Our Dispute Resolution team represented AS CATA, one of the most experienced transport companies in Latvia, before the Administrative Court in a dispute over the right to conclude a public contract for passenger transport in the region of Vidzeme. The Court has found that the Road Transport Administration has to withdraw from state contracts worth EUR 200 million with the company Nordeka, which has not started passenger transportation on routes in Cēsis, Limbaži and Sigulda within the time stipulated.
In the judgment of 2 March, the Administrative Court ruled that the Road Transport Administration had no grounds to give AS Nordeka, which was involved in the cartel, additional time in order to start providing transport. As of today, Nordeka has still not started providing services in Vidzeme, where the previous carrier, AS CATA, continues to provide transport.
Extension of the deadline – an unfair approach to other applicants
The Court recognised that the extension of the deadline for the commencement of public transport services by one year constituted a substantial modification of the tender conditions and facilitation of the performance of the contract, thus making the performance of the contract more advantageous for Nordeka AS compared to other applicants. Neither the tender specifications nor the contract provide for the possibility to modify the starting time of public transport services.
The Court found that the amendments to the contracts did not in fact disclose the reason for the extension of the deadline for starting the service. From the evidence in the case, the Court concluded that AS Nordeka had not made the full advance payments stipulated in its contracts with suppliers on time, which has consequently delayed the start of bus production.
The opponent’s reference to external circumstances is not recognised as justified
The Road Transport Administration had previously considered the risk that the carrier might not start the service on time and in such a situation had foreseen a unilateral withdrawal from the contract. In addition, when preparing the procurement documents, the Road Transport Administration had to consider the risks associated with the consequences of the measures taken to limit the spread of Covid-19. On the other hand, at the time of the conclusion of the contracts, when one year had passed since the application of restrictive measures against Covid-19, the Road Transport Administration had no reason to refer to the consequences of the measures imposed to limit the spread of Covid-19 as previously unforeseeable.
In assessing the impact of the war in Ukraine on the fulfilment of the contractual obligations, the Court stated that hostilities began 10 months after the conclusion of the contracts and three months before the deadline for the delivery of the buses. Therefore, the sanctions imposed on Russia and Belarus in the context of hostilities could not have had a significant impact on the preparations for the execution of the contract and could not have been a reason to postpone the delivery of the buses.
The client AS CATA was represented in the Administrative Court by senior associate Katrīne Pļaviņa-Mika and associate Elvis Grinbergs.