Virgin launches legal challenge

 
Marion Dakers
THE HANDOVER of the West Coast Main Line was last night plunged into chaos after Virgin Trains, the losing bidder for the route, mounted a legal challenge just hours before the final sign-off.

The government had been due to formally approve FirstGroup as the new operator of the franchise as early as today, but the Department for Transport (DfT) hinted at delays last night, saying only that it expects to sign the contract “soon”.

Virgin Trains put a spanner in the works yesterday by applying for a judicial review into the DfT’s decision, complaining that it did not properly consider the risks involved in each bid.

Virgin, which has run the route in a joint venture with Stagecoach since 1997, has made increasingly angry appeals for a rethink since the department picked FirstGroup as the new operator two weeks ago.

“We have not taken this decision lightly, but it is the only course now available to try to unravel this sorry process,” said Virgin founder Sir Richard Branson in a statement.

The company claims that a delay is now required under rules set out in the bidding process back in January, and so has not sought an injunction to stop the DfT putting pen to paper.

Legal experts were doutbful whether Virgin will eventually win in the courts, with Pinsent Masons partner Patrick Twist calling the various requirements of a judicial review “a very high hurdle to leap”.

Michael Whitehouse, partner at Wragge & Co, told City A.M.: “The government processes lots of projects and occasionally underbidders are disgruntled for various reasons. While a judicial review is not something that happens every day – it doesn’t help relationships – Virgin Trains would be out of the rail business anyway.

“I would think they have a hard task ahead of them, but they do have some very good lawyers.”

FirstGroup, which outbid Virgin by £1bn to run the West Coast for the next 13 years from December, said: “There has been no complaint about the process, which was carefully described in advance, until Virgin Rail Group had lost commercially.”

The DfT was last night combing through Virgin’s hefty legal documents before making its next move.

The setback comes at a torrid time for Justine Greening’s department, which this week encountered stern opposition on both the West Coast decision and the thorny topic of expanding Heathrow airport.

Several select committees and the Labour Party have called on the coalition to push back the West Coast approval until after parliament returns from its summer break.