Public Contracts Regulations 2015 - Regulation 100

Regulation 100 - General interest grounds for not making a declaration of ineffectiveness

Regulation 99 establishes a number of limited grounds whereby the court may declare the ineffectiveness of a contract. Regulation 100 establishes exceptions to those grounds effectively mandating the court not to declare ineffectiveness if there are overriding reasons owing to a general interest requiring the contract to be maintained (paragraph 1(a)(b)).

The rest of the Regulation is focused on helping the court establishing parameters to determine overriding reasons owing to a general interest. Paragraph 2 establishes that the economic interests in the effectiveness of the contract may be considered an overriding reason but only if in exceptional circumstances ineffectiveness lead to disproportionate consequences. We can argue therefore that the court will have to apply a proportionality test to measure both outcomes.

This limitation to the grounds for ineffectiveness is restricted by paragraphs 3 and 4 whereby it is established that economic interests directly linked to the contract do not constitute overriding reasons. Costs such as the delay on contract performance, starting a new procedure, changing contractors or legal costs incurred with the process are considered to be direct economic costs and as such not eligible defenses against the declaration of ineffectiveness. If on the one hand I expressed concerned on Regulation 99 regarding the very limited grounds for ineffectiveness, on the other hand it appears that the potential exceptions or defenses have been clearly restricted as well.

It therefore appears that it may be easier for a contracting authority trying to avoid a declaration of ineffectiveness to put the emphasis of its arguments on the effects upon the potential beneficiaries of what is being procured than the direct economic costs of correcting a mistake.