The UK Home Office has won an appeal against US defence giant Raytheon to award the company £224m after cancelling its £750m e-Borders contract.
The company was engaged by the Home Office in 2007 to design the e-Borders technology system. However, by 2010 the Home Office had terminated the contract on that grounds that key milestones had been missed and parts of the programme were running at least a year late.
Raytheon had claimed that the termination was unlawful and that it was entitled to recover substantial damages for wrongful termination.
A confidential arbitration process was then commenced, which held that the termination was indeed unlawful and directed the Home Office to pay substantial sums to Raytheon.
These comprised £49.98m for damages; £9.6m for disputed contract change notices; £126m for assets acquired by the Home Office during the contract and substantial sums in respect of interest and Raytheon's costs of the arbitration.
According to Pinsent Masons, the law firm representing the Home Office, Mr Justice Akenhead upheld the government's challenge and determined that the award "had been tainted by serious irregularity so as to cause substantial injustice within the meaning of the Arbitration Act; and second that the consequence was that the Award must be set aside in total and reheard by a new Tribunal."
A Home Office spokesperson said: “We are pleased with the judgement handed down today by the court.
“However, the legal process is ongoing and it would be inappropriate for us to comment further at this time.”
A Raytheon spokesperson said: "RSL (Raytheon) is determined to pursue an appeal of this decision, to enforce the Tribunal’s Award and to recover the sums due to RSL for wrongful termination of the e-Borders contract."
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