Coulson LJ: No Standing for Subcontractors or US Firms in National Lottery Claim

28 Jul 2023

IGT v Gambling Comission [2023] EWHC 1961 (TCC)

Judgment has been handed down today in a preliminary issue in IGT v Gambling Commission, International Gaming Technology’s claim against the Gambling Commission in respect of the award of the Fourth National Lottery Licence (4NL).

This is part of the long-running procurement litigation about the award by the Gambling Commission of the 4NL concession to a Czech-owned company, Allwyn. Incumbent supplier Camelot brought a procurement law challenge, as did the key subcontractor, the IGT Group, which comprises both UK and US companies. After the lifting of an automatic suspension on contract-making (see here) and permission to appeal being granted to the Court of Appeal, in an unusual move Allwyn bought the other bidder, Camelot, ending the appeal process. IGT’s claim then continued alone in the High Court as a damages-only claim.  This led to the preliminary issue to determine (i) generally, whether subcontractors have standing in procurement claims, and (ii) specifically, whether US companies have standing in UK service concession contract claims.

The judgment is of obvious wider interest to public procurement lawyers and clients, as it considers and clarifies the requirements for a claimant to have standing under the Concession Contracts Regulations 2016 (CCR), and thus also under the procurement regulations more generally. Further, it determines the standing requirements for bidders from third countries, specifically other GPA states, in service concession contract cases. This is the first time that either of these matters have been fully argued and decided in the UK courts.

Sitting as a first instance judge in the TCC, Coulson LJ determined that none of the IGT Claimants had standing to bring claims under the CCR.

In the judgment dealing with subcontractors Coulson LJ considered and determined a number of issues of EU and UK law around the meaning of the Directives and Regulations, including:

  • EU law did not impose an obligation on the UK to provide standing to anyone other than the bidders in a procurement (§52);
  • Although there is no general presumption, as a matter of policy, that the UK did not “gold-plate” EU Directives, when the CCR were made the UK Government did not intend to gold-plate the Remedies Directive in order to provide standing to other categories of interested persons, including non-bidders (§120 – 121);
  • The phrase “economic operator” when considered in the context of the CCR did not include non-bidders (§160).

The Court’s conclusion on the first issue was that subcontractors (whether “key” or otherwise) do not have standing to bring a claim under the CCR (nor, by implication, under the Public Contracts Regulations 2015 and the Utilities Contracts Regulations 2015). Earlier UK cases that may have suggested otherwise, and which apparently proceeded on the basis of standing for subcontractors, (like Sysmex) notwithstanding.

In the part of the judgment dealing with service concession contract challenges by US companies, Coulson LJ found that such bidders do not have standing, and that this would be the case even if they were bidding as the main contractor.

In this regard the judgment considers the interaction between the CCR and the WTO Agreement on Government Procurement (“GPA”). This arose as one of the IGT Claimants is a US company and so was required to establish that it was an economic operator to whom a duty was owed under regulation 51 CCR. Coulson LJ determined that the competition was not a procurement to which the GPA applied on the basis that neither lottery service contracts nor service concession contracts appear in the Annexes to the GPA. Accordingly, the US company-claimant did not have standing to challenge the procurement in any event (§196).

The Court’s conclusion on the second issue means that US companies, whilst they might bid for – and potentially win – a UK service concession, do not have recourse to the High Court review procedure under the CCR if they wish to challenge such a procurement decision.

Philip Moser KC, Ewan West and Clíodhna Kelleher of Monckton Chambers acted for IGT.