England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE CHANF 98/1130/3

Royal Courts of Justice

Strand

London WC2A 2LL

Thursday, 25th February 1999

B e f o r e :

LORD JUSTICE HIRST

LORD JUSTICE MUMMERY

LORD JUSTICE BUXTON

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MATRA COMMUNICATION SAS Appellant

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HOME OFFICE Respondent

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(Handed down transcript of

Smith Bernal Reporting Limited

180 Fleet Street, London EC4A 2HD

Tel: 0171 421 4040 Fax: 404 1424

Official Shorthand Writers to the Court)

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MR. D. VAUGHAN Q.C. and MR. M. BREALEY (instructed by Messrs Nabarro Nathanson, London, W1) appeared on behalf of the Appellant.

MR. C. FLINT Q.C. and MR. A. LEWIS (instructed by The Treasury Solicitor) appeared on behalf of the Respondent.

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J U D G M E N T

(As approved by the Court)

Crown Copyright

BUXTON LJ:

This appeal from a judgment of Rattee J delivered on 31 July 1998 turns on the compatibility with Community law of the three month time-limit for bringing claims that is imposed by regulation 32(4)(b) of the Public Services Contracts Regulations 1993 [the Regulations]. Other issues were considered by the judge and were ventilated before us, but as will become apparent the issue just set out is the main point of substance in the appeal.

The plaintiff, Matra Communication SAS [Matra], is a French company that specialises in the design of the type of mobile radio telephone systems that are used by limited groups on a secure basis. The system that it offers for this purpose is called TETRAPOL: the nature of which it is fortunately not necessary for the purposes of this judgment for me to explicate further. The main rival system, offered by a consortium called Quadrant, of which BT plc is a member, is based on technology called TETRA.

In July 1995 the Home Office issued a consultation document that set out what were likely to be the requirements for a new secure radio system for the police service; but envisaging that the selected system was likely to be attractive also to other public service users, such as the fire service. This project, called in this case a project for a national PSRCS, was obviously potentially of the greatest interest to providers such as Matra since its likely value as stated in the project notice referred to below would be £1.5 billion over 15 years. Matra however learned that Home Office policy was to require TETRA systems for the project. That excluded Matra, as Matra pointed out to the Home Office in a letter dated 29 September 1995. That requirement on the part of the Home Office was confirmed in the notice of the PSRCS project published in accordance with Community requirements in the Official Journal on 23 January 1996. That set out the terms of the project and invited expressions of interest from contractors who were willing to take part in more detailed project definition studies. The notice said specifically that

Subject to its adoption by the European Union, Tetra will be the technical standard specified for the mobile radio service.

After the publication of that notice Matra sought without success to persuade the Home Office to change its announced policy. In a letter to the Home Office dated 30 May 1996 Matra acknowledged that, whatever the position about the adoption of TETRA as a European Standard, that system had been adopted by the Home Office, and therefore Matra could not pursue the project further. On 9 August 1996 the Home Office issued a formal invitation to tender, which specified TETRA. Some considerable time later, in June 1997, Matra reopened the correspondence, and sought the extension of the project to include TETRAPOL; but the Home Office made clear, for instance in a letter of 18 July 1997, that they would not interrupt the procurement process. Matra then sent a solicitors' letter dated 12 September 1997 threatening proceedings. The contract was awarded, to Quadrant, on 10 October 1997. Matra issued these proceedings on 13 October 1997.

Matra complains that the specification of TETRA prevents it, in the context of the PSRCS project, from supplying goods and services within the United Kingdom, and thus entails a breach of the directly effective provisions of Articles 30 and 59 of the EU Treaty. Further, Article 3.2 of Council Directive 92/50/EEC, relating to the coordination of procedures for the award of public service contracts, provides that contracting authorities shall ensure that there is no discrimination between different service providers. Matra allege that the effect of specifying TETRA is to breach that requirement.

The Home Office denies those claims, fundamentally on the ground that European procurement rules required them to specify TETRA, as being the approved standard. That very important question is not in issue in this appeal. The Home Office however successfully contended before the Judge that the action should be, in effect, struck out, because it had not been brought within the three month time-limit that the Home Office argued to be applicable to this claim. In order to understand that point it is necessary first to set out the legislative provisions relevant to that issue.

This matter is addressed in Community legislation in Council Directive 89/665/EEC on the coordination of laws relating to the application of review procedures to the award of public supply contracts [Directive 89/665]. In its recitals the Directive 89/665 observes that the extant Directives on public procurement "do not contain any specific provisions ensuring their effective application" (a matter to which I shall have to return), and then says, inter alia

Whereas the existing arrangements at both national and Community levels for ensuring their application are not always adequate to ensure compliance with the relevant Community provisions particularly at a stage when infringements can be corrected.

Whereas the opening-up of public procurement to Community competition necessitates a substantial increase in the guarantees of transparency and non-discrimination; whereas, for it to have tangible effects, effective and rapid remedies must be available in the case of infringements of Community law in the field of public procurement or national rules implementing that law;

Whereas it is necessary to ensure that adequate procedures exist in all the Member States to permit the setting aside of decisions taken unlawfully and compensation of persons harmed by an infringement.

The relevant legislative provisions then follow:

Article 1

1. The Member States shall take the measures necessary to ensure that, as regards contract award procedures falling within the scope of Directives 71/305/EEC and 77/62/EEC, decisions taken by the contracting authorities may be reviewed effectively and, in particular, as rapidly as possible in accordance with the conditions set out in the following Articles.... on the grounds that such decisions have infringed Community law in the field of public procurement or national rules implementing that law...

3. The Member states shall ensure that the review procedures are available, under detailed rules which the Member States may establish, at least to any person having or having had an interest in obtaining a particular public supply or public works contract and who has been or risks being harmed by an alleged infringement. In particular, the Member States may require that the person seeking the review must have previously notified the contracting authority of the alleged infringement and of his intention to seek review.

Article 2

1. The Member States shall ensure that the measures taken concerning the review procedures specified in Article 1 include provision for the powers to:-

(a) take, at the earliest opportunity and by way of interlocutory procedures, interim measures with the aim of correcting the alleged infringement or preventing further damage to the interests concerned, including measures to suspend or to ensure the suspension of the procedure for the award of a public contract or the implementation of any decision taken by the contracting authority;

(b) either set aside or ensure the setting aside of decisions taken unlawfully, including the removal of discriminatory technical, economic or financial specifications in the invitation to tender, the contract documents or in any other document relating to contract award procedure;

(c) award damages to persons harmed by an infringement.

It was agreed before us that the provisions of Article 2 had been properly transposed into regulation 32 of the 1993 Regulations. The relevant parts of regulation 32 are as follows:

(3) Proceedings under this regulation shall be brought in England and Wales and in Northern Ireland in the High Court and, in Scotland, before the Court of Session.

(4) Proceedings under this regulation may not be brought unless-

(a) the services provider bringing the proceedings has informed the contracting authority of the breach or apprehended breach of the duty owed to him pursuant to paragraph (1) above by the contracting authority and of his intention to bring proceedings under this regulation in respect of it; and

(b) they are brought promptly and in any event within 3 months from the date when grounds for the bringing of the proceedings first arose unless the Court considers that there is good reason for extending the period within which proceedings may be brought.

(5) Subject to paragraph (6) below, but otherwise without prejudice to any other powers of the Court, in proceedings brought under this regulation the Court may-

(a) by interim order suspend the procedure leading to the award of the contract in relation to which the breach of the duty owed pursuant to paragraph (1) above is alleged, or suspend the implementation of any decision or action taken by the contracting authority in the course of following such procedure; and

(b) if satisfied that a decision or action taken by a contracting authority was in breach of the duty owed pursuant to paragraph (1) above-

(i) order the setting aside of the decision or action or order the contracting authority to amend any documents; or

(ii) award damages to a services provider who has suffered loss or damage as a consequence of the breach, or

(iii) do both of those things.

The substantive claims made by Matra in its statement of claim are:

1. A Declaration that the Defendant is in breach of Article 30 and/or Article 59 and/or Article 3(2) of Directive 92/50 and/or Regulation 8 of [the Regulations] by excluding from consideration TETRAPOL based systems in the evaluation of the Public Safety Radio communications Project as advertised in the Contract Notice published in the Official Journal of the European communities on 23 January 1996

2. Damages

Particulars of the loss and damage alleged were given in paragraphs 29 and 30 of the statement of claim as follows:

29 (ii) Matra had a real chance of being awarded the contract for the provision of the PSRCS due to lower cost and due to the fact that a TETRAPOL based system was better suited to the provision of PSRCS.

(iii) Matra claims as damages the profit that it would have made on the PSRCS contract and consequential loss due to damage to its reputation.

30. Pending further discovery, in particular discovery of the terms and conditions of the contract to Quadrant, Matra estimates its claim at £100,000,000 in respect of equipment and subsequent support in relation to the provision of spares and materials.

It is important at this stage to note that the damages claimed are not what Mr Vaughan described before the Judge, and which for purposes of identification only I will continue to refer to, as Norbrook damages; that name being taken from Case C-127/95 Norbrook Laboratories v Ministry of Agriculture , 2 April 1998. In Case C-127/95 the European Court of Justice restated the conditions imposed by Community law on the recovery of damages for a breach of Community law by a member state. The Court of Justice said, at paragraphs 106-107 of its ruling, that

It must be remembered, first, that as the Court has held repeatedly, the principle of State liability for loss and damage caused to individuals as a result of breaches of Community law for which the State can be held responsible is inherent in the system of the Treaty (Joined Cases C-6/90 and C-9/90 Francovich and Others v. Italian Republic [1991] ECR I-5357, paragraph 35; Joined Cases C-46/93 and C-48/93 The Queen v. H.M. Treasury, ex parte British Telecommunications [1996] I-1631, paragraph 38; Case C-5/94 The Queen v. MAFF, ex parte Hedley Lomas [1996] ECR I-2553, paragraph 24; and Joined Cases C-178/94, C-179/94, C-188/94, C-189/94 and C-190/94 Dillenkofer and others v. Germany [1996] ECR I-4845, paragraph 20).

It is clear from the above case-law that three conditions must be satisfied for a Member State to be required to compensate for damage thus caused: the rule of law infringed must have been intended to confer rights on individuals; the breach must be sufficiently serious; and there must be a direct causal link between the breach of the obligation resting on the State and the damage sustained by the injured parties (Brasserie du Pecheur and Factortame paragraph 51; British Telecommunications, paragraph 39; Hedley Lomas, paragraph 25; and Dillenkofer and others, paragraph 24, all cited above).

It is clear that the damages claim in our case is not a Norbrook claim not only because Mr Vaughan so said; but also because no attempt is made in the statement of claim to plead, much less to establish, that the breach on which the claim is based was "sufficiently serious" in Norbrook terms.

The issue s

The case proceeded below on a series of preliminary points relating to whether the claim complied with regulation 32(4)(b) of the Regulations, which it will be seen is in effect a limitation provision. Although there was no formal claim to strike the action out, the effect of the Judge's findings was that the action could not proceed further, since he held that it had not been brought within the time limited by regulation 32(4)(b), and that no grounds existed for extending that time.

Rather than simply set out the preliminary points it will be more convenient to list the issues that arise on the appeal, not least because they fall conveniently into, and were argued before us in, a somewhat different order from that adopted before the Judge. The issues in the appeal are:

I. Was this action brought promptly and in any event within three months from the date when grounds for the bringing of the action first arose, as required by regulation 32(4)(b)?

II Is that requirement of regulation 32(4)(b) in conformity with Community law?

III If yes, was the Judge correct in refusing to extend the time limited by regulation 32(4)(b)?

I deal with these questions in turn. They are however all affected by a general issue as to the effect and status of Directive 89/665, transposed as it is into the Regulations. I deal with that matter first.

Both parties recognised that their respective cases turned on a proper understanding of the juristic nature and effect of Directive 89/665. Matra contended in particular that the requirement of Article 2.1(c) that member states should put in place procedures for the award of damages to persons harmed by an infringement of, inter alia, Directive 92/50 was a separate and free-standing provision, not necessarily linked to or dependent on the requirements in Articles 2.1 (a) and (b) for procedures to correct infringements or set aside decisions. The importance of this contention was that Mr Vaughan argued, inter alia, that the damages claim made by Matra should be treated as a claim entirely separate from any claim that might have been made, but in the event was not, under regulations 32(5) (a) or (b)(i) of the Regulations. Thus, for instance, the appropriate event from which time started to run under the Regulations in respect of a damages claim might be different from the appropriate event relevant to a claim to set aside or have altered a contract procedure. Each separate right of recourse had to be evaluated according to the rules of domestic law relevant to that type of recourse. By contrast, Mr Flint QC for the Home Office in effect argued that Directive 89/665 provided a complete and separate statement of the ability of the persons protected by it to assert their rights, and of the limitations on that ability. The recourse provided by the Regulations under the Directive had to be looked at as a whole.

Some of the more detailed implications of this dispute will have to be taken up in addressing the individual issues in the appeal. In more general terms, however, I am of opinion that:

1. The "damages" referred to in Article 2.1(c) are not Norbrook damages. As already noted that is conceded in this case, but the point needs to be underlined. At the date of Directive 89/665, not only did the Directives to which it was subsidiary not contain provisions to ensure their effective application in the member states, as the recitals to Directive 89/665 acknowledged in terms, but also it was uncertain whether, in at least a number of member states, there could be any, or at least any general, recourse to damages as a remedy for infringement of directly effective Community rights: for example, see the position in 1989 in the United Kingdom as set out in the judgments in this court in Bourgoin SA v Ministry of Agriculture [1986] 1 QB 716. The right to damages that the member states are obliged by Article 2.1(c) to create must therefore be, in Community terms, sui generis, and must find its origins and limits in the specific provisions of Directive 89/665 rather than in more general principles of Community law.

2. That Directive 89/665 creates its own limited code of remedies is underlined by the fact that it only applies, because the underlying Directive 92/50 only applies, to contracts of a value in excess of ECU 200,000: Directive 92/50, Article 7.1. If the remedies envisaged by Directive 89/665 were general remedies already available in member states through the requirements of Community law, rather than being remedies imposed on the member states by Directive 89/665 itself, not only would there have been no need for Directive 89/665 at all, but also the exclusion from contracts of a certain size of the Directive 89/665 remedies would equally beat the air.

3. Once the obligation of the member state to provide that remedy in damages has been discharged by the United Kingdom by the terms of regulation 32(5)(b)(ii) those damages provided by domestic law remain damages on the basis envisaged by Directive 89/665; but regulation 32(5)(b)(ii) nonetheless thereby creates a private law, non-discretionary, remedy, because within the national legal order any remedy in damages necessarily has those qualities.

4. The obligation under Article 2.1(c) arises in the context of a scheme of remedies that are intended, as the recitals to Directive 89/665 state, to be effective and rapid.

5. The "review" required by Article 1, and elsewhere in Directive 89/665, is the whole scheme of remedies that the member state is required to make available. That is of some importance in connexion with point 4 above, because under Article 2.1 "the review procedures specified in Article 1" include the power to award damages under Article 2.1(c); it is therefore that whole range of remedies, including damages, that are required by Article 1 to be provided "effectively and, in particular, as rapidly as possible".

I revert to some of these considerations when addressing the particular issues in this case, to which I now turn.

As a matter of logic, issue II is the first issue to be considered, because if regulation 32(4)(b) is not in conformity with Community law it must be disapplied or ignored, and thus it does not matter whether or not the action was brought within the time limited by it. However, certain of the matters addressed under issue II overlap with issue I; and the analysis of the requirements of regulation 32(4)(b) forced on us by issue I illuminates the terms and nature of that regulation in a manner that is of value when considering issue II.

The Judge answered this question in the negative, and was plainly right to do so. The issue is when "grounds for the bringing of the proceedings" first arose. By regulation 32(2), breaches of duty under the Regulations are actionable by any services provider (which expression includes Matra) who in consequence of the breach "suffers or risks suffering" loss or damage. By its pleading, and in particular by the terms of the declaration that it seeks, Matra alleges that the breach was committed by the terms of the Official Journal notice of 23 January 1996. Even if, as Matra now contends, there was some uncertainty at that stage as to whether TETRA was to be adopted as a European Union standard, it was quite clear to Matra by June 1996 that it had been excluded from the PSRCS project. Matra so stated in its letter of 30 May 1996, a letter that Matra's solicitors subsequently adopted in their own letter before action of 12 September 1997. On any sensible view of the facts, therefore, it was plain to Matra some fifteen months before they issued their writ that they were suffering, or at least risked suffering, damage by reason of the configuration of the PSRCS project.

Mr Vaughan sought to meet this point by arguing that the damages claim had to be viewed separately from the other relief provided by the Regulations. While Matra might well have been under an obligation to seek an injunction, or public law relief, in January or at least in May 1996, a damages claim did not arise and therefore could not be pleaded until it was clear that damages were going to be suffered. That was not clear until the contract was actually awarded, to someone else. Matra had acted very promptly on that latter event.

There are a number of serious objections to that argument. First, it is not correct as a matter of fact. Matra's claim is, as stated in paragraph 29(ii) of its statement of claim, for loss of the chance to obtain the PSRCS contract. It lost that chance, and therefore suffered damage, whether or not the contract was awarded to anyone else. Quantification of that loss would of course be difficult, and be affected by whether in the event the contract was awarded at all, and the extent to which Matra's absence from the field of contenders contributed to any failure to make the award. But those are indeed issues of quantification, not of liability. To that extent, therefore, Matra's argument confuses liability for loss or damage with the assessment of damages. The latter task may well not yet be possible when the action is brought, or when liability first arises; but that does not affect the fact that in this case liability arose when Matra in its pleading said it did.

Second, however, and more fundamentally, Matra's argument is inconsistent both with the normal English practice and with the scheme of the Directive 89/665. As to the former, questions of limitation are determined, as regulation 32(4) says, according to when the proceedings are brought; it is unheard of to have a single limitation period which however commences at different dates according to the nature of the remedy sought. As to Directive 89/665, I have pointed out above that the whole range of remedies envisaged by Directive 89/665 is required to be provided rapidly, and no distinction is made in that respect between damages and other remedies. Although the present issue is one of construction of the Regulations, the approach of the Regulations in submitting all remedies to the same rules is consistent with the approach of the Directive.

This is the central issue in the appeal. The Judge answered this question in the affirmative. My reasons for holding that he was right to do so differ in some details from the grounds adopted by him, but the arguments appear to have been put to us in some respects in terms that had not been ventilated before the Judge.

As already indicated, it is accepted that the Regulations correctly transpose the substance of Directive 89/665. The latter, however, while generally supporting promptitude, neither lays down nor specifically permits any particular period of limitation. The question is therefore whether the limitation period provided for the remedies under the Regulations causes the whole scheme of those remedies, including their limitation period, to breach the United Kingdom's obligation to provide remedies for breaches of Community provisions that comply with the requirements of Community jurisprudence. In addressing that question the Judge rightly referred to the principle adopted by the Court of Justice in Cases C6/90 and C9/90 [1991] ECR 5357, Francovich, at paragraph 43 of that report, and expanded on in Case C261/95 [1997] ECR I-4025, Palmisani, at paragraph 27 of the judgment of the Court of Justice:

it follows from consistent case-law since Francovich that...it is on the basis of the rules of national law on liability that the State must make reparation for the consequences of the loss or damage caused; further, the conditions, in particular time-limits, for reparation of loss or damage laid down by national law must not be less favourable than those relating to similar domestic claims (principle of equivalence) and must not be so framed as to make it virtually impossible or excessively difficult to obtain reparation (principle of effectiveness).

It was accepted before us that the domestic remedies, including the limitation period, must be scrutinised according to those two tests. I deal later with the principle of effectiveness. I turn first to the application of the principle of equivalence.

The operation and effect of this principle is of crucial importance in this case. In Palmisani the complaint was of delay in transposing a Directive on the protection of employees on the insolvency of their employers. The law of the member state in question required an action for reparation for loss or damage suffered thereby to be brought within one year of the Directive's eventual transposition. As "similar domestic claims" under the principle of equivalence the parties referred to actions for reparation for non-contractual loss under Article 2043 of the Civil Code (a five-year limitation period); and to claims for the actual benefits provided on the basis of the Directive (a one-year limitation period). As to the latter, the Court of Justice recorded, [1997] ECR I-4025[34], that the objective of providing employees with specific benefits was different from the objective of compensating them for depriving them of those benefits by failure to transpose the Directive that related to them. As to the comparison with general non-contractual liability, the Court of Justice said, at paragraph 38 of the report,

As far as the ordinary system of non-contractual liability is concerned it must be pointed out that, unlike the procedures [for payment of benefits] that system is on the whole, in terms of its objective, similar to that introduced [to compensate for the belated transposition] inasmuch as it is intended to guarantee reparation of the loss or damage sustained as a result of the conduct of the perpetrator. However, in order to establish the comparability of the two systems in question, the essential characteristics of the domestic system of reference must be examined. In that regard the Court does not have all the information necessary to determine more specifically whether an action for damages brought by an individual pursuant to Article 2043 of the Italian Civil Code is capable of being directed against public authorities on the ground that they have failed to act or have committed an unlawful act for which they can be held responsible in the exercise of their powers. It falls therefore to the national court to undertake that examination.

The Court of Justice continued, at paragraph 39,

If the ordinary Italian system of non-contractual liability were to prove incapable of serving as a basis for an action against public authorities for unlawful conduct for which they can be held responsible in the exercise of their powers and the national court were unable to undertake any other relevant comparison between the time limit at issue and the conditions relating to similar claims of a domestic nature, the conclusion would have to be drawn, in view of the foregoing, that Community law does not preclude a Member State from requiring any action for reparation of the loss or damage sustained as a result of the belated transposition of the Directive to be brought within a limitation period of one year from the date of its transposition into national law.

Two principles can be drawn from this part of the judgment. First, the principle of "equivalence" really does mean what it says. The domestic court, in applying the principle, must look not merely for a domestic action that is similar to the claim asserting Community rights, but for one that is in juristic structure very close to the Community claim. It does that, in the words of the Court of Justice in Case C-326/96, Levez, [1999] IRLR 36 at paragraph 43, by considering "the purpose and the essential characteristics of allegedly similar domestic actions". That approach was demonstrated in Palmisani by the rejection of a claim for specific payments, as opposed to compensation, as a relevant comparison. It was also demonstrated by the need to find in the domestic law not merely a cause of action for reparation, but one for reparation for conduct of a public authority in the exercise of its powers. The narrowness of that comparison was underlined by Mr Advocate General Cosmas in paragraphs 38 and 39 of his opinion:

The claim in this case is for reparation on the ground that Directive 80/987 was not transposed into Italian law within the prescribed period, and as a result the persons concerned could not obtain the benefit of the guarantee provided for by the Directive at the proper time. Only the national court is in a position to know what similar claim may exist under the Italian legal system.

If, however, it were necessary to provide the national court with some element of comparison, it would in my opinion be the non-contractual liability of the State arising from belated adoption of a regulatory act provided for by an enabling statute.

Second, as paragraph 39 of the judgment of the Court of Justice makes clear, if there is no action in the domestic system that fulfils the requirements set out above, then the national system is at liberty (subject always to the further principle of effectiveness) to set whatever limitation period seems best to it for the claim in relation to Community rights.

Mr Vaughan accepted this latter principle, and that the task of the court was to seek to identify a "comparator" in domestic procedure that met the Palmisani criteria. If there was such a valid comparator, the Community claimant was entitled to the limitation period that applied to that comparator. If there was no such comparator, the limitation period provided by regulation 32(4)(b) was not, on this ground at least, open to objection in Community law. I will therefore survey in turn the various comparators put before us and before the Judge.

Action for breach of statutory dut y

Mr Vaughan said, rightly, that the action for damages provided by the Regulations was, in its domestic characterisation, one for breach of statutory duty. It should therefore be subject to the same limitation period as domestic actions for breach of statutory duty, which was (usually) six years. This argument was plainly wrong. As Mr Flint put it, "breach of statutory duty" is simply too wide a category to meet the Palmisani requirements of equivalence. If the approach here suggested were correct, then the Court of Justice would in that case have accepted claims under Article 2043 of the Italian Civil Code as an appropriate comparator without further investigation.

This was one of the comparators relied on before the Judge. He correctly held that the comparison was wrong as a matter of Community law, because the comparator must be concerned with similar rights derived wholly from domestic law: per the Advocate-General in Levez at paragraphs 26-28 of his opinion. Further, and in any event, the claim in respect of other directly effective Community rights will be for Norbrook damages. The essential characteristics of that claim are therefore different from those of a claim under the Regulations.

It would appear that before the Judge Mr Flint supported this comparator with some caution. He however succeeded in persuading the Judge that the comparison was appropriate. The Judge referred, in my respectful view rightly, to the fact that the whole purpose of Directive 89/665 was to secure the rapid rectification of errors by public authorities, just as do judicial review proceedings, and to the fact that the wording of Regulation 32(4)(b) had clearly been taken more or less verbatim from RSC O53 r4(1). The Judge continued, at p34C,

In my judgment the only similar domestic action is an application for judicial review. The procedure laid down by Article 32, including the time limit, is no less favourable to a claimant than that laid down by Order 53 for judicial review. Therefore, in my judgment, there is no breach of the principle of equivalence.

Before us, Mr Flint was even more restrained in his reliance on judicial review as an appropriate comparator. He was justified in that diffidence.

First, while as I have indicated I cannot accept arguments that are based on a need to view the damages claim envisaged by Directive 89/665 in complete isolation from the other provisions of that Directive, Mr Vaughan is nonetheless right in saying that the damages claim envisaged by the Regulations must necessarily be a claim in private law. While therefore there may be good reasons of policy for the limitation period applied to the particular damages remedy provided by the Regulations, those reasons are not to be found in, and the limitation period cannot be justified by comparison with, the criteria applying to the general public law remedies of Order 53. Second, whilst a damages claim can now be joined in an Order 53 application, that is a matter of procedure, not of substance, and only arises where there is a separate though linked right to damages:

[RSC O 53 r 7(1)] permitting a joinder of claims for damages for tort or breach of contract was an entirely procedural reform, designed to prevent multiplicity of proceedings, and did not affect the rule that there is no right to damages for unlawful administrative action per se: De Smith, Woolf and Jowell, Judicial Review of Administrative Action (5th edition), para 19-010.

That means, as Mr Vaughan pointed out, that the effective limitation period for such a claim is not the three months of Order 53, but whatever period would apply to the claim if the plaintiff did not take advantage of the provisions of Order 53 rule 7(1). It is this consideration that, in my view, takes the damages claim under the Regulations well away from any equivalence with procedure under Order 53.

Mr Vaughan said that this was his strongest case. The right of action provided by the 1988 Act was directly equivalent to the right to claim damages created by the Regulations. It was, in the absence of any indication to the contrary, subject to a six-year limitation period.

By the 1988 Act local and other public authorities are forbidden to select the persons with whom they contract on the basis of "non-commercial considerations". Such considerations include, by section 17(4), such matters as the composition of and the terms of employment enjoyed by the contractors' workforce; and the country of origin of supplies used by the contractors. By section 19(7)(b) a failure to comply with that duty is actionable in damages by any person who in consequence suffers loss or damage, though by section 19(8)

any action...by a person who has submitted a tender for a proposed public supply or works contract arising out of the exercise of functions in relation to the proposed contract the damages shall be limited to damages in respect of expenditure reasonably incurred by him for the purpose of submitting the tender

Mr Vaughan submitted that the purpose of both the Regulations and the 1988 Act was the same, to provide tenderers with a right to compensation when they had been unfairly treated. To implement that purpose, in both cases a damages remedy was provided against a public authority when it had wrongly excluded a tenderer from the contracting process.

I agree that the 1988 Act comes closer as a comparator than any of the other candidates surveyed, but it falls well short of satisfying the principle of equivalence set out in Palmisani and LEVEZ. First, the purpose of the two legislative provisions, and thus of the actions that they support, is different. The Regulations enforce the objectives of Directive 92/50/EEC, which is aimed at the establishment of the internal Community market and the general elimination of discrimination between nationals of different member states. To cite one only of the recitals to that Directive,

to eliminate practices that restrict competition in general and participation in contracts by other Member State's nationals in particular it is necessary to improve the access of service providers to procedures for the award of contracts.

By contrast, the 1988 Act has much more limited objectives. It does not address competition in public supply in general, or indeed at all; that latter objective is pursued by different provisions in Part I of the 1988 Act. Rather, it prohibits very specific conditions in the procurement policy of public authorities. The contrast is indeed to be seen in an authority shown to us by Mr Vaughan, Case 31/87 [1988] ECR 4635, Beentjes. A condition of invitations to tender issued by the Dutch Ministry of Agriculture was that contractors should employ long-term unemployed persons. A complaint was raised under Directive 71/305/EEC, the predecessor of our Directive 92/50. The Court of Justice held that

the condition relating to the employment of long-term unemployed persons is compatible with the directive if it has no direct or indirect discriminatory on tenderers from other Member States of the Community. An additional specific condition of this kind must be mentioned in the contract notice.

The contrast with the 1988 Act is very striking. Under section 17(5)(a) such a condition would be absolutely prohibited as a condition relating to the composition of the contractor's workforce. It would not be saved by any publication of a specific notice; nor by appeal to an absence of actual discriminatory effect, and much less to the absence of any discrimination against nationals of other member states of the Community. And on the other side of the coin, many contractual requirements prohibited under Directive 89/665 and the Regulations would not be open to objection under the 1988 Act: including, significantly enough, as Mr Vaughan agreed, the specification of TETRA that is complained of in this case.

Second, the whole structure and approach of the two regimes is different. Directive 92/50, and thus the Regulations, lay down a very detailed code for the whole tendering process; the 1988 Act merely prohibits certain specific conditions from being included in invitations to tender that are otherwise not regulated by it at all. And the essential conditions of the two actions that are generated by those regimes are different. Damages under the Regulations are at large, indeed in this case alleged to amount to loss of profits of £100,000,000; under the 1988 Act they are confined to the tendering expenses of persons who do submit tenders. That, as Mr Flint said, is not merely a cap on the damages, but a limitation to a particular type of damages, to one head of loss suffered by one class of plaintiff. Mr Flint summed up this part of the case by pointing out that on the facts of our case Matra would, mutatis mutandis, simply have had no claim under the 1988 Act, because its complaint was nothing to do with irrelevant conditions, but rather with the form of invitation to tender; its claim was for loss of a chance of profit and loss of reputation and not for tendering expenses; and it could not claim in any event because it had not been a tenderer.

All these considerations confirm that the Judge was right in holding the 1988 Act not to be an equivalent comparator under the Palmisani rule.

I therefore conclude that Mr Flint was right in what was his primary case before us, as in effect before the Judge, that there is no such comparator for the claim under the Regulations. By the application of the second rule in Palmisani, therefore, the limitation period provided for that claim is not open to attack under Community law.

This is very limited criterion. The remedy provided by the member state must not make the Community right "virtually impossible or excessively difficult" to exercise: Case C-312/93 [1995] ECR I-4599 [12]. Mr Vaughan in effect accepted that it was impossible to attack this case on that basis. He had originally submitted that a requirement to instigate proceedings for a damages remedy many months before the actual conferring of the contract meant that time could expire before the right accrued. That argument however rests on the contention, which I have demonstrated above to be mistaken, that damage is not suffered until damages are quantifiable or potentially quantifiable. I can see no other reason for holding that the remedies granted by the Regulations are not effective in the Community law sense.

The Regulations not being invalid it is necessary to go on and consider the third issue.

Mr Vaughan accepted that this was a matter of discretion, and that to disturb the Judge's refusal to extend the time limit he had to show that there had been an error in principle. That error was said to be the adoption by the Judge of an approach based on the criteria appropriate to a public law claim under Order 53, rather than a private law damages claim, where the balance of prejudice, not expressly considered by the Judge, should be taken into account.

I leave aside the preliminary question, discussed above, as to whether it is appropriate to analyse the damages claim under the Regulations, albeit a claim in private law, in isolation from the general scheme of the Regulations, because even on the basis advanced by Mr Vaughan the objections to the Judge's approach are unfounded. First, as a matter of construction of the Regulations, since those Regulations use the language of Order 53, and since (as I have held) it is lawful for them to use that language, the Judge should not be criticised if in applying that language he did indeed confine himself to principles to be found in public law. Second, however, if prejudice is to be taken into account, I am quite satisfied that the effect even of a damages claim, and notably a claim for a huge amount, in a complex contracting process such as the present will be to have an unsettling and disrupting effect on that process. The damages claim cannot succeed unless Matra demonstrates that the basis of the whole PSRCS project, the use of TETRA technology, is unlawful. That that is indeed Matra's case is reinforced by the declaration to that effect that Matra seeks in the action: which will apparently be an active claim should this action continue. There is every reason in the public interest why such claims should be made promptly. That consideration is only underlined by the emphasis on speedy recourse of Directive 89/665 itself.

The Judge reviewed other considerations advanced by Matra and rejected all of them. He was clearly justified in that course, and in particular in not entering into speculation about the strength of Matra's claim; and in concluding that Matra had been well-informed throughout as to its rights, and had taken a conscious decision, however commercially justified that might have been, not to assert them at the appropriate time. There are no grounds for criticising his conclusion on this point.

I would accordingly declare, in much the same terms as the Judge, that

1. The requirements of regulation 32(4)(b) of the Public Services Contracts Regulations 1993 are not unlawful as being in breach of Community law

2. The plaintiffs did not bring these proceedings within the time limited by that sub-regulation

3. There are no grounds for displacing the Judge's refusal to extend that time and I would dismiss this appeal.

MUMMERY LJ : I agree

HIRST LJ : I also agree.

Order: Appeal dismissed with costs.

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