Britain has paid out £33 million pounds to Eurotunnel, the company that runs the Channel Tunnel between the UK and France.

The settlement, which amounts to just under $47 million, was made after the firm took legal action over the process to award ferry contracts to cope with a no-deal Brexit.

According to Reuters, the company’s court action began in December 2018. At the time, the Department of Transport contacted various ferry companies to ensure an uninterrupted flow of supplies to the state-run National Health Service (NHS) if Britain was to leave the European Union without a deal.

One of the companies that were awarded a contract from the Department of Transport was Seaborne Freight, a move that attracted widespread criticism and controversy. Chris Grayling, the Transport Secretary, awarded the company a contract worth £13.8 million. Soon after the news was announced, BBC researches found that Seaborne Freight had never run a ferry service and did not own any boats.

And while the government said that it awarded the contract “in the full knowledge” that Seaborne was “a new shipping provider,” it canceled the contract after a major Irish shipping company backed out of the deal.

Eurotunnel claimed the process of awarding contracts to suppliers was done in a “secretive way,” and said that it would have been a strong contender for such a contract had the government conducted a fair public tender process.

Sources familiar with the case told BBC that the government was essentially “held over a barrel” by Eurotunnel, and was left with little choice but to settle. British Transport Secretary Chris Grayling said that the agreement with Eurotunnel secures the government’s additional freight capacity in the event of a no-deal Brexit.

“While it is disappointing that Eurotunnel chose to take legal action on contracts in place to ensure the smooth supply of vital medicines, I am pleased that this agreement will ensure the Channel Tunnel is ready for a post-Brexit world,” he said according to Reuters.

Back in January, Eurotunnel said it was taking steps to ensure that a no-deal Brexit would have minimum impact on its transport network. A month later, Getlink, Eurotunnel’s holding company, said it had spent 13 million euros in Brexit preparations in 2018 and so far in 2019.

Per the agreement, the UK government will pay the £33 million settlement in three annual installments starting in April 2019. This will be done regardless of whether there is a Brexit deal or not, Logistics Manager reported. Eurotunnel will, in turn, use the settlement to upgrade its infrastructure to meet the greater complexities at the border following Brexit, including improving traffic flow and counter-terrorism measures, as well as reducing operational dependency on the UK Channel terminal.

(Banner image: Eurotunnel)