R (Shepherd Offshore Limited) v North Tyneside Council – update

Regular readers of this blog may be interested to receive an update on the outcome of the State aid judicial review challenge in R (Shepherd Offshore Limited) v North Tyneside Council (previously covered here).

For those with faint memories, the relevant facts can be shortly stated. North Tyneside Council (“NTC”) entered into a contract (a licence) with Jupiter Offshore Limited (“Jupiter”) to allow it to operate a crane on NTC’s land on the Tyneside quayside, so as to provide services to third parties by loading and unloading ships. In order to avoid the application of the Public Contract Regulations 2006 – which, if they had applied, would have obliged NTC to conduct a tender process for the licence – NTC drafted the contract so that there was no binding obligation on Jupiter to actually provide any services.

Shepherd Offshore Limited sought judicial review, claiming (amongst other things) that by entering into the licence without: (i) conducting any form of advertisement or tender process whatsoever; or (ii) obtaining an ex ante independent valuation, the transaction gave rise to unlawful State aid. On 17 May 2013, Sales J granted permission and an expedited two-day hearing was listed for early July.

NTC has now publicly announced that it has conceded the judicial review and has confirmed that:  “The council will now commence an open tender process in relation to procuring a quay operator for the site, including the provision of craneage services.”

The grant of permission by Sales J and the successful outcome of the judicial review proceedings suggests that a contracting authority that is contemplating structuring a transaction which relies on Case C-451/08 Helmut Muller and the absence of a directly enforceable legal obligation to provide services or perform works would be well advised to carefully consider the EU State aid implications of the proposed transaction structure.

Shepherd Offshore Limited was represented by Joseph Barrett and Jason Coppel QC of 11KBW. Patrick Halliday and Nigel Giffin QC (also of 11KBW) acted for NTC.

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