Court dismisses injunction against newly-formed fast ferry service bidder

A court has thrown out a request for an injunction against a newly-formed company being awarded the Gozo ferry service contract despite a condition requiring experience, holding that there was no evidence that its competitor would have won the tender.

Virtu Holdings Ltd had applied for a warrant of prohibitory injunction against Gozo Channel and its holding company to prevent it from entering into an agreement with Islands Ferry Network Ltd for the provision of fast ferry services between Malta and Gozo.

The issue arose after a call for proposals for the Public Service Concession Contract for the Provision of Passenger and Vehicle Ferry Services in Malta and Gozo in January 2018, which fell under the authority of the Ministry for Transport, Infrastructure and Capital Projects, according to the tender.

In accordance with the tender, Gozo Channel had issued a call for interested parties who might consider partnering up with it to participate in the tender. According to the call, prospective partners had to have the necessary experience, expertise or resources to provide fast ferry services, as Gozo Channel lacked this capability.

Virtu Ferries Ltd made its offer on 23 February 2018 and was rejected, being told it was not the most financially competitive offer. Instead, Gozo Channel chose the recently-formed Islands Ferry Network Ltd, whose shareholders are Magro Brothers Investments Ltd and Fortina Ltd. 

Subsequently, Virtu requested the Board for the Revision of Public Contracts to rescind Gozo Channel’s decision because Islands Ferry Network Ltd, which had just been set up, lacked the financial stability and the technical capacity to fulfil the duties and had no experience in fast ferry services.

In late August, the Board rejected the request and an appeal was filed. In its application for the injunction filed last week, Virtu declared that it was considering a case for judicial review under the Code of Organisation and Civil Procedure, insisting that Gozo Channel’s decision went beyond the scope of its powers.

In a decision handed down last Thursday, the First Hall of the Civil Court, presided by judge Anthony Ellul ruled that at first glance it appeared that Gozo Channel itself had recognised the fast ferry service would mean an acquisition under Public Acquisition Regulations.

The court noted that the fact that there were no other pending negotiations appeared to make the Islands Ferry Network Ltd and Gozo Channel agreement a fait accompli. It observed that the Revision Board had concluded that this was not a case of public procurement but a simple call for interest from one economic operator to another to participate in partnership for the sole objective of submitting an offer to a tender for a public service obligation.

This type of consultation should take place before acquisition proceedings by the contracting authority, noted the court. In this case Gozo Channel had signed a charter party agreement with Islands Ferry Network Ltd for the fast ferry service between Malta and Gozo, subject to a suspensive condition should it not be the recommended bidder in a future tendering process.

“It is obvious that Gozo Channel already took the decision about who it would be giving the fast ferry service to in the eventuality that it wins the tender and had bound itself with a contract,” said the court.

The court said it had taken into account the fact that Islands Ferry Network Ltd had only been incorporated days before the tender was issued, but said that there was insufficient prima facie evidence that the tender would have been won by Virtu. At the moment it was clear that the government tender was suspended and nobody could therefore present a tender, said the court. This meant that there was no actual necessity for the injunction as the tender was suspended. 

Furthermore, added the judge, from the testimony of Virtu’s director Mark Portelli, the company was clearly keeping its options open and would submit a tender either together with Gozo Channel or independently.

The court therefore rejected the request for an injunction.