The Channel Tunnel Group Limited and France-Manche S.A. v. United Kingdom and France (The Eurotunnel Arbitration)
PCA · Investment (ICSID and treaty) · France, United Kingdom · 30 Jan 2007
Why it matters
This is a landmark case in investment treaty arbitration, being one of the first major awards involving a State-to-State treaty with a concession agreement. It clarified the scope of State responsibility for security and non-discrimination in the context of a major infrastructure project, and set a high bar for proving breach of treaty obligations in the face of complex operational and policy challenges.
Summary
The Channel Tunnel Group Limited and France-Manche S.A. (together 'Eurotunnel') brought an arbitration against the United Kingdom and France under the Treaty of Canterbury and the Concession Agreement for the Channel Tunnel. Eurotunnel claimed that the Governments failed to protect the Fixed Link from incursions by clandestine migrants based at the Sangatte hostel, discriminated against the Tunnel in favor of other transport operators (SNCF and the Port of Calais), and that the UK's civil penalty regime and detention/removal costs were unlawful. Eurotunnel also claimed that France unlawfully subsidized SeaFrance, a ferry operator. The Tribunal, constituted under the PCA, issued a Partial Award on 30 January 2007. It held that it had jurisdiction over the claims under Clause 40.1 of the Concession Agreement, which covers disputes 'relating to this Agreement.' However, on the merits, the Tribunal dismissed all claims. Regarding the Sangatte claim, the Tribunal found that the Concessionaires had assumed the risk of security problems at the Coquelles terminal under the Concession Agreement and the Sangatte Protocol, and that the Governments had not breached their obligations to take measures necessary for the operation of the Fixed Link. The Tribunal also found no discrimination against the Fixed Link, as the measures taken at other terminals were not comparable. The UK's civil penalty regime was held to be lawful and not in breach of the Concession Agreement. On the SeaFrance claim, the Tribunal held that the subsidies to SeaFrance did not breach the Concession Agreement's non-discrimination clause (Clause 34.3) because the clause only prohibited discrimination in the application of laws and regulations, not in the grant of subsidies. The Tribunal also rejected claims based on other provisions. The award is significant for its detailed analysis of the allocation of risk in concession agreements and the limits of State liability for third-party actions.
The detail
Parties: The Channel Tunnel Group Limited and France-Manche S.A. v. United Kingdom and France (The Eurotunnel Arbitration)
Case number: PCA Case No. 2003-06
Outcome: The Tribunal dismissed all claims. No compensation awarded.
Applicable law: Treaty of Canterbury (1986), Concession Agreement (1986), Sangatte Protocol, Special Security Arrangement, English law, French law, international law
Issues in play: The case involved the interpretation of the Concession Agreement and Treaty of Canterbury, particularly the obligations of the States to protect the Fixed Link from clandestine migrants and not to discriminate. The Tribunal applied the principle that the Concessionaires assumed the risk of security problems at Coquelles.
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