The regulation on limitation in Chapter 20, section 5(b) of the Public Procurement Act (Lagen om Offentlig Upphandling – LOU)/Act on Public Procurement in the Utilities Sectors (Lagen om offentlig upphandling – LUF) applies to procurements begun after July 2022. The provision means that a supplier must state the circumstances cited by the supplier as a basis for its action within three weeks of the date on which the application for review was received by the administrative court. Circumstances cited by the supplier after the three-week period may only be taken into consideration by the administrative court if the supplier credibly establishes that it was unable to cite the circumstance earlier or otherwise had a valid excuse for failing to do so. In its judgment of 3 October 2023 in case no. 1791-23, the Administrative Court of Appeal in Jönköping provided welcome guidance on how the limitation period should be interpreted and applied in practice.
BACKGROUND TO THE CASE
A supplier applied for a review of a municipality’s procurement of dishwashing and flushing disinfectors. The company argued that the successful tender did not meet obligatory requirements and that a new evaluation should be carried out in which the successful supplier’s tender should not be taken into consideration.
THE ADMINISTRATIVE COURT’S JUDGMENT
In its judgment, the Administrative Court stated that, as a prerequisite for the court to decide to intervene in a procurement, a fault in the procurement must have meant that the applicant had suffered or could suffer damage. The supplier applying for review is responsible for clearly stating which circumstances it bases its action on.
The Administrative Court also found that the complainant supplier only stated that it had suffered damage as a result of defects in the procurement after the limitation period in Chapter 20, section 5(b) LOU had expired and had not given any reasons why these circumstances should be taken into consideration after the time limit had passed. The information was therefore not taken into consideration by the Administrative Court.
The Administrative Court rejected the application for review without examining the case.
THE ADMINISTRATIVE COURT OF APPEAL’S JUDGMENT
The supplier appealed the judgment before the Administrative Court of Appeal, arguing primarily that the case should be referred back to the Administrative Court for examination. The supplier argued that it had stated, within the limitation period, the way in which it had suffered damage and that its subsequent statements were only for the purpose of developing its case (without putting forward any new ground or circumstance in support of the application).
The municipality opposed the appeal.
In its judgment, the Administrative Court of Appeal stated that it is not sufficient to state, within the limitation period, merely that the supplier has suffered or may suffer damage, without the way in which it has suffered damage being clear from the circumstances cited. If the supplier only specifies its damage after the expiry of the prescribed period, that must be regarded as constituting new circumstances which may only be taken into consideration if the supplier credibly establishes that it was unable to cite the circumstances earlier or otherwise had a valid excuse for failing to do so.
The Administrative Court of Appeal then carried out an overall assessment of the information and documents that the supplier had attached to its application for review. The Administrative Court of Appeal found that the supplier had stated which defects in the procurement formed the basis for the application for review, in what way the supplier considered that the procurement should be corrected or re-done and that the company had suffered damage as a result of the award in question.
In view of the above, the Administrative Court of Appeal set aside the Administrative Court’s judgment and referred the case back to the Administrative Court for re-examination.
Analysis
The Administrative Court of Appeal has clarified that it is not sufficient for the supplier to merely state that it has suffered damage due to defects in the procurement in general; the supplier must specify within the relevant limitation period how this has occurred. The Administrative Court of Appeal issued a specific pronouncement on the question of the damage requirement, but the same should apply to all circumstances cited by a supplier as a basis for its action. This is because the wording of the limitation provision is general and covers all circumstances cited by a supplier, which is also confirmed by the preparatory materials (see Government Bill 2021/22:120 p. 85). That means that a supplier cannot simply claim that a procurement is in breach of a certain provision of the LOU or the principles of procurement law and only explain what the defect actually consists of after the prescribed period has expired. The same applies if a supplier considers that a tender should be rejected. It is thus important to specify at the outset what the defect is and on what grounds the tender should be rejected.
In the case in question, it becomes clear that difficult issues can arise when deciding whether a supplier’s additional arguments are merely a development and/or clarification of circumstances already stated or whether it is a question of new circumstances. It is the supplier that is responsible for ensuring that it has set out all the circumstances within the limitation period in a sufficiently specific manner. That applies even if the Administrative Court has granted a grace period, which may be perceived as a relatively heavy responsibility for the individual supplier. Furthermore, if the supplier only states new circumstances after the expiry of the prescribed period, the supplier is responsible for giving reasons why the new circumstances should still be taken into consideration. It is therefore the supplier’s own responsibility to cite the circumstances within the prescribed period and, after the expiry of the limitation period, state any reasons why a new ground cited should nevertheless be taken into consideration. Therefore, in order not to risk losing the opportunity to have their claims examined in their entirety, suppliers should not wait until the three-week period has expired to state grounds for their application for review.
However, it is also worth noting that the Administrative Court of Appeal carried out an overall assessment of the information and documents that the supplier had attached to its application and was of the opinion that the supplier could be considered to have stated circumstances relating to damage within the prescribed period. That indicates that a supplier can still be considered to have stated circumstances in a sufficiently specific manner even if the supplier did not initially formulate its claim in precise terms, as long as the circumstances can be considered to be clear from the application. The Administrative Court of Appeal’s judgment in this regard is fully in line with the preparatory materials, which state that there should be relatively broad scope for the supplier to develop and clarify its action.
To sum up, the judgment of the Administrative Court of Appeal may be regarded as expressing the balancing of interests carried out by the legislator when introducing the limitation rule. There is tremendous interest in review cases being decided as quickly as possible, though at the same time this must not take place at the expense of the right to an effective legal remedy, i.e. a supplier’s right to have a procuring authority’s decision reviewed.
Guiding case law regarding the limitation period in review cases is welcome, since it is likely to become more common for questions regarding limitation to be put to the test in the context of review proceedings.
