Halliwells forces councils to follow EU procurement rules

Halliwells has won a victory in the High Court that could force local authorities to withdraw from a mutual insurance scheme designed to overhaul how they purchase insurance.

As reported in March, Halliwells brought the case against Brent Council on behalf of Risk Management Partners to show that the council had sidestepped EU procurement procedures when selecting its insurance provider (The Lawyer, The Lawyer, 10 March.)

Brent had purchased insurance cover from London Authorities Mutual Limited ;(LAML). ;The mutual insurer for London borough ;councils ;was launched in April 2007 with participation from Brent and Harrow Councils.

LAML was established to allow local authorities to pool their insurance risks to combat rising premiums as the number of local authority insurers dwindle.

Halliwells argued that in signing up to the mutual, Brent had failed to comply with EU regulations that required the council to put the work out to tender.

In response, Brent's legal department, represented by Nigel Giffin QC of 11KBW, argued that under the Teckel exemption Brent was free from complying with EU regulations.

The Teckel exemption requires contracting local authorities to demonstrate they have exercised controls over the contracting party similar to that which it exercises over its own departments.

Lord Justice Burnton found that the authorities participating in LAML did not have necessary control of the mutual, pointing to the independence of LAML from any of its member authorities.

Halliwells partner Jolyon Patten, who instructed John Howell QC of Blackstone Chambers, said: "These regulations are there precisely to ensure transparency, fairness and competition in public procurement, and these decisions underline the fundamental importance of those principles."

LAML, which defended the claim alongside Brent and Harrow, said it would appeal the decision. Weightmans partner Michael Green and Harrow's legal services department instructed James Goudie QC of 11KBW to act on behalf of LAML and Harrow.

The case follows an earlier ruling against Brent that found that no council could participate in a mutual insurance company on the basis of saving capital.