Czech Republic: Restraint of Contractual Performance – a new Measure in the Public Procurement Act
An important amendment to the Public Procurement Act came into force on 1 January 2010. In particular, these implement a host of changes in Czech law aimed towards increased transparency in public contract procurement and increased protection against unlawful conduct on the part of the contract-awarding authority. Among these, the 'restraint of contractual performance' appears to be one of the most important and most promising new concepts.
Previuously, where the contract-awarding authority acted unlawfully (by violating specific provisions of the Public Procurement Act) but where the most favourable bid was already selected and the contract was already made with the successful bidder, the contract-awarding authority could be sanctioned only in the form of a fine imposed by the Antitrust Office - not to mention that the amount of the fine was and is regularly incommensurate with the consequences of the authority's unlawful conduct. The newly-introduced measure allows the Antitrust Office to restrain a delinquent authority from performing under a contract that has already been made. Restraint of performance under the contract means that the contract is treated as ineffective; the contract-awarding authority is thus forced, for example, to initiate a new tender procedure. Unfortunately, the impact of this measure has been somewhat compromised by the fact that restraint of performance can only be imposed at the request of a bidder, and only in the cases listed in the Public Procurement Act. That being said, practice has the last word: only time will tell whether this new concept will live up to expectations.
