Damages

• EU
  • Directive 89/665/EEC (Remedies Directive)

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    • Article 2 Requirements for review procedures
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      1. The Member States shall ensure that the measures taken concerning the review procedures specified in Article 1 include provision for the powers to:

      …

      (c) award damages to persons harmed by an infringement.

      …

      5. The Member States may provide that where damages are claimed on the grounds that a decision was taken unlawfully, the contested decision must first be set aside by a body having the necessary powers.

      6. The effects of the exercise of the powers referred to in paragraph 1 on a contract concluded subsequent to its award shall be determined by national law.

      Furthermore, except where a decision must be set aside prior to the award of damages, a Member State may provide that, after the conclusion of a contract following its award, the powers of the body responsible for the review procedures shall be limited to awarding damages to any person harmed by an infringement.

  • Treaty on the Functioning of the European Union

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    • Article 340
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      The contractual liability of the Union shall be governed by the law applicable to the contract in question.

      In the case of non-contractual liability, the Union shall, in accordance with the general principles common to the laws of the Member States, make good any damage caused by its institutions or by its servants in the performance of their duties.

      Notwithstanding the second paragraph, the European Central Bank shall, in accordance with the general principles common to the laws of the Member States, make good any damage caused by it or by its servants in the performance of their duties.

      The personal liability of its servants towards the Union shall be governed by the provisions laid down in their Staff Regulations or in the Conditions of Employment applicable to them.

    • Article 268
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      The Court of Justice of the European Union shall have jurisdiction in disputes relating to compensation for damage provided for in the second and third paragraphs of Article 340.

  • Regulation (EU, Euratom) 2024/2509 on the financial rules applicable to the general budget of the Union (recast)

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    • Article 174 Cancellation of the procurement procedure
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      The contracting authority may, before the contract is signed, cancel the procurement procedure totally. In the case of procedures awarded in lots or multiple sourcing procurement the cancellation may be done partially. The candidates or tenderers shall not be entitled to claim any compensation.

      The decision shall be justified and brought to the attention of the candidates or tenderers as soon as possible.

    • Recital 182
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      A contracting authority should be able to cancel a procurement procedure, or partially cancel in the case of procedures awarded in lots or through multiple sourcing, before the contract is signed, without the candidates or tenderers being entitled to claim compensation. This should be without prejudice to situations where the contracting authority has acted in such a way that it is possible to hold it liable for damages in accordance with the general principles of Union law.

• UK
  • Procurement Act 2023

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    • Section 103 Pre-contractual remedies
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      (1) This section applies if the court is satisfied that a decision made, or action taken, by a contracting authority breached the duty referred to in section 100(1) and—

      (a) the contract in relation to which the breach occurred has not been entered into, or

      (b) where the breach occurred in relation to a modification of a contract, the modification has not yet been made.

      (2) The court may make one or more of the following orders—

      (a) an order setting aside the decision or action;

      (b) an order requiring the contracting authority to take any action;

      (c) an order for the award of damages;

      (d) any other order that the court considers appropriate.

    • Section 104 Post-contractual remedies
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      (1) This section applies if the court is satisfied that a decision made, or action taken, by a contracting authority breached the duty referred to in section 100(1) and—

      (a) the contract in relation to which the breach occurred has already been entered into, or

      (b) where the breach occurred in relation to a modification of a contract, the modification has already been made.

      (2) The court—

      (a) must, if a set aside condition in section 105 is met, make an order setting aside the contract or modification, and

      (b) may, in any case, make an order for the award of damages.

      …

• Ireland
  • S.I. No. 130/2010 - European Communities (Public Authorities' Contracts) (Review Procedures) Regulations 2010

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    • Regulation 9 Powers of Court
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      (6) The Court may award damages as compensation for loss resulting from a decision that is an infringement of the law of the European Communities or the European Union, or of a law of the State transposing such law.

    • Regulation 13 Alternative Penalties
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      (6) The award of damages is not an appropriate alternative penalty for the purposes of this Regulation.

• EFTA
  • Case E-16/16 Fosen-Linjen I

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    Region: EFTA

    Entitlement to damages cannot be made dependent on showing fault and the entitlement to damages cannot be limited to breaches of a certain gravity

    The case concerned a tender for ferry services. One of the award criteria was ‘environment’. The contracting authority admitted an error as  it had not established a reasonable basis for evaluating this criteria, with regard to fuel consumption. It cancelled the tender and re-tendered./ However, Fosen-Linjen sued for damages.

    The Norwegian Court of Appeal asked the EFTA Court, inter alia: “Do Article 1(1) and Article 2(1)(c) of Directive 89/665/EEC, or other provisions of that Directive, preclude national rules on awarding damages, where the award of damages due to the contracting authority having set aside EEA law provisions concerning public contracts, is conditional on (a) the existence of culpability and a requirement that the contracting authority’s conduct must deviate markedly from a justifiable course of action? (b) the existence of a material error where culpability on the part of the contracting authority is part of a more comprehensive overall assessment? (c) the contracting authority having committed a material, gross and obvious error?…”

    “66 The Remedies Directive is closely related to Directive 2004/18/EC and aims, as can be inferred from its first, second and third recital, at providing adequate remedies that ensure compliance with the relevant EEA provisions on public contracts.

    67 Another fundamental objective of the Remedies Directive is to create the framework conditions under which tenderers can seek remedies in the context of public procurement procedures, in a way that is as uniform as possible for all undertakings active on the internal market. Thereby, as is also apparent from the third and fourth recitals to the Remedies Directive, equal conditions shall be secured. This will ultimately contribute to the opening-up of procurement markets to competition across the EEA.

    68 Furthermore, the provisions of the Remedies Directive are intended to protect tenderers from arbitrary behaviour on part of the contracting authority, and are designed to ensure the effective application of EEA rules in the award of public contracts (compare Fastweb, C-19/13, EU:C:2014:2194, paragraph 59).

    69 In order to achieve this outcome, Article 1(1) of the Remedies Directive obliges the EEA States to take the measures necessary to ensure that contracting authorities’ decisions may be reviewed effectively and as rapidly as Article 2(1)(c) of the Remedies Directive states that the measures taken concerning such review procedures must include provision for powers to award damages to those harmed by an infringement of public procurement law. However, neither Articles 1(1), 2(1)(c) nor any other provisions of the Remedies Directive lay down any conditions for the award of damages as a remedy in the field of public procurement.

    70 Therefore, in the absence of EEA rules on this matter it is for the legal order of each EEA State, in principle, to determine the criteria on the basis of which harm caused by an infringement of EEA law on the award of public contracts must be assessed. The national rules laying down these conditions must nevertheless comply with the principles of equivalence and effectiveness (compare the judgment in Combinatie, cited above, paragraph 90, and case law cited).

    71 However, it must be noted, that the wording of Articles 1(1) and 2(1), as well as the sixth recital in the preamble to the Remedies Directive in no way indicate that the infringement of the public procurement legislation liable to give rise to a right to damages in favour of the person harmed should have specific features (compare Strabag and Others, cited above, paragraph 35).

    72 The Remedies Directive must, moreover, be interpreted in the light of fundamental rights, in particular the right to an effective judicial remedy.

    73 In this regard, the Court recalls, that while it is preferable that a breach of public procurement law will be corrected before a public contract takes effect, there may be cases where such a breach can only be remedied by way of damages. For instance, the second subparagraph of Article 2(6) of the Remedies Directive reserves to the EEA States the right to limit the powers of the body responsible for review procedures, after the conclusion of a contract following its award, to the award of damages.

    74 Against the background of the fundamental right to an effective judicial remedy, it must be possible for unsuccessful tenderers to obtain a judgment finding a breach of the EEA rules on public procurement law, even in circumstances in which the other remedies provided for by the Remedies Directive are excluded.

    75 Indeed, the remedy of damages provided for in Article 2(1)(c) of the Remedies Directive can constitute, where appropriate, a procedural alternative, which is compatible with the principle of effectiveness underlying the objective pursued by that directive of ensuring effective review procedures, only where the possibility of damages is no more dependent than the other legal remedies provided for in Article 2(1) on a finding that the contracting authority is at fault (compare Strabag and Others, cited above, paragraph 39).

    76 As such, damages seek to achieve a three-fold objective: to compensate for any losses suffered; to restore confidence in the effectiveness of the applicable legal framework; and to deter contracting authorities from acting in such a manner, which will improve future compliance with the applicable rules. Liability through damages may also provide a strong incentive for diligence in the preparation of the tender procedure, which will, ultimately, prevent the waste of resources and compel the contracting authority to evaluate the particular market’s features. Were liability to be excluded, this may lead to a lack of restraint of the contracting authority.

    77 Accordingly, it has already been established that a national rule making the award of damages conditional on proof of fault or fraud would make actions for damages more difficult and costly, thereby impairing the full effectiveness of the public procurement rules. Article 2(1)(c) of the Remedies Directive therefore precludes national legislation which makes the right to damages for an infringement of public procurement law by a contracting authority conditional on that infringement being culpable (compare Commission v Portugal, C-70/06, EU:C:2008:3, paragraph 42; and Strabag and Others, cited above, paragraph 45). The same must apply where there exists a general exclusion or a limitation of the remedy of damages to only specific cases. This would be the case, for example, if only breaches of a certain gravity would be considered sufficient to trigger the contracting authority’s liability, whereas minor breaches would allow the contracting authority to incur no liability.

    78 Moreover, a limitation of the possibilities to claim damages could entail a reduction in the willingness of contracting authorities to comply with the relevant conditions of EEA public contract law, or to decrease their diligence in conducting a tender procedure. A requirement that only a breach of a certain gravity may give rise to damages could also run contrary to the objective of creating equal conditions for the remedies available in the context of public procurement. Depending on the circumstances, a breach of the same provision on EEA public procurement could lead to liability in one EEA State while not giving rise to damages in another EEA State. In such circumstances, economic operators would encounter substantial difficulties in assessing the potential liability of contracting authorities in different EEA States.

    79 Thus, a rule requiring a breach of a certain type or gravity would ultimately, substantially undermine the goal of effective and rapid judicial protection sought by the Remedies Directive. It would also interfere with the objectives pursued by Directive 2004/18/EC, namely to guarantee the free movement of services and to ensure open and undistorted competition in this field in all EEA States.

    80 Therefore, the gravity of a breach of the EEA rules on public contracts is irrelevant for the award of damages. Moreover, it is not decisive for the award of damages pursuant to Article 2(1)(c) of the Remedies Directive, whether the breach of a provision of public procurement law was due to culpability and conduct deviating markedly from a justifiable course of action, or whether it occurred on basis of a material error, or whether it is attributable to the existence of a material, gross and obvious error.

    81 Nevertheless, a claim for damages can only succeed if certain other conditions are fulfilled, such as the condition that there must be a sufficient causal link between the infringement committed and the damage incurred.

    82 In view of the foregoing, the answer to the first and second questions must be that the award of damages according to Article 2(1)(c) of the Remedies Directive does not depend on whether the breach of a provision of public procurement law was due to culpability and conduct deviating markedly from a justifiable course of action, or whether it occurred on basis of a material error, or whether it is attributable to the existence of a material, gross and obvious error. 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, pursuant to Article 2(1)(c) of the Remedies Directive, provided that the other conditions for the award of damages are met including, in particular, the existence of a causal link.

  • Case E-7/18 Fosen-Linjen II

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    Region: EFTA

    It is not the case that any breach of the procurement rules gives rise to a right to damages; the requirement that the breach be sufficiently serious applies

    The EFTA Court essentially overturns its analysis in Fosen-Lijnen I and confirms that it is not the case that any breach gives rise to a right to damages; the breach must be sufficiently serious

    Having considered Fosen-Lijnen I, the Frostating Court of Appeal considered that the EFTA judgment in Fosen-Lijnen I did not appear to be clearly correct given that it did not require the showing of a sufficiently serious breach. On appeal, the Norwegian Supreme Court made a reference to the EFTA Court asking: Does Article 2(1)(c) of the Remedies Directive require that any breach of the rules governing public procurement in itself is sufficient for there to be a basis of liability for positive contract interest?

    “109 As set out in the sixth recital of the Remedies Directive, one of the aims of the Directive is to ensure that adequate procedures exist in all the Member States to permit the setting aside of decisions taken unlawfully and compensation of persons harmed by an infringement. Adequate review procedures, as formulated in the directive, must not necessarily be homogenous or identical, they must merely satisfy minimum conditions, which are required by the Directive in order to ensure compliance with EEA law. It follows that the Remedies Directive is an instrument of minimum harmonisation (compare the judgment in Hochtief, cited above, paragraphs 35-39, and case law cited; compare also the judgments in Strabag, cited above, paragraph 33, and case law cited; Combinatie, cited above, paragraph 86; and Symvoulio Apochetefseon Lefkosias, cited above, paragraph 37).

    110 Article 1(1) and (3) of the Remedies Directive requires the EEA States to take the measures necessary to guarantee reviews which are effective and as rapid as possible against decisions of the contracting authorities which are incompatible with EEA law and to ensure the wide availability of reviews with respect to any person having, or having had, an interest in obtaining a particular contract and who has been, or risks being, harmed by an alleged To that end, Article 2(1)(c) of the Remedies Directive requires EEA States to ensure that the measures taken concerning the review procedures include provision for powers to award damages to persons harmed by an infringement.

    111 However, neither Article 2(1)(c) nor any other provision of the Remedies Directive lays down specific conditions for the award of damages, which encompass specific heads of damage and the standard of liability in particular (see Fosen-Linjen I, cited above, paragraph 69; compare the judgment in Combinatie, cited above, paragraph 86, and the Opinion of Advocate General Cruz Villalón in Combinatie, cited above, point 106).

    112 For comparison, Article 2(7) of Directive 92/13/EEC explicitly refers to damages representing the costs of preparing a bid or of participating in an award Loss of profit as a head of damage, is, however, as is the case under the Remedies Directive, not addressed in Directive 92/13/EEC.

    113 The Court recalls that, in the absence of EEA rules governing the matter, it is for the legal order of each EEA State, in accordance with the principle of the procedural autonomy of the EEA States, to determine the criteria on basis of which harm caused by an infringement of EEA law in the award of public contracts must be assessed (see Fosen-Linjen I, cited above, paragraph 70).

    114 As such, EEA States enjoy discretion in determining the criteria on the basis of which damage for loss of profit arising from an infringement of EEA law on the award of public contracts is determined and estimated, provided that the principles of equivalence and effectiveness are respected. This means that those rules must not be less favourable than those governing similar domestic actions and they must not render practically impossible or excessively difficult the exercise of rights conferred by EEA law (see Case E-6/17 Fjarskipti [2018] EFTA Ct. Rep. 78, paragraph 31; compare also the judgments in Club Hotel Loutraki and Others, C-145/08 and C-149/08, EU:C:2010:247, paragraph 74, and eVigilo, C-538/13, EU:C:2015:166, paragraph 39).

    115 In order to ensure the effectiveness of Article 2(1)(c) of the Remedies Directive, a person harmed by an infringement of public procurement law should, in principle, be able to seek compensation for loss of profit (see Fosen-Linjen I, cited above, paragraph 90; compare also the Opinion of Advocate General Cruz Villalón in Combinatie, cited above, points 108 and 112).

    116 Indeed, the total exclusion of loss of profit as a head of damage for which reparation may be awarded in the case of a breach of EEA law cannot be accepted. Especially in the context of economic or commercial litigation, such a total exclusion of loss of profit would be such as to make reparation of damage practically impossible (compare the judgment in Brasserie du Pêcheur, cited above, paragraph 42; and the judgment in Manfredi, C-295/04 to C-298/04, EU:C:2006:461, paragraph 96).

    117 The standard of liability is not harmonised by the Directive. However, according to the principle of State liability, an EEA State may be held responsible for breaches of its obligations under EEA law when three conditions are met: firstly, the rule of law infringed must be intended to confer rights on individuals and economic operators; secondly, the breach must be sufficiently serious; and, thirdly, there must be a direct causal link between the breach of the obligation resting on the state and the damage sustained by the injured party (see HOB-vín ehf., cited above, paragraph 121, and case law cited).

    118 Furthermore, compliance with the principle of effectiveness requires, in particular, that national rules cannot subject the award of damages to a finding and proof of fault or fraud (compare the judgment in Strabag, cited above, paragraphs 39 and 40; the judgment in Commission v Portugal, C-70/06, EU:C:2008:3, paragraph 42; and Fosen-Linjen I, cited above, paragraph 75).

    119 This does not mean that certain objective and subjective factors connected with the concept of fault under a national legal system cannot be relevant in the assessment of whether a particular breach is sufficiently serious. However, the obligation to make reparation for loss or damage caused to individuals cannot depend on a condition based on any concept of fault going beyond that of a sufficiently serious breach of EEA law (compare the judgments in Brasserie du Pêcheur, cited above, paragraphs 78 and 79, and Fuß, cited above, paragraph 67).

    120 The requirement of a sufficiently serious breach as a minimum standard is considered sufficient for the purposes of safeguarding the rights of individuals, since it is the threshold applied for the award of damages for injuries caused by failure to act on the part of the EEA States, and where it is the result of the adoption of a legislative or administrative act in breach of EEA law (see, for example, Case E-4/01 Karl Karlsson v Iceland [2002] EFTA Ct. Rep. 240, paragraph 32, and case law cited).

    121 In light of the foregoing, the Court finds that the answer to the question referred must be that Article 2(1)(c) of the Remedies Directive does not require that any breach of the rules governing public procurement in itself is sufficient to award damages for the loss of profit to persons harmed by an infringement of EEA public procurement rules.”

• England and Wales
  • Harmon CFEM Facades (UK) Ltd v The Corporate Officer of the House of Commons [1999] EWHC Technology 199 (Lloyd QC)

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    Region: England and Wales

    Where various breaches occurred, damages awarded on a loss of chance basis (35% of gross margin/loss of profit) and bid costs also awarded

    Note: the judgment in this case is very lengthy

    “301. I have already decided that H of C is liable under all four heads: PWR and Directives; Article 6 of the Treaty of Rome; implied contract and misfeasance. Harmon submitted that it was not necessary for its purposes to consider what damages were recoverable under the second and third heads if it was in principle entitled under the first head to all that it claimed…

    302. In my judgment Harmon is basically right in its submission…

    303. There is no specific guidance in either the PWR or the directives (in particular directive 89/665) as to how Regulation 31(3) is to be interpreted in English law. There are no decisions directly on the question of the assessment of damages from the European Court of Justice, or any English Court.

    304. As a matter of approach to Regulation 31(3) Harmon relied on some key decisions of the ECJ. In von Colson und Kamann v. Land Nordrhein-Westfalen Case 14/83, [1984] ECR 1891 it was said:

    “[23] Although, as has been stated in the reply to Question 1, full implementation of the directive does not require any specific form of sanction for unlawful discrimination, it does entail that that sanction be such as to guarantee real and effective judicial protection. Moreover it must also have a real deterrent effect on the employer. It follows that where a member-State chooses to penalise the breach of the prohibition of discrimination by the award of compensation, that compensation must in any event be adequate in relation to the damage sustained.

    [24] In consequence it appears that national provisions limiting the right to compensation of persons who have been discriminated against as regards access to employment to a purely nominal amount, such as, for example, the reimbursement of expenses incurred by them in submitting their application, would not satisfy the requirements of an effective transposition of the directive…

    [28] It should, however, be pointed out to the national court that although Directive 75/207/EEC, for the purpose of imposing a sanction for the breach of the prohibition of discrimination, leaves the member-States free to choose between the different solutions suitable for achieving its objective, it nevertheless requires that if a member-State chooses to penalise breaches of that prohibition by the award of compensation, then in order to ensure that it is effective and that it has a deterrent effect, that compensation must in any event be adequate in relation to the damage sustained and must therefore amount to more than purely nominal compensation such as, for example, the reimbursement only of the expenses incurred in connection with the application. It is for the national court to interpret and apply the legislation adopted for the implementation of the directive in conformity with the requirements of Community law, in so far as it is given discretion to do so under national law.”

    305. In Brasserie du Pêcheur v. Germany; R v. Secretary of State for Transport ex p. Factortame [1996] 1 CMLR 889 it was said :

    ’87 “Total exclusion of loss of profit as a head of damage for which reparation may be awarded in the case of a breach of community law cannot be accepted. Especially in the context of economic or commercial litigation, such a total exclusion of loss of profit would be such as to make reparation of damage practically impossible.’

    306. In my judgment it is not enough that some remedy should be provided for, in my view, it is clear that from the cases culminating in Brasserie du Pêcheur that the remedy should be both adequate and a real deterrent. Accordingly, it is necessary always to take care to ensure that the result of applying a national law which purports to implement a directive will sufficiently meet the requirements of Directive 89/665. It follows that the interpretation of a national law purportedly giving effect to a directive such as 89/665 should be one which assumes that it is intended to achieve the objectives of the relevant directive, unless the language is completely inconsistent with that intention, in which case effect will have to be given to the parent Directive or other law or principle of law for the national law will have failed to implement it. Accordingly Regulation 31(3) must be read or applied in such a way that a contractor will recover all its losses incurred in consequence of the relevant breach even if such losses might not be recoverable under a comparable or analogous provision of national law for in that way the remedy will be both adequate and a real deterrent. The latter objective will not be met if a contracting authority were able to escape paying the full consequences of its breach.

    307. Similarly I can see no reason why the special or general damages recoverable should vary depending on whether the breach or default is characterised as one for failure to comply with Treaty or like obligations (assuming that they fall outside Regulation 31(3)) of breach of contract or for misfeasance in public office provide of course that the underlying facts and results are the same, namely that the contractor has wrongfully been deprived of a contract or of a real and substantial chance of being awarded a contract (applying Allied Maples) and in consequence has wasted its costs of tendering or lost the chance of recovering them through the contract or has lost the net profit and contribution to overheads that it would have obtained or the chance of so doing. Indeed the objects of the Treaty and like obligations, of the implied contract and of the proper exercise of powers are precisely to avoid such situations.

    308. H of C commented that Harmon’s pleaded case on damage did not say how much of the gross margin is likely to be profit and that that omission was never made good during the evidence. I do not consider this to be relevant for the purposes of the present issues …

    312. As a matter of principle, I see no reason why Harmon cannot recover the intra group margin as part of its gross margin, since in my view it is again necessary to be realistic and commercial about activities incurred within a group and those incurred as a result of sub-contracts placed outside a group…

    Issue 12 – Gross Margin

    317. H of C’s case has been considered under the heading of Causation where I have decided that it should be assumed that Harmon’s fourth tender had an estimated gross margin of about -4.5 million to about -5.5 million. I have excluded costs which Harmon might have had to incur so as to reduce the margin available. To that extent I do not accept Harmon’s definition in its substituted annotated Further and Better Particulars (A2/307);

    “Total gross margin is calculated by subtracting the net costs from the tender sum. It is also the sum of contribution to overheads, additions to dayworks, contingency, additions to novated suppliers, additions to the cost of the Bond, currency hedge and unallocated profit and risk”.

    As a matter of principle H of C is right in its submission that Harmon cannot recover as damages quantified by reference to a gross margin costs which it would have incurred even if it had not been awarded the contract, such as the costs of tendering. They may be recovered in some other way. For the purposes of assessing damages gross margin differs from loss of profit only in so far as it includes a contribution to items of recurrent or fixed expenditure the cost of which must defrayed from earnings. Such costs may of course be recoverable as damages in some other way. The assessment of gross margin must take account of events which would have affected the performance of the contract for good or ill. The answer to this issue is: Yes.

    Issue 20

    318. I have already decided that damages for “loss of a chance” are really only to be awarded only if H of C was not obliged to award the contract to Harmon and ought to have sought new tenders. In such event the selection of one of Harmon’s tenders does not arise. H of C is therefore correct in its submission that this issue should be not be answered “yes” although any assessment will require the construction of a hypothetical tender for Option A1 or B which would undoubtedly be based on the November tender. The answer to part (1) is therefore No, does not arise as a hypothetical tender would be used and the answer to part (2) is that based on option (a): the plaintiff is entitled in principle to quantify its claim by reference to a tender based on a November tender with such adjustments as may be necessary for the purposes of a hypothetical tender required by re-tendering in competition with others.

    Issue 21

    319. Under the heading of Causation I have concluded that if Harmon had been treated fairly and in accordance with the law Community Law, then H of C ought to have awarded it the contract on the basis of Option A1. If H of C had decided to award the Contract on the basis of Option B2, and if it had given other tenderers the opportunity to tender on the basis of that option, then Harmon stood as good a chance as any of being awarded the contract, and better than most – probably 70;30. In arriving at these conclusions I have endeavoured to apply the principles set out in Allied Maples v Simmons & Simmons [1995] 1 WLR 1602, in particular the observations of Stuart-Smith LJ at page 1614D which are relevant both to issues of causation and issues relating to the principles upon which damages are to be assessed:

    “But, in my judgment, the plaintiff must prove as a matter of causation that he has a real or substantial chance as opposed to a speculative one. If he succeeds in doing so, the evaluation of the chance is part of the assessment of the quantum of damage, the range lying somewhere between something that just qualifies as real or substantial on the one hand and near certainty on the other. I do not think that it is helpful to seek to lay down in percentage terms what the lower and upper ends of the bracket should be.”

    H of C submitted that generous discounts were made in assessing damages for loss of a chance. Mr White referred to Fisher v. Knibbe (1989) 6 WWR 130 (where the court awarded the plaintiff 15% of the damages he would have received as the value of a lost cause of action) and Yardley v. Coombes (1963) 107 SJ 575 (where there was a 66% reduction in the damages the plaintiff would have received had his negligence action been successful.) Both provide little help as each are concerned with the consequences of lost causes of action where the outcome is necessarily speculative and where the courts understandably take a conservative attitude so as to avoid holding the defendant liable for anything more than the minimum. Mr White was on surer ground in referring to Gregory v. Tarlo (1964) 108 SJ 209 (where the Court held that the plaintiff had a “formidable case”, but still reduced the damages by 25%) and Dolmon v. Penrose (1983) 34 SASR 481 (a case described as “almost certain of success” where there was a 20% discount).

    320. On the other hand it remains important to distinguish between the evaluation of the loss of chance of “success” ie being awarded the contact” and the probability that the whole of the likely profit might be recovered. In my judgment Mr Fernyhough’s approach both recognised this distinction and was sensible and practical. He submitted that all that was here required was to make an assessment of the probability of the profit being earned. He suggested that it might be reduced by 50% to illustrate the risks and hazards inherent in construction work. In my view this is realistic and conservative and I agree with it since it is in my view a reasonable assessment, entirely consistent with experience of the incidence of risk on work of this kind. I therefore answer this issue: 35%.

    …

    Tender Costs

    327. In my judgment, the situation is akin to that in St Martin’s or, rather, Darlington v. Wiltshier. H of C wanted Harmon Group, with its worldwide reputation, to take an interest in this project. It did so, being represented by a French operating subsidiary which, in turn, was specifically invited to tender by H of C. H of C shortly afterwards accepted the substitution of Harmon for that company when it was clear that preparations were already well in hand for the tender. Certainly by the time of the second, third and fourth tenders, H of C knew that preparatory work was being done, namely at Orly, and that Harmon’s own offices in the United Kingdom were vestigial. By inviting the second, third and fourth tenders, is it to be supposed that H of C was requiring Harmon to re-do work that had already been done by others, so that it could be said to have been done by Harmon itself? In my judgment H of C knew that the Harmon’s tender was being prepared for it by others in the Harmon group, and that Harmon could not itself have tendered without that assistance. H of C was derived considerable benefit from the work that Harmon and its associated companies had done because it enabled H of C to maintain competitive tendering.

    328. Where one company within a group carries out work for the preparation of a tender by another company within that group which is or may be for the benefit of it or the group as a whole it is to be inferred that it has been requested and that if necessary the costs will be chargeable to the tendering company on the basis that it requested the work. It is not usual within a group for formal arrangements to be made for the preparation of tenders (as opposed to the execution of work which is and should generally be covered by tangible basis for recompense). There are no facts here to displace that inference. The arrangements that were made, such as the management fee, are not inconsistent with and do not preclude such an inference. In addition it was known to H of C that Harmon was looking to other companies for the work so that the fact that other companies were involved was within its contemplation. In my judgment to deny Harmon the opportunity of recovering such tender costs would be to recognise the proverbial “legal black hole” which it was the intention of the House of Lords in St Martin’s to avoid, by the application of the principle in Dunlop v. Lambert which itself calls for an effective remedy. As Lord Diplock said in The Albazero [1977] AC 774 at page 846: “the rule [provides] a remedy where no other would be available to a person sustaining loss which under a rational legal system ought to be compensated by the person who has caused it.” Thus, in my view, Harmon is entitled to recover tender costs incurred by other companies both before and after 23 May 1995. On whatever basis tender costs may be recoverable Issue 24 will be answered: Yes.

    Issue 25

    329. It would in my judgment be artificial and wrong to refuse Harmon its tender costs for its earlier tender and to limit its recovery to the minimal costs incurred after the third tender in presenting the fourth tender, particularly in the circumstances of this case where the request for the fourth tender was not genuine one and was colourable. Where a contractor is entitled to recover its tender costs the costs must be all the costs incurred in presenting the tender that was not accepted including costs incurred in the preparation of preceding tenders unless of course some of those costs were not reasonably incurred or were incurred only on at the tenderer’s own initiative and were of no interest or value to the contracting authority. None of these reservations apply here so on whatever basis tender costs are recoverable Issue 25 will also be answered: Yes.”

  • Nuclear Decommissioning Authority v EnergySolutions EU Ltd [2017] UKSC 34

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    Region: England and Wales

    Entitlement to damages only arose where the Francovich conditions were met, including the second condition, requiring the breach to be "sufficiently serious"; the fact that proceedings were not instituted before the contract was concluded was not a bar to obtaining damages

    “25 There is in my view very clear authority of the Court of Justice confirming that the liability of a contracting authority under the Remedies Directive for breach of the PP Directive is assimilated to that of the state or of a public body for which the state is responsible. It is in particular only required to exist where the minimum Francovich conditions are met, although it is open to States in their domestic law to introduce wider liability free of those conditions. In the light of Spijker, ATK’s submissions based on the general wording of articles 1 and 2 of the Remedies Directive cannot lead to a contrary conclusion…

    26 Finally, the Supreme Court, during the course of submissions, asked about academic authority, and was shown a further article additional to any in the agreed bundles. That was Professor Steen Treumer’s article Basis and Conditions for a Damages Claim for Breach of the EU Public Procurement Rules in Fairgrieve and Lichère, Public Procurement Law (2011). Professor Treumer wrote then of a lack of clarity in cases such as Commission v Portugal, of confusion arising from, and fundamentally different approaches taken in, the cases of Stadt Graz and Spijker and of differing approaches taken in national law, presumably before those cases. For the reasons I have already given, I do not see any such lack of clarity or confusion. Further, the Supreme Court was shown in the agreed bundles a more recent article, by a serving judge of the General Court, Judge Anthony M Collins, Damages in Public Procurement – An Illusory Remedy? in Chapter 21 (p 339) in Of Courts and Constitutions – Liber Amicorum in honour of Nial Fennelly (ed Bradley, Travers and Whelan) (2014). Setting out the criteria for the recovery of damages for breaches of the procurement rules, Judge Collins explains Spijker precisely in the sense which I consider that it obviously bears. It harmonises liability for such breaches “irrespective of the identity of the author of the alleged illegality”, with the minimum Francovich conditions applying to all such breaches (p 340), and with the result (p 341) that:

    “… the requirements that the rule breached must be intended to confer rights on individuals and that the breach of such a rule must be ‘sufficiently serious’, means that not every legal error in the course of an award procedure can ground an action in damages.”

    This article reinforces my view that there is no uncertainty or confusion in the Court of Justice’s case law, and that the Supreme Court can be safe in relying on the clear language and ruling in Spijker as settling the position, whatever may have been previous doubts or differences of view at national level.

    52. The question therefore arises whether and on what basis it could be said to be unreasonable for ATK to delay commencing proceedings until after the entry into the contract. If ATK regarded damages as an adequate remedy, there would be no point in bringing about a stop in the first place. Even if it did not regard damages as an adequate remedy – and confident though it may have been in the prospects of success of its (ultimately successful) challenge to the NDA’s contract award decision – it may in its own interests have preferred to rest on a claim for damages if its challenge to the contract award decision succeeded, rather than give a cross-undertaking and expose itself to an indeterminate liability thereunder if its challenge failed.

    53. It is true, as Lord Pannick submits, that the scheme of the Remedies Directive and the 2006 Regulations aims specifically at giving an economic operator the opportunity to stop the wrongful award of a procurement contract to a competitor. But that does not mean that the economic operator is obliged to take advantage of the opportunity. The scheme gives both parties choices as to how to proceed and how to protect themselves. It assimilates the position, after a stop has been placed on the entry into a contract by the issue of a claim, with that which exists when a party is seeking an interim injunction: see para 42(d) above. An economic operator is, under the scheme as enacted in the United Kingdom, thus left free to issue a claim for damages after awaiting the entry into the contract. If, on the other hand, it issues a claim before entry into the contract, it is, on the face of it, also entitled to consider in its own interests whether or not to give an undertaking or put up security, if that is later required as the price of continuing the stop on entry into the contract.”

  • Braceurself Ltd v NHS England [2024] EWCA Civ 39

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    Region: England and Wales

    Despite establishing that the contracting authority committed a manifest error which, if not committed, would have resulted in the plaintiff winning the tender, there was no entitlement to damages because the breach was not 'sufficiently serious'. The fact that the challenger would have won the contract had the breach not occurred did not make the breach 'sufficiently serious.'

    The Court of Appeal therefore divorced the question of the effect of the breach, from its nature. Despite its effect (i.e. changing the outcome of the competition), an entitlement to damages would arise only where the breach itself was ‘sufficiently serious’.

    Overview of the law on the question of what constitutes a sufficiently serious breach at [27]- [35]

    On ‘sufficiently serious’ breach:

    “32. Lord Clyde identified eight factors (which are sometimes referred to as the Factortame checklist) which are of practical assistance to judges considering this issue. Those eight factors were usefully summarised by Richards LJ in Delaney v SoS for Transport [2015] 1 WLR 5177 at [36] in these terms:

    “36 …Lord Clyde identified the following factors, though the list was not exhaustive: (1) the importance of the principle which has been breached; (2) the clarity and precision of the rule breached; (3) the degree of excusability of an error of law; (4) the existence of any relevant judgment on the point; (5) the state of the mind of the infringer, and in particular whether the infringer was acting intentionally or involuntarily (i.e. whether there was a deliberate intention to infringe as opposed to an inadvertent breach); (6) the behaviour of the infringer after it has become evident that an infringement has occurred; (7) the persons affected by the breach, including whether there has been a complete failure to take account of the specific situation of a defined economic group; and (8) the position taken by one of the Community institutions in the matter. He said that the application of the “sufficiently serious” test “comes eventually to be a matter of fact and circumstance“; no single factor is necessarily decisive; but one factor by itself might, particularly where there was little or nothing to put in the scales on the other side, be sufficient to justify a conclusion of liability.”

    34. …  if the breach occurs in a public law context where there is little or no discretion, excusability may have less relevance, and it may be correspondingly easier to demonstrate the seriousness of the breach. But again that must turn on the facts of the individual case.“

    Procurement Cases on the seriousness of the breach

    Refers to

    Energy Solutions EU Limited v Nuclear Decommissioning Authority [2017] UK SC 34 and [2016] EWHC 3326 (TCC)

    Ocean Outdoor Ltd v Hammersmith and Fulham London Borough Council [2019] EWCA Civ 1642

    Alstom Transport UK Ltd v Network Rail Infrastructure Ltd [2019] EWHC 3585 (TCC)

    Consultant Connect Ltd v NHS Bath and Northeast Somerset, Swindon and Wilshire Integrated Care Board [2022] EWHC 2036 (TCC)

     

    Adequacy of Damages and the Automatic Suspension

    “43. [It] could not be right that, whenever the question whether the breach satisfied the Francovich conditions was in issue, damages would automatically be rendered inadequate for the purposes of considering whether or not to lift a suspension.

    44. In Alstom, O’Farrell J had said that, if a breach was not sufficiently serious enough to justify the Francovich conditions, it was unlikely to be sufficiently serious to justify setting aside the contract under challenge, Constable J said in Boxxe that there was force in that observation. I agree. In my experience, the present case is therefore unusual, if not unique, because of the vast gap the judge found between the very low culpability on the part of the respondent, and the extreme consequences of the single marking error.”

    Is The Effect Of The Breach – That The Appellant Should Have Been Awarded The Contract – Determinative Of The ‘Sufficiently Serious’ Test?

    “50. … No: the effect of the breach is not and cannot be determinative of the issue as to whether the breach itself was sufficiently serious to attract an award of damages. There are a number of reasons for that conclusion

    …

    67. … [The] ‘sufficiently serious’ test cannot be automatically satisfied simply because the unsuccessful bidder should have been awarded the contract.

    …

    69. As to the general principle of taking into account the actual consequences of the breach when considering the second Francovich condition, I do not rule out any consideration of the consequences of the breach at that stage. To require the court to ignore the consequences may be artificial: the court may well want to look at the consequences of the breach as part of its overall consideration of the Francovich conditions. So the effect of the breach may, on the facts, be a relevant consideration. But caution is still required. Whilst the particular consequences of a breach should, in an appropriate case, be weighed in the balance, the drastic (or otherwise) nature of the consequences of the breach is not a matter identified in any CJEU authority concerned with the ‘sufficiently serious’ test. In addition, it was not a factor highlighted in Factortame.

    70. In a public procurement case, it is likely to be a relevant consideration that, for example, the contract was awarded to the wrong bidder because of an error by the contracting authority. In this case, that effect would be a factor in favour of the appellant. Depending on the facts, in other cases, the consequences of the breach may have little weight. But what matters for the purposes of this appeal is that, contrary to the appellant’s case, the consequences of the breach can never, on their own, be determinative of the ‘sufficiently serious’ test. That would be contrary to the European cases, and contrary to Factortame.“

• EU - CJEU
  • Case C- 275/03 Commission v Portugal

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    Region: EU - CJEU

    Portuguese law making entitlement to damages contingent on a finding of culpability was in breach of the principle of effectiveness

    The case is not available in English. The following is a translation of the French text below

    “31. [While] Portuguese legislation provides for the possibility of obtaining damages in the event of a breach of Community law governing public procurement or the national rules transposing it, it cannot be considered an adequate system of judicial protection insofar as it requires proof of fault or fraud on the part of the agents of a specific administrative body. Thus, a tenderer harmed by an unlawful decision of the contracting authorities risks being deprived of the right to claim damages for the harm caused by that decision, or at least of obtaining them late, on the grounds that they cannot establish proof of fraud or fault.”

    “31. Or, si la réglementation portugaise prévoit la possibilité d’obtenir des dommages‑intérêts en cas de violation du droit communautaire régissant la passation de marchés publics ou des règles nationales le transposant, elle ne saurait néanmoins être considérée comme un système de protection juridictionnelle adéquat dans la mesure où elle exige la preuve d’une faute ou d’un dol commis par les agents d’une entité administrative déterminée. Ainsi, le soumissionnaire lésé par une décision illégale des pouvoirs adjudicateurs risque d’être privé du droit de demander des dommages‑intérêts au titre du préjudice causé par cette décision, ou du moins de les obtenir tardivement, au motif qu’il ne peut établir la preuve d’un dol ou d’une faute.”

  • Case C‑568/08 Combinatie Spijker Infrabouw-De Jonge Konstruktie

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    Region: EU - CJEU

    Once the conditions for State liability are met – (i) the provision infringed is intended to confer rights, (ii) the breach is sufficiently serious and (iii) there is a direct causal link between the breach and the damage – it is for the Member State to determine the criteria on the basis of which the damage arising from an infringement of EU law on the award of public contracts must be determined and estimated, provided the principles of equivalence and effectiveness are complied with

    The case concerned a tender for a public works contract for the restoration of bridges. Combinatie challenged the award to MFE on the basis that it had utilised references of  predecessor and did not meet certain requirements, despite having submitted the lowest-priced tender. An application for interim measures was dismissed and the contract was awarded to MFE following a direction of the court that the contract could not be awarded to a tenderer other than MFE. Subsequently, the national court hearing the substantive case determined that the contract award decision was unlawful. The damages question raised was whether the public authority could be liable in damages where it awarded the contract following judgment of the court hearing the application for interim measures (which provided that the authority was precluded from awarding the contract to a tenderer other than MFE, but where there was no positive direction that the contract must be awarded to MFE), but where the decision to award the contract was subsequently declared incompatible with EU law. It was unnecessary for the CJEU to address that question and the only question on damages which remained to be answered was whetjer, if the authority was liable in damages, EU law provides criteria on the basis of which the damage may be determined and estimated and, if so, what those criteria are.

    “86 Article 2(1)(c) of Directive 89/665 clearly indicates that Member States must make provision for the possibility of awarding damages in the case of infringement of EU law on the award of public contracts, but contains no detailed statement either as to the conditions under which an awarding authority may be held liable or as to the determination of the amount of the damages which it may be ordered to pay.

    87      That provision gives concrete expression to the principle of State liability for loss and damage caused to individuals as a result of breaches of EU law for which the State can be held responsible. According to case-law developed since the adoption of Directive 89/665, but which is now consistent, that principle is inherent in the legal order of the Union. The Court has held that individuals harmed have a right to reparation where three conditions are met: the rule of EU law infringed must be intended to confer rights on them; the breach of that rule must be sufficiently serious; and there must be a direct causal link between the breach and the loss or damage sustained by the individuals.

    90  In the absence of EU provisions in that area, it is for the legal order of each Member State to determine the criteria on the basis of which damage arising from an infringement of EU law on the award of public contracts must be determined and estimated.

    91   It is apparent from well-established case-law that the detailed procedural rules governing actions for safeguarding an individual’s rights under EU law must be no less favourable than those governing similar domestic actions (principle of equivalence) and must not render practically impossible or excessively difficult the exercise of rights conferred by EU law (principle of effectiveness).”

  • Case C-314/09 Stadt Graz v Strabag AG

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    Region: EU - CJEU

    National legislation imposing a condition that the right to damages is dependent on the contracting authority being at fault, even where there was a presumption of fault, is incompatible with the Remedies Directive

    The case concerned the award of a contract to HFB for the supply of asphalt. Strabag and others brought a challenge, arguing that HFB did not have an up and running asphalt plant for the requisite period. That claim was dismissed by the procurement review body and the contract was concluded. However, the administrative body’s decision was subsequently overturned by the Verwaltungsgerichtshof, and it was found that the contract award decision was unlawful. Strabag sought damages. The contracting authority said that it was bound the first instance decision of the administrative body and that if that decision was unlawful, this was attributable to Land Steiermark.

    Austrian law transposing EU public procurement law provided for the reimbursement of bid costs and damages where there was “culpable infringement” of the public procurement law. However, the burden lay on the contracting authority to show that it was not culpable. The CJEU addressed the question whether Directive 89/665 precluded such legislation which made the right to damages dependent on whether the infringement was culpable.

    “39 [The] remedy of damages provided for in Article 2(1)(c) of Directive 89/665 can constitute, where appropriate, a procedural alternative which is compatible with the principle of effectiveness underlying the objective pursued by that directive of ensuring effective review procedures (see, to that effect, inter alia, Uniplex (UK), paragraph 40) only where the possibility of damages being awarded in the event of infringement of the public procurement rules is no more dependent than the other legal remedies provided for in Article 2(1) of Directive 89/665 on a finding that the contracting authority is at fault.

    40      As the European Commission states, it makes little difference in that regard that, by contrast with the national legislation referred to in Commission v Portugal, the legislation at issue in the main proceedings does not impose on the person harmed the burden of proving that the contracting authority is at fault, but requires the latter to rebut the presumption that it is at fault, while limiting the grounds on which it can rely for that purpose.

    41      The reason is that that legislation, too, creates the risk that the tenderer who has been harmed by an unlawful decision of a contracting authority is nevertheless deprived of the right to damages in respect of the damage caused by that decision, where the contracting authority is able to rebut the presumption that it is at fault. However, as emerges from the present order for reference and as was confirmed at the hearing, such a possibility is not excluded in the present case, given that Stadt Graz is able to rely on the fact that the legal error it is alleged to have made is excusable, on account of the intervention of the decision of the Vergabekontrollsenat des Landes Steiermark of 10 June 1999 which dismissed the action brought by Strabag and Others.

    42      At the very least, that tenderer runs the risk, under that legislation, of only belatedly being able to obtain damages, in view of the possible duration of civil proceedings seeking a finding that the alleged infringement is culpable.

    43      However, in both cases, the situation would be contrary to the aim of Directive 89/665, set out in Article 1(1) thereof and in the third recital in the preamble thereto, which is to guarantee judicial remedies which are effective and as rapid as possible against decisions taken by contracting authorities in infringement of the law on public contracts.

    44      It should also be noted that, even allowing for the possibility that, in the present case, Stadt Graz might have taken the view in June 1999 that it was required, because of the objective of efficiency relating to procedures for the award of public contracts, to take immediate steps to comply with the decision of the Vergabekontrollsenat des Landes Steiermark of 10 June 1999 without awaiting the expiry of the period for bringing an appeal against that decision, the fact remains – as the Commission noted at the hearing – that a declaration that an application for damages, brought by the unsuccessful tenderer following the annulment of that decision by an administrative court, is well founded cannot – contrary to the wording, context and objective of the provisions of Directive 89/665 which establish the right to such damages – depend, for its part, on a finding that the contracting authority involved is at fault.

    45      In the light of the foregoing considerations, the reply to Question 1 is that Directive 89/665 must be interpreted as precluding national legislation which makes the right to damages for an infringement of public procurement law by a contracting authority conditional on that infringement being culpable, including where the application of that legislation rests on a presumption that the contracting authority is at fault and on the fact that the latter cannot rely on a lack of individual abilities, hence on the defence that it cannot be held accountable for the alleged infringement.”

  • Case C-300/17 Hochtief

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    Region: EU - CJEU

    Remedies Directive does not preclude national procedural rules that require the illegality of a procurement decision to be definitively established by a review body or court as a mandatory prerequisite for an unsuccessful tenderer to bring a civil claim for damages

    Hungarian rule provided that an unsuccessful tenderer could only seek damages if the illegality of the contracting authority’s decision had already been definitively established by a designated review body or, on review, by a court.

    33 [Under] Articles 2d to 2f of Directive 89/665, the Member States may provide that, where damages are claimed on the ground that a decision was taken unlawfully, the contested decision must first be set aside by a body having the necessary powers to that effect.

    35 Directive 89/665 lays down only the minimum conditions to be satisfied by the review procedures established in domestic law to ensure compliance with the requirements of EU law concerning public procurement.

    40 [The] national procedural rule which makes the possibility of asserting a claim under civil law in the event of an infringement of the rules governing public procurement and the award of public contracts subject to the condition that the infringement be definitively established in advance does not deprive the tenderer concerned of the right to an effective remedy.

    41 Article 2(6) of Directive 89/665 must be interpreted as not precluding a national procedural rule, such as that at issue in the main proceedings, which makes the possibility of asserting a claim under civil law in the event of an infringement of the rules governing public procurement and the award of public contracts subject to the condition that the infringement be definitively established by an arbitration committee or, in the context of judicial review of the decision of that arbitration committee, by a court.”

  • Case C-547/22 INGSTEEL

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    Region: EU - CJEU

    In a case concerning a tenderer which had been unlawfully excluded from the process, the CJEU found that Member States are required to provide for damages for loss of opportunity in procurement cases and national rules or case law excluding the possibility of such damages are precluded

    “37 The action for damages provided for in Article 2(1)(c) of [Directive 89/665] was thus envisaged by the EU legislature as being the legal remedy of last resort, which must remain available to persons harmed by an infringement of EU law where they are de facto deprived of any possibility of benefiting from the effectiveness of one of the other remedies provided for in that provision.

    38 While damage may result from the failure to obtain, as such, a public contract … it is possible for the tenderer who has been unlawfully excluded to suffer separate damage, which corresponds to the lost opportunity to participate in the procedure for the award of a public contract concerned in order to obtain that contract.

    43 As the Court has held with regard to loss of profit, the total exclusion, in respect of the damage for which compensation may be granted, of the loss of the opportunity to participate in a procedure for the award of a public contract in order to obtain that contract, cannot be accepted in the event of an infringement of EU law since, especially in the case of economic or commercial disputes, such total exclusion of that loss of opportunity would be such as to make it practically impossible to make good the damage suffered.

    44 Article 2(1)(c) of Directive 89/665 must be interpreted as meaning that the damages which persons harmed by an infringement of EU public procurement law may claim under that provision may cover the loss or damage suffered as a result of the loss of opportunity.

    45 [It] is, in the absence of EU provisions in that field, for the legal order of each Member State to determine the criteria by reference to which damage resulting from the loss of an opportunity to participate in a procedure for the award of a public contract in order to obtain that contract must be established and assessed, provided that the principles of equivalence and effectiveness are observed.”

• EU - General Court
  • Case T-160/03 AFCon Management Consultants v Commission

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    Region: EU - General Court

    Bid costs exceptionally awarded as damages where failure to investigate collusion between tenderer and evaluation committee

    Failure to investigate winning tender even though signs of collusion with member of the evaluation committee

    Bid costs can be recovered as damages where the breach affected a tenderer’s chances of being awarded the contract

    “98 It must be borne in mind that economic operators must bear the economic risks inherent in their activities, regard being had to the circumstances of each particular case. As regards a tendering procedure, those economic risks include, in particular, the costs relating to preparation of the tender. The expenses thus incurred therefore remain the responsibility of the undertaking which chose to take part in the procedure, since the opportunity to compete for a contract does not involve any certainty as to the outcome of the procedure. In accordance with that principle, Article 24 of the General Regulations for Tenders and the Award of Service Contracts financed from Phare/Tacis Funds provides that in the event of closure or annulment of a tendering procedure, the tenderers are not entitled to compensation. It follows that the charges and expenses incurred by a tenderer in connection with his participation in a tendering procedure cannot in principle constitute damage which is capable of being remedied by an award of damages. However, the provision in question cannot, without potentially undermining the principles of legal certainty and of protection of legitimate expectations, apply in cases where an infringement of Community law in the conduct of the tendering procedure has affected a tenderer’s chances of being awarded the contract (Case T‑203/96 Embassy Limousines & Services v Parliament [1998] ECR II‑4239, paragraphs 75 and 97, and Case T‑13/96 TEAM v Commission [1998] ECR II‑4073, paragraphs 70 to 72).

    99 In this instance, the applicants have established that there was a breach of Community law in the way the tendering procedure was conducted. That breach fundamentally undermined the tendering procedure and affected AFCon’s chances of securing the tender at issue.

    100 If the Commission had conducted an inquiry into the links between GFA and Mr A, it is possible that it would have concluded that there was collusion such as to warrant the exclusion of GFA from the remainder of the tendering procedure. In that regard, it is noteworthy that the Commission actually acknowledged, at the hearing, that if an inquiry had produced such a result, it would have then been obliged to penalise GFA by excluding it from the procedure.

    101 In taking the decision to proceed with the tendering procedure without holding an inquiry, the Commission evaluated GFA’s tender and awarded the contract to it even though there were a number of signs all of which suggested that there might have been collusion with a member of the evaluation committee. In acting in that way and failing to satisfy itself that GFA’s participation entailed no irregularities, the Commission allowed GFA to remain in contention and accordingly undermined AFCon’s chances of being awarded the contract.

    102 It is true that any tenderer who participates in a tendering procedure must, as a general rule, accept the risk that he will remain liable for the costs associated with submission of his tender in the event of the contract being awarded to one of his competitors. However, that risk is accepted on the presumption inherent in any call for tenders that the Commission will act impartially in accordance with the principles set out at paragraph 90 above in order to ensure equal treatment as between the tenderers. By allowing GFA to take part in spite of the signs mentioned above and by failing to open an inquiry, the Commission disregarded that presumption and directly prejudiced AFCon’s chances. Consequently, AFCon must be compensated for the loss relating to the costs incurred in participating in the procedure.

    103 As regards quantum, the applicants assess their loss at EUR 31 070: in respect of costs incurred in a reconnaissance trip to south Russia (EUR 8 800), the time and costs entailed in preparing the tender (EUR 14 950) as well travel costs to Brussels in order to attend the two evaluation interviews (EUR 7 320). Since that estimate is not excessive, the loss sustained by AFCon in respect of costs relating to submission of its tender must be set at EUR 31 070.”

  • Case T 554/10 Evropaïki Dynamiki v Frontex

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    Region: EU - General Court

    Failure to provide reasons did not entitle the applicant to damages

    “168. As regards the ICT call for tenders, it is true that the contested decisions relating to Lots 1 and 6 are vitiated by an inadequate statement of reasons and must be annulled for that reason. However, the inadequacy of the statement of reasons does not mean that the award of the contracts to the tenderers accepted constitutes wrongful conduct or that there is a causal link between that fact and the loss alleged by the applicant (see, to that effect, judgment in Renco v Council, paragraph 52 above, EU:T:2003:37, paragraph 89). Indeed, there is no ground for concluding that Frontex would have awarded the contracts in question to the applicant if the contested decisions had been adequately reasoned. It follows that the application for damages in respect of the alleged harm suffered as a result of the contested decisions in the context of the ICT call for tenders must be dismissed as unfounded in so far as it is based on the inadequate statement of reasons for those decisions.”

  • Case T-556/11 European Dynamics Luxembourg SA v EUIPO

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    Region: EU - General Court

    Damages awarded for loss of opportunity where multiple breaches found, including failure to investigate exclusion grounds and manifest error

    Appeal dismissed by Order: Case C‑379/16 P European Dynamics Luxembourg SA v EUIPO

    Cascade Framework; breaches resulted in loss of opportunity, at least of coming third

    Relevant factors for assessment of damages:

    • • Estimated value of the contract
      • Likelihood of success in the absence of the breaches (at least, likelihood of coming third in the cascade); requires consideration that if applicant’s score in technical quality increased (in the absence of manifest errors), under the calculation formula, other tenderers’ scores would have decreased
      • Framework only for an initial three years, with possibility, but no guarantee of renewal for a further four years; relevant to consider likelihood of first placed contractor being able to meet requirements
      • Net profit applicant could have made
      • Deduct other profits the applicant would have made by reason of not being awarded the contract (to avoid overcompensation)
      • Multiply net income by likelihood of success

     

    “264 According to settled case-law, in order for the European Union to incur non-contractual liability, within the meaning of the second paragraph of Article 340 TFEU, on account of the unlawful conduct of its institutions, a number of requirements must be satisfied, namely that the alleged conduct is unlawful, that the damage is real and that there is a causal link between the conduct alleged and the damage relied upon (see Evropaïki Dynamiki v Commission, cited in paragraph 63 above, EU:T:2013:528, paragraph 215 and the case-law cited). Those principles apply mutatis mutandis to the non-contractual liability incurred by the European Union within the meaning of that provision, as a result of the unlawful conduct and damage caused by one of its bodies (see, to that effect, judgments of 2 December 1992 in SGEEM and Etroy v EIB, C‑370/89, ECR, EU:C:1992:482, paragraphs 15 and 16, and of 10 April 2002 in Lamberts v Ombudsman, T‑209/00, ECR, EU:T:2002:94, paragraph 49), such as EUIPO, for which the latter is liable under Article 118(3) of Regulation No 207/2009.

    265 In that regard, it should be recalled that the claim for damages is based on the same unlawful conduct as that relied on in support of the application for annulment of the decision to reject the tender, which is vitiated by various instances of substantive unlawful conduct, including an infringement of the principle of equal treatment between tenderers (see paragraph 77 above) and manifest errors of assessment (see paragraphs 104, 115, 134, 138, 144, 158, 166, 186, 194 and 207 above), and several shortcomings in the statement of reasons (see paragraphs 145 and 254 to 256 above).

    266 However, with respect to the existence of a causal link between those instances of unlawful conduct in substance and form and the damage purportedly suffered, it is settled case-law that inadequate reasoning is not capable as such of rendering the EU liable, in particular because it is not capable of showing that, had the reasoning not been inadequate, the market could, or should, have been awarded to the applicant (see, to that effect, judgments of 20 October 2011 in Alfastar Benelux v Council, T‑57/09, EU:T:2011:609, paragraph 49; of 17 October 2012 in Evropaïki Dynamiki v Court of Justice, T‑447/10, EU:T:2012:553, paragraph 123; and of 14 January 2015 in Veloss International and Attimedia v Parliament, T‑667/11, EU:T:2015:5, paragraph 72).

    267 Accordingly, in the present case, it is not possible to accept that there is a causal link between the shortcomings identified in the statement of reasons and the damage alleged by the applicants.

    268 However, as regards the causal link between the substantive illegalities found, namely the infringement of the principle of equal treatment of tenderers and the manifest errors of assessment, on the one hand, and the loss of opportunity, on the other, EUIPO cannot merely claim that, in view of its broad discretion as a contracting authority, it was not obliged to sign a framework contract with the first applicant (see, to that effect, judgment in Evropaïki Dynamiki v EIB, cited in paragraph 215 above, EU:T:2011:494, paragraph 211).

    269 In the present case, it must be stated that the infringement of the principle of equal treatment of tenderers, in conjunction with that of Article 93(1)(e) of the General Financial Regulation and point 13.1, first paragraph, subparagraph (e), of the tender specifications, and the manifest errors of assessment made by the contracting authority in the context of the individual assessment of the first applicant’s bid, necessarily affected the latter’s chance of being ranked higher in the cascade procedure and of becoming, at least, the third successful tenderer, in particular in the event the Drasis consortium were to be excluded from the tendering procedure for the reasons outlined in paragraphs 64 to 78 above.

    270 It also follows that, even taking account of the contracting authority’s broad discretion with respect to the award of the contract at issue, the loss of opportunity suffered in the present case by the first applicant constitutes actual and certain damage according to case-law (see, to that effect and by analogy, judgments of 9 November 2006 in Agraz and Others v Commission, C‑243/05 P, ECR, EU:C:2006:708, paragraphs 26 to 42, and Evropaïki Dynamiki v EIB, cited in paragraph 215 above,EU:T:2011:494, paragraphs 66 and 67; Opinion of Advocate General Cruz Villalón in Giordano v Commission, C‑611/12 P, ECR, EU:C:2014:195, point 61). In the present case, the fact that the first applicant was awarded the highest score for the technical quality of its tender, although that tender was ranked fourth, renders implausible the premiss that the contracting authority could have been led not to award it the contract at issue but to offer it a framework contract with EUIPO.

    271 Furthermore, as the applicants correctly submit, in a situation such as the present case, in which, at the end of the proceedings before the Court, there is a significant risk that the contract at issue has already been implemented in full, the very lack of acknowledgment by the EU judicature of the loss of such an opportunity and the need to grant compensation in that regard is contrary to the principle of effective judicial protection enshrined in Article 47 of the Charter of Fundamental Rights. In such a situation, the retroactive annulment of an award decision does not provide the unsuccessful tenderer with any advantage, with the result that it is apparent that the loss of opportunity is irremediable. Moreover, it should be noted that, because of the conditions governing interlocutory proceedings before the President of the General Court, the tenderer whose tender was assessed and unlawfully rejected is, in practice, only rarely able to obtain suspension of the operation of such a decision (see, to that effect, orders of 23 April 2015 in Commission v Vanbreda Risk & Benefits, C‑35/15 P(R), ECR, EU:C:2015:275, and of 4 February 2014 in Serco Belgium and Others v Commission, T‑644/13 R, ECR, EU:T:2014:57, paragraph 18 et seq.).

    272 Consequently, the Court considers that, in the present case, it is necessary to compensate the first applicant in respect of the loss of opportunity, to the extent that the decision to reject the tender, even in the event of its annulment with retroactive effect, has in practice definitively removed any possibility of its being awarded the contract at issue as a contractor under the cascade procedure and, accordingly, its opportunity to perform specific contracts in the context of the implementation of a framework contract.

    273 However, in respect of the scope of the compensation for the damage related to the loss of opportunity, estimated by the applicants to be EUR 6750000, the Court is not in a position, at this stage of the proceedings, in the light of the contents of the Court file, to rule definitively on the amount of compensation that the European Union must award to the first applicant. In view of the fact that it is not yet possible to assess the harm, it is thus appropriate, for reasons of economy of procedure, to give an initial interlocutory ruling on the liability of the European Union. The determination of the amounts of compensation resulting from EUIPO’s unlawful conduct is deferred to a later stage, either by mutual agreement of the parties, or by the Court in the absence of such an agreement (see, to that effect, judgment of 16 September 2013 in ATC and Others v Commission, T‑333/10, ECR, EU:T:2013:451, paragraph 199 and the case-law cited).

    274 Nonetheless, to that end, in the present case, both the parties and the Court are required to consider the following aspects.

    275 First, it should be borne in mind that the estimated value of the contract at issue, as set out in the contract notice and in point 16 of the tender specifications, is EUR 135000000, before tax, for the maximum period of seven years for the implementation of the framework contract and that, accordingly, the value of obtaining the framework contract for the initial three years is at least EUR 57857143.

    276 Secondly, it is necessary to determine the likelihood of success of the first applicant’s bid, namely the chance of being ranked at the very least third in the cascade procedure, in the absence of the various instances of EUIPO’s substantive unlawful conduct during the tendering procedure. In that regard, account should be taken of the contracting authority’s possible duty to exclude the Drasis consortium as the third successful tenderer. The fact that the first applicant’s technical tender was awarded the highest score, but that its financial tender was ranked only fourth (see the tables set out in paragraph 14 above) must also be taken into consideration, as well as the fact that, according to the method of calculation set out in point 13.5 of the tender specifications, the weighting of those tenders for the purpose of the award of the contract at issue was 50-50. In particular, as part of a new assessment of the technical quality of the first applicant’s bid in the absence of the manifest errors of assessment established, account would have to be taken of the fact that, under the calculation formula used by the contracting authority, any increase in points in favour of the tender, the score for which is the reference value, would necessarily result in the proportionate reduction of the gross points awarded to the successful tenderers, which would be liable to have an impact on their ranking in the cascade procedure and on the comparative assessment, on the basis of the gross values thus calculated, of all the tenders in order for the tender which is the most economically advantageous under the table referred to in paragraph 14 above to be determined (see paragraph 228 above).

    277 Thirdly, it is necessary to take account of the fact that the framework contract is awarded and signed only for an initial period of three years, that there is no certainty that it will be renewed by EUIPO for the four following years (see point 14.3 of the tender specifications), that the first contractor has no exclusive right to provide the services covered by the framework contract and that EUIPO is not subject to an obligation to purchase, but is legally bound only through the conclusion of specific agreements and the issue of purchase orders (see points 14.4 and 14.5 of the tender specifications, and points 1.1.3 to 1.1.5 of the model framework contract). In that context, it is also appropriate to assess the likelihood that the first contractor is able to meet the requirements of the various purchase orders issued by the contracting authority both during the first three years of the implementation of the framework contract and in the years thereafter in the event that it is renewed (see points 1.4.1 to 1.4.4 of the model framework contract). It follows that it is necessary to adjust the likelihood of success to the lack of certainty in respect of the renewal of the framework contract and the possible inability of that contractor to implement those purchase orders.

    278 Fourthly, it is appropriate to establish the recoverable loss by taking into consideration the net profit which could have been made by the first applicant during the implementation of the framework contract. In that regard, it should be recalled that the applicants argued that, in the 2006 tax year, in the context of commercial projects, the first applicant made an average gross profit of 10.33%.

    279 Fifthly, it is necessary to deduct the other profits made by the first applicant by reason of its failure to have the contract at issue awarded to it in order to avoid overcompensation.

    280 Sixthly, in order to determine the total amount payable by way of compensation for the loss of opportunity, it is necessary to multiply the net income established by the likelihood of success.

    281 In the light of all the foregoing considerations, it is therefore appropriate to uphold the applicants’ claim for damages inasmuch as it seeks compensation for the loss of opportunity.

    282 With respect to the amount payable by way of compensation for the loss of opportunity, the parties should therefore be asked, subject to a subsequent decision of the Court, to reach agreement on that amount in the light of the foregoing considerations and to inform the Court, within three months from the date of delivery of the present judgment, of the amount to be paid, reached by agreement, failing which they are to send to the Court a statement of their views with supporting figures within the same period (see, to that effect, ATC and Others v Commission, cited in paragraph 273 above, EU:T:2013:451, paragraph 201).”

  • Case T-292/15 Vakakis kai Synergates v Commission

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    Region: EU - General Court

    Applicant entitled to damages for loss of opportunity to be awarded the contract and bid costs, plus compensatory interest, where failure to carry out proper conflict of interest inquiry

    EU contract for services relating to food safety programme in Albania

    Expert of successful tenderer had participated in drafting the Terms of Reference

    Failure to adequately supervise tender and to conduct a proper inquiry into existence of risk of a conflict of interest

    Heads of damage claimed:

    (i) loss of profit: not awarded – “not real and certain”; assumed applicant was entitled to the contract but for the breach but contracting authority had wide discretion ([166]-[167])

    (ii) cost in contesting lawfulness of procedure: not awarded; costs not substantiated

    (iii) loss of opportunity to win other tenders: not awarded; did not flow from the breach ([178]-[179])

    (iv) loss of opportunity to be awarded the contract and bid costs: applicant entitled to this

    “62 In accordance with settled case-law, for the EU to incur non-contractual liability under the abovementioned provision for unlawful conduct on the part of its institutions, three conditions must be fulfilled, namely the unlawfulness of the acts alleged against the institutions, the fact of damage and the existence of a causal link between that conduct and the damage complained of…

    63 With regard to the condition relating to the unlawful conduct of an institution, it is required that there be established a sufficiently serious breach of a rule of law intended to confer rights on individuals…

    64 Therefore, only the unlawful conduct of an institution giving rise to such a sufficiently serious breach is capable of establishing the liability of the EU. In that regard, it should be noted that the decisive test for finding that a breach of EU law is sufficiently serious is whether there was a manifest and grave disregard by the institution of the limits on its discretion… In particular, it follows from the case-law that the system of rules which the Court of Justice has worked out in relation to the non-contractual liability of the EU takes into account, inter alia, the complexity of the situations to be regulated, difficulties in the application or interpretation of the legislation and, more particularly, the margin of discretion available to the author of the act in question…

    186 First, as regards the damage based on the loss of an opportunity, it is necessary first of all to reject the Commission’s argument that the damage invoked by the applicant in respect of the loss of an opportunity is uncertain.

    187 By maintaining that the Court, on numerous occasions, rejected claims for damages alleging loss of profit or the loss of an opportunity due to the broad discretion enjoyed by the contracting authority in deciding to award a contract, the Commission wrongly equates damages resulting from a loss of profit and those resulting from the loss of an opportunity.

    188 First, those two types of damage are different. The loss of profit concerns compensation for the loss of the contract itself, whereas the loss of opportunity concerns compensation for the loss of the opportunity to conclude that contract (see, to that effect, judgments of 21 May 2008, Belfass v Council, T‑495/04, EU:T:2008:160, paragraph 124, and of 20 September 2011, Evropaïki Dynamiki v EIB, T‑461/08, EU:T:2011:494, paragraph 210).

    189 Secondly, the fact that the contracting authority enjoys a broad discretion in the context of the award of the contract at issue does not prevent the damage caused by the loss of opportunity from being actual and certain for the purposes of the case-law (see, to that effect and by analogy, judgment of 9 November 2006, Agraz and Others v Commission, C‑243/05 P, EU:C:2006:708, paragraphs 26 to 42, and Opinion of Advocate General Cruz Villalón in Giordano v Commission, C‑611/12 P, EU:C:2014:195, points 60 and 61). Moreover, the fact that the contracting authority is never obliged to award a public contract does not preclude the finding of a loss of opportunity in the present case. Although that fact affects the tenderer’s certainty of winning the contract, and, therefore, the corresponding loss, it cannot preclude all likelihood of winning that contract and therefore the loss of opportunity. In any event, although it is true that the contracting authority may always, until the signature of the contract, either abandon the procurement, or cancel the procedure for the award of a public contract, without the candidates or tenderers being entitled to claim compensation, the fact remains that those situations of abandonment of the procurement or cancellation of the procedure did not actually materialise and that, as a result of the unlawful acts committed during the procedure for the award of the contract, the applicant lost an opportunity of winning that contract (see, to that effect, judgment of 29 October 2015, Vanbreda Risk & Benefits v Commission, T‑199/14, EU:T:2015:820, paragraph 199).

    190 Next, as is apparent from paragraph 156 above, the Court considered that, during the tendering procedure, the Commission committed several unlawful acts in the context of the investigation relating to the existence of the conflict of interests. Such unlawful acts in the conduct of the tendering procedure fundamentally vitiated that procedure and affected the chances of the applicant, whose tender was ranked in second position, being awarded the contract. If the EU Delegation had fulfilled its obligation of due diligence and adequately investigated the extent of Mr P.’s involvement in the drafting of the ToR, it is not excluded that it might have established the existence of a conflict of interests in favour of company A. justifying its exclusion from the procedure. Therefore, by deciding to award the contract to the consortium of which company A. was a member without having conclusively established that the latter was not in a situation of a conflict of interests even though significant evidence suggested the existence of an apparent conflict of interests, the EU Delegation affected the chances of the applicant being awarded the contract.

    191 In those circumstances, the damage invoked with respect to the loss of an opportunity must, in the present case, be considered to be actual and certain, because there is evidence that, as an unsuccessful tenderer, the applicant definitively lost an opportunity to be awarded the contract and that that opportunity was real and not hypothetical.

    192 Finally, the damage directly and immediately results from the unlawful acts committed in the present case by the EU Delegation. The condition relating to the existence of such a causal link must be assessed in the light of the loss alleged. Without it being necessary to determine whether the situation in the present case constituted a conflict of interests, it is clear that, due to the inadequacies of the investigation and the award of the contract to the consortium of which company A. is a member, the EU Delegation vitiated the tendering procedure and, consequently, directly affected the applicant’s chances of being awarded the contract.

    193 Since the applicant established that the EU Delegation committed several unlawful acts in the context of the investigation relating to the existence of the conflict of interests, that it suffered damage in respect of the loss of an opportunity, that that loss is actual and certain and results directly from those unlawful acts, it must be concluded that the conditions for compensating the applicant in respect of the loss of an opportunity are satisfied.

    194 Secondly, as regards the costs and expenses relating to the participation in the tendering procedure, it should be noted that economic operators are to bear the risks forming an integral part of their activities. In the context of a tendering procedure, those economic risks include, inter alia, the costs associated with the preparation of the tender. The costs incurred for that purpose therefore remain chargeable to the undertaking which chose to participate in the procedure, since the right to bid for the award of a contract does not signify that the contract will definitely be awarded to that undertaking (see, by analogy, judgment of 30 April 2009, CAS Succhi di Frutta v Commission, C‑497/06 P, not published, EU:C:2009:273, paragraph 79). In that regard, Article 101 of the Financial Regulation provides that the Commission is free to decide not to make any award at all. Therefore, there was no guarantee that even the tenderer offering the most advantageous bid would win the contract.

    195 Consequently, the costs and expenses incurred by a tenderer in connection with its participation in a tendering procedure cannot, in principle, constitute harm which is capable of being remedied by an award of damages (judgments of 30 April 2009, CAS Succhi di Frutta v Commission, C‑497/06 P, not published, EU:C:2009:273, paragraph 81; of 17 December 1998, Embassy Limousines & Services v Parliament, T‑203/96, EU:T:1998:302, paragraph 97; and of 8 May 2007, Citymo v Commission, T‑271/04, EU:T:2007:128, paragraph 165).

    196 However, that principle cannot, without potentially undermining the principles of legal certainty and of protection of legitimate expectations, apply in cases where an infringement of EU law in the conduct of the tendering procedure has affected a tenderer’s chances of being awarded the contract (judgments of 30 April 2009, CAS Succhi di Frutta v Commission, C‑497/06 P, not published, EU:C:2009:273, paragraph 82; of 17 March 2005, AFCon Management Consultants and Others v Commission, T‑160/03, EU:T:2005:107, paragraph 98; and of 8 May 2007, Citymo v Commission, T‑271/04, EU:T:2007:128, paragraph 165).

    197 In the present case, since the Court considered that the unlawful acts invoked by the applicant in the conduct of the tendering procedure had affected its chances of being awarded the contract and that, therefore, it was necessary to compensate it for the loss of an opportunity, the costs and expenses relating to the participation in the tendering procedure are damage capable of being remedied by the grant of damages.

    198 Moreover, as regards the causal link between that damage and the unlawful acts found by the Court, it should be noted that those unlawful acts vitiated the tendering procedure. As a result, those unlawful acts caused the applicant, as tenderer, to needlessly incur costs in relation to the participation in the tendering procedure. It results therefrom that the damage invoked by the applicant follows directly from the unlawful acts found by the Court and that the conditions for compensating the applicant for the costs and expenses relating to the participation in the tendering procedure are satisfied.

    199 Third, as regards compensatory interest, it should be noted that the conditions for non-contractual liability must be satisfied for an applicant to be eligible to receive compensatory interest (judgments of 2 June 1976, Kampffmeyer and Others v EEC, 56/74 to 60/74, EU:C:1976:78, and of 26 February 1992, Brazzelli and Others v Commission, T‑17/89, T‑21/89 and T‑25/89, EU:T:1992:25, paragraph 35, upheld on appeal by judgment of 1 June 1994, Commission v Brazzelli Lualdi and Others, C‑136/92 P, EU:C:1994:211, paragraph 42).

    200 Compensation for damage within the framework of non-contractual liability is intended so far as possible to provide restitution for the party applying for compensation. Consequently, since the criteria giving rise to non-contractual liability are fulfilled, the adverse consequences resulting from the lapse of time between the occurrence of the event causing the damage and the date of payment of the compensation cannot be ignored, in so far as it is appropriate to take into account the fall in the value of money (judgments of 27 January 2000, Mulder and Others v Council and Commission, C‑104/89 and C‑37/90, EU:C:2000:38, paragraph 51, and of 13 July 2005, Camar v Council and Commission, T‑260/97, EU:T:2005:283, paragraph 138; see also, to that effect, judgment of 3 February 1994, Grifoni v Commission, C‑308/87, EU:C:1994:38, paragraph 40). Therefore, compensatory interest is designed to compensate for the time that passes before the judicial assessment of the amount of damage, irrespective of any delay attributable to the debtor (judgment of 12 February 2015, Commission v IPK International, C‑336/13 P, EU:C:2015:83, paragraph 37).

    201 In the present case, since it follows from paragraphs 197 and 198 above that the applicant must be compensated for the loss consisting in the costs and expenses relating to the participation in the tendering procedure and that the compensation is intended so far as possible to provide restitution for the party applying for compensation, the applicant’s claim that the amount of the loss consisting in the costs and expenses relating to the participation in the tendering procedure be increased by compensatory interest must be upheld.

    202 It follows from all those considerations that it is necessary to uphold the applicant’s claim for damages in so far as it seeks compensation for the loss of an opportunity to be awarded the contract at issue and compensation for the costs and expenses relating to the participation in the tendering procedure, plus compensatory interest, and to reject it as to the remainder.”

    Assessment of the actual damages amounts left for agreement of the parties in the first instance, as insufficient evidence for the Court to determine the amounts

  • Case T-298/16 East West Consulting SPRL v Commission

    View Case

    Region: EU - General Court

    Applicant entitled to damages for loss of opportunity to obtain contract where wrongfully excluded but not entitled to damages for loss of opportunity to obtain other contracts; damages assessed at EUR 20,000

    Warning pursuant to an Early Warning System (for the purposes of countering fraud and any other illegal activities affecting the financial interests of the Union) unlawfully placed on applicant’s company, breaching rights of defence and presumption of innocence

    Breach was sufficiently serious ([145]-[153])

    145 As to whether the breach of the rules of EU law found may be considered to be sufficiently serious, the Court of Justice has already had occasion to state that that condition might be considered to be satisfied where the institution concerned had manifestly and gravely disregarded the limits set on its discretion, the factors to be taken into consideration in that connection being, inter alia, the degree of clarity and precision of the rule breached and the measure of discretion left by that rule to the EU authority (see judgment of 30 May 2017, Safa Nicu Sepahan v Council, C‑45/15 P, EU:C:2017:402, paragraph 30 and the case-law cited).

    146 According to the case-law, where the EU authority has only a considerably reduced, or even no, discretion, the mere infringement of EU law may be sufficient to establish the existence of a sufficiently serious breach (see judgments of 14 December 2005, FIAMMand FIAMM Technologies v Council and Commission, T‑69/00, EU:T:2005:449, paragraphs 88 and 89 and the case-law cited, and of 11 July 2007, Sison v Council, T‑47/03, not published, EU:T:2007:207, paragraph 235 and the case-law cited).

    147 It follows from the case-law, last, that a breach of EU law will, in any event, clearly be sufficiently serious if it has persisted in spite of a judgment finding the breach in question to be established, or in spite of a preliminary ruling or settled case-law of the Courts of the European Union on the matter from which it is clear that the conduct in question constituted a breach (see judgment of 30 May 2017, Safa Nicu Sepahan v Council, C‑45/15 P, EU:C:2017:402, paragraph 31 and the case-law cited).

    148 In  the present case, since the Delegation itself refused to endorse the contract awarded to the consortium led by the applicant on the sole ground that the Commission had placed a W3b warning concerning the applicant in the EWS, the Commission cannot maintain that that warning was not intended to produce effects outside the internal sphere of the institution, or to have a negative impact on the applicant’s legal position.

    149 In  fact, in July 2010, a well-established body of case-law and the Charter of Fundamental Rights, which entered into force on 1 December 2009, enabled the Commission to understand that, if the applicant’s legal position was liable to be thus adversely affected by its W3b warning in the EWS, its right that that warning be founded on a legal basis and its rights of defence and the principle of the presumption of innocence had to be respected.

    150 The application of those rights in the present case did not give rise to particular difficulties and the Commission had no discretion in that connection. In particular, the fact that the Commission was required to ensure the protection of the financial interests and the reputation of the European Union could not justify its breach of the applicant’s rights.

    151 Furthermore, in spite of the applicant’s numerous letters and attempts to secure respect for its rights, the Commission did not react, either to amend the EWS Decision or to withdraw the warning in respect of the applicant or the persons linked to it in the EWS, before its acts or conduct were directly called in question by the Ombudsman.

    152 Last, the Commission’s conduct was neither transparent nor coherent. First, it never supplied to the applicant or produced in the context of these proceedings documents attesting to the requests for activation of a warning on the EWS addressed to it by OLAF concerning the applicant or concerning Mr L. and ECO3 (see paragraph 138 above). Second, the Delegation, by letter of 9 November 2011, informed the national contracting authority that it had decided to cancel the tender procedure for the procurement at issue without awarding the contract, in application of Article 17(2)(c) of the EWS Decision, which was applicable to the Commission’s authorising officers and authorising officers by delegation, while indicating, in its reply to the measures of organisation of procedure notified on 15 June 2017 and 23 March 2018, that the act giving rise to the damage sustained by the applicant was issued by the national contracting authority, which alone had the power to decide to cancel the tender procedure for the procurement at issue, in accordance with point 2.4.13 of the PRAG and point 15 of the instructions to tenderers for that procurement. Third, following the Ombudsman’s interventions, the Commission, in February 2015, withdrew the warning in respect of the applicant and Mr L. on the EWS (see paragraph 64 above), while continuing to observe, in its written pleadings before the Court, that the judicial proceedings that justified those warnings were continuing in Belgium, where proceedings had been requested against Mr L. Fourth, although the applicant was still the subject of a W3b warning on the EWS and although, on that ground, the Commission had refused to endorse the contract relating to the procurement at issue, it signed with the applicant, on 15 December 2010, a contract having a value of EUR 1338225 for a procurement in Albania funded, within the framework of the IPA, by EU funding, and did not succeed, in its replies to the measures of organisation of procedure notified on 23 March 2018 and at the hearing, in showing that it had ensured that reinforced monitoring measures, within the meaning of Article 17(2)(a) of the EWS Decision, had been applied.

    153 In the light of the foregoing findings, and without there being any need to examine the other illegalities on which the applicant relies, it must be held that, by activating a W3b warning on the EWS and refusing, on the ground of that warning, to endorse the contract relating to the procurement at issue, the Commission, by itself or through the Delegation, committed a sufficiently serious breach of a rule of law of such a kind as to incur the liability of the European Union.

    Causation was established ([160]-[162])

    160 In the present case, although the contract relating to the procurement at issue was never signed by the national contracting authority and although the latter could, until the contract was signed, decide to cancel the tender procedure for that contract, in accordance with point 2.4.13 of the PRAG and point 15 of the instructions to tenderers for that contract, the fact nonetheless remains that in its letter of 3 November 2011 that authority had clearly and specifically manifested its intention to conclude the contract relating to the procurement at issue with the consortium led by the applicant, to which the procurement had been awarded, and to do so quickly, the only outstanding condition for finalising the procedure for signature of the contract being the endorsement of the contract file by the Commission.

    161 As already observed in paragraph 88 above, it is apparent from the documents in the file and from the discussion before the Court that, by its letter of 9 November 2011, the Delegation used the power conferred on it by Article 1 of Decision C(2009) 7692 final, read in conjunction with Annex II to that decision, and by point 2.2 of the PRAG, to refuse to allow the contract relating to the procurement at issue to be concluded with the consortium led by the applicant on the ground that the applicant was the subject of a W3b warning in the EWS, with the consequence that the national contracting authority had no choice, since the only technically acceptable offer had been submitted by that consortium, other than to cancel the tender procedure for the procurement at issue.

    162 In those circumstances, it should be stated that the applicant’s W3b warning on the EWS was the determining cause of the Delegation’s refusal to endorse the contract relating to the procurement at issue, which had been awarded to the consortium led by the applicant, that refusal having itself been the determining cause of the cancellation, by the national contracting authority, of the tender procedure for that contract. Thus, in the circumstances of the present case, the loss of the profits which the applicant would have made by carrying out the procurement at issue was a sufficiently direct consequence of the conduct complained of for it to be found that there was a causal link between that conduct and the damage alleged.

    Detailed assessment of the amount of loss of profit (see [166]-[176])

    176 The applicant’s claim for compensation for the material damage corresponding to the loss of an opportunity to achieve the profits which it expected when the procurement at issue was carried out must be allowed in the sum of EUR 20000 and the claim for compensation concerning the loss of the procurement at issue must be rejected as to the remainder.

    No Damages for loss of other contracts ([181]-[189])

    181 As regards the material damage corresponding to the loss of an opportunity to obtain other public contracts, which the applicant evaluates in the amount of EUR 330000, it should be observed that the cancellation of the tender procedure for the procurement at issue because of the applicant’s W3b warning on the EWS undoubtedly had an adverse effect on its image and therefore on its commercial reputation, both with the public authorities of the former Yugoslav Republic of Macedonia and with the former members of the consortium, who were aware of it. In addition, the cancellation of the procedure certainly deprived the applicant of the opportunity to be able to rely on the procurement at issue, as a reference, in order to establish its technical capacity to operate in the sector covered by that contract in other tender procedures in which it would have participated or wished to participate.

    182 However, it does not follow directly, by a link of cause and effect, from the findings set out in paragraph 181 above that the applicant would have lost the opportunity to conclude three contracts equivalent to the contract relating to the procurement at issue and therefore to make profits corresponding to three times those which it expected from the performance of the latter contract, namely an amount of EUR 480000, reduced, in the form of order sought, to the sum of EUR 330000.

    183 As a preliminary point, it should be noted that, as the Commission observes and as the applicant acknowledges, the fact that the applicant was the subject of a W3b warning on the EWS between June 2010 and February 2015 did not prevent it from signing, alone or in the framework of consortia, five contracts with the Commission, between 15 December 2010 and 3 August 2015, relating to public procurement financed by EU funds, in particular in the context of the IPA, in sectors other than employment, in neighbouring States of the former Yugoslav Republic of Macedonia (Bosnia-Herzegovina, Montenegro and Albania) and in Africa, for a total value of EUR 3503955.

    184 In so far as the applicant maintains that the reference connected with the procurement at issue was a determining factor as regards its eligibility to tender in other relevant procurement procedures, it should be stated that its assertions concerning its lack of experience in the employment sector are contradicted by the information on the pages of its website, placed in the file by the Commission, in which the applicant states, among its reference sectors, ‘Employment and Labour Market’. Even on the assumption that, as the applicant maintains, it lacked references in that sector, that did not prevent it from winning public contracts such as the procurement at issue by forming a consortium with other undertakings with such expertise, as already observed in paragraph 167 above.

    185 In so far as the applicant claims that, following the cancellation of the procurement at issue, it became impossible for it to become associated with other undertakings, in particular with former members of the consortium, it has not, as the Commission correctly observes, adduced any evidence to show that, in order to be able to participate in tender procedures, in the employment sector or in the former Yugoslav Republic of Macedonia, it had contacted other undertakings with a view to forming a consortium and those undertakings had refused to do so. In addition, the applicant itself acknowledges that, as the leader of a consortium, it successfully tendered in procedures relating to sectors other than employment or outside the former Yugoslav Republic of Macedonia. The applicant’s assertions in that regard are therefore not sufficiently substantiated.

    186 In the same way, in so far as the applicant claims that it had lost the opportunity to obtain other public contracts in the former Yugoslav Republic of Macedonia because its image there was tarnished in the eyes of the authorities of that State, it should be noted that, as the Commission correctly observes, the applicant has not indicated, nor, a fortiori, has it shown, that it was a candidate for the award of public contracts in which the authorities of the former Yugoslav Republic of Macedonia would have been the contracting authority. In those circumstances, the applicant cannot claim to have lost a genuine opportunity to obtain those contracts because its image was tarnished in the eyes of those authorities.

    187 Last, it should be observed that the table evaluating the damage linked with the loss of the procurement at issue set out in the application contains data which are purely hypothetical. In fact, the applicant has not mentioned any specific tender procedures in which it would have participated or might have participated, but merely inferred the number of tender procedures in which it considered that it would have been able to participate from data based on its past experience, without providing any evidence that would allow the veracity and the relevance of those data to be verified.

    188 It follows from the foregoing findings that the applicant has neither demonstrated the actual and certain nature of the material damage corresponding to the loss of opportunity to obtain other public contracts nor shown that that damage arose in a sufficiently direct manner from the illegality established in paragraph 153 above, in the sense that that illegality constituted the determining cause of that damage.

    189 The claim for compensation based on the loss by the applicant of the opportunity of obtaining other public contracts must therefore be rejected in its entirety.

     

• Ireland
  • Clare Civil Engineering Ltd v Mayo County Council [2004] IEHC 135 (O'Neill J)

    View Case

    Region: Ireland

    But for unlawful elimination, applicants would have won road building tender and were entitled to damages for recoverable losses suffered (no treatment of quantification as case resolved following judgment on liability)

    Applicants excluded from road building tender because contracting authority considered they had engaged in “zero rating”, i.e. failure to include rates on two items in the Bill of Quantities. The Court found that this was a manifest error as the Applicants’ approach was consistent with the correct meaning of the tender documents. The Applicant was entitled to damages.

    “I have therefore come to the conclusion that the opinion which the applicants formed as to the correct construction of the above portions of the contract documents was correct and the conclusion reached by the respondents which led to their decision to eliminate the applicant’s tender was a clearly established or manifest error. The applicants had not engaged in “zero rating”…

    It was submitted by the respondent that even if they were not entitled to eliminate the applicants tender, it does not follow that the applicants would have been entitled to the award of the contract and therefore it was submitted that it did not follow that there would be a liability on the respondents in damages.

    I am satisfied that the contract having been awarded to Frank Harrington Ltd., and the tender of the applicant having been unlawfully eliminated, and it being common case that the applicants tender price was substantially below that of Frank Harrington Limited, it in my view necessarily follows, that but for the unlawful elimination of its tender, the applicants would have been successful in winning the contract and hence it follows in my view that the respondents are liable to them in damages for whatever recoverable losses having suffered by the applicants.”

    It is understood that the matter was resolved following this judgment, so there is no judgment on the quantification of damages

• Northern Ireland
  • FP McCann Limited v Department for Regional Development [2019] NIQB 100 (Colton J)

    View Case

    Region: Northern Ireland

    Breaches of procurement rules were "sufficiently serious" to meet the second Francovich condition

    The Court applied Nuclear Decommissioning Authority v Energy Solutions EU Limited [2017] UKSC 34 and applied the principles in Delaney v Secretary of State for Transport [2015] EWCA Civ. 172 on the question of sufficiently serious breach.

    “[26] The court has found that there has been a breach of Regulation 30 of the Public Contracts Regulations 2006. In summary the breaches arose from the following findings:

    • Matters which were expressly excluded as contributing to the recommendation in fact did or may well have contributed to the actual decision taken by the defendant to reject the plaintiff’s bid.
    • BBMC were not given the opportunity to explain matters which ultimately contributed to the decision to reject the tender which constituted a breach of Regulation 30(6)(a) which placed an obligation upon the defendant that before it could come to any decision that a tender was “abnormally low” it must request “in writing an explanation of the offer or of those parts which it considers contribute to the offer being abnormally low.”
    • The defendant took into account issues in relation to the plaintiff’s involvement in the A5 tender process without ever informing BBMC of this or giving it an opportunity to deal with any issues of concern.
    • The defendant failed to comply with its obligation to verify the offer or parts of the offer which were allegedly abnormally low as expressly required by Regulation 30(6)(c).

     

    [27] In general terms the defendant has sought to argue that these breaches did not demonstrate any bad faith on behalf of the defendant. The defendant was applying a complex statutory scheme and any errors were explicable and did not have a manifest effect on the exercise of its discretion and thus the outcome of the process. It is submitted that the errors were involuntary and unintentional.

    [28] In assessing the “seriousness” of the breaches it is important to remember that the court’s jurisdiction is to supervise the way in which the process has been carried out, and to review whether proper procedures and basic principles underlying the directive have been respected, for example those concerning equality of treatment and As was said in Lion Apparel Systems Limited v Firebuy Limited [2007] EWHC 2179 at paragraph [36]:

    “[36] If the Authority has not complied with its obligations as to equality, transparency or objectivity, then there is no scope for the Authority to have a ‘margin of appreciation’ as to the extent to which it will, or will not, comply with its obligations.”

    [29] It is correct to say that the court concluded that the question of the ability to agree target cost on the basis of the tendered figures submitted by BBMC was a legitimate concern which required examination by the defendant. However, there was a clear obligation on the defendant to conduct that examination in accordance with the Regulations and in particular in accordance with the principles of equality, transparency and objectivity. In this regard there is no question of permitting a margin of discretion.

    [30] It should be clear from the judgment of the court that it has real concerns about the transparency of the process in this case. On reflection I am concerned that I may have underestimated the part played by the “A5 consideration”, something which the defendant robustly relies on in its submissions on this issue. The fact that this was never raised with BBMC in the course of this process is in my view a serious breach given the apparent emphasis placed on it by the defendant.

    [31] It seems to me that the principles which have been breached are clear. The Regulations which have been breached are clear, precise and indeed mandatory.

    [32] The court is acutely aware of the distinction between the defendant’s “discretion” or “margin of appreciation” and has sought to stay clear of interfering with any matters of judgment in relation to BBMC’s tender. However the breaches which I have found do not relate to matters of judgment or discretion but constitute, in the court’s view, breaches of both the fundamental principles of the procurement process and the specific obligations under the relevant regulations.

    [33] I agree with the plaintiff’s submission that taken separately and individually, the breaches are sufficiently serious to find an entitlement to damages, all the more so when taken cumulatively. Insofar as the defendant relies on the court’s conclusion that the defendant could have reached the same outcome if it had carried out the process lawfully then this could only be relevant to causation, namely the third Francovich condition which does impact on the level of damages the court can

    [34] I have therefore concluded that the breaches I have found clearly meet the second Francovich condition and are “sufficiently serious” to justify an award of damages.”

  • FP McCann Limited v Department for Regional Development [2020] NIQB 51 (Colton J)

    View Case

    Region: Northern Ireland

    Court assessed the quantum of damages, first considering the claim on the basis that the Plaintiff would have won and then applying a 50% apportionment to reflect damages on a loss of chance basis

    This was the Court’s judgment on quantum, having previously issued judgments on liability ([2016] NICh 12) and on the entitlement to damages in principle ([2019] NIQB 100)

    Much of the judgment is taken up with very detailed assessment of specific items of damage/cost (main quantum items; collateral items etc.)

    The main point of principle is that damages were ultimately assessed on a loss of chance basis, with a 50% figure applied to the overall damages that would have been incurred had the Plaintiff won. Also, no tender costs were recoverable.

    “[5] The court has had great difficulty in coming to a determination on damages. It is often said that a court should not intervene by way of injunctive relief in circumstances where an award of damages is an appropriate alternative remedy. This case demonstrates the potential difficulty with such an approach. Ideally this is a case in which the plaintiff’s joint tender (BBMC) should have been reconsidered by the defendant in light of the breaches identified by the court, but that is simply not an option. The court is compelled to determine the issue of damages.

    [6] The matter is of course further compounded by the fact that the court has come to the conclusion that what the plaintiff has lost is an opportunity to be awarded the contract rather than a loss of the contract itself, contrary to the plaintiff’s submissions.

    [7] The court’s determination is based on the well-known principles established in Chaplin v Hicks [1911] 2 KB 786. In that case the defendant, by a breach of contract in conducting a contest, deprived the plaintiff, one of fifty finalists, of the opportunity to compete for one of the 12 prizes. Although there could be no precision in calculating the value of her lost chance she was entitled to substantial damages. As Vaughan Williams LJ said at page 792 of the judgment:

    “But the fact that damages cannot be assessed with certainty does not relieve the wrongdoer of the necessity of paying damages for his breach of contract.”

    [8] That this remains the law is not in dispute. In Yam Seng Pte Limited v International Trade Corporation Limited [2013] 1 Lloyds Rep 526 at [188] Leggatt J says:

    “On the one hand, the general rule that the burden lies on the claimant to prove its case applies to proof of loss just as it does to the other elements of the claimant’s cause of action. But on the other hand the attempt to estimate what benefit the claimant has lost as a result of the defendant’s breach of contract or other wrong can sometimes involve considerable uncertainty; and courts will do the best they can not to allow difficulty in estimation to deprive the claimant of a remedy, particularly where that difficulty is itself the result of the defendant’s wrongdoing.”

    Leggatt J quoted with approval the passage from the judgment of Vaughan Williams LJ in Chaplin cited above. He went on to say:

    “Accordingly, the court will attempt so far as it reasonably can to assess the claimant’s loss even when precise calculation is impossible. The court is aided in this task by what may be called the principle of reasonable assumptions – namely that it is fair to resolve uncertainties about what would have happened but for the defendant’s wrongdoing by making reasonable assumptions which err if anything on the side of generosity to the claimant where it is the defendant’s      wrongdoing      that     has      created      those uncertainties.”

    [9] The court considers this is the proper approach to the assessment of damages in a case such as this. In coming to a conclusion on damages the court also bears in mind that procurement law requires the award of effective damages where a sufficiently serious breach has been established.

    [12] Before considering any apportionment issues arising from loss of chance the court proposes to consider the plaintiff’s claim on the basis that BBMC would have been awarded the contract.

    Loss of main contract contributions through fee and gain share

    [13] There are three key variables in this assessment namely:

    (i) The amount of the target cost that would have been agreed by the defendant and BBMC;

    (ii) The outrun cost of a BBMC contract;

    (iii) The extent to which any overspend on the target cost would be reflected in increased target costs (because, for instance, it relates to compensation events) or will be reflected in some degree of pain for BBMC.

    Tender costs

    [76] The only circumstances in which this could be recoverable would be if all the other parts of the plaintiff’s claim fail. The court is assessing the plaintiff’s loss firstly on the basis that it would have been awarded the contract before considering any reductions arising from causation issues. The tender documents expressly say that tender costs would not be recoverable. Tender costs are the costs of doing business. In those circumstances the court does not consider that the tender costs would be part of the loss that the plaintiff would have sustained had it been awarded the contract.”

• Scotland
  • Aquatron Marine v Strathclyde Fire Brigade [2007] CSOH 185 (Lord Carloway)

    View Case

    Region: Scotland

    Exclusion of tenderer gave rise to several breaches of the Procurement Regulations and the Court, having found that the pursuer would have won the contract but for the breaches, awarded damages for loss of profit (if the court had not been able to establish that the pursuer would have won the contract but for the breach, it would have applied a loss of chance analysis to damages)

    “100 With the exception of “price”, all of the criteria stipulated in the OJ appear to have little or no relevance to a contract of the type under consideration. This was the position even of the defenders’ own expert, Mr Williams. Rather, the criteria appear to be more appropriate to a contract for the sale or supply of goods. Each of the “non-price” criteria can be discounted as inapplicable or of little significance. That essentially leaves “price” as the decisive criterion for the award of this contract. The pursuers’ tender was lower in price than that of MB Air Systems. Therefore, if the criteria had been applied properly in terms of the Regulations, the pursuers would have been awarded this contract.

    103 … Even if a much wider number of considerations were permissible, such as quality and technical merit, the pursuers’ tender would still have stood at least an even chance of acceptance and I would have regarded it as open to the Court to make an award for the loss of such a chance on the basis that a claim for loss of a chance to obtain a contract is included in averments claiming the full contract value. I would have assessed this loss at half of that contract value.

    The Pursuers’ Losses

    104 The financial effect on the pursuers in not being awarded the tender was spoken to primarily by Rognvald Young. Although the pursuers did not suffer a downturn in annual profit because of the loss of the contract, since they continued to seek and obtain alternative business, they would have made considerably more profit had they been awarded this contract. In particular they would have made the profit available on it. The starting point for the assessment of damage is the income which the contract would have generated. The annual sum is £74,100, broken down (6/23 p 26) into three parts: servicing the breathing apparatus at

    £39,514; servicing the low pressure tyre compressors at £4,010; and air purity analysis at £30,576. The total for the three years is £222,300.

    105 Rognvald Young spoke to the benefits which would have been received in respect of the extra work. This would have been charged at £32.00 per hour with a mileage rate of 75 pence. On the basis of the Evaluation, there would have been 800 hours of work, thus producing £25,600. There would also have been 7,000 miles, thus giving further income of £5,250. The extra works would bring in a total income of £92,550 (3 x £30,850), increasing the value of the tender up to £314,850. However, although there is a general averment about this on record (37 B-C), the pursuers’ claim does not appear to include the profit on this extra work. That claim, on record and in submissions, is simply based on the contract works of £222,300 less the costs of those works. The profit on the extra work (if any) will therefore not be taken into account.

    106 Rognvald Young had produced a spreadsheet detailing the costs in respect of servicing each fire station (6/1 and 6/53 p 3) together with notes on the figures used (6/53 p 1). These figures were based on the pursuers’ previous contract with the defenders. His basic labour cost is £10.12 per hour. However, he doubled that figure to take into account overheads of one sort or another. He reached that overhead uplift using the accounts (6/53 p 2) for the last year in which the pursuers were engaged on the contract. The uplift is somewhat greater than the arithmetic demonstrates (see note 3) but, no doubt, these matters cannot be weighed on too fine a scale. Labour costs are then taken as being £20.24 per hour. So far as the time expended on the work at each station is concerned, Rognvald Young took what he regarded as a generous (to the defenders) 2.5 hours for each service. Looking at mileage, the figures given on the spreadsheet do not always represent distances from the pursuers’ base at Kinning Park in Glasgow to each station, as a number of stations in a locality would be visited on one particular day. The distance taken may be from one station to another on a programmed route. Forty pence is taken as the mileage cost. All of this produces a total of

    £21,094.76 per annum. Next, there are the air purity sample costs. These consist first of postage of £4.18 (6/2). Six tests would be carried out in an hour using FTIR. If labour is taken at £20.24 per hour, each test would cost £3.37. With the postage added, there is a cost of £7.55 for each test. The contract involved 588 tests, so the total is £4,439.40 per annum. Next, there is the cost of servicing the tyre compressors, which is estimated at £3,804.96. The testing of the storage cylinders adds another £726.17 per annum. Overall then, the total costs for the main contract works, based on the pursuers’ previous contract experience, would have been about £30,065.28 per annum.

     

    107 However, Rognvald Young estimated, again erring on the side of caution, that the new contract works would cost 25% more than the previous works, an additional £7,516.32 per annum. The addition produces total costs of £37,581.60 (see 6/2). This amount, subtracted from £74,100 leaves £36,518.40 (cf 6/2) to produce a total loss over the three years of almost £109,555.20. That is what the pursuers sought in submissions but it is rather more than the sum sued for (£102,300), which was based on a slightly different calculation of costs. A motion to amend was made in that regard at the end of the pursuers’ submissions. Although the defenders opposed that motion, the discrepancy is relatively minor and it is in the interests of justice to allow it.

    108 It was not disputed that interest should be applied to any sum awarded at the rate of 4 per centum per annum for the duration of the contract and 8 per cent thereafter. It is not known when the contract awarded to MB Air Systems actually started. It did not do so on time. In these circumstances I was invited to (and will) take a start date of 1 January 2005, which would produce £12,594 in interest to date at 4 per cent.

    109 I will accordingly repel the defenders’ first to fifth pleas-in-law and sustain the pursuers’ first and second pleas-in-law and grant decree for £122,149.20.”

  • Salt International Ltd (fromerly Nationwide Gritting Services Ltd) v The Scottish Ministers [2015] CSIH 85

    View Case

    Region: Scotland

    In challenge to a direct award, no damages where pursuer could not prove it would have tendered had a competition been held, and could not demonstrate a chance of success

    The Inner House upheld the first instance judgment of Lord Woolman in Nationwide Gritting Services Ltd v The Scottish ministers [2014] CSOH 151

    While a breach was made out, as the pursuer could not show it would have tendered had a competition been held, this was fatal to its damages claim. Similarly, it could not establish an entitlement to damages on a loss of chance basis. As the Lord Ordinary put it at [68], “[in] the absence of a finding that NGS would have made a bid and the price at which it would have done so, I cannot make an award for loss of a chance.” The entirety of the analysis was upheld by the Inner House on appeal, which stated as regards damages:

    “52 In terms of regulation 47(5), a breach of duty owed under the Regulations is actionable only where the economic operator suffers (or risks suffering) loss or damage. It is for the operator to bring himself within this provision by demonstrating that he has so suffered. The loss of a chance in a tendering process may sound in damages, but that can only arise if it is established that the operator had such a chance and that it had a “measurable, non-negligible value” (Kyle v P&J Stormonth Darling WS 1993 SC 57, Lord McCluskey at 69). There can be no damages where, on the evidence, it is established that the economic operator would not have availed himself of the opportunity to tender or if it is demonstrated that he had no chance of success.

    53 It was essential to the pursuers’ case that they proved that, had a tender process been initiated, they would have tendered. The only evidence to support the pursuers’ position came from their commercial director, whom the commercial judge did not regard as credible and reliable. That judgment is not under challenge. It effectively ended the pursuers’ case on damages in its entirety. The judge went further in making a positive finding that the pursuers would not have tendered in relation to either winter 1 or 2. His finding is adequately explained and justified, under reference for winter 1, to the pursuers’ nascent state at the time, and for winter 2, to the director’s own statement that they would not have done so if the offer was, as the judge held, in the form of a framework agreement for only 30,000 tonnes. The fact that the pursuers did not make a bid for the local authority contracts was significant. The judge adequately explains and justifies his conclusion that the pursuers would have failed in any bid by referring to, first, their lack of track record as tenderers to be relied upon and, secondly, the absence of material upon which it could be inferred that they would have been able to undercut the main competition.

    54 In these circumstances, where the commercial judge’s finding-in-fact are unimpeachable, there is no scope for any revaluation of the evidence. The complaint from the pursuers included a contention that the judge had not taken account of relevant testimony, but there is no substance in this criticism. Once the pursuers’ director’s evidence was found to be unacceptable, there was no route available upon which to build a credible and reliable claim for damages. His evidence about the pursuers’ abilities was rendered valueless as a consequence of the judge’s rejection of his testimony as a generality.”

• Sweden
  • Case T 3852/14

    View Case

    Region: Sweden

    Swedish Supreme Court restates the requirement that entitlement to damages requires a showing of a sufficiently serious breach; applicant's claims of error dismissed

    Re-statement of requirement of sufficiently serious breach by reference to Spijker.

    “13. EU-domstolen har i sin dom i målet Combinatie Spijker, C-568/08,
    EU:C:2010:751, sammanfattat sin rättspraxis beträffande bestämmelsen om skadestånd i rättsmedelsdirektivets artikel 2.1 (se närmare p. 85–92 i domen). Enligt domstolen ankommer det på medlemsstaterna att själva, med iakttagande av de unionsrättsliga effektivitets- och likvärdighetsprinciperna, ange kriterier för hur skadestånd ska fastställas och beräknas. Av rättsfallet (p. 87) framgår bl.a. att den enskilde har rätt till skadestånd när en överträdelse av en unionsbestämmelse om offentlig upphandling är tillräckligt klar (”sufficiently serious” i den engelska språkversionen, jfr domen i målen Brasserie du Pêcheur och Factortame, C-46/93 och C-48/93, EU:C:1996:79, p. 51). Vidare har EU-domstolen i sin dom i målet HI, C-92/00, EU:C:2002:379, slagit fast att en så restriktiv tolkning av rättsmedelsdirektivet, som innebär att felprövningen begränsas till att avgöra huruvida det beslut som är föremål för prövning är av godtycklig art, inte är förenlig med direktivets syfte och därför inte kan godtas.”

• Damages against Member State Authorities

  Under the Remedies Directive (89/665), Member States must provide for damages as a remedy.

  Article 2(1) of the Remedies Directive provides that member State “shall ensure” that review bodies have the power to “award damages.”

  As a matter of EU law, the minimum Francovich conditions apply:

  (1) the rule of law infringed must be intended to confer rights on individuals,

  (2) the breach must be sufficiently serious, and

  (3) there must be a direct causal link between the breach of the obligation and the damage sustained by the injured party.

  Member States cannot make the entitlement to damages dependent on proof of fault

  Case C-314/09 Stadt Graz v Strabag AG

  Member States are required to provide for damages for loss of opportunity in procurement cases

  Case C-547/22 INGSTEEL – “As the Court has held with regard to loss of profit, the total exclusion, in respect of the damage for which compensation may be granted, of the loss of the opportunity to participate in a procedure for the award of a public contract in order to obtain that contract, cannot be accepted in the event of an infringement of EU law since, especially in the case of economic or commercial disputes, such total exclusion of that loss of opportunity would be such as to make it practically impossible to make good the damage suffered” ([43])

  Quantification is a matter for the national court/review body, subject to the principles of equivalence and effectiveness

• Damages Against EU Institutions

  The same three conditions for damages as apply to Member State contracting authorities  also apply to claims against EU institutions:

  the rule of law infringed must be intended to confer rights on individuals; the breach must be sufficiently serious; and there must be a direct causal link between the breach of the obligation resting on the author of the act and the damage sustained by the injured parties (Joined Cases C-46/93 and C-48/93 Brasserie du Pêcheur and Factortame [51])

  Whether the breach is sufficiently serious depends on

  “whether there was a manifest and grave disregard by the institution of the limits on its discretion”

  which takes account of “the complexity of the situations to be regulated, difficulties in the application or interpretation of the legislation and, more particularly, the margin of discretion available to the author of the act in question” (Case T-292/15 Vakakis kai Synergates v Commission [64])

  As a general rule, bid costs are not recoverable as damages

  but they may be recoverable exceptionally (Case T-160/03 AFCon Management Consultants v Commission [102]; Case T-292/15 Vakakis kai Synergates v Commission [197])

  A failure in providing reasons does not give rise to an entitlement to damages (Case T 554/10 Evropaïki Dynamiki v Frontex [168]; Case T-556/11 European Dynamics Luxembourg SA v EUIPO [266])

• Sufficiently Serious Breach

  [Add]

Fairgrieve and Lichère (eds), Public Procurement Law: Damages as an Effective Remedy (2011)