The Court of Appeal (superior jurisdiction) delivered its judgment on June 30 on appeal application 95/21/1.

The realm of public procurement is an often controversial matter due to the obvious public interest related to it. This field is quite regulated and subject to legislation which often finds its source or legislative higher calling in the law of the European Union. In this case, the recommended contract value of the tender (exclusive of VAT) was a relative mere pittance of €901,904, as set by the contracting authority.

The Ministry for Finance and Employment (the ministry) had resorted to a negotiated procedure for the “procurement of card services”. Subsidiary Legislation 601.03, the Public Procurement Regulations (PPR) define negotiated procedures as “those procedures whereby contracting authorities consult the economic operators of their choice and negotiate the terms of a contract with one or more of these”. Negotiated procedures should be exceptional and their use is restricted to specific instances according to the Public Procurement Regulations. As will be seen, their use could become quite controversial.

This appeal to the Court of Appeal was filed by Truevo Payments Ltd against the decision of the Public Contracts Review Board (PCRB) dated March 18, 2021. In this negotiated procedure, the offer by the appellant company had actually been recommended for acceptance and the contract awarded. The said recommendation and award were contested by appealed company Credorax Bank Ltd in front of the PCRB.

The whole case, in fact, kicked off with Credorax Bank Ltd filing its suit in front of the PCRB against the contracting authority, which in this case was the ministry, and against Truevo Payments Ltd. Credorax Bank Ltd filed the said suit after the lapse of the publication period of the tender and after the actual tender award to Truevo Payments Ltd. In its submissions to the PCRB, the ministry had submitted that an invitation had been issued to several parties to participate in the negotiated procedure. Credorax Bank Ltd had not participated, and the Director of Contracts verified that this was not due to any failure on the part of the Electronic Public Procurement system.

The realm of public procurement is an often controversial matter due to the obvious public interest related to it

Credorax Bank Ltd sought the cancellation of the procedure and the revocation of the tender award. The ministry submitted that this contestation in front of the PCRB was not admissible as Credorax Bank Ltd had no juridical interest as it had decided not to submit a bid. The ministry submitted that article 270 of the PPR clearly states that the right of appeal is limited to a tenderer or bidder. The PCRB decision and the Court of Appeal judgment are, in fact, on preliminary pleas raised by the defendants in front of the PCRB.

Central to this the issue was the article of the PPR which Credorax Bank Ltd acted upon. The PCRB held that the parties seemed to agree that the application in front of the PCRB was filed according to the referred article 270. However, the ministry had argued that Credorax Bank Ltd could not avail itself of an article 270 action after failing to make use of an article 262 action (which is a remedy available before the closing date of a tender), and this argument would prove successful in the end.

The PCRB determined that the applicability of article 270 of the PPR is not excluded by what article 262 of the PPR dictates. It also noted that the first request of Credorax Bank Ltd was that of revoking the ministry’s decision to recommend the award to Truevo Payments Ltd, and the PCRB held that this was definitely not a request that could in any way or by any stretch of imagination be made in terms of article 262 of the PPR. This is where the Court of Appeal has significantly differed.

Both the PCRB and the Court of Appeal agreed that Credorax Bank Ltd had the required juridical interest to file an article 270 action in front of the PCRB, with the Court of Appeal importantly noting that this notion is not the classic notion of juridical interest under Maltese law but was based on the wording of article 270 and of the EU directive which is at its basis.

The PCRB decided that Credorax Bank Ltd was fully entitled to propose its action in front of the PCRB according to article 270 of the PPR. For the PCRB, the action could proceed towards the determination of all the merits of the case. Appellant company Truevo Payments Ltd appealed this PCRB decision by application to the Court of Appeal, and successfully so.

Truevo Payments Ltd appealed on the basis that Credorax Bank Ltd was not a participant in the tender proceedings and that it could have made use of an article 262 action. The Court of Appeal squarely focused the matter it reviewed on whether Credorax Bank Ltd could contest the procedure used for this contract award in front of the PCRB.

As stated, the matter of the required interest under article 270 was considered by the Court of Appeal and it confirmed that Credorax Bank Ltd held such interest. However, in a determining twist, it accepted Truevo Payment Ltd’s argument that such an action was actually inadmissible due to Credorax Bank Ltd having failed to propose an article 262 action.

The Court of Appeal pointed out that Credorax Bank Ltd’s action was clearly intended to attack the negotiated procedure itself and not the substance of the offer by Truevo Payments Ltd. The facts complained of existed prior to episodes which would have allowed an article 262 action, and thus the Court of Appeal stated that such complaints had to be raised before the closing date for the calls for application. Therefore, the Court of Appeal acceded to the appeal by Truevo Payments Ltd and declared the PCRB decision revoked and the contestation by Credorax Bank Ltd in front of the PCRB as null and inadmissible, which is basically saying that it acted to no avail.

Edric Micallef Figallo is an associate at Azzopardi, Borg and Associates Advocates.