Eurotunnel has announced it will trigger arbitration proceedings under the Channel Tunnel concession agreement between the United Kingdom and France, challenging the Valuation Office’s decision to triple its UK business rates rateable value from £40 million to £118 million per year in what the company describes as an unreasonable and unjustifiable assessment.
The dispute will be referred to Brussels-based arbitration bodies under the concession agreement that governs the Channel Tunnel business, with arbitrators appointed by both the British and French states. Eurotunnel, part of Getlink, will simultaneously pursue an appeal through the Valuation Office’s own internal complaints process and, if necessary, through the independent Valuation Tribunal — a parallel track dispute strategy that reflects the severity of the company’s position.
The Valuation Office, a unit of HMRC, assessed Eurotunnel’s UK rateable value at £118 million — up from £40 million — based on calculations that the company says contain fundamental errors. The agency estimated the replacement cost of Eurotunnel’s shuttle trains at £1.4 billion, a figure it placed at roughly a third below its assessment from three years earlier despite the actual cost of replacing those trains having remained flat. The Valuation Office also assessed Eurotunnel’s cost of capital as having fallen by half since 2023, a calculation the company has formally disputed. Despite repeated requests, the company states that Valuation Office representatives visited the site on only one occasion and stayed for half a day before making no changes to their conclusions.
The practical consequences of the assessment are significant. Eurotunnel’s UK business rates have risen 10-fold since 2017 while equivalent French payments have remained broadly flat — despite the company’s French properties being approximately four times the size of its UK sites. Eurotunnel handles around 3,200 trucks per day of freight and has already frozen all fresh UK investment pending resolution of the dispute, including planned spending on a new freight service from Barking to Lille.
HMRC stated that its valuation methods are long established and reflect the specific facts of each property, noting that large infrastructure valuations are highly specialised and that ratepayers have the right to challenge assessments and appeal to the independent Valuation Tribunal.
For disputes lawyers and in-house counsel advising major infrastructure operators, the case raises significant questions about the methodology applied to unique asset classes where no direct market comparator exists. The concession agreement arbitration mechanism — engaging both state parties and Brussels arbitration institutions simultaneously with a domestic Valuation Tribunal appeal — represents one of the most complex multi-jurisdictional dispute structures in recent UK infrastructure regulatory practice. Herbert Smith Freehills, Freshfields and other firms with significant infrastructure disputes practices will be watching the arbitration appointment process closely.