Court of Appeal: Suspension on decision to award €800m search and rescue contract lifted

About this case:

• Citation:
  [2023] IECA 229
• Judgment:
  External link
• Court:
  Court of Appeal
• Judge:
  Ms Justice Caroline Costello

Delivering judgment for the Court of Appeal, Ms Justice Caroline Costello remarked that the “crucial issue” was “where the greatest risk to life lies”, finding that the private interests of the appellant could not outweigh the public interest in the continuation of the lifesaving service.

Background

The respondent awarded a search and rescue aviation contract for the Irish Coast Guard valued at €800 million to Bristow Ireland Ltd on 31 May 2023. The appellant, being the current provider of the service, had tendered unsuccessfully for the contract.

The appellant commenced proceedings on 14 June 2023, which automatically suspended the ability of the respondent to conclude the contract with Bristow by operation of Regulation 8(2) of the European Communities (Public Authorities’ Contracts) (Review Procedures) Regulations 2010.

The respondent applied for an order permitting it to sign the contract pursuant to Regulation 8A of the European Communities (Public Authorities’ Contracts) (Review Procedures) Regulations 2010 (S.I. 130 of 2010).

The High Court

The trial judge outlined that the applicable law in respect of lifting the automatic suspension in public procurement contracts was set out in Wordperfect Translation Services Ltd. v. The Minister for Public Expenditure and Reform [2021] IECA 305.

The court stated that the appellant needed to establish that there was a fair question to be tried, and that the balance of justice favoured the granting of an interlocutory injunction.

As the respondent conceded that there was a fair question to be tried, the court proceeded to consider the balance of justice under eleven headings, including the need to avoid a “gap” in the provision of search and rescue services, and the appellant’s contention that it could provide enhanced services which, it was argued, would better serve the public.

The court also considered whether damages would be an adequate remedy for the parties, finding that “even if damages are an inadequate remedy for CHC, this does not swing the balance of justice in favour of continuing the suspension…because this Court cannot conclude that damages are an adequate remedy for the Minister, where he, unlike CHC acts in the public interest…”

Accordingly, the High Court concluded that the balance of justice required that the automatic suspension be lifted, subject to a stay pending any appeal.

The Court of Appeal

Ms Justice Caroline Costello first considered Regulation 8A(2), which states that when deciding whether to make an order under the Regulation, the court must consider whether it would be appropriate to grant an injunction to restrain the contracting authority from entering the contract if the Regulation were not applicable, and only if an injunction be inappropriate could the order be granted.

Finding that the correct approach was to be found in Wordperfect and in Merck Sharp & Dohme Corporation v. Clonmel Healthcare Ltd. [2020] 2 IR 1, the court then turned to the issue of damages. Ms Justice Costello determined that due to the concession of the respondent, damages would be available as a remedy to compensate the appellant if the stay were lifted, and it subsequently succeeded in its challenge to the award of the contract.

The court noted that in assessing the balance of justice, the trial judge appeared to believe that an unjust advantage could accrue to the challenger by reason of the mere existence of the automatic suspension, in that the challenger could be encouraged to institute proceedings in order to avail of the automatic suspension and the possibility of an extension to their contract.

Ms Justice Costello expressed dissatisfaction with the approach of the High Court, finding that the correct test was set out in Merck, and that the court should approach the matter as though the appellant was seeking an injunction with no automatic suspension in place, noting that “it is not a factor to be weighed at all in the court’s determination of whether or not to lift the automatic suspension”.

Nonetheless, the judge confirmed that the “distaste and suspicion” expressed by the trial judge had not improperly influenced the weighing of the evidence and the arguments advanced by the parties, and that the judgment was not vitiated by any error in principle by reasons of the views expressed by the trial judge.

The court moved on to assess the balance of justice, finding that all were in agreement that “the most important factor in this case is the public interest in ensuring that there is no gap in the provision of the service…It is literally lifesaving.” Therefore, the main issue for the Court of Appeal was whether the High Court erred in weighing the risk of a gap in service occurring by virtue of Bristow taking over the contract, and so far as is possible, guarding against it.

Ms Justice Costello considered that if the suspension was not lifted, the respondent could not award the contract to anyone until after the final determination of the proceedings, and in that event, Bristow would not be able to commence providing the service on the start date as it could not implement most of its tasks in its transition plan until the contract is concluded.

The effect of the alternative was to permit the appellant to extend its contract indefinitely pending the outcome of the trial, which the court found would not satisfy the requirements of a “substantial modification” to the existing contract by reference to Regulation 72(7).

The court then considered that the procurement process which resulted in the decision of the respondent to award the contract to Bristow was a measure of public law which is prima facie valid, by reference to Okunade v. Minister for Justice & Ors. [2012] 3 IR 152 and Krikke v. Barranafaddock Sustainability Electricity Ltd [2020] IESC 42, and further, that the status quo would be maintained by lifting the suspension.

The court also observed that whilst the appellant may cease business with the loss of the existing contract and so damages would not adequately compensate it, the market for the provision of such services is so specialised that all such providers would likely have no other business within the State, meaning that “virtually inevitably, the suspension would never be lifted because of the nature of the service offered”.

Finally, the Court concluded that the risk that Bristow may not be ready to commence provision of the service of the start date was far outweighed by the risk that it may not be lawful for the Minister to extend the existing contract for an indefinite period.

Conclusion

Accordingly, Ms Justice Costello concluded that the balance of justice tilted in favour of lifting the suspension, affirmed the judgment of the High Court and refused the appeal.

CHC Ireland DAC v. The Minister for Transport [2023] IECA 229