The analysis of court practice in respect of invalidation of contracts on public procurement of services (hereinafter “the Contract”) performed by the team of Linkage&Mind Law Firm has shown that plaintiffs (potential suppliers, who are not parties of the Contract) (hereinafter “the Plaintiff”) along with the claims for invalidation of the Contract usually file an application for an interim measure «suspension of contract execution».
Such kind of an interim measure is allowed by paragraph 1 of Article 9 of the Civil Code of the RK, according to which the protection of civil rights shall be carried out by the court in the way of suppressing actions that violate the right or create a threat of its violation; as well as by paragraph 2 of Article 156 of the Civil Procedure Code of the RK, which sets forth that, if necessary, the court may take any other measures to secure the claim to prevent any event that make enforcement of the court’s decision difficult or impossible (i.e. the law specifies unexhaustive list of interim measures).
However, the practice shows that Plaintiffs before taking a decision on filing of such an application on abovementioned interim measure, shall take into consideration the following:
The application for interim measure shall indicate specific arguments that failure to take such interim measure may make it difficult or impossible to enforce a judicial act (Court Decision) (par. 3, para. 5 of the Regulatory Resolution of the Supreme Court of the Republic of Kazakhstan)
Considering an application for interim measures, the court examines:
- whether the inquiry for the interim measure meets the substantive legal requirements stated by the Plaintiff;
- whether it will ensure the suppression of possible actions of the defendant, which may be committed in order to make it difficult or impossible to execute a judicial act (Court Decision) (paragraph 7 of the Regulatory Resolution of the Supreme Court of the Republic of Kazakhstan).
Moreover, in the judicial act (Court Decision), the court shall assess the Plaintiff's arguments about the presence or absence of the grounds for taking interim measures prescribed in Article 155 of the Civil Procedural Code of the Republic of Kazakhstan (par. 1, para. 9 of the Regulatory Resolution of the Supreme Court of the Republic of Kazakhstan).
Otherwise, the court may refuse to take interim measures.
The arguments given in the claim for recognition of the contract of public procurement of services as invalid shall be justified and sufficient enough to be satisfied by the court.
For example, if a claim is filed by the potential supplier who has occupied third, fourth, etc. place in tender, the court may deny the claim because it may seem to be unreasonable for the court to invalidate the Contract. Under «unreasonableness», courts may understand:
1) excessive transaction costs for new public procurement procedure; and
2) lack of guarantee of recognition of the Plaintiff as the winner of new public procurement and conclusion of an agreement with him.
However, it should be noted that the principle of impracticability is contrary to the principles of fairness and integrity.
Also the Plaintiff should take into consideration that it may have negative consequences in case the court rejects the claim
After the court decision, which rejects the claim, comes into force:
a) the defendant shall be entitled to claim losses, caused by the Contract suspension, from the Plaintiff who has applied for the interim measures (paragraph 2 of Article 162 of the Civil Procedure Code of the Republic of Kazakhstan);
b) in case of suspension of construction works, along with suspension of the Сontract, which was related to the construction and installation works (for example, agreement on engineering services for technical supervision), any person carrying out such construction works shall be entitled to claim non-contractual damages caused by the Contract suspension from the Plaintiff, who has applied for the interim measure (paragraph 1 of Art. 917 of the Civil Code of the Republic of Kazakhstan).
*Normative resolution of the Supreme Court of the Republic of Kazakhstan No. 2 dated 12 January 2009 On taking interim measures in civil cases / http://adilet.zan.kz/rus/docs/P09000002S_