European Dynamics SA v HM Treasury

In procurement challenges, an interim injunction requires a serious issue to be tried and a balance of convenience favouring relief. The court must assess whether damages adequately compensate the tenderer and must consider the prejudice to the contracting authority, other suppliers and the public interest. A claim based on defects apparent from tender documents may be out of time where proceedings were not brought promptly under the Public Contracts Regulations 2006. Difficulty in quantifying loss does not itself make damages inadequate. Loss of chance, projected contract value, likely market share and profit may provide workable methods of assessment.

The claimant, a software consultancy, challenged its exclusion from framework agreements established by HM Treasury. It alleged defects in the invitation to tender, unlawful pre-qualification criteria, unfair and irrational scoring, and unequal treatment. A without-notice injunction had restrained the defendant from entering the framework agreements. Following an inter partes hearing, the court considered whether there was a serious issue to be tried, whether damages were an adequate remedy, and where the balance of convenience lay.

1. The court discharged the without-notice injunction. Although some complaints about the consensus scoring process raised a serious issue to be tried, the complaints concerning the tender documentation and pre-qualification stage were weak and appeared likely to face the promptness requirement in regulation 47 of the Public Contracts Regulations 2006. The court made clear that these observations would not create an issue estoppel in the substantive proceedings.
2. The applicable interim-injunction principles remained those in American Cyanamid Co v Ethicon Ltd [1975] AC 396, as practically explained in National Commercial Bank Jamaica Ltd v Olint Corp Ltd [2009] 1 WLR. The court had to assess which course was likely to cause the least irremediable prejudice, having regard to the strength of the cases, the likely prejudice, the adequacy and enforceability of damages, and the public consequences.
3. Damages were an adequate remedy. The fact that assessment might be imperfect or difficult did not prevent adequacy. A loss-of-chance assessment could be made by estimating the value of work available under the frameworks, the claimant’s probable share, its profit and overhead margin, and an appropriate discount for earlier receipt.
4. The balance of convenience favoured discharge. Continuing the injunction would delay a public procurement route, prejudice the defendant and customers, risk reputational and other harm, and potentially require the tender process to be rerun. The claimant had not shown irremediable reputational or market-share loss which damages could not compensate.
5. The cross-undertaking in damages would, if necessary, have been sufficient. Costs were summarily assessed at £17,000 payable by the claimant.

First-instance decision on an inter partes application following a without-notice injunction granted on 10 December 2009.