Firebuy Resists Heat Brought On By Procurement Injunction Challenge

Firebuy, a non-departmental public body sponsored by the Department for Communities and Local Government, has successfully resisted an application for an interim injunction in a procurement claim by Lion Apparel.  The injunction, if granted, would have prevented Firebuy from entering into a contract for the supply of a new national uniform for firefighters.

The challenge related to a procurement competition commenced in 2003 called the “Integrated Clothing Project” or ICP.  Under the ICP, Fire and Rescue Authorities across England are to be given the opportunity to acquire the new national uniform, which includes protective equipment, through a centralised contract.

In March 2007, Bristol Uniforms was appointed preferred bidder for the ICP.   Following that appointment, Lion Apparel, one of the unsuccessful bidders, challenged the outcome of the process and commenced proceedings in the Chancery Division, applying for an interim injunction pending trial.  The claims made by Lion were wide ranging, but included allegations that Lion’s bid had been mis-scored in relation to price and garments; an allegation that Firebuy’s scoring system was irrational and unfair; and an allegation that Firebuy had discriminated against Lion in giving feedback to Bristol in a “bid development” phase.

Lion’s application was heard over 6 days by Morgan J.  The judge reviewed Lion’s various complaints in detail, and with one exception, found that Lion’s complaints were unfounded, out of time or would not have affected the outcome of the competition.  Morgan J held that the remaining claim, the challenge to Firebuy’s scoring methodology, was weak and speculative.  That complaint was not sufficient to interrupt the process given the possible adverse consequences of doing so.  Lion, if it succeeds at a trial, is limited to a claim in damages.

The judgment, which will be published in full in the week of 1st October 2007, contains interesting findings in relation to the standard of review the court will apply to decisions of contracting authorities, and the particular need for promptness where a claimant wishes to interrupt a procurement process which would otherwise move forward to the next stage.

Michael Bowsher QC and Rob Williams appeared for Firebuy, instructed by Pinsent Masons.

Please click below for more information on:
Michael Bowsher QC
Rob Williams

Ex-Works Argument Dispatched by the ECJ

Case C-409/04, The Queen, on the application of Teleos plc and others v HMCE

The applicants were UK mobile phone traders who had supplied phones to a Spanish company.  The goods’ destination was France or Spain and the traders argued that by placing the goods at the purchasers’ disposal at a UK bonded warehouse under “ex-works”, a standard Incoterm, the goods had been “dispatched” for the purposes of an intra-Community acquisition of goods, so that the intra-Community supply of goods was exempt from VAT.  The traders were assessed for VAT by HMCE retrospectively.

The High Court judge found that the traders had made all such investigations as were reasonably possible and that the right to dispose of the goods as owner had been transferred to the purchaser.

In this context the question of the meaning of “dispatch” was referred to the ECJ, which held that in order to qualify for exemption, “dispatch” within the meaning of Article 28 of the Sixth VAT Directive means not only that (a) the right to dispose of the goods as owner had to have been transferred to the purchaser, but also that (b) the supplier had to establish that those goods had physically left the UK.  However, the ECJ also held that the fact that a supplier acted in good faith and that it took every reasonable measure in its power and that its participation in fraud is excluded were important points in deciding whether such a supplier could be obliged to account for the VAT after the event.  The ECJ observed that, once the supplier has fulfilled all its obligations, where the contractual obligation to dispatch or transport the goods out of the Member State of supply had not been satisfied by the purchaser, it is the latter who should be held liable for the VAT in that Member State.  The case now returns to the High Court for a decision on the facts.

Rupert Anderson QC and Rebecca Haynes of Monckton Chambers acted for HMCE. Philip Moser of Monckton Chambers acted for Teleos and others.

Please click below for more information on:
Philip Moser QC
Rebecca Haynes



Calltel Telecom Ltd and Opto Telelinks (Europe) Ltd ~ News Update

Following the ECJ’s judgment in Kittel v Belgium, the scope and application of the “means of knowledge” (“MoK”) test in cases of “Missing Trader Intra-Community” VAT fraud (“MTIC” or “carousel” fraud) has been considered twice at interim hearings in UK cases: in Dragon Futures Limited (Decision of the VAT & Duties Tribunal dated 10 October 2006) and Just Fabulous (UK) Ltd & ors [2007] EWHC 521 (Admin).

A decision in the first MoK case after a full hearing on the facts was delivered by the VAT & Duties Tribunal Calltel Telecom Limited and Opto Telelinks (Europe) Limited v HMRC on 20 July 2007.

The Tribunal approved of the application of Kittel to chains of transaction (and to so-called “contra-trading”) and found that the Appellants were not entitled to their repayment claims for VAT, despite their not having dealt directly with any defaulting trader, due to their being “connected with” MTIC fraud within the meaning of the test in Kittel.  The Tribunal found that these particular Appellants had had actual knowledge, but it found in the alternative that the same would have been the case on the basis of MoK.

The Tribunal also gave guidance on the disclosure required in cases of this type.
The Appellants have appealed to the High Court by Notice of Appeal dated 14 September 2007.

Philip Moser acted for HMRC.

Please click below for more information on:
Philip Moser QC



Premier League Panel’s Ruling on Heinze Transfer

After a two-day hearing on 20th and 21st August 2007 the Premier League’s Arbitration Panel decided that Manchester United would not be forced to sell Gabriel Heinze to Liverpool.

The arbitration centred on a letter dated 13th June 2007 which according to Heinze gave him written permission to pursue a transfer to another club.

The panel decided that the disputed letter did not constitute a binding agreement for Manchester United but only an ‘agreement to agree’ and thus did not create an obligation to sell the player.  They also agreed it should be interpreted in context of verbal discussion and the club’s policy of not transferring players to Liverpool.

Heinze has now transferred to Real Madrid.

Paul Harris was instructed by Edward Canty at Brabners Chaffe Street on behalf of Manchester United.

Please click below for more information on:
Paul Harris QC



Welsh Water Allowed to Appeal CAT Decision

The Court of Appeal (Rix, Thomas LJJ) has granted Dwr Cymru Cyfyngedig (Welsh Water) permission to appeal against two judgments of the Competition Appeal Tribunal (CAT) in Albion Water Ltd v Water Services Regulation Authority.

The permission is limited to two issues, namely whether:

  • the CAT applied the wrong legal test for margin squeeze in its judgments of 6 October 2006 and 18 December 2006
  • the CAT had jurisdiction under the Competition Act 1998, Schedule 8, para 3(2) to determine whether Dwr Cymru held a dominant position in a relevant market in the UK in the absence of a prior decision on that issue by Ofwat.

Welsh Water’s application for permission was refused on paper, but was granted following reconsideration of that earlier decision at a hearing end of July 2007.

Christopher Vajda QC and Meredith Pickford represented Welsh Water and Rupert Anderson QC and Valentina Sloane represented OFWAT.

Please click below for more information on:
Meredith Pickford
Valentina Sloane



Successful Challenge to NICE on Access to Alzheimer’s Drugs

Today the High Court handed down judgment in the case of R (Eisai Ltd) (Alzheimer’s Society & Shire Ltd, Interested Parties) v. the National Institute for Health and Clinical Excellence.

In her judgment, Mrs Justice Dobbs ruled that NICE had failed in its duty to ensure that its guidance was not discriminatory and that there was a need for NICE to clarify its position as to the circumstances when doctors may exercise their own clinical judgment about whether a patient should have access to drug treatments, overriding NICE’s recommendations when it is appropriate to do so.

The court did not find that the NICE guidance itself (which recommends Alzheimer’s drugs only for patients in the moderate stage of Alzheimer’s disease) or the way in which NICE had calculated benefits of the drugs for carers was irrational.  The Judge also dismissed an argument by drug manufacturer Eisai that the decision-making process was unfair because NICE’s cost effectiveness model was not made public.

However, ordering NICE to amend its Guidance, Mrs Justice Dobbs made strong criticisms of NICE’s failure to comply with its statutory equality duties under the Race Relations Act and the Disability Discrimination Act.  Upholding the challenge by Eisai and the Alzheimer’s Society, the Judge found that “no proper consideration was given to NICE’s duties as a public authority to promote equal opportunities and to have regard to the need to eliminate discrimination” and that, at the stage of formulating its Guidance, NICE had not considered or complied with its “due diligence” equality duties, and it did not appear that any thought was given to present or imminent obligations under anti-discrimination law.

The Alzheimer’s Society, representing the interests of people with dementia and their carers, acted as one of a number of separate interested parties in this challenge.

Tim Ward and Gerry Facenna were junior counsel to the Alzheimer’s Society.

Please click below for more information on:
Tim Ward QC
Gerry Facenna



CAT Dismisses Brannigan Appeal

On 26 July 2007, the Competition Appeal Tribunal unanimously dismissed an appeal brought by a local newspaper proprietor,  Mr. Brannigan, which challenged the OFT’s refusal to investigate a complaint under the Competition Act 1998.

Mr. Brannigan complained to the OFT that two rival publishers, Newsquest and Johnston Press had engaged in exclusionary practices contrary to the Chapter I and II prohibitions which had forced him out of the market in the East Sussex area.  He claimed that Newsquest had threatened litigation, cancelled the printing slot for his publication, launched a “spoiler” free newspaper and had targeted Mr. Brannigan’s customers with selective discounts conditional on them advertising exclusively in Newsquest’s papers.

The OFT rejected Mr. Brannigan’s complaint on its administrative priorities but offered to reassess the complaint at a hearing on 26 April 2006, after the CAT refused to strike the case out.  On re-assessment, the OFT rejected the complaint on the basis that there was no clear evidence of dominance or abuse.  It also refused to investigate the complaint further for reasons of administrative priority. Mr. Brannigan appealed that rejection to the CAT, which dismissed his appeal against the decision on the grounds that on the facts available there was not enough evidence to suggest that the OFT had made any material error of law, fact or appraisal.  As to the question of whether the OFT should have conducted further investigations, a decision by the OFT not to carry out an investigation under section 25 or to reject a complaint otherwise than on the grounds that there has been no infringement was a decision which could only be challenged before the Administrative Court, not the Tribunal.

Daniel Beard and Anneli Howard represented the OFT.

Jennifer Skilbeck and Ben Rayment assisted Brannigan pro bono at the preliminary stages of the appeal, who appeared in person at the hearing.

Please click below for more information on:
Daniel Beard QC
Ben Rayment
Anneli Howard



The End of the Line for the Mobile Telecoms Operators and their VAT Refund Claims?

Case C-369/04 Hutchison 3G UK Ltd & Others v CEC and Case C-284/04 T-Mobile & Others v Austria, Judgments of 26 June 2007

The ECJ has held that a Member State’s auction of 3G licences does not constitute an economic activity and so falls outside the scope of the Sixth Directive.  In finding that claims by successful bidders for recovery of allegedly-paid VAT have failed at the first hurdle, the ECJ declined to offer any observations on the other questions referred.  Issues such as when treatment of a public authority as a non-taxable person will lead to “significant distortions of competition” therefore remain shrouded in uncertainty.  There is, however, an interesting gleam of light in the short judgment. In departing from the Opinion of Advocate General Kokott, the ECJ has indicated that the door is open for the crossfertilisation of certain concepts in VAT and competition law.

Competition/EU Set of the Year Nomination

We are delighted to announce that Monckton Chambers has been nominated as “Set of the Year” for Competition and EU for the third year running as part of the Chambers Bar Awards 2007 held in recognition of the high quality work done at the Bar.  These nominations are the result of research conducted for the next edition of Chambers UK.  We also offer our congratulations to Peter Roth QC who in the same category has been shortlisted as “Silk of the Year”.

We would like to take this opportunity to thank all our clients for their continuous support.

Tour Operators Challenge Air Passenger Duty

Judgment is expected in September in R(Federation of Tour Operators) v HM Treasury.

The Federation of Tour Operators challenged the recent increase in the rate of Air Passenger Duty, a tax upon the carriage of passengers by air, which is typically passed on by airlines to their passengers.

Tour Operators sell flights as part of package holidays but are prevented by the Package Travel Regulations from passing on the increase in the tax to customers who had already made bookings, but not yet travelled, at the time this increase took effect.  They argued that the Treasury overlooked this difficulty and that as a result a burden of £45 – £50m of the tax has unintentionally stuck with them, giving rise to a breach of their “right to property” protected by Article 1 of the First Protocol to the ECHR.  They further argued that the entire tax was contrary to the Chicago Convention on aviation, and Community law.

Tim Ward acted as junior counsel for the tour operators.

Please click below for more information on:
Tim Ward QC