Public contract - Public procurement - Eurostar tendering for new supply of trains

Alstom Transport v Eurostar International Ltd: Chancery Division (Mr Justice Roth): 20 January 2012

The first defendant company (Eurostar) operated the rail service through the Channel Tunnel. In May 2009, it issued invitations to tender for a substantial contract for the design, supply and maintenance of a new generation of trains. In October 2010, it announced that the second defendant company, Siemens plc (Siemens), would be awarded the contract. The claimant, which had previously supplied the trains then used by Eurostar, was an unsuccessful tenderer. It claimed that the tender process conducted by Eurostar had violated the European Union procurement regime. It issued proceedings accordingly, seeking a declaration of ineffectiveness of Eurostar’s contract with Siemens, and also seeking damages. 

It failed to obtain an interim injunction restraining Eurostar from entering into the agreement with Siemens (see [2010] All ER (D) 70 (Nov)). The part of the claim seeking a declaration of ineffectiveness of that agreement was struck out at a subsequent interim hearing (see [2011] All ER (D) 236 (Jul)), leaving only the claim for damages. Siemens thereafter ceased to be a defendant, as damages were only sought against Eurostar. The instant hearing concerned the determination of a preliminary issue as to whether Eurostar was subject to the Utilities Contracts Regulations 2006, SI 2006/6 (UCR), or alternatively, the Public Contract Regulations 2006, SI 2006/5 (PCR), or neither. 

The issues were: (i) whether Eurostar was a utility for the purposes of the UCR, interpreted in accordance with the wording of Council Directive (EC) 2004/17; (ii) whether it was a contracting authority for the purposes of the PCR 2006, interpreted in accordance with Council Directive (EC) 2004/18; (iii) if it was not a utility for the purposes of the PCR, whether it had been such at any time from the start of the procurement in January 2009 to the conclusion of the contract with Siemens in December 2010. It was common ground that an implementing regulation was to be interpreted in the light of the directive which it was intended to implement, and also that national legislation should receive a purposive rather than a literal construction. 

The claimant argued that where a purposive interpretation could not achieve the same result as was laid down by the directive, the court should disapply the domestic legislation. It further argued that Eurostar had only continued trading due to very substantial state aid, and was therefore precluded from being of an industrial or commercial character within the terms of the procurement directives.

The court ruled: (1) There was no general requirement of EU law for a national court to disapply, in a claim against a private party, provisions of national law that were inconsistent with a directive (see [47] of the judgment). Were it otherwise, the distinction between vertical and horizontal direct effect would in practical terms be abolished, and the difference between directives and regulations expressed in article 288, Treaty on the Functioning of the European Union (TFEU) would be emasculated (see [47] of the judgment). On the proper construction of the UCR, Eurostar did not operate a network for the purposes of the UCR and was accordingly not a ‘utility’ (see [70] of the judgment).

Pfeiffer v Deutsches Rotes Kreuz, Kreisverband Waldshut eV: C-397/01 to C-403/01 [2004] All ER (D) 52 (Oct) applied; Seda Kucukdeveci v Swedex GmbH & Co KG: C-555/07 [2010] All ER (D) 126 (Feb) considered; Churchill Insurance Co Ltd v Wilkinson; Evans v Equity Claims Ltd [2010] All ER (D) 171 (May) considered.

(2) The fact that an undertaking was able to continue trading due to very substantial state aid did not of itself preclude it from being of an industrial or commercial character within the terms of the procurement directives. It was necessary to consider all the circumstances. The criterion looked to the ‘character’ of the undertaking, not its profitability. The underlying rationale of the criterion was that it served as an indication of whether the undertaking would be expected to take procurement decisions on economic grounds (see [89] of the judgment).

In the instant case, although Eurostar had only continued in business as a result of state aid, that aid had been given precisely in order to enable it to operate for the future as a commercial entity (see [89] - [91] of the judgment).

(3) On the facts, Eurostar was not a contracting authority for the purpose of the PCR, nor a utility for the purpose of the UCR at any time from the start of the procurement until the conclusion of the contract with Siemens.

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 Eurostar.