I.T.C. LTD v. MALTA
Inadmissible
Nicolas Bratza
The case originated in an application (no. 2629/06) against the Republic of Malta lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by a Maltese company, International Trading Corporation Limited (“the applicant company”), on 31 October 2006. The applicant company was represented by Mr I. Refalo and Mr M. Refalo, lawyers practising in Valletta, Malta. The Maltese Government (“the Government”) were represented by their Agent, Mr S. Camilleri, Attorney General. The facts of the case, as submitted by the parties, may be summarised as follows. On 28 December 2003 the Ministry for Youth and the Arts issued a call for tenders for the design, organisation and management of a quality national event, on the occasion of the celebration of Malta’s accession to the European Union. The deadline for submitting bids was January 2004. Three participants (the applicant company, Welcomeurope Consortium and Synergix Limited) paid the relevant fees and guarantees and submitted their bids. On 3 February 2004 the tender was awarded by the Adjudication Board to Welcomeurope Consortium. On 5 February 2004 the applicant company objected to this decision. On 19 February 2004 a hearing took place before the Public Contracts Appeals Board (the “PCAB”). The applicant company alleged that the bid made by Welcomeurope had not met the formal requirements of the tender. In particular, its components had been presented collectively and not individually and it had not been submitted in an itemised format. Moreover, the bid in question had been based on incorrect and misleading information. It had made reference to “laser cannons” which, according to the applicant, did not exist, and to a TV transmission deal with the European Broadcasting Union (the “EBU”), which was not dependent on the involvement of Welcomeurope. In the applicant’s view, as the EBU would have broadcast all the major shows from the ten acceding countries, this matter should not have been taken into consideration during adjudication. The applicant company further stated that its bid was better value for money. Welcomeurope challenged the applicant company’s arguments. It contended that “cannon lights” would be used in the show. Furthermore, the EBU had informed them that, due to the presence of an artist who had signed a contract with Welcomeurope for the exclusive right to use his services, Malta would have been allotted a longer transmission period. Representatives from the Adjudication Board gave oral evidence, stating that both bids had satisfied the formal requirements of the tender and that the final choice in favour of Welcomeurope had been based on the price and on the satisfactory standard reached. The applicant company requested the production of a number of documents, namely the Adjudication Board’s report, minutes of meetings regarding the bids, letters from Welcomeurope relating to TV coverage, Welcomeurope’s detailed list of equipment and its certificate of insurance cover. It alleged that these documents were indispensable for allowing it to substantiate its objections. Welcomeurope objected to this request, noting that some of the documents contained commercial information of a highly confidential nature. The PCAB observed that it could authorise the production of documents only in so far as they were relevant to the objections raised and strictly necessary for giving a ruling on their merits. As a consequence, only a small extract from the Adjudication Board’s report was produced. The chairman of the Adjudication Board had in fact noted that other parts of the report might have contained commercial and other information of a confidential nature. In a decision of 27 February 2004, the PCAB rejected the applicant company’s claim. It held that the invalidity of Welcomeurope’s bid had not been proved and that there had been no reason to doubt the method used by the Adjudication Board to assess the bids, which had been based on an overall assessment and had not been dependent on the amount or type of lasers used. On 24 February 2004 the applicant company lodged an application with the Civil Court (First Hall) in its constitutional jurisdiction. It alleged that the rejection of its request for the production of documents had infringed its right to a fair hearing. By a judgment of 16 December 2004, the Civil Court dismissed the applicant company’s claim on the ground that Article 6 of the Convention was not applicable to the proceedings before the PCAB. It recalled that this provision only applied to disputes concerning civil rights and obligations. These rights belonged to private and not to public law and existed only if they arose from a “clearly defined statutory right”. Thus, although a company was entitled not to be discriminated against in the adjudication procedure, it did not have a civil right to be awarded the tender. The fact that it carried out commercial activities aimed at earning profit was not in itself sufficient to bring Article 6 into play. Moreover, it could not be said that the PCAB was a “tribunal” within the meaning of this provision. It was not independent since essential features of its constitution and of the exercise of its functions depended on the Prime Minister. Furthermore, its decisions took the form of specific recommendations, which were final as regards the award of the contract. They were binding on the Director of Contracts who could not be considered a body having judicial powers. According to domestic case-law, a recommendation did not have the same authority as a judgment of a competent court determining the existence of civil rights and obligations. On 28 December 2004 the applicant company appealed to the Constitutional Court. It claimed that according to the case-law of the European Court of Human Rights, the word “tribunal” in Article 6 of the Convention had to be given a wider interpretation, not based on the distinction between quasi-judicial and purely administrative bodies. All judicial authorities that determined a person’s complaints affecting his or her rights should be considered a “tribunal”. In particular, the dispute submitted to the PCAB concerned civil rights and obligations. Indeed, the participation in the tender involved substantial financial and logistical efforts and the award of the contract would have entailed significant financial benefits for the applicant. By its very nature, the whole process gave rise to rights and obligations in respect of any person entering into negotiations to obtain such an award. The applicant further argued that, having regard to the manner of appointment of its members and to its procedures, the PCAB resembled more a court or judicial tribunal than an administrative body. By a judgment of 12 July 2005, the Constitutional Court rejected the applicant company’s appeal. It held that Maltese law applicable at the time (the Public Service (Procurement) Regulations 1996) did not grant any rights in the context of a public call for tenders. The mere act of submitting a tender did not give the applicant company the right to have its tender accepted. It was true that the amount of work involved in submitting a tender and the financial expenses attached to it carried with it an obligation to act in good faith and with the diligence of a bonus pater familias throughout the negotiations. However, these obligations only had a pre-contractual nature; they could give rise to a claim for damages, but not to any right to demand specific performance. In the present case, the applicant did not request damages but a reconsideration of the decision. The fact that the result of the proceedings before the PCAB had economic consequences for the applicant was not sufficient to conclude that the dispute concerned the determination of a civil right. The Constitutional Court distinguished the applicant company’s case from the case of Tinnelly & Sons Ltd and Others and McElduff and Others v. the United Kingdom (see judgment of 10 July 1998, Reports of Judgments and Decisions 1998-IV). Although that case had dealt with tenders, the right at issue was the right not to be discriminated against in the job market. In view of the above, the Constitutional Court concluded that the proceedings before the PCAB did not involve a determination of civil rights and obligations. It was therefore irrelevant to establish whether the PCAB was a “tribunal” within the meaning of Article 6 of the Convention. Article 469 A (1) of the Code of Organisation and Civil Procedure (the “COCP”), reads as follows: “Save as is otherwise provided by law, the courts of justice of civil jurisdiction may enquire into the validity of any administrative act or declare such act null, invalid or without effect only in the following cases: (a) where the administrative act is in violation of the Constitution; (b) when the administrative act is ultra vires on any of the following grounds: (i) when such act emanates from a public authority that is not authorised to perform it; or (ii) when a public authority has failed to observe the principles of natural justice or mandatory procedural requirements in performing the administrative act or in its prior deliberations thereon; or iii) when the administrative act constitutes an abuse of the public authority’s power in that it is done for improper purposes or on the basis of irrelevant considerations; or iv) when the administrative act is otherwise contrary to law.” Regulation 4.2 of the Public Service (Procurement) Regulations 1996 read as follows: “These regulations do not confer any right on any tenderer, supplier or contractor beyond those pertaining under civil law.” Regulation 2 of the sixth schedule to the 1996 Regulations required Contract Committees to: “evaluate tenders submitted as well as reports and recommendations made thereon by the respective departments and public organisations and make definite recommendations for the award of tenders ensuring that the best value for money at the lowest possible cost is attained. In this regard, due consideration shall be given to i. the final cost including financing costs to Government or to the public organisation, and ii. the impact of each offer on the recurrent expenditure of Government or the public organisation;” The 1996 Regulations were amended by Legal Notice 387 of 2003, (the “2003 Regulations”). In so far as relevant the 2003 Regulations read as follows: Regulation 4 “(1) Contracting authorities shall ensure that there is no discrimination between undertakings, and that all undertakings are treated equally in all calls for tenders whatever their estimated value. ... (4) Contracting authorities shall respect fully the confidential nature of any information furnished by candidates and tenderers. (5) In the context of provision of technical specifications to interested candidates and tenderers, the qualifications of candidates and selection of tenderers and the award of contracts, contracting authorities may impose requirements with a view to protecting the confidential nature of information which they may wish to make available.” Regulation 103 “(1) Any tenderer who feels aggrieved by a proposed award of a contract and any person having or having had an interest in obtaining a particular ... contract and who has been or risks being harmed by an alleged infringement may ... file a notice of objection with the Department of Contracts or the contracting authority involved as the case may be.” The functions of the PCAB have not been subject to any relevant changes in the past amendments and the Ninth Schedule to the 1996 Regulations in so far as relevant read as follows: “(l0) The sessions of the Board during which the complaint is heard shall be held in public and both the complainant and the interested party shall have the right to attend and to be accompanied by any person, professional or otherwise, whom they consider suitable to defend their interests. (11) The Chairman shall ensure that during the public hearing all interested parties are given the opportunity to state their cases. ... (17) All decisions taken by the Board shall be submitted in writing and shall contain the full facts and reasons on which the Board’s final decision is taken. All decisions shall be concluded with definite recommendations which shall be binding on the Director of Contracts. (18) Any bidder submitting a complaint who is not satisfied with the final decision taken by the Board shall have final legal rights to refer the matter to a Court of Law and to seek any redress or compensation which he considers due to him as a result of the decision with which he may disagree. Such recourse by any bidder to a Court of Law shall not deter the Director of Contracts from implementing the Board’s final decision.”