An economic operator’s standing to bring a claim

In a dispute over the licence to run the National Lottery, the High Court has dismissed the UK's largest procurement damages claim. Colin Ricciardiello, Joe Walker and Jonathan Blunden explain why.

Lord Justice Coulson sitting as Judge in the High Court has delivered an illuminating judgment in IGT v The Gambling Commission & Allwyn Entertainment (an interested party) [2023] EWHC 1961(TCC) on the definition of an “economic operator” who has standing to bring a claim under the procurement regulations.

In a trial of a preliminary issue, the judge dismissed a challenge to the award of the Fourth Lottery Licence, estimated to be worth £8 billion. In so doing, the judge held that parties who did not bid to be awarded the contract in a procurement did not have standing to bring a claim. Whilst the judgment concerned The Concession Contracts Regulations 2016 (“CCR”), it applies equally to the Public Contracts Regulations 2015.

Camelot were an incumbent who started procurement challenge proceedings against the Gambling Commission. The contract making suspension was lifted in June 2022 ([2022] EWHC 1664 (TCC)[1]). IGT was its key sub-contractor, and it commenced its own proceedings, adopting many of Camelot’s complaints. Allwyn was the winning tenderer for the Fourth Licence, and in February 2023 it purchased Camelot’s parent. Camelot then discontinued its claim and that

“…threw into stark relief a point which the Commission had originally taken at paragraph 3 of their Defence, namely that IGT had no standing to make the claim at all, because none of the IGT Claimants had submitted a bid in the Competition for the Fourth Licence.” (§23).

This Gambling Commission standing defence (supported by Allwyn) was the subject of a trial of a preliminary issue in which both maintained that since IGT did not bid for the Fourth Licence, they were at best Camelot’s sub-contractor, and so they had no standing to bring a claim.

“This is an issue on which there is no authority directly in point, and its resolution may have an impact beyond the confines of this case”. [§1].

It was also noted at §161 of the judgment that:

“There are no EU or UK authorities which define the term “economic operator” “

The Gambling Commission and Allwyn argued that the CCR had to be interpreted consistently with the UK’s obligations to the EU law from which it came, namely Article 1(3) of the Remedies Directive. This Article requires Member States to have available (detailed rules for review/challenge procedures) “…at least to any person having or having had an interest in obtaining a particular contract …” Accordingly, it was held that this origin of the EU law requirement only required a right to claim to be conferred by Member States on economic operators who had sought for themselves a public contract. It followed that on a purposive interpretation of the CCR, no legal right to bring proceedings was conferred on economic operators such as IGT, who were sub-contractors of Camelot – the operator who had sought a public contract. This principle applies to operators who are even further away than a direct sub-contractor such as related group entities ^[2] and sub-sub-contractors.

IGT maintained that the correct interpretation of CCR was that the UK’s implementation of EU law had expanded the pool of those who had standing to bring a procurement challenge. IGT argued that the definition of “economic operators” to whom a duty was owed was wide enough to encompass each IGT claimant even though they had submitted a tender.

The preliminary issue on standing was determined in the Commission’s and Allwyn’s favour – “On the wording of Article 1(3) of the Remedies Directive, an entity who did not seek to obtain the contract (i.e. a bidder) will generally not have the necessary standing to challenge the result of the procurement. That is the straightforward reading of the words …” [§50]. The claim was accordingly dismissed.

Commentary

This judgment is a welcome clarification for practitioners, not least because it is consistent with previous judgments and related positions, including:

• The economic operator who has standing is the one who seeks the contract by submitting a tender. That is why those entities are recognised interested parties who can participate in procurement challenge proceedings – usually at the ending of contract- making applications ^[3];
• In Boxxe Ltd v. SOS for Justice ^[4] (a contract -making suspension case), the Claimant argued that damages were not an adequate remedy for its key sub-contractor, Involve. By reference to the judgment in Circle it was concluded that the position of Involve was irrelevant and should not be taken into account when assessing the adequacy of damages for Boxxe, the Claimant.