07 September 2022

Why does this matter?

On Monday 5 September 2022, Camelot (the incumbent operator of the National Lottery) announced it would not be proceeding with its appeal on the issue of whether an ‘automatic suspension’ should stay in place preventing the Gambling Commission from contracting with the proposed successor operator for the lottery, Allwyn. This means the Gambling Commission and Allwyn will now be able to enter into the Fourth Licence, making Allwyn the custodian of Europe’s biggest lottery.

Whether or not it was the right outcome for this particular case, this means we will not get (what would have been) highly valuable guidance from the Court of Appeal on the correct application of the American Cynamid test for lifting the automatic suspension (see Box 1). In particular, this is because many practitioners hold it to be a truth of procurement litigation that, notwithstanding the facts of the case, the outcome of an application to lift a suspension can be very different in ostensibly similar situations.

That uncertainty of outcome means less clarity for:

(i) contracting authorities looking to assess the probability of being able to stick to their intended timetable for entering into the newly procured contract, which is dependent on the suspension being lifted.

(ii) challengers, particularly those seeking to calibrate their decision on whether to press for continued suspension and agree to give a cross-undertaking in damages in the hope of ultimately winning the contract[1], as opposed to conceding / losing the point leaving it with a ‘damages only’ action.

The uncertainty as to whether a court will be prepared to continue to suspend contracting, or will lift the suspension and allow the award to proceed, has increased in recent years. This is in large part the result of a continuum of decisions which appear to establish that the availability (or not) of an expedited trial window only a few months away in the court’s calendar can play a weighty if not decisive role in whether the suspension should be lifted, at least where all other parts of the test for lifting the suspension are sufficiently balanced.

That is all the more problematic considering that (amongst other difficult balancing factors):

  • whether there is an available slot coming free in the court’s calendar may be a matter of chance and also something not known at the time of making the application, the time when both parties have to take a decision on whether to risk heavy adverse cost risk of a lost suspension application [2];
  • where there is such a slot, it is hard for the court to arbitrate the position as between:
    • a challenger asserting that expedition (whilst undoubtedly involving lots of hard graft) is possible and the trial window is therefore viable; and
    • a contracting authority taking the familiar stance that there is too much disclosure and witness evidence needed in a too short a timeframe, making expedition too tight;
  • The wider the grounds of challenge, the less likely it is that the court will agree that expedition is realistic because of all the evidence that will need to be explored in respect of those grounds.
    • Consultants Connect is a good example of a case where expedition was refused for this reason, but where the challenge then succeeded at trial, establishing a broad range of breaches which the judge characterised as a ‘defence of the indefensible’[3];
    • However, Vodafone is an example of where that difficulty could be overcome by expedition of part of the claim: a preliminary issue that would likely be decisive for the rest of the case.
    • Whether such an option is available will be case specific.

The Court of Appeal recognised the need to give guidance

In mid-September 2022 (in the Court vacation, reflecting both the urgency and importance of the situation), the Court of Appeal was poised to hear an appeal from Camelot as to whether the automatic suspension preventing the Gambling Commission from contracting with Allwyn should remain in place until the outcome of trial.

Several recent cases, all heard in the Technology and Construction Court (TCC), have considered the interlinked issues of (i) lifting the automatic suspension; and (ii) expedition of the litigation, in order to minimise the time the suspension remains in place. However, in granting the appeal, the Court did so expressly on the basis that:

'there is a dearth of appellate guidance on the correct approach to applications to lift the suspension (or to maintain the suspension) relating to the award of contracts, where the procurement process has been challenged. There are often two conflicting interests: the need to do justice, and the need for speed. In our view, the arguments [of the parties, as to why the suspension should or should not remain in place] demonstrated the potential importance of such guidance.'

The Court acknowledged that the Procurement Bill currently progressing through Parliament will enact a new test for whether to lift the suspension (see Box 1), the Court said that 'it by no means follows that, even assuming that the Bill stays in this form, the test that will be applied by the courts will be very different to that which is currently applied. So we do not consider that the opportunity to give guidance is an academic exercise.'

The absence of appeal guidance on suspension probably results from a combination of (a) many suspensions being lifted (or occasionally upheld) upon the exercise of the balance of convenience discretion – judicial discretion on the facts is not generally appealable; and (b) the cost/benefit equation for a losing party in all but the most valuable of competitions.

It proved to be issue (b) which was pivotal to Camelot’s decision to pull the plug on its appeal: the size of the cross-undertaking in damages it would have to give to maintain the suspension meant that the cost/benefit analysis did not stack up when considering the impact of its cases failing. In its press release, Camelot said:

“…it has become clear that the potential damages covered by the undertakings [which Camelot would have] needed [to give] for the appeal to proceed would have been too large, and involved too great a commercial risk, for it to be reasonable to provide them. For that reason, Camelot has decided to withdraw its appeal in relation to the lifting of the suspension and Allwyn has agreed not to pursue any damages against Camelot in relation to the undertakings given in July. Camelot is no longer seeking to prevent the enabling agreement being signed prior to the procurement trial, which will now take place in January/February.”

As this disposes of the appeal, it is worth considering where we have landed on the vexed issues of whether an automatic suspension should remain in place, and whether a claim should proceed to an expedited trial.

Box 1: The test for lifting the suspension... and what might replace it

Current American Cyanamid Test

(1) Is there a serious issue to be tried? (There nearly always is, and limb of the test is often agreed between the parties prior to the hearing)

(2) If so, would damages be an adequate remedy for the challenging bidder if the suspension were lifted and they then succeeded at trial?

(3) Would damages be an adequate remedy for contracting authority if the suspension remained in place and it succeeded at trial?

(4) Where there is doubt as to the adequacy of damages for any or all of the parties, which course of action is likely to carry the least risk of injustice if it transpires that it was wrong? In other words, where does the balance of convenience lie?

Proposed Procurement Bill Test

The court must have regard to—

(a) The public interest in, among other things— (i) upholding the principle that public contracts should be awarded, and contracts should be modified, in accordance with the law; (ii) avoiding delay in the supply of the goods, services or works provided for in the contract …

(b) The interests of suppliers, including whether damages are an adequate remedy for the claimant;

(c) Any other matters that the court considers appropriate.

How did we get here? An overview of the last 18 months of cases on this issue

In Draeger v London Fire Commissioner (summarised here), the TCC (O’Farrell J) upheld the continuation of the automatic suspension through to trial. 

An application of the current test (American Cynamid) suggested the question of whether to lift the suspension was finely balanced. In particular, the contract being suspended was for provision of vital respiratory protective equipment (RPE) necessary to protect fire fighters tackling blazes; so there were strong reasons to lift the suspension and let the contract proceed. However, a 'significant factor' tipping the scales was that between the time of the application hearing (in July 2021), and the court handing down its decision (in August) space had just become available for a speedy trial in October. The Court determined that the necessary litigation steps (disclosure, witnesses, trial preparations etc) could be packed into the resulting remaining timeframe.

This was followed by Vodafone v Sec of State for FCDA (here) in which Kerr J said he found it impossible 'to ignore, in the real world, the availability of a preliminary issue trial window in January 2022, any more than O'Farrell J in the Draeger case ignored the availability of an early trial window'.

All other factors of the suspension lifting test being quite balanced, whether to lift the suspension therefore turned on Vodafone’s linked application to have the core issue of the litigation determined via an expedited trial. Vodafone succeeded in persuading the court both that an expedited trial of this preliminary issue was viable, and therefore also that the automatic suspension should remain in place.

Less than a month later, in Kellogg Brown (here) the TCC (this time Joanna Smith J) rejected the challenger’s application for an expedited trial and granted the contracting authority’s application to lift the automatic suspension:

(i) On expedition, although the Judge did enquire of the court listing office as to availabilities in the TCC’s calendar, and found there was a potential window only four months away, she accepted the authority’s arguments that the procedural timetable (in particular given the scope of disclosure, witness evidence and the pleadings had not yet been settled) would not make this feasible.

(ii) On lifting the suspension, the Court provided an important clarification of how that test would be impacted by the viability of an expedited trial. Draeger and Vodafone were different because American Cynamid test – in particular limbs 2 & 3 (see Box 1) – were more finely balanced. However, in this case, the challenger could not produce adequate evidence that an award of damages would not be an adequate remedy for it if the suspension was lifted. The Court clarified that if damages were an adequate remedy for a challenger then the suspension would be lifted. In other words, the availability of an expedited trial loses all weight in the balance in such cases [4].

Camelot’s application to ‘pre-weight the scales’

In Draeger, Vodafone and Kellogg Brown, the court had given consolidated consideration to interlinked applications for an expedited trial and to lift the automatic suspension, and, as noted above, the feasibility of an expedited trial (and a slot in the court’s diary for that trial) had tipped the scales in favour of suspension in Draeger and Vodafone.

As such, in Camelot v Gambling Commission, the Claimants perhaps hoped to ‘pre-weight the scales’ in favour of continuing the suspension by making an application for expedition (very) early, to potentially be heard before the lifting hearing. However, in April 2022, the TCC (this time Waksman J) determined it would not be appropriate to determine whether to order an expedited trial until the Gambling Commission's application to lift the suspension was determined.

In other words, the Court was not willing to make a decision on expedition which would ‘pre-weight the scales’ one way or the other at a suspension hearing; expedition would be considered alongside the suspension lifting application[5].

The TCC determines the suspension should be lifted

Most recently, in June 2022, the TCC (O’Farrell J) handed down judgment on the interlinked applications of: (i) Camelot for an expedited trial and (iii) the Gambling Commissions to lift the suspension preventing it contracting with Allwyn. In this case, the Court did not need to determine the question of expedition because, applying the American Cynamid test, the Court determined that it should lift the suspension:

(1) There was a serious issue to be tried: whether the lawful running of the procurement should have resulted in an award of the National Lottery Licence to Camelot or to Allwyn.

(2) However, damages would be an adequate remedy for Camelot. In particular, Camelot UK was a special purpose entity for the operation of the National Lottery; precluded from undertaking other revenue-generating activities (with minor exceptions); and on expiry of its contract its staff and assets would be transferred to Allwyn and it would therefore have no business. Any complaint it would suffer loss of the opportunity to exploit ancillary activities was speculative and not supported by any concrete evidence. As such, any losses flowing from the loss of the Lottery Licence, and the business as a whole, ought to be readily quantifiable and compensable by damages.

(3) Damages would not be an adequate remedy for the Gambling Commission, in particular because any reduction, or interruption, in the contribution of the National Lottery to good causes would be inconsistent with its statutory objective of maximising returns to good causes from the National Lottery, and would jeopardise or cause a delay in the funding of a large number of arts, sports, heritage and community projects.

(4)The balance of convenience lay in lifting the suspension, as explored further in the next section below.

Box 2: The 'Standalone' test for expedition of a case (per Lord Neuberger in WL Gore)

(1) whether the applicant had shown good reason for expedition;

(2) whether expedition would interfere with the good administration of justice;

(3) whether expedition would cause prejudice to the party;

(4) whether there are any other special factors.

How does this decision sit with the judgments from Draeger onwards?

When looking at this judgement within the continuum of cases mentioned above, the Court did consider the weight to be given to the fact that an expedited trial window was available in October 2022. O’Farrell J said that 'on the basis of the pleadings and documents before the court, I consider that the parties could be ready for an expedited trial in October 2022'. However, the Court said that this did not swing the balance of convenience back in favour of maintaining the suspension because:

(i) Even if a speedy trial could be held in October 2022, there would be an inevitable ‘gap’ between the end of Camelot’s licence and the start of the new licence, leading to the interruption in the contribution of the National Lottery to good causes (see (3) above).

(ii)There were therefore strong public interest reasons to lift the suspension. Proposals put forward to Camelot to address this ‘gap issue’ were rejected as not being feasible.

(iii) Balanced against the commercial losses Camelot claimed it would suffer, for which damages would be an adequate remedy, allowing the Gambling Commission to enter the contract with Allwyn was the course that would produce the least risk of injustice if ultimately it proves to be wrong.

So what's next?

Whether or not it was the right outcome for this particular case, the withdrawal of Camelot’s appeal is a disappointment to practitioners who were keenly awaiting the appellate court’s analysis and views on the TCC’s decisions and reasoning in DraegerVodaphoneKellogg Brown and Camelot.

It would have been valuable to have the Court’s analysis of whether the American Cynamid test for lifting the automatic suspension, including in respect of the weight given to the possibility for expedition, is being properly applied. In the absence of such guidance, there are common themes which can be extracted from these recent judgments. However, the suspicion remains that the outcome of an application to lift a suspension can be very different in ostensibly similar situations.


This article was written by members of our Procurement Team: Lloyd Nail (Senior Associate) and Chris Jackson (Partner).


[1] Maintaining the suspension currently depends on the challenger’s willingness to give a cross-undertaking in damages to cover certain losses of the contracting authority (and potentially the winning bidder) should the court ultimately find the procurement was lawful. The logic is that contracting should not have been suspended so the parties affected are entitled to their losses resulting for the period it was suspended. 

[2]orders to pay the other party’s costs are intended to reflect losing litigation choices. However, the recent criticality of the shape of the Court diary as at the date of hearing rather than the date of application - as a factor materially increases unpredictability of outcome.

[3] An interesting point about Consultants Connect is that although the application for expedition was refused, the court determined at trial that the procurement process had been so badly run that it was appropriate to make a Contract Shortening Order, with the remaining term of the shortened contract being just enough time for the contracting authority to run a new compliant procurement. In this way the challenger was given a fresh opportunity to win the contract. Ineffectiveness/contract shortening remedies are however not always in scope for the Court to use at trial – that will depend on the specific procurement mechanisms/actions used.

[4] The Court rejected expressly the submission that Vodafone was any authority for the idea that there might be cases where damages were an adequate remedy for a claimant but the suspension should still be maintained because a speedy trial was available.

[5] Note that in Consultant Connect an expedition application was refused in circumstances where the automatic suspension had already been lifted, as the lifting of the suspension meant that a key driver in favour of expedition had been removed. This reinforces the position that an expedition application and maintaining the suspension usually stand or fall together.

Key contact

Chris Jackson

Chris Jackson Partner

  • Infrastructure
  • Procurement and State Aid
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