UK to fight Eurotunnel case

The government plans to pay a law firm £800,000 ($ 1,040,000) for advice in case Eurotunnel decides to sue over the effects of Brexit on its business.

Background 

The Channel Tunnel is a 50.45-kilometre (31.35 mi) rail tunnel linking Folkestone, Kent, in the United Kingdom, with Coquelles, Pas-de-Calais, near Calais in northern France, beneath the English Channel at the Strait of Dover. It is the only fixed link between the island of Great Britain and the European mainland. At its lowest point, it is 75 m (250 ft) deep below the sea bed and 115 m (380 ft) below sea level.

Getlink is a public company which manages and operates the Channel Tunnel between England and France, including the Eurotunnel Shuttle vehicle services, and earns revenue on other trains through the tunnel (DB Schenker freight and Eurostar passenger). The tunnel carries high-speed Eurostar passenger trains, the Eurotunnel Shuttle for road vehicles—the largest such transport in the world and international goods trains. The tunnel connects end-to-end with the LGV Nord and High Speed 1 high-speed railway lines. In 2017 through rail services carried 10.3 million passengers and 1.22M tonnes of freight, and the Shuttle carried 10.4M passengers, 2.6M cars, 51,000 coaches, and 1.6M lorries.

In January, Eurotunnel, part of the Getlink group, accused the Government of "distortionary and anti-competitive" behaviour over the award of contracts worth more than £100m to provide additional cross-Channel capacity in the case of a no-deal Brexit. People have attempted to use the tunnel to enter the UK illegally since 1997, creating the ongoing issue of the migrants around Calais on the French side, causing both diplomatic disagreement and violence.

Analysis 

The government website detailing the contract with law firm Slaughter and May originally stated that Getlink had "expressed concern that their business may be disturbed or interfered with... and that this will in turn hit their profits".

The contract description originally said Getlink, previously called Eurotunnel, was "highly likely" to go through litigation. It said the government could be forced to pay "significant damages" if the firm was successful. The Department for Transport said it routinely seeks legal advice.

A DfT spokeswoman said. "This multiannual contract is to provide advice on a wide range of areas relating to the Channel Tunnel and EU exit." Additionally, the government announced that lorries will be able to drive straight off ferries and Channel Tunnel trains without making customs declarations in the event of a no-deal Brexit. It continued, "It is highly likely that they would seek to protect their business and profits through litigation against the department." The contract description was subsequently changed to say simply that it is to provide "advice and assistance to DfT on the Cross-Channel Rail Services".

In December 2018, it emerged that the government had awarded contracts worth £107m to three companies to provide extra ferry services in the event of a no-deal Brexit. An investigation found that Seaborne Freight, which won a contract for £13.8m to run ferries from Ramsgate to Ostend, had no ships.

In January, Eurotunnel wrote to Transport Secretary Chris Grayling to complain that they had not been considered when the contracts were awarded. The company also warned that their award of these contracts could be illegal. Eurotunnel has previously voiced concerns more broadly about the potential impact of a no-deal Brexit on their business.

Slaughter and May have not issued any statements regarding their defence strategy or their intentions regarding the case. Although it is assumed that the law firm will be expected to swing the negotiations in the UK’s favour by winning the case and strike down the anti-competitive allegations against the UK government.

Seaborne Freight said its services were due to commence in March 2019 and they expect to be ready "very close to schedule".

Assessment 

Our assessment is that the UK will fight for every bit of strategic advantage it can get during the negotiations. We believe that if the UK wins the case, it will present a stronger, united front to the EU negotiators and we also feel that it will prove that Brexit itself is not anti-competition.