In a leading judgment the High Court has refused to lift the automatic suspension of a contested procurement for air traffic control services carried out by Gatwick Airport Limited on the grounds that the claimant, NATS (Services) Limited would suffer a serious harm to their reputation, goodwill and business if it lost the contract and it was only appropriate in the circumstances that their allegations against the contracting authority should be fully tested at trial.

This decision is surprising and unusual because in most cases when contracting authorities apply to lift the automatic suspension of the procurement process it is invariably granted on the basis that the balance of convenience lies with authority as the resulting delay would cause undue prejudice. Furthermore damages are usually an adequate remedy for the claimant.

Under the Public Contract Regulations 2006 (“the PCRs”) as amended, where legal proceedings are brought by an aggrieved tenderer for breach of the PCRs the procurement exercise is automatically suspended. The same mechanism exists under the Utilities Contract Regulations 2006 as amended (“UCRs).

The High Court has a long track record of lifting the automatic suspension of procurements ever since it was first considered by the English courts in Indigo Services v Colchester Institute. In that case the Court adopted the leading authority upon interlocutory injunctions, American Cyanamid Co v Ethicon Limited, as the appropriate test to decide whether the automatic suspension should be lifted.

Therefore in such cases the Court will consider the following:-

– whether there is a serious issue to be tried; and if so
– where the ‘balance of convenience’ lies. A significant factor in ‘balance of convenience’ is whether damages would be an adequate remedy if the contract was awarded.

In a recent post (see October 15th “Automatic Suspension of Award of UK Defence Contract lifted by High Court” ) we discussed the case of NP Aerospace Ltd v Ministry of Defence [2014] EWHC 2741 (TCC) in which the Court agreed to lift the automatic suspension of a contract. Here the balance of convenience lay in lifting the suspension on national interest grounds despite the objections of an aggrieved contractor that the MoD had accepted a abnormally and potentially predatory bid contrary to the Defence & Security Contracts Regulations 2011 ( a version of PCRs covering defence & security contracts). The important aspect of this case was that the Court relied on interests of national security to justify its conclusion that the balance of convenience lay with the removal of the suspension.

In another important yet surprising decision on automatic suspension under the UCRs, the High Court in NATS (Services) Ltd v Gatwick Airport Ltd recently decided not to lift the automatic suspension. The Court concluded that there was a serious issue to be tried. The claimant had alleged that the contracting authority, Gatwick Airport Limited, had used undisclosed, irrational and inappropriate criteria to select the successful tenderer in breach of the provisions of the UCRs.

Looking at the balance of convenience the Court concluded that damages would not be an adequate remedy for the claimant. It concluded that in light of the claimant’s allegations it would be very difficult for the Court to calculate damages as it could not assess what chance had been lost and what the impact might have been on the process had rational and appropriate criteria been used. By contrast, the impact in damages on Gatwick Airport Limited of not yet being able to award the contract would be easily quantifiable.

The Court further held that it believed the balance of convenience was clearly on the side of NATS not only given the difficulty of calculating damages but also the fact that the 10 year contract on offer was a unique opportunity. There had already been a substantial delay in the procurement process and there would be a substantial impact on the Claimant’s reputation, goodwill and business if it lost the contract.

In those circumstances, the Court decided it would not lift the automatic suspension but did order an expedited trial which is likely to take place before the end of this year.

See: NATS (Services) Ltd v Gatwick Airport Ltd [2014] EWHC 3133 (TCC)