Alstom Transport v Eurostar International Ltd & Anor (Rev 1) [2011] EWHC 1828 (Ch)

Wednesday July 13th, 2011
Neutral Citation Number: [2011] EWHC 1828 (Ch)
Case No: HC10C03303/HC11C01788

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

Royal Courts of Justice
Strand, London, WC2A 2LL
13/07/2011

B e f o r e :

MR JUSTICE MANN
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Between:

Alstom Transport
Claimant
- and -

(1) Eurostar International Limited
(2) Siemens PLC
Defendants

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Sarah Hannaford QC and Jessica Stephens (instructed by Hogan Lovells International LLP) for the Claimant
Michael Bowsher QC and Ewan West (instructed by Burges Salmon LLP) for the First Defendant
John Howell QC and Rob Williams (instructed by Freshfields Bruckhaus Deringer LLP) for the Second Defendant
Hearing dates: 14th & 15th June 2011

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HTML VERSION OF JUDGMENT
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Crown Copyright ©

Mr Justice Mann :

Introduction

  1. This is an application to strike out part of a claim in these proceedings, which turn on the regulations governing public procurement exercises. That part is a claim for a “declaration of ineffectiveness”. The claim concerns tenders for a new generation of trains to run under the English Channel. The first defendant (Eurostar) is the train operator and it invited the claimant (Alstom) and the second defendant (Siemens) to tender for those trains. The contract is a valuable one. In October 2010 Eurostar announced that Siemens was the successful tenderer. Alstom objected to that decision and on 19th October 2010 commenced proceedings (action no HC10C03303 – the 2010 action) in which it sought inter alia an injunction to restrain Eurostar from contracting with Siemens. Vos J dismissed a claim for an interim injunction restraining Eurostar from contracting on 29th October ([2010] EWHC 2747 (Ch)); reference should be made to that decision for the history of the matter up until then. Eurostar entered into a contract (actually 2 contracts, but I can treat them as one for these purposes) with Siemens on 3rd December 2010 and announced to Alstom on that date that the contract had been entered into.
  2. The action at that time was also a claim for damages and a claim for a declaration of ineffectiveness (a remedy given by regulations which brings an offending contract to an end – see below) in relation to a preliminary contract with which I am not presently concerned. Originally Siemens was not a party to it, but it was subsequently joined. Then on 4th May 2011 Alstom sought to amend its claim to introduce new material and in particular a new claim for a declaration of ineffectiveness in relation to the final contract. The defendants objected to the amendments on various grounds and court time availability meant that the application could not be dealt with then. In order to crystallise certain limitation arguments, and preserve possible rights for limitation purposes, it was agreed that it would be more convenient to raise the new points in a separate action which incorporated the amended claim, and that what were originally objections to an amendment would be taken in the form of an application to strike out made in the new action. That was duly done. It is that application which is now before me.
  3. The principles on which I should act in considering such a striking out action are clear. I should only strike the claim out if it is clear, at this stage, that the claim cannot succeed, and that a trial will add nothing material to the debate. That is the test I shall apply.Outline of the basis of the application and its significance
  4. Before turning to the applicable regulations it will be useful to outline the basis on which the striking out application is made. It is twofold:

    (a) First, it is said that the necessary grounds do not exist for the application of the remedy of a declaration of ineffectiveness. The regulations in question prescribe certain grounds which have to be fulfilled before the remedy is available, and it is said that none of them apply.

    (b) Second, if that is wrong, it is said that the claim is made out of time. The regulations prescribe certain limited time periods within which any claim for a declaration of ineffectiveness must be made, and it is said that this claim falls outside the applicable period.

  5. For the purposes of this application a number of assumptions are made in favour of Alstom. The first is that the regulations relied on by Alstom apply. The defendants both vigorously contest their applicability to the relevant contract procedure, but for the purposes of this application they assume that they apply. The second is an assumption about the contract entered into when compared with the previous tendering process. Alstom’s claim is dependent on an allegation that the contract entered into by Eurostar and Siemens departs from the contract sought by the tender process to such an extent that it is a materially varied contract which was not actually the subject of the previous tender process and would have required a fresh process in order to fall within the regulations in question. This, too is assumed to be correct.
  6. The significance of the application is that, if successful, it will remove Siemens from the fray, or largely from the fray and remove the commercial uncertainty arising from the threat of the remedy to the contract. The main reason for Siemens being a party at all is because it is a necessary party to the ineffectiveness claim. If that claim goes then Siemens will cease to be a relevant party to the second action, and the claim overall will be a damages one. That means that Eurostar and Siemens can continue to implement their contract in the knowledge that it cannot be upset, and a large degree of commercial uncertainty will be removed.The principal legislative provisions
  7. For the purposes of this application it is accepted that I should assume that the Utilities Contracts Regulations 2006 SI2006/5, as amended in 2009, should apply in their current amended form. There are two elements built into that assumption, neither of which will apply if and insofar as there is a trial of these matters. The first is that any regulations apply at all; and the second is that, if they do, they apply in their current amended form. That puts the case on the applicability of the Regulations at its highest so far as the claimant is concerned.
  8. The Regulations set out a number of procedural requirements relating to the inviting of tenders for public procurement projects, the consideration and evaluation of those tenders, the determination as to how to award the resulting contract procedures for notifying unsuccessful parties, and remedies for breach of the Regulations. The essential relevant provisions are as follows.
  9. An amendment of the 2006 Regulations in 2009 introduces the remedy of “ineffectiveness”. It is now contained in Reg 45J:

    “(1) Paragraph (2) applies if –

    a. the Court is satisfied that a decision or action taken by a utility was in breach of the duty owed in accordance with Regulations 45A or 45B; and

    b. the contract has already been entered into.

    (2) In those circumstances, the Court –

    (a) must, if it is satisfied that any of the grounds for ineffectiveness applies, make a declaration of ineffectiveness in respect of the contract unless Regulation 45L requires the Court not to do so…”

  10. Reg 45M provides that, where a declaration of ineffectiveness is made, the contract is to be considered prospectively, but not retrospectively, ineffective. Reg 45L must be assumed not to apply for the purposes of this application.
  11. Reg 45B has no relevance to this case. Reg 45A (which is referred to in Reg 45J(1)(a)) provides:

    “45A(1) This Regulation applies to the obligation on a utility to comply with –

    the provisions of these Regulations, other than Regulations 30(9) and 38…

    (2) That obligation is a duty owed to an economic operator.”

  12. Thus the declaration is to be granted on the footing of a breach of obligation contained in the Regulations. However, there are three further “grounds for ineffectiveness”, one of which has to exist for the remedy to be available. They are contained in Reg 45K. That Regulation contains a number of provisions which have no bearing on the present matter, and I do not set them out. So far as material it reads:

    “45K – grounds for ineffectiveness

    (1) There are three grounds for ineffectiveness.

    The first ground

    (2) Subject to paragraph (3), the first ground applies where the contract has been awarded without prior publication of a notice in the Official Journal in any case in which these Regulations require the prior publication of such a notice.

    The second ground

    (5) The second ground applies where all the following apply –

    (a) the contract has been entered into in breach of any requirement imposed by -

    (i) Regulation 33A (the standstill period) …

    (b) there has also been a breach of the duty owed to the economic operator in accordance with regulation 45A or 45B in respect of obligations other than those imposed by regulation 33A (the standstill period) and this Part;

    (c) the breach mentioned in sub-paragraph (a) has deprived the economic operator of the possibility of starting proceedings in respect of the breach mentioned in sub-paragraph (b) or, pursuing them to a proper conclusion, before the contract was entered into;

    (d) the breach mentioned in sub-paragraph (b) has affected the chances of the economic operator obtaining the contract.”

  13. There is a third ground which has no relevance in this case.
  14. Alstom relies on each of those two grounds in the alternative. A consideration of the second requires an understanding of the reference to the standstill period (Reg 33A). The preceding Reg 33 provides for notice to be given after an award decision, and Reg 33A requires a standstill period after that notification.

    “33 – Information about contract award procedures

    (a) … a utility shall, as soon as possible after the decision has been made, inform the tenderers and candidates of its decision to award the contract, and shall do so by notice in writing by the most rapid means of communication practicable.

    (2) Where it is to be sent to a tenderer, the notice referred to in paragraph (1) shall include -

    (a) the criteria for the award of the contract;

    (b) the reasons for the decision, including the characteristics and relative advantages of the relevant tender, the score (if any) obtained by -

    (i) the economic operator which is to receive the notice; and

    (ii) the economic operator to be awarded the contract,

    and anything required by paragraph (10)

    (c) the name of the economic operator to be awarded the contract; and

    (d) a precise statement of either -

    (i) when, in accordance with regulation 33A, the standstill period is expected to end and, if relevant, how the timing of its ending might be affected by any and, if so what, contingencies; or

    (ii) the date before which the utility will not, in conformity with regulation 33A, enter into that contract.

    (9) Except to the extent that the utility has already informed the economic operator (whether by notice under paragraph (1) or otherwise) … a utility shall within 15 days of the date on which it receives a request in writing from any economic operator which was unsuccessful -

    (a) inform that economic operator of the reasons why it was unsuccessful; and

    (b) if the economic operator submitted an admissible tender, the utility shall inform that economic operator of the characteristics and relative advantages of the successful tender and -

    (i) the name of the economic operator to be awarded the contract …”

  15. The expressions “candidate” and “tenderer” are defined in paragraph 14:

    “(14) For the purposes of this regulation:

    (a) ‘candidate’ means an economic operator (other than a tenderer) which applied to be included amongst the economic operators to be selected to tender or to negotiate the contract …

    (b) ‘tenderer’ means an economic operator which submitted an offer.

  16. Regulation 33A then builds on that:

    “33A – Standstill period”

    Where regulation 33(1) applies, the utility must not enter into the contract before the end of the standstill period.”

  17. The standstill period is essentially 10 or 15 days after the sending of the notice of award, depending on whether the notice is sent by electronic or physical means.
  18. Alstom relies on each of the first and second grounds of ineffectiveness. The defendants say neither is available, so the claim must fail, but if that is wrong then they say that the claim is barred by the limitation periods under Reg 45E. Reg 45D, as construed in authorities, imposes a time limit of 3 months from the date of knowledge or constructive knowledge in the case of a damages claim (subject to possible extensions by the court), but ineffectiveness has its own time limits in Reg 45E:

    “45E – Special time limits for seeking a declaration of ineffectiveness.

    (1) This regulation limits the time within which proceedings may be started where the proceedings seek a declaration of ineffectiveness.

    (2) Such proceedings must be started -

    (a) where paragraph (3) or (5) applies, within 30 days beginning with the relevant date mentioned in that paragraph;

    (b) in any other case, within 6 months beginning with the day after the date on which the contract was entered into.”

  19. Paragraph (3) is not said by Eurostar or Siemens to apply, but paragraph (5) is relied on:

    “(5) This paragraph applies where the utility has informed the economic operator of -

    (a) the conclusion of the contract; and

    (b) a summary of the relevant reasons

    in which case the relevant date is the day after the date on which the economic operator was informed of the conclusion or, if later, was informed of a summary of the relevant reasons.

    (6) In paragraph (5), ‘the relevant reasons’ means the reasons which the economic operator would have been entitled to receive in response to a request under regulation 33(9).”

  20. Reg 45F provides that the date of starting proceedings is the date of service.
  21. Those are the essential relevant provisions. However, it will be necessary to refer to other parts of the Regulations in deciding this case; it is more convenient to consider them in the context of the point in relation to which they arise.The main issues
  22. The facts are such that if the 6 month time limit applies in the case, Alstom is (at least for present purposes) in time, but if the 30 day limit applies as Eurostar and Siemens say it does it is out of time. Thus the main issues on this application can be summarised as follows:(a) Does ground 1 (no prior notice) found an ineffectiveness claim?

    (b) If not, does ground 2 (breach of requirements affecting the prospects of Alstom) found an ineffectiveness claim?

    (c) If either of those grounds is available, has Reg 45(5) been satisfied so as to have started the 30 day clock running and so that it has run down with the effect that the claim is statute barred?

    The availability of the first ground

  23. The essence of this ground is the award of a contract without prior publication of a required notice in the Official Journal.
  24. The Regulations provide for various mechanisms for giving effect to a “call for competition”. Reg 16 provides:

    “16 – Call for competition

    (1) Subject to regulation 17, for the purposes of seeking offers in relation to a proposed contract a utility shall make a call for competition.

    (2) The requirement under paragraph (1) to make a call for competition is satisfied -

    (a) In the case of a contract to be awarded using the restricted procedure or the negotiated procedure:

    (ii) if a notice indicating the existence of a qualification system for economic operators has been sent to the Official Journal in accordance with regulation 25(17) and the requirement referred to in paragraph (5) is satisfied; or

    (b) in any case by sending to the Official Journal a contract in [a prescribed form] containing the information specified in respect of the contract.

    (5) The requirement referred to in paragraph (2)(a)(ii) is that the economic operators selected to tender for or to negotiate the contract are selected from the candidates which qualify in accordance with the system.”

  25. In this case the proposal was for the negotiated procedure (defined elsewhere) and there was a qualification system. Under such a system the notice referred to in Reg 16(2)(a)(ii) tells potential tenderers that within a given timeframe the utility in question may be proposing contracts of certain kinds, that there is a scheme of qualification for those who might wish to tender, and potential tenderers are thereby invited to demonstrate that they qualify to be in a pool of tenderers for that sort of work. The utility then selects tenderers and deals with them in accordance with other requirements of the Regulations. That is what happened in this case. Pursuant to a notice both Alstom and Siemens qualified and thereafter were selected and embarked on the tendering process. There is no dispute thus far. I shall call this form of notice a “qualification notice”.
  26. Reg 16 provides for other forms of notice, including what is familiarly called a “contract notice” under Reg 16(2)(b) – a general notice of an intention to let a contract. That was not the procedure adopted in this case.
  27. Alstom’s case is that no relevant notice was, or can have been, served in respect of the contract that was entered into. On the assumptions on which this case proceeds there was a materially varied contract which required a new tender process if that contract was to be proper within the regulations. Such a tender process would have required a fresh notice of some sort under Reg 16, but there was no such notice. Accordingly, the contract was awarded without a notice which was required, and ground 1 is therefore available to Alstom.
  28. The defendants say that this ground is not available for two reasons. First, Mr Bowsher QC for Eurostar submits that the notice referred to in ground 1 is a contract notice within Reg 16(2)(b) and no other notice. Such a notice was not required in the case of this contract because a different procedure (the qualification procedure) was followed, and while a notice is required under that procedure that is not the sort of notice referred to in ground 1. Next, both defendants submit that if that is wrong, and a notice of a different sort is within the first ground, then such a notice was given because there was a valid notice of a qualification procedure pursuant to which the tender process started, or (as submitted by Mr Howell QC for Siemens) there was a further qualification notice in May 2010.
  29. I will first deal with Mr Bowsher’s submission that the only notice referred to in the first ground is a contract notice, and that since there was no need for such a notice in this case (because of the qualification procedure) then this was not a case in which “these Regulations required the prior publication of [any relevant] notice” (see the wording of Reg 45K(2)).
  30. I do not consider that this argument is correct. The Regulations provide for various types of notice (including one which I have not set out above, called a “periodic indicative notice”). In describing the first ground the provisions of paragraph (2) do not, on their face, obviously refer to one particular kind of notice, let alone a contract notice, and there is no reason in principle why that meaning should be forced on the paragraph. While it is true that the notion embodied in the paragraph does not sit wholly comfortably with the qualification notice, it can be made to work.
  31. Furthermore, there are other good reasons why it should be supposed to be Parliament’s intention that notices other than a contract notice were intended to be within the provision.

    (i) The Regulations define the expression “contract notice” as being the notice referred to in Reg 16(2)(b) (see the definitions in Reg 2(1), and then uses it from time to time (see e.g. Reg 45E(4)(a)). It does not use that defined expression in defining the first ground, leading to the strong inference that that ground is not so confined.

    (ii) There is another set of regulations which is parallel to the Regulations with which this case is concerned, namely the Public Contract Regulations 2006 (SI 2006/5). Those parallel regulations were amended at the same time as the Regulations so as to introduce an ineffectiveness remedy in the same sort of terms. They provide for a parallel “first ground” in Reg 47K, which refers in terms to a “contract notice” where our Regulations refer to “a notice”, thereby demonstrating that Parliament (or the Treasury, which propounds the Regulations) knows what words to use when a “contract notice” is required. Those words are not used in the first ground with which I am concerned. It is true that the parallel regulations do not provide for notices other than a “contract notice”, but that does not detract from the force of the point just made.

    (iii) Those 2 sets of regulations were amended pursuant to EC Directive 2007/66/EC. One set of amendments are required in relation to public contracts (the parallel regulations) and one in relation to the Regulations with which this case is concerned. The amendments introduce the ineffectiveness remedy, and in relation to the parallel regulations they use the expression “contract notice” and in relation to the present Regulations they use “a notice”, again pointing up the distinction. It is again, therefore, plain that different requirements are in play.

  32. Accordingly, I reject the submission that the only notice referred to in the first ground is a contract notice.
  33. The next position of the defendants is that the relevant notice can only be the notice that was given of the qualification scheme for this contract. If that was a notice “required” by the Regulations, then it was given. Miss Hannaford QC, for Alstom, does not dispute the existence of the prior notice, or that her clients qualified under it and that it led to the tender. Her case was that, since the contract was materially different and required a new tender process, no notice had been given in relation to that materially different contract because it was one which required a new tender process for it to be compliant. If the prior publication of a notice is to deprive an economic operator of an ineffectiveness remedy then it must have some proper connection with the subsequent contract. If it had no such connection then the case was one of an “illegal direct award”, which was one of the prime evils at which the scheme of the Regulations was aimed, and the declaration of ineffectiveness ought to be available. Treating the contract as requiring a fresh tender process, and divorcing it from the preceding notice, achieved that desirable result.
  34. Because of the assumptions on which this application proceeds, I have to consider this matter on the footing that the differences between the final form of contract and the tender conditions were such as to make the contract sufficiently materially different as to require a new tender process. The defendants accept the factual assumption within that, and Eurostar accepts the underlying legal principle in its Defence. It is clear to me that a notice of a qualification scheme is capable of being a notice required to be given for the purposes of the first ground, and no-one disputes that such a notice was given in this case. So the central question in this case is whether it is right (or sufficiently arguably right to prevent striking out) that the alteration of the contract makes that notice irrelevant, with the effect that a relevant notice was in fact not given.
  35. In support of her submissions, Miss Hannaford pointed to guidance issued by the OGC on the new remedy, published by the OGC Policy and Standards Division on 19thDecember 2009. In relation to the first ground the OGC said:

    “21. It should be noted that this particular ground has wider implications beyond the classic situation of a deliberately illegal direct award involving no transparency at all. For example:

    (c) Where there has been an OJEU advertisement but the subsequent contract is outside the scope of the initial contract notice.

    (d) Where an existing contract is subjected to a variation, in the erroneous belief that the scope and scale of the change does not need a new OJEU advertisement.”

  36. Miss Hannaford said that the present case (with an assumed contract which has stepped beyond the original tender so as to require a further tender process) is analogous to those instances, and particularly (c). Furthermore Directive 2007/66/EC showed that the remedy of ineffectiveness was aimed at illegal direct awards. The recitals provide:

    “(13) In order to combat the illegal direct award of contracts, which the Court of Justice has called the most serious breach of Community law in the field of public procurement on the part of a contracting authority or contracting entity, there should be provision for effective, proportionate and dissuasive sanctions. Therefore a contract resulting from an illegal direct award should in principle be considered ineffective …”

    (14) Ineffectiveness is the most effective way to restore competition and to create new business opportunities for those economic operators which have been deprived illegally of their opportunity to compete. Direct awards within the meaning of this Directive should include all contract awards made without prior publication of a contract notice in the Official Journal of the European Union within the meaning of Directive 2004/18/EC. This corresponds to a procedure without prior call for competition within the meaning of Directive 2004/17/EC.”

  37. So the point is said to be that a contract which has stepped beyond the bounds of the tendering process is one which should be treated like an illegal direct award. Any argument which seeks to look purely at the initial notice of the qualification scheme fails to give effect to a necessary connection between the notice and the contract, which connection is absent on the assumed facts of this case.
  38. It seems to me that this argument does not give sufficient weight to the mechanism that Parliament has adopted in the Regulations, and also Directive 2007/66/EC, which also spoke in terms of the giving of a notice. Reg 45K does not speak in terms of a failure of the competitive process generally. It specifically ties itself down to the failure to give a prior notice. In the present case a contract notice was not required. It was open to Eurostar to adopt the qualification procedure instead. It did so. The first step in that (for present purposes) is the publishing of the notice required by Reg 16(2)(a)(ii). Such a notice was published. It preceded the competition between Alstom and Siemens. It is not said that no such notice was given; indeed it is implicit in the Particulars of Claim that such a notice was given, because paragraphs 4 and 5 of the Particulars in the first action, adopted in this action, plead that Eurostar used a qualification system. Nor is it said that the notice was in terms incapable of applying to the final contract. Qualification notices are in such general terms that that would be a difficult thing to say in this case. No complaint is made about the notice. The pleading goes on to refer to an invitation to negotiate, and the essence of the complaint about the final contract is that it is said to demonstrate that Eurostar’s requirements had materially changed. But that does not affect the force and effect of the notice, or its applicability. So the complaint is not, and in my view cannot be, that a required notice was not given. It was given. The Regulations required a notice. It could have been in one of the three forms referred to in Reg 16. Eurostar gave a qualification system notice (and then, if it is relevant, selected the potential tenderers from the pool of the qualified, for the purposes of Reg 16(5)). No other notice was required. Any divergence from the proper path which led to an aberrant contract as is assumed in this case is a breach of subsequent procedure, not consequential upon a failure to give the notice. There is therefore no failure under ground 1.
  39. Miss Hannaford sought to rely on what she said was the absurdity of approaching this question without requiring a link between the required notice and the final contract (which link, she said, was broken by the material alterations in the final contract). She said that if the situation were as the defendants would say it was, one could have a qualification notice, and then have the utility taking tenderers from outside the pool and escaping ineffectiveness because of what would, on those facts, be a wholly irrelevant notice, albeit a notice which ostensibly covered the contract in question (because of the generality of the description of the activities that is contained in an qualification notice).
  40. In my view Miss Hannaford is right about a link, but only to a limited extent. Any notice which is relied on by the utility as being part of its compliance with its duty to economic operators must be a notice which is objectively capable of being a relevant notice. Mr Howell sought to say that any qualification notice would suffice in the present case provided that it was given before the contract was concluded, and referred to an intention to contract within the period of the notice. Thus he relied (so far as he had to) on a qualification system notice which was placed in the Journal in May 2010, which was well into the negotiation and tender process. He said he could also, as a matter of analysis, have relied on a notice given one day before the actual contract. The purpose of the notice, he said, was to give notice of the competition, and to that end it did not matter when it was given provided it was adequate in form.
  41. Those are unattractive submissions. It cannot realistically have been intended that a utility could rely on a notice which was given at a time when, on the facts, it had nothing whatsoever to do with what had been going on in relation to the contract in question. While the test of the existence or absence of a notice is a mechanistic test, it cannot be taken to be so mechanistic as to produce a test which is pure form and no substance at all. Such a test would be pointless. Mr Howell suggested it would have some point because it would give notice that there is a competition, but that would be a largely pointless indication if the notice were given (as Mr Howell said it could be given) very shortly before the contract.
  42. Be that as it may, Mr Howell does not have to go that far. There has, in my view, to be a notice which is capable of being related to the procedure and the contract. Even so, Alstom cannot satisfy this ground because of the earlier qualification notice which is not only objectively capable of being the prior notice for the competition in this case, it was actually the notice which sparked the competition in this case. Even if Miss Hannaford’s material alteration case is right, there was still a prior notice. She submitted that in such a case there would be an illegal direct award, and that that should attract the sanction. The trouble with that argument is that that is not how the Regulation operates. It operates by looking to the existence or absence of a notice. That is, as I have observed, a mechanistic test. The benefit of such a test is that it will often be easier to apply, and since the availability or not of the ineffectiveness remedy is something which calls for clarity if the remedy is to operate sensibly in a commercial context, ease of application is important. The detriment is that it is indeed mechanical, and may not catch some instances where, on the merits, it might be thought the remedy should operate. The mechanics of this test rule out the first ground in this case.
  43. I therefore find that ground 1 is not available to Alstom.The availability of the second ground
  44. There are 4 requirements for the second ground to be available:(a) Breach of the requirement for a standstill period.

    (b) A breach of some other duty imposed by the regulations.

    (c) The breach of the standstill obligation has deprived Alstom of the possibility of starting proceedings for the breach in (b).

    (d) The breach of the other obligations has affected the chance of Alstom getting the contract.

    The defendants point out, correctly, that all 4 conditions have to be fulfilled for the ground to be available. The assumptions on which this application is taking place require that it be assumed that (b) is fulfilled.

  45. As a matter of clear pleading, Alstom have pleaded only (a) and (b) in relation to the remedy of ineffectiveness. In paragraph 10 of the Particulars of Claim it pleads:

    ” … alternatively, [Alstom relies] on the second ground in Regulation 45K (the First Defendant having failed to provide a standstill period as required by Regulation 33A in respect of the materially varied contract and having breached the Amended Regulations, by failing to hold a tender process in accordance therewith in relation to that contract).”

    Mr Howell relies on this form of pleading and says that (c) and (d) are missing. Those missing elements could not now be added because of the expiry of all relevant limitation periods; so this ground must fail on that basis alone.

  46. As a matter of pleading, it does not seem to me that he is wholly right. At the beginning of paragraph 8 Alstom pleads:

    “By reason of the above breaches, the Claimant has been deprived of the opportunity to tender for the materially varied Contract; to tender for a contract with a clear baseline in relation to IGC requirements (present and future) and/or without the need for unqualified compliance with the fifth Mandatory Requirement; and/or to bid on the basis of the material amendments identified above.”

    That is a pleading of the sort of things that would fall within (d), and while it is not in the context of the ineffectiveness claim, it is very arguably an answer to the pleading point taken in relation to (d). However, there is no doubt that there is no vestige of a pleading of requirement (c), and it is said by the defendants that this is more than just a pleading point – it is a point of substance because, on the facts, Alstom could not properly plead it at all. Accordingly, it is said that ground 2 cannot be available to Alstom.

  47. In order to test the point I shall assume that the other requirements are fulfilled. For that purpose it is necessary to bear in mind how Alstom’s case on (a) (breach of the standstill period requirement) is put because, as will appear when I consider the facts, there was something which looks like a standstill period. Alstom’s point is that there cannot have been a standstill period in relation to the contract which was awarded because the material alterations had meant it was awarded outside the tender regime. I shall assume that that argument is correct for the purposes of this part of the case.
  48. At one level it would be sufficient simply to rely on the absence of a pleading of the relevant averment. I consider that the defendants are right – the relevant averment of (c) is missing. However, pleading points by themselves are seldom attractive, and it will be useful to see whether the defendants are correct in saying that the relevant facts could never be established anyway.
  49. The relevant part of the narrative is as follows (additional detail can be seen from Vos J’s judgment if required).
  50. By October 2010 all parties had been conducting the negotiated procedure for many months. Eurostar issued an invitation to negotiate on 15th May 2009. Alstom submitted its tender in response on 30th October 2009, and submitted its best and final offer on 30th January 2010. Thereafter the tenderers were invited to enter into negotiations (under the negotiated contract procedure), and did indeed negotiate. No-one contends otherwise.
  51. By a letter dated 5th October 2010 Alstom was told that its bid was rejected. The letter outlined the criteria and weightings applied and the details of the successful and unsuccessful bids. Under the heading “Further Information” it said there would be a 10 working day standstill period during which no contract would be awarded to Siemens (citing the authority of the pre-2009 regulations). Further information was provided on the bids (and particularly in relation to scoring) at a meeting on 11th October and more information went out with a letter the same day. Yet more information was given on 13th October, and in subsequent correspondence. In the course of the correspondence Alstom’s solicitors (Messrs Hogan Lovells) made it clear that it considered that there was a material amendment to Siemens’ bid and/or Eurostar’s requirements as a result of a meeting on 22nd July 2010. That suggestion was rebutted by Eurostar’s solicitors in a letter of 17th October.
  52. Alstom had also been asking questions about the way in which crystallisation or formulation of IGC requirements might affect the contract in a letter of 11th October. They were told on 13thOctober that:

    “[the contract] does however provide a mechanism for managing the risk of the relevant rule not changing”

    in a manner which Eurostar declined to disclose on commercial sensitivity grounds. This point lies at the heart of what Alstom now says are material changes in the contract.

  53. Alstom started proceedings on 19th October (within the stated standstill period). In those proceedings it sought to restrain Eurostar from contracting with Siemens. The basis of the application appears from the judgment of Vos J, and I will not repeat it here. It covers a lot of the same ground as the material currently relied on in the present action. Further relevant material came out during the course of those interlocutory proceedings. A deponent for Eurostar (a Ms Livingston) made it plain that there was an arrangement that if the IGC did not change the rules on distributed power by a certain time then the parties would be able to bring the contract to an end. On the basis of that, and a subsequent reference to a right of Eurostar to sell or lease the trains, Miss Hannaford submitted to Vos J that that would be a different procurement which might have attracted different tenderers – a version of the material alteration case. Material alteration was clearly in play at that hearing.
  54. The injunction application failed and the contract was entered into on 3rd December. Apparently at least part of the intervening delay was attributable to inter-governmental dealings, but I do not need to go into that.
  55. The point about all this is that it goes to the point raised by requirement (c). Alstom can only rely on ground 2 if it can establish that there was a breach of the standstill requirement and that that breach prevented Alstom from starting proceedings before the conclusion of the contract, or prevented it from bringing those proceedings to a conclusion. Not only is that matter not pleaded, the short narrative above demonstrates that it simply cannot have been the case on the facts. There was a standstill period announced by Eurostar. Whether that was or was not announced under the correct regulations, there was a moratorium. Within that period Alstom managed to formulate and bring proceedings seeking to stop the contract. While those proceedings at that time did not have all the material currently available, it is apparent that the essence of the present case was within it in a sufficient form to be recognisable. Accordingly, either there has been no breach of the standstill obligation, or if there has been it has not deprived Alstom of the opportunity of starting proceedings. It managed to start proceedings. To some extent the ineffectiveness provisions are obviously intended to operate only when anticipatory proceedings could not be brought. One can understand that as a rationale – it was obviously thought that it would better to try to stop a contract than to try to bring an existing contract to an end. Particularly after it has been on foot for some considerable time. The possibility of the former should exclude the latter; the latter should only be available when the former has not been possible because of act of the utility in not holding its hand on contracting to the requisite extent. In the present case Alstom’s own acts have demonstrated that it was able to launch proceedings before the contract was entered into.
  56. Miss Hannaford sought to say that in this case there was no relevant standstill period at all, and hence a breach of the standstill provision. The material variations meant that there should have been a new tender process. That would have required a fresh notification, which would have generated a different standstill period under Reg 33A. That never happened because there was no notification of a new tender process. Accordingly there was a breach of the standstill period obligation. Mr Howell’s counter-proposition is that if there was a fresh tender situation arising out of material variations then, on the facts, there was only one tenderer (Siemens) and therefore no need to give notice, or a standstill period, to anyone. Accordingly there was no required standstill period, and no standstill period obligation for Eurostar to be in breach of.
  57. I do not need to rule on which of these contentions, if either, is the correct one. They both seem to me to smack of the over-rigorous pursuit of logic to an unrealistic result. I do not need to rule on them because underpinning ground 2 is the requirement that a failure to stand still has deprived an economic operator of the opportunity to commence proceedings before the contract was entered into. On the facts of the present case Alstom was able to, and did, commence proceedings before the contract was entered into. So even if there was no proper standstill period because there was no notice of a new tender situation (Miss Hannaford’s case at its highest), then that breach has not deprived Alstom of the possibility of starting proceedings in respect of the other breaches. Alstom did actually start proceedings.
  58. Accordingly, ground 2 is not available to Alstom.Conclusion on the availability of the ineffectiveness remedy
  59. I therefore conclude that on the plain facts of this case, the ineffectiveness remedy is not available to Alstom. Alstom’s case could not be improved by a trial. The position is clear enough at this stage – Alstom is bound to fail. The ineffectiveness claim should be struck out.
  60. That gives Siemens and Eurostar what they seek in this application, and makes it strictly unnecessary to go on to consider the limitation points. However, since they have been argued I will make some findings in relation them.Limitation
  61. The legislation is set out above. The defendants say that the shorter time period (30 days) applicable to claims for a declaration of ineffectiveness applies in this case and had expired before the present proceedings were commenced.
  62. If the defendants are to be successful in this part of the application they must show that there was a “relevant date” within Reg 45E(2)(a) and that it occurred more than 30 days before the claim form in this action. Working through the provisions of that regulation, it must establish the following things to arrive at a relevant date:

    (i) that Eurostar informed Alstom of the conclusion of the contract;

    (ii) the date on which it was so informed;

    (iii) that it gave a summary of the reasons that Alstom would have been entitled to had a request been made under Reg 33(9);

    (iv) The date on which that summary was given.

    Having established those things, the 30 days starts running from the later of the two dates.

  63. There is no doubt about the first two of those elements. Alstom was informed of the award of the contract, and that occurred on 3rd or 4th December (the difference is immaterial). The dispute in this case turns on the third and fourth elements.
  64. The case for the defendants is that over the period following from the announcement of 5th October Alstom was supplied with a lot of information which amounted to far more than a summary of the reasons that would have been given under a Reg 33(9) request. Eurostar points to the occasions in which information was provided in writing, in which it was provided at a meeting, and to the additional material which was provided as evidence in the hearing before Vos J. All that meant that item (iii) above was fulfilled by the date on which Alstom was told of the contract, so the 30 day clock started running then and expired on or about 4th January 2011 – long before these proceedings were started. Hence the action is time-barred.
  65. Alstom’s answer to that developed somewhat in the course of submission, but it has the following elements:

    (i) The summary within Reg 45E(5)(b) has to be in some sort of formal and identifiable form. It is not sufficient if equivalent information is given in other forms and in a variety of contexts as happened here.

    (ii) There cannot ever have been a summary of reasons, because Reg 33(9) can never have been engaged in this case, because the material alterations mean that a different tendering process was going on to that which Alstom was participating in. Reg 33(9), in this context, can only be engaged where there is the same process being conducted in relation to each tenderer. Since Alstom was tendering on one basis, and Siemens was tendering on another, there was no proper process, Reg 33(9) cannot have been engaged; so there can never have been something qualifying as a summary of Reg 33(9) reasons.

    (iii) In any event, it is not clear, on the evidence, that what was provided amounted to an adequate summary of any such reasons. In particular, Alstom was being told why it was unsuccessful on its tender, not why it was unsuccessful in relation to the different tendering exercise which was being conducted in relation to Siemens’ different tender.

  66. I do not accept Miss Hannaford’s first point. When the Regulations refer to a “summary of the relevant reasons”, there is no reason in principle why that should be in any particular form. The wording of Reg 45E(5)(b) requires the economic operator to be “informed of … a summary of the relevant reasons”. It does not say in writing, and in practice a lot of relevant information about unsuccessful bids is passed in de-briefings which occur in meetings. I can see no reason why the “informing” should be done in writing; certainly the Regulations do not say so. If it does not have to be done in writing, then the case for any particular form is weakened beyond recovery. The process required is the passing of information (and summary information at that). Provided it is passed then the manner of passing does not matter, provided, of course, that the summary is sufficiently clear.
  67. Her second point returns to the theme of the assumed materially altered contract. Miss Hannaford adapts the analysis for these purposes and refers to what are in substance two tenders. She says that what actually happened (on the assumed facts) was that Alstom were engaged in tendering under one tender (tender A) whereas it now transpires that Siemens were tendering for another one, on materially different terms (tender B) on which Alstom never had an opportunity of tendering. So there was effectively a direct negotiation with Siemens, under a new process which should have started again at the beginning with Alstom properly involved. So, she argued, one never got as far as reasons being given in relation to that new process under Reg 33(9), so there could never have been a summary of those reasons either. It was impossible to fulfil the conditions of the limitation period, so it did not apply. Alstom were not, and never could have been, told why they were not successful in tender B because they never participated in it.
  68. The validity of this point must be judged against the wording of the Regulations. The starting point is the definition of “relevant reasons” in Reg 45(E)(6). That refers back to the “reasons which [Alstom] would have been entitled to receive in response to a request under regulation 33(9)”. So one goes back to Reg 33(9) to see how it applies.
  69. Reg 33 is about the provision of necessary information. It applies when a decision has been made to award “the contract”. That contract is, in my view, the contract which the utility has been telling the relevant commercial world it is minded to enter into and is the contract which apparently conforms to the “proposed contract” for which it called for competition under the Reg 16 mechanism (in this case). The “tenderers and candidates” referred to are those who were tenderers and candidates for that contract. That is the effect of the definitions contained in paragraph (14). The provision of such information is a vital part of the control mechanism under the Regulations. Tenderers and candidates are entitled to assume that once they are part of the process, they will get the information referred to Reg 33(2). The regulation makes linguistic and commercial sense if it is construed in that way. It would not make so much sense were Miss Hannaford’s construction to be correct. If she were right then a utility which decided to award a materially varied contract which in fact required a different tender process would not be under any obligation under this provision to announce the award of its contract, let alone to give reasons under this regulation. That would be a very curious result. The unsuccessful entities would be in the dark as to the award of any contract at all, and while that would not mean that they had no right to challenge (because on these assumed facts they would have all sorts of other objections to what had gone on) they would, for a time anyway, be in the dark about the most material of facts (the award). It is difficult to accept that that was the intention behind the Regulations. It is much more likely to have been its intention that the contract referred to is the contract which has apparently resulted from the previously announced procedures and therefore, ostensibly at least, which the unsuccessful candidates and tenderers thought they were competing for. If that is right in relation to the announcement in Reg 33(1) then the same chain then follows through the remaining parts of the regulation. Paragraph (2) works well and intelligibly. So does paragraph (9). It applies in favour of an economic operator which was “unsuccessful”. It was “unsuccessful” in relation to the tender it submitted, in relation to the overall process it was participating in. It may be that as a matter of analysis the eventual contract falls to be treated as a contract beyond the scope of that process, but that is no reason to go back and treat there as being two parallel processes going on at material times before then for the purposes of Reg 33. Such an analysis would tend to make a nonsense of the provisions of Reg 33, and paragraph (9) in particular. Paragraph (9) requires the utility to tell the unsuccessful economic operator why it was “unsuccessful”. That can only mean unsuccessful in relation to that in which it sought success, namely the contract it was bidding for. The identity of the successful tenderer who was “awarded the contract” must mean the contract which was actually awarded at the end of the process, and the successful tender obviously means the tender which was actually successful. It all becomes very odd if one adopts the approach of Miss Hannaford. The economic operator can be told of reasons why it was unsuccessful, but there is no obligation to tell it the identity of the successful tenderer because the contract in question is one falling outside paragraph (9). That cannot be right.
  70. I therefore consider that Miss Hannaford is wrong in submitting that the requirement in 45E(5)(b) cannot be fulfilled in this case.
  71. The success of the limitation point therefore turns on the third point, which is whether the information provided can be seen, at this stage of proceedings, to amount to a summary of the “relevant reasons” as defined. If it does not, or if there is a dispute which can only be resolved at a trial, then the limitation point fails in this application. I bear in mind that this is potentially a very fact-sensitive exercise, and must be approached with particular caution in a context other than a trial.
  72. It is important to bear in mind two things:

    (i) That what is required is not the full reasons which would be given under a 33(9) request, but a summary. The reasons themselves can, on the authorities, be short. In Strabag Benelux NV v Council of the European Union Case T-183/00 the reasons were given in a letter which did no more than set out that the tenders were evaluated against 8 previously specified criteria and stated that the successful tenderer had submitted the most economically advantageous tender. The reason went to say no more than this:

    “For your information, I would add that your tender was also ranked highly for the qualitative evaluation criteria but was unsuccessful because of its price.”

    That was all that was said. The Court stated that that was sufficient – see paragraph 57 of the judgment. If those are sufficient for reasons, then the level of detail required of a summary must be even less.

    (ii) Regulation 33(9) anticipates that reasons might be given without an express request (“Except to the extent that the utility has already informed the economic operator, whether by notice under paragraph (1) or otherwise) …”). If they are fully given prior to a request, the utility needs to do nothing else on receipt of a request. Those opening words of the paragraph also tend to suggest that they might be given by aggregating more than one occasion on which information was provided. I think that is suggested in the word “otherwise”.

  73. The defendants did not rely on information provided in relation to an actual 33(9) request, but pointed to the information actually provided in the manner provided above. Miss Hannaford complained about that, and submitted that that sort of exercise did not fall within the obligation. I have already ruled on that. Provided that the relevant information was given with sufficient clarity, the manner in which it was given does not matter for these purposes.
  74. She went on to say that the reasons (or summary) given were only reasons as to why Alstom did not succeed on its tender. It was not debriefed on the footing that Siemens had succeeded on what had become a different tender, and why Alstom had not succeeded on that other tender. Therefore the reasons given were not proper reasons, or was not a proper summary, for the purposes of the Regulations.
  75. This analysis seems to me to be a reformulation of her second point, which I have ruled on above. She seems to be saying that the reasons which were given in this context can never be reasons within Regs 45E and 33(9) because they do not explain that there were two parallel tender processes by the end of the procedure, and do not explain why Alstom did not succeed on the second of them. So far as it involves a revival of the argument I have rejected, it fails for the same reasons. But it also fails, as an argument, because it does not pay sufficient attention to the wording of Reg 33(9). It is perfectly possible for information to be given in accordance with the wording of that provision even in a “materially altered contract” case. The unsuccessful economic operator has been unsuccessful in its tender, and can be told why. The relative advantages of the successful tender, however it is viewed, can be specified, and the successful economic operator can certainly be identified. The system is perfectly workable and sensible.
  76. So the question further distils itself down to the question of whether what was provided in this case amounted to proper reasons (or a summary) within the Regulations. The defendants took me to some material on this, to demonstrate the kind of thing that was said, and in particular what was said in the areas which Alstom says have given rise to a materially altered contract. Miss Hannaford did not really join issue at this level. She did not seek to go through the material and point out what elements were omitted in such a way as to make the material misleading or insufficient. I am therefore spared having to rule on a detailed comparison. I still, however, have to consider whether the material is, on its face, sufficient to help start the clock running.
  77. I have already ruled as a matter of principle that the summary can be contained in information provided on more than one occasion and in more than one document. I accept that there may be circumstances in which the quality of the document, its addressee, or the occasion of any oral presentation could be such that it would not be right to treat it as part of the relevant summary, but in my view that does not apply to any of the material relied on in the present case. The material was presented in response to some sort of challenge by Alstom, at an occasion or in a document which was obviously intended to be a formal presentation of information, or, in the case of material emerging as evidence in the hearing before Vos J, was material which is appropriately to be treated as a conveying information for these purposes notwithstanding that its being conveyed had a further (evidential) purpose.
  78. So it comes down to the content of the information provided. In the absence of a detailed challenge I do not need to set out detail here. The detail included an outline of the scoring of the two bids on 5th October, together with the evaluation criteria and overall final score of the tenders; PowerPoint slides showing the non-financial and financial evaluations at the debriefing meeting on 11th October; and a response to a prior challenge, in letters dated 13th and 17th October. Two particular challenges and responses from that list are relevant. On 11thOctober Hogan Lovells, solicitors for Alstom, had asked:

    “Have Siemens altered their bid (technical or price) since their appointment as Preferred Bidder: If so, when and how; has it affected their scores?”

    To which the response from Burges Salmon (solicitors for Eurostar) was:

    “We do not consider that any material changes have been made to Siemens’ bid since its appointment as preferred bidder.

    We have provided you with detailed explanations and responses to your queries about the difference between Alstom’s and Siemens’ bids. Eurostar owes duties of confidentiality to Siemens in respect of its bid which it is not prepared to breach. You are not entitled to further information in this respect.”

    To the question:

    “Is Siemens’ contract conditional upon the new rules: If so, how is that conditionality expressed.”

    Burges Salmon replied:

    “The contract when signed will not be conditional on the introduction of new Tunnel Safety Rules concerning DP [distributed power]. It does however provide a mechanism for managing the risk of the relevant rule not changing. The issue is discussed in detail in the body of this letter. We are not prepared to disclose the detail of the relevant contract clauses as this is commercially sensitive and confidential. It is not necessary for Alstom to understand the award of the contract.”

  79. This latter point is particularly significant. The main complaint about the material alteration of the contract turns around how rule changes for the design of train power were to be catered for under the Siemens contract. This is a summary of what were said to be the intended clauses. Alstom knew in general terms that the matter was addressed. It was also told by Miss Livingstone, in her witness statement used on the injunction application, that Eurostar had agreed that the award would be on the assumption that relevant rule changes would be made by the IGC by a certain time, in the absence of which both parties would have the right to bring the contract to an end, or agree to continue it.
  80. Having considered that material, I am satisfied that it amounts to more than a summary of the reasons why Alstom was unsuccessful, and of the characteristics and relative advantages of the successful tender. It does not, of course, say that Siemens was successful because its contract was amended materially as against the original tender proposals, but even assuming that to be true the summary of reasons does not have to contain such a statement. It has to give a summary of the reasons for lack of success and the comparative merits of the winning bid.
  81. There are no doubt sound practical reasons for using a limited summary as the trigger for the relevant limitation period. A balance is struck. The remedy of ineffectiveness is provided, but the period is short, doubtless to prevent commercial uncertainty. The trigger is intended to be a clear and relatively short document or statement, again in order to lessen commercial uncertainty. It is undesirable to have a period dependent on a long and potentially contentious document. Something shorter and easier to deal with is provided for.Conclusion on limitation
  82. I therefore consider that a summary of reasons had been given before the contract was concluded and notice of it given, so the 30 day limitation period started on 4thDecember and had expired long before these proceedings were issued and served. In the circumstances, if the ineffectiveness claim were otherwise available it would be time-barred, and would fall to be struck out for that reason. This conclusion is plain on the current material, and a trial is not necessary to reach that conclusion.Overall conclusion
  83. I therefore find that this ineffectiveness claim should be struck out. 

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