World Bank Procurement Training
1
International
Agreements
Institutions
LEGAL
Background
ECONOMY
HISTORY
Political
situation
Procurement
Legal
Framework
World Bank Procurement Training
2
Law?
Guidelines?
World Bank Procurement Training
3
IMPACT of the LEGAL SYSTEM

LEGAL

INSTITUTIONS

PERFORMANCE

INTEGRITY
ACTION PLAN/
RECOMMENDATIONS
The impact of the legal background on 1, 2, and 4 will be studied in the following slides
World Bank Procurement Training
4


This presentation aims at clarifying the legal context
of the countries for a pedagogical purpose. It does
not and it can not reflect all the variations and
particularities that are the product of each country’s
history.
For simplicity, the expression “civil law” system will
be used in the following slides even if it is not
actually endorsed by many countries which prefer to
call it the “romano-germanic” system.
World Bank Procurement Training
5
1. ASSESSMENT (CPARs and UCS stage 1)

LEGAL
Civil law systems
Common law systems
Common findings:
•Limited scope of application of the procurement legislation;
•Limited access to procurement information;
• Lack of transparency;
•Excessive use of single source/direct contracting;
• Lack of complaint mechanism for unsuccessful bidders;
•Individual conflict of interests and organizational conflict of
interest;
•Lack of sanctions;
World Bank Procurement Training
6





Is there a regional trade agreement concerning
procurement?
Accessing process to a regional trade area?
Impact of bilateral trade agreements?
Constitution: Legal force of international
agreements?
International arbitration permitted?
World Bank Procurement Training
7








Government Procurement Agreement (WTO)
UNCITRAL Model Law
Regional Procurement provisions: EU Directives,
WAEMU, COMESA
OECD/DAC methodology
Working Group on Transparency of WTO
Regional Trade agreement: e.g. NAFTA
OECD Convention on combating bribery
World Bank (& other MDBs) Guidelines
World Bank Procurement Training
8




Plurilateral (NOT multilateral)
Agreement between 37 WTO
countries (over 150 countries
are members of WTO)
Treaty
Signed in 1994, renegotiated in
2007
New interest form several
countries in negotiating
accession
World Bank Procurement Training
9
Negotiating accession
Albania
Chinese Taipei
Kyrgyz Republic
Georgia
Moldova
Jordan
Oman
Panama
Commitments to access
Armenia
CHINA
Croatia
INDIA
Former Yugoslav Republic of Macedonia
Mongolia
Saudi Arabia
Observers
Albania, Argentina, Armenia, Australia, Cameroon, Chile, China, Colombia,
Croatia, Georgia, Jordan, the Kyrgyz Republic, Moldova, Mongolia, Oman,
Panama, Sri Lanka, Chinese Taipei and Turkey. Three intergovernmental
organizations, IMF, OECD and UNCTAD
World Bank Procurement Training
10


No requirement for public bid
opening
Late bid possible under specific
circumstances “A procuring entity shall not
penalize any supplier whose tender is received after
the time specified for receiving tenders if the delay is
due solely to mishandling on the part of the procuring
entity”

Negotiations possible
(b)
A Party may provide for its procuring entities to
conduct negotiations: A procuring entity shall:
where negotiations are concluded, provide a
common deadline for the remaining
participating suppliers to submit any new or
revised tenders.
World Bank Procurement Training
11
GPA (2007)
EU 2004/18 Article 53
Contract award criteria
Article XV
Treatment of Tenders and
Contract Awards
The criteria on which the contracting
authorities shall base the award of
public contracts shall be either:
it shall award the contract to •
(a)
when the award is made
the supplier that … has
to the tender most economically
advantageous…;
submitted:
(a)the most advantageous or
•
(b)
the lowest price only
tender; or
(b)where price is the sole
criterion, the lowest price.
World Bank Procurement Training
12
2. Identifying the Legal
environment of the country
 What is the current system?
• What is the Legal framework?
World Bank Procurement Training
13
“CIVIL LAW” COUNTRIES




Strict hierarchy of
norms (Constitution,
law, Regulation,
Circular, order,
Individual decision)
Codification
Case law ?
Administrative
law/private law
“COMMON LAW” COUNTRIES






Flexible hierarchy ?
Guidelines, Guidance,
Waiver
No codification
Judiciary and Case law
Arbitration and ADR
No distinction between
public and private law
World Bank Procurement Training
14







Countries following a common law system are typically those that were former
British colonies or protectorates, including the United States and Commonwealth
members.
Common law is the system of law which is based on judges
decisions, custom and practice rather than on written laws.
There is not always a written constitution or codified
laws/statutes.
Judicial decisions are binding – decisions of the highest court can
generally only be overturned by that same court or through
legislation.
A common law system is generally less prescriptive, more flexible,
quickly adapted to changes than a civil law system. e.g: waiver
“Case-law system”requires a well functioning court system,
strong reliance on precedent (stare decisis)
Main issues in client countries: uncertainty, lack of coherence of the
judicial decisions leading to proliferation of “guidances” , “guidelines”
and regulations
World Bank Procurement Training
15



The Legal Framework is based on “Administrative
Regulations”.
Under that approach, the Ministry of Finance, or other
relevant ministries/ organs/agencies, issue
regulations, in some cases in the form of a
“procurement manual”, pursuant to powers granted
by a statute or regulation such as a Finance or Treasury
Act.
Fragmentation : In some States that applied such an
approach, there is an accumulation of various sets of
overlapping and sometimes inconsistent regulations,
instructions and circulars modifying earlier texts
World Bank Procurement Training
16






Former French, Dutch, German, Spanish or Portuguese colonies or protectorates,
including much of Central and South America and many African countries.
Also, most of the Central and Eastern European and East Asian countries follow.
The civil law system is a codified system of law taking its origins
from Roman law.
There is a written constitution and specific codes (e.g., civil code,
codes covering corporate law, tax law and criminal law);
Only legislative/regulatory enactments are considered binding.
A civil law system is generally considered more prescriptive than
a common law system
Main issues in client countries: Rigidity. Heavy and slow process
to enact the procurement law depending on the political agenda.
Minor rules should be kept in the regulations
World Bank Procurement Training
17

Administrative law is a branch of public law.


It is, in a limited definition, the body of law that governs the activities of
Government administrative agencies (in the US).
In an extensive definition it covers almost all the decision-making process
of all administrative units at the national level (Agencies, ministries or
even some Presidential decisions) or at the local level (local governments)
+ all public bodies using public funds. Not only it oversights the making
process of individual decision concerning citizens but also of general
regulations. It could also concern public contracts (including procurement
contracts), contratacion publico in Spanish).
These decisions or regulations are reviewed by the courts (civil
courts or sometimes, by specialized courts called Administrative
courts).

In some civil law systems, Administrative law is essentially a
judge-made law (case law).
+ e.g., Germany, writings of legal scholars have significant influence
on the courts

World Bank Procurement Training
18
CIVIL LAW



COMMON LAW
References to the Constitution (if
applicable) + other laws +
regulations in the procurement field
No chapter on definitions. Many
legal concepts are already defined
(by former laws, case-law or
practice). E.g. “Procurement
contracts“ (or marchés publics in
French), “Concessions” and
“affermage”.
Subdivisions:
 Chapters,
 Sections,
 Articles





Introduction
No list of other laws
Summary
Chapter on definitions
Subdivisions:



Chapters/Parts
Sections
Provisions/”regulations”
World Bank Procurement Training
19
“CIVIL LAW”






“COMMON LAW”
Public contracts/private
contracts
Procurement proceedings
heavily regulated
Criterium= Price ; “sealed
bidding”
No bid security
No performance bond but
warranty
Performance and
administration of the
contract by Standards
clauses/ GCC








No distinction between
public and private contracts
Procurement proceedings
lightly regulated
Criterium= best value
negotiations
Bid bond/security
Performance bond
No standardization (= no
SBDs, no GCC)
No specific powers granted
to the Public authority
World Bank Procurement Training
20


English Law (contrary to US
law) used to require that the
promisee himself must suffer
the legal detriment
(consideration). Since 1999,
Right of Third Parties Act,
certain third parties can
enforce contracts to which
they are not parties.
Change in the contract:
admitted for long time in US
law, more recently in English
law because of the
consideration doctrine
Promise/Offer
by the
Promisor
World Bank Procurement Training
Acceptance
by the
Promisee
Consideration
21





The call for bids = invitation to make an offer
The bidder is the “offeror”
Limited power of revocation of the offer = the
bid security is an “option” ( a separate
consideration/contract)
No contract exists until the public entity (the
“offeree”) accepts one bid.
The acceptance of the offer creates the contract ;
but there is no formalization of the acceptance
World Bank Procurement Training
22


“Mailbox rule” (British case 1818 Adams v.
Lindsell) = an offer is effective when it is
received by the offeree while an acceptance is
effective on dispatch.
The US-English law does not impose an
obligation on a party to volunteer information
to the other contracting party, with exception
World Bank Procurement Training
23



In English law, intention of the parties: property
in goods is transferred when the parties
(essentially the seller) to the contract intend it to be
transferred.
In French law, the transfer of property is an
immediate result of the agreement between the
parties and the intention of the parties is irrelevant
after that moment, even though the goods are not
delivered nor the price paid (Civil Code article
1583). Signature and formalization are required.
In German law, two conditions: the agreement of
the parties (legal basis) and the delivery of the
goods (article 929 of the Civil Code).
World Bank Procurement Training
24




Modification/change clause
Differently from the courts in most civil law
countries, under the common law the courts
have not the power to adjust or adapt the
contract to changing circumstances.
Incidents, contractual events
Termination
World Bank Procurement Training
25
CIVIL LAW

This indemnification covers 9095% of costs incurred between
the date on which the economic
balance of the contract was
disrupted and the date on which
the event of « imprévision »
disappears or is overcome.

as long as the economic balance
of the contract is not disrupted,
hardship-related costs are borne
by the company.

continuing hardship entitles the
State to terminate ongoing
payments (except loss of profits)
and/or to take over the project.
COMMON LAW

At best in Common Law, a
hardship clause imposes an
obligation to meet and to
discuss possible re-balancing
of contract.
Page 26

Page 27
In Common Law:

A contractual term but not a « term of art » by which one or both parties are
excused from performance i.e. no contractual term, no excuse.

Burden of proof on party claiming to prove:
 beyond his control;
 no reasonable way to avoid or mitigate;
 impossible (not merely more difficult or expensive); and
 not necessarily unforeseeable.

Different from « Frustration » whereunder a contract may be discharged if
something occurs after formation making it physically or commercially
impossible to fulfil the contract (e.g. the building in which the performance is to
take place is destroyed).

If the contract contains a force majeure clause then the contract cannot be
frustrated as the parties have dealt with the situation.


Principle of privity of contract in both systems
Consequence on the complaint mechanism and
actions against the existing contract



US law already accepted that Third parties could
enforce contracts to which they are not a party.
“Right of Third parties Act” 1999
WB Audit clause and third party rights?
World Bank Procurement Training
28









Registration of companies, commercial law
Freedom of information Law
Criminal Law
Competition Law
Public Domain/ ownership of the land
Guaranties, legal liabilities
Arbitration for public matters
Court of Auditors and (public) accounting
mechanisms
Civil Servants Law
World Bank Procurement Training
29

Consistency between the procurement system
and the Constitutional framework,



hierarchy of norms
Organization of the country: federalist,
decentralized, centralized with deconcentration
Legal background: civil law (emphasis on
norms) or common law (emphasis on
institutions)

Judicial system:



Civil courts
Commercial courts?
Administrative courts?
 Proceedings? Powers? Efficiency? Staffing?

Status of the court of Auditors: established by
the Constitution?


Independence? Efficiency?
What implication in the procurement review
system?/ Audit system?

Anti-trust policy/competition law? Anti-trust
Body?


Sanction of collusive practices? Sectors regulations?
Civil service law: does it permit to create a
specific position for procurement staff?

Requirements for hiring? Specific incentives?
“Revolving door” provision? Code of ethics?
Prevention of conflict of interest?

PPP law? Specific or covered by procurement
framework?




Institutions in charge, methods of procurement,
complaint system, oversight of the performance
Arbitration? Availability of arbitration for
public contracts?
Appropriation/ budgetary proceedings
Environmental issues
ASSESSMENT (CPARs and UCS Stage 1)

INSTITUTIONS
Common
issues:
Civil
law systems
Common law systems
Common findings:
•Unclear involvement of several institutions,
overlaps
•Political interferences; political appointments
•Hegemony of certain ministries;
• Central Tender Boards responsible of reviewing
most of the procurement proceedings;
• Conflict of interest between traditional Central
Tender Board functions and the review of bidder
complaints;
• Lack of an independent Review Body;
• Lack of material and legal resources for Court of
Auditors;
World Bank Procurement Training
34
 Institutional
organization
 Justice organization
The institutional model is linked to the Legal
system
World Bank Procurement Training
35



Emphasis on the Institutions
‘The Commission shall have a distinct corporate
identity with perpetual succession and a common
seal and may sue and be sued in its corporate name.’
Government agencies, decentralized bodies

What approvals during the tender process are
required and from whom?
World Bank Procurement Training
36
CIVIL LAW





“COMMON LAW
Regulatory body= Branch of the
Executive (e.g. in the MOF)
Procurement entities= permanent
committee with civil servants
Deconcentration of the procuring
power: pyramidal structure, levels
depending on thresholds
Contract signed by the Minister or
his delegates (“deconcentred”
levels)
Prior control by ministries,
internal system and
administrative control




Regulatory body established by
Statutes (Independent Agencies)
Procurement entities: ad-hoc
committee (Procurement
Committee, “bid-evaluation panel”,
“steering committee”)
Panel shall prepare and submit an
evaluation report for the
consideration of the Procurement
Committee
Term appointed procurement
officers + required experts
World Bank Procurement Training
37
CIVIL LAW



COMMON LAW
Prior review is performed by
Ministry of Finance or by a
centralized body that
performs the quality control.
Where there is wider
capacity, this responsibility
is deconcentred to specific
bodies within line
ministries/contracting
entities.
Efficiency of the system is
based on the
“independence” of entities.


Performed by the
contracting entities
themselves.
Efficiency of the system
is based on the
“independence‘” of the
individuals

World Bank Procurement Training
38
1. Internal review
1. Internal
review
2.Appeal:
Judicial review
1. Internal review
2.Administrative
Review Panel
3.Appeal:
Judiciary
World Bank Procurement Training
2. Court of
Auditors
and
Judicial review
39
‘CIVIL LAW


COMMON LAW
Protest and complaints :
Courts (civil or
administrative)
Judges are civil servants
+ independent
•
Protests: Peer /
Administrative
• + professional
•
Judiciary only for appeal
or parallel
World Bank Procurement Training
40
ASSESSMENT (CPARs and UCS Stage1)
3
INTEGRITY
Civil Law
•
Common Law
Common findings:
•Lack of anti-corruption institutions-sanctions
• Limited prosecution of procurement
corruption cases;
• Deficient post review mechanisms;
• Absence of effective appeal mechanism for
unsuccessful bidders;
•Lack of resources for the judicial system;
World Bank Procurement Training
41
CIVIL LAW



COMMON LAW
Strong emphasis on the
judiciary
Reluctance to go for
arbitration in public
affairs
Case-law?


Precedent : Under the
doctrine of Stare
Decisis, common-law
judges are obliged to
adhere to previously
decided cases, or
precedents.
Critics of the Judiciary
World Bank Procurement Training
42
CIVIL LAW





COMMON LAW
“Inquisitorial“
Active role of the Judge
Written communication is
prevailing
Process of collecting
evidence is a public
function conducted by the
Court.
The Judge is in charge to
find the truth not to
decide which argument is
stronger.




“Adversarial“,
Passive role of the
Judge: oversees the
proceedings.
Strong emphasis on the
oral argument
Process of discovery is
conducted by the
parties
World Bank Procurement Training
43




Sovereign Act doctrine for
the Government decisions.
Exception in specific areas.
Judicial review is different
from an administrative
appeal.
In Judicial review the Court
will only look at the method
and the proceedings of the
decision.
An administrative appeal is
performed by a higher body
in the agency to assess also
the correctness of the
decision .
World Bank Procurement Training
44
2. ACTION PLAN
Recommendations
RECOMMENDATIONS
World Bank Procurement Training
45
CIVIL LAW



COMMON LAW
Main issues in a civil
law system:
centralization of the
procurement process,
lack of external controls,
Targets: independency
of the procurement
Authority,
Streamline the
complaint and review
mechanisms


Main issues in a common
law system: competition
among agencies and
procurement bodies,
uncertainty of the legal
procurement framework
Targets: clarify and
rationalize the
institutional framework,
Secure the legal
environment
World Bank Procurement Training
46



Court of Auditors
Competition/Antitrust Agency or Sector
Agencies
Procurement regulatory body should be
involved in negotiations of international trade
agreement dealing with procurement
World Bank Procurement Training
47





Create a specific delay before contract
signature (“Standstill period”)
Screening
Non-automatic suspension of the contract
proceedings
Access of Third parties?
Impact in the existing contract?
World Bank Procurement Training
48






Adoption of international treaties, conventions and uniform rules
containing elements of both the civil law and the common law.
1980 Vienna Sales Convention.
The UNIDROIT Principles for International Commercial Contracts
They are aimed to serve as a model to national legislators and to
provide guidance to courts and arbitrators when interpreting
existing uniform law and deciding disputes relating to
international commercial contracts.
The 2000 INCOTERMS regulate the transfer of risk and costs in
contracts of sale.
Soft law: Commission on European Contract Law (the Lando
Commission) has prepared the Principles of European Contract
Law
There are similar examples in other fields of law, like international
carriage of goods, international payments, international
commercial arbitration.
World Bank Procurement Training
49
WB PROCUREMENT
GUIDELINES




Mandatory provisions for
procurement methods,
SBDs,
GCC
But they don’t consider:
Institutions, Complaint
mechanism, arbitration,
enforcement of
International agreements
OTHER “INTERNATIONAL
STANDARDS”



UNCITRAL Model Laws
International Procurement
Agreements (GPA)
Regional Trade
Agreements
EU Procurement Directives
WAEMU Procurement
Directives (UEMOA)
 COMESA procurement
Directive




FIDIC
+ OECD reports
World Bank Procurement Training
50



the UN Convention Against Bribery and
Corruption (UNCAC);
the OECD Convention on Combating Bribery
of Foreign Public Officials in International
Business Transactions;
the OECD Revised Recommendation on
Combating Bribery in International Business
Transactions.
World Bank Procurement Training
51





Procurement model law drafted for
countries lacking procurement
legal framework
Agreed in 1994 new draft should
be adopted in 2011
It is NOT a Treaty but a Model
Law
No binding provisions but
recommendations
Drafted by an expert group and
approved by UNCITRAL
Committee (60 countries)
World Bank Procurement Training
52
RECOMMENDATIONS
UNCITRAL Model Law 1994
Unrestricted access to bidders: open competition shall be the rule;
Comprehensive specifications in bidding documents;
Full disclosure of evaluation criteria;
Public bid opening;
No negotiation for goods and works;
The UNCITRAL Model Law does not provide specific
recommendation for Institutions;
World Bank Procurement Training
53
1994 VERSION



DRAFT
Bid opening (art.33)
All suppliers or contractors that
have submitted tenders, or their
representatives, shall be permitted
by the procuring entity to be
present at the opening of tenders.
Negotiations (art.35)
No negotiations shall take place
between the procuring entity and
a supplier or contractor with
respect to a tender submitted by
the supplier or contractor.
Provisions for consultant
services



New provisions in draft
More procedures
See UNCITRAL web
site under working
procurement 1
World Bank Procurement Training
54


FRAMEWORK
AGREEMENTS
E-PROCUREMENT
World Bank Procurement Training
55
Operation
&
Efficiency
World Bank Procurement Training
56