Covanta Energy Ltd v Merseyside Waste Disposal Authority

Transitional provisions for procurement remedies apply according to their clear terms. A contract-award procedure begun before the stated date remained governed by the unamended regime, and the Public Contracts Regulations 2006 did not provide an automatic suspension.

An interim injunction is governed by the American Cyanamid approach. Difficulty in assessing loss-of-chance damages, particularly where an alleged failure in competitive dialogue must be reconstructed through numerous exchanges and hypothetical bids, may make damages inadequate. The court must then weigh the least risk of injustice. In procurement, effective pre-contract review and the public interest in lawful tendering are relevant to the balance of convenience, although neither creates a presumption for an injunction.

MWDA conducted a lengthy competitive-dialogue procurement for a resource recovery contract valued at more than £1 billion. Covanta, an unsuccessful tenderer, alleged manifest errors in the evaluation of its tender and failures in the competitive dialogue process. It sought to prevent MWDA from contracting with the successful tenderer, SITA, pending trial.

The application raised two issues. First, whether the automatic suspension introduced by the 2009 amendments to the Public Contracts Regulations 2006 applied to a procurement procedure commenced before 20 December 2009. Secondly, if it did not, whether an interim injunction should be granted under the American Cyanamid principles.

1. The application for an interim injunction was granted, subject to Covanta providing a parental guarantee for its cross-undertaking in damages. The automatic suspension was unavailable.

2. Paragraph 11 of the Public Contracts (Amendment) Regulations 2009 was clear: the amendments did not affect a contract-award procedure commenced before 20 December 2009. Legal certainty required the procurement and its aftermath to be governed by the rules in force when the procedure began. The New Remedies Directive did not expressly require the automatic-suspension remedy to apply retrospectively, and the earlier regime was not thereby deficient. The court declined to disapply the transitional provision.

3. Applying American Cyanamid Co v Ethicon Ltd [1975] AC 396, there was a serious issue to be tried. There was no presumption either for an injunction because European procurement law values pre-contract review, or against one merely because damages could be estimated. The question was whether it was just to confine the claimant to damages.

4. Damages would not adequately compensate Covanta. The alleged scoring errors, and especially the alleged failures in competitive dialogue, required analysis of numerous exchanges, their effect on both bids, and a hypothetical tender never submitted. The resulting loss-of-chance assessment would be highly speculative. MWDA's financial loss from delay was quantifiable and secured, although environmental harm from continued landfill could not be compensated by damages.

5. The balance of convenience favoured restraint. Lawful procurement, effective review before contract, and avoidance of potentially substantial damages ultimately borne by taxpayers outweighed the countervailing factors. A nine-month delay was modest against a six-year procurement and a 30–35 year contract. Its environmental effect, though material, did not alter that conclusion. Granting the injunction involved the least risk of injustice.

not stated in the judgment.