NATS (Services) Ltd v Gatwick Airport Ltd & Anor

Applications to lift an automatic suspension under the Utilities Contracts Regulations 2006 are governed by the two-stage approach in American Cyanamid Co v Ethicon [1975] AC 396: whether there is a serious issue to be tried, followed by the balance of convenience. The Remedies Directive does not require a separate balance-of-interests test. Adequacy of damages remains an important consideration, but difficulty valuing a lost chance and unquantifiable goodwill or trade-reputation loss may make damages inadequate. The public interest in lawful procurement, the existing status quo and the practical consequences of delay are relevant to the balance. On the facts, the suspension was maintained and an alternative injunction was granted pending an expedited trial.

Gatwick Airport Ltd conducted a procurement for air traffic control and related services. NATS (Services) Ltd was an unsuccessful tenderer and challenged the procurement.

NATS contended that the procurement was subject to the Utilities Contracts Regulations 2006, triggering an automatic suspension when proceedings were issued. GAL denied that the Regulations applied and sought to lift any suspension. Alternatively, NATS sought an interim injunction based on an implied tender contract. The central issues were whether GAL was a utility, whether NATS had a serious case on the alleged procurement breaches and implied contract, and how the interim-relief principles should be applied.

The applications were determined in favour of preserving the suspension. The court refused to permit GAL to enter into the contract with DFS pending an expedited trial.

1. Applicable test. The two-stage American Cyanamid approach applied to an application to lift the automatic suspension under Regulations 45G and 45H of the Utilities Contracts Regulations 2006. The court considered whether there was a serious issue to be tried and then whether the balance of convenience favoured maintaining or removing the restraint. Article 2(4) of the Directive 2007/66/EC was consistent with that approach. It permitted consideration of all interests and the public interest, but did not prescribe a different test.
2. Serious issue. There was a serious issue as to whether the transfer scheme, licensing arrangements and other rights relating to Gatwick constituted special or exclusive rights under Regulation 3(2) and Schedule 1. The Aerodrome Licence alone did not appear sufficient. There was also a serious issue as to an implied tender contract on the particular facts.
3. Adequacy of damages. Damages were not an adequate remedy for NATS. The alleged use of undisclosed, irrational or inappropriate criteria would make the lost chance difficult to value. The importance of the Gatwick contract to NATS’s goodwill and trade reputation created losses that could not properly be calculated in damages. The effect on staff was less significant.
4. Balance of convenience. NATS’s interest in a long-term contract, the substantial previous delay, the public interest in lawful procurement and preservation of the existing service arrangements outweighed the operational and commercial consequences of delay for GAL and DFS. NATS’s cross-undertakings in damages were relevant. The suspension therefore remained in force; alternatively, an interlocutory injunction prevented GAL from entering into the contract until the expedited trial or further order.

not stated in the judgment.