MA Abogados leads appeal against Madrid City Council

MA Abogados has assumed the legal management of a contentious-administrative appeal against a decision of the Madrid City Council rejecting the price review of a works contract requested under Royal Decree-Law 3/2022.

Court no. 32 of Madrid upheld the claim in a judgment dated 4 March 2024.

The judgment resolves the question of how Royal Decree-Law 3/2022 should be interpreted in relation to the minimum duration period for its applicability in relation to contracts based on the execution of a framework agreement, in which respect it accepts the grounds of Report 5/2023, of 20 October, issued by the Advisory Board for Administrative Contracting of the Community of Madrid, considering that if the award of the contract based on the performance of a framework agreement in which the applicable prices are established, the requirement of the minimum period of four months should be computed from the date of formalisation of the framework agreement.

But in addition to the above, other pronouncements of the judgement are highly relevant, analysing other issues of interest in the area of exceptional price review, beyond the case of procurement by framework agreement, stating:

1. That the impact on the contract must be considered up to the date of formalisation of the Act of Acceptance and issue of the Final Works Certification, in accordance with the wording of Article 7 of Royal Decree-Law 3/2022. On this point, it rejects the Madrid City Council’s argument that the period to be considered in determining the minimum duration period should be the duration of the execution of the work or the duration period established in the formalisation of the contract on the basis of the contract.
2. The judgement also states, as we stated in the claim, that purely formal reasons cannot be used to deny the price review, clarifying the judgement that the right to the price review derives not only from the norm, but also from the general principles applicable to administrative law, such as good faith, legitimate expectations or the prohibition of unjust enrichment, which are included in article 3 of the Public Sector Legal Regime Act.
3. Finally, among other matters of interest, the judgment also states that, in the absence of regulatory provisions, or when these regulatory provisions exist but there are facts in the contractual-legal relationship that are not covered by them, the doctrine of “reasonably unforeseeable risk” must be applied in order to re-establish the economic equilibrium of the contract.

The team has been formed by Sofia Acuña, partner and Andrés Moreno, associate.