Alstom Transport v Eurostar International Ltd & Anr [2011] EWHC 1828 (Ch)

Towards the end of the summer, the long-running dispute over the award of a contract for a new generation of trains to be used in the Channel Tunnel came to an end. The part of the case discussed here is interesting for two reasons. Firstly, Alstom objected to the decision and commenced proceedings in which it sought a declaration of ineffectiveness in relation to a preliminary contract. Second, it was said that the claim was brought out of time.

The power to declare that a contract was ineffective if it was entered into before a contracting authority has completed the proper procurement process has existed since 20 December 2009. It was not however something that had been considered by the courts until now. Here, Alstom argued that the contract eventually entered into with Siemens was materially different to the contract tendered for, which meant that the contract had been awarded without prior publication of a notice of the Official Journal. Further this material difference meant that Eurostar had not observed a proper standstill period; both reasons why a proper procurement process had not been followed.  

Mann J looked at the qualification notice issued by Eurostar to commence the tender process and held that it was wide enough to cover the contract signed with Siemens, even in its varied form. The Judge said that the test of whether a proper notice has been provided is a “mechanistic” one which was satisfied here. There was a further problem for Alstom in that on the facts, there was no reason why Alstom could not have brought its claim for ineffectiveness before the end of the standstill period and so before the contract had actually been entered into. Alstom needed to establish that there was a breach of the standstill requirement and that that breach prevented Alstom from starting proceedings before the conclusion of the contract, or prevented it from bringing those proceedings to a conclusion. Here, there was a standstill period announced by Eurostar. There was a moratorium. Within that period Alstom managed to formulate and bring proceedings seeking to stop the contract. While those proceedings at that time did not have all the material currently available, it was apparent that the essence of the current argument about the varied contract was recognisable. Accordingly, either there had either been no breach of the standstill obligation, or if there had been, it had not deprived Alstom of the opportunity of starting proceedings. Mann J continued:  

To some extent the ineffectiveness provisions are obviously intended to operate only when anticipatory proceedings could not be brought. One can understand that as a rationale - it was obviously thought that it would better to try to stop a contract than to try to bring an existing contract to an end. Particularly after it has been on foot for some considerable time. The possibility of the former should exclude the latter; the latter should only be available when the former has not been possible because of act of the utility in not holding its hand on contracting to the requisite extent. In the present case Alstom’s own acts have demonstrated that it was able to launch proceedings before the contract was entered into.