U.K. Settles Brexit Ferry Lawsuit With $44 Million Payout

(Bloomberg) -- The U.K. government reached a last-minute settlement with the owners of the Channel Tunnel, and will pay 33 million pounds ($44 million) to avoid a potentially embarrassing Brexit court case.

The government was due in court Friday to defend a lawsuit over its award of back-up ferry contracts to handle freight shipments, just weeks after one of the contracts with a startup company that didn’t own any ships fell through. The suit was brought by Eurotunnel -- which operates the undersea link between the U.K. and mainland Europe.

“The agreement with Eurotunnel secures the Government’s additional freight capacity, helping ensure that the NHS has essential medicines in the event of a no deal Brexit," transport minister Chris Grayling said in a statement.

The contracts cover the importation of medicine and supplies for the National Health Service should Britain leave the EU without a deal. Eurotunnel challenged the government’s “secretive and flawed procurement exercise” for the award of ferry contracts. The 13.8 million-pound contract with U.K.-based Seaborne Freight was scrapped when it became clear the company, which doesn’t own any ships, wouldn’t meet its requirements.

The agreement "will ensure that the Channel Tunnel remains the preferred route for vital goods to travel between the EU and the U.K.," Channel Tunnel Group Ltd. and France-Manche SA, who together form Eurotunnel, said in a statement.

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