Out-Law News | 27 Nov 2012 | 1:06 pm | 4 min. read
The ruling will affect businesses bidding to win contracts from the Government and public sector organisations. They now cannot expect confidential information they provide during the procurement process to be exempt from public disclosure, even if the confidentiality of the information has been promised, said Laura Gilliespie, a regulatory expert at Pinsent Masons, the law firm behind Out-Law.com.
Gillespie said that the recent Tribunal ruling had shown that public sector bodies may be required to disclose information they said they would otherwise treat confidentially in order to comply with freedom of information (FOI) laws.
Earlier this month an Information Rights Tribunal ruled (19-page / 139KB PDF) that a local authority, the London Borough of Newham, did not have to disclose confidential information provided to it by a company, Aspers Stratford City Limited, in the course of a tender for a casino licence. In its ruling the Tribunal made clear that information submitted in "any competitive tendering operation" could be said to be confidential, and that this was especially the case because Newham council had given "specific assurances" that the information would be treated as such.
However, the Tribunal said that information submitted by suppliers during the tendering process would not remain confidential indefinitely and that it could therefore be subject to disclosure "after a reasonable period of time".
The Tribunal did not elaborate on what would constitute a 'reasonable period of time' because it ruled that the freedom of information (FOI) request that Newham council received, from Aspers' rivals Apollo Resorts and Leisure Limited and Apollo Genting London Limited, had been submitted at a time when the information was still to be considered as confidential.
Under the Freedom of Information Act (FOIA) individuals have a general 'right to know', which entitles them to be provided with information held by Government departments and public bodies. However, those bodies can legitimately withhold information requested in some circumstances.
One absolute exemption under the Act allows bodies to refuse to disclose information they hold when it is "obtained ... from any other person" and "disclosure to the public ... would constitute a breach of confidence actionable by that or any other person."
Public bodies applying this exemption do not have to conduct a 'public interest test' to assess whether the public interest in disclosing the information merits that disclosure despite the exemption being engaged, as is the requirement with 'qualified' exemptions under FOIA.
However, a separate exemption under FOIA allows public bodies to withhold information sought if disclosure of it "would, or would be likely to, prejudice the commercial interests" of it or any other person. The 'commercial interests' exemption is qualified and requires public bodies seeking to rely on it to conduct a public interest test in order to determine whether the commercially sensitive information should be disclosed or withheld.
As part of Newham council's tendering process for its casino licence, prospective contractors were required to set out, in a written agreement, what benefits and compensation they would provide if they were awarded the casino licence but the project was subsequently delayed or if the "benefits failed to materialise", according to the ruling. The Newham council said it would treat the information provided as confidential.
The council had argued that it was statutorily obliged, under gambling laws, to withhold the information requested by Apollo and Apollo on the basis that disclosing the information would be "likely to cause commercial harm" to Aspers. This was because there were a number of other casino licence bidding competitions being run by other local authorities "at around the same time". However, the Tribunal said that the particular exemption the council had relied upon did not impose an "obligation of confidentiality".
The council had further argued that the information Apollo and Apollo sought was protected by the 'commercial interests' exemption under FOIA. It said the information Aspers had provided was of "great value to a competitor" because rivals could have used the information to their advantage in other casino licence bidding competitions being run by other local authorities, or if the Newham licence competition was to be re-run following a judicial review.
The Tribunal agreed that the information was commercially sensitive and that the FOIA exemption was "engaged". However, it said that there was a greater public interest in disclosure of the information than there was in the details remaining withheld. It rejected arguments from the Council that disclosure of the information would discourage businesses from "engaging in public sector competitive tendering exercises".
"We believe that the public interest in full disclosure of the identity and creditworthiness of whoever agrees to stand behind the obligations assumed by a bidder is very substantial," the Tribunal said. "Conversely, the public interest in bidders being able to prevent competitors finding out about this part of their proposals is relatively slight. It is certainly not sufficient to equal, let alone outweigh, the public interest in disclosure."
However, the Tribunal then dismissed claims that the information sought by Apollo and Apollo should be disclosed. It said that, at the time of the companies' request, the information Aspers' submitted to the council was still to be treated as being confidential.
"In our view the reasonable expectations of the confider, presenting information to a local authority in the circumstances of this case, is that confidentiality would be maintained for a reasonable period of time after the date when the licence was awarded," the Tribunal said. "It is not necessary for us to determine whether that would last until the licence award was secure (in that the time for challenging it by Judicial Review had expired), other broadly comparable competitive tendering exercises had been completed or some other period of time."
"This is because, whatever the period of time, we are satisfied that it would have extended beyond the date, just a few weeks after the date of the decision complained of, when the council was required to respond to the Information Request," it said. Disclosure at the time sought would have been "unauthorised" and would have been to Aspers' "detriment ... as confider," the Tribunal added.
Laura Gillespie said that the ruling showed that confidential information submitted by companies to public sector bodies during a contract bidding process can be disclosed by public bodies, even if those bodies had made contractual promises regarding confidentiality.
"This demonstrates that notwithstanding the parties agreeing to keep information confidential, the application of the public interest test means that information supplied does remain vulnerable to disclosure," Gillespie said. "Confidentiality agreements will only be one factor in considering whether the information should be disclosed and bidders should not think that it is possible to have the public authority contract out of its FOIA obligations."