London Underground is suing lawyer for alleged negligence over PPP contract
London Underground is suing lawyer Freshfields Bruckhaus Deringer for £141.96m for alleged negligence over the public private partnership (PPP) contract to upgrade the tube.
The High Court claim relates specifically to London Underground’s contract with PPP company Metronet, which was set up in 2003 to oversee the £8.7bn upgrade of seven lines.
London Underground claims that when Metronet fell into administration in 2007, £178.5m of the £1.74bn it was forced to pay out went to compensate investors backing the project for costs they never actually incurred. LU claims this was due to a negligently worded contract approved by Freshfields.
London Underground claims options in the original agreement meant it “could be required” to pay the £178.5m to cover break clauses in the bonds raised to finance the PPP when Metronet went bust, despite the PPP’s financers never incurring the break costs. It has since recovered £36.5m of the costs directly from the funders, leaving it out of pocket for£141.96m.
Freshfields denies the claim and says the contract was worded correctly. It argues London Underground was not obliged to make the extra £178.5m payment.
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