Tribunal strikes high fees for judicial review in public procurement cases
For the second time this year, the Constitutional Tribunal has considered a challenge to the court fees for appeals against rulings by the National Appeals Chamber in public procurement cases. The maximum fee of PLN 5 million was held to be disproportionately high.
Earlier this year, in Case No. SK 25/11 (14 January 2014), Poland’s Constitutional Tribunal upheld the constitutionality of one aspect of Art. 34(2) of the Act on Court Costs in Civil Cases, calculating the filing fee for seeking judicial review of decisions in public procurement cases by the National Appeals Chamber concerning actions taken after opening of the bids at 5% of the value of the procurement. But in January, the Tribunal did not reach the more pressing issue to contractors: the maximum fee under Art. 34(2) of PLN 5 million in such cases. The Tribunal held that the petitioners in Case No. SK 25/11 did not have standing to challenge the maximum amount of the fee because the fee in their cases had fallen well below the maximum.
Now, in a ruling handed down on 15 April 2014 (Case No. SK 12/13), in a case in which the contractors were required to pay the maximum fee of PLN 5 million to seek judicial review of a ruling by the National Appeals Chamber, the Tribunal considered the issue of the excessiveness of the maximum fee and decided to strike down Art. 34(2) of the Act on Court Costs in Civil Cases in its entirety.
The filing fee for appeals to the National Appeals Chamber, a division of the Public Procurement Office, is a flat fee of PLN 7,500, 10,000, 15,000 or 20,000, depending on the subject matter and value of the procurement. These fees are not regarded as excessive. If a party dissatisfied with the ruling by the National Appeals Chamber files a petition with the regional court seeking judicial review, Art. 34(1) of the Act on Court Costs in Civil Cases provides that the filing fee is equal to five times the filing fee at the National Appeals Chamber level—effectively a maximum of PLN 100,000. The constitutionality of this fee for judicial review was not challenged. The challenge came under the exception provided in Art. 34(2), which divided cases seeking judicial review of decisions by the National Appeals Chamber into those concerning actions taken before or after the bids were opened. If judicial review were sought concerning actions taken after the bids were opened, the filing fee would not be five times the fee at the National Appeals Chamber, but 5% of the value of the procurement, up to a maximum of PLN 5 million.
Art. 34(2) had been the subject of heated criticism in the public procurement community for years. No judicial proceedings in Poland in any other kind of case require the payment of such a high fee. (By comparison, the filing fee in civil cases seeking monetary relief is 5% of the amount in dispute, up to a maximum of PLN 100,000.) It was argued that contractors could not afford to invest such sums in appeals which might not even be successful. And even if the contractor were confident that it would be reimbursed the fee after ultimately prevailing in court, the liquidity of many contractors is such that they simply do not have several million zloty lying around which they could temporarily pay into court. An additional hindrance is that the regional court very rarely provides relief from court costs in challenges to rulings by the National Appeals Chamber.
Because the petitioner in Case No. 12/13 was required to pay the maximum of fee of PLN 5 million, the Constitutional Tribunal was required to address the constitutionality of the maximum fee as such.
The Tribunal concluded that Art. 34(2) of the act “violates the right of access to the courts and the right to appeal against rulings and decisions issued at the first instance pursuant to Constitution Art. 77(2),” and is also contrary to Constitution Art. 78 because “it establishes excessively difficult (disproportionate) conditions for filing appellate instruments with the court, only formally assuring the right to appeal against a ruling issued at the first instance.”
In the Tribunal’s opinion, the unconstitutionality of Art. 34(2) of the Act on Court Costs in Civil Cases was due to its “defective (disproportionate) determination of the maximum filing fee for a challenge to a ruling by the National Appeals Chamber when it concerns actions by the contracting authority after opening of the bids. The figure of PLN 5,000,000 must be regarded as arbitrary and excessive.”
As the Tribunal recognised, with Art. 34(2) stricken from the act, for now the court fee on all cases seeking review of decisions by the National Appeals Chamber will be calculated on the basis of the remaining Art. 34(1), and therefore the maximum will be PLN 100,000 (five times the highest filing fee before the National Appeals Chamber).
Will the new ruling by the Constitutional Tribunal finally change things, and not just brush over the surface of the problem? Fortunately the answer is yes. First, upon official publication of the judgment, the courts will be prohibited from applying Art. 34(2) of the act and charging contractors fees running to millions of zloty for seeking judicial review in procurement cases. Second, the ruling is a clear signal to lawmakers that excessively high court fees, effectively blocking access to the courts, will not be tolerated.
The judgment does not necessarily mean, however, that the maximum fee for seeking judicial review in procurement cases must finally be set at PLN 100,000. The Constitutional Tribunal merely made its suggestions in this respect, leaving it up to the legislative discretion of the Parliament to amend the remaining portion of Art. 34. This means that the maximum fee could remain at PLN 100,000, or a new method for calculating the fees for judicial review in procurement cases could be established, with or without a distinction between cases involving actions taken before or after the bids were opened. While the maximum fee would have to be less than what was provided in Art. 34(2), it could be similar to the maximum in other civil cases or it could be higher—perhaps even significantly higher.
It remains to be seen how lawmakers respond to the judgment of the Constitutional Tribunal. Given the nature of the ruling and the approach the state has taken so far to judicial review in procurement cases, a new maximum fee will probably be set which is somewhat greater than PLN 100,000.
Natalia Rutkowska, Infrastructure & Transport and Public Procurement & PPP practices, Wardyński & Partners