COBALT wins landmark procurement case facilitating the defence of suppliers’ rights

COBALT acted for AB Eurovia Lietuva, a world leader in road infrastructure projects, railways and urban development, in public procurement proceedings for the award of damages arising from unlawful actions of the Contracting Authority. By the Ruling of 14 May 2014 the Court of Appeal of Lithuania, considering the case for the third time, awarded all lost profit to the company.

By the Ruling of 12 March  2013  and its subsequent Ruling of 31 January  2014 the enlarged panel of judges of the Supreme Court of Lithuania granted the appeal in cassation, thereby changing the existing case law by facilitating the defence of suppliers’ rights. The court emphasised that fair competition between suppliers depends not only on how the contracting authority conducts the procurement procedures, but also on the degree of efficiency of the defence of the infringed rights of the suppliers. The court found that the efficiency of the defence of suppliers’ rights, including compensation of damages, in addition to the legal regulation of this remedy as such, is also ensured by the actual ability of a supplier to enforce such right in court.

The Supreme Court of Lithuania held that for a causal link between unlawful actions and damages to be identified it has to be demonstrated that the claimant’s tender is non-compliant with the tendering conditions. The burden of proof to do so falls namely on the defendant, i.e. it is for the contracting authority to show that the claimant’s tender contained defects of such kind which in any event would render it impossible to enter into a public procurement contract. The court concluded that the Contracting Authority is not entitled to compensation of lost profit.

COBALT drafted procedural documents and represented the client’s interests at all stages of pre-litigation and litigation. The project was led by Jolita Rima Puškorienė, Managing Associate, Head of Public Procurement Practice Group.