Be-Mobile loses the fight over TomTom’s Flemish travel-time data not on the merits but on its own articles of association: two directors could not decide alone to go to the Council of State
Be-Mobile challenged the award by the Flemish Traffic Centre to Tom Tom International of a 117,467-euro contract for a network of travel times or speeds across Flanders, but the Council of State declared the annulment action and the suspension request inadmissible of its own motion, because the decision to litigate had been signed by only two directors, whereas Be-Mobile’s articles required, for any legal action, the approval of a director from each of its three categories and a validly deliberating board.
What happened?
Through the Traffic Centre division of its Department of Mobility and Public Works, the Flemish Region launched a general call for tenders for the ‘supply of a Flanders network with travel times or speeds’ (specifications VC/10122). The contract was published in the Official Journal of the European Union on 31 July 2010 and in the Belgian Tenders Bulletin on 4 August 2010. Be-Mobile NV and Tom Tom International BV of Amsterdam submitted tenders. On 1 December 2010 the contract was awarded to Tom Tom International for 117,467 euros including VAT. Be-Mobile was informed by letter of 21 December 2010 that its tender had not been selected, and on 6 January 2011 it brought an action for annulment together with a request for suspension. The case was dealt with under the short-debate procedure. The award itself was never discussed. The Council examined of its own motion whether Be-Mobile had validly decided to litigate. Under article 522(2) of the Companies Code, the board of directors represents a public limited company in legal proceedings unless the articles provide otherwise. Be-Mobile’s articles provided for six directors in three categories (A, B and C), each nominated by a different group of shareholders. The board could only deliberate validly if more than half of its members were present, including at least one director from each category (article 13). For ‘acting in legal proceedings, as claimant or defendant, including conducting administrative and arbitral proceedings’, the approval of an A, a B and a C director was also required, except for legal measures that cannot be delayed and ordinary debt collection (article 14). The document of 4 January 2011 deciding to bring the suspension and annulment proceedings, however, bore full signatures only from a ‘Class A Director’ (Cools Projects BVBA) and a ‘Class B Director’ (Philippe Leerman). Next to the mention of an unnamed ‘Class C Director’ there was only an initial, ‘apparently in the same ink and pen’ as that of the A director, the Council noted. Be-Mobile had itself highlighted article 16, third paragraph, (i) of the attached articles — the clause under which two directors of different categories jointly bind the company — from which the Council inferred that the document was not a decision of the board but only of its signatories. That external-representation rule, the Council held, could not override the internal requirement of article 14. Day-to-day management offered no way out either: no document showed that the A director was the managing director, and article 17 expressly excluded the article 14 decisions from day-to-day management. For good measure, the Council found that it was not shown that the quorum of four out of six directors had been met: the document did not state who was present or represented, and even the name of the C director was unknown. Even if the suspension request, as an urgent legal measure, could have been decided by two directors, the annulment action remained invalidly brought. The action was therefore dismissed, and so was the suspension request that depended on it. Be-Mobile was ordered to pay the costs of the suspension request, set at 175 euros.
Why does this matter?
This judgment shows how a procurement dispute can fail before a single word is said about the award. Whether the Traffic Centre compared the tenders of Be-Mobile and TomTom correctly, we do not know; the Council never got that far. The decisive issue was one of company law: who, within the applicant company, may decide to go to the Council of State? The Council examines this of its own motion, even if the contracting authority does not raise it, and places the burden on the applicant: the question is not whether the decision is invalid, but whether it is shown to be valid. Particularly instructive is the distinction the Council draws between external representation (who binds the company towards third parties — here two directors of different categories) and internal decision-making power (who may decide to litigate — here a board including an A, a B and a C director). Relying on the former does not cover the latter. Articles of association with shareholder categories and veto rights — typical of joint ventures and companies with financial investors — make that risk particularly real. For contracting authorities, the judgment is a reminder that the applicant’s decision to litigate is a fully-fledged line of defence.
The lesson
For bidders: treat the decision to bring proceedings as part of the application, not as a formality. Before filing, check the articles of association — not only who represents the company externally, but above all who may decide internally to litigate, with what quorum and which approvals. If your company works with director categories or veto rights, have the board decide at a meeting whose minutes show who attended, from which category and how they voted, and have each signatory sign with name and capacity. Build in time for this: time limits in procurement cases are short, and a late or defective decision to litigate is hard to cure afterwards. For contracting authorities: request and check the applicant’s decision to litigate and its articles in every case. The Council will do so of its own motion if need be, but it is a defence you can raise yourself.
Ask yourself
Do you know which body in your company is competent to decide to bring an action before the Council of State, and whether your articles require a reinforced majority or the approval of particular directors for it? Can you show with minutes that the required quorum was met? Does each signature bear a name and capacity, or only an initial? Does litigation fall under day-to-day management in your articles, or is it expressly excluded? And as a contracting authority: do you check, when your award is challenged, whether the applicant validly decided to litigate?
About this database
The Council of State (Raad van State / Conseil d'État) is Belgium's supreme administrative court. In disputes over public procurement — from contract awards to tenderer exclusions — the Council of State is the final arbiter. The rulings in this database are summarised by TenderWolf in plain language, with practical lessons for tenderers and contracting authorities. View all rulings →