The State of Mauritius and another v The (Mauritius) CT Power Ltd and others (Mauritius)

A public authority’s decision whether to enter a commercial contract, and how to exercise contractual rights, can be judicially reviewed because the authority remains subject to public law. A contract cannot oust the court’s supervisory jurisdiction. In commercial negotiations, however, the authority enjoys broad bargaining discretion. Review will ordinarily be very limited in the absence of fraud, corruption or bad faith.

A legitimate expectation requires a clear, unambiguous assurance devoid of relevant qualification. An unsigned draft subject to contract, especially language proposed by the private party, supplies no such assurance. Where a specialist authority must assess complex evidence to its own satisfaction, it enjoys a wide margin of appreciation. Fairness does not require a further opportunity to debate non-compliance after the requirements were explained and an opportunity to respond was given.

CT Power proposed to construct and operate a coal-fired electricity generating plant in Mauritius. Its environmental impact assessment licence required proof of its financial capabilities to the satisfaction of the Ministry of Finance. The project also depended on an Implementation Agreement under which the Government would guarantee payments due from the Central Electricity Board. Negotiations continued, but the agreement remained unsigned and subject to contract.

The Ministry of Finance decided that a letter from Avendus did not provide the required assurance about equity financing. The Ministry of Energy subsequently declined to sign the Implementation Agreement. The Supreme Court of Mauritius held that both decisions were amenable to judicial review and made declarations that the Ministries had acted irrationally and in breach of CT Power’s legitimate expectations.

The Ministries appealed. The central issues were whether the decisions were reviewable, whether either Ministry had acted unlawfully or frustrated a legitimate expectation, and whether the judicial review proceedings were an abuse because CT Power later brought a damages claim.

Lord Sales delivered the judgment of the Board.

1. Disposition. The appeal was allowed and the Supreme Court’s order was quashed. Neither Ministry had acted unlawfully.
2. Abuse of process. The judicial review proceedings were not abusive merely because CT Power later brought a damages claim. Judicial review had to be commenced promptly and sought distinct public law relief. The damages claim required proof of faute lourde, involving serious disregard of public law duties, and pursued different remedies. Concurrent proceedings may, where appropriate, be managed by staying one claim or considering whether they can be heard together.
3. Amenability to review. The Ministry of Finance’s decision under Condition 15 was plainly a public law decision. The condition formed part of a regulatory licence issued under the Environment Protection Act 2002 and entrusted the Ministry with a function serving the public interest. The Ministry of Energy’s decision whether to enter the Implementation Agreement was also reviewable in principle. A public authority remains subject to public law when deciding whether to contract or how to exercise contractual rights. The unsigned sovereign-immunity clause was irrelevant. In any event, a contract cannot remove the court’s supervisory jurisdiction.
4. Financial capability. Condition 15 required proof to the Ministry’s satisfaction and called for a complex, prospective evaluation. The Ministry therefore enjoyed a wide margin of appreciation. It lawfully found that the Avendus letter failed to meet the agreed requirements concerning bank status, anti-money-laundering assurance, institutional authorisation, legal responsibility and independent due diligence. The absence of liability and the requirement that the Government conduct its own inquiries were major deficiencies. The licence remained available until January 2016, during which CT Power could have submitted improved financing arrangements, but none were submitted.
5. Legitimate expectation and fairness. A legitimate expectation required a clear, unambiguous assurance devoid of relevant qualification. At most, the Ministry of Finance led CT Power to expect that it would consider a comfort letter conforming to the agreed draft, subject to the Government being prepared to sign the Implementation Agreement. It performed that consideration. Neither Ministry promised to provide a further opportunity to defend a non-conforming letter. Fairness did not require a second opportunity after CT Power had participated in settling the requirements and knew what was needed.
6. Commercial discretion. Section 62 of the Constitution of Mauritius authorised the Minister of Energy to conduct government business, including commercial negotiations. That power carried a very wide discretion to use the Government’s bargaining position and to consider commercial, public-interest and political matters. Basic public law standards continued to apply, but the court should not undermine the Government’s bargaining power or give a prospective counterparty an unbargained-for advantage. Reaffirming Mercury Energy Ltd v Electricity Corporation of New Zealand Ltd [1994] 1 WLR 521, the Board held that review of such commercial decisions will ordinarily be unavailable without fraud, corruption or bad faith. None was present, and the Minister could lawfully regard CT Power as an unsatisfactory counterparty.

1. Privy Council: In The State of Mauritius and another v The (Mauritius) CT Power Ltd and others (Mauritius) [2019] UKPC 27, the Board allowed the appeal and quashed the Supreme Court’s order.
2. Supreme Court of Mauritius: After granting leave for judicial review, the court gave judgment for CT Power on 7 July 2016. It declared that the Ministries’ reasons were irrational or unreasonable and breached CT Power’s legitimate expectations.