Leading case on damages for "lack of competition"


21-11-2006

Torben Bondrop of Plesner represented a large firm of architects and its liability insurance company in proceedings instituted by the Legal Advisor to the Danish Government on behalf of the Danish Building Directorate (Statens Byggedirektorat) and Denmark's National Gallery, Statens Museum for Kunst, in connection with the extension of the latter.

The Legal Advisor to the Danish Government submitted a number of views, but primarily the principal view that services related to the building, the delivery of which due to oversights in the project material had to be agreed after the tender had been held, have not been subject to competition and therefore entitled the builder to damages estimated to 35% of the price of each forgotten service, since there was a presumption of this increase in cost due to the lack of competition.

The question has been discussed among practitioners in the field and was considered to be of such general public importance that the Building and Construction Arbitration Board appointed an arbitration tribunal consisting of two Supreme Court judges, one High Court judge and two lay judges.

Following extensive preparations, eleven test claims were selected and the case was argued at the beginning if October 2006. On 10 November 2006 the decision of the arbitration tribunal became available; the contention of the Legal Advisor to the Government that a percentage could be claimed in damages due to "lack of competition" was not upheld. The arbitration tribunal stated that a builder in principle is not prevented from recovering damages for such a claim, but that the claim must be documented in each case and that the standards of evidence requested must depend on the specific situation. In the present proceedings the arbitration tribunal did not find that the Legal Advisor to the Government had discharged the burden of proof for any of the selected test claims on behalf of the state. The decision has brought about considerable clarification of the state of the law and several proceedings before the Building and Construction Arbitration Board have been awaiting this decision.

Please contact Torben Bondrop and Klint Klingberg-Jensen for further information about the decision or if you have any other questions.

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