German rail giant launches second legal attack on Grayling
Arriva are owned by Deutsche Bahn, the German state-backed operator Credit: Phil Noble/PA
11 May 2019 • 8:00pm
One of the world’s biggest transport companies is suing Chris Grayling over his governing of the railways, opening a second front against the embattled Transport Secretary over his controversial disqualification of train operators.
Arriva Rail, owned by German state-backed behemoth Deutsche Bahn, is taking legal action over the award of the East Midlands network to Dutch rival Abellio.
The move raises the prospect of a High Court battle between the British and German governments that could result in Mr Grayling himself hauled in front of judges to give evidence.
Arriva’s court filings reference the same “case type” to a separate claim brought by Stagecoach against Mr Grayling last week.
Stagecoach’s action marked a fresh escalation in hostilities between the FTSE 250 company and the Department for Transport in a row that has raged for more than a month.
Stagecoach was the majority owner of the Virgin Trains East Coast train line Credit: DANIEL LEAL-OLIVAS/AFP
Once one of the biggest train operators in Britain, Stagecoach was effectively kicked off the railways at the start of last month for submitting “non-compliant” bids, two of which were for its only remaining franchises.
Its threat of legal action, first
revealed by The Sunday Telegraph, became a reality on Wednesday.
Stagecoach wants the Department for Transport decision to be overturned and is understood to also be seeking damages of up to £30m in lost bidding costs.
Arriva’s bid for East Midlands was also deemed “non-compliant” by the Department for Transport. But it has sought to keep a much lower profile than Stagecoach, which has become embroiled in a public war of words with Whitehall.
Industry sources said Deutsche Bahn is worried a public spat could harm its current plans to either sell or float Arriva.
The East Midlands franchise was awarded to Dutch state-backed operator Abellio on April 1, but the deal was delayed until last Thursday amid allegations of a flawed procurement process and an investigation over the leak of confidential details about Stagecoach’s bid.
Stagecoach, along with prospective partners Virgin Trains and French giant SNCF, was also
excluded from bidding to run the lucrative West Coast network upon which High Speed 2 trains would operate.
Stagecoach prospered as the Government deregulated first the bus, then the train markets Credit: Graeme Hart/Perthshire Picture A/PA
Virgin founder Sir Richard Branson said he was left “devastated” by the decision. In addition, Stagecoach was banned from a tender to run the South Eastern franchise. Stagecoach’s legal action is understood to include a demand for a Judicial Review of the rail procurement process across all three tenders it has been ousted from.
The controversy is seen as the biggest in the rail industry since 2012, when ministers had to renege on a decision to award the West Coast to FirstGroup, costing the taxpayer £50m. Mr Grayling’s predecessor admitted the fault lay “only and squarely within the Department for Transport”.
In that scenario, however, the contract was not formally signed. Sources close to Abellio said that if the Government were to acquiesce to Stagecoach and Arriva’s demands and restart the tendering process, it could be in line for “massive” damages from the taxpayer for breach of contract.
Abellio operates the Greater Anglia network Credit: Nick Ansell/ PA Wire
Earlier this year legal action was brought over the award of a £14m Brexit contingency contract to a ferry company that had no ferries. Eurotunnel was handed £33m to settle the case. A similar case with P&O Ferries is outstanding.
Arriva said: “We can confirm that we are seeking to obtain more information relating to how the bids for the East Midlands franchise were assessed.”
A Government spokesman said: “We do not comment on legal proceedings. However, we have total confidence in our franchise competition process and will robustly defend decisions that were taken fairly following a thorough and impartial evaluation process.”
