In Poland, the National Appeal Chamber upholds the effectiveness of the rules guaranteeing transparent and non-discriminatory access to public procurement contracts within the EU. Member states are required to ensure contractors the consideration of review procedures concerning the award of public contracts, as is clear from the Remedies Directive.
The task of the National Appeal Chamber (KIO) is to effectively and quickly eliminate infringements in public procurement cases. KIO does this by reviewing decisions taken by contracting authorities in the process of awarding contracts and by overturning unlawful decisions. Therefore, the ability to carry out public procurement procedures in accordance with European law depends on the effectiveness of the chamber. In turn, the condition of the Polish economy affected by crisis depends on the continuity of tenders.
To avoid obstacles in conducting tenders, the Public Procurement Office is looking for ways to extend the use of electronic and remote methods in procedures for award of contracts to all stages of the procedure, as well as contracts below the EU thresholds (as we discuss in the article “Digitalisation against the crisis”).
Nevertheless, the president of the Public Procurement Office and the president of the National Appeal Chamber decided to suspend the organisation and handling of cases by KIO between 16 and 27 March 2020. As the state of emergency resulting from the epidemic is not going away, and relevant institutions impose more and more far-reaching restrictions on everyday life of Poles, further periods of restriction of the chamber’s activities can be expected, in particular until 11 April 2020 (see Regulation of the Minister of Health of 24 March 2020 Amending the Regulation Declaring a State of Epidemic in the Territory of the Republic of Poland).
However, at the same time, the state supports the continuation of tendering procedures by allowing to an unprecedented extent electronic means of communication and maintaining the running of all time limits for public procurement matters. In particular, it requires contractors to observe the time limit for filing appeals or joining appeal proceedings (as we write on the firm’s COVID-19 FAQ site). In this context, the decision to suspend KIO activity is not only inconsistent but also unfounded.
Shutdown of KIO contrary to EU law
The Procurement Remedies Directive for the public sector (Council Directive 89/665/EEC of 21 December 1989 on the coordination of the laws, regulations and administrative provisions relating to the application of review procedures to the award of public supply and public works contracts) imposes an undisputed obligation on member states to ensure that rapid and effective review procedures in public procurement are available to contractors. This is a key element of European public procurement law. Appropriate review procedures guarantee correct application of substantive rules in the area of public procurement (C-337/06, Bayerischer Rundfunk). Under the directive, the inability to use such procedures or the ineffectiveness of the remedies constitutes a barrier to accessing the European public procurement market. A situation in which contractors, due to inaction of KIO, cannot count on the review of appeals and setting aside of illegal actions taken by the contracting authority in proceedings, renders Polish review procedures ineffective. Therefore, the decision to suspend KIO’s work creates a barrier in access to public contracts currently awarded on the Polish market, which is non-compliant with the EU regulations.
The decision to suspend KIO operations also contradicts a fundamental principle of European Union law, proportionality. This principle requires that any measures taken by a member state within the framework of legislation, including the transposition of EU legislation, must not go beyond what is necessary to achieve the aim (C-491/01, British American Tobacco).
It should be pointed out that for effective transposition of the Remedies Directive into national law, it is sufficient to meet the minimum conditions. The directive only requires that the appeal body carry out proceedings in which both parties are heard and that decisions of the appeal body, which is not a court, be reasoned in writing and subject to judicial review. However, the details are left to the member states. They are to create mechanisms for using legal remedies that are effective under the reality of the local public procurement market and legal culture. In fact, there are fundamental procedural distinctions between member states, due to various legal traditions (see report “Functioning of legal protection measures in EU countries: Key conclusions”).
The rules just need to be changed
The detailed manner of operation of KIO is set out in rules established by the Regulation of the Prime Minister of 22 March 2010 (annex to the Prime Minister’s announcement of 7 May 2018). It was only on the basis of these rules that the requirement was formulated that the chamber should consider appeals in sessions and hearings held at the Public Procurement Office headquarters (§14), and that the opening of a hearing, modelled on court proceedings, be preceded by a call for the case by the recording clerk immediately before the hearing (§18).
At the same time, these regulations fully allow for electronic communication between the chamber and the parties and other participants in the proceedings (§7), and provide that lodging an appeal and joining appeal proceedings may be done through the chamber’s electronic inbox (§5).
If the member state has full discretion in organising the functioning of KIO as an appeal body, it should also act to adapt the functioning of the chamber to suit the existing circumstances. In other words, the decision to suspend KIO operations is an excessive measure, since to ensure the compliance of KIO’s activities with the law and public security requirements, it is sufficient to amend the rules to eliminate the requirement to consider appeals at hearings in which the parties participate in person.
Full digitalisation is necessary
Unfortunately, in the current circumstances, restoration of ordinary KIO operations will not ensure the effectiveness of legal remedies. Other generally binding laws limit the possibility to participate in hearings, as for example they prohibit persons from other EU countries from entering Poland, allow for issuance of stay-at-home orders, and in general limit the possibility of travelling by public transport to KIO headquarters.
Therefore, maintaining a provision of national law requiring consideration of appeals at a hearing with the parties appearing in person, which is currently objectively impossible to fulfil and forces restrictions on the work of KIO, is a measure non-compliant with EU law.
Such a requirement is particularly unjustified in a situation where EU lawmakers have consistently sought full digitalisation of the public procurement market. This process has been underway since 2011, when the European Commission announced the gradual creation of a single European digital public procurement market (see “A strategy for e-procurement,” Commission communication COM/2012/0179 final). Subsequently, the 2014 Classic Procurement Directive (2014/24/EU) called for full electronic communication in procurement to be mandatory (recital 52) and required member states to introduce electronic communication in all stages of procurement procedures (Art. 22(1)). Although the term “communication” is used in the directive, this concept covers the conduct of the entire public procurement procedure as well as conclusion and performance of the contract.
Remote hearing possible and safe
The Remedies Directive leaves no doubt that to be able to continue awarding contracts in full compliance with EU law, KIO’s activities cannot be restricted. At the same time, the current realities for competing for and awarding contracts are displacing traditional forms of action in procurement procedures in favour of electronic and remote forms. This is fully in line with the trend of digitalisation across the public procurement market in the EU.
To enable KIO to work on a day-to-day basis, it is sufficient to amend the rules on handling of appeals and provide for the possibility to conduct hearings remotely through systems allowing audiovisual links. The state of technology makes it possible to ensure the security of such connections and to guarantee that only authorised persons take part in the hearing, e.g. by prior verification of devices or a registration obligation, which is feasible using electronic communications.
Sessions of arbitral tribunals are already being held around the world under similar conditions, and there seem to be no irregularities in determining who can take part in remote hearings, whether acting for the parties or other participants or as witnesses or experts.
A hearing before the National Appeal Chamber held in this way would not lose the adversarial character of an oral hearing, as each of the parties would be heard remotely in real time, much as is currently the case, i.e. after being given the floor by the chair of the panel. Once the decision is announced, the chamber will be able to draw up a statement of reasons in writing and communicate it to the parties in electronic form. Thus, the minimum requirements of the Remedies Directive would be met.
For the purposes of a remote hearing, there is no need to guarantee the participation of an audience in real time. Since by its nature the audience does not take an active part in the hearing, it is sufficient if the public can review the recorded proceedings after the fact. This will not infringe the principle of openness and transparency.
Any document submitted in a tender procedure may already be filed electronically with the chamber, under the current regulations. Due to the equivalence of written and electronic form in Polish law, all documents submitted electronically will be treated as originals.
Main problem: preparation of hearings
What could be the biggest difficulty with remote hearings at KIO? Preparation of the hearing. In Poland, the adversarial nature of proceedings before KIO is reinforced by the principle of written appeals and the possibility to submit procedural documents and motions for evidence in the course of the proceedings.
Unfortunately, it is a well-established practice in appeal proceedings that filings such as the reply to the appeal, the position of a participant and evidence are only submitted during the hearing. Even in the case of traditional hearings, this practice is detrimental to the quality of the proceedings.
For this reason, in 2017, on the basis of research on legal protection measures in EU countries, the Public Procurement Law Association (SPZP) called for introduction in appeal proceedings of mechanisms to increase the order and efficiency of proceedings, in order to avoid the exchange of documents at the hearing (report “Functioning of legal protection measures in EU countries: Key conclusions”). In the association’s opinion, the obligation to deliver pleadings to the parties and other participants in appeal proceedings within a specified period before the hearing, even at the cost of extending the date of the hearing, would not only allow for better preparation of the parties and the chamber for the hearing, but would also expedite the hearing itself.
This demand is again gaining momentum today, as in remote hearings the submission of pleadings would have to be excluded to avoid disrupting the course of the hearing. On the other hand, the submission of a new motion for evidence at the hearing, which cannot be excluded under Art. 190(1) of the Public Procurement Law, could constitute a basis for postponing the hearing in order to allow the evidence and guarantee the parties and the chamber the opportunity to review it before the next hearing (unless the chamber refuses to admit the evidence under Art. 190(6) of the Public Procurement Law).
Changes will gather pace
This article is not intended to discuss comprehensively the necessary amendments to KIO’s operating rules to allow for remote hearings. It is merely aimed at showing that such changes are not only possible but also necessary in light of the current circumstances and under EU public procurement law.
It could even be said that the pandemic, like nothing before, will speed up the digitalisation of every aspect of our lives. Therefore, amendment of the KIO rules to allow electronic handling of appeals before the National Appeal Chamber should be carried out as a conscious step towards the development and improvement of the state’s methods of operation, paving the way for other institutions to adapt their activities to unexpected conditions.
Mirella Lechna, attorney-at-law, Infrastructure, Transport, Public Procurement & PPP practice, Wardyński & Partners