British Nuclear Group Sellafield Ltd v Kernkraftwerk Brokdorf & Mbh

Side letters providing for the reprocessing of an additional 1,000 tons of spent fuel were rescinded on the ground of misrepresentation. The defendants were entitled to financial restitution of sums overpaid in connection with those side letters and the additional fuel. The remaining challenges to the claimant’s invoices, including the Magnox prioritisation and accounting issues, were rejected, subject to an accounting issue concerning COGEMA costs being adjourned until completion of the baseload.

The claimant brought a claim concerning invoices arising from spent-fuel reprocessing arrangements. The defendants challenged the invoices and pursued a counterclaim concerning side letters signed on 25 August 1989, which provided for reprocessing an additional 1,000 tons of spent fuel.

The court determined the rigorous technical review issue in favour of the defendants, and the Magnox prioritisation and accounting issues in favour of the claimant. It also considered whether the side letters were rescindable for misrepresentation and whether alternative claims based on breach of condition, common mistake, failure of consideration and damages succeeded.

1. Side letters. The defendants were entitled to rescind the side letters dated 25 August 1989 on the ground of misrepresentation. The side letters, providing for reprocessing an additional 1,000 tons of spent fuel, were therefore liable to be set aside.
2. Restitution. Following rescission, the defendants were entitled to financial restitution from the claimant for sums overpaid in connection with, or related to, the side letters and the additional 1,000 tons of spent fuel.
3. Invoice challenges. The rigorous technical review issue was decided in favour of the defendants. The Magnox prioritisation issue and the accounting issues were decided in favour of the claimant. Except for the specified matters preserved by the order, the defendants’ claims concerning the identified accountancy items were dismissed.
4. Alternative grounds. The defendants’ claims that the side letters were void for breach of condition, common mistake or failure of consideration, together with their related claim for damages, were dismissed.
5. Further determination. The accountancy issue concerning COGEMA costs was adjourned until completion of the baseload. The £10 million paid into court was ordered to be paid out to the defendants’ solicitors, with accrued interest. The court reserved submissions on the form of order, further directions, costs and permission to appeal.