Energysolutions EU Ltd v Nuclear Decommissioning Authority

Under the Public Contracts Regulations 2006, a post-contract damages claim for breach of procurement duties is a domestic private-law claim for breach of statutory duty. The fact that the duties implement EU law does not subject the claim to the more restrictive Francovich conditions where English law provides a more generous remedy. Once breach and consequential loss are established, damages are assessed under ordinary English principles; the statutory word “may” does not confer a separate discretion to refuse damages or impose a seriousness threshold. An unsuccessful tenderer’s failure to issue and notify a claim before contract formation, thereby missing standstill protection, does not by itself break causation or bar damages. Ordinary rules on loss and mitigation continue to apply.

Energy Solutions EU Limited was a member of an unsuccessful consortium bidding for a major nuclear decommissioning contract procured by the Nuclear Decommissioning Authority. The contract was entered into with the successful consortium before Energy Solutions issued its claim for approximately £100 million in damages.

Edwards-Stuart J determined two preliminary issues. He held that it was inappropriate to decide without a trial whether the failure to invoke the standstill procedure affected causation. He also held that damages under regulation 47J were not discretionary. The appeals concerned whether failure to seek pre-contract protection barred damages and whether the Francovich conditions governed the damages claim.

Vos LJ gave the judgment, with which Tomlinson LJ and the Master of the Rolls agreed.

1. Disposition. Energy Solutions’ appeal was allowed on the first preliminary issue. The Nuclear Decommissioning Authority’s appeal on the second issue was dismissed.
2. Nature of the claim. Part 9 of the Public Contracts Regulations 2006 created a domestic cause of action for breach of statutory duty. The court approved the essential reasoning in Matra Communications S.A.S. v The Home Office [1999] 1 WLR 1646 that the claim was a private-law claim. The contrary observations in Matra about the claim being non-Francovich and non-discretionary were treated as obiter or not operative parts of that decision.
3. Damages standard. The Francovich conditions, as explained in Francovich v Italy [1991] ECR I-5357, Brasserie du Pêcheur [1996] QB 404 and Combinatie Spijker v Provincie Drenthe C-568/08, were minimum conditions for a direct EU-law claim. In the absence of EU criteria governing assessment, national law could provide a more generous remedy, subject to equivalence and effectiveness. The same approach applied to claims under domestic implementing regulations. Regulation 47J(2)(c)’s use of “may” did not confer a separate discretion to refuse damages or require a sufficiently serious breach.
4. Causation and interim relief. Mitigation and the determination or estimation of loss were matters of national law. Brasserie’s statement that a court may consider whether the claimant used available legal remedies did not impose a mandatory EU-law condition. English law contained no principle depriving a claimant of damages for failing to seek an interlocutory injunction. The standstill and suspension regime was an available protective remedy, not a statutory precondition to damages.
5. The answers were that failure to issue and notify a claim form before contract formation did not break the chain of causation, and that the court had no discretion to refuse damages where breach and consequential loss under the Regulations were established.

1. Court of Appeal (Civil Division). Allowed Energy Solutions’ appeal on the causation issue and dismissed the NDA’s appeal on the discretionary-damages issue.
2. High Court, Technology and Construction Court. Edwards-Stuart J held that the causation issue was unsuitable for determination as a preliminary issue and that damages under regulation 47J were not discretionary.