The EFTA Court renders judgment in landmark public procurement case
Simonsen Vogt Wiig Press
Simonsen Vogt Wiig and lead counsel Anders Thue represented Fosen-Linjen AS (a ferry operator) against AtB AS before the EFTA Court. AtB organises the public transportation in one of the Norwegian counties. In its judgment delivered on 31 October 2017 (in Case E-16/16), the EFTA Court replied to questions referred to it by the Frostating Court of Appeal (Frostating lagmannsrett). In its decision, the EFTA Court concludes that a simple breach of public procurement law is, in itself, sufficient to trigger the liability of the contracting authority to compensate the person harmed for the damage incurred, provided that the other conditions for the award of damages are met. This includes, in particular, the condition of a causal link.
"The judgment is a landmark case because the EFTA Court has now concluded that a simple violation of procurement law is enough for awarding damages under the EU’s Remedies Directive", lead counsel Anders Thue comments. "This judgment will surely spark a lot of comments in the public procurement legal community, because national courts in many jurisdictions until now have applied a different more stringent doctrine", says co-counsel Jan Magne Juuhl-Langseth.
The background for the EFTA-Court's decision is a lawsuit filed by Fosen-Linjen AS against AtB. Fosen-Linjen AS principally claims damages for the positive contract interest (loss of profit) resulting from AtB's alleged breach of procurement law in a public tender procedure for the procurement of ferry services. The case will be heard by the Frostating Court of Appeal in the end of January 2018.
The EFTA Court states that the award of damages according to Article 2(1)(c) of Directive 89/665/EEC (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, whether it occurred on basis of a material error or whether it is attributable to the existence of a material, gross and obvious error. Furthermore, the Court states that "[a] simple breach of public procurement law is in itself sufficient to trigger the liability of the contracting authority to compensate the person harmed for the damage incurred", provided that the other conditions for the award of damages are met, including, in particular, the condition of a causal link.
The decision of the EFTA-Court means that Norwegian Courts must alter their practice in cases regarding claims for damages in public procurement matters. Norwegian Courts have applied a requirement for material breach of procurement law in order to establish a claim for the positive contract interest (loss of profit). Such a requirement can no longer be upheld.
The decision of the EFTA-Court also contains other noteworthy statements regarding claims for damages in public procurement. Furthermore, the decision contains statements regarding contracting authorities' obligation to include documentation requirements and to verify information included in tenders.
Anders Thue (lead counsel) and Jan Magne Juuhl-Langseth represented Fosen-Linjen AS before the EFTA-Court.
The decision can be found on the EFTA Court's website
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