The Supreme Court has opened the door for contractors to claim damages from contracting authorities that violate public procurement law. But how do things look in practice?

In order to claim damages for a breach of public procurement law in Poland, no final judgment by the National Appeals Chamber ("NAC") declaring that the contracting authority acted unlawfully is needed. Yet the courts continue to dismiss claims in the absence of such a ruling. Our law firm has filed a complaint in a case affected by this.

On 25 February 2021, the Supreme Court issued the following decision in case No. III CZP 16/20:

A claim for damages from a contractor whose offer was not selected because the contracting entity violated the provisions of the Act on Public Procurement does not require a prior finding of a violation of the provisions of that Act by a final decision of the NAC or a final court decision issued following an appeal against a decision of the NAC.

The case is still pending, and we are handling it in the Polish Public Projects and Procurement team at Bird & Bird.

It’s still difficult to claim damages for a breach of public procurement law

Previous case law was inconsistent and created uncertainty. The Polish courts required a prior decision of the NAC declaring the illegality, which meant there were very few compensation cases in Poland.

The Appeals Directive 2007/66/EC leaves it up to Member States to regulate mechanisms for claiming damages. In Poland, the Public Procurement Act is silent on this issue, so the general principles of damages set out in the Civil Code apply. Under those rules, a contractor wishing to claim damages does not need a preliminary ruling, i.e. a prior decision of the NAC.

The 2021 Supreme Court ruling sends an important signal to contractors that, from now on, they don’t need an NAC decision to establish an infringement.

However, there is a disclaimer in the Supreme Court's reasoning, namely, that a failure to appeal may be material to the case as indicating that the contractor contributed to the damage. On that basis, the courts are again beginning to hold that, if the contractor did not appeal, it contributed to the damage and is therefore not entitled to damages.

The issue of damages requires a further decision by the Supreme Court

We have filed a cassation appeal with the Supreme Court in the case referred to above. The legal issue to be resolved is:

What is the due diligence of the Contractor, and what is the pattern of its behaviour that would enable it to claim damages in the event of a withdrawal of an appeal and a failure to obtain a decision of the NAC as a result?

The Supreme Court has opened the door for contractors to claim damages, but further steps are required to make the awarding of damages effective in accordance with the Appeals Directive.

The facts of the case

The issue of the grounds for claiming damages arose in a case we are conducting.

In a tender for training services, the contracting authority rejected the lowest bid, and then cancelled the procedure because the other two bids exceeded the amount allocated to the contract. The contractor with the lowest bid appealed to the NAC. In response, the contracting authority upheld the appeal in its entirety. This meant that the contracting authority should reinstate the contractor's bid and reject all competitors’ bids. But instead of complying with this, the contracting authority allowed a competitor to supplement its bid, increased the amount of the contract, and evaluated the bids on the basis of non-price criteria. In the end, the higher bid was selected.

The contractor was very active in pointing these infringements out to the contracting authority, but to no avail. In the end, the contractor submitted a second complaint, which it then withdrew. The reasons for the withdrawal are the subject of ongoing litigation; one of them was the high cost of the appeals and complaints procedure back in 2017. The Polish Constitutional Tribunal declared such high costs unconstitutional, but it was only in 2020 that they were reduced from five times the fee (PLN 75,000) to three times the fee (PLN 45,000).

The plaintiff has decided to bring an action for damages against the contracting authority.

At this point, we are waiting for the Supreme Court’s next decision, which should clear up this matter once and for all and give some certainty regarding the awarding of damages in Poland, something the whole community of contractors and contracting authorities is really in need of.