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Compensation of Damages Within the Public Procurement Procedure

On 20 November 2018, Dienas bizness HUB published an article by Kristīne Gaigule-Šāvēja, Partner at PRIMUS DERLING, on compensation of damages within the public procurement procedure.

When participating in a public procurement procedure, all applicants assume the economic risk related to their activity, including the expenses related to the participation in the procurement procedure, in case another participant’s proposal would be considered a winner. However, when assuming those risks, the tenderers (applicants) are entitled to rely on the fact that the customer will act legally, namely, that the customer will comply with the principles of the public procurement procedure and the statutory procedures, ensuring equal winning opportunities to all tenderers (applicants). If the customer has acted illegally, contrary to the aforementioned, as the result whereof a person has incurred damage, then such person may request compensation of damages incurred by it as the result of the activities of the customer.

A person can request compensation of damages for the illegal activity of the customer within public procurement procedure, if a link or causal relationship between the loss and the illegal activity of the customer may be established.

The compensation of damages for the damages incurred within the public procurement procedure can be claimed from the customer and by bringing a claim to the court according to the procedure prescribed in the Administrative Procedure Law. The compensation of damages may not be claimed from the Procurement Supervision Bureau.

A person may not claim compensation of damages before adoption of an administrative deed on the winner or another decision materially infringing the rights of the person and thus being regarded as an administrative deed.

Pursuant to the Public Procurement Law, the damages caused by the customer shall be compensated according to the procedure prescribed in the Law on Compensation of Damages.

This article deals only with such damages that have been incurred through breaches of the public procurement procedure before the conclusion of the procurement contract; consequently, such damages that are compensated for according to the administrative procedure.

The full version of the article in the Latvian language is available here.



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