Wednesday, November 03, 2010

Alstom v. Eurostar and Siemens

I was going to write about this case last week, but I had to wait until the text of the judgement appeared on Bailii. The case is Alstom Transport v. Eurostar International and Siemens [2010] EWHC 2747 (Ch), of October 29, 2010. The dispute in question is between the French train builder Alstom and Eurostar, and concerns a tender that did not turn out the way Alstom had hoped. Inbetween the usual complaints about technical specifications and criteria, it is a wonderful case of a French and a German company wooing an English princess.

The case can be viewed on two levels: On the one hand, there is the tendering issue, which is understandable hampered by the ongoing regulatory uncertainty about the regulator's willingness to allow Eurostar (and, in the future, Deutsche Bahn) to use distributed power systems (DPS) in addition to the current concentrated power systems (CPS). [In normal English, the difference is that CPS involves having the engine and traction system up front and DPS involves having it underneath the floor of the carriages throughout the train.]

Eurostar's tender allowed offerors to use either system, even though the Intergovernmental Commission which ultimately regulates the Channel Tunnel has not yet permitted DPS even today. (Cf. par. 48 of the judgement.) Alstom alleged that this uncertainty made it impossible to prepare an adequate bid. (Even though Siemens did not seem to have the same problem.)

On the other hand, there is the position of France as both an important party to the regulatory process and a stakeholder in Alstom's fortunes. Under the Treaty of Canterbury, France appoints one half of the members of the Intergovernmental Commission and the Channel Tunnel Safety Authority. (Cf. UK Rail Regulator website.) At the same time, the French state remains heavily involved in Alstom's business, even though it no longer holds any shares. (As it did after the 2004 bailout.) The result is predictable: France is fighting against any move towards allowing DPS, so as to give Alstom's existing CPS design a better chance. (Cf. Financial Times.) In the end, it looks like DPS will probably be allowed.

Amidst all this, Vos, J.'s judgement isn't helping Alstom's case. Not only did Alstom lose, but the judge was also highly critical at times. Most notably:

136: (...) 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.

138: (...) 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.

In the mean time, the Commission, too, has concluded that there is no evidence to suggest a breach of EU public procurement law. (Cf. Financial Times.)

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