Royal Courts of Justice
Strand, London, WC2A 2LL
Before :
MR JUSTICE VOS
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
Hearing dates: 26th to 29th October 2010
Judgment
Mr Justice Vos:
Introduction
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.
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.
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.
ALSTOM alleges that, in making its decision to award the Agreement to Siemens, Eurostar breached:-
the Utilities Contracts Regulations 2006 (the “2006 Regulations”); and/or
the general EU Treaty principles of equal treatment, transparency, proportionality, and good administration; and/or
an implied tender contract between ALSTOM and Eurostar.
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.
The main breaches alleged relate to two aspects of the bidding process.
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.
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:-
Eurostar was evaluating the financial aspect of the bids on the basis of their net present value calculated in a particular way (“NPV”); and
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).
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 1st January 2010, and will start in earnest in or about 2013.
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.
The Issues
Two issues that may arise at a future trial of this action have not been argued on this application:-
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.
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 20th 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 18th August 2010 (the “Preliminary Agreement”).
Against this background, the main issues that need to be determined on this application are as follows:
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:-
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?
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?
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?
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?
Does the balance of convenience or injustice lie in favour of the grant of an interim injunction?
Before dealing in detail with these issues, I should say a little about the factual background to this application.
Chronological background
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.
In January 2009, Eurostar issued a pre-qualification questionnaire to 6 potential bidders.
In February 2009, ALSTOM pre-qualified as a bidder, together with two other bidders.
On 15th 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:-
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.
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.
The Mandatory Requirements included:-
A minimum of 850 seats per train.
The unit must be capable of at least 300km/hour.
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.
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:-
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.
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%.
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%.
Project delivery and commercial criteria as having a 15% weight. The project delivery and commercial criteria were broken down into 4 sub-criteria each of which was allocated a percentage totalling 100%.
The bid process timetable suggested that Eurostar was aiming to award the contract in January 2010, but reserved the right to change the dates. Eurostar’s preference was to have delivery of at least two new units to enable passenger services to begin no later than 31st December 2014, and all subsequent units to enable passenger use by December 2016.
It was made clear in the ITN that all elements of the bidders’ responses might be subject to negotiation.
The train unit’s configuration was specified as having a nominal length of 400 metres with a driving cab at each end.
Details were sought of the bidders’ fire safety strategy in respect of numerous particular areas, and certain specified requirements were delineated including the need for trains to be able to keep moving so as to exit the Tunnel in the event of a fire.
Requirements were specified relating to passenger seating, luggage space and interior design.
It was made clear that all questions asked by bidders and the answers to them would be circulated to all bidders.
The draft purchase agreement provided:-
by clause 4.1 that the bidder had to design manufacture and sell in accordance with all Applicable Laws and Standards as defined in clause 1.1 to include such standards “as they are from time to time”.
By clauses 11.3 and 11.4 for a variation procedure in the event of regulatory changes, some at the bidder’s risk (such as foreseeable changes), and some at Eurostar’s expense.
On 15th June 2009, ALSTOM met with the Channel Tunnel Safety Authority (CTSA), which confirmed that only CPS were permitted, with a dedicated carriage carrying the power units at each end of the train.
ALSTOM raised a tender query with Eurostar on 9 July 2009 seeking to resolve the apparent conflict between the safety rules laid down by the CTSA and the Intergovernmental Commission, the regulatory body ultimately responsible for safety (the “IGC”), requiring the use of CPS, and Eurostar’s apparent willingness to accept bids based on trains using DPS.
On 21 July 2009, the IGC launched a consultation to review the existing safety rules.
On 26th August 2009, Eurostar responded to ALSTOM’s question saying that it would accept bids based on DPS, but would “not commit via contract signature to purchase [DPS] until after the IGC consultation outcome confirm that [DPS] will satisfy IGC future requirements”.
Meanwhile, ALSTOM says that it had discontinued work on the bid on 17th June 2009 as a result of the regulatory uncertainty, but started again on 3rd Sept 2009.
ALSTOM met Eurostar on 14 September 2009, and in this meeting Eurostar again made it clear that a “bid is acceptable with [DPS] as the IGC has said that it is likely to change this rule”. Eurostar continued by saying: “If this should not happen, then Eurostar would not sign a contract for new trains and would cancel the bid. ALSTOM should proceed for now as if the rules will change”.
On 30th October 2009, ALSTOM submitted its bid.
On 11th November 2009, Eurostar sought mandatory information by 20th November 2009 from those wishing to be considered for the Best and Final Offer (“BAFO”) stage.
On 20th November 2009, ALSTOM submitted the mandatory information requested, making it clear that its commitments were subject to the IGC amending its safety rules to permit trains using DPS in the Tunnel.
On 4th December 2009, ALSTOM was given feedback on its bid. The general points that Eurostar made included “a lack of detail throughout the bid in all areas – ALSTOM experience not showing through as we would have expected”, and ““We comply” but no substance to demonstrate compliance” and “A strong product but needs more information to support it as it is as yet untested in the marketplace” and “Much still to be done before BAFO to provide enough confidence in ALSTOM bid”.
On 8th December 2009, Eurostar issued its BAFO document. The BAFO document repeated the evaluation criteria contained in the ITN, but indicated a revised timetable culminating in an award of the contract in May 2010. The BAFO repeated that it was for the bidder to gain the “Relevant Approvals”, and added that “Eurostar requires a firm written commitment that, once the IGC consultation outcome is known, the Bidder in its BAFO will assume all responsibility for obtaining all Relevant Approvals to operate on the Relevant Network …”.
On 11th December 2009, Eurotunnel issued its “Network Statement 2011 Working Timetable” indicating that trains could be composed of vehicles formed from motor sets, which Mr Bowsher submits refers to trains using DPS.
On 20th December 2009, the 2009 Regulations came into force.
On 21st December 2009, Eurostar responded to a request from ALSTOM about the 4 financial matters contained in the ITN and the BAFO (which related to Maintenance Price, Capital Price of the units, Capital Price of the options, and additional costs for modifying depot facilities) saying: “These considerations are not sub-criteria as they cannot be evaluated in isolation of each other. A competitive Capital Price might be hugely advantageous for Eurostar. However, if considered with a prohibitive Maintenance Price, the derived benefits are no longer significant to Eurostar and vice-versa. To evaluate the impact of the Financial Offer, all pricing elements must be analysed separately and also in conjunction with the Eurostar Business Case”.
On 14th January 2010, ALSTOM attended a pricing workshop, where it appeared that Eurostar would be assessing its overall confidence in the completeness of its pricing.
On 29th January 2010, ALSTOM submitted its BAFO saying that it was doing so on the assumption that the IGC would change the safety regulations (2/30 and 2/31).
On about 10th March 2010, Eurostar’s evaluation of the BAFOs concluded.
Eurostar sought various clarifications from ALSTOM, to which ALSTOM responded on 5 March, 21 April, 26 April and 21 May 2010.
On 31st March 2010, the IGC said that its consultation generally supported DPS: “The CTSA has advised that consultation appears generally to support accepting trains with [DPS], though with some dissenting voices…”… “The IGC has accepted the principle of this advice and … has invited Eurotunnel to submit an operating rule incorporating these requirements [both ends driving facilities and all power units fitted with fire detection and extinction system]. When this submission has been received, and advice thereon received from the CTSA, the IGC expects to be in a position to accept this new operating rule”.
On 7th April 2010, the IGC wrote to Eurotunnel asking it to propose a new operating rule to establish the change in the rules to allow DPS to proceed in the Tunnel.
On 16th April 2010, ALSTOM met Eurostar and M Phillippe Mellier (President of ALSTOM) is alleged to have said that:-
he was not happy with the quality of ALSTOM’s bid (which he denies saying);
he wished to make improvements; and
he had commissioned an internal audit (which he denies saying but accepts that he did commission the audit in consequence of the meeting).
ALSTOM then submitted a revised bid.
On 21st April 2010, ALSTOM wrote to Eurostar saying that the uncertainty regarding the Tunnel acceptance criteria had been eliminated.
On 11th May 2010, Eurostar informed ALSTOM that the bid would be awarded to Siemens.
On 17th May 2010, ALSTOM received its completed internal audit (the “Internal Audit”) saying:-
that ALSTOM had started slowly because of uncertainty about whether Eurostar wanted new trains, and about non-compliance with the IGC’s safety regulations;
ALSTOM thought its relationship with Eurostar was poor initially, but the problems had been addressed; and
By the time of the BAFO, ALSTOM thought it was in a good position.
Eurostar relies on certain specific passages in the Internal Audit which it contends demonstrate that ALSTOM itself knew that it had made the Eurostar bid an insufficiently high priority and it had not dedicated enough effort to successfully competing for it. The document is a confidential one and, therefore, it is difficult to cite extensively from it in this public judgment, but suffice it to say that Eurostar’s submission is made good by a detailed reading of either the redacted or the unredacted versions of the Internal Audit that have been placed before me. Several non-confidential passages make these points good:-
“Several stop and go in tendering activity, wheareas Eurostar sticking to its bid timetable”;
“Priority given to other tenders”;
“Leading to tender prepared “a minima” [apparently meaning with minimum compliance with the ITN]”;
“According to official meeting minutes …Eurostar unsure if ALSTOM really wants to work with Eurostar as a customer”;
“Project not perceived as a priority by Product Line … E-mail L Baron to J Wallut 30 November 2009 “Ok pour faire le maximum. J’ai mal à comprendre pourquoi une offre à laquelle personne ne croyait il y a quelques semaines devient prioritaire. Nous demander maintenant d’être au niveau d’un Siemens qui lui ne s’est pas arrêté cet été est illusoire.” Roughly translated, that email meant: To do the maximum, I find it hard to understand why an offer which no-one believed in a few weeks ago is now becoming a priority. It is illusory to ask us now to be at the level of Siemens, who did not stop over the summer;
“but of the highest priority for Siemens”;
“Over confidence after BAFO”.
On 21st May 2010, ALSTOM wrote to Eurostar again indicating that following the IGC’s “ruling in respect of the use of [DPS] in the [Tunnel], the caveat in the bid that this change of ruling would be a pre-requisite requirement can be removed”, and indicating “However, it is still necessary that these recommendations become Law”.
Also on 21st May 2010, ALSTOM suggested a different type of “paper” train (the AGVII) in a meeting with Eurostar.
On 1st June 2010, Mr Holden of Eurostar telephoned Mr Robinson of ALSTOM and told him that the idea of the AGVII “paper” train was rejected, but he did not say that Siemens was the preferred bidder or that ALSTOM was the reserve bidder.
On 21st June 2010, Eurostar wrote to Siemens confirming that it was the preferred bidder, and that ALSTOM was the reserve bidder, but no similar letter was sent to ALSTOM.
On 14th July 2010, Eurotunnel replied to the IGC’s letter of 7th April 2010, saying that it would prepare the documentary changes reflecting the change to DPS systems and reflecting the necessary fire safety provisions.
On 18th August 2010, Eurostar entered into the Preliminary Agreement with Siemens.
On 29th September 2010, Mr Roy Griffins of the IGC wrote to European Investment Bank (EIB), as Eurostar’s funders, saying that DPS would be acceptable in principle, but saying that “we can confirm that nothing in the elements available to the IGC at present would mean automatic rejection of the file but there is also no assurance that it will be adopted without modifications”. Mr Bowsher says that this letter has not been withdrawn, even now, and so must be taken to stand.
On 30th September 2010, the French Minister of the Environment, Energy Sustainable Development and the Sea, M. Carenco wrote to EIB saying that Mr Griffins’s letter dated 29th September 2010 on behalf of the IGC only represented the views of Mr Griffins, and was not approved by the IGC, and pointing out that the French delegation to the IGC had received instructions to ensure that safety levels within the Tunnel are not reduced in any way.
On 1st October 2010, M. Parent, the head of the French delegation at the IGC, wrote to Mr Griffins complaining that he would not feel bound by the 29th September 2010 letter.
On 5th October 2010, Eurostar informed ALSTOM that its bid had been unsuccessful, and that Eurostar would be awarding the contract to Siemens, initiating a standstill period of 10 days under Regulation 33(3) of the 2006 Regulations. The letter gave some details of the evaluation process including an indication that Eurostar had graded bids out of 5 against each sub-criteria before producing four weighted marks and combining these to achieve the final mark. The scores that had been awarded to the competing bids were stated to have been as follows:-
Category Siemens score ALSTOM’s score
Positive impact of the bidder’s
financial offer on Eurostar’s business case 45 36
Technical 19.2 12
Maintenance 19 14
Project Delivery and Commercial 14.4 12
Totals 97.6 74
On 7th October 2010, a press release from the French Ministry of Environment at C/10/152 said: “At a meeting of the IGC held in Paris yesterday the French representative confirmed in absolute terms the need to conduct a comprehensive study before any modifications to the safety rules are made, and which would authorise the use of the [DPS] as was put forward by certain tenderers in their bids”.
ALSTOM also sought further information by letters dated 7, 11 and 14 October 2010, to which responses were dated 11, 13 and 17 October 2010.
On 11th October 2010, a de-brief meeting occurred between ALSTOM and Eurostar. In the course of this meeting, Eurostar disclosed its evaluation methodologies for both the ITN and the BAFO to ALSTOM for the first time. The evaluation section of the BAFO Evaluation Methodology document (which is similar to the ITN document) made clear that “one criteria can be evaluated via several sub-criteria”, and provides for a scoring system based on scores of only 0, 1, 2, 3, 4, or 5:-
“The evaluation of a criteria and/or sub-criteria consists of an analysis and a score which should be recorded in the appropriate Evaluation Templates provided at Appendix 3.
The score has no value if [not] backed up by a detailed evaluation covering the strengths and weaknesses of the proposed solution.
Score
Meaning
0
No answer provided
1
The Bidder has not demonstrated an ability to meet the requirement.
2
The Bidder’s proposed solution does not FULLY meet the requirement: the Bidder’s solution only partially meets the requirement
3
The Bidder’s proposed solution seems to meet the requirement but Eurostar cannot fully evaluate whether the requirement is met. Eurostar needs further material information/proof to fully assess whether the requirement is met.
4
The Bidder’s Proposed solution meets the requirement but does not give us high level of confidence in the Bidder’s ability to deliver against the criteria or sub-criteria
5
The answer is so complete and detailed that it gives Eurostar a high level of confidence in the Bidder’s ability to deliver against the criteria or sub-criteria
Financial Evaluation Score
Score | Meaning |
0 | No pricing info given |
1 | Eurostar cannot fully evaluate the appropriate NPV as information is missing or unclear |
2 | An NPV of <0 against our business case combining their capital prices and maintenance price quoted |
3 | An NPV of >0 against our business case combining their capital prices and maintenance price quoted but uncertainty about one or more elements of the Financial Offer |
4 | An NPV of >0 against our business case combining their capital prices and maintenance price quoted and good detail/clarity to justify all the costs & prices quoted giving us a high level of confidence in the Bidder’s ability to maintain its pricing |
5 | An NPV >0 against our business case combining their capital prices and maintenance price quoted and good detail/clarity to justify all the costs & prices quoted giving us a high level of confidence in the Bidder’s ability to maintain its pricing and the lowest offer received against the considerations set out in the first criteria as against our business case. |
For the purpose of scoring 2, 3, 4 or 5, the ‘business case’ shall mean a business case based on a [redacted] train lease financing with the following characteristics:
A [particular kind of lease],
A weighted average capital cost (WACC) of [redacted]%,
[A particular kind of interest rate].
Relevant Bidder’s Information and Evaluation Templates
…
Reviewers should disregard and information and/or answers provided by Bidders at the Bidder Presentations or at the Workshops if such information and/or answers have not been reduced to writing and submitted by the Bidders to Eurostar.
…
Further information on Total and Scores
…
Accepted scores are either 0, 1, 2, 3, 4 or 5 (i.e. no 0.5 increment) …”
Also, on 11th October 2010, ALSTOM wrote to Eurostar under regulation 45 of the 2006 Regulations indicating its intention to bring proceedings.
Eurostar informed ALSTOM that it had entered into the Preliminary Agreement on 13 October 2010.
On 19th October 2010, ALSTOM issued its claim form and application notice seeking an injunction.
Also on 19th October 2010, ALSTOM filed a formal complaint to the Internal Market Directorate General of the European Commission relating to the alleged breaches of EU public procurement law.
On 21st October 2010, Floyd J ordered that Siemens should be joined as the second defendant to this action.
At 5pm on Tuesday 26th October 2010, Eurostar’s original undertaking not to contract with Siemens expired, but it has now been extended until after delivery of this judgment.
Directive 89/665/EEC of 21 December 1989 and Directive 92/13/EEC of 25th February 1992, and Directive 2007/66/EC of 11th December 2007
Directive 92/13/EEC of 25th February 1992 coordinating the laws, regulations and administrative provisions relating to the application of Community rules on the procurement procedures of entities operating in the water, energy, transport and telecommunications sectors (the “Utilities Remedies Directive”) applied to utilities, the rules concerning procurement by public bodies previously laid down by Council Directive 89/665/EEC of 21st December 1989 (the “Public Procurement Remedies Directive”) on the coordination of the laws, regulations and administrative provisions relating to the application of review procedures to the award of public supply and public works contracts.
Article 1 of the Utilities Remedies Directive provided as follows:-
“1. The Member States shall take the measures necessary to ensure that decisions taken by contracting entities may be reviewed effectively and, in particular, as rapidly as possible in accordance with the conditions set out in the following Articles …”
Article 2 of the Utilities Directive provided as follows:-
“1. The Member States shall ensure that the measures taken concerning the review procedures specified in Article 1 include provision for the powers:
either
(a) to take, at the earliest opportunity and by way of interlocutory procedure, interim measures with the aim of correcting the alleged infringement or preventing further injury to the interests concerned, including measures to suspend or to ensure the suspension of the procedure for the award of a contract or the implementation of any decision taken by the contracting entity; and
(b) to set aside or ensure the setting aside of decisions taken unlawfully, including the removal of discriminatory technical, economic or financial specifications in the notice of contract, the periodic indicative notice, the notice on the existence of a system of qualification, the invitation to tender, the contract documents or in any other document relating to the contract award procedure in question; or
(c) to take, at the earliest opportunity, if possible by way of interlocutory procedures and if necessary by a final procedure on the substance, measures other than those provided for in points (a) and (b) with the aim of correcting any identified infringement and preventing injury to the interests concerned; in particular, making an order for the payment of a particular sum, in cases where the infringement has not been corrected or prevented. …
(d) and, in both the above cases, to award damages to persons injured by the infringement.
Where damages are claimed on the grounds that a decision has been taken unlawfully, Member States may, where their system of internal law so requires and provides bodies having the necessary powers for that purpose, provide that the contested decision must first be set aside or declared illegal. …
3. Review procedures need not in themselves have an automatic suspensive effect on the contract award procedures to which they relate.
4. The Member States may provide that, when considering whether to order interim measures, the body responsible may take into account the probable consequences of the measures for all interests likely to be harmed, as well as the public interest, and may decide not to grant such measures where their negative consequences could exceed their benefits. A decision not to grant interim measures shall not prejudice any other claim of the person seeking these measures”.
Directive 2007/66/EC of 11th December 2007 amending Council Directives 89/665/EC and 92/13/EEC (the Public Procurement Remedies Directive and the Utilities Remedies Directive) with regard to improving effectiveness of review procedures concerning the award of public contracts (the “New Remedies Directive”) sets out an enhanced procedure concerning the award of contracts by EU public utilities.
Member States were required, under Article 3 to bring into force laws, regulations and administrative provisions to comply with the Directive by 20 December 2009.
The Utilities Remedies Directive has given rise to the 2006 Regulations, with which I shall now deal in detail. The New Remedies Directive has given rise to the 2009 Regulations, to which I shall turn thereafter.
Utilities Contracts Regulations 2006 (the 2006 Regulations)
Regulation 14 of the 2006 Regulations permits a utility to choose between three types of procedure: the open procedure, the restricted procedure and the negotiated procedure. The definitions in Regulation 2 are as follows:-
Open procedure means “a procedure leading to the award of a contract whereby all interested economic operators may tender for the contract”.
Restricted procedure means “a procedure leading to the award of a contract whereby only economic operators selected by the utility may submit tenders for the contract”.
Negotiated procedure means “a procedure leading to the award of a contract whereby the utility negotiates the terms of the contract with one or more economic operators selected by it”.
The 2006 Regulations concern three types of contracts: service contracts, works contracts and supply contracts. A supply contract is defined in Regulation 2 as “a contract, in writing, for consideration (whatever the nature of the consideration) — (a) for the purchase of goods by a utility (whether or not the consideration is given in instalments and whether or not the purchase is conditional upon the occurrence of a particular event) …”
Regulation 30(1) provides that a utility shall award a contract on the basis of the offer which is either “most economically advantageous from the point of view of the utility” or “offers the lowest price”. As already indicated, Eurostar chose the former option.
Regulations 30(2)-(10) lay down procedures concerning the use of criteria and weightings as follows:-
“(2) A utility shall use criteria linked to the subject matter of the contract to determine that an offer is the most economically advantageous including delivery date or period for completion, running costs, cost-effectiveness, quality, aesthetic and functional characteristics, environmental characteristics, technical merit, after sales service and technical assistance, commitments with regard to parts, security of supply and price or otherwise.
(3) Where a utility intends to award a contract on the basis of the offer which is the most economically advantageous, it shall state the weighting which it gives to each of the criteria chosen in the contract notice or in the contract documents.
(4) When stating the weightings referred to in paragraph (3), a utility may give the weighting a range and specify a minimum and maximum weighting where it considers it appropriate in view of the subject matter of the contract.
(5) Where, in the opinion of the utility, it is not possible to provide weightings for the criteria referred to in paragraph (3) on objective grounds, the utility shall indicate the criteria in descending order of importance in the contract notice or contract documents. …
(10) In this regulation “offer” includes a bid by one part of a utility to provide services, to carry out work or works or to make goods available to another part of the utility when the former part is invited by the latter part to compete with the offers sought from other persons”.
Regulation 4(3) provides that utilities shall treat tenderers equally, and in a non-discriminatory and transparent manner, as follows:-
“(3) A utility shall (in accordance with Article 10 of the Utilities Directive)—
(a) treat economic operators equally and in a non-discriminatory way; and
(b) act in a transparent way”.
Regulation 12 relates to technical specifications in contractual documents and provides, in general terms that these requirements must be sufficiently precise to allow bidders to determine the subject matter of the contract. The Regulation provides in material part as follows:-
“(5) Subject to technical requirements which are mandatory in the United Kingdom and to the extent that those requirements are compatible with Community obligations, a utility shall define the technical specifications required for a contract in accordance with paragraphs (6), (7), (8) or (9).
(7) A utility may define the technical specifications referred to in paragraph (5) in terms of performance or functional requirements (which may include environmental characteristics) provided that the requirements are sufficiently precise to allow an economic operator to determine the subject of the contract and a utility to award the contract”.
Regulation 33 provides for information about contract award procedures as follows:-
“(1) Subject to paragraph (13), a utility shall as soon as possible after the decision has been made, inform any economic operator which submitted an offer or applied to be included amongst the economic operators to be selected to tender for or to negotiate the contract, or applied to be a party to a framework agreement, of its decision in relation to-
(a) the award of the contract; or
(b) the conclusion of the framework agreement;
and shall do so by notice in writing by the most rapid means of communication practicable.
(2) The notice referred to in paragraph (1) shall include-
(a) the criteria for the award of the contract;
(b) where practicable, the score obtained by-
(i) the economic operator which is to receive the notice; and
(ii) the economic operator-
(aa) to be awarded the contract; or
(bb) to become a party to the framework agreement; and
(c) the name of the economic operator-
(i) to be awarded the contract; or
(ii) to become a party to the framework agreement.
(3) A utility shall allow a period of at least 10 days to elapse between the date of despatch of the notice under paragraph (1) and the date on which that utility proposes to enter into the contract or to conclude the framework agreement.
(4) Subject to paragraph (13) if by midnight at the end of the second working day of the period referred to in paragraph (3) a utility receives a request in writing, from an economic operator which was sent a notice under paragraph (1), for the reasons why that economic operator was unsuccessful, the utility shall inform that economic operator of the characteristics and relative advantages of the successful tender.
(5) A utility shall give the information set out in paragraph (4) at least 3 working days before the end of the period referred to in paragraph (3), or where that is not possible, the period referred to in paragraph (3) shall be extended to allow at least 3 working days between the provision of the information set out in paragraph (4) and the date the utility proposes to enter into the contract or conclude the framework agreement”.
Regulation 45 provides as follows in relation to enforcement of obligations under the 2006 Regulations as follows:-
“(1) The obligation on a utility to comply with the provisions of these Regulations other than regulations 30(9) and 38, and with any enforceable Community obligation in respect of a contract or design contest (other than one excluded from the application of these Regulations by regulations 6, 7, 8, 9, 11 or 34) is a duty owed to an economic operator.
(2) The duty owed to an economic operator in accordance with paragraph (1), except in relation to –
(a) a Part B services contract; and
(b) a contract for research and development services specified in category 8 of Part A of Schedule 3;
is a duty owed also to a GPA economic operator.
(3) References to an “economic operator” in paragraphs (4), (5), (8) and (9) shall be construed as including a reference to a GPA economic operator.
(4) A breach of the duty owed in accordance with paragraphs (1) or (2) is actionable by any economic operator which, in consequence suffers, or risks suffering, loss or damage and those proceedings shall be in the High Court.
(5) Proceedings under this regulation may not be brought unless-
(a) the economic operator bringing the proceedings has informed the utility of the breach or apprehended breach of the duty owed to it in accordance with paragraphs (1) or (2) by that utility and of its intention to bring proceedings under this regulation in respect of it; and
(b) those proceedings are brought promptly and in any event within 3 months from the date when grounds for the bringing of the proceedings first arose unless the Court considers that there is good reason for extending the period within which proceedings may be brought.
(6) Subject to paragraph (7), but otherwise without prejudice to any other powers of the Court in proceedings brought under this regulation, the Court may-
(a) by interim order suspend the procedure leading to the award of the contract or the procedure leading to the determination of a design contest in relation to the award of the contract of which the breach of the duty owed in accordance with paragraphs (1) or (2) is alleged, or suspend the implementation of any decision or action taken by the utility in the course of following such a procedure; and
(b) if satisfied that a decision or action taken by a utility was in breach of the duty owed in accordance with paragraphs (1) or (2)-
(i) order the setting aside of that decision or action or order the utility to amend any document;
(ii) award damages to an economic operator which has suffered loss or damage as a consequence of the breach; or
(iii) do both of those things”.
(7) In proceedings under this regulation the Court does not have power to order any remedy other than an award of damages in respect of a breach of the duty owed in accordance with paragraphs (1) or (2) if the contract in relation to which the breach occurred has been entered into”.
Utilities Contracts (Amendment) Regulations 2009 (the “2009 Regulations”)
As I have said, Eurostar denies the applicability of the 2009 Regulations on the grounds that regulation 13(1) limits its applicability to procurements that were commenced after 20th December 2009. The applicability of the 2009 Regulations is only material to ALSTOM’s argument about the Preliminary Agreement, and to the remedy that is appropriate generally. In these circumstances, I do not intend to cite the provisions extensively. Suffice it to say that:-
Regulation 45G provides for the procurement process to be automatically suspended by the issue and service of a claim form, until the Court brings the suspension to an end.
Under Regulation 45H(1)(a), the Court can end the automatic suspensory effect of the claim having been made.
Regulation 45H(2) allows the Court to consider whether it would have been appropriate to grant interim relief to the dissatisfied bidder if it were not for Regulation 45G.
Regulations 45J, K and L provide for the Court to make a declaration of ineffectiveness where a contract has been entered into in 3 situations:-
First, where the utility has made no call for any competition at all;
Secondly, where the utility has concluded a contract where there was a specific obligation not to do so, for example during the standstill period.
Thirdly, in other more complex cases, which do not apply where the utility thought it was acting lawfully.
The grant of an interim injunction:
It is accepted on all sides that, with one significant exception, the normal principles apply in this case to the grant of an interim injunction. Those principles were laid down by Lord Diplock in American Cyanamid v. Ethicon [1975] A.C. 396, where it was established that three questions need to be asked:-
Is there a serious question to be tried?
If so, would damages be an adequate remedy for a party injured by the court’s grant, or its failure to grant, an injunction?
If not, where does the balance of convenience lie?
In Fellowes & Sons v. Fisher [1976] 1 QB 122 at 137, Browne LJ helpfully summarised the principles as to the exercise of discretion that Lord Diplock had laid down in American Cyanamid as follows:-
“As to that, [i.e. the balance of convenience], the governing principle is that the court should first consider" whether, if the plaintiff succeeds at the trial, he would be adequately compensated by damages for any loss caused by the refusal to grant an interlocutory injunction. "If damages… would be adequate remedy and the defendant would be in a financial position to pay them, no interlocutory injunction should normally be granted, however strong the plaintiff's claim appeared to be at that stage": p. 408.
"If, on the other hand" damages would not be an adequate remedy, the court should then consider whether, if the injunction were granted, the defendant would be adequately compensated under the plaintiff's undertaking as to damages. "If damages in the measure recoverable under such an undertaking would be an adequate remedy and the plaintiff would be in a financial position to pay them, there would be no reason upon this ground to refuse an interlocutory injunction": p. 408.
"It is where there is doubt as to the adequacy of the respective remedies in damages… that the question of balance of convenience arises. It would be unwise to attempt even to list all the various matters which may need to be taken into consideration in deciding where the balance lies, let alone to suggest the relative weight to be attached to them. These will vary from case to case": p. 408.
"Where other factors appear to be evenly balanced it is a counsel of prudence to take such measures as are calculated to preserve the status quo": p. 408.
"The extent to which the disadvantages to each party would be incapable of being compensated in damages in the event of his succeeding at the trial is always a significant factor in assessing where the balance of convenience lies;…": p. 409.
"… if the extent of the uncompensatable disadvantage to each party would not differ widely, it may not be improper to take into account in tipping the balance the relative strength of each party's case as revealed by the affidavit evidence adduced on the hearing of the application. This, however, should be done only where it is apparent upon the facts disclosed by evidence as to which there is no credible dispute that the strength of one party's case is disproportionate to that of the other party": p. 409.
"… in addition to [the factors] to which I have referred, there may be many other special factors to be taken into consideration in the particular circumstances of individual cases": p. 409”.
Lord Hoffmann at paragraphs 18-19 in National Commercial Bank Jamaica Limited v. Olint Corporation Limited 28th April 2009 in the Privy Council said this:-
“18 Among the matters which the court may take into account are the prejudice which the plaintiff may suffer if no injunction is granted or the defendant may suffer if it is; the likelihood of such prejudice actually occurring; the extent to which it may be compensated by an award of damages or enforcement of the cross-undertaking; the likelihood of either party being able to satisfy such an award; and the likelihood that the injunction will turn out to have been wrongly granted or withheld, that is to say, the court's opinion of the relative strength of the parties' cases.
19 There is however no reason to suppose that, in stating these principles, Lord Diplock was intending to confine them to injunctions which could be described as prohibitory rather than mandatory. In both cases, the underlying principle is the same, namely, that the court should take whichever course seems likely to cause the least irremediable prejudice to one party or the other … If it appears that the injunction is likely to cause irremediable prejudice to the defendant, a court may be reluctant to grant it unless satisfied that the chances that it will turn out to have been wrongly granted are low; that is to say, that the court will feel, as Megarry J said in Shepherd Homes Ltd v Sandham [1971] Ch 340, 351, "a high degree of assurance that at the trial it will appear that the injunction was rightly granted"”.
I also bear strongly in mind what Lord Diplock said at page 409 as to the impermissibility of conducting a mini-trial as follows:-
“The extent to which the disadvantages to each party would be incapable of being compensated in damages in the event of his succeeding at the trial is always a significant factor in assessing where the balance of convenience lies, and if the extent of the uncompensatable disadvantage to each party would not differ widely, it may not be improper to take into account in tipping the balance the relative strength of each party's case as revealed by the affidavit evidence adduced on the hearing of the application. This, however, should be done only where it is apparent upon the facts disclosed by evidence as to which there is no credible dispute that the strength of one party's case is disproportionate to that of the other party. The court is not justified in embarking upon anything resembling a trial of the action upon conflicting affidavits in order to evaluate the strength of either party's case”.
An issue arose in the course of argument as to whether the public interest could be taken into account in determining the balance of convenience when an interim injunction is sought under the 2006 Regulations. It seems to me to be self-evident, not only that it can, but that it should. The main objectives of the Utilities Directive and the 2006 Regulations included opening up utility procurement to EU competition, as well as ensuring transparency and non-discrimination in the award of utilities’ procurement contracts in the public interest. It would be entirely wrong to ignore the public interest when considering whether or not to grant interim measures, and that is made expressly clear by article 2.4 of the Utilities Directive itself, which provides that “The Member States may provide that, when considering whether to order interim measures, the body responsible may take into account the probable consequences of the measures for all interests likely to be harmed, as well as the public interest, and may decide not to grant such measures where their negative consequences could exceed their benefits….”. In the transposition to the 2006 Regulations, article 2.4 was not entirely reproduced, but the Court of Appeal has recently held, as has been the case in other areas, that the public procurement regulations should be construed in accordance with the meaning of the directive. Moreover, other authorities suggest that it is appropriate at the interface of public law and private law for the public interest to be taken into account as one of the factors in the balance of convenience (see, for example, the Court of Appeal’s decision in Smith v ILEA [1978] 1 All ER 411).
Before leaving general principles, I should also mention that the principles applicable to public procurement cases under the public procurement directive, have been well set out by Morgan J in Lion Apparel Systems Limited v. Firebuy Limited [2007] EWHC 2179 (Ch) at paragraphs 26-42. I shall not set out those principles here but have borne them in mind in reaching my conclusions in this case.
First issue: Is there a serious question to be tried?
Issue 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?
In putting forward this basis of claim against Eurostar, Ms Sarah Hannaford QC, counsel for ALSTOM, has relied on a breach of Regulation 12(7), which requires that the technical specifications must be sufficiently precise to allow a bidder to determine the subject of the contract and the utility to award the contract.
In addition, she has relied on the following dicta:-
Lord Phillips CJ giving the judgment of the Court of Appeal in R (Law Society) v Legal Services Commission[2008] 2 WLR 803 said at paragraph 72:
“What is also plain is that among the most important factors for compliance with the principle of transparency are the definition of the subject matter of the contract and the need for certainty of terms. That is why both article 2 of the Public Sector Directive [equivalent to article 2 of the Utilities Directive] and regulation 4(3) require the contracting authority to “act in a transparent way” and why regulation [12(7)] requires technical specifications in terms of performance or functional requirements to be “sufficiently precise to allow an economic operator to determine the subject matter of the contract””.
The ECJ in Case C-340/02 Commission v French Republic [2004] I-9845 said at paragraph 34 that:
“The principle of equal treatment of service providers, laid down in…the Directive, and the principle of transparency which flows from it…require the subject matter of each contract and the criteria governing its award to be clearly defined”.
The precise manner in which Ms Hannaford has made this argument changed in the course of oral submissions, but essentially, as I understood her argument, she was ultimately contending that:-
The IGC had not changed the safety rules at the date of the evaluation of the bids, and nobody knew precisely how the rules would eventually be changed.
Eurostar had given ALSTOM a clear indication on 14th September 2009 that if the rules as to the use of DPS were not changed“Eurostar would not sign a contract for new trains and would cancel the bid”, and had said on 26th August 2009, in answer to ALSTOM’s question (provided to both bidders), that it would accept bids based on DPS, but would “not commit via contract signature to purchase [DPS] until after the IGC consultation outcome confirm that [DPS] will satisfy IGC future requirements”.
The bidders were therefore bidding in the vacuum of not knowing what the safety rules with which they were required to comply would say, and on the basis of existing safety rules that were incompatible with trains using DPS. Examples were given of how requirements concerning the fire compartmentalisation and the location of power transformers might change the whole structure of the specification, maintenance requirements, and therefore the bid, in numerous ways.
The likely changes that would be required once the new rules were brought in would inevitably require changes to the contract, which would require a new bidding process. For this proposition, Ms Hannaford relied on:
Paragraphs 34-37 of the ECJ’s decision in Case C-454/06 Pressetext[2008] ECR I-4401; and
R (Law Society) v. Legal Services Commissionsupra at paragraph 45.
Eurostar, therefore, acted in breach of Regulations 4(3), 12(7) and 30, by preparing an uncertain specification, and then evaluating the bids and awarding the contract against an uncertain specification. Had Eurostar waited until the new IGC rules were available to evaluate the bids, the landscape would have been entirely different, and it is impossible to say which bid would have been likely to succeed against those new criteria.
Eurostar answers these allegations by pointing to the documents that I have set out above that make it clear that ALSTOM understood the basis on which it was bidding, and that by 21st April 2010 it had acknowledged that “the uncertainty regarding the Tunnel acceptance criteria [had] been eliminated”. In addition, Mr Bowsher submitted that:-
Eurostar only said that it would not sign a contract, not that it would not evaluate the bids prior to the IGC rule changes.
The uncertainty as to the rule changes no longer exists, now that Eurotunnel has approved the use of trains with DPS, and has said that it will draft the necessary regulations, which will be automatically accepted under paragraph 13.2 of the Tunnel Concession Agreement dated April 1986, unless the IGC expressly withholds consent within 30 days of being notified of the proposed changes.
Mr John Howell QC, counsel for Siemens, analyses ALSTOM’s complaint somewhat differently, and submits that they are really threefold:-
That the technical specification was uncertain, so that the procedure was flawed from the outset;
That Eurostar could not determine what was most economically advantageous to it, because of the absence of the IGC’s rules allowing DPS; and
That Eurostar represented that it would not sign the contract before the IGC position was certain.
As it seems to me, Ms Hannaford relied upon the third point in support of the other two points, so I shall deal with them in the way that she advanced her case. But I shall deal with the limitation arguments at the same time.
Before doing so, I should say something generally about limitation. Regulation 45(5)(b) provided, as I have said, that “[p]roceedings under this regulation may not be brought unless - (b) those proceedings are brought promptly and in any event within 3 months from the date when grounds for the bringing of the proceedings first arose”, unless the Court considers that there is good reason for extending the period.
In the recent ECJ decision in Uniplex v. NHS Business Services Authority [2010] PTSR 1377, it was held that article 1(1) of Directive 89/665 required that the period for bringing proceedings seeking to have an infringement of the public procurement rules established or to obtain damages for the infringement of those rules should start to run from the date on which the claimant knew, or ought to have known of that infringement (see paragraphs 32, 35, and 47-50).
Accordingly, the question here is whether these proceedings have been brought within 3 months from the date on which ALSTOM knew, or ought to have known of the alleged infringements of the public procurement rules, or whether there is good reason for extending that period. Ms Hannaford’s main point was that the breaches of which she complains were not known to ALSTOM until the 5th October 2010, and in some cases until the 11th October 2010 when the de-briefing meeting took place.
I cannot finally decide the limitation issues in this hearing, but if there were a strong argument that the claims were statute barred, then it would affect my ultimate view as to whether there was, in each case, a serious case to be tried.
Was the technical specification so uncertain that the procedure was flawed from the outset?
It is true that ALSTOM willingly proceeded with their bid knowing of the uncertainty about the IGC rule changes. It is also true that they themselves said that the uncertainty had been resolved once the outcome of the IGC consultation was known on 31st March 2010. But in fact the IGC has not yet changed the rules. As the chronology I have recited above demonstrates, the nature and timing of the prospective changes remains uncertain, and the French government seems to have indicated a level of opposition to such changes absent a comprehensive study. Nonetheless, it is clear that Eurotunnel intends to promulgate changes, and I shall assume that political considerations will not affect the IGC’s independent judgment as a regulator. Thus, the position is that changes may be expected in the future that will allow the use of DPS in trains travelling through the Tunnel.
Ms Hannaford’s point about the uncertainty of the specification has to be taken together with her point about Eurostar’s representation that the Agreement would not be signed before the rules had been changed. First, she says that until the rules were known, the specification was so internally inconsistent that a sensible bid could not be made. Secondly, she submits that, even on the basis of the assumptions that ALSTOM was asked to make, that uncertainty still left the specification in such a state that bids based on it could not be properly evaluated.
Siemens submitted that this was simply wrong, since both it and ALSTOM put in bids on the basis of the assumption that the rules would change. It was not unique for DPS trains to need to be evacuated in tunnels, and that fire safety and evacuation equipment was something that bidders could fairly provide for. In addition, Siemens said that, if a utility could not run a valid procurement when regulations were in a state of change, that would destroy competition and work against the very objectives for which the Utilities Directive had been provided. Mr Howell pointed out that the draft contract had detailed provisions for the allocation of risk when the IGC rules changed, so as to allow foreseeable rule changes to be provided for at the expense of the contractor. In other words, ALSTOM and Siemens were in an equal and non-discriminatory position of uncertainty, which had been properly managed by Eurostar’s specification.
I accept that ALSTOM may well have reasonably thought that no contract would be signed until the IGC rules had been changed, relying on the representations made to it. But that did not mean it could not have expected the decision to be made about which bidder to choose before the rules changed. Matters moved fast and the chronology leads me to think it most likely on the present materials that ALSTOM knew in early 2010 that Eurostar did indeed intend to make a decision. Thus it seems to me that the representation is not of any real relevance if, but only if, Eurostar could properly make a decision on the basis of the assumptions it had suggested, notwithstanding that the changes to the IGC rules remained unknown. That means that the real question is the second one that Mr Howell posed above, and that Ms Hannaford accepted in reply to be most important.
Could Eurostar properly determine what was most economically advantageous to it in the absence of IGC rules allowing DPS?
It is important to understand when considering this question that I am in no position at this stage of the proceedings to judge the adequacy of the precise terms of the lengthy technical specification in the ITN. The safety requirements set out in the ITN were themselves detailed and technical.
The main point of ALSTOM’s complaint is that it was bidding against a moving target, because it may turn out that the IGC will require DPS systems to have specific safety features, such as a fireproof sarcophagus to enclose them, and specific evacuation capabilities that the locations of their DPS units would not permit. Thus, Eurostar may have been judging the bids on an entirely false basis.
Conversely, of course, there is, in my judgment, merit in Eurostar’s contention that both bidders were in the same position of uncertainty as to the eventual rule changes. And Siemens was right to say that the regulatory environment is perpetually changing and such changes could not possibly prevent a valid procurement exercise altogether. It should, I think, be open to Eurostar to go through a procurement on an entirely hypothetical basis, taking the risk that material variations after the contract will require a new process, provided the bidders are treated fairly and equally, and provided the specification they are being asked to bid in relation to is sufficiently clear and certain. But it is not completely clear on the facts at this stage that that was the position in relation to this bidding process. I have accorded full weight also to Eurostar’s contention that this was a negotiated procedure under the 2006 Regulations, so that it was entitled to choose one or more bidders with whom to negotiate the terms of the Agreement. I accept also that Eurostar were looking for the most economically advantageous offer “from the point of view of [Eurostar]”. But, as it seems to me, once the full facts of both the bidding process and the evaluation process are known, it may turn out that there is some merit in ALSTOM’s case that the absence of certainty as to the IGC rules, taken together with the detailed contents of the specification, created a situation in which either non-transparency, or perhaps less likely, inequality contravened regulations 4(3), 12(7) and/or 30.
With regard to limitation on this point, Mr Howell’s main point was that, by 1st June 2010 at the latest, ALSTOM knew that there had been an evaluation and a decision – in short ALSTOM knew it had lost. Thus, 3 months certainly expired from then before these proceedings were initiated. I cannot accept that submission on the present evidence, which I have tried to summarise above. All it seems that Mr Robinson was told on the 1st June 2010 was that the paper train idea had been rejected. He had of course been told earlier on 11th May 2010 that that the bid would be awarded to Siemens, but since that time Eurostar had continued to engage with ALSTOM in respect of the proposed revised bid. The rejection of the paper train idea did not necessarily mean that the entire evaluation of ALSTOM's bid had been undertaken. Short of a trial and without detailed evidence as to precisely what occurred, I do not think I can assume that limitation in respect of this allegation had expired.
Against that background, therefore, I have to consider whether ALSTOM, on the presently available evidence has established a serious case to be tried under this heading. As it seems to me, there is a reasonable argument that the specification was not sufficiently precise to allow Eurostar to award the contract. As to whether the alleged breach of the 2006 Regulations affected ALSTOM’s bid, it seems to me to be obvious that if Eurostar was unfairly putting forward an inconsistent specification that could not be fairly evaluated, ALSTOM’s bid must have been arguably affected.
I have considered, then, whether this is a case that can now be judged to be a strong one and very likely to succeed, or only a bare case that just meets the test of a ‘serious case to be tried’. This is difficult, bearing in mind the lack of detailed evidence as to the bidding and evaluation process and the regulatory background. I have also seen no expert evidence. And Eurostar has declined to produce its evaluation template and the completed version of it. On the material now available, however, I would say that the case ALSTOM advances, rapidly changing as it has been, does not look to be very strong. In the fast-moving competitive commercial environment faced by Eurostar it would be surprising if it was effectively prevented from procuring trains in the expectation that the regulatory environment would change. And it would be surprising if the technical assumptions that it was being asked to make were proved at a trial to be so unclear and uncertain that the court was led to the conclusion that a process on which two major suppliers willingly engaged was fatally flawed. That said, of course, the commercial imperatives that may have led to that situation will not necessarily mean that ALSTOM’s case is bad in law, since we are talking about a closely controlled statutory regime. For present purposes, anyway, I am satisfied that under this head, ALSTOM has demonstrated a serious case to be tried, if not a very strong one.
I should make clear in this connection that, at this point under Issues 1, 2 and 3, I am deciding only whether there is a serious case to be tried as to whether the Regulations have been breached, not whether there is a serious case to be tried as to whether the remedy of an injunction could or would be granted at trial. That decision can only, as it seems to me, be made in the context of all the alleged breaches and the general factors with which I shall be dealing later in this judgment. Moreover in deciding whether there is a serious issue to be tried under these heads, I have not decided (at this stage) the issue of whether loss could actually be shown to have been caused by the alleged breaches, though under issue B below I will consider (as I have in this issue) whether the methodological breaches could have had any effect on ALSTOM’s preparation of its bid.
Issue 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?
ALSTOM’s complaints here can be summarised under the following headings:-
Eurostar was evaluating the financial aspect of the bids on the basis of NPV, without having disclosed that criterion to bidders.
Eurostar used a banding scoring system, which unfairly attributed 4 points for satisfying all the financial criteria, and the additional 5th point (amounting to nearly 10% of the overall score) to the lowest bidder, even though that bidder might have only been the lowest by a tiny margin. A rational system should, argues ALSTOM, have awarded points for the lowest figure proportionate to the bids.
Eurostar’s 5 point banding system was in conflict with the 100 point marking system indicated in both the ITN and the BAFO documents, and was unfair, unequal, non-transparent, counter-intuitive and inappropriate for the purpose of selecting the most economically advantageous bid from Eurostar’s point of view.
Eurostar’s evaluation methodology revealed that bidders were obtaining only 3 out of 5 points for satisfying the criteria, and the remaining points for higher levels of confidence in the ability of the bidder to deliver.
Eurostar’s technical evaluation system was flawed because ALSTOM was marked down for what has been described, for confidentiality reasons, as “Issue A” and “Issue B”, where Issue A was a mandatory requirement and adversely impacted Issue B, which was not. What is said is that if these issues were so important, ALSTOM should have been told that marks would be awarded for them, rather than the very many other specified matters.
Ms Hannaford cited no less than 8 cases on this aspect of her case in oral argument, despite my making it clear that it would be surprising if I were to be able to decide a disputed point of law that was so intimately connected with the facts at this kind of highly expedited interim hearing. She submitted that all the features to be taken into account in identifying the most economically advantageous tender and their relative importance must be disclosed in advance. Ultimately this proposition did not seem to me to be much in dispute, though there will, at trial, be likely to be arguments as to precisely what is a feature that is to be taken into account.
Ms Hannaford placed particular reliance on the following cases:-
In Case C-532/06 Emm. G. Lianakis v. Dimos Alexandroupolis [2008] ECR I-0251, the ECJ said the following at paragraph 36:-
“According to the case-law, Article 36(2), read in the light of the principle of equal treatment of economic operators set out in Article 3(2) of Directive 92/50 and of the ensuing obligation of transparency, requires that potential tenderers should be aware of all the elements to be taken into account by the contracting authority in identifying the economically most advantageous offer, and their relative importance, when they prepare their tenders…”.
In Lettings International v. Newham [2008] EWHC 1583, Silber J, at a trial, reviewed the European authorities and decided that sub-criteria and their weightings and a marking scheme (which allocated 3 marks to tenders that complied with the specification, but 4 and 5 only to tenders that exceeded the specification) needed to be disclosed. He said this:-
In any event, even if the 28 sub-criteria are described as an evaluation methodology, Universale Bau is clear authority for the proposition that an evaluation methodology falls to be disclosed pursuant to the principle of transparency. They were matters which in the words of the ECJ in paragraph 32 of ATI “if they had been known at the time the tenders were prepared could have affected that preparation”.
…
My conclusion, which is that the EC law obligation to disclose award criteria, weightings and sub-criteria does not depend upon whether non-disclosure would have had a material impact on the preparation of tenders, follows from the fact that the obligation is an inevitable consequence of the overarching principles of transparency and equal treatment. It is only by advance disclosure of each of these matters that observance of the principles of equal treatment and transparency required by regulation 30 can be ensured…”.
Silber J’s treatment of the three important ECJ cases in this field, Universale-Bau 2002 ECR 1-11617, ATI EAC [2005] ECR I-10109, and Lianakissupra at paragraphs 25-46 of his judgment is scholarly and reliable.
Both Mr Bowsher and Ms Hannaford referred me to J. Varney & Sons Waste Mangement v. Hertfordshire CC [2010] EWHC 1404, where Flaux J, again at trial, held at paragraph 107 that there was no margin of appreciation for an authority in complying with its obligations of transparency and equal treatment (applying a dictum of Morgan J in Lion Apparel v. Firebuy [2007] EWHC 2179 (Ch) at paragraph 36).
Against this background, I shall deal with ALSTOM’s case under the 5 headings I have set out above.
First, should Eurostar have disclosed that it was evaluating the financial aspect of the bids on the basis of NPV?
Ms Hannaford draws attention to the fact that NPV is a crucial criterion that needs to be known to bidders when making their financial bid. Mr Howell argues that it is obvious that Eurostar will want to pay the minimum as far ahead as possible, so that NPV is an obvious matter to consider, which need not be stated.
ALSTOM was told in the ITN and the BAFO that the financial criteria were broken down into 4 sub-criteria none of which was allocated a percentage. These related to 4 different costs: capital cost of units, capital cost of options, maintenance, and modification of depots. The evaluation criteria, however, made clear that for the purpose of scoring the NPV as to the positive impact of the financial offer on Eurostar’s business case, the business case was based on a [redacted] lease financing with the following characteristics:
A [particular kind of lease];
A weighted average capital cost (WACC) of [redacted]%;
[A particular kind of interest rate].
Ms Hannaford says that ALSTOM could not have guessed the interest rate they would apply or the WACC, and therefore, the payments bid for were not being assessed transparently or fairly, without these criteria. Eurostar submits that these matters are not criteria or targets at which bidders had to aim, simply methods of evaluating bids equally amongst themselves.
In my judgment, it is at least arguable that the criteria by which the financial bids were to be evaluated should have been disclosed on the basis of the authorities I have mentioned. It seems to me that this knowledge could have affected the preparation of the bid – particularly the interest rates that were being used by Eurostar. Whether that effect would have been important can only be determined at trial.
Secondly, was Eurostar justified in using a banding system that gave 10% of the marks to the lowest bidder without regard to the margin between them?
This argument is probably the clearest advanced under this heading by Ms Hannaford. It seems to me that it could certainly be regarded as unsual and unpredictable to award almost a 10% difference in overall marks simply on the basis of the bidder being the lowest, even if the two bids were separated by a very small margin. The system one might have expected would be to award marks equally if the bids were equal and then proportionately to the percentage difference between them. The banding system that Eurostar used was not transparent, and it is at least arguable that it breached the relevant regulations. Whether it actually did or not may depend on evidence about common practice and other matters that was not available to me.
It is more difficult to say whether this knowledge could really have made a difference to ALSTOM’s preparation of the bid. But it could in one way have done so. ALSTOM would have perhaps placed all its efforts on bidding at the lowest level possible as the 10% scoring difference could well prove decisive.
Thirdly, was Eurostar’s 5 point banding system in conflict with the 100 point marking system in the ITN and the BAFO?
It seems to me that the 5 point banding system was indeed at odds with the 100 point system mentioned in the ITN and the BAFO. It is also hard to say whether knowledge of the banding could really have made a difference to ALSTOM’s preparation of the bid, but again one can see that it might have done. Again, I think there is a serious case to be tried under this head.
Fourthly, was Eurostar justified in awarding only 3 out of 5 points for satisfying the criteria, and the remaining points for higher levels of confidence in the ability of the bidder to deliver?
I find this a more difficult complaint. It seems to me that confidence in the ability of a bidder to deliver is something that the ITN mentions and that bidders would naturally expect to bear upon the marks they were awarded. It is not, in my judgment, akin to the facts in Lettings Internationalsupra where higher marks were awarded for additional unspecified offers over and above what had been sought. I doubt this case will be made out at trial.
Fifthly, was Eurostar’s technical evaluation system flawed because it marked ALSTOM down for failure in 2 criteria namely “Issue A” and “Issue B”?
This argument is very difficult to evaluate on the present state of the evidence. As I have said, Eurostar has declined to disclose either its evaluation template or the completed versions of it. It is hard to know precisely what was done or why without seeing those documents. For present purposes, it can only be said that it is possible that what was done was either unequal treatment or lacking in transparency.
Conclusions on the evaluation criteria
For the reasons I have given, I think that ALSTOM has shown that it has a serious case to be tried under some aspects of this heading. Plainly, the claim is not limited, because the evaluation criteria were only disclosed to ALSTOM on 11th October 2010. I will return to the strength of this case under the heading of the balance of convenience/ injustice.
Issue 1C: 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?
ALSTOM relies on the conclusion of the Preliminary Agreement as evidence of Eurostar’s disregard for the 2006 Regulations, as amended by the 2009 Regulations. It is submitted that there was no possible basis for the conclusion of such an agreement with Siemens without regard to any of the procedures laid down such as a call for competition and a standstill period.
Siemens submits that the Preliminary Agreement fell outside the scope of the 2006 and the 2009 Regulations because it was:-
A contract merely for the reimbursement of costs and no remuneration or other benefit, and so was not a contract “for pecuniary interest” to which the Utilities Directive applies (see Chandler v Camden LBC [2009] 1 CMLR 19).
Excluded by Regulations 17(1)(c) and (j) of the 2006 Regulations as a contract that for technical reasons could only be performed by a particular economic operator, and/or a supply contract taking advantage of a particularly advantageous bargain available for a very short period of time at a price considerably lower than normal market prices.
Ms Hannaford submits that these exceptions are plainly inapplicable since, although the Preliminary Agreement may have provided only for reimbursement of costs, it was part of a wider contractual arrangement intended to lead to the conclusion of the Agreement. It was, therefore, ‘for pecuniary interest’ and way outside the intent of the exceptions in Regulation 17. It is once again very hard to determine this point at an interim hearing of this kind, without any disclosure of documents leading to the Preliminary Agreement, and any argument as to its precise terms. Suffice it to say, however, that I am not persuaded that the Preliminary Agreement is obviously outside the scope of the Regulations, being an important stepping stone towards the main Agreement as part of the negotiation process envisaged by the 2006 Regulations.
I asked Ms Hannaford at an early stage in the argument what she hoped to gain from the allegation, since no interim relief is sought in respect of the Preliminary Agreement. She submitted that it demonstrated Eurostar’s disregard for the principles of equality and transparency encapsulated in Regulation 4(3). Since no relief is sought on the basis of this alleged breach, it seems to me that I have no need to make any finding as to whether there is or is not a serious issue to be tried on this issue.
Before turning to the question of the adequacy of damages, I should deal with the question of causation of loss. It is impossible on an interim application to say that the allegedly unfair commissioning process will not have caused ALSTOM any loss. Provided the breaches could have affected ALSTOM’s bid (as I have found in some cases they could have done), the more important question for present purposes is whether the breaches would have resulted in a different outcome. I deal with that issue under the balance of convenience below.
Issue 2: 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?
Before turning to the question of whether or not damages would, in fact, be an adequate remedy for either side, I should deal with a submission by ALSTOM that, in the context of a procurement case, the Court should not be too ready to decide that damages are an adequate remedy for a number of reasons, because of the strong public interest in utilities carrying out procurements lawfully and in an equal, transparent and non-discriminatory manner. Ms Hannaford went so far as to submit that there is a presumption that an injunction will be the primary remedy, based on two dicta as follows:
In the Northern Irish case of Partenaire v Department of Finance and Personnnel[2007] NIQB 100, where Coghlin J said this at paragraph 13:
“… it is important to bear in mind that the primary objective that the 1993 Regulations and council Directive 92/50/EEC are intended to implement is the open transparent award of public service contracts. Such open and transparent competition is not only in the interests of the applicant but also that of the general public. Indeed it seems to me that it might well be argued that the European jurisprudence reflected in the Remedies Directive as interpreted by decisions such as Alcatel [1999] ECR 1-7671 intended injunctive relief to be the primary remedy”.
Mackay J in Electronic Data Systems Ltd v Transport Trading Ltd [2008] EWHC 2105 said that it would not be: “just or in keeping with the scheme of these regulations and their purpose to leave the claimant with merely a remedy in damages”.
Siemens, on the other hand, submitted that regulation 45(6) is clear in providing a discretion in allowing interim suspensions of the procedure or contract award, and then provides 3 remedies for breach of a duty under the Regulations, namely setting aside the decision, damages or both. It seems to me that I should be guided by normal principles in deciding on interim relief. Plainly the policy of the Utilities Directive and the 2006 Regulations is to ensure that a transparent and non-discriminatory procurement procedure is in place. If the Regulations are transgressed, the Court is able and willing to ensure such transgressions are remedied. Indeed the 2009 Regulations (though they do not apply here), as we have seen, have imposed more stringent procedures designed to ensure that contracts are not entered into without a standstill period being allowed and in such a way as to preclude interim relief being granted. But these provisions are only intended to ensure that the court can be given an opportunity to decide on whether interim measures are appropriate in any given case. And, as it seems to me, the decision as to whether they are will depend on the application of the normal principles (including, as I have said, taking into account the public interest) taking into account the policy of the legislation to which the court is giving effect.
ALSTOM argues that damages are not adequate for the following reasons.
It will be difficult or impossible fairly to assess ALSTOM’s loss.
ALSTOM will lose the experience of homologation (the testing and obtaining of regulatory approvals) of the new rolling stock.
ALSTOM will lose significant market position and reputation.
ALSTOM’s loss of this contract will have a serious impact on its cost base and leave it with over-capacity.
There is a public interest in Eurostar not being required to pay twice by contracting with Siemens and then paying damages to ALSTOM.
This aspect of the case should be tested by considering what would be the position if ALSTOM had succeeded at trial (in which case, of course, they would have demonstrated that the procurement process was seriously flawed, and not just a serious case to be tried) with the result that the contract should have been awarded to ALSTOM. Otherwise, one would be allowing considerations as to the strength of ALSTOM’s case on the merits to influence one’s view as to whether damages are truly an adequate remedy.
Eurostar submits that damages would be adequate for ALSTOM, because it says that ALSTOM is a huge public company with a turnover in excess of €15 billion, and that it has other huge train manufacturing projects that it has already won for SNCF in France and in other countries. It says that losing as well as winning competitive procurement contracts is a fact of commercial life for major manufacturers like ALSTOM operating on the world stage, and damages could and would adequately compensate it. I am asked also to say that the fact that damages may be difficult (but not impossible) precisely to assess does not mean that they will not be adequate. Eurostar finally asks me to take into account the terms of ALSTOM’s internal audit, which indicate that it did not try very hard to obtain this contract, and gave other procurement competitions a higher priority.
In my judgment, damages could not properly compensate ALSTOM for the loss of this contract. It is a highly prestigious contract which would undoubtedly enhance ALSTOM’s international reputation. Whilst it is only 10 trains (or 23 if the option is exercised) the Eurostar service is well known internationally and runs ALSTOM’s trains (or trains in which ALSTOM participated in a consortium) at the moment. I accept that, looked at from a non-UK perspective, the Tunnel train service is just one more service operating through a long tunnel. But nonetheless, it seems to me that ALSTOM as the leading French train manufacturer, would obtain specific and uncompensatable benefits from the award of the Agreement. I accept that it could, in Mr Bowsher’s words “get over it”, but that does not mean that damages would be an adequate remedy. ALSTOM may well have made mistakes in the bidding process, as its internal audit highlights. But that does not mean that the loss of the contract can be compensated adequately by an award of damages. I also accept that the assessment of ALSTOM’s loss would be a complex process requiring the valuation of a lost chance which is always a somewhat difficult process. The evaluation of its reputational and market position losses would be very difficult indeed.
I take no account of the advantages ALSTOM would gain by undertaking its homologation exercises for the Eurostar project, since it seems to me that such an exercise can and will be undertaken within the contexts of other projects anyway – true it may set ALSTOM back a little, but ultimately that set back would not by itself make damages an inadequate remedy. I take into account here the public interest in not requiring Eurostar to pay twice for this procurement, but it does not seem to me to be a feature that much affects whether damages would adequately compensate ALSTOM for its failure to obtain the Agreement. That factor comes into play more, in my judgment, under the balance of convenience.
The next question, then, is whether Eurostar can be adequately compensated in damages if an injunction is granted. The argument advanced by ALSTOM is that the project has already been significantly delayed, the expected date of the contract having gone back nearly a year already, and the IGC rule changes are now not expected for some 5-7 months. In that period, submits Ms Hannford, an expedited trial could occur, and Eurostar would be no further backwards. It could easily, she submits, be compensated for that loss. In addition, ALSTOM points to the fact that Eurostar has already advertised its contract for the mid-life refurbishment of its existing fleet, so it will not anyway be handicapped if there is a little further delay in the commissioning of its new trains, which would not anyway enter service until about 2014 – after some of the refurbishments will have been undertaken.
In my judgment, what is sauce for the goose is sauce for the gander. Eurostar is entering a brave new world of competition for Tunnel rail services. It needs to compete with other operators keen to enter the market as soon as the necessary procedures have been completed. Once there is competition for Tunnel services, the quality of the rolling stock will be crucial. Eurostar, as Mr Bowsher pointed out, is a small company (relative to ALSTOM) with a turnover of only some £600 million per annum. It could be disastrous for its business model if it were to be delayed still further in procuring its new trains. I accept that IGC rules may take a while to change, but change in some respect they will. And once the Agreement is signed, Eurostar and Siemens will be able to work together to start the process according to the agreed risk allocation procedures I have already mentioned, to bring the trains forward as soon as possible. The delay caused by even a speedy trial of this action would likely be very damaging to the manufacturing process. Siemens cannot be expected to proceed without profit-making remuneration for any extended period.
I have considered when a speedy trial of this action might occur, and I accept Mr Bowsher’s submission that it would not be realistic to expect such a trial to be concluded before Easter 2011. Judging by the 4 days of argument which I have heard, every point will be taken. Undoubtedly, many witnesses and experts on 3 sides will be likely to be called, and there will be confidentiality difficulties that will undoubtedly slow things down. I doubt that the trial of this case could be justly concluded in less than 3 weeks of court time.
My conclusion, therefore, is that damages would not be an adequate remedy either for ALSTOM or for Eurostar, and I must move to decide where the balance of convenience or the balance of injustice lies. Before doing so, I should say that the adequacy of damages for Siemens was not the subject of any substantial argument, but if damages is not adequate for Eurostar, that is probably enough for the purposes of the application of the American Cyanamid test. Even if damages were adequate for Siemens, as they might well be, that cannot outweigh the problems that I have identified that interim relief would create for Eurostar.
Issue 3: Does the balance of convenience or injustice lie in favour of the grant of an interim injunction?
Ms Hannaford accepted in opening ALSTOM’s application that “If I cannot prove that I have lost a realistic chance of winning, then I think that I would ultimately be unlikely to get the remedy of set-aside”. This concession was properly made. It means that in considering the balance of injustice, I have to consider whether ALSTOM does indeed have a realistic chance at trial of achieving an order setting aside Eurostar’s procurement decision.
I should first consider the balance of uncompensatable disadvantage between the parties. I have already considered the adequacy of damages on both sides, but need now to weigh whether one side would be more disadvantaged than the other by the grant of an injunction. Here it seems to me, the balance lies in Eurostar’s favour. It is the smaller concern, and whilst ALSTOM would like to have won the contract, it will not be as serious for ALSTOM to be prevented from having it as it would be for Eurostar to have its entire future business programme set back by what may amount to nearly a year, by the time a trial and even possibly an appeal have taken place. This is Eurostar’s entire business. ALSTOM has many other business activities, and this is a relatively small project for ALSTOM. Moreover, I bear in mind here ALSTOM’s own internal audit that indicates at least that ALSTOM was, to a significant extent, the author of its own misfortune in failing to take the bid adequately seriously and according other projects higher priority.
This would not, however, be the end of the matter if the ultimate trial was likely to result in an order setting aside Eurostar’s procurement decision. I have considered this aspect of the case with particular care, but nothing I say here should be taken as tying the hands of the judge who may eventually have to hear the trial of this action. I am necessarily acting on the basis of few documents and limited evidence. I have taken into account at this point the fact that Eurostar has not voluntarily disclosed its evaluation template showing how precisely it reached its procurement decision. I think that was an unfortunate failure, but I note that ALSTOM never actually applied for a timely order requiring such disclosure.
Despite the fact that I have not seen the actual decision-making documents, I have formed the view that ALSTOM is unlikely to obtain an order setting aside Eurostar’s decision at trial. There are several reasons for this:-
First, the alleged breach in relation to the inconsistent specification is undoubtedly a difficult one to identify and succeed upon. On one analysis, there was no reason why Eurostar should not have procured trains, whether or not they would be able to use them, on the basis of assumptions. The question here is whether those assumptions were sufficiently transparent and non-discriminatory to enable Eurostar to decide on which bid was most economically advantageous to it. I have grave doubts about whether ALSTOM will ultimately succeed in doing so. ALSTOM seems to have been a willing participant in the process and never complained effectively that the process was flawed. All it did was to caveat its bid in a way that it later withdrew once the IGC consultation was reported on 31st March 2010.
Secondly, whilst I think that some of the alleged process breaches were significant, in that Eurostar would have done far better to disclose its 5 point banding system, that it was using NPV criteria and that it was awarding nearly 10% of the marks to the lowest bidder, I harbour grave doubts about whether any of these breaches would in fact have made any difference to the outcome. Siemens was scored way ahead of ALSTOM. Even adding 10% to ALSTOM’s score of 74 leaves it well behind Siemen’s 97.6. None of the other allegations will obviously result in a major difference to ALSTOM’s score, and looking at the matter generally, the evidence leaves me with the impression that Siemens took the bidding process far more seriously than ALSTOM, placed it at the front of its list of priorities, and perhaps most importantly paid greater attention to what Eurostar was telling bidders and to what was contained in the ITN and BAFO documents. If, as I think, ALSTOM stands only a quite small chance of demonstrating that all its alleged arguable breaches, taken together, would have made any difference to the outcome, ALSTOM will be unlikely to obtain an order setting aside Eurostar’s decision at trial.
I take into account that, in one sense, the status quo would be better preserved by the grant of the injunction than by its refusal, but as it seems to me this is not a large factor in this case, because of the damage to Eurostar’s business if its procurement process is frozen for a significant period whilst the litigation process proceeds.
The public interest, which I have held is relevant to the balance of convenience militates also in favour of the refusal of interim relief. First, the delay for Eurostar will be costly and will affect its competitive position. The travelling public will be affected by having new trains delayed, and probably by the additional costs of the delay. It is no answer to say that Eurostar can refurbish its existing fleet – that is a very different exercise from bringing forward an entire new fleet of rolling stock. The public interest will be served by the introduction of timely and effective competition for Tunnel train services. To prevent Eurostar commissioning its new fleet as quickly as the regulatory procedures will allow would damage that competition. I accept that there is a possibility that Eurostar would have to pay twice, but that possibility seems unlikely, and therefore not sufficient to outweigh the factors I have already mentioned.
Conclusions
For the reasons I have sought to give, whilst I find that ALSTOM has a serious case to be tried in some areas of its complaint that Eurostar has breached the 2006 Regulations in the process of procuring its 10 new train sets, I do not think that the balance of convenience lies in favour of granting any interim relief. In my view, it would be unjust and inappropriate to freeze the tendering process to allow a trial to take place, and thereby prevent Eurostar progressing its contract with Siemens and bringing forward its new rolling stock as quickly as possible. As I have said, I regard it as unlikely that ALSTOM will demonstrate at trial that it would have secured the contract, even absent the alleged breaches. In the result, therefore, it will probably not achieve an order setting aside the award of the Agreement to Siemens.
For these reasons, I dismiss ALSTOM’s application. I will hear counsel on any ancillary questions.