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Home / News and Insights / Blogs / Public Law / 103: Procurement: National Lottery award remains suspended

Last month the Court of Appeal granted permission to appeal to Camelot Group (Camelot) and International Game Technology (IGT) against the decision to award the fourth UK National Lottery Licence to Allwyn Entertainment Limited (Allwyn). This means the automatic suspension remains in place pending the outcome of the appeal proceedings which is likely to take place on 13 September 2022.

Background

Camelot has operated the UK’s National Lottery from its inception in 1994, until now. The Gambling Commission (the Commission) ran a procurement under the Concession Contracts Regulations 2016 to award a statutory licence to operate the National Lottery from 2024. The 10 year licence is estimated to be worth £100 billion in sales.

  • In March, Allwyn was announced the successful bidder. Camelot, the existing licence holder, and IGT were named as the ‘reserve applicant’.
  • On 31 March, Camelot and IGT brought proceedings against the Commission.
  • The grounds of challenge were centred on the Commission’s consideration and assessment of Allwyn’s application.
  • These included allegations that the Commission failed to correctly and lawfully apply the published evaluation methodology and / or applied an unpublished evaluation methodology and / or there was manifest error in the evaluation in respect of bids.
  • The issue of proceedings triggered an automatic suspension of the award process and prevented the Commission from entering into an agreement or licence with Allwyn.

The Commission applied for the suspension to be lifted, claiming it was not appropriate for the suspension to remain in place pending a full trial. Camelot and IGT opposed the lifting of the suspension.

The High Court lifted the suspension at the end of June, allowing the lottery licence to be awarded to Allwyn. That decision was determined in accordance with the American Cyanamid principles:

  1. There was a serious issue to be tried;
  2. Damages would be an adequate remedy for Camelot and IGT, but not for the Commission, as the delay to the start of the new licence would result in losses that would be difficult to quantify and damages would not be adequate; and
  3. As there was doubt as to the adequacy of damages, it fell to look at where the balance of convenience lay – in this case, in lifting the suspension and allowing the award of the licence to Allwyn.

Mrs Justice O’Farrell found that maintaining the suspension until the dispute was resolved would cause delay to the commencement of the fourth licence, which in turn would cause delay to its benefits and give rise to reduced contributions to good causes (amongst other things). Allowing the fourth licence to proceed would be the course that produced the least risk of injustice, if ultimately, it proved to be wrong.

Permission to appeal

Camelot and IGT sought permission to appeal the lifting of the suspension.

In accordance with part 52.6 of the Civil Procedure Rules, permission to appeal may only be given where:

  1. the court considers that the appeal would have a real prospect of success; or
  2. there is some other compelling reason for the appeal to be heard.

Lord Justice Coulson concluded that Camelot had met a), stating that it is a relatively low threshold. He was less persuaded by IGT’s submissions, but as some of the challenges overlapped did not consider it appropriate to deny them.

In determining b), LJ Coulson stated:

‘First, 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, both this morning and indeed this afternoon, demonstrated the potential importance of such guidance.’

Ms Hannaford QC, for the Commission, submitted that the Procurement Bill sets out provisions on this issue which uses different terminology from those currently used by the courts, but, as LJ Coulson point out, even once the Bill is passed, it does not follow that the test to be applied by the courts will be different to that which is currently applied.

The significance of the fourth licence and substantial sum provided by the Lottery to good causes also added to the compelling reason for the appeal to be heard, and consequently become a flagged appeal, to be heard by the Master of the Rolls.

In addition, the Court found that the Camelot and IGT’s applications to continue the suspension were ‘fundamentally flawed’ as a result of the applicants’ failure to provide appropriate written cross-undertakings as to damages. The grant of permission to appeal was conditional upon the provision of those undertakings being given. We assume they have now been given, as the appeal is now listed.

The appeal hearing has been provisionally listed for two days starting on 13 September 2022.

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