Beware of the AMP's power to terminate contracts

According to the Act respecting contracting by public bodies (ACPB), public bodies are required to use the public tendering procedure to award any public contract involving an expenditure whose value is equal to or greater than the threshold provided for in any applicable intergovernmental agreement.

However, section 13(4) of the ACPB provides that it is possible to derogate from this rule and enter into a contract by mutual agreement, in particular when a public body considers that it will be possible for it to demonstrate, having regard to the purpose of the contract and in compliance with the principles set out in section 2, that a public call for tenders would not serve the public interest.

On April 23, 2024, the Autorité des Marchés Publics (AMP) published its Recommendations to the Université du Québec en Abitibi-Témiscamingue (UQAT) concerning the tendering processes identified at SEAO under reference numbers 1743546 and 1594593.

One of the calls for tenders analyzed by the AMP concerned the awarding by UQAT of a contract by mutual agreement based on the exception provided for in paragraph 4 of section 13 of the ACPB for an amount exceeding the thresholds. According to UQAT, a public call for tenders would not have served the public interest since it was necessary to quickly find a new service provider before the winter in order to compensate for the withdrawal of the previous service provider, otherwise UQAT would have been exposed to a loss of several thousand dollars.  The AMP notes in its analysis that, according to the evidence presented, it was not until nearly five months after the withdrawal of the previous service provider that UQAT's procurement manager and the person responsible for the application of contractual rules (RARC) were informed of the need to enter into a new contract to complete the work. The AMP therefore concludes that the work became urgent because the situation was not taken care of at the appropriate time following an internal communication problem, which, in itself, does not justify the use of an exception in section 13 of the ACPB. UQAT also confirmed that without this internal communication problem, it would have proceeded by public call for tenders to award the contract.

The AMP notes that the contract was awarded without the publication of a notice of intent prior to the awarding of a contract by mutual agreement. However, according to section 13.1 of the ACPB, the organization that uses an exception in section 13 of the ACPB must, at least 15 days before the contract is entered into, publish a notice of intention that complies with the requirements of the Act, thus allowing any company to express its interest in carrying out the contract.

The AMP points out that the courts have repeatedly determined that the provisions of the ACPB relating to the awarding and awarding of public contracts are of public order and must be complied with, and that a contract entered into before the publication of the notice of intention provided for in section 13.1 may be terminated by the AMP.

Reminder

The AMP has broad powers and both public bodies and contractors should ensure that any contract is awarded in accordance with the provisions of the ACPB.  In the event of an award of contract by mutual agreement above the prescribed thresholds, they should ensure that the notice of intention is properly published.

Notice and Registry Required Content Requirements Under Quebec Privacy Laws

In the wake of the amendments to Quebec's privacy laws, the Regulation respecting confidentiality incidents was adopted and came into force on December 29, 2022.

The Regulation specifically determines:

·        The content of the notice and the information that must be sent by an organization to the Commission d'accès à l'information (the "CAI") in the event of a confidentiality incident presenting a risk of serious injury;

·        The content and manner of delivery of the notice to the concerned individual(s) affected by the confidentiality incident that poses a risk of serious injury; Note that the public or private body may proceed by public notice to proceed quickly to reduce the risk of serious injury or to mitigate such injury.  Public notice is required when an organization does not have the contact details of the concerned individual(s).

·        The content of the incident register that every organization must maintain.

The information contained in the register must be kept up to date and retained for a minimum period of 5 years after the date or period during which the organization became aware of the incident.

To remember

All confidentiality incidents, whether or not they pose a risk of serious injury, must be recorded in the register with the details on the incident required by Regulation as well as the elements that lead the organization to conclude that there is or not a risk of serious injury and the actions taken by the organization to reduce the risks, following the occurrence of the incident.

The CAI may require a copy of this register at any time, whether as part of routine checks or in the event of an incident.

As of September 22, 2023, note that in the event of failure to provide the prescribed notices, a private organization is subject to administrative penalties of up to $10,000,000 or 2% of the previous fiscal year's worldwide turnover, whichever is greater and criminal penalties of up to $25,000,000 or 4% of the previous fiscal year's worldwide turnover,  whichever is greater.  For public bodies, there are no administrative penalties but criminal penalties of up to $30,000.

Do non-competition clauses still have value in employment contracts in the digital age?

In employment context, non-competition clause opposes the employee's right to work and the protection of the employer's legitimate interests.  In Quebec, non-competition clauses in employment contracts are governed by article 2089 of the Civil Code of Quebec.

An review of recent case law indicates that Quebec courts have shown some flexibility in adapting the time limitation and territorial restrictions required by article 2089 C.C.Q. to the digital and technological reality. However, courts remain cautious when considering global territorial restrictions and time limits of more than 12 months.   We although must be careful not to generalize because any such analysis must be done on a case-by-case basis considering the reasonableness between the actual legitimate interests that the employer is trying to protect and the actual impacts on the employee.   It is the employer's responsibility to prove the reasonableness of the non-competition clause and part of this requires demonstrating that there was no other more reasonable means of protection available to it.  A non-competition clause must also not be ambiguous. It must allow the employee to know the extent of his obligations.

In all cases, non-competition clauses in the context of employment are interpreted restrictively and if a non-competition clause is ambiguous or its reasonableness is questionable, it will likely be considered abusive and invalidated by the Quebec courts.

 Reminder

In the United States, the state of California made employment non-compete clauses invalid and contrary to public policy, and the U.S. federal government and several other U.S. states have also passed legislation to further regulate the use of restrictive employment covenants in order to promote mobility and competition.  It is likely that this trend will have an impact on the interpretation of restrictive covenants in Quebec.   Article 2089 C.C.Q. still allows these types of clauses in Quebec, but it is more important than ever for employers to clearly define the protections they need in this regard and not to rely exclusively on non-competition clauses to protect their trade secrets.