Alstom Transport v Eurostar International Ltd and Another

JurisdictionEngland & Wales
CourtChancery Division
JudgeMR JUSTICE VOS,Mr Justice Vos
Judgment Date29 Oct 2010
Neutral Citation[2010] EWHC 2747 (Ch)
Docket NumberCase No: HC10C03303

[2010] EWHC 2747 (Ch)

IN THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

Royal Courts of Justice

Strand, London, WC2A 2LL

Before: Mr Justice Vos

Case No: HC10C03303

Between
Alstom Transport
Claimant
and
(1) Eurostar International Limited
(2) Siemens Plc
Defendants

Ms Sarah Hannaford Q.C. and Ms Jessica Stephens (instructed by Hogan Lovells International LLP) for ALSTOM Transport

Mr Michael Bowsher Q.C. and Mr Ewan West (instructed by Burges Salmon LLP) for Eurostar International Limited

Mr John Howell Q.C. and Mr Rob Williams (instructed by Freshfields Bruckhaus Deringer LLP) for Siemens PLC

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Hearing dates: 26 th to 29 th October 2010

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Approved Judgment

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I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.

MR JUSTICE VOS Mr Justice Vos
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Mr Justice Vos:

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Introduction

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1. This is an urgent application for an interim injunction brought by ALSTOM Transport (“ALSTOM”) in order to restrain Eurostar International Limited (“Eurostar”) from entering into an agreement (the “Agreement”) with Siemens PLC (“Siemens”) for the design, supply and maintenance of 10 high speed train sets, with an option for a further 13 train sets. The intended contract price has not been disclosed but is thought to be of the order of €600-€700 million. I have been informed by Mr Michael Bowsher QC, counsel for Eurostar, that the contract is drawn up and ready to sign, its execution only having been prevented by Eurostar's undertaking not to conclude it pending this decision.

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2. Despite the urgency of the application, and the original time estimate of 2 days, the argument has lasted almost 4 court days, and has ranged far and wide. In the time available, I have not been able to record all the arguments advanced or all the authorities cited, but have confined myself to dealing with the main points.

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3. ALSTOM is a manufacturer of railway rolling stock and, as part of a consortium, supplied the trains currently used by Eurostar to provide services through the Channel Tunnel (the “Tunnel”), and was a bidder for the contract that Eurostar now proposes to award to Siemens.

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4. ALSTOM alleges that, in making its decision to award the Agreement to Siemens, Eurostar breached:—

i) the Utilities Contracts Regulations 2006 (the “2006 Regulations”); and/or

ii) the general EU Treaty principles of equal treatment, transparency, proportionality, and good administration; and/or

iii) an implied tender contract between ALSTOM and Eurostar.

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5. ALSTOM relied primarily in argument on the alleged breaches of the 2006 Regulations, accepting that the other aspects of its case did not add anything significant to the basis of its claim at this stage.

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6. The main breaches alleged relate to two aspects of the bidding process.

i) First, ALSTOM alleges that Eurostar encouraged ALSTOM and Siemens to bid for trains using distributed power systems (“DPS”), as opposed to concentrated power systems (“CPS”), which are in current use through the Tunnel. Since, however, the applicable regulatory regime concerning safety in the Tunnel has not yet authorised the use of trains using DPS, ALSTOM submits that the specification and the bidding process were affected by a fundamental uncertainty that meant that its bid could not be fairly made or evaluated.

ii) Secondly, ALSTOM alleges that Eurostar did not properly inform ALSTOM about the criteria, weightings and evaluation methodology that it intended to use to assess the bids, so that the requirements of transparency and equal treatment were breached. The main allegations are that the evaluation criteria were not disclosed to the bidders, and that those criteria demonstrated that:—

a) Eurostar was evaluating the financial aspect of the bids on the basis of their net present value calculated in a particular way (“NPV”); and

b) Eurostar was using an unusual scoring system with only 5 marks, awarded on a basis that is said to be both counter-intuitive and inappropriate for the purpose of selecting the most economically advantageous bid from Eurostar's point of view (which was the criterion that Eurostar had chosen under Regulation 30(1) of the 2006 Regulations).

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7. This litigation arises against the background of impending competition for train services using the Tunnel. Deutsche Bahn has only in the last week announced its intended service from St Pancras to stations in Germany and elsewhere. Eurostar wishes to upgrade and improve its fleet of trains as soon as possible so as to ensure that it is well placed to engage in the competition that was permitted from 1 st January 2010, and will start in earnest in or about 2013.

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8. In this judgment, I have tried to avoid referring to any redacted or confidential matters that have been referred to in argument. If I have made any error in this regard, I invite counsel to draw my attention to that error.

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The Issues

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9. Two issues that may arise at a future trial of this action have not been argued on this application:—

i) Eurostar contends that the 2006 Regulations do not apply to it at all, because it is a private entity. Mr Bowsher has said, however, that Eurostar is happy to proceed on the basis that they do apply for the purposes of the injunction application alone.

ii) ALSTOM wishes to contend that the Utilities Contracts (Amendment) Regulations 2009 (the “2009 Regulations”) apply to the award of the Agreement, but has accepted that, for the purposes of this application (because Regulation 13 provides that the 2009 Regulations only apply to contract award procedures that commenced after 20 th December 2009), it can be assumed that only the 2006 Regulations applied to the procurement process for the Agreement. ALSTOM does, however, contend that the 2009 Regulations applied to the preliminary agreement made between Eurostar and Siemens on 18 th August 2010 (the “Preliminary Agreement”).

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10. Against this background, the main issues that need to be determined on this application are as follows:

i) First, whether ALSTOM has shown that there is a serious issue to be tried as to its alleged breaches of the 2006 Regulations. This issue breaks down broadly as follows:—

a) Does (a) the absence of regulatory approval for the use of DPS and/or (b) the fact that material amendments may be necessary if and when regulatory approval for the use of DPS is decided upon, mean that the specification and bidding process were affected by such uncertainty that the bids could not be fairly made or evaluated?

b) Does Eurostar's alleged failure to inform ALSTOM about the criteria, weightings and evaluation methodology that it intended to use to assess the bids, mean that the requirements of transparency and equal treatment were breached?

c) Does the fact that Eurostar entered into the Preliminary Agreement with Siemens demonstrate that it failed to comply with the requirements of transparency and equal treatment in respect of the award of the Agreement?

ii) If there is a serious case to be tried, would damages be an adequate remedy for ALSTOM, and if not, would damages be an adequate remedy for Eurostar and/or Siemens if the injunction were granted?

iii) Does the balance of convenience or injustice lie in favour of the grant of an interim injunction?

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11. Before dealing in detail with these issues, I should say a little about the factual background to this application.

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Chronological background

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12. In December 2008, Eurostar identified a need to refurbish its existing trains and/or acquire new trains. The procurement of new stock was authorised by Eurostar's board with 3 criteria: (a) delivery dates; (b) capacity; and (c) reliability.

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13. In January 2009, Eurostar issued a pre-qualification questionnaire to 6 potential bidders.

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14. In February 2009, ALSTOM pre-qualified as a bidder, together with two other bidders.

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15. On 15 th May 2009, Eurostar issued an ITN (Invitation to Negotiate) to ALSTOM and Siemens. The ITN filled more than an entire lever arch file and contained detailed draft contract terms. I cannot do justice to such a document in this brief judgment, but the ITN included the following:—

i) Eurostar said that its preferred method of procuring the new units was by outright purchase funded entirely by Eurostar, but it might consider alternative methods of funding via third parties and/or the bidder at a later stage.

ii) Eurostar would choose the most economically advantageous bid, and would evaluate bids as to compliance with the Mandatory Requirements, and in accordance with the criteria in Table 2.

iii) The Mandatory Requirements included:—

a) A minimum of 850 seats per train.

b) The unit must be capable of at least 300km/hour.

c) The bidder assumed all responsibility for obtaining all Relevant Approvals to operate on the Relevant Network except where Eurostar is the only party legally able to submit an application in which case the bidder will prepare all necessary documentation.

iv) The evaluation of the criteria in Table 2 would be scored out of a total of 100 points. Once completed, each key criteria score would be multiplied by the percentage score defined in Table 2 to produce the weighted score. Table 2 showed:—

a) Positive impact of the bidder's financial offer on Eurostar's business case as having a 45% weight. The financial criteria were broken down into 4 matters none of which was allocated a percentage.

b) Technical criteria as having a 20% weight. The technical criteria were broken down into 3 sub-criteria each of which was allocated a percentage totalling 100%.

c) Maintenance criteria as having a 20% weight. The maintenance criteria were broken down into 3 sub-criteria each of which was allocated a percentage totalling 100%.

d) Project delivery and commercial criteria as having a 15% weight. The project delivery and...

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