DfT racked up £1m in legal costs over £33m Eurotunnel settlement
£940,000 bill does not include VAT or cost of departmental officials' time
The Department for Transport’s legal tussle with Eurotunnel over its procurement of no-deal Brexit ferry services has cost the department nearly £1m in legal costs, CSW has learned.
DfT agreed to pay £33m to Eurotunnel in March, following a legal challenge brought by the cross-Channel rail operator after it was not invited to bid for contracts to provide extra freight capacity in the event of a no-deal Brexit.
As part of the out-of-court settlement, the two sides agreed they would each pay their own legal costs.
- DfT perm sec warned of ‘high likelihood’ of Brexit ferry payout before contract award
- Grayling stands by no-deal ferry procurement despite £33m hit
- Department for Transport pays £33m to Eurotunnel over Brexit ferry fiasco
Figures obtained by CSW through a Freedom of Information request show the department racked up a litigation bill of £938,588.93 related to the case – not including VAT.
Around three-quarters of the total – £710,933.48 – went to the magic circle law firm Slaughter and May, with a further £83,716.25 paid to legal counsel.
The remaining £143,939.20 went to the Government Legal Department.
DfT declined to provide a breakdown of exactly how the money had been spent, saying it would prejudice the department’s commercial interests and those of its legal suppliers.
“There are some remaining administrative tasks in hand to finalise these figures, but we do not expect these to result in significant changes,” the response added.
The bill does not include costs related to time spent working on the case by departmental officials. DfT confirmed that it had incurred staff time costs, but said these were “not accounted for separately and specifically with respect to litigation”.
A DfT spokesperson said: “The cross-government decision to reach agreement with Eurotunnel protected vital freight capacity, ensuring critical supplies including medicines for our NHS could enter the country in the event of disruption at Dover.
“Specialist legal advice was regularly used to inform decisions.”
As part of the £33m deal, Eurotunnel committed to improving security, infrastructure and traffic flow on its services. Defending the freight procurement process in April, transport secretary Chris Grayling said the settlement would help to prevent no-deal disruption, and would “provide benefits to UK security and resilience” whether or not a Brexit deal is agreed.
However, the payout has been seen as the latest development in a fiasco that has cost the government millions.
Three ferry companies – Seaborne Freight, Brittany Ferries and DFDS – were handed contracts worth a total of £108m in December to run extra crossings across the English Channel and the North Sea in a no-deal scenario. The Seaborne contract was scrapped in February after it became apparent it could not provide the services it had committed to, and in May the government paid around £50m to cancel the contracts with the two remaining companies following the extension to the Article 50 exit process.
Eurotunnel, which was not among the handful of companies invited to bid for the contracts, sued DfT over its decision not to hold an open tender for the contracts, saying they had been awarded in a distortive and anticompetitive manner.
In May, it emerged that DfT’s permanent secretary, Bernadette Kelly, had warned there was a “high likelihood” the department would be challenged over its handling of the no-deal ferry contracts.
A review by the National Audit Office found that in October, before the contracts were awarded, “the department had recognised that there would be a high risk of legal challenge to government intervention, including a risk that Eurotunnel might challenge its approach”.
But in weighing the risk of legal action against the risk of not securing additional capacity to transport goods, Kelly had estimated that the cost of any legal remedies to the department would not exceed £20m, the NAO said.
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