UKLFI: Supporting Israel with legal skills

Welsh Government warned that proposed procurement advice would be illegal

UK Lawyers for Israel (UKLFI) have warned the devolved Welsh Government that advice on procurement which it intends to issue would be illegal and liable to challenge in the courts.

According to a written answer of the Welsh Minister for Finance in the Welsh parliament on 11 August 2020, the Welsh government intends to issue a Procurement Advice Note (PAN) for all the public sector in Wales, that will advise buyers that they may exclude from tendering any company that conducts business with occupied territories whether directly or via third parties.

Photo: Sheep in Wales,  Roger Davies, Wikimedia Commons

UKLFI have written to the Minister pointing out that this would breach section 17 of the UK Local Government Act 1988 as well as the Public Contracts Regulations 2015 which implemented the EU Public Procurement Directive 2014/24 and remain in force in accordance with section 6 of the European Union (Withdrawal) Act 2018.

Section 17 of the 1988 Act requires local authorities to exercise their functions of accepting tenders and selecting contractors without reference to the location of the business activities or interests of the contractors. The proposed PAN would thus advise local authorities to take into account a matter which they are explicitly required not to take into account by applicable primary legislation.

The Welsh government cites Regulation 57(8)(c) of the Public Contracts Regulations, under which contracting authorities may exclude a tenderer where they can demonstrate that it is guilty of grave professional misconduct which renders its integrity questionable. However, the interpretations of the EU Court of Justice, which remain applicable under the EU (Withdrawal) Act, make it clear that this exception applies where the “misconduct” is such as to undermine the contractor’s reliability, and that it requires a specific and individual assessment of the economic operator concerned.

Our letter points out that decisions of UK and French appellate courts have confirmed that producing goods or providing services in occupied territories is not in itself illegal; that many leading companies have dealings with occupied territories; and that having such dealings does not make them unreliable as contractors carrying out public contracts in the UK.

We also point out that the proposed PAN would breach Art. VIII of the Agreement on Government Procurement (GPA) of the World Trade Organisation and that compliance with the conditions laid down would expose businesses to sanctions and liabilities under US counter boycott legislation.

Furthermore,since the PAN would be directed at international relations and the regulation of international trade, it would be a reserved matter, outside the legal competence of Welsh Ministers, in accordance with para 10(1) of Schedule 7A to the Government of Wales Act 2006.

The proposed PAN would apparently apply to all occupied territories. The Welsh government does not appear to be aware of the massive implications of this, given the large number of leading companies that do business with occupied territories around the world. So we have drawn their attention to the detailed examination by Prof Eugene Kontorovich and the reports of the Kohelet Policy Forum.

On the other hand, if the PAN were limited so as to target Israeli businesses and individuals in territories occupied by Israel, or if it were applied more vigorously towards them than towards others, additional legal provisions would be infringed, including Regulation 18 of the Public Contracts Regulations and Art. IV of the GPA; and businesses refusing to deal with Israelis in order to comply with its conditions would be even more exposed to sanctions and liabilities under US law, as well as to claims under section 29 of the UK Equality Act 2010 and laws on discrimination in other countries.