Blood on the tracks

Disputes over procurement policies are on the rise as contractors fiercely fight to secure contracts. Nowhere is this more evident than in Alstom Transport’s legal battle with Eurostar International over the train operator’s decision to hand a fleet building contract to Siemens.

The tender bidding process opened in October 2010 in anticipation of the Channel Tunnel being opened up to its competitors. Alstom was the supplier of the rolling stock being used by Eurostar for Channel Tunnel crossings at that point. Alstom tendered for the new contract, but was unsuccessful.

Immediately, the decision sparked threats of litigation and Alstom launched an unsuccessful attempt to get a court injunction against the award (see judgment). That did not dissuade it from continuing, however.

Alstom continued to pursue a case against Eurostar and the tender contract winner Siemens. In May last year it amended its claim to include new material and in particular a new claim for a declaration of ineffectiveness in relation to the final contract. The defendants objected to the amendments on various grounds.

Mr Justice Mann turned down the application, ruling that the claim should continue its litigation journey with Alstom arguing that Eurostar was in breach of EU procurement rules governing public sector contracting. It was at this point that Siemens dropped out of the proceedings, leaving Eurostar to defend the claim alone in the High Court.

The case was heard by Mr Justice Roth, a Chancery judge with expert knowledge of European competition law, in October last year. He handed down his decision last week (see judgment).

The judge was asked to decide upon, first, whether Eurostar is a utility for the purpose of the Utilities Contracts Regulations 2006 and/or the Utilities Contracts Amendment Regulations 2009. Second, if it is not, he was asked to rule whether Eurostar was a utility for the purposes of the Utilities Contracts Regulations 2006 at any time or times from the start of the procurement in January 2009 to the conclusion of the contract between Eurostar and Siemens on 3 December 2010.

He said no to both questions, stating that Eurostar is not a utility obliged to comply with the Public Contract and Utilities Regulations. Roth J ruled that Eurostar does not operate a network, an essential component of the definition of ’utility’ under the regulations, on the grounds that it does not provide or operate railway infrastructure, nor does it provide services pursuant to relevant conditions laid down by or under the law.

The judgment also considers the duty of a national court to disapply provisions of national law that are inconsistent with an EU directive, concluding that there is no general requirement to do so in claims against private parties.

This leaves Alstom with just one point to proceed on, its tender contract argument on which it will have to demonstrate breach, causation and loss.

Some might suggest that to go forward on this point after a series of defeats would be a fool’s errand. That, however, is for Alstom to decide and there is no telling in which direction the court will lean.

The legal line up:

For the claimant Alstom Transport: Hogan Lovells partners Ciara Kennedy-Loest and Rupert Sydenham, instructed Keating Chambers’ Sarah Hannaford QC to lead Jessica Stephens, also of Keating Chambers.

For the defendant Eurostar Burges Salmon partner Chris Jackson instructed Monckton Chambers’ Michael Bowsher QC to lead Ewan West of the same chambers.