Damages

The rules for damages are drawn up in more or less the same way in both LOU and LUF. The rules regarding damages in the Defence and Security Procurement Act (LUFS) and the Act on Procurement of Concessions (LUK) are also drawn up in approximately the same way as in LOU and LUF. Moreover, the rules are the same above and below the thresholds.

A supplier who wishes to claim damages must institute proceedings at the District Court by applying for a summons. The application must have been submitted within one year from the day that the supplier became aware of, or should have become aware of, that an agreement was entered into between a contracting authority or entity (procuring organisation) and a supplier.

If the agreement has been invalidated by a court of law, the application must instead have been submitted to the court within one year from the day the judgement became final and no longer can be challenged.

A procuring organisation that has not complied with the procurement rules shall compensate for the harm that has thereby been caused to a supplier. The procuring organisation may be obligated to pay damages irrespective of whether the organisation committed the error intentionally or due to negligence. However, the right to damages presumes that a sufficiently clear breach of the law has been committed. Anyone claiming damages must present evidence of the harm caused. 

The harm caused refers to both unnecessary costs and loss of profit, so-called positive contractual liability. For the supplier to be entitled to compensation for positive contractual liability, they must more or less have lost the contract due to the procurement error. However, it is sufficient for the supplier to show that it is probable that the supplier lost the contract as a consequence of the violation.

The costs for preparing a tender and otherwise participating in a procurement process (negative contractual liability) can be compensated in certain cases. For a supplier to be entitled to compensation for negative contractual liability it is sufficient for the supplier to show, aside from proving a violation of the procurement rules, that the supplier had a realistic opportunity of being awarded the contract and that the violation impeded this opportunity. This means that several suppliers may receive damages due to the same breach of the procurement legislation.

In certain instances, damages may include the supplier’s legal expenses in a previous review case of the same procurement, if the supplier won that case.

Finally, the right to damages is contingent on the supplier trying to avoid or mitigate the harm caused, for example by applying for review of the incorrect procurement.

The District Court will charge a small fee for a summons application. Commonly, the losing party also must bear the costs of the opposing party, such as legal expenses.

The court commonly adjudicates on the matter after a hearing. The court will only consider circumstances that are presented during the court proceedings. For that reason, it is important for both parties to present their arguments in the case.