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Administrative Fee or Nothing

Milica Karadza's picture

“Blessed is the one who learns a lesson on the basis of other people’s loss, but the one who learns on the basis of its own loss can be in trouble”. This is an old saying. Whoever deals with public procurement, and we are many, then the one also has a possibility to learn that this old saying is so true.

With all due respect, as well as in compliance with all laws and bylaws, the complicated legislation or in simple words – the “wood of the strict provisions” which is not always clear, takes its toll on a daily basis. However, the subject of this article is another important issue in relation to the public procurement procedure, and that is a matter of appeal in the public procurement procedure. In particular, the appeal procedure before the Office for the Review of Appeals (hereinafter: the Office).

Although it is almost clear to everyone, it should still be noted that in case a bidder’s dissatisfaction with the public procurement procedure, the same can complain to the contracting authority, and if the contracting authority considers that the timely and admissible appeal is not grounded, the same will forward it, along with their explanation, to the Office for the final decision.

This sounds as a simple and logical process. It should be the same in practice. However, as often happens, reality (practice) differs from the desired normative framework or what the legislator has in mind. One of the pre-conditions for the procedure before the Office is payment of an administrative fee for the appeal procedure. One of the novelties of the Law on Public Procurement is that quite high administrative fees were determined in relation to appeals, which supposedly was with a purpose to achieve a higher level of discipline and prevent the easy and frivolous statement of complaints that would interfere with the work of the contracting authority, actually work with public companies in general, which consequently could lead to major problems in their undisturbed functioning. Although such a solution and explanation sound quite justified, there is the other side of the story which is almost unacceptable. We say “almost” since there are no other options at the moment. Of course, there is a question of managing the administrative dispute, but the emphasis is this time in the administrative proceedings.

Namely, as already stated, the pre-condition for conducting proceedings before the Office is that the administrative fee for the appeal procedure has been paid, otherwise, if it has not been done, the Office will reject the appeal and will not decide on the merits, i.e. according to the reasons given in the appeal quotes. Just to remind, the administrative fee ranges from BAM 500.00 to BAM 10,000.00, depending on the estimated value of the procurement. In this way, the participants in the public procurement procedure are directly denied of legal protection, due to unpaid administrative fees. In addition the Constitution of the Republic of Srpska determines:

Article 16

Everyone has the right to equal protection of his/her rights in the proceedings conducted before the court and other State bodies and organizations.

Everyone is guaranteed the right to appeal or use some other legal remedies against a decision that resolves his/her rights or lawful interests.

The Constitution is therefore quite clear. The right to appeal or other legal remedy is guaranteed. The Constitution does not foresee unpaid administrative fees as a reason to deny this right.

In addition, the European Convention for the Protection of Human Rights and Fundamental Freedoms, which is directly applicable in Bosnia and Herzegovina, provides:

Article 13

The right to an effective remedy

Any person whose rights or freedoms set forth in this Convention shall be entitled to an effective remedy before a national authority, regardless of whether the offense has been committed by persons acting in an official capacity.

The Law on Public Procurement prescribes (Articles 106 and 108) that the Appellant is obliged to pay the administrative fee for initiating the appeal procedure, in the event that this administrative fee is not paid, the Office will reject the appeal as disorderly.

With such a conduct the remedy is deprived. There is a justified question of the constitutionality of such provisions in the Law on Public Procurement. Especially due to the fact that an unpaid administrative fee cannot in any modern, civilized and legally regulated state be a reason for denial of legal protection. In addition, this problem could easily be solved through the Tax Administration’s orders and forced collection. The courts do not reject a lawsuit because the administrative fee for the same is not paid in advance or the administrative fee on the motion for enforcement. This can be solved through the Tax Administration. In the extreme case, the obligation to pay an administrative fee in some cases also becomes obsolete, which is certainly less harmful than to deny someone the right to protection. Furthermore, in the Law on Public Procurement, in Article 105 and 106 the administrative fee is stated, while in Article 108 is stated the administrative fee for initiating an appeal procedure, and in fact it is the same administrative fee. In this way, to a certain extent, the obvious issue is blurred. It’s not an administrative fee, but compensation. It seems so. In that case it is not even a rejection of the appeal due to unpaid administrative fee.

In any case, it is a matter of reducing the guaranteed rights, i.e. the right to appeal, the right to an effective remedy.

This Act has been in use for a certain period of time (2 years) and the novelties found their place in practice. This does not mean that what is bad should be nurtured.

“It’s better to get back half way than continue the bad path”. This is another old saying that we could take into account in this regard, because those rights serve to those to whom the same relates?

Respecting the letter of the law is an option that has no substitute. There is a substitute option only for bad options.

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Milica Karadza's picture

Ms.Karadza deals with commercial and corporate matters, provides counsel in relation to legal and regulatory framework and advises on complex corporate transactions.