Alstom Transport v Eurostar International Ltd

Domestic regulations implementing EU procurement directives must be interpreted purposively and, so far as possible, consistently with those directives. That obligation does not generally permit an English court to disapply domestic legislation in horizontal proceedings between private parties.

For the utilities regime, a rail undertaking must satisfy both a status condition and an activity condition. A railway network ordinarily concerns infrastructure, or a service operated under legally prescribed conditions concerning matters such as routes, capacity or frequency. An open-access rail operator running services at its own commercial risk does not operate a network merely because it must comply with general safety, licensing and interoperability requirements.

A commercially operated undertaking may remain industrial or commercial despite substantial State aid. Strategic veto rights may give a minority shareholder dominant influence, making the undertaking a public undertaking.

Alstom, an unsuccessful tenderer, challenged Eurostar International Ltd’s procurement of new high-speed trains. It alleged breaches of the Utilities Contracts Regulations 2006 and, alternatively, the Public Contracts Regulations 2006.

The preliminary issues concerned whether Eurostar was a utility, a contracting authority, a public undertaking, or an undertaking operating on the basis of special or exclusive rights. They also concerned whether a change in ownership during the procurement affected the application of the procurement regime.

The court therefore had to determine the proper interpretation of the domestic regulations and whether Eurostar’s passenger rail operation satisfied the relevant status and activity conditions.

1. Interpretation. The implementing regulations had to be construed purposively in the light of the relevant directives, following Marleasing [1990] ECR I-415, Pfeiffer [2004] ECR I-8835 and R (Risk Management) v Brent LBC [2011] UKSC 7. That obligation was limited by the wording and constitutional scheme of the regulations. It did not create a general power to disapply inconsistent domestic provisions in a claim between private parties.
2. Utilities regime. The court held that Eurostar provided a service to the public, but did not operate a railway network. The concept of network covered railway infrastructure and services operated under legally prescribed conditions concerning routes, capacity or frequency. General safety, licensing and interoperability requirements were insufficient. Eurostar’s unrestricted commercial services were exposed to competition and did not have the character of a protected network.
3. Status. Eurostar was not a body governed by public law because it operated in normal commercial conditions, aimed to operate commercially and bore the risks of its activity. State aid intended to restore long-term viability did not alter that commercial character. Eurostar was nevertheless a public undertaking because LCR’s strategic veto rights gave it the potential to exercise dominant influence, notwithstanding its 40 per cent shareholding. Those rights covered matters including the budget, business plan, major contracts and senior management.
4. Special or exclusive rights and timing. The former requirement that cross-border services be operated by an international railway grouping, Eurostar’s licence and its reserved Tunnel capacity did not amount to special or exclusive rights. The procurement regime could not be engaged merely because Eurostar became a public undertaking during the procurement. The relevant process had not made Eurostar a utility when it was not one at the outset, and the activity condition was in any event unsatisfied.
5. Disposition. Eurostar was not a utility under the UCR, was not a contracting authority under the PCR, and was not a utility at any time from the commencement of the procurement to the conclusion of the Siemens contract. The fourth preliminary issue did not arise.

First-instance determination of preliminary issues. The judgment records earlier interlocutory decisions in the related proceedings, including [2010] EWHC 2747 (Ch) and [2011] EWHC 1828 (Ch), but this judgment was not an appeal.