Legal Updates

The attachment of a bank’s guarantee to a tender offer amounts to a flaw justifying its disqualification

May 26, 2020

A tender participant attached to the bid a copy of the bank guarantee, while the tender terms required the attaching the original guarantee. The tender committee disqualified the bid.
The Supreme Court held that the bid is disqualified because a copy, and not the original, was attached to the bid. Flaws in guarantees attached to tender bids are reviewed under strict scrutiny, and thus will usually result in disqualification of the bid, regardless of the nature of the flaw or the participant’s intent. This approach stems from the close link between the guarantee requirement and the rationales behind the tender law: promoting equality among participants on the one hand and promoting efficiency of the tender publisher on the other. The importance of attaching an original guarantee rests on three cornerstones: First, it is a requirement for preserving equality among participants due to the concern that the possession of the original guarantee may enable its unilateral cancellation by the participant. Although this is a relatively negligible flaw in comparison the flaws of amounts, dates etc., the principle of equality requires insistence on furnishing original guarantee. Thirdly, submitting a copy of a guarantee as a policy may burden the tender committee’s work. Here, especially in light of the tenders’ unambiguous wording, requiring an original guarantee to be submitted, allowing the submission of a copy would hinder the equality among the participants.