Noewe Dispute Resolution Team Successfully Defended the Interests of the Client Participating as a Third Party in the Civil Case


NOEWE Dispute Resolution (in Public Procurement) team successfully defended the interests of the Client participating as a third party in the civil case.

The contracting authority declared the Client as the winner of the public procurement tender. The supplier (plaintiff) who remained in second place appealed such decision, bringing a lawsuit to the court. Although the contracting authority categorically disagreed with the plaintiff’s claim at first, after a few days these parties concluded a settlement agreement. In the settlement agreement, the contracting authority unconditionally recognized the plaintiff’s claim, undertook to cancel the decision and not to announce the third party as the winner of the tender, agreeing with the plaintiff that the third party’s offer does not meet the tender requirements. The court of first instance approved such settlement agreement.

The third party represented by NOEWE did not agree with the ruling and filed a separate appeal. The third party claimed that the settlement agreement approved by the court contradicts the principles of public procurement, also, violates the interests of the third party.

The Court of Appeal of Lithuania upheld the separate appeal brought by the Client. The court stated that even though settlement agreement in public procurement cases is, in principle, possible, such agreement has its limits. The Court of Appeal emphasized that the right of the contracting authority to reconsider its decisions is exclusive, and there must be clear reasons for using it. Meanwhile, in this case, the contracting authority did not indicate any circumstances which would allow it to cancel the decision on recognizing the third party as the winner and, at the same time, to return to the offers’ evaluation stage. The court also drew attention to the circumstances emphasized by NOEWE, that the position of the contracting authority stated in the settlement agreement contradicted its statements in the procedural documents, by which the contracting authority fully confirmed the suitability of the third party. For these reasons, the appellate court decided that the settlement agreement could not be approved, as it clearly contradicted the principles of public procurement and the provisions of law. The Court of Appeal of Lithuania annulled the decision of the first instance court and refused to approve the settlement agreement. After annulling the decision of the court of first instance, the case was returned to the Vilnius Regional Court.

This Client’s victory in the field of public procurement is extremely significant. The decision of the appellate court prevented the contracting authorities and the suppliers, in the absence of any objective reasons, from agreeing on the replacement of the winner of the public procurement tender. Moreover, such ruling of the Court of Appeal of Lithuania once again proves that the right of the parties to close the dispute by concluding a settlement agreement is not absolute – exercising such right cannot violate the legitimate interests of third parties and, of course, the provisions of law. As a result, in this way, NOEWE successfully contributed to the development of a more consistent and clearer practice of the Lithuanian Court of Appeal on the issue under consideration.

NOEWE Dispute Resolution (in Public Procurement) team:

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