Challenging in Court the Outcome of Public Procurement Procedures – A Predictable End of a Journey

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Author: Radu Damaschin

As of February 12, 2020, court complaints filed against documents issued by the contracting authorities are subject to a stamp duty equal to 2% of the estimated value of the contract, as per the distinctions set forth in Art. 56 para. 1 and/or para. 2 of Law 101/2016[1]. The new rule is set forth in Art. IV point 19 of Government Emergency Ordinance 23/2020, amending and supplementing regulatory acts with impact on the public procurement system[2]. Essentially, the aforementioned norm is a reenactment of the previous form of Art. 52 of Law 101/2016, as amended on June 4, 2018 by Government Emergency Ordinance 45/2018[3]. Pursuant to paragraph 2 of the new Art. 52, the appeal against the court’s decision with respect to the challenge will be subject to a fee of 50% of the amount of the stamp duty paid in relation to the complaint.

Furthermore, we should also recall that the executive power confirmed, with respect to the same expedited procedure, with effect from December 22, 2017, the dual regime governing the resolution of challenges, and the fact that the choice with respect to what means of challenge to exercise was, under this dual regime, at the claimant’s discretion. This could file a challenge before the National Council for Solving Complaints (NCSC), either by means of an administrative-jurisdictional procedure, or before the court, by means of a judicial action.

Irrespective of the preferred option, the claimant had to pay a bail of 2% of the value of contract, according to the distinctions under Art. 61 of Law 101/2016. If the complaint was filed before a court, the claimant had to pay, in addition to the bail, a stamp duty of RON 450, as set forth in Government Emergency Ordinance 107/2017. The complaint filed with NCSC was exempt from the obligation to pay stamp duty, but as far as the appeal was concerned, regardless of whether it referred to the decision issued by NCSC or to the decision rendered by the court, according to the consolidated national practice the applicable fee was RON 225.

Under the previous regulatory framework, the preference for an administrative-jurisdictional procedure or for a legal action for the resolution of the challenge did not depend to a great extent on the applicable legal regime as regards the stamp duty. More specifically, according to spirit of the former regulatory framework, the claimant could opt for one or the other of these two procedures based on a single criterion: how much trust they had in the specialized administrative-jurisdictional body (NCSC) or the court.

Under the current regulation, the executive power has theoretically maintained the possibility of the claimant to choose between the two procedures available for solving challenges, but, de facto, due to the applicable tax regime, it has actually excluded the direct access to the court.

Pursuant to Art. 4 para. 5 of Law 101/2016, as amended by Government Emergency Ordinance 23/2020, challenges filed with the NCSC are exempt from the payment of the stamp duty under Art. 521, but continue to be subject to the bail set forth in Art. 61 para. 1.

On the other hand, the challenge filed with the court is, as we have already shown, subject to a stamp duty calculated based on the value of the contract, but is exempt from the payment of the bail by virtue of the amendment brought to Art. 61 para. 1 of Law 101/2016.

Pursuant to GEO 23/2020 Implementation Note, the amendments seem to be based on, among others, the need to ensure “predictability, in terms of the duration of public procurement procedures, as well as to ensure that the adjudication of public procurement disputes is given priority, because otherwise there is a risk that the extent to which the allocated funds, including European funds are spent, will be reduced.

The commendable, actually, concern of the executive power raises nonetheless some questions in terms of the extremely insidious manner, we dare say, in which it proposes to address the issue of the alleged lack of expediency of the procedure.

As already known, under the previous regulatory framework, the term for resolving a challenge filed by means of an administrative-jurisdictional procedure ranged between 5 or 15 calendar days from the date the challenge was filed, depending on the manner in which the Council resolved the matter, i.e. on the merits or based on a procedural objection. In the majority of cases, NCSC strictly complied with these terms. In court, the term for resolving the same challenge was of 45 days from the date on which the court was notified. For reasons related mainly to the organization of the judicial activity, and due to purely procedural constraints, in practice, this term was very rarely observed.

A comparison of the two procedures in terms of the time required to render a decision reveals that the administrative-jurisdictional procedure seemed to satisfy to a higher extent the expediency requirement.

Due to this, we consider that the true intention of the executive power – although never disclosed – was to render the judicial procedure impractical, and to force the claimant to resort to the administrative-jurisdictional procedure.

Pursuant to Art. 4 of Law 101/2016, the judicial procedure continued to remain, as indicated above, a theoretical alternative for resolving challenges. In practice, the conditions that have to be satisfied in order to resort to this procedure became excessively burdensome. More specifically, unlike the bail, which is capped at RON 220,000/880,000, pursuant to Art. 611, the amount of the stamp duty can reach, as per Art. 56 para. 1, a maximum of RON 100,000,000.

As a matter of principle, we can acknowledge the existence of a real alternative only if the conditions for exercising the second option are equivalent or at least relatively equivalent to those applicable to the first one. To create this impression, the executive power has used, in a very insidious manner, two legal instruments that have a fundamentally different role: the stamp duty and the bail.

The stamp duty is the amount of money payable by the bidder seeking a compensation (i.e. the claimant) in exchange for the judicial service it requires (the resolution of the challenge by the court). It is paid in advance and recovered exclusively in the form of litigation costs, if the party that bore the cost proves its right to claim a remedy was substantiated.

On the other hand, the bail is a guarantee intended to cover any possible loss that could be caused to the contracting authority as a result of the challenge. In practice, the bail is usually returned since in the majority of cases no loss is caused to the contracting authorities through the exercise of this right. As a matter of principle, any challenge delays the term necessary for the completion of an award procedure, but not every such delay is reflected in a patrimonial loss.

Under the circumstances, if the bidder has certain doubts as to the lawfulness of a document issued by the contracting authority, it will be rather tempted – in reality, compelled – to resort to the least expensive procedure that enables the recovery of the cost incurred, even if, for some reason, it gives more credit to the other procedure.

Apart from the fact that the new requirements for the use of the two procedures are not equivalent from a legal point of view, as we indicated above, the solution imposed by the legislator for accessing the judicial procedure is prejudicial to the interests of the contracting authority itself, which is left, in this scenario, with no guarantees of rapid recovery of an eventual harm, something that only a bail could ensure.

Of course, no one challenges the right of the executive power to regulate, by means of an expedited procedure, the regime for reviewing the lawfulness of award procedures. However, just like a legal act must be interpreted in order to produce legal effects, a judicial procedure that the legislator chooses to maintain as a real and effective alternative to the administrative-jurisdictional procedure must contain equivalent (or at least comparable) conditions, and not excessively/extremely expensive conditions for the sole purpose of preventing the exercise of this right.

[1] Law 101/2016 governing the remedies and means of challenge in the field of public procurement contracts, sectorial contracts and works and services concession contracts , as well as the organization and functioning of the National Council for Solving Complaints was published in Official Gazette of Romania no. 393 of May 23, 2016.

[2] Published in the Romanian Official Gazette no. 106 of February 12, 2020.

[3] Published in the Romanian Official Gazette no. 459 of June 4, 2018.

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