary issues was problematic. In this case, the difficulties that arose were addressed in paragraphs 19–25 of the judgment of Edwards-Stuart J. The judge was required to address what was really something of a moving target.
The preliminary issues themselves together with the answers that the judge gave were as follows:-
"a. whether the fact that the Claimant did not issue a claim form and notify the Defendant that it had done so before the Defendant's entry into the Contract means that, given regulation 47G of the Public Contracts Regulations 2006, any loss that the Claimant has suffered in consequence of any breach of its obligations by the Defendant is not attributable to any such breach [Answer: the issue is not appropriate to be determined as a preliminary issue].
b. if the Claimant has suffered any loss in consequence of any breach by the Defendant of its obligations:
i. whether the Court has any discretion not to make any award of damages in respect of that loss or a discretion to make only a partial award of damages in respect of any such loss [Answer: No]; and
ii. if so:
(1) on what basis any such discretion is to be exercised; and
(2) whether the fact that the Claimant did not issue a claim form before the Defendant's entry into the Contract and notify the Defendant that it had done so means that, given regulation 47G of the Public Contracts Regulations 2006, it would be inappropriate for the court to make any award of damages or one in relation to the full loss suffered by the Claimant [Answer: Does not arise]."
We were told at the end of the argument that the liability trial of these proceedings is due to commence on 16 th November 2015 with an estimate of 5 weeks. The parties have apparently agreed that our decision on the preliminary issues is not required for the start of the liability trial, and that, because of the possibility of further appeals, the trial judge will be asked to determine the factual issues on the alternative bases that either side is ultimately successful on these points.
Before turning to the details of the judge's decision and the arguments advanced by the parties, it is necessary to deal with the relevant European and domestic legislative background.
The Public Sector Directive
The "Public Sector Directive" ( Directive 2004/18/EC of the European Parliament and of the Council of 31 March 2004 on the coordination of procedures for the award of public works contracts, public supply contracts and public service contracts) replaced earlier directives on the same subject. Parts 1 to 8 of the Regulations (regulations 1–46) give it effect in England, Wales and Northern Ireland. Recital (2) of the Public Sector Directive makes clear that it seeks to guarantee the opening up of public procurement to competition and to draw up provisions of EU co-ordination of national procedures and to ensure that the award of such contracts respects principles of equal treatment, non-discrimination and transparency. The details of the Public Sector Directive are not material to the issue we have to decide.
The Remedies Directive
Part 9 of the Regulations (regulations 47–47P) implements the "Remedies Directive" (Directive 89/665/EEC of the European Parliament and of the Council of 21 December 1989 (as amended by Directive 2007/66/EC of the European Parliament and of the Council) on the coordination of the laws, regulations and administrative provisions relating to the application of review procedures to the award of public supply and public works contracts).
The recitals to the Remedies Directive include the following:-
"Whereas … effective and rapid remedies must be available in the case of infringements of Community law in the field of public procurement, or national rules implementing that law …
Whereas it is necessary to ensure that adequate procedures...
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