According to the Act CXLIII of 2015 on Public Procurement (hereinafter referred to as the PPA) the Public Procurement Arbitration Board (hereinafter referred to as the Arbitration Board) is empowered to conduct proceedings initiated against any infringement of the legislative provisions applicable to public procurement or contract award procedures, including the proceeding initiated against the rejection of the request for prequalification specified in a separate act of legislation and the deletion from the prequalification list. The Arbitration Board may open a procedure upon a claim or ex officio. The claim can be submitted by a contracting authority, a tenderer, in the case of a joint tender any of the tenderers, a candidate, in the case of a joint request to participate any of the candidates, or any other interested person whose right or legitimate interest is being harmed or risks being harmed by an activity or default which is in conflict with the PPA. The chambers or interest representation organisations with an activity related to the subject-matter of procurement may submit an application regarding the illegal nature of the contract notice, the invitation for submission of tenders, the invitation to participate, the documentation or the amendment thereof.
Before launching the proceeding of the Arbitration Board in case the tenderer does not agree with a decision by the contracting authority it can apply for a review procedure directly at the contracting authority (preliminary dispute settlement). After the opening of tenders in case the tenderer has initiated the preliminary dispute settlement the contracting authority is not allowed to conclude the contract within 10 days from sending its answer. Proceedings of the Arbitration Board – as a main rule – have to be launched within 15 days from becoming aware of the infringement of the PPA, but in case the claim is related to the closure decision of the contract award procedure the proceeding can be launched within 10 days. 90 days after the occurence of the infringement there’s no possibility to submit a claim.
The application has to include all the relevant information as stipulated in Article 149 (1) of the PPA and an administrative service fee has to be paid. The Arbitration Board may take interim measures, upon request or ex officio, before the conclusion of the contract, if there is indicative evidence that an infringement of the rules of the contract award procedure has been committed or a risk thereof is detected. As an interim measure the Arbitration Board may:
- order the suspension of the public procurement procedure
- request the contracting authority in charge of the contested procedure to invite the applicant take part in the procedure.
The Arbitration Board holds a hearing if it considers that it is required for the clarification of the cause of action. The hearing is held in public. During the proceedings only interested parties have access to the documents of the procedure.
The Arbitration Board may impose a fine – from 50.000 to 500.000 HUF – on the applicant or any other person taking part in the review procedure if they:
- disclose wrong or false data, relevant to the judgment of the case
- fail to supply information at all or within the deadline
- hinder access to documents related to business or public procurement activities
- make a clearly unsubstantiated statement with respect to exclusion, or make a repeated unsubstantiated statement against the same public procurement commissioner during the same procedure.
The Arbitration Board’s decisions have to be taken within:
- 15 days, if hearing is not held
- 25 days, if a hearing is held
- 60 days, if the proceedings initiated against the amendment or performance of public procurement contracts, in a manner violating the PPA.
An additional 10 days extension can be granted if justifiable circumstances arise.
Decisions are delivered to the parties and other interested parties. They are also published in the Public Procurement Bulletin.
The Arbitration Board can take the following decisions (Article 165 of the PPA):
- dismisses any unfounded applications;
- in proceedings launched ex officio states the lack of infringement;
- states that an infringement has occurred;
- states that an infringement has occurred and
- before the closure of the contract award procedure, calls upon the person who committed the infringement to act in conformity with the rules laid down in the PPA, or orders that the contracting authority may take its decisions only subject to certain conditions;
- declares void any decision made by the contracting authority either during the contract award procedure or as a decision closing that procedure, provided that no contract has been concluded yet on the basis of the decision in question;
- orders the removal of the tenderer from the official list of approved tenderers;
- imposes a fine – as a general rule – on any organisation (person) which has violated the PPA or on any person or organisation that is liable for the infringement and has a legal relationship with the person or organisation liable for the infringement in question.
- states that an infringement has occurred, and imposes a fine
- states that an infringement has occurred and shall prohibit the tenderer, the subcontractor or another entity (person) who or which participated in the contract award procedure from participating in the contract award procedure, according to the stipulations of a separate act of legislation.
The application of the legal consequences required by the PPA does not preclude the application of the Civil Code, according to which a contract, awarded in violation of the PPA, can be declared void.
Procedure of the Court
No direct appeal can be lodged against the Arbitration Board’s decisions. The courts can review these decisions only if so requested in the form of a statement of claim. The reason for reviewing the deicision of the Arbitration Board can be not only the infringement of the law, but also the fact if the plaintiff has found that the Arbitration Board – in accordance with the PPA – had assessed, qualified the previous proceeding in an appropriate way. The court’s procedure can be launched according to the following procedure:
- a statement of claim is submitted to the Arbitration Board within 15 days from the service of the decision
- the statement does not have a suspending effect on the enforcement of the Board’s decision, however if the application contains a request for the suspension of the enforcement of the decision, the court takes a decision within 5 days following the receipt of the documents at the court and it shall send its decision to the parties without delay.
- the Arbitration Board sends the statement and the documents of the proceeding to the court in 5 days
- the court serves the statement of claim within 8 days, simultaneously it informs the plaintiff and the parties involved, in case they wish to intervene.
The court may overrule the Arbitration Board’s decision or it may annul the decision and order a new procedure to be conducted by the Arbitration Board. Furthermore the Regional Court reviews decisions of the court if the PPA allows further remedy.
The decision of the Arbitration Board may not be annulled by the court unless an infringement of the substantial rules on legal remedy proceedings having an effect on the substance of the case occurred in the proceeding of the Public Procurement Arbitration Board.