First guidance from the High Court on what constitutes a “concession contract”

Cases

In a judgment delivered today the High Court has provided critical guidance to public authorities seeking to ascertain whether contracts and certain leases must be awarded in compliance with a procurement process prescribed by the Concession Contracts Regulations 2016 (CCR).

The judgment in Ocean Outdoor UK Limited v London Borough of Hammersmith and Fulham [2018] EWHC 2508 (TCC) considers, for the first time, what amounts to a “concession contract” for the purposes of the CCR.

The central question was whether leases entered into over two properties which permitted advertising next to a highway was a “concession contract”.

The Court held that it was not, making three critical observations:

First, a contract will only be a concession contract where the services or works provided for by the contract were for the benefit of the contracting authority or its residents, in furtherance of the strategic objectives of the contracting authority, or to satisfy the contracting authority’s statutory obligation. In the absence of a statutory obligation to provide advertising or evidence of some benefit to the contracting authority or its constituents, the leases could not be service concession contracts.

Second, to come within the CCR, the putative concession contract must contain a legally enforceable obligation to provide works or services. An obligation which does not require the procurement or carrying out of “any particular scope, volume or value of advertising”, but merely the use of “reasonable endeavours” to procure advertising business for the site did not constitute a “legally enforceable obligation”.

Third, no procurement process would have been required even if the leases had been concession contracts. Although the objective of the lessee in entering into the leases was to carry out economic activity on the land, the leases were genuine leases and therefore exempted from the CCR by CCR reg 10(11).

An alternative argument was also made that the Council was bound to comply with general principles of EU law even if the CCR did not apply in terms. The Court rejected the submission, noting that the leases were not contracts for services falling within the remit of the Treaty on the Functioning of the European Union. In any event, it observed (applying the observations of Coulson J in AG Quidnet Hounslow LLP v London Borough of Hounslow [2012] EWHC 2639) that evidence of cross-border interest was required for the general principles of EU law to apply to the award of a contract. Accordingly, in the absence of evidence of a realistically hypothetical bidder, the award of the leases was not subject to EU general principles.

James Goudie QC and Joanne Clement acted successfully for the London Borough of Hammersmith and Fulham (instructed by Mari Roberts of Sharpe Pritchard LLP).