UK pays Eurotunnel 33 million pounds over 'secretive' no-deal Brexit ferry contracts

LONDON (Reuters) - Britain has paid out 33 million pounds ($43.7 million) to settle a claim with Eurotunnel which runs the Channel Tunnel between Britain and France after the firm took legal action over the process to award ferry contracts to cope with a no-deal Brexit.

Eurotunnel had begun court action after the Department for Transport contracted ferry companies in December to ensure supplies to the state-run National Health Service (NHS) and other critical imports should Britain leave the European Union on March 29 without a deal.

One of the companies awarded a contract was Seaborne Freight, a decision that provoked criticism as the company did not have any ships and the deal was subsequently terminated last month.

In a statement, the British government said it had reached agreement with Eurotunnel, whose holding company is Getlink, to settle the case and ensure the Channel Tunnel would continue to keep passengers and freight moving after Brexit.

"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," British Transport Secretary Chris Grayling said.

"While it is disappointing that Eurotunnel chose to take legal action on contracts in place to ensure the smooth supply of vital medicines, I am pleased that this agreement will ensure the Channel Tunnel is ready for a post-Brexit world."

In 2018, Eurotunnel carried 21 million passengers, 17 million trucks, 2.7 million cars and 26 percent of trade between Britain and the EU, and there are fears that a no deal Brexit could disrupt supplies and choke supply chains.

"Eurotunnel has concluded an out of court agreement ... that will ensure the Channel Tunnel remains the preferred route for vital goods to travel between the EU and the UK," Eurotunnel said in a statement.

"The agreement enables the development of infrastructure, security and border measures that will guarantee the flow of vehicles carrying urgent and vital goods, thereby keeping supply chains essential to both industry and consumers moving.”

Businesses have been warning of long tailbacks for lorries transporting goods between Britain and mainland Europe, and the British government has said most goods from the EU will be allowed into Britain without full customs checks for at least three months if there is no Brexit deal.

In January, Eurotunnel said it was taking steps to ensure that a no-deal Brexit would have minimum impact on its transport network and in February Getlink said it had spent 13 million euros in Brexit preparations in 2018 and so far in 2019.

($1 = 0.7553 pounds)

(Reporting by Michael Holden; Editing by James Davey, William Maclean)