Eurotunnel's hopes of a windfall to help pay off its banks were dashed yesterday when the bulk of a pounds 2.6bn claim against the British and French railways was rejected by an arbitration tribunal.
The International Chamber of Commerce, which acted as arbitrator in the case, dismissed a call by Eurotunnel for a complete overhaul of its 1987 contract with SNCF and British Rail.
The company had claimed for the costs of delays in starting services, inadequate infrastructure and poor marketing.
The tribunal found the railways had met their obligations under their contracts and rejected Eurotunnel's demand for a renegotiation that would have led to a 55 per cent increase in annual payments from the rail operators, and damages of Fr3bn (pounds 400m.) An alternative demand for a cash payment of Fr20bn was also dismissed.
However, the tribunal's 220-page report agreed to continued inquiries over the next six months into smaller claims.
These relate to late commencement and build-up of Eurostar passenger services through the tunnel last year, and to the impact in 1994 of sub- standard infrastructure on the existing rail links through Kent to London.
This further investigation does not include delays in starting construction of the Channel Tunnel rail link.
Eurotunnel said it was disappointed by the decision to reject the main claim and it acknowledged that there was no means of appeal against the tribunal findings which were a final verdict.
However, a spokesman said the company considered the decision had no impact on other claims by Eurotunnel against Transmanche Link, the tunnel constructor, which are thought to total around pounds 1bn.
Neither would there be any effect on Eurotunnel's claims against the British and French governments, which include demands for a level playing field with the ferries on duty-free concessions.
The flood of announcements of legal proceedings by Eurotunnel came in the wake of its decision in September to suspend interest payments on pounds 8bn of bank debt for 18 months.
Although the company is not thought to have had strong expectation of winning the full pounds 2.6bn claimed from the railways, it did have high hopes of receiving at least some increase in tunnel fees for the trains, which would have been a big boost to its campaign to win concessions from the banks.
The announcement came after the market had closed, with Eurotunnel shares down only 1p to 95p.
British Rail welcomed what it said was the tribunal's decision to "totally disallow" Eurotunnel's biggest claims, which were based on the contention that the railways should "contribute to the cost of Eurotunnel's own cost overruns and delays".
But the judgment said the railways admitted that they did not have the expected number of trains available at the start of the Eurostar service on 14 September 1994.
The tribunal ordered an inquiry by experts into the amount of any damages.
The experts are also to be asked by the tribunal to examine whether in 1994 British Rail had performed its obligations to maintain adequate infrastructure.
This claim relates to the upgrading of existing lines in Kent.