CEDH · CASELAW;JUDGMENTS;CHAMBER;ENG — 7 janvier 2025

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Does not bind the Court.   STRASBOURG 7 January 2025 FINAL   07/04/2025   This judgment has become final under Article 44 § 2 of the Convention. It may be subject to editorial revision. In the case of UAB Profarma and UAB Bona Diagnosis v. Lithuania, The European Court of Human Rights (Second Section), sitting as a Chamber composed of:   Arnfinn Bårdsen, President ,   Saadet Yüksel,   Pauliine Koskelo,   Jovan Ilievski,   Anja Seibert-Fohr,   Peeter Roosma,   Stéphane Pisani, judges , and Dorothee von Arnim, Deputy Section Registrar , Having regard to: the applications (nos.   46264/22 and 50184/22) against the Republic of Lithuania lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by two companies registered in Lithuania, UAB Profarma (“the first applicant company”) and UAB Bona Diagnosis (“the second applicant company”), on 16   September and 18 October 2022, respectively; the decision to give notice to the Lithuanian Government (“the Government”) of the complaints concerning the applicant companies’ right to peaceful enjoyment of their possessions and to declare the remainder of the applications inadmissible; the withdrawal from the case of Mr Gediminas Sagatys, the judge elected in respect of Lithuania (Rule 28 § 3 of the Rules of Court), and the decision of the President of the Section to appoint Mr Peeter Roosma to sit as an ad hoc judge in the case (Article 26 § 4 of the Convention and Rule 29 § 1); the parties’ observations; Having deliberated in private on 3 December 2024, Delivers the following judgment, which was adopted on that date: INTRODUCTION 1.     The case concerns civil proceedings in which the domestic courts annulled several contracts between the applicant companies and the State concerning the purchase of COVID-19 rapid tests. The applicant companies complained under Article 1 of Protocol No. 1 to the Convention that they had been ordered to return to the State a substantial part of the money that they had received under those contracts. THE FACTS 2.     The first applicant company is a biotechnology and pharmaceutical company established in May 2007, with its registered office in Vilnius. It was represented by Mr L. Lukošiūnas, a lawyer practising in Vilnius. 3.     The second applicant company is a retailer of medical and orthopaedic goods established on 18 March 2020, with its registered office in Vilnius. It was represented by Mr   T. Jasiulionis, a lawyer practising in Vilnius. 4.     The Government were represented by their Agents, Ms   K. Bubnytė-Širmenė and Mr R. Dzikovič.         PURCHASE OF COVID-19 RAPID TESTS BY THE LITHUANIAN AUTHORITIES 5 .     On 26 February 2020 a national state of emergency was declared in Lithuania in view of the spread of COVID-19. On 16   March 2020 a nationwide lockdown was announced. 6.     The Minister of Health was appointed as head of emergency operations. He was in charge of implementing the decisions taken by the government relating to the management of the pandemic. The Minister was assisted in that role by a team comprising employees of the Ministry of Health and individuals delegated by the government. Moreover, at the material time daily meetings were held at the Ministry of Health which were attended by the Minister and Deputy Ministers of Health, lawyers working at the Ministry, epidemiologists and other relevant experts and officials. Those meetings were aimed at discussing the evolving situation in the country and distributing tasks to be carried out; it appears that the tasks were distributed in an informal manner and that most instructions were issued orally, without decisions being adopted in writing. When there was a need to purchase certain protective equipment or medical supplies, the Minister of Health informed the Prime Minister and his relevant advisers accordingly and, after receiving their approval, gave the necessary instructions to other relevant officials or employees. It appears that, at least at the material time, different purchases were coordinated by different officials of the Ministry and that there was no single official in charge of determining the need for any given item. 7 .     According to the information in the Court’s possession, on various dates in March 2020 the Ministry of Health and the National Public Health Surveillance Laboratory ( Nacionalinė visuomenės sveikatos priežiūros laboratorija – “the NVSPL”), a public entity supervised by the Ministry of Health, received emails from several companies containing information about COVID-19 rapid tests that they were selling. Some of the emails contained general information about the tests, without indicating their prices, whereas others also gave the prices of the tests being offered. 8 .     On 18 March 2020, at around 12.45 p.m., the chief executive officer (CEO) of the first applicant company, E.M., sent an email to one of the Deputy Ministers of Health, L.J. (hereinafter “the Deputy Minister”), with a leaflet attached containing information about COVID-19 rapid tests which the first applicant company was selling. In the leaflet, the test was referred to as “COVID-19 IgM-IgG rapid test” (“ COVID-19 IgM-IgG Greitasis testas ”). The leaflet stated, inter alia , that the tests in question were aimed at identifying the presence of coronavirus antibodies in a blood sample and that they were designed for in vitro utilisation. According to the leaflet, the tests could identify the presence of antibodies in blood with a precision rate of over 94%. It also acknowledged certain limitations in the use of rapid tests: they could not be used as the main means of diagnosing coronavirus infections; rapid tests could give a false negative result at a very early stage of infection; a negative result from a rapid test did not rule out the possibility that the individual was infected with coronavirus; and rapid tests could not determine the exact amount of antibodies in the blood. The leaflet did not indicate the price of the tests, their manufacturer or the country in which they were produced. 9 .     On 18 March 2020 the Minister of Health issued a written decision instructing the NVSPL to urgently organise a purchase of COVID-19 rapid tests. On the same day the Deputy Minister forwarded to the NVSPL the email sent by the first applicant company (see paragraph 8 above), asking the head of the NVSPL to “coordinate an order” ( suderinti užsakymą ) with E.M. It appears that the Deputy Minister telephoned E.M. and asked her to submit an official tender for rapid tests on behalf of the first applicant company. 10 .     At around 8.10 a.m. on 19 March 2020 the first applicant company submitted, by email, two alternative tenders to the Ministry of Health and the NVSPL: (i) to sell 1,010,000 rapid tests for 9,980,000 euros (EUR) excluding value-added tax (VAT), or EUR 12,075,800 including VAT; or (ii) to sell 510,000 rapid tests for EUR   5,000,000 excluding VAT, or EUR 6,050,000 including VAT. Under both tenders, the tests would be delivered in several stages, a week or two after receipt of payment, with the price per test being different at each stage. Under the first tender, the price per test was between EUR   9 and EUR 16 excluding VAT. Under the second tender, the price per test was between EUR 8.85 and EUR 16 excluding VAT. In both tenders, the test was called “UAB Profarma’s rapid test ‘COVID-19 express test’” (“ UAB Profarma greitasis testas ‘COVID-19 Express testas’ ”). In both tenders it was also stated that each batch of the tests would be examined by the first applicant company in its certified laboratory in order to verify their quality. The tenders did not indicate the manufacturer of the tests or the country in which they were produced. 11 .     At around 8.40 a.m. on the same day, in an email addressed to, among others, the head of the NVSPL and the CEO of the first applicant company, the Deputy Minister stated that the second tender had been accepted. The NVSPL prepared a draft of the procurement contract and sent it to the first applicant company for signature. 12 .     On the same day the head of the NVSPL informed the Minister of Health that the NVSPL was planning to purchase 510,000 COVID-19 rapid tests for the price of EUR 6,050,000 and asked to be allocated that amount. The Minister issued a written decision allocating the NVSPL EUR   6,050,000 for that purpose. 13 .     On the same day the Public Procurement Commission of the NVSPL held a meeting in which it adopted a decision to carry out public procurement by a negotiated procedure without publication ( neskelbiamų derybų būdu ), as provided for in Article   71 §   1   (3) and Article 72 §   2   (3) of the Law on Public Procurement (see paragraphs 153 and 154 below), and to urgently purchase COVID-19 rapid tests from the first applicant company. In the minutes of the meeting, it was noted that the NVSPL had received an order from the Ministry of Health to award the procurement contract to the first applicant company. 14 .     Also on the same day (19 March 2020) the first applicant company and the NVSPL signed a sale and purchase agreement (hereinafter “the procurement contract”), whereby the NVSPL undertook to buy from the first applicant company 510,000 COVID-19 rapid tests for EUR   6,050,000 including VAT. In the text of the contract, the test was called “COVID-19 Express test” (“ COVID-19 Express testas ”). In an annex to the contract it was stated that the tests in question were “COVID-19 IgM-IgG rapid tests” aimed at detecting the presence of coronavirus antibodies in blood and designed for in vitro use. The annex also listed the components of each test. The first applicant company was indicated as the manufacturer of the tests. The tests would be delivered in several stages, a week or two after receipt of payment, and the price per test would differ at each stage, ranging between EUR 8.85 and EUR 16 excluding VAT, or EUR 10.709 and EUR   19.36 including VAT. 15 .     Paragraph 3 of the procurement contract stated that if, owing to circumstances outside its control, the first applicant company was unable to provide the exact items indicated in the contract, at the written consent of both parties it could provide items of a different model, as long as they met the relevant requirements and their quality was not lower than the promised tests, nor their price higher. 16 .     On the same day the first applicant company signed a sale and purchase agreement with the second applicant company, whereby the first applicant company undertook to buy from the second applicant company 510,000 COVID-19 rapid tests for EUR 5,904,800 including VAT. The text of the contract, the components of the tests and the timeline within which they had to be delivered were essentially the same as those indicated in the procurement contract (see paragraph 14 above), but an annex to it stated that the manufacturer of the tests would be determined in the course of the performance of the obligations laid out in the agreement. 17 .     On the same day (19 March 2020) the second applicant company signed a cooperation agreement with the R. company, registered in Latvia, whereby the R. company undertook to look for potential manufacturers or sellers willing to sell COVID-19 rapid tests to the second applicant company. 18 .     On 20 March 2020 the first applicant company received EUR   6,050,000 from the State budget in accordance with the procurement contract (see paragraph 14 above). On the same day it transferred EUR   5,904,800 to the second applicant company in accordance with their sale and purchase agreement (see paragraph 16 above). 19 .     On 20 March 2020 the second applicant company signed a sale and purchase agreement with the A. company, registered in Austria, whereby the second applicant company undertook to buy from the A. company 510,000 COVID-19 rapid tests for EUR 1,135,360. 20.     On various dates between 25 and 31 March 2020 the second applicant company paid the R. company a total of EUR 454,931 in accordance with their cooperation agreement (see paragraph 17 above). 21 .     On 28 March 2020 the first applicant company informed the NVSPL that owing to the constantly changing circumstances relating to the spread of the COVID-19 pandemic, which were outside of its control, it was unable to provide tests made by the manufacturer indicated in the procurement contract (see paragraph 14 above). However, in line with paragraph 3 of that contract (see paragraph 15 above), it would provide tests made by a different manufacturer, the A. company (see paragraph   19 above), which met all the relevant criteria. 22 .     On 3 June 2020 the NVSPL sent a letter to the first applicant company stating that the NVSPL considered that the first applicant company had fully and properly fulfilled its obligations under the procurement contract.       OPENING OF THE PRE-TRIAL INVESTIGATION 23 .     On 27 May 2020 the Financial Crimes Investigation Service opened a pre-trial investigation concerning the purchase of COVID-19 rapid tests from the first applicant company by the NVSPL. On unspecified dates several individuals were officially notified that they were suspected of criminal offences. 24 .     L.J., who at the material time had been one of the Deputy Ministers of Health (see paragraph 8 above), was suspected of abuse of office (Article   228 §   1 of the Criminal Code – see paragraph 139 below). It was alleged that she had issued unlawful and unfounded instructions to the NVSPL and had granted unjustified privileges to the first applicant company in the procurement of COVID-19 rapid tests, which had led to the State sustaining significant pecuniary losses. 25 .     Furthermore, E.M., who was the CEO of the first applicant company, and R.L., who at the material time had been its chief operating officer (COO), were suspected of fraud (Article 182 § 2 of the Criminal Code – see paragraph   137 below). It was alleged that they had provided false information during the procurement procedure, in particular as regards the manufacturer of the rapid tests, and had thereby obtained State funds by means of deception. 26 .     Lastly, E.M. and R.L., as well as L.P., who at the material time had been the CEO of the second applicant company, A.Č., who was a shareholder of the second applicant company, and M.K., who was the CEO of the R. company (see paragraph 17 above), were suspected of money laundering (Article   216 §   1 of the Criminal Code – see paragraph   138 below). It was alleged that they had acted in concert with the aim of laundering EUR   6,050,000, obtained from the State by means of deception, and that to that end they had entered into various transactions simulating contracts which had not in fact been fulfilled. 27 .     During the investigation it was discovered that on 18 March 2020 the P. company had sent an email to the Ministry of Health offering to sell various COVID-19 rapid tests, including those produced by the A. company (see paragraph 19 above), for EUR 3.65, EUR 3.74 or EUR 3.99 per test including VAT. 28.     When questioned during the pre-trial investigation, the Deputy Minister stated that she had been instructed by the Minister of Health and one of the Prime Minister’s advisors, L.S., to purchase rapid tests from the first applicant company. The latter were also both questioned but they denied having given such an instruction to the Deputy Minister. Furthermore, the Deputy Minister stated that she had been aware of the offer sent by the P. company on 18 March 2020 (see paragraph 27 above) and had tried to call its CEO but the latter had not answered and had not returned her call. The Deputy Minister stated that stopping or pausing the already ongoing negotiations with the first applicant company at that time would have led to the risk of the State not obtaining any tests at all. 29.     In September 2020 the prosecutor in charge of the pre-trial investigation sent an official report to the Prosecutor General’s Office. The prosecutor noted that the first applicant company had submitted a tender regarding COVID-19 rapid tests to the NVSPL, and that following the instruction from the Deputy Minister of Health the NVSPL had awarded the procurement contract to the first applicant company without carrying out any assessment of the market or of the proposed price of the tests. As a result, the State had paid EUR 6,050,000 to the first applicant company for 510,000 rapid tests. However, on 18 March 2020 the Ministry of Health had received an offer from the P. company to sell the same type of tests for a price not exceeding EUR   4 per test. Moreover, the tests which the first applicant company had delivered had in fact been bought from an Austrian company for a much lower price (see paragraph 19 above). That gave reason to believe that the State may have sustained significant pecuniary damage. Given the circumstances, the prosecutor considered that there might be grounds to institute civil proceedings seeking the annulment of the decisions and contracts at issue.     CIVIL PROCEEDINGS AGAINST THE APPLICANT COMPANIES    Proceedings before the Vilnius Regional Court      The prosecutor’s claim 30 .     In December 2020 the Prosecutor General’s Office lodged a civil claim in the public interest against the NVSPL, the two applicant companies and the R. company with the Vilnius Regional Court. The prosecutor asked the court, inter alia : (i) to annul the procurement contract between the NVSPL and the first applicant company (see paragraphs   14 and 15 above) and to order the first applicant company to pay the State EUR 145,200; (ii) to annul the sale and purchase agreement between the first applicant company and the second applicant company and to order the second applicant company to pay the State EUR   3,542,469 (see paragraph 16 above); and (iii)   to annul the cooperation agreement between the second applicant company and the R. company (see paragraph 17 above) and to order the R. company to pay the State EUR   454,931. 31 .     The prosecutor submitted that the public procurement procedure had not been carried out in accordance with the law. Instead, the procedure had been simulated and the NVSPL had simply chosen the supplier handpicked by the Ministry of Health, in violation of the principle of transparency enshrined in the Law on Public Procurement (see paragraph 150 below). After the Ministry had ordered the NVSPL to purchase tests from the first applicant company, the NVSPL had not looked for other potential suppliers and had not verified whether the price proposed by the first applicant company had been justified and reasonable. Although both the Ministry and the NVSPL had received offers from other companies, they had not examined them. In particular, the P. company had offered to sell COVID-19 rapid tests for a price which had been several times lower than the one proposed by the first applicant company (see paragraph 27 above), which showed that the price paid to the latter had been excessive and that awarding it the procurement contract had breached the principle that public funds must be used rationally (see paragraphs   150 and 159 below). The prosecutor acknowledged that negotiating with other potential suppliers was not obligatory when carrying out procurement by a negotiated procedure without publication. However, in the case at hand, the NVSPL had been instructed to choose a specific supplier. 32 .     The prosecutor also acknowledged that the applicant companies had not been responsible for the fact that the NVSPL had not negotiated with other potential suppliers. However, the prosecutor contended that the applicant companies had acted in bad faith ( nesąžiningai ) and that, as a result, the contracts at issue were contrary to public morals (see paragraph 142 below). In particular, the first applicant company had stated that it would be the manufacturer of the tests (see paragraph 14 above), although it did not in fact produce such tests. The reservation clause in paragraph 3 of the procurement contract (see paragraph   15 above) showed that at that time the first applicant company had already known that it would not be able to provide the exact tests indicated in the contract. Furthermore, in a sale and purchase agreement signed on the same day, the first applicant company had transferred all of its obligations to the second applicant company (see paragraph   16 above). The prosecutor emphasised that the second applicant company had only been established on 18 March 2020, its registered headquarters were in a warehouse of 3 sq. m, the value of its share capital had been EUR 2,500 and its only revenue had been received from the contract with the first applicant company. Moreover, the second applicant company had eventually purchased the tests from the A. company for a much lower price (see paragraph 19 above). Thus, the applicant companies had provided tests manufactured by the A. company to the NVSPL for a price which had been several times higher than the one proposed by the P. company (see paragraph   31 above), and the State had paid the applicant companies much more than what they themselves had paid to the A. company for the tests (see paragraph 19 above). The prosecutor contended that the applicant companies had sought to profit from the emergency caused by the pandemic and to obtain public funds in bad faith, and that they had signed the various contracts at issue in order to avoid any potential legal consequences. They had failed to act in a socially responsible manner and had breached the general principles of fairness and good faith. 33 .     The prosecutor further contended that the contract between the second applicant company and the R. company (see paragraph 17 above) had been fictitious and that the R. company had not provided any actual services to the second applicant company. 34 .     Accordingly, the prosecutor submitted that the applicant companies should be ordered to return to the State the difference between the amounts which they had received as a result of the contracts at issue and the actual market price of the tests provided (see paragraph 30 above). 35 .     When lodging the claim, the prosecutor asked the court to order interim measures and seize, inter alia , EUR 145,200 from the first applicant company and EUR 3,542,469 from the second applicant company. In January 2021 the Vilnius Regional Court granted that request.      The applicant companies’ requests to adjourn the civil proceedings 36.     The applicant companies lodged several applications with the Vilnius Regional Court seeking the adjournment of the civil proceedings while the criminal proceedings were pending (see paragraph 23 above). They submitted, inter alia , that the two sets of proceedings concerned the same factual circumstances and that the civil case could not be properly examined until the criminal case was concluded. They further submitted that the prosecutor’s claim was based on information obtained in the course of the pre-trial investigation and that the prosecutor had the possibility to rely on that information selectively, whereas the applicant companies did not have full access to the investigation material, which put them in an unequal position. The applicant companies pointed out that the prosecutor had the right to lodge a civil claim in the criminal proceedings. 37.     The Vilnius Regional Court dismissed the requests to adjourn the civil proceedings. It stated that, according to the case-law of the Supreme Court, the fact that a pre-trial investigation was ongoing did not constitute a mandatory ground for adjourning related civil proceedings. Civil proceedings should be adjourned on that ground only in exceptional cases, where carrying out any procedural measures would be impossible or entirely uneconomical. However, where the relevant circumstances could be determined in the civil proceedings, those proceedings should not be adjourned. The Vilnius Regional Court considered that the applicant companies’ requests had not been sufficiently specific and that it was unclear which particular circumstances warranted adjourning the case. Lastly, it stated that although the applicant companies had not been allowed to access certain documents in the pre-trial investigation file, that fact did not constitute grounds for adjourning the proceedings because those documents did not relate to them and the prosecutor’s claim against the applicant companies was not based on them.      The applicant companies’ replies to the prosecutor’s claim    The first applicant company 38 .     The first applicant company disputed the prosecutor’s claim. It submitted that the procurement procedure had been carried out in accordance with Article 71 § 1 (3) of the Law on Public Procurement (see paragraph   153 below) and that conducting procurement by a negotiated procedure without publication had been justified in view of the national emergency caused by the coronavirus pandemic (in this connection, the first applicant company referred to the guidance issued by the European Commission, quoted in paragraph 168 below). In any event, the first applicant company had not been in charge of conducting the public procurement procedure; ensuring compliance with the relevant law and the principles of public procurement had been the responsibility of the NVSPL and that responsibility should not be transferred onto private companies. 39 .     The first applicant company further contended that when buying COVID-19 rapid tests the main criterion was not their price but their quality, as some tests available on the market were unable to accurately detect the presence of coronavirus antibodies. The first applicant company had had the capacity to provide high-quality tests within a short time and it was the only company in Lithuania which examined the quality of all imported tests in its certified laboratory in order to detect those which were deficient or ineffective. Indeed, the NVSPL had not had any complaints regarding the quality of its tests (see paragraph 22 above). The first applicant company also submitted that during the procurement procedure there had not been a requirement to provide tests by any specific manufacturer – the only requirements for the tests had concerned their quality. Moreover, at the time when the procurement contract was signed, it had not been possible to ensure that the tests would be produced by a specific manufacturer because of the constantly changing situation. 40 .     The first applicant company further contended that the price for which it had sold the tests to the NVSPL had not been excessive. Prices both lower and higher than theirs could be found on the market, and there had not been any expert assessment of what price would have been reasonable. In any event, the prosecutor had not demonstrated that any of the other companies which had sent offers to the Ministry of Health or the NVSPL, including the P. company, had had the capacity to deliver the required quantity of tests and that those tests would have been of equivalent quality to the ones delivered by the first applicant company. 41 .     It further submitted that it had cooperated with the second applicant company because the latter had experience and contacts in the area of sales and purchases, whereas the expertise of the first applicant company was in the field of testing and certifying medical reagents. 42 .     Lastly, the first applicant company submitted that allowing the prosecutor’s claim and ordering it to return part of its earnings would be unfair in the absence of an order for the NVSPL to return the tests which it had bought, as otherwise the NVSPL would in fact be using goods for which it had not paid. Nor would it be fair to retroactively reduce the price of the tests because the first applicant company had never offered to sell tests for the price determined by the prosecutor.    The second applicant company 43.     The second applicant company disputed the prosecutor’s claim as well, presenting similar arguments to those presented by the first applicant company (see paragraphs 38-42 above). It further submitted that the prosecutor had failed to show that the second applicant company had breached any legal requirements, and that the law did not provide for any restrictions on contracts between private entities regarding the price of goods they wished to buy from and sell to one another. 44.     In addition, it contended that what the prosecutor was seeking was not restitution but a reduction in the price of the tests. If the contracts at issue were annulled, the tests could not be returned to the applicant companies because their shelf life was short, and, in any event, the applicant companies would no longer be able to sell those tests at a comparable price because the market price had since fallen. 45 .     It further submitted that the contract between the two applicant companies had been signed because the shareholders of the second applicant company had relevant experience and had been able to form a team capable of obtaining goods which had been especially scarce at that time. 46 .     Lastly, the second applicant company contested the prosecutor’s assertion that its agreement with the R. company had been fictitious (see paragraph 33 above).      Submissions by the NVSPL and the Ministry of Health 47 .     The NVSPL supported the prosecutor’s claim. It submitted that it was subordinate to the Ministry of Health and therefore could not have exercised control over the public procurement procedure. It had followed the instructions received from the Ministry of Health because it had considered them to be binding. The NVSPL further stated that it did not have any complaints vis-à-vis the first applicant company regarding its compliance with the procurement contract. 48 .     The Ministry of Health, which was a third party in the proceedings, also supported the prosecutor’s claim.      Expert assessment 49 .     An expert assessment was delivered by the Public Procurement Service (hereinafter “the PPS”), a public entity. It submitted that even when the circumstances justified conducting public procurement by a negotiated procedure without publication, the contracting authority ( perkančioji organizacija ) was still under an obligation to conduct the procurement process in a transparent manner. While the contracting authority was entitled to a certain margin of discretion as regards the number of suppliers with which it should negotiate, the PPS always recommended that negotiations be held with more than one potential supplier in order to ensure competition, equality of treatment and a rational use of public funds. 50.     The PPS observed that in the case at hand, the Ministry of Health had issued an unconditional order for the NVSPL to award the contract to one specific supplier, which had been contrary to the principle of transparency enshrined in the Law on Public Procurement (see paragraph   150 below). There was no information to suggest that the NVSPL had contacted other potential suppliers or that it had sought to verify whether the price proposed by the first applicant company had been reasonable and justified. At the same time, the PPS stated that it could not provide an answer as to whether the price proposed by the first applicant company had been reasonable because it had not carried out such an assessment. 51 .     Lastly, it submitted that where the principles of public procurement had been breached, the contracting authority had to be held accountable. However, in the case at hand, no individuals had incurred administrative liability for any such breaches.      Decision of the Vilnius Regional Court 52.     On 2 February 2022 the Vilnius Regional Court allowed the prosecutor’s claim in part.    Whether the procurement procedure had been conducted in accordance with the law 53 .     The court noted that in the case at hand there was no dispute that the grounds provided for by law for the NVSPL to conduct public procurement by a negotiated procedure without publication had been present and that negotiating with multiple potential suppliers had therefore not been mandatory. 54.     Turning to the question whether the public procurement procedure had been conducted in accordance with the law, the Vilnius Regional Court referred to the case-law of the Supreme Court, according to which any violation of the principles of public procurement had to be considered material, regardless of any additional considerations (see paragraph 161 below). 55 .     The Vilnius Regional Court observed that the testimonies of several employees of the NVSPL and other available evidence revealed that the decision of 19 March 2020 of the Public Procurement Commission of the NVSPL, whereby it had decided to award the procurement contract to the first applicant company (see paragraph 13 above), had been a mere formality because the NVSPL had been following the instruction to that effect given by the Ministry of Health. Although the NVSPL had received offers from other potential suppliers, it had not compared them with the first applicant company’s tender and had awarded that company the contract without any further assessment. 56.     The court noted that, according to the guidance issued by the European Commission, although a negotiated procedure without publication allowed contracting authorities to negotiate directly with potential contractors, a direct award to a preselected economic operator had to remain the exception, applicable if only one undertaking was able to deliver within the technical and time constraints imposed by a situation of extreme urgency (see paragraph 168 below). 57 .     Accordingly, the court concluded that the NVSPL had not conducted an actual procurement procedure and had thereby breached the principle of transparency enshrined in the Law on Public Procurement (see paragraph 150 below), as well as the requirement to use public funds rationally, provided for in the Law on the Management, Use and Disposal of State and Municipal Assets (see paragraph 159 below). As a result, the procurement contract had not complied with imperative legal norms and was contrary to public order (see paragraphs   140 and 142 below).    Whether there were grounds to annul the procurement contract between the NVSPL and the first applicant company 58.     The Vilnius Regional Court stated that when determining whether the procurement contract should be annulled and restitution should be ordered, it was necessary to examine whether that contract had been fulfilled and to assess the first applicant company’s conduct. 59 .     It held that, according to the established domestic case-law, the obligation to clearly set out the terms and conditions of public procurement and to bear the negative consequences of a failure to fulfil that obligation fell on the contracting authorities. However, suppliers were not exempt from the duty to fulfil contracts in good faith and to cooperate with the contracting authorities, and they were not entitled to profit from mistakes made by the contracting authorities. 60 .     The Vilnius Regional Court noted that the prosecutor had not argued or provided any evidence to show that the procurement contract had been awarded to the first applicant company because of any improper actions on its part. The first applicant company had merely sent its tender to the Ministry of Health and the NVSPL, as had several other companies, and none of the officials of the NVSPL heard by the court had alleged that they had experienced any pressure from the first applicant company. 61 .     At the same time, the court noted that, according to the procurement contract, the first applicant company had undertaken to deliver rapid tests which it had produced itself (see paragraph 14 above). However, the first applicant company had not denied that it had not been producing such tests at the time when the contract was signed. Moreover, from the terms of its contract with the second applicant company it could be deduced that, at that time, the first applicant company had not known which exact manufacturer would provide the tests that it had undertaken to deliver to the NVSPL (see paragraph   16 above). In addition, the first applicant company’s letter to the NVSPL of 28   March 2020 (see paragraph 21 above) showed that it understood that it had undertaken to deliver tests which it had produced itself. Accordingly, the court considered that, by undertaking to provide tests which it produced itself while knowing that it would not be able to do so, the first applicant company had acted in bad faith. 62.     However, the Vilnius Regional Court emphasised that, when deciding on the validity of the procurement contract, it was necessary to determine to what extent the first applicant company’s conduct had affected the decision to award it the procurement contract and the performance of that contract. 63.     In that connection, the court observed that the procurement contract had been performed, the NVSPL had not had any complaints vis-à-vis the first applicant company, and there was no indication that the delivered tests had not met the relevant requirements (see paragraphs 22 and 47 above). 64 .     The court further noted that the text of the procurement contract had been prepared by the NVSPL (see paragraph 11 above). That fact, together with the fact that the Public Procurement Commission of the NVSPL had not assessed the first applicant company’s tender before awarding it the procurement contract (see paragraph 55 above), confirmed that the NVSPL had not considered the identity of the manufacturer to be an essential term of the contract. Moreover, the NVSPL had not asked the first applicant company to justify the need to change the manufacturer and had accepted the tests produced by the A. company. The court stated that the prosecutor had not provided any evidence to show that the identity of the manufacturer of the tests had been essential to the NVSPL and that, had the A. company been indicated as the manufacturer from the very beginning, the NVSPL would not have awarded the procurement contract to the first applicant company. Given the circumstances, the court concluded that the first applicant company had provided inaccurate information about the manufacturer of the tests and had thereby acted in bad faith, but that that was not the reason why the procurement contract had been found to be unlawful. 65 .     The court then turned to the prosecutor’s argument that the price of the rapid tests which the State had paid to the first applicant company had exceeded the market price of such tests. It observed that the NVSPL had never asked the first applicant company to justify the price which it had proposed and had not attempted to negotiate. Furthermore, the first applicant company was a private, for-profit entity. The freedom to engage in economic activity was enshrined in the Constitution (see paragraph 136 below). Accordingly, the price set out in any contract had to be determined by the free agreement of the parties, a