P&O drops claim against Eurotunnel and UK Government in respect of Brexit ferry capacity contract settlement

On 4 November 2019, P&O Ferries agreed to drop its claim against the UK Department for Transport (DfT) and Eurotunnel regarding the settlement Eurotunnel achieved earlier this year in its high-profile challenge to DfT’s direct awards of capacity contracts worth c. £103mn to various ferry freight companies in the context of the UK Government’s no-deal Brexit contingency planning (Eurotunnel v Secretary of State for Transport (HT-2019-000028)). 

Eurotunnel’s original claim alleged that DfT had breached public procurement, state aid and general public law principles in making those awards, and excluding Eurotunnel from the award process, and led to Eurotunnel securing a cash settlement of £33mn in February this year, on the eve of trial.

P&O subsequently sought to challenge the settlement both by way of judicial review and for breach of the Public Contracts Regulations 2015 (PCR15). In particular P&O claimed: (a) that the settlement sum amounted to unlawful state aid; and (b) that the settlement amounted to a disguised procurement exercise, in respect of which DfT had failed to issue a call for competition in contravention of PCR15. Eurotunnel was joined as a party in the proceedings.‎

P&O’s challenge raised intersecting public procurement and state aid questions, in a Brexit context, requiring cross-disciplinary and specialist expertise to address:

• The extent to which the objective “efficient market operator” for the purpose of a state aid assessment can share the characteristics of a settling public body (here the DfT seeking to secure freight capacity against the backdrop of Brexit).
• The extent to which a third party can force settling parties effectively to re-litigate compromised claims via the introduction of new evidence and the appropriate extent of disclosure in such cases.
• The application of time limits for claims under PCR15, and judicial review claims relating to procurement matters under CPR 54.
• The ambit of without prejudice privilege over communications that lead to a settlement, where a third party is challenging the settlement on the basis of irrationality.

The matter was set for trial in November 2020, but P&O has now withdrawn its claim in its entirety, with no admission of liability on the part of DfT or Eurotunnel or any payment on account of costs. Eurotunnel retains in full the settlement it secured earlier this year.

A multi-specialist team from Freshfields acted for Eurotunnel in its original claim against DfT and in defending the claim brought by P&O, led by Deba Das (commercial public law and antitrust); Sally Roe (public procurement) and Rod Carlton (state aid), with senior associate Oliver Sangster, and associates Michael Quayle, Harriet Drury, Jessica Steele and Matt Evans, alongside a leading counsel team from Monckton Chambers (Daniel Beard QC, Valentina Sloane QC, and Jack Williams).