Striking out - Public procurement - Public utilities

Alstom Transport v Eurostar International Ltd and another: Chancery Division (Mr Justice Mann): 13 July 2011

The instant case concerned an application to strike out part of a claim for a declaration of ineffectiveness in proceedings, which turned on the regulations governing public procurement exercises. Reg 45J of the Utilities Contracts (Amendment) Regulations 2009, SI2009/3100 (the Regulations), which amended the Utilities Contracts Regulations 2006, SI2006/6 (the 2006 Regulations), provided for the grant of a declaration of ineffectiveness where there was a breach of obligation contained in the Regulations.

Pursuant to reg 45K, the first two grounds of ineffectiveness were: (i) where the contract had been awarded without prior publication of a notice in the Official Journal, where such publication was required (ground one); and (ii) where the contract had been entered into in breach of any requirement imposed by reg 33A (the standstill period) (ground two).

The claimant (ALSTOM) was the leading French manufacturer of railway rolling stock and, as part of a consortium, supplied the trains used by the first defendant company train operator (Eurostar) to provide services through the Channel Tunnel. The instant claim concerned tenders for a new generation of trains to run under the English Channel.

Eurostar invited Alstom and the second defendant (Siemens) to tender for those trains. In October 2010, Eurostar announced that Siemens was the successful tenderer. Alstom objected to that decision and on 19 October 2010 commenced proceedings in which it sought, inter alia, an injunction to restrain Eurostar from contracting with Siemens. The main allegations were that the evaluation criteria had not been disclosed to the bidder as required by the Regulations.

The claim was dismissed (see[2010] All ER (D) 70 (Nov)). The claimant sought a declaration of ineffectiveness and consequential damages on the ground that the concluded contract differed materially from the requirements of the entity procuring it and from the bid of the company awarded it. The defendants applied to strike out the proceedings for a declaration of ineffectiveness.

The defendants submitted, first that the necessary grounds did not exist for the application of the remedy of a declaration of ineffectiveness because the notice referred to in ground one was a 'contract notice' within reg 16(2)(b) of the 2006 Regulations and no other notice.

Alternatively, if a notice of a different sort was within the first ground, then such a notice had been given because it was not disputed that there had been a valid notice of a qualification period pursuant to which the tender process had started. Alstom contended that a contract, which had stepped beyond the bounds of the tendering process, which it was contended the instant contract had done, was one which should be treated like an illegal direct award.

Accordingly, the issues were: (i) whether the only notice referred to in the first ground was a contract notice; (ii) whether the notice of a qualification period was valid notice; and (iii) whether there had been a breach of the standstill requirement which had deprived an economic operator of the opportunity to commence proceedings before the contract had been entered into. The application would be allowed.

(1) In describing the first ground, the provisions of para (2) of reg 16 did not, on their face, obviously refer to one particular kind of notice, let alone a contract notice, and there was no reason in principle why that meaning should be forced on the paragraph. The Regulations provided for various types of notice, including a ‘periodic indicative notice’.

Notice could be one of the three forms referred to in reg 16. A notice of a qualification scheme was capable of being a notice required to be given for the purposes of the first ground. While the test of the existence or absence of a notice was a mechanistic test, it could not be taken to be so mechanistic as to produce a test which was pure form and no substance at all. There had to be a notice which was capable of being related to the procedure and the contract (see [30], [34], [38], [41]-[42] of the judgment).

In the instant case, the submission that the only notice referred to in the first ground was a contract notice would be rejected. A contract notice had not been required (see [32] of the judgment). (2) In respect of the defendants' alternative submission, it had been open to Eurostar to adopt the qualification procedure instead, which it had done.

The first step had been the publishing of the notice required by reg 16(2)(a)(ii) of the 2006 Regulations and such a notice had been published. Eurostar had given a qualification system notice and no other notice had been required. (see [32], [38] of the judgment). It followed that there had been no failure under ground one (see [38] of the judgment).

(3) Breach of a standstill obligation concerned a requirement that a failure to stand still had deprived an economic operator of the opportunity to commence proceedings before the contract had been entered into (see [57] of the judgment).

On the facts of the instant case, Alstom had been able to, and had, commenced proceedings before the contract had been entered into. So even if there had not been a proper standstill period because there had been no notice of a new tender situation, then that breach had not deprived Alstom of the possibility of starting proceedings in respect of the other breaches. It followed that, on the plain facts of the case, the ineffectiveness remedy was not available to Alstom and Alstom’s case could not be improved by a trial (see [57], [59] of the judgment).

Ground two was not available to Alstom. The ineffectiveness claim should be struck out (see [58]-[59], [83] of the judgment).

Sarah Hannaford QC and Jessica Stephens (instructed by Hogan Lovells International LLP) for the Alstom. Michael Bowsher QC and Ewan West (instructed by Burges Salmon LLP) for the Eurostar. John Howell QC and Rob Williams (instructed by Freshfields Bruckhaus Deringer LLP) for Siemens.