Birmingham City Council and Amey reach deal for contractor to exit highways PFI contract

Birmingham City Council and Amey have reached a settlement agreement that will allow the contractor to exit from the £2.7bn Birmingham Highways PFI contract.

In a joint statement the local authority and the company said: “As part of the agreement, Amey will continue to provide services until a replacement contractor is found to deliver those services on an interim basis.

“That interim replacement will be sought as soon as possible, but will be in place no later than 1st April 2020. The full retendering of the project to find a permanent replacement contractor will take place during 2020/21.

“All parties will be working closely in the coming months to ensure the smooth transition of services and staff."

The Financial Times has reported that Amey has agreed to pay £215m to extricate itself from the agreement.

Last autumn the Supreme Court refused to grant Amey permission to appeal in its dispute with the city council over the correct interpretation of the PFI contract.

A three-justice panel comprising Lord Wilson, Lord Carnwath and Lady Black decided that Amey’s application did not raise an arguable point of law.

In August 2016 His Honour Judge Mark Raeside QC had found in favour of the contractor in the Technology and Construction Court, overturning an adjudicator’s decision in favour of the council.

Birmingham appealed and in February the Court of Appeal ruled in its favour in Amey Birmingham Highways Ltd v Birmingham City Council [2018] EWCA Civ 264.

The 25-year long PFI contract, which was entered into in May 2010, was some 5,190 pages long. The definitions alone spanned over 200 pages.

The background to the case was that in February 2014 the council’s PFI contract and performance manager noticed that some parts of the roads and footpaths were being left unrepaired. Amey Birmingham Highways Ltd (ABHL) were leaving defects in selected areas untreated.

A dispute about ABHL’s contractual obligations then arose.