Alstom Transport v Eurostar International Ltd

JurisdictionEngland & Wales
CourtChancery Division
JudgeMr Justice Roth
Judgment Date20 Jan 2012
Neutral Citation[2012] EWHC 28 (Ch)
Docket NumberCase No: HC10C03303

[2012] EWHC 28 (Ch)

IN THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

Royal Courts of Justice

Strand, London, WC2A 2LL

Before:

Mr Justice Roth

Case No: HC10C03303

HC11C01178

Between:
Alstom Transport
Claimant
and
Eurostar International Limited
Defendant

Sarah Hannaford QC and Jessica Stephens (instructed by Hogan Lovells International LLP) for the Claimant

Michael Bowsher QC and Ewan West (instructed by Burges Salmon LLP) for the Defendant

Hearing dates: 17, 18, 19 & 20 October 2011

Mr Justice Roth

Introduction

1

The Defendant ("EIL") operates a high-speed passenger rail service through the Channel Tunnel ("the Tunnel") between London on the one side and Brussels and Paris on the other, with occasional extended services on the continent. In May 2009, EIL issued invitations to tender for a substantial and valuable contract for the design, supply and maintenance of a new generation of trains. In October 2010, EIL announced that Siemens PLC ("Siemens") would be awarded the contract. The Claimant ("Alstom"), which supplied the trains currently used by EIL, was an unsuccessful tenderer. Alstom claims that the tender process conducted by EIL violates the EU procurement regime and this judgment is given after the trial of preliminary issues to determine whether that regime applies.

2

The proceedings have a somewhat complicated history. In the original action (Case no HC10 CO3303) Siemens was not originally a party but was subsequently joined. On 29 October 2010, after EIL had announced its decision that Siemens was the successful tenderer, Vos J refused Alstom's application for an interim injunction to restrain EIL from entering into a binding contract with Siemens: see [2010] EWHC 2747 (Ch). For procedural reasons which it is unnecessary to go into, Alstom then commenced the present action, as fresh proceedings, seeking damages and a declaration of ineffectiveness regarding the contracts which EIL concluded with Siemens on 3 December 2010. On 13 July 2011, Mann J granted the Defendants' application to strike out that part of the claim which sought a declaration of ineffectiveness: [2011] EWHC 1828 (Ch). Accordingly, the action proceeded as a claim for damages, which were sought only as against EIL. Although Siemens was still a defendant at the time of the trial of the preliminary issues and filed a defence concerning those issues, it took no part in the hearing before me. Subsequently, by order of Briggs J of 18 November 2011, Siemens ceased to be a party to these proceedings.

3

Alstom contends that EIL infringed the procurement rules in various respects. In summary, it claims that the technical specifications in the bidding process were insufficiently precise, and that the approach adopted by EIL and lack of information given to Alstom mean that the requirements of transparency and equal treatment that are fundamental to the procurement regime were breached. For further details, reference should be made to the judgment of Vos J in the related case, especially at [82] to [122]. Alstom's primary claim is under the Utilities Contracts Regulations 2006 ("the UCR") on the basis that EIL is a utility. But in case it should be held that EIL is not a utility within the terms of the UCR, the parties also seek clarification of EIL's status under the Public Contracts Regulations 2006 ("the PCR"). The UCR and the PCR give effect to the EU regimes under, respectively, Directive 2004/17 and Directive 2004/18. It is common ground that the two sets of legislation are mutually exclusive, although some common issues arise under both.

4

EIL denies the alleged breaches but contends in any event that it is subject to neither procurement regime. On that basis, Mann J ordered the trial of preliminary issues, essentially to determine whether EIL comes within the scope of either procurement regime. The framing of those issues was revised and refined in the course of the hearing, and there are now four issues which I have re-numbered for convenience as follows:

"1. Is EIL a utility for the purpose of the Utilities Contracts Regulations 2006 and/or the Utilities Contracts Amendment Regulations 2009 when the provisions of the same are properly interpreted and/or disapplied (if and insofar as appropriate) in accordance with the wording and meaning of Directive 2004/17?

2. Is EIL a contracting authority for the purposes of the Public Contracts Regulations 2006 and/or the Public Contracts (Amendment) Regulations 2009 when the provisions of the same are properly interpreted and/or disapplied (if and insofar as appropriate) in accordance with the wording and meaning of Directive 2004/18?

3. In the event that it is determined that EIL is not a utility for the purposes of the Utilities Contracts Regulations 2006 and/or the Utilities Contracts (Amendment) Regulations 2009 in accordance with issue (1) above, was EIL 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 EIL and Siemens on 3 December 2010?

4. In the event that it is determined in accordance with (3) above that EIL was a utility when it sought offers and/or until 31 August 2010, did either the Utilities Contracts Regulations 2006 and/or Utilities Contracts (Amendment) Regulations 2009 thereby apply to the procurement?"

Although the issues make separate reference to the 2009 amendment regulations, those regulations do not make any changes that are material to the questions raised and they do not require separate consideration.

5

The reduction in the number of preliminary issues from those ordered by Mann J reflects the fact that Alstom no longer pursues its pleaded contention that EIL is an emanation of the State. Accordingly, it is common ground that (a) Alstom has no direct claim under the EU directives but may claim only under domestic law, i.e. the implementing regulations; but (b) those regulations are to be interpreted in the light of the directives which they are intended to implement. How far the interpretative obligation in (b) goes is a matter of dispute in this case to which it will be necessary to return. But (a) reflects the position under Article 189 TFEU as regards the application of directives and that the doctrine of "direct effect" applies only, as it is generally described, 'vertically', that is to say in a claim against an emanation of the State (such that the State cannot derive an advantage from its failure to implement a directive) but not 'horizontally' as against private parties.

The Facts

6

The relevant facts for determination of the preliminary issues are not in dispute.

7

The Tunnel was constructed and brought into operation pursuant to the provisions of the Treaty of Canterbury concluded between the British and French governments in 1986, and of a concession agreement entered into on behalf of those governments in the same year with The Channel Tunnel Group Ltd and France-Manche SA ("the Concession Agreement"). The two concessionaires are both subsidiaries of Groupe Eurotunnel SA ("Eurotunnel"). Eurotunnel also itself operates the "Le Shuttle" service carrying vehicles and their passengers through the Tunnel.

8

Passenger train services through the Tunnel started on 14 November 1994. Those services are branded as "Eurostar" and were then operated by a consortium comprising Société Nationale des Chemins de fer Français ("SNCF", being the company operating French railways), Société Nationale des Chemins de fer Belges ("SNCB", being the company operating Belgian railways) and the company now called EIL which was then called European Passenger Services Ltd and was wholly owned by the British Railways Board ("BR").

9

For the purpose of Directive 91/440 on the development of the Community's railways, this consortium constituted an "international grouping" (or international railway grouping or "IRG") defined in Article 10 as:

"an association of at least two railway undertakings established in different Member States for the purpose of providing international transport services between Member States."

Until Directive 91/440 was amended with effect from 1 January 2010, under EU law only an IRG had a right of cross-border access to a national network for passenger rail transport.

10

On 1 June 1996, BR's interest in EIL was sold to London and Continental Railways Ltd ("LCR").

11

On 31 August 2010, a radical restructuring of EIL took place, referred to as "Futur Eurostar". EIL became a joint venture company involving SNCF and SNCB, and assumed the operation of the Eurostar service. Its shareholding was as follows: SNCF (and its subsidiary): 55%; LCR: 40%; and SNCB: 5%. Futur Eurostar reflected the legislative change whereby Art 10(1) of Directive 91/440 was repealed and it was no longer necessary for international rail services to be provided by an IRG. Save for a change in the way that the shares are held by SNCF's subsidiaries, this remains the ownership structure of EIL today.

12

EIL is an English company.

13

SNCF is a French company with public law status, wholly owned by the French State.

14

Since 6 June 2009, LCR has been wholly owned by the Secretary of State for Transport.

15

SNCB is a Belgian company with public law status, wholly owned by the Belgian State.

16

EIL shares access to the Tunnel with the operator of Le Shuttle, and to the British, French and Belgian rail infrastructure with other passenger operators providing domestic services or international services not passing through the Tunnel.

17

EIL's train operations through the Tunnel are subject to compliance with the safety and operating rules...

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