Today in a unanimous decision the Court of Appeal found that the current Government policy in relation to the expansion of Heathrow Airport is unlawful

Background

The Court of Appeal has today handed down two related judgments both concerned with the Government’s policy in relation to the proposed expansion of Heathrow by way of a third runway, one dealing with the detail of how expansion should take place and the other considering the planning aspects and process of the policy. This latter case originated as five judicial review applications at the High Court. The policy in question was set out in the “Airports National Policy Statement: new runway capacity and infrastructure at airports in the south east of England” (the “ANPS”), which was designated by the then Secretary of State for Transport under section 5(1) of the Planning Act 2008.

The appellants in this appeal ranged from local authorities and climate change campaigners to the Mayor of London. The Court of Appeal was unconvinced by the appellants’ attempts to overturn the first instance judgment on various issues relating to the Habitats Directive and the Strategic Environmental Assessment Directive and broadly agreed with the judgment of the Divisional Court on many of those aspects.

And then there was one…

The appellants succeeded today on only one ground: the Court of Appeal found that the designation of the ANPS was unlawful by reason of a failure to take into account the Government’s commitment to the provisions of the Paris Agreement on climate change.

The question upon which the decision turned was what is “Government policy” relating to climate change, pursuant to section 5(8) of the Planning Act which requires that the reasons for the policy set out in the ANPS “must … include an explanation of how the policy set out in the statement takes account of Government policy relating to the mitigation of, and adaptation to, climate change” [emphasis added].

The court found that the Government’s commitment to the Paris Agreement was “clearly” part of Government policy by the time of the designation of the ANPS because the Paris Agreement was ratified and there were firm statements re-iterating Government policy of adherence to the Paris Agreement by relevant Ministers. The concept of “Government policy” did not have any specific technical meaning, but should be applied in its ordinary sense. In particular, there was nothing to warrant limiting the phrase “Government policy” to mean only the legal requirements of the Climate Change Act. The concept of policy is necessarily broader than legislation.

The Court of Appeal concluded that the Paris Agreement was not taken into account by the Secretary of State in the preparation of the ANPS and so there was no explanation provided as to how it was taken into account. Indeed it appears that the Secretary of State received legal advice that not only did he not have to take the Paris Agreement into account but that he was legally obliged not to take it into account, which amounted to a material misdirection of law at an important stage of the process.

Potential consequences

Although the appellants won today and at the time of seeing the draft judgment the Government did not seek to appeal the decision to the Supreme Court, this is not necessarily the end of the matter.

The court decided not to quash the ANPS. Instead, it declared that the ANPS in its present form is unlawful and cannot have legal effect, which gives the Secretary of State the opportunity to reconsider the ANPS. The court stated that the initiation, scope and timescale of any such review must and will be a matter for the Secretary of State to decide. The court also explained that the duty in section 5(8) does not require the Government to conform to its own policy commitments, “simply to take them into account and explain how it has done so”.

Importantly, the court repeatedly emphasised the line between its judgment and the politics of the third runway:

“[We] are required to consider whether the Divisional Court was wrong to conclude that the Government’s policy in favour of the development of a third runway at Heathrow was produced lawfully. That is the question here. It is an entirely legal question. …”

“We have made it clear that we are not concerned in these proceedings with the political debate and controversy to which the prospect of a third runway being constructed at Heathrow has given rise. That is none of the court’s business…..”

“Our decision should be properly understood. We have not decided, and could not decide, that there will be no third runway at Heathrow.”

These comments reflect the well-established purpose and role of judicial review, aimed at ensuring that the Executive is held to account in its decision making but without straying into the sphere of policy making and politics.

The judgments can be found here: R (on the application of (1) Heathrow Hub Limited (2) Runway Innovations Limited) v Secretary of State for Transport [2020] EWCA 213 and R (on the application of Plan B Earth and others) v Secretary of State for Transport [2020] EWCA 214.

Andrew Lidbetter
Andrew Lidbetter
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Nusrat Zar
Nusrat Zar
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Jasveer Randhawa
Jasveer Randhawa
Of Counsel
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Shameem Ahmad
Shameem Ahmad
Associate
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Public Procurement: Public interest prevails as High Court lifts suspension of Network Rail contract

In a judgment handed down on 20 December 2019, the High Court in Alstom Transport UK Ltd v Network Rail Infrastructure Ltd [2019] EWHC 3585 (TCC) allowed Network Rail Infrastructure Ltd (“Network Rail”) to enter into a major signalling contract with Siemens. The court lifted the automatic suspension which had been in place after an unsuccessful bidder in the procurement process, Alstom Transport UK Ltd (“Alstom”), issued a claim challenging Network Rail’s decision to award the contract to Siemens.

In reaching its decision, the court applied the American Cyanamid test. The court found that damages would be an adequate remedy for Alstom but not for Network Rail, and that the balance of convenience lay in favour of lifting the suspension.

Background

Network Rail had sought to procure a partner operator for the new digital train control system on the East Coast Main Line. The system was being introduced to improve safety and reduce delays and the contract had an estimated value of £1.8 billion.

After a year-long procurement process, on 10 July 2019, Siemens narrowly won, with a score of 77.71% against Alstom’s 76.39%.

Alstom challenged Network Rail’s decision by issuing a claim under the Utilities Contracts Regulations 2016 (“Utilities Contracts Regulations”). Alstom sought an order setting aside Network Rail’s decision to award the contract to Siemens, a declaration that Alstom should have been awarded the contract, and damages for lost profits and wasted tender costs.

Under the Utilities Contracts Regulations, when a claim form in respect of a contracting authority’s decision to award the contract is issued, the contract award is automatically suspended. On 19 August 2019, Network Rail applied to Court to lift the automatic suspension and allow it to enter into the contract with Siemens.

Decision

O’Farrell J held that it is “settled law” that the American Cyanamid test should be applied when deciding whether to lift the suspension.

  1. Is there a serious issue to be tried?

Network Rail conceded that there was a serious issue to be tried.

  1. Would damages be an adequate remedy for Alstom?

The judgment explains that Network Rail found itself on the horns of interesting dilemma. It had initially argued that the alleged breaches were not “sufficiently serious” to justify the award of damages (as required by the Supreme Court in Energy Solutions EU Ltd v Nuclear Decommissioning Authority [2017] UKSC 34). If that was correct, however, Alstom would have no remedy in damages at all – a factor pointing in favour of maintaining the suspension. Network Rail therefore conceded that the breaches were “sufficiently serious”.

This illustrates how defendant authorities in Network Rail’s position are likely to be forced to run or drop the “sufficiently serious” defence early on in the process. If the authority runs the point, this increases the chance the automatic suspension will be maintained (because damages might not be an adequate remedy), but allows the authority to rely on the defence in a subsequent damages claim. On the other hand, if the authority concedes this point, it should increase the likelihood that the suspension will be lifted, but such an admission may impede its defence in a subsequent damages claim.

Alstom raised a number of arguments as to why damages would not be an adequate remedy. These were rejected by the court, which held that:

  • Any losses incurred in the tendering process could be quantified.
  • Alstom would not be at a disadvantage in future tenders, as it had comparable opportunities to tender and had gained experience on other European projects.
  • Any negative impact on Alstom’s employees, such as redundancies/HR costs, could be quantified.
  • There was no negative impact on Alstom’s ability to develop resources, as this could be gained through Danish and Spanish projects and subsequently applied in the UK.
  • The loss of the contract did not threaten Alstom’s solvency.
  • There is no obligation, and it would be contrary to procurement rules, to ensure equitable apportionment of Network Rail projects (an argument Alstom raised because Siemens has a greater share of Network Rail’s existing signalling work).
  1. Would damages be an adequate remedy for Network Rail?

Network Rail argued that damages would not be an adequate remedy for three reasons.

One of those reasons was accepted. The court agreed that “the delayed improvements to safety, and the wider impact on businesses and the travelling public caused by delays and disruption to rail services” were matters that could not be quantified or fairly compensated by way of damages.

  1. Where does the balance of convenience lie?

For completeness, the court went on to consider the balance of convenience and decided that it lay in favour of lifting the suspension.

The court had regard, in particular, to Network Rail’s argument that it could not delay progress on vital signalling upgrades. This included work on the East Coast Main Line (from Kings Cross to Peterborough) worth £10m and on the Northern City Line (from Finsbury Park to Moorgate) worth £46m. There was an urgent need to replace degraded signalling works which required a decision in early 2020 to either proceed with the new contract or implement a conventional replacement system. The court held that there was a “strong public interest” in proceeding with the new contract as soon as possible as maintaining the suspension would likely “cause abortive costs of urgent replacement”, “years of delay” and put the funding of the project at risk.

The court also considered the position of Siemens, for whom the continuation of the suspension would cause problems in retaining the specialised workforce assembled for the project and loss of a commercial advantage.

Finally, the court rejected Alstom’s alternative case that the suspension should only be lifted for part of the contract. It held that this would still affect the urgent replacement works; there was a strong public interest in lifting the suspension in its entirety; and the commercial basis of Siemens’ tender was reliant on it being awarded the full contract.

Network Rail’s application to lift the suspension was granted. An expedited trial is scheduled to be heard in June 2020.

Comment

In line with the recent trend in cases of this nature, the court placed considerable emphasis on the public interest in lifting the suspension, including the delay it would cause in bringing about improvements to safety, and the wider impact on businesses and the travelling public caused by delays and disruption to rail services, if the suspension continued. The court found these were not matters which could be fairly compensated for by damages. It also found that the balance of convenience lay in favour of lifting the suspension, particularly so as not to delay progress on vital signalling upgrades.

The decision is also notable in illuminating that it may well be necessary for defendants to concede that alleged breaches are sufficiently serious to justify the award of damages, to avoid strengthening the claimants’ argument that damages would not be an adequate remedy.

Andrew Lidbetter
Andrew Lidbetter
Partner
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Nusrat Zar
Nusrat Zar
Partner
+44 20 7466 2465
Jasveer Randhawa
Jasveer Randhawa
Of Counsel
+44 20 7466 2998
Rachel Lidgate
Rachel Lidgate
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