Year in Review: Public Procurement

| Insight

The year 2019 was another year of important developments within Public Procurement Law. A particular highlight was the Norwegian Supreme Court's judgement in its first procurement case in 11 years, the Fosen-Linjen case. Our Public Procurement team provides us in the following article with a brief summary of important events in 2019.

The year 2019 was another year of important developments within Public Procurement Law. A particular highlight was the Norwegian Supreme Court’s judgement in its first procurement case in 11 years, the Fosen-Linjen case (HR-2019-1801-A). Earlier the same year, the EFTA Court had, for an unprecedented second time in the same case, handed down its judgement in Fosen-Linjen II (E-7/18). Other notable decisions in 2019 include the judgements by the ECJ in case C-216/17 on framework agreements and case C-465/17 regarding non-profit organisations.

The EFTA Court in Fosen-Linjen II

In Fosen-Linjen II, the EFTA Court made a complete u-turn from its previous judgement in Fosen-Linjen I (E-16/16). In Fosen-Linjen I, the EFTA Court had concluded that «a simple breach of public procurement law is in itself sufficient to trigger the liability of the contracting authority to compensate the person harmed for the damage incurred». However, in Fosen-Linjen II, the same Court concluded that EEA law «does not require that any breach of the rules governing public procurement in itself is sufficient to award damages for the loss of profit to persons harmed by an infringement».

The Norwegian Supreme Court in Fosen-Linjen

In its judgement in Fosen-Linjen, the Norwegian Supreme Court effectively revised the Norwegian rules for damages in public procurements. According to the judgement, the relevant threshold is that the claimant must, in order to be awarded damages, be able to show that the contracting authority has committed a sufficiently serious breach of procurement law. The judgement also contains important statements regarding to what degree a contracting authority is obligated to require documentation proving the veracity of information in tenders and to what degree such information must be verified.

The Norwegian Courts and the Complaints Board for Public Procurement

Aside from the Norwegian Supreme Court’s decision in Fosen-Linjen, a number of other actions for damages was considered by the Norwegian Courts, including three cases before the Borgarting Court of Appeal (LB-2018-39460, LB-2018-091633 and LB-2018-82338).The Hålogaland Court of Appeal also handed down judgement in a case where a contract resulting from an illegal direct award was set aside, a fine levied on the contracting authorities and the contractors awarded damaged for the negative contract interest (LH-2018-099424).

The Complaints Board for Public Procurement maintains its role as a key driver in the development of Norwegian Public Procurement law. Among the many interesting cases, the Complaints Board has, for the first time, referred a question to the EFTA Court in spite of objections by the Ministry of Foreign Affairs (case 2018/157). The EFTA Court has not yet consider the referral, including whether it has jurisdiction to consider referrals from the Complaints Board.

The European Court of Justice

Notable judgements from the ECJ include case C-216/17 (ATE Markas) where ECJ founds that there is an obligation to state the maximum value under a framework agreement. The ECJ also states that, once the total quantity has been reached, «the agreement will no longer have any effect» (para. 61). In case C-465/17 (Falck Rettungsdienste) ECJ gives further guidance to what constitutes a non-profit organisation and association under the Public Procurement Directive.

New regulations and guidelines

The regulatory work within the field of public procurement in 2019 was limited. A Regulation on Electronic Invoice in Public Procurements was, however, adopted, instructing all contracting authorities to use electronic invoices in their contracts. The object of the Regulation is to promote efficient and eco-friendly invoicing.

Two important guidelines on the public procurement rules were issued, namely the Ministry of Trade and Industry’s Guidelines on Security in Public Procurement and the Ministry of Defence’s Guidelines on Defence and Security Procurement.

The government also issued a White Paper on public procurement entitled Smarter Procurement – Efficient and Professional Public Procurement, aiming to achieve better use of public funds through more comprehensive and efficient public procurement policies.

This article is part of a series of articles where the different practice groups in SVW will summarize the most important regulatory happenings in Norway in 2019.