Going Nuclear On Damages

Nuclear Decommissioning Authority v Energy Solutions EU Ltd (now called ATK Energy EU Ltd) [2017] UKSC 34

The UK Supreme Court has recently considered an authority's liability for damages in the case of a breach of public procurement rules and has concluded that a breach must be "sufficiently serious" for damages to be awarded. The Supreme Court also decided that an economic operator need not have raised its damages claim before the contracting authority enters into the contract in question.

Case details

The respondent, the Nuclear Decommissioning Authority ("NDA"), sought to contract for the decommissioning of 12 Magnox power stations ("the procurement").

ATK Energy EU Ltd ("ATK") as part of the unsuccessful consortium Reactor Site Solutions ("RSS") raised an action for damages claiming that, in running the Procurement, NDA had breached its obligations under the (applicable at the time in question) Public Procurement Directive 2004/18/EC ("the Directive") and the Public Contracts Regulations 2006 ("the Regulations").

ATK contended (and the courts agreed) that NDA had erred in its awarding of the contract as the awarded economic operator had failed two threshold requirements and so should have been disqualified. In any event, it was found that NDA made "many manifest errors" in scoring and as such the contract should have been awarded to ATK.

NDA notified RSS by letter on 31 March 2014 that it had been unsuccessful in its tender and noted that the standstill period would run until 14 April 2014. RSS wrote a number of letters requesting further information and extension to the standstill period. NDA refused to extend and entered into its contract on 15 April 2014. ATK raised proceedings on 28 April 2014. An initial judgment on 24 January 2016 was appealed to the Court of Appeal with the matter subsequently being heard before the Supreme Court on 1 and 2 March 2017.

Supreme Court's Decision

Three main issues were considered by the Supreme Court:

1. Whether a breach of the Directive has to be "sufficiently serious" for an award of damages to be made.

   The Supreme Court agreed with the Court of Appeal that the Francovich EU law conditions (Francovich v the Italian Republic [1995] ICR 772) apply i.e. liability would arise where:

   the legal rule infringed intends to confer rights on the party; the breach is sufficiently serious; and there is a direct causal link between the obligation and the damage, In addition, the general principles of...