Edenred (UK Group) Ltd, R (on the application of) v HM Treasury & Ors

When deciding whether to lift an automatic suspension in public procurement proceedings, the court applies the ordinary interim-relief principles in American Cyanamid v Ethicon [1975] AC 396, without favouring either continuation or removal of the suspension.

The court must consider the adequacy of damages and the balance of convenience, including the public interest. A serious issue that a public contract may be awarded unlawfully can justify maintaining the suspension where the public interest in compliance with procurement law outweighs the public interest in avoiding delay to a government scheme.

Edenred, a provider of employer-supported childcare vouchers, challenged the proposed administration of the Tax Free Childcare scheme by National Savings and Investments and Atos. It argued that the arrangements would involve either a new public services contract or a material variation of an existing contract, requiring a tender under the Public Services Regulations 2006.

The defendants applied under regulations 47G and 47H to lift the automatic suspension preventing them from entering into the proposed arrangements. An expedited trial of the legality issues was due to take place in approximately four weeks. The central issue on the application was whether the suspension should remain in place pending that trial.

1. The defendants’ application to lift the automatic suspension was refused. The suspension was to remain in place until the conclusion of the trial.

2. The application was to be approached as an application for interim relief under the principles in American Cyanamid v Ethicon [1975] AC 396. There was no weighting in favour of maintaining the suspension. The court accepted that there was a serious issue to be tried.

3. It was unnecessary and inappropriate to assess the relative merits in depth because the full trial was imminent. Neither party had an obviously stronger case on the material then available.

4. If the suspension were lifted and the arrangements were unlawful, damages would not be an adequate remedy. The lost opportunity to compete in a tender could not be quantified without making highly conjectural assumptions about whether a tender would occur, who would participate and what bids might be made.

5. The court assessed the balance of convenience by considering both private and public interests. The potential commercial opportunity for Edenred was speculative, but the public interest in preventing a public contract worth approximately £160 million from being awarded without a legally required tender was substantial and irreparable.

6. The defendants established a countervailing public interest in avoiding delay to the Tax Free Childcare scheme and the benefits it was expected to provide. That interest could be mitigated, for example, by backdating payments. The court could take account of the likelihood that the scheme would be enacted, while recognising that delayed public expenditure could be used for other beneficial public purposes.

7. Overall, the public interest in prompt implementation did not outweigh the strong public interest in compliance with the law. A short delay pending an expedited determination could not justify introducing the scheme in a potentially unlawful manner.

This was a first-instance application. The claim was commenced on 27 August 2014. Directions made on 29 September 2014 provided for an expedited trial of the legality issues. The defendants then applied under regulations 47G and 47H of the Public Services Regulations 2006 to lift the automatic suspension.