The Constitutional Court clarified the procedure for concluding an agreement with a single bidder

The Constitutional Court (CC) clarified the meaning of the norm of the Civil Code (CC) on the conclusion of an agreement with a single bidder. The reason for checking the constitutionality of paragraph 2 of Art. 432, paragraph 1 of Art. 438, paragraph 4 of Art. 445, paragraph 5 of Art. 447, p. 4 p. 448 of the Civil Code was the complaint of the joint-stock company “System Operator of the Unified Energy System” (JSC “SO UES”).

In 2019, the Moscow Department of the Federal Antimonopoly Service revealed violations of the procurement legislation in the actions of SO UES JSC during a tender for cleaning up the adjacent territory. Then the antimonopoly body came to the conclusion that the refusal to conclude an agreement with AVK Complex LLC based on the results of the tender was unreasonable, and obliged it to complete the procurement procedures.

Subsequently, SO UES JSC did not agree with the FAS order and filed a request to recognize the decision and order of the antimonopoly authority as invalid to the Moscow Arbitration Court, which refused to satisfy the requirements, with which the courts of appeal and cassation agreed. SO UES JSC insisted that during the tender only one application was allowed for purchase and the tender was declared invalid.

In his complaint, the applicant disputed the provisions of the Civil Code, since he believes that these norms restrict the freedom of contract in civil circulation and allow forcing the organizer of the auction to conclude an agreement with a single participant, even if the tender is declared invalid. In addition, SO UES JSC questioned the constitutionality of the norm of Art. 445 of the Civil Code, which allows the antimonopoly body in cases not provided for by law to require the conclusion of an agreement in an administrative manner.

Having considered the complaint, the Constitutional Court came to the following conclusions: the most favorable conditions should be created in Russia for the functioning of the economic system. The Civil Code, establishing that the auction and tender, in which only one participant participated, are recognized as failed, does not regulate the further consequences of such a decision. “However, this cannot be considered a gap in legal regulation, given the nature of this general rule, which is designed to be applied in the absence of special regulation. In some laws, the legislator has provided for such consequences,” the Constitutional Court’s resolution states. In conclusion, the court affirmed that the contested norms were recognized as not contradicting the Constitution, since they do not imply the obligation of the auction organizer to conclude an agreement, for the right to conclude which mandatory auctions are held, with the only bidder if they are recognized as invalid due to the absence of other bidders, if in the procurement regulation adopted in accordance with this law expressly provides that in this case the contract is not concluded and the auction is repeated.

The Constitutional Court terminated the proceedings in terms of verification of paragraph 4 of Art. 445 of the Civil Code, and judicial acts issued against a joint-stock company on the basis of paragraph 2 of Art. 432, paragraph 1 of Art. 438, paragraph 5 of Art. 447 and paragraph 4 of Art. 448 of the Civil Code of the Russian Federation in an interpretation that is at odds with their constitutional and legal meaning, identified in the resolution, are subject to revision.

Previously, the courts did not recognize the right for customers to determine in the procurement documentation the consequences of admitting a single participant to the application procedure, Forward Legal lawyer Ilya Ryzhakov believes. In his opinion, the most important is the conclusion of the court that the customers organizing the purchase at the auction are allowed to refuse to conclude a contract if the competitive procedure is declared invalid due to the admission to participation of only one application and the customer has provided in the procurement regulation as consequences in such a situation of holding repeated bidding.