The Supreme Court has ruled that cases seeking refund of a bid bond lie within the jurisdiction of the civil courts, finally resolving doubts surrounding the legal recourse a contractor should follow to reclaim a deposit retained by the contracting authority.
The ruling by the Supreme Court of Poland of 12 February 2014 (Case IV CSK 291/13) involved a case in which the municipality of Olsztyn, as the contracting authority, retained the bid bond from a contractor which paid the deposit but then failed to submit any documents in the procurement. The contractor sought refund of the bid bond before the Olsztyn Regional Court and then before the Białystok Court of Appeal. Both courts rejected the claims without considering the merits, holding that refund of the bid bond must be sought before the National Appeal Chamber (KIO).
This position was not upheld by the Supreme Court, which held that claims of this type are civil cases and therefore consideration of such cases by an authority other than a civil court would be justified only by an express statutory provision.
Under the earlier case law it was not clear whether refund of a bid bond retained by the contracting authority should be sought by appealing to the National Appeal Chamber against an action by the contracting authority or by asserting a claim for unjust enrichment before the common court.
The Supreme Court refused to consider a cassation appeal on this issue in an earlier case, finding that the doubts in interpretation asserted in the legal issue were theoretical but might not arise in practice. But in that order (7 May 2010, Case V CSK 456/09), the court nonetheless commented on the merits, taking the view that a contractor whose bid bond is incorrectly retained by the contracting authority has the legal recourse provided in the Public Procurement Law, i.e. an appeal to the National Appeal Chamber. The court supported that position by arguing that payment of the deposit is an element of the procurement procedure enabling the contractor to participate in the procedure.
Following the ruling from 2010, Polish state courts had a tendency to reject claims for refund of improperly retained bid bonds on the grounds that recourse to the courts was barred under Civil Procedure Code Art. 199 §1(1). But this practice was broadly criticised in the legal community. The dominant view—also expressed by the National Appeal Chamber—was that a distinction should be made between payment of the bond and failure to refund it by the contracting authority (taking place during the course of the procurement proceeding), on the one hand, and the act of retaining the bid bond (performed outside of the procurement proceeding). This distinction was overlooked by the Supreme Court in the 2010 case.
The National Appeal Chamber had consistently taken the view that a case seeking refund of a bid bond retained by the contracting authority should be considered by the civil courts, reasoning that under the legal definition in the Public Procurement Law, a public procurement proceeding ends upon selection of the most advantageous offer. Retention of the deposit is an action taken after the end of the procurement proceeding thus is not covered by the legal remedies for procurements (ruling of 1 April 2011, Cases KIO/UZP 576/11 and KIO/UZP 577/11).
The prevailing view in the literature had always been that the state courts have jurisdiction over cases of this type, but the inconsistent case law, particularly in the courts, introduced uncertainty and often prevented contractors from getting their improperly retained deposits back for a long time, as the contractor pursued the wrong avenue.
The latest ruling by the Supreme Court thus establishes the touchstone on this issue, resolving the debate over who has jurisdiction to consider cases seeking refund of a retained bid bond.
Hanna Drynkorn, Infrastructure & Transport and Public Procurement & PPP practices, Wardyński & Partners