Matra Communications SAS v Home Office

Council Directive 89/665/EEC establishes a single, limited and rapid procurement-review scheme. Its damages remedy is not the general Community-law remedy for sufficiently serious state breaches. All remedies within the scheme may therefore be subject to the same prompt limitation rule.

Under regulation 32(4)(b) of the Public Services Contracts Regulations 1993, time starts when the claimant suffers, or risks suffering, relevant loss. A loss of a contractual opportunity is sufficient, even if the contract has not yet been awarded and the loss cannot yet be quantified. A three-month period, subject to an extension for good reason, is compatible with the principles of equivalence and effectiveness where no closely comparable domestic claim exists.

Matra Communications SAS, a French supplier of secure radio systems, alleged that the Home Office unlawfully excluded its TETRAPOL system from a major public-safety radio procurement by specifying TETRA technology. The Home Office published that requirement in January 1996. Matra knew by May 1996 that it was excluded, but issued proceedings only after the contract was awarded in October 1997.

Rattee J held that the claim was outside the time limit in regulation 32(4)(b) of the Public Services Contracts Regulations 1993 and declined to extend time. Matra appealed. The central questions were when its grounds for proceedings arose, whether the three-month limit conformed with Community law, and whether the judge should have extended it.

1. Appeal dismissed. Buxton LJ gave the court’s judgment, with Mummery and Hirst LJJ agreeing. Rattee J was right to hold that the proceedings were time-barred and to refuse an extension.

2. Council Directive 89/665/EEC created a limited procurement-review code. The damages required by Article 2(1)(c) were not general state-liability damages of the kind discussed in Norbrook Laboratories v Ministry of Agriculture Case C-127/95. Once implemented by regulation 32(5)(b)(ii), the remedy was a private-law and non-discretionary remedy in domestic law, but its Community origin and limits remained those of the Directive. The Directive required the whole range of remedies, including damages, to be effective and rapid.

3. Matra’s grounds for proceedings arose when it knew that the procurement excluded it and it consequently suffered, or risked suffering, loss. Its pleaded loss was the lost chance of obtaining the contract. The later contract award affected quantification, not the existence of liability. Regulation 32(4)(b) regulates when proceedings must be brought; it does not create separate starting dates for different remedies sought in the same proceedings.

4. The three-month limit complied with Community law. Under the equivalence principle, a domestic comparator must be closely similar in purpose and essential characteristics. General breach-of-statutory-duty claims, claims based on other directly effective Community rights, judicial review, and the statutory procurement remedy in the Local Government Act 1988 were not equivalent comparators. In the absence of one, the national limit was unobjectionable. Nor did the limit make the Directive remedy virtually impossible or excessively difficult to exercise.

5. The judge made no error of principle in refusing an extension. A late and very substantial damages claim challenging the legality of the procurement’s technical basis would disrupt a complex public contracting process. Matra had long known of its position and had consciously chosen not to assert its rights promptly.

• Court of Appeal (Civil Division): Appeal dismissed with costs. The court upheld Rattee J’s conclusion that the claim was outside regulation 32(4)(b) of the Public Services Contracts Regulations 1993 and that time should not be extended.
• High Court, Chancery Division (Rattee J): On 31 July 1998, held that the proceedings could not continue because they had not been brought within the applicable time limit and no grounds justified an extension.