Exel Europe Ltd v University Hospitals Coventry and Another: TCC 21 Dec 2010

Akenhead J said: ‘For many years, the Courts of England and Wales have, with regard to interlocutory or interim injunctions, applied the principles and practice laid down in the well-known case of American Cyanamid Co v Ethicon [1975] AC 396. The first question which must be answered is whether there is a serious question to be tried and the second step involves considering ‘whether the balance of convenience lies in favour of granting or refusing interlocutory relief that is sought’ (page 408B). The ‘governing principle’ in relation to the balance of convenience is whether or not the claimant ‘would be adequately compensated by an award of damages for the loss he would have sustained as a result of the defendant’s continuing to do what was sought to be enjoined between the time of the application and the time of the trial.’
It is quite clear that, prior to the amendments to Regulation 47 made by the 2009 Regulations (see above), Cyanamid principles were applied in considering whether or not an injunction should be granted to an unsuccessful or discontented tenderer preventing the placing of the relevant contract or agreement by the contracting authority. A good example is the recent case of Alstom Transport v Eurostar International Ltd and another [2010] EWHC 2747 (Ch), a decision of Mr Justice Vos. The Court of Appeal had upheld this approach in Letting International v London Borough of Newham [2007] EWCA Civ 1522.
The issue arises whether these principles apply following the imposition of the amendments to the Regulations. Regulation 47H addresses interim orders which the Court may make in circumstances, where, pursuant to Regulation 47G, the commencement of proceedings, as in this case, has meant that the contracting authority (the Defendant in this case) is statutorily required to refrain from entering into the framework agreement (in this case). In my judgment this is primarily simply a question of interpretation of Regulation 47H. Regulation 47H(1) gives the Court the widest powers in terms of what it may do with regard to entering into contracts. It is in Regulation 47H(2) that one finds what exercise the Court ‘must’ do: it must consider whether, if regulation 47G(1) was not applicable, ‘it would be appropriate to make an interim order requiring the contracting authority to refrain from entering into the contract’; it then goes on to say that it is ‘only if the Court considers that it would not be appropriate to make such an interim order may it make an order under paragraph (1)(a)’. This is saying in the clearest terms that the Court approaches the exercise of interim relief as if the statutory suspension in Regulation 47G(1) was not applicable. That means that one does not as such weight the exercise in some way in favour of maintaining the prohibition on the contracting authority against entering into the contract in question. What in practice it means is that the Court should go about the Cyanamid exercise in the way in which courts in this country have done for many years.
It is said that the Court should interpret national legislation, including Regulation 47, in the light of the wording and purpose of the Remedies Directive, 2007/66/EC, which in part at least, led to the 2009 Regulations. This Directive amended earlier Council Directives and was much concerned with establishing an effective standstill period between the submission of tenders and the entering into the relevant contract. That is not the problem here. The 2009 regulations extend the standstill period simply by the claiming tenderer issuing and serving proceedings; that has the advantage of involving the court which can then review what has happened to determine whether there is an actionable complaint and, if so, to do about it. The revised Article 1 requires measures to be taken ‘to ensure that . . decisions taken by contracting authorities may be reviewed effectively and, in particular, as rapidly as possible . .’ Article 2(1) says that measures should be taken in connection with the review procedures to provide powers to
‘(a) take at the earliest opportunity and by way of interlocutory procedures, interim measures with the aim of correcting the alleged infringement or preventing further damage to the interests concerned, including measures to suspend or to ensure the suspension of the procedure for the award of a public contract or the implementation of any decision taken by the contracting authority.
(b) either set aside or ensure the setting aside of decisions taken unlawfully . .
(c) award damages to persons harmed by an infringement.’
Article 5 goes on to say that, in effect the Court ‘may take into account the probable consequences of interim measures for all interests likely to be harmed, as well as the public interest, and may decide not to grant such measures when their negative consequences could exceed their benefits.’ I see nothing in Regulation 47H or in the application of the Cyanamid principles which offends or is not consistent with the Remedies Directive. These principles are positively consistent with it. Even if the suspension is not maintained, the claimant is not without a remedy. Obviously, if damages were not an effective remedy, and there was clearly an arguable and serious issue on liability raised, it may well be that the suspension or other directive orders should be continued or made.’


Akenhead J


[2010] EWHC 3332 (TCC)




Public Contracts Regulations 2006, Public Contracts (Amendment) Regulations 2009


England and Wales

Cited by:

CitedNATS (Services) Ltd v Gatwick Airport Ltd and Another TCC 2-Oct-2014
NATS had tendered unsuccessfully for a contract to provide air traffic control services at Gatrwick airport, and challenged the award. GAL denied that the Regulations applied and now sought disapplication of the automatic suspension from the award . .
Lists of cited by and citing cases may be incomplete.


Updated: 23 March 2022; Ref: scu.427413