Unipart Group Limited & Anor v Supply Chain Coordination Limited

On an application to lift an automatic suspension in a public procurement, the court applies the American Cyanamid principles. A serious issue requires a claim that is not frivolous or vexatious; the court should avoid a mini-trial. Damages are inadequate only where there is a real risk of significant loss that cannot properly be recovered, and the prestige or value of a contract alone is insufficient. Evidence must establish the likely reputational or financial consequences. Complexity in assessing loss of chance is not, by itself, enough. Delay by a claimant and the public interest in avoiding disruption to critical national infrastructure may decisively favour lifting the suspension.

Three related claims challenged the procurement by Supply Chain Coordination Limited of a long-term NHS logistics contract. Unipart, the incumbent provider, and DHL, an unsuccessful bidder, alleged numerous breaches of the Public Contracts Regulations 2015. The applications concerned the lifting of automatic suspensions under regulation 96(1), the adequacy of damages, the balance of convenience, and DHL’s request for an expedited preliminary issue concerning alleged conflicts of interest and unequal treatment arising from the involvement of a former SCCL executive in GXO’s tender.

The central questions were whether the claimants had shown that damages would be inadequate, and whether the suspensions should remain in place pending trial.

1. The applications to lift the automatic suspensions succeeded. DHL had not shown, to a reasonable degree of confidence, that lifting the suspension would cause significant and irrecoverable financial loss. Unipart just crossed the threshold, but its evidence provided only a low degree of confidence concerning unquantifiable reputational and financial loss.

2. The court applied the familiar American Cyanamid sequence: whether there was a serious issue to be tried; whether damages were adequate for the claimant; whether damages were adequate for the defendant; and, if necessary, where the balance of convenience lay. A serious issue means a claim which is not frivolous or vexatious. The court should not conduct a mini-trial.

3. A prestigious or high-value contract may support an argument that reputational damage will produce irrecoverable financial loss, but it does not establish that conclusion. The claimant must provide a proper evidential foundation, including evidence of significant financial consequences which cannot be compensated in damages. The evidence of DHL and Unipart did not sufficiently establish that losing the contract would produce those consequences.

4. Difficulty in calculating damages, including loss-of-chance damages involving several bidders and counterfactual assessments, does not itself make damages inadequate. The court could assess the relevant variables fairly using ordinary legal principles.

5. The possibility that a breach might fail the Francovich sufficiently-serious requirement did not justify maintaining the suspension. If only a low-culpability breach were ultimately established, that possibility would weigh heavily against setting aside the award. The prospect of that unusual situation was sufficiently remote to be discounted.

6. SCCL established a credible and substantial risk that delay would impede Project Tokyo, a critical modernisation programme addressing serious NHS Supply Chain infrastructure problems. That loss would not be adequately compensable in damages. Nevertheless, the balance favoured SCCL because DHL had not established inadequate damages and Unipart had delayed in seeking to restrain the procurement after its exclusion.

7. DHL’s proposed preliminary issue was rejected. It was not a discrete preliminary issue but an attempt to stage the liability trial. It would require clarified pleadings, extensive disclosure, factual evidence and consideration of causation in the context of the other alleged breaches.

8. The court also held that Unipart remained entitled in principle to challenge the contract award while its exclusion was not definitive, but that standing did not determine whether setting aside the award would ultimately be an appropriate remedy.