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China's Ministry of Finance (MOF) has lost a lawsuit for failing to perform its duty in a dispute over a business contract between a private trading company and two government departments.

The company, Beijing Modern Osme Economic and Trade Co., Ltd, brought a lawsuit against the MOF last year. It claimed it had appealed to the ministry to investigate irregularities in the bidding process to provide medical devices to the Ministry of Health (MOH) and the National Development and Reform Commission (NDRC). But they said the MOF did not respond.

The Beijing No.1 Intermediate People's Court ruled the MOF must address the complaint within 30 days of the ruling, or appeal to a higher court in 15 days.

The MOF had argued that it had no remit over the complaint, as China's contract bidding law puts this kind of bid under the authority of the National Development and Reform Commission.

The country's law on bidding does appear to contradict the law on government procurement, which says complaints about government procurement should be handled by the financial watchdog.

The plaintiff, the Beijing Modern Osme Economic and Trade Co., Ltd, joined the bidding for providing medical devices to the MOH and the NDRC in 2004 as part of a major national project involving public health emergencies, but lost to another company at a cheaper price.

The Beijing Modern Osme company filed a written complaint to the MOF in December, 2004, questioning the qualification of the winning bidder and asking the ministry to investigate the issue.

The ministry denied it had ignored the company's plea, saying it had communicated many times with the company's authorities by telephone, according to the report.

The ministry said it held a meeting with officials from the NDRC and the MOH and agreed to refer the complaint to the NDRC, according to the report.

"The MOF is quite innocent. The contradictory law is to blame for the problem," Gu Liaohai, who actually acted as a lawyer for the plaintiff and is a consultant at the Procurement Center for the Central People's Government, told the Beijing-based China Economic Weekly.

"The country's law on bidding should be changed to take into account the law on government procurement," said Gu.

In July, the MOF was also defeated in a lawsuit for failing to address fully the complaint of a medical device producer involved in a government purchase bid.

(Xinhua News Agency December 23, 2006)