Aims & objectives
The proposed contract between the UK government and Electricité de France, backed by the Chinese government, contains a number of clauses purporting to constrain over a period of 35 years the ability of future UK governments to change policy on nuclear power, including changes in taxation. The practical question these clauses present is whether they are in fact enforceable, either as a matter of contract law or as a matter of business judgment. Behind those immediate concerns, however, lie a number of sharp theoretical questions about the sovereignty of Parliament, the effects of international law and EU law, the relationship between public law and private law, and the relationship between all of those and the democratic legitimacy of governments through time. To what extent is the practice of outsourcing very long-term infrastructure projects to the private sector compatible with democratic government? And if it is not compatible, to what extent can the law restrain governments’ claims to alienate their ability and the ability of their successors to make public policy in what they perceive to be the public interest? From the point of view of the companies concerned, the same questions arise in a different guise: does it make sense to negotiate such clauses? To what extent do they really change the distribution of risks in the deal? Does the involvement of foreign sovereigns make a difference? What can we learn from previous contractual failures (for example the Metronet public-private partnership)?
The project brings together academics with relevant expertise in law, economic, politics and management, and who have published in the relevant areas (contract and commercial law, international and EU law, public, constitutional law and political economy) to provide an assessment both of this particular contract and more generally of the techniques it uses, and to disseminate their work to policy makers including MPs, ministers, civil servants, NGOs, and potential business users of research based in energy and construction companies.
BBC Today Programme interview with David Howarth
(access limited to members of the University of Cambridge)
A workshop to discuss the contract was held in Cambridge on 11 April 2014. Those attending were the project PIs, Simon Deakin and David Howarth; researcher and coordinator, Carolyn Twigg; policy associate, Boni Sones; academic experts in law (David Feldman, Angus Johnston, Oke Odudu and Pippa Rogerson) and economics (Michael Pollitt); and policy makers (Tom Burke, independent consultant, and Tim Yeo MP, chair of the House of Commons Energy Select Committee). The main finding from the workshop was that the contract could well be in breach of EU rules on state aid and free movement of goods, and would have to be renegotiated.
Deakin, S. and Howarth, D. (2014) The Law and Economics of Nuclear Power. Report summarising the conclusions of the Centre for Business Research Workshop on the ‘Hinkley Point’ Nuclear Contract held in Cambridge on 11 April 2014.