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Contract dispute not allowed to delay supply of underground trains

Posted: 12th December 2018   In: Corporate Commercial, Dispute Resolution

London Underground has succeeded in legal action to prevent a contract dispute with three major suppliers delaying the delivery of new trains.

The issue arose when the company conducted a procurement exercise for the manufacture and supply of 94 new trains and equipment for the Piccadilly Line, with options for the supply of additional trains to three other lines.

Bombardier and Hitachi formed a joint venture to bid for the contracts, which were worth up to £2.5 billion over 40 years. Alstom also bid.

Their bids were all unsuccessful, so the three companies jointly issued proceedings alleging breach of the Utilities Contracts Regulations 2006. Once proceedings were issued, reg.45G took effect and prevented London Underground from entering into the contracts with the successful bidder, Siemens.

It sought to lift that suspension.

The claimants submitted that damages would not be an adequate remedy if the suspension were lifted and they went on to succeed at trial.

The High Court found in favour of London Underground. It accepted there was a serious issue to be tried and Alstom and the other two claimants had an arguable cause which, if established, could provide the basis for setting aside the award of the contracts to Siemens.

However, the trial would take four weeks and could not be accommodated before November 2019 without causing unjustified disruption to other cases.

There was credible evidence that the reliability of the current rolling stock was decreasing. Age-related failures were likely to cause increasing amounts of disruption. The upgrade works would result in improved journey times, comfort, capacity and access.

There was a strong public interest in introducing the new trains as soon as possible and decommissioning the old stock. Maintaining the contract suspension was likely to cause years of delay to the work.

The balance of convenience lay in lifting the suspension and permitting London Underground to enter into the contracts with Siemens.

Please contact Jon Alvarez if you would like more information about the issues raised in this article or any aspect of contract law and litigation.

Posted by: Jon Alvarez
Corporate Commercial
Luton Office