Mutual says there is "greater clarity" following a similar ECJ decision.
The London Authorities Mutual (LAML) has said the European Court of Justice has given a considerable boost to its prospects of reversing the procurement decision in RMP v Brent, which found in that instance that Brent were not permitted to award contracts of insurance to their own mutual insurance organisation (LAML) without running a procurement exercise.
The mutual said it gives renewed hope to local authorities running their own mutual insurance organisation to save council taxpayers up to 15% a year in premiums while providing greater cover and risk management benefits.
The high court ruled Brent was wrong to use the so-called Teckal exemption avoiding a public procurement exercise but the ECJ decision throws fresh light on this.
Greater clarity has been provided by the European Court of Justice (ECJ) on the question of whether a public body which is a member of an organisation designed to deliver services to public bodies exercises sufficient control over that organisation such that it can procure services from that organisation without running a public procurement exercise.
In Coditel Brabant SA v Commune d’Uccle et al the ECJ has ruled that sufficient control can be demonstrated to satisfy the “Teckal” test.
The landmark case is seen as being very helpful in resolving Brent’s attempt to overturn a recent High Court decision which is due to come before the Court of Appeal in March 2009.
Risk Management Partners, who operate on behalf of beleaguered AIG in the UK public sector, had claimed that Brent were in breach of Public Procurement regulations by awarding their contracts of insurance to the London Authorities’ Mutual Limited, of which Brent were a subscribing member, outside of a procurement exercise.
Martin Fone, from LAML’s Managers, said: “All the case law relating to the so-called Teckal exemption relates to cases decided in the ECJ. As this is the latest authority and is directly on point, we regard this as being very helpful to our cause and reflects what our understanding on this point always was."
