Supreme Court ruling of 30 July 2021 in Case no. T 4071–20
During the summer the Supreme Court issued an interesting interim ruling regarding the issue of whether a procured framework agreement gives the supplier the sole right to deliver the services covered by the framework agreement. In the present case the Supreme Court answered the question in the affirmative, thereby raising the issue of whether procured framework agreements always give a supplier the sole right to supply what is covered by the framework agreement, or whether in certain cases a procuring authority may purchase such services alongside a procured framework agreement from another supplier.
Supreme Court ruling
The Supreme Court starts the examination by stating that the content of procured framework agreements may be determined on the basis of the wording of the framework agreement and other objective criteria, e.g. tender-request documentation and administrative provisions, as well as by applying general contract law. Furthermore, interpretation and modification of a framework agreement may be based on an overall assessment of the agreement and its purpose, after taking into consideration its context in terms of procurement law. According to the Supreme Court, the interpretation should also be in harmony with the rest of the agreement, assuming that an agreement should have a sensible function and constitute a reasonable regulation of the parties’ interests.
On the basis of these points of departure the Supreme Court lists the following circumstances, which suggest that the framework agreement pertaining to the case entails a sole right for the supplier.
- The agreement’s terms and conditions entail far-reaching and costly undertakings for the supplier and do not grant the supplier any independent rights. According to the Supreme Court, the framework agreement would thus be of no value to the supplier, and would cause an imbalance if the procuring authority were to turn to other suppliers alongside the framework agreement. In particular in view of the fact that the framework agreement includes an explicit condition that the procuring authority does not undertake to order a certain minimum volume during the period of the agreement.
- The terms and conditions of the agreement give the procuring authority the right to withdraw from the agreement during the agreement period with twelve months’ notice. According to the Supreme Court, such a regulation would not serve any function if the procuring authority were to be able to freely purchase the services covered by the framework agreement from another supplier.
- It has been stated in the administrative regulations that framework agreements must be signed by a supplier, who must be able to deliver everything requested.
Overall, the Supreme Court considers that the framework agreement for the case at issue entails a sole right for the supplier in the sense that it constitutes a breach of the agreement if the procuring authority purchases services covered by the agreement from another supplier. In that regard it can be noted in particular that the Supreme Court also states that the scope of such a sole right is not entirely clear regarding the procuring authority’s ability to procure further framework agreements concerning the same type of service, or to directly procure such services, in accordance with procurement law. According to the Supreme Court this matter may be assessed as part of the continued proceedings.
Analysis
In view of the majority of circumstances on which the Supreme Court bases its conclusion that the framework agreement in question entails a sole right for the supplier, this decision does not give a clear and unambiguous indication as to when procured framework agreements entail a sole right for the supplier. Not least considering that the Supreme Court allows the interpretation that a sole right does not necessarily apply when an authority procures additional framework agreements regarding the same type of service, or directly procures such services, in accordance with procurement law. This statement is in itself very interesting, as the Supreme Court’s assessment of a sole right would then only have an impact in the event of impermissible direct procurements.
The terms and conditions of different framework agreements may also differ considerably, which is why there is still justified uncertainty as to when a procured framework agreement automatically entails a sole right for the supplier in question. This uncertainty should in future be avoided by the procuring authority expressly stating in the tender-request documentation and administrative provisions whether or not the announced framework agreement entails a sole right.
With existing framework agreements, however, it is not possible to take any clarifying measures at this stage. Given that the Supreme Court has not succeeded in clarifying the issue of when procured framework agreements entail a sole right, procuring authorities should in our opinion be extremely careful with purchases outside current framework agreements in order to avoid possible liability with respect to framework-agreement suppliers.
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