Lifting Automatic Suspension

June 28th, 2017

In yet another Alstom Transport UK Limited v London Underground Ltd (2017) EWHC 1521 (TCC) the Defendants applied to lift an automatic suspension on contract making imposed by the Utilities Contracts Regulations 2006.

The present dispute arose out of a procurement for the provision of AC traction motors for the Defendants’ fleet of Central Line trains. The outcome of the procurement was that the Defendants decided that Bombardier should be the winning bidder, with Alstom coming second. By these proceedings Alstom challenged the validity of the procurement and its outcome. It opposed the lifting of the automatic suspension.

Stuart-Smith J set out the modern approach as follows (paragraph 22):-

(1)       If damages are an adequate remedy, that will normally be sufficient to defeat an application for an interim injunction, but that will not always be so;

(2)      In more recent times, the simple concept of the adequacy of damages has been modified at least to an extent, so that the Court must assess whether it is just, in all the circumstances, that the claimant be confined to his remedy of damages.

The Judge accepted (at paragraph 36) that, in principle, the loss of a uniquely qualified workforce could, in appropriate circumstances, support a finding that damages would be an inadequate remedy and that it would be unjust to confine a claimant to its remedy in damages.

The Judge said (paragraph 39) the following about the public interest:-

  1. There is a public interest in procurements being carried out properly;
  2. However, the undoubted public interest in procurements being carried out properly does not tend of itself to support the maintenance of the automatic suspension: the Regulations provide more than one possible remedy;
  3. The appropriate remedy should be identified without preconception as to which one may be appropriate;
  4. It will be only in an exceptional case that it can be said that the application of American Cyanamid principles fails to give adequate support to the public interest in procurements being carried out properly;
  5. The fact that setting aside the automatic suspension at a time when the Court does not know what the final outcome of the Claimants’ allegations will be gives rise to the possibility that the Defendant will end up paying a contract sum to the successful tenderer and damages to the aggrieved Claimants is not a reason for maintaining the automatic suspension if it is otherwise inappropriate to do so: on the contrary, the prospect of paying damages as well as a contract price if it breaches its obligations is an integral part of the scheme under the Regulations for encouraging proper and principled procurements since it is to be assumed that contracting authorities will (in general) wish to avoid double payment;
  6. If there were even a whiff of corruption in a given case (e.g. that the procurement had deliberately been conducted in breach of the Regulations to achieve a given end irrespective of the risk of double payment), any Court would regard that as a feature tending to support the maintenance of the automatic stay.

 

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