JBW Group Ltd v Ministry of Justice

The classification of an agreement as a public service contract or a service concession is an autonomous question of EU law. It requires an overall assessment. Third-party remuneration and the transfer of operating risk are important, but do not provide a complete rule. Relevant matters include whether the contractor receives a real opportunity to exploit a service, its economic freedom, the authority’s control of performance, and who benefits from the service.

A tendering authority may owe an implied obligation to consider a tender in good faith. A wider obligation of equal, transparent treatment cannot be implied without necessity or common intention. The exclusion of service concessions from Directive 2004/18/EC does not itself prevent parties from agreeing equivalent contractual obligations.

The Ministry of Justice invited tenders for regional contracts to enforce magistrates’ courts’ warrants. JBW Group Ltd unsuccessfully tendered for three contracts. It alleged breaches of the Public Contract Regulations 2006 and an implied contractual duty to conduct the tender fairly and transparently.

Master Victoria McCloud gave summary judgment for the Ministry. She held that the contracts were service concessions, outside the Regulations, and that the alleged implied contract could not arise. JBW appealed directly on preliminary issues of law. The central issues were whether the bailiff arrangements were public service contracts or service concessions, and whether any wider implied tendering obligations existed.

1. Appeal dismissed unanimously. Elias LJ held, with the Master of the Rolls and Kitchin LJ agreeing, that the bailiff contracts were service concessions. They were therefore excluded from the procurement regime created by Directive 2004/18/EC and the Public Contract Regulations 2006.

2. The distinction between a public service contract and a service concession is an autonomous EU-law question requiring an assessment of all relevant features. A conventional concession commonly gives the contractor an exploitable business opportunity, economic freedom in operating it, third-party payment and the associated operating risks. The Ministry’s detailed control of performance, the restricted scope for exploitation, and its direct benefit from recovered fines pointed towards a service contract. Those features were not decisive.

3. The decisive countervailing features were that the Ministry made no direct payment, the defaulters paid the recovery costs, and the contractor assumed all material financial risks of running the bailiff service. That included the risks of unsuccessful enforcement and of recovering too little to meet both the fine and the costs. Although defaulters were unwilling recipients and the opportunity for exploitation was limited, a service was provided to them. The agreement was consequently a concession under Article 1(4).

4. The court accepted in principle, following [1990] 1 WLR 1195, that an authority inviting tenders is obliged to consider a conforming tender in good faith. JBW did not allege breach of that limited duty. There was no basis to imply wider duties of equality, transparency and adherence to tender terms: they were neither necessary for contractual efficacy nor part of the parties’ common intention. EU principles could not expand the common-law implication of terms where EU law was not engaged by a cross-border element.

5. The Master of the Rolls also held that no reference to the CJEU under Article 267 was appropriate. The applicable EU principles were sufficiently clear; the difficulty lay only in applying them to unusual facts.

• Court of Appeal (Civil Division) — dismissed JBW’s appeal and upheld summary judgment for the Ministry of Justice: [2012] EWCA Civ 8.
• High Court of Justice, Queen’s Bench Division — Master Victoria McCloud gave summary judgment for the Ministry, holding that the contracts were service concessions and rejecting the alleged implied contract.