Introduction
The "balance of convenience" principle is an essential part of the Scottish Court's approach to the grant or refusal of interim interdict (i.e., injunction). The recent Court of Session judgment in Amey OW Limited v North Lanarkshire Council considered this test in the context of an interim order sought in terms of the Public Contracts (Scotland) Regulations 2015 (the Regulations).
The Courts employ the balance of convenience doctrine in order to weigh the interests of parties and the consequences of either granting or refusing the interim remedy. In essence, if the potential harm or prejudice to the applicant of refusing the grant of the interim order outweighs the harm or prejudice to the respondent, the court will be more likely to favour the interest of the applicant, and vice versa.
While several key cases in England have previously been rejected in Scotland as a general approach to the grant or recall of interim orders, Lord Sandison's recent judgment in Amey OW Limited v North Lanarkshire Council considered their relevance in the context of Regulation 90(2):
"90. Powers and duties of the court
…
(2) In any interim proceedings under this Part the court may decide not to grant an interim order when the negative consequences of such an order are likely to outweigh the benefits, having regard to the following considerations -
(a) that decisions taken by a contracting authority must be reviewed effectively and, in particular, as rapidly as possible;
(b) the probable consequences of an interim order for all interests likely to be harmed; and
(c) the public interest."
Case Background
The Pursuer, Amey OW Limited, brought an action against North Lanarkshire Council (NLC) after they were unsuccessful in a competitive roads and infrastructure contract procurement. The Pursuer stated that the contract was wrongfully awarded to the successful tenderer, Hochtief, on the basis that the Defender was in breach of several obligations under the Regulations.
The service of the court proceedings prevented NLC from entering into the proposed contract until the court ordered otherwise. The Defender applied to the court for an interim order under Regulation 89(1)(b) allowing it to enter into the proposed contract with Hochtief.
The Cases
Shetland Line (1984) Limited v Scottish Ministers
When addressing the court, both Amey OW Limited and NLC quoted Shetland Line as authority on the application of the balance of convenience principle.
Parties sought to apply Lord Malcolm's reasoning in Shetland Line: "It seems to me that what requires to be considered is the strength of the parties' cases, the balance of convenience having regard, but not overwhelming regard, to the question of whether damages might be an adequate remedy, and the public interest."
Lord Malcolm referred to Lord Hodge's observations in Clinical Solutions International Limited v NHS 24 on the overlap of the public interest with other factors. Namely, how the public interest interacts with requirements such as the effective review of a challenged procurement process, the need for certainty in the procurement exercise, and the avoidance of delay if the challenge has no reasonable prospect of success. In one such weighing exercise, for example, Lord Malcolm found the need for certainty in the procurement exercise to be 'of little significance' in comparison to the public interest in the procured contract proceeding.
American Cyanamid Co v Ethicon Ltd
Both Amey OW Limited and NLC made reference in court to the English case of American Cyanamid.
In his judgment Lord Sandison considered that this case and its application in the English courts for determining the balance of convenience was actually more consistent than Shetland Line with Regulation 90(2), apart from American Cyanamid's focus on the adequacy of damages.
When applying the balance of convenience principle, American Cyanamid outlines that where factors appear to be evenly balanced between parties, the status quo should be preserved such that an interim order should not be granted. Where the disadvantage to parties appears to be equal, or almost equal, the court is to consider the strength of each party's case in the context of the action. Should it become apparent that the strength of one party's case is disproportionate to the other party's, to the extent that there is no credible dispute, such knowledge should be used to tip the balance in favour the stronger party.
This judgment also allows for additional, case specific factors to be taken into account by the court when 'tipping the balance' in favour of either applicant or defender. Lord Sandison referred to the English courts in Draeger Safety UK Ltd v London Fire Commissioner, which stated the Court must consider all the circumstances of the case to determine which course of action is likely to carry the least risk of injustice to either party, if it is subsequently established to be wrong.
Decision
Lord Sandison focused on Regulation 90(2) and outlined three key considerations:
- The court's primary task is to attempt to balance the benefits of lifting the automatic suspension with the negative consequences of that course of action.
- The court should have regard to what is "likely" to be the case in the event that the suspension is lifted or in the event that it remains.
- The particular considerations to which regard should be had are the requirement for effective and rapid review of decisions taken by a contracting authority; harm to any relevant interests; and the public interest itself.
Lord Sandison decided that the negative consequences of lifting the interim suspension were outweighed by the positive consequences and therefore lifted the automatic suspension, allowing NLC to proceed to award the contract to Hochtief.
Comment
Lord Sandison's judgment and fresh approach should be at the forefront of parties' minds in Scotland in any procurement dispute scenarios where interim orders are sought to be granted or recall. Shetland Line no more: Regulation 90(2) itself is the primary guidance.
