Matra Communication SAS v Home Office

Factual and Procedural Background

The Appellant, Company A, is a foreign company specializing in secure mobile radio telephone systems, offering a system called TETRAPOL. The Respondent, a government department, initiated a project for a national public safety radio communications system (PSRCS) with an estimated value of £1.5 billion over 15 years. The Respondent's policy was to require the use of a competing system, TETRA, which excluded Company A from participation.

The Respondent published a contract notice in the Official Journal specifying TETRA as the technical standard. Company A unsuccessfully sought to change this policy and later threatened legal proceedings. The contract was awarded to a consortium using TETRA. Company A issued proceedings alleging that the specification of TETRA breached certain directly effective provisions of EU law, including Articles 30 and 59 of the EU Treaty and Article 3.2 of Council Directive 92/50/EEC, claiming discrimination and unlawful exclusion.

The Respondent contended that the claim was time-barred under regulation 32(4)(b) of the Public Services Contracts Regulations 1993, which imposes a three-month time limit for bringing proceedings. The lower court struck out the claim on this basis. The appeal concerns the compatibility of this three-month limitation period with Community law.

Legal Issues Presented

1. Whether the action was brought promptly and within the three-month time limit from when grounds for bringing the action first arose, as required by regulation 32(4)(b).
2. Whether the time limit requirement in regulation 32(4)(b) is compatible with Community law.
3. Whether the lower court judge was correct in refusing to extend the time limit under regulation 32(4)(b).

Arguments of the Parties

Appellant's Arguments

• The damages claim should be treated separately from other remedies under the Regulations, with the limitation period running from when damages became quantifiable, i.e., after contract award.
• The damages sought were not of the "Norbrook" type, and thus the limitation rules applicable to private law damages claims should apply.
• The limitation period under regulation 32(4)(b) was incompatible with Community law principles, particularly the principles of equivalence and effectiveness.
• The limitation period should be comparable to that applying to claims under the Local Government Act 1988, which typically has a six-year limitation period.
• The judge erred in refusing to extend the time limit, failing to consider the balance of prejudice and the private law nature of the damages claim.

Respondent's Arguments

• The three-month time limit in regulation 32(4)(b) was properly transposed from Directive 89/665 and is compatible with Community law.
• The damages remedy under the Regulations is part of a comprehensive and integrated scheme of remedies, all subject to the same limitation period.
• The limitation period is analogous to that for judicial review, which also requires prompt action.
• The Local Government Act 1988 claims are not an appropriate comparator due to differences in purpose, scope, and damages available.
• The judge correctly exercised discretion in refusing to extend the time limit, given the public interest in prompt challenges to public procurement decisions.

Table of Precedents Cited

Court's Reasoning and Analysis

The court first addressed the nature and scope of Directive 89/665 and its transposition into the Regulations, emphasizing that the Directive establishes a comprehensive and integrated scheme of remedies, including damages, which must be effective and rapid.

Regarding the timing of the claim, the court held that the cause of action arose when Company A knew it had been excluded from the project, which was well before the contract award. The damages claim related to loss of a chance to obtain the contract, which constituted damage at that earlier date. Thus, the three-month limitation period began to run from that time.

In examining the compatibility of the three-month limitation period with Community law, the court applied the principles of equivalence and effectiveness. It rejected comparisons with broad domestic actions such as breach of statutory duty or other Community rights claims, finding them too dissimilar. The court also dismissed judicial review as an appropriate comparator for the damages claim, noting the private law nature of the latter.

The court considered the Local Government Act 1988 as a closer comparator but found significant differences in purpose, scope, and damages available. The Act's limitation period and damages regime were not sufficiently analogous to satisfy the equivalence principle.

Consequently, the court found no suitable domestic comparator and held that the limitation period under regulation 32(4)(b) was not incompatible with Community law. The principle of effectiveness was also satisfied, as the limitation period did not render the right to damages virtually impossible or excessively difficult to exercise.

Finally, the court upheld the lower court's refusal to extend the limitation period, emphasizing the public interest in prompt challenges to procurement decisions and noting that Company A had consciously chosen not to assert its rights earlier despite being well-informed.

Holding and Implications

The appeal was dismissed.

The court held that the three-month limitation period imposed by regulation 32(4)(b) of the Public Services Contracts Regulations 1993 is lawful and compatible with Community law. Company A's claim was not brought within this period, and no grounds existed to extend it. As a result, the claim was time-barred, and the lower court's decision to strike out the action was upheld. This decision directly affects the parties by terminating the claim but does not establish new precedent beyond affirming the validity of the limitation period under the Regulations.