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You are here: BAILII >> Databases >> England and Wales High Court (Technology and Construction Court) Decisions >> NATS (Services) Ltd v Gatwick Airport Ltd & Anor [2014] EWHC 3133 (TCC) (02 October 2014) URL: http://www.bailii.org/ew/cases/EWHC/TCC/2014/3133.html Cite as: [2014] WLR(D) 416, [2015] PTSR 566, [2014] EWHC 3133 (TCC) |
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QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
Strand, London, WC2A 2LL |
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B e f o r e :
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NATS (SERVICES) LIMITED |
Claimant |
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- and - |
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GATWICK AIRPORT LIMITED |
Defendant |
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- and - |
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DFS DEUTSCHE FLUGSICHERUNG GMBH |
Interested Party |
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Mr Michael Bowsher QC and Mr Rob Williams (instructed by Freshfields Bruckhaus Deringer LLP) for the Defendant
Mr Philip Moser QC (instructed by Simmons & Simmons LLP) for the Interested Party
Hearing dates: 10 and 12 September 2014
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Crown Copyright ©
Mr Justice Ramsey:
Introduction
Background
The principles to be applied to the applications
"Member States may provide that the body responsible for review procedures may take into account the probable consequences of interim measures for all interests likely to be harmed, as well as the public interest, and may decide not to grant such measures when their negative consequences could exceed their benefits."
"The obligation to interpret a provision of national law in conformity with a directive arises whenever the provision in question is to any extent open to interpretation. In those circumstances the national court must, having regard to the usual methods of interpretation in its legal system, give precedence to the method which enables it to construe the national provision concerned in a manner consistent with the directive."
"According to Article 189(3): 'A directive shall be binding, as to the result to be achieved, upon each member-State to which it is addressed, but shall leave to the national authorities the choice of form and methods'. Although that provision leaves Member States to choose the ways and means of ensuring that the directive is implemented, that freedom does not affect the obligation imposed on all Member States to which the directive is addressed, to adopt, in their national legal systems, all the measures necessary to ensure that the directive is fully effective, in accordance with the objective which it pursues."
"As mentioned above, it is common ground that an implementing regulation is to be interpreted in the light of the directive which it is intended to implement. Moreover, it is well established that such national legislation should receive a purposive rather than a literal construction in order to achieve the result pursued by the related directive. That has been repeatedly emphasised by the ECJ, notably in case C-106/89 Marleasing [1990] ECR 1-415, para 8."
"26. For many years, the Courts of England and Wales have, with regard to interlocutory or interim injunctions, applied the principles and practice laid down in the well-known case of American Cyanamid Co v Ethicon [1975] AC 396. The first question which must be answered is whether there is a serious question to be tried and the second step involves considering "whether the balance of convenience lies in favour of granting or refusing interlocutory relief that is sought" (page 408B). The "governing principle" in relation to the balance of convenience is whether or not the claimant "would be adequately compensated by an award of damages for the loss he would have sustained as a result of the defendant's continuing to do what was sought to be enjoined between the time of the application and the time of the trial."
27. It is quite clear that, prior to the amendments to Regulation 47 made by the 2009 Regulations (see above), Cyanamid principles were applied in considering whether or not an injunction should be granted to an unsuccessful or discontented tenderer preventing the placing of the relevant contract or agreement by the contracting authority. A good example is the recent case of Alstom Transport v Eurostar International Ltd and another [2010] EWHC 2747 (Ch), a decision of Mr Justice Vos. The Court of Appeal had upheld this approach in Letting International v London Borough of Newham [2007] EWCA Civ 1522.
28. The issue arises whether these principles apply following the imposition of the amendments to the Regulations. Regulation 47H addresses interim orders which the Court may make in circumstances, where, pursuant to Regulation 47G, the commencement of proceedings, as in this case, has meant that the contracting authority (the Defendant in this case) is statutorily required to refrain from entering into the framework agreement (in this case). In my judgment this is primarily simply a question of interpretation of Regulation 47H. Regulation 47H(1) gives the Court the widest powers in terms of what it may do with regard to entering into contracts. It is in Regulation 47H(2) that one finds what exercise the Court "must" do: it must consider whether, if regulation 47G(1) was not applicable, "it would be appropriate to make an interim order requiring the contracting authority to refrain from entering into the contract"; it then goes on to say that it is "only if the Court considers that it would not be appropriate to make such an interim order may it make an order under paragraph (1)(a)". This is saying in the clearest terms that the Court approaches the exercise of interim relief as if the statutory suspension in Regulation 47G(1) was not applicable. That means that one does not as such weight the exercise in some way in favour of maintaining the prohibition on the contracting authority against entering into the contract in question. What in practice it means is that the Court should go about the Cyanamid exercise in the way in which courts in this country have done for many years.
29. It is said that the Court should interpret national legislation, including Regulation 47, in the light of the wording and purpose of the Remedies Directive, 2007/66/EC, which in part at least, led to the 2009 Regulations. This Directive amended earlier Council Directives and was much concerned with establishing an effective standstill period between the submission of tenders and the entering into the relevant contract. That is not the problem here. The 2009 regulations extend the standstill period simply by the claiming tenderer issuing and serving proceedings; that has the advantage of involving the court which can then review what has happened to determine whether there is an actionable complaint and, if so, to do about it. The revised Article 1 requires measures to be taken "to ensure that...decisions taken by contracting authorities may be reviewed effectively and, in particular, as rapidly as possible..." Article 2(1) says that measures should be taken in connection with the review procedures to provide powers to
"(a) take at the earliest opportunity and by way of interlocutory procedures, interim measures with the aim of correcting the alleged infringement or preventing further damage to the interests concerned, including measures to suspend or to ensure the suspension of the procedure for the award of a public contract or the implementation of any decision taken by the contracting authority.
(b) either set aside or ensure the setting aside of decisions taken unlawfully...
(c) award damages to persons harmed by an infringement."
Article 5 goes on to say that, in effect the Court "may take into account the probable consequences of interim measures for all interests likely to be harmed, as well as the public interest, and may decide not to grant such measures when their negative consequences could exceed their benefits." I see nothing in Regulation 47H or in the application of the Cyanamid principles which offends or is not consistent with the Remedies Directive. These principles are positively consistent with it. Even if the suspension is not maintained, the claimant is not without a remedy. Obviously, if damages were not an effective remedy, and there was clearly an arguable and serious issue on liability raised, it may well be that the suspension or other directive orders should be continued or made."
"The court finds that it would be inconsistent with European Union law and, more specifically, with the court's obligations as regards harmonious interpretation, as considered above, were the Court to apply what might be styled the Campus Oil guidelines in the context of the Remedies Regulations. There are at least five reasons why this is so.
…
Third, to apply the Campus Oil guidelines would be to superimpose requirements and conditions that are not envisaged by Directive 92/13/EEC, as amended, or the Remedies Regulations and would in fact render it more difficult for an applicant to obtain relief than would be the case if the scheme specified in the Directives were applied. Two elements of the Campus Oil guidelines, in particular, appear to add conditions that are not contemplated by Directive 92/13/EEC, as amended, vis. (1) the requirement to demonstrate the impossibility of calculating damages; and (2) the requirement for an applicant to provide an undertaking in damages in order to benefit from the continuation of the suspension. Both conditions would constitute additional pre-conditions to the granting of relief not contemplated by European Union law and would be inconsistent with the same."
"Pursuant to regulation 9(4) of the Remedies Regulations, DAA has to satisfy the court that the negative consequences of making any interim interlocutory order as is sought do not exceed the benefits of such order. No other requirement arises and the test is untrammelled by the considerations that would arise from an, unwarranted and inappropriate, application of the Campus Oil guidelines. This being so, the usual requirement as to an undertaking in damages that would arise were the Campus Oil guidelines to be followed does not arise. However, this does not mean that that a court could not, when undertaking its analysis under Regulation 9(4) of the remedies Regulations, factor into its considerations any offer of an undertaking as to damages as might be made."
"It is where there is a doubt as to the adequacy of the respective remedies in damages available to either party or to both, that the question of balance of convenience arises. It would be unwise to attempt even to list all the various matters which may need to be taken into consideration in deciding where the balance lies, let alone to suggest the relative weight to be attached to them. This will vary from case to case.
Where other factors appear to be evenly balanced it is a counsel of prudence to take such measures as are calculated to preserve the status quo."
"16. …The purpose of such an injunction is to improve the chances of the court being able to do justice after a determination of the merits at the trial. At the interlocutory stage, the court must therefore assess whether granting or withholding an injunction is more likely to produce a just result. As the House of Lords pointed out in American Cyanamid Co v Ethicon Ltd [1975] AC 396, that means that if damages will be an adequate remedy for the plaintiff, there are no grounds for interference with the defendant's freedom of action by the grant of an injunction. Likewise, if there is a serious issue to be tried and the plaintiff could be prejudiced by the acts or omissions of the defendant pending trial and the cross-undertaking in damages would provide the defendant with an adequate remedy if it turns out that his freedom of action should not have been restrained, then an injunction should ordinarily be granted.
17. In practice, however, it is often hard to tell whether either damages or the cross-undertaking will be an adequate remedy and the court has to engage in trying to predict whether granting or withholding an injunction is more or less likely to cause irremediable prejudice (and to what extent) if it turns out that the injunction should not have been granted or withheld, as the case may be. The basic principle is that the court should take whichever course seems likely to cause the least irremediable prejudice to one party or the other. This is an assessment in which, as Lord Diplock said in the American Cyanamid case [1975] AC 396 , 408: "It would be unwise to attempt even to list all the various matters which may need to be taken into consideration in deciding where the balance lies, let alone to suggest the relative weight to be attached to them." "
Serious issue to be tried
"273. Airports form a natural oligopoly. Moreover, in all the Member States except the Netherlands and the United Kingdom, the State or local government has full control of the principal airports. Even in the Netherlands, the state owns the majority of the capital in the principal airports. In the United Kingdom, seven major airports are owned and operated by BAA PLC, a private company established in 1987. Elsewhere although there is variation in the system of ownership, all but a few small airfields are publicly owned and controlled. Further, in Spain, Portugal and Greece airports are administered centrally.
274. Landing charges, passenger charges and commercial activities (such as concessions for shops, restaurants, offices, etc.) provide the main sources of revenue for airport companies. The level and structure of airport revenues varies substantially between and within the various Member States. Landing and passenger charges are normally determined by State authorities, or with their approval. Even the private BAA is subject to strict limits on the charges it can levy.
…
285. Airports are under the control of the public authorities and depend on them for their ability to operate. This applies whatever the formal ownership of the airport. The case for their inclusion seems evident. Application of the existing Directives to airports has not been free of problems of interpretation. It has therefore seemed appropriate to include them in a very explicit manner in the new proposals."
"The third category of cases concerns those cases in which an entity exploits a geographical area for a given purpose, subject to some form of State concession or authorization. Once again the entities find themselves in a situation in which the impact of market forces is often significantly reduced and they are exposed to the influence of the State through a variety of means, not least their need to have their concession or authorization renewed or to secure other similar concessions or authorizations. Even when competitive forces are still present to a degree though qualified, the exposure to State Influence through the need to retain the concession or obtain new ones is frequently sufficient to influence their procurement behaviour."
"(2) One major reason for the introduction of rules coordinating procedures for the award of contracts in these sectors is the variety of ways in which national authorities can influence the behaviour of these entities, including participation in their capital and representation in the entities' administrative, managerial or supervisory bodies.
(3) Another main reason why it is necessary to coordinate procurement procedures applied by the entities in these sectors is the close nature of the markets in which they operate, due to the existence of special or exclusive rights granted by the Member States concerning the supply to, provision or operation of networks for providing the service concerned."
"This Directive shall apply to activities relating to the exploitation of a geographical area for the purpose of:
(a) exploring or for extracting oil, gas, coal, or other solid fuels or
(b) the provision of airports and maritime or inland ports or other terminal facilities to carriers by air, sea or inland waterway."
"not a contracting authority or a public undertaking, but whose activities include an activity specified in the second column of Schedule 1 and who carries out that activity on the basis of a special or exclusive right;"
"special or exclusive rights" means rights granted by a competent authority by way of any legislative, regulatory or administrative provision, the effect of which is to limit the exercise of activities specified in the second column of Schedule 1 to one more entities, and which substantially affects the ability of other entities to carry out such activities."
"Of course it is still possible for private entities to continue to have exclusive or special rights - even after the new definition applies. Firstly private undertakings may have received their rights without any opening up to competition or public undertakings which were simply created to carry on one of the activities referred to by the Directive may change their status from that of public undertaking to that of private undertaking."
Adequacy of Damages
(a) 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. (American Cyanamid, Fellowes, National Bank);
(b) 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 (as in Evans Marshall and the passage from Chitty);
(c) If damages are difficult to assess, or if they involve a speculative ascertainment of the value of a loss of a chance, then that may not be sufficient to prevent an interim injunction (Araci);
(d) In procurement cases, the availability of a remedy of review before the contract was entered into, is not relevant to the issue as to the adequacy of damages, although it is relevant to the balance of convenience (Morrisons).
(e) There are a number of procurement cases in which the difficulty of assessing damages based on the loss of a chance and the speculative or 'discounted' nature of the ascertainment, has been a factor which the court has taken into account in concluding that damages would not be an adequate remedy (Letting International, Morrisons, Alstom, Indigo Services, and Metropolitan Resources). There are also cases where, on the facts, damages have been held to be an adequate remedy and the injunction therefore refused (European Dynamics, Exel)
"The courts have repeatedly recognised that there can be claims under contracts in which, as here, it is unjust to confine a plaintiff to his damages for their breach. Great difficulty in estimating these damages is one factor that can be and has been taken into account. Another factor is the creation of certain areas of damage which cannot be taken into monetary account in a common law action for breach of contract: loss of goodwill and trade reputation are examples…"
Balance of convenience
Conclusion