P&O Sues U.K. Over No-Deal Brexit Settlement With Eurotunnel

File Photo: REUTERS/Peter Nicholls

By Jonathan Browning (Bloomberg) — P&O Ferries Ltd. sued the British government over its handling of no-deal Brexit preparations, saying that a 33 million-pound ($42 million) settlement with a rival failed to treat all the companies equally.

The ferry firm said the U.K.’s last-minute deal with the owners of the Channel Tunnel was “irrational” and signed “for improper purposes.” P&O wants the settlement torn up, or the government to agree to pay it 10.9 million pounds a year in damages as long as the agreement runs, a U.K. judge said Tuesday.

The settlement with Eurotunnel, which operates the undersea link between the U.K. and mainland Europe, avoided a potentially embarrassing court case, but it may now be reconsidered at a trial early next year.

The transportation issues had already proved troublesome to the government. The Eurotunnel case itself would have looked at how the heavily-criticized Department for Transport gave a contract to a ferry company that didn’t own any ships.

The P&O lawsuit comes weeks after the U.K. canceled 50 million pounds of contracts for additional shipping in the event of a no-deal departure from the European Union. Hiring ferry companies to ensure Britain wasn’t left without key supplies was part of the government’s broader no-deal planning and has been mired in controversy from the start.

Britain was due to leave the EU in March, but the deadline has been extended to October. A no-deal Brexit could still happen later this year.

P&O said the agreement was anti-competitive and gave Eurotunnel an unfair advantage.

“It was prudent of the government to make contingency plans to protect international supply chains in the event of a hard Brexit,” P&O said in a statement. “However, we do not believe that the payment of 33 million pounds of public money to Eurotunnel to settle its legal challenge to these plans is fair or reasonable.”

The companies are keeping details of their contracts secret. Indeed, due to a mixup, even the judge hasn’t yet been able to see them.

The “confidentiality ring appears to have been applied spectacularly rigorously on the basis that I don’t appear to be part of it,” Judge Peter Fraser said. “It’s too secret even for me.”

© 2019 Bloomberg L.P

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