Rail compensation clash

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The UK rail industry is engaged in a three-way tussle over £100m of compensation resulting from the chaos after the Hatfield crash.

Track operator Network Rail is due to compensate train operator GNER for the delays caused by the crash in October 2000, with a payout worth at least £100m.

But the industry regulator, the Strategic Rail Authority, is attempting to claim some of the compensation as its own. It believes a contract it has with GNER entitles it to a chunk of the money.

GNER disagrees and also argues that any money given to the SRA, headed by former Virgin boss Richard Bowker, should come from Network Rail and not be taken out of its own compensation.

The row is a blow to the UK rail industry, whose members pledged to work together after the formation of the not- for-profit Network Rail, successor to the failed Railtrack.

One industry source said a clash of personalities between James Sherwood - the chairman of GNER's owner, Sea Containers - and Network Rail's executives was partly to blame for the wrangle.

However, GNER said it was due to the complexity of the legal arguments. "It is about an interpretation of a track access agreement," explained Chris Garnett, GNER's chief executive. "We have one legal interpretation, [the SRA] has another. Basically it is about Network Rail passing money to us, how much of that money we [receive in] compensation and what the SRA thinks it is entitled to. If the SRA thinks it is entitled to it, then Network Rail has to pay more [compensation]. That's why we are involved in a three-way conversation - the SRA, Network Rail and us sitting round the table ... I think we will resolve it quite soon."

He said the amount of compensation GNER might receive could not be revealed, as the details were still under discussion. The SRA declined to comment but said the situation would not be resolved until the end of this month.

Mr Garnett added: "James Sherwood has spent his life in negotiations and he says it is one of the most complicated things he has ever been involved in. It's a legal minefield."