Grant Agreement
FINAL - SIGNED ON 23/09/25
Between:
- The Scottish Ministers, Victoria Quay, Edinburgh, EH6 6QQ acting through their executive agency Transport Scotland, Ferries Directorate, 177 Bothwell St, Glasgow, G2 7ER or such other agency, department or other organisational unit of the Scottish Government as they may from time to time nominate (including all respective assignees and successors) (who and whose successors are referred to as the Scottish Ministers);
and
- CalMac Ferries Limited incorporated in Scotland (Company No SC 302282) and having its registered office at Ferry Terminal, Gourock, PA19 1QP (who and whose permitted assignees are referred to as CFL).
Whereas:
- The existing contract for the provision of ferry services in the Clyde and Hebrides was entered into between the Scottish Ministers and CFL on 22 August 2016 (CHFS2 Contract) and is due to expire on 30 September 2025.
- The Scottish Ministers, acting through their agency Transport Scotland, have been considering options for continued service provision after the expiry of the CHFS2 Contract.
- The Minister for Transport announced to the Scottish Parliament on 16 November 2023 that, following expiry of the CHFS2 Contract, ferry services in and around the Clyde and Hebrides would be provided via a direct award of a contract by the Scottish Ministers to CFL in reliance on the exemption in Regulation 13 of the Public Contracts (Scotland) Regulations 2015.
- This Agreement is entered into pursuant to the announcement referred to in Recital C and in conjunction with the Grant In Aid Letter (as hereinafter defined).
Definitions
In this Agreement, words and expressions will, except where the context otherwise requires, have the following meanings assigned to them:
Affiliate means, in relation to any body corporate, any other entity which directly or indirectly Controls, is Controlled by, or is under direct or indirect common Control with, that body corporate from time to time, save that CFL shall not be construed to be an Affiliate of the Scottish Ministers for the purposes of this Agreement;
Agreement means this grant agreement between the Scottish Ministers and CFL and any agreement which replaces or supersedes it or any part of it, all as amended, supplemented or varied from time to time;
Annual Budget means the annual budget to be provided by or on behalf of CFL pursuant inter alia to the GIA Letter;
Applicable Law means regulation, Legislation, practice or concession or official directive, ruling, request, notice, guideline, statement of policy or practice by any relevant legislative authority, governmental, local, international, national or other competent authority or agency, whether or not having the force of law, in respect of which compliance by ship owners and operators is generally customary;
Asset Register means the assets list to be developed in accordance with Schedule Part 3 Part D (Vessels and Ports -Asset Register) ;
Assets means any assets owned by CFL and/ or the Scottish Ministers and used in connection with the Services;
Associated Company has the meaning attributed in Section 449 of the Corporation Tax Act 2010;
Associated Lifeline Services mean the associated lifeline services referred to in Schedule Part 3 (Vessels and Ports) and forming part of the Unscheduled Ferry Services;
Business Day means any weekday during which the Scottish Clearing Banks (or a majority of them) are open for business;
Cascade and Cascaded means the temporary or permanent replacement on any particular route of the Services of any Vessel by any other Vessel;
CFL’s Representative means the suitably qualified and competent individual nominated by CFL to be the main point of contact with the Scottish Ministers during the Grant Period and in accordance with paragraph 5.6 of Schedule Part 9 (Human Resources and Core Personnel);
Change in Control means a person or persons acting in concert (as that term is defined in The City Code on Take-overs and Mergers from time to time) having control of the relevant entity (not being a person having a shareholding in the relevant entity as at the date hereof) who did not have control of the relevant entity at the date hereof (and control is to be determined in accordance with Sections 450 and 451 of the Corporation Tax Act 2010);
CHFS means the Clyde and Hebrides Ferry Services;
CMAL means Caledonian Maritime Assets Ltd., a Scottish private limited company (SC001854) wholly owned by the Scottish Ministers;
Commencement Date has the meaning given to it in Clause 3.1 (Grant Period);
Consumer Prices Index or CPI means the Consumer Prices Index as published from time to time by the Office of National Statistics or such index as replaces the same;
Control means the possession by person, directly or indirectly, of the power to direct or cause the direction of the management and policies of the other person (whether through the ownership of voting shares, by contract or otherwise) and “Controls” and “Controlled” shall be interpreted accordingly;
Controller has the meaning given in the Data Protection Act 2018;
Core Personnel means those of CFL’s employees as are identified as such in accordance with Schedule Part 9 (Human Resources and Core Personnel);
Cure Notice has the meaning given to it in Clause 28 (Cure);
Cure Plan means the programme of action referred to in the Cure Notice;
Customer Care and Accessibility Process will be construed in accordance with Schedule Part 7 (Customer Service and Accessibility);
Data Protection Law means any applicable law relating to data protection and the processing of personal data from time to time under this Agreement, including:
- the Data Protection Act 2018;
- the UK GDPR; and
- any law, statute, declaration, decree, directive, legislative enactment, order, ordinance, regulation, rule or other binding restriction (as amended, consolidated or re-enacted from time to time) which relates to the protection of individuals with regards to the processing of personal data to which a party is subject;
Dispute means any dispute, difference or question of interpretation arising out of or in connection with this Agreement and the GIA Letter, including any dispute, difference or question of interpretation relating to the Services, or any matter where this Agreement directs the parties to resolve an issue by reference to the Dispute Resolution Procedure;
Dispute Resolution Procedure will be construed in accordance with Clause 26 (Dispute Resolution Procedure);
EIRs means the Environmental Information (Scotland) Regulations 2004;
Eligible Employee means any employee of CFL or any Associated Company or subcontractor who is wholly or mainly assigned to the provision of the Services or any part of the Services;
Employee Liabilities means all claims actions, proceedings, orders, demands, complaints, investigations and any award, compensation, damages, tribunal awards, fine, loss, penalty, disbursement, payment made by way of settlement and costs, expenses and legal costs reasonably incurred in connection with a claim or investigation including in relation to the following:
- redundancy payments including contractual or enhanced redundancy costs, termination costs and notice payments;
- unlawful deduction of wages;
- unfair, wrongful or constructive dismissal compensation;
- compensation claims for sex, race or disability discrimination or discrimination on the grounds of religion, belief or sexual orientation or claims for equal pay;
- compensation for less favourable treatment of part time workers;
- outstanding debts and unlawful deduction of wages including any PAYE and National Insurance Contributions in relation to payments made by the Scottish Ministers or the Incoming Operator to a Transferring Employee which would have been payable by CFL if such payment should have been made prior to the Service Transfer Date;
- claims whether in delict, contract or statute or otherwise;
- any investigation by the Equality and Human Rights Commission or other enforcement, regulatory or supervisory body and of implementing any requirements which may arise from such investigation);
Employment Liabilities means costs, claims liabilities and expenses (including reasonable legal expenses) relating to or arising out of the employment of the Transferring Employees in the period from and including the Commencement Date including, without prejudice to the foregoing generality, negligence claims by any of such employees or any third party, unfair dismissal, redundancy, unlawful discrimination, breach of contract, claims in relation to pension entitlement, unlawful deduction of wages and equal pay;
Employment Regulations means the Transfer of Undertakings (Protection of Employment) Regulations 2006 (SI 2006/246);
Escalation Process means the initial stages of the process for dealing with Disputes without the intervention of third parties as set out in the Dispute Resolution Procedure;
Event of Default means the occurrence of any of the events set out in Clause 27.1 (Events of Default);
Existing Employee means any employee of CFL or any of its Associated Companies engaged in, or wholly or mainly assigned to, the provision of the Services or any part of the Services to whom the Employment Regulations will apply on or immediately prior to the Commencement Date;
Expiry Date means 30 September 2035 or such other date as may be notified by the Scottish Ministers pursuant to Clause 3.3 (Grant Period) and Expiry will be construed accordingly;
Final Staff List has the meaning given to it in paragraph 1.1.6 of Schedule Part 14 (TUPE);
Financial Distress Event means:
- there being a public investigation into improper financial accounting and reporting, suspected fraud or any other impropriety of CFL;
- CFL committing a material breach of covenants to its lenders;
- a subcontractor notifying the Scottish Ministers that CFL has not satisfied any material sums properly due under a specified invoice and which are not subject to a genuine dispute;
- commencement of any litigation against CFL with respect to financial indebtedness or obligation under a contract;
- non-payment by CFL of any financial indebtedness;
- any financial indebtedness of CFL becoming due as a result of an event of default; or
- the cancellation or suspension of any financial indebtedness in respect of CFL,
in each case which the Scottish Ministers believe could impact on the continued performance and delivery of the Services in accordance with this Agreement and/or the GIA Letter;
Financial Year means:
- in respect of the initial Financial Year, the period beginning on the Commencement Date and ending at 23:59 on the next occurrence of 31 March; and
- for each successive Financial Year, a period of twelve (12) months commencing on April 1 and ending on following March 31, provided always that the last Financial Year shall end on the Expiry Date or the Termination Date (as the case may be);
Fleet Bareboat Charterparty means the bareboat charter for the Fleet Vessels entered into between CMAL and CFL on or about the date hereof;
Fleet Vessels means the vessels listed in Table 8 in Part A of Schedule Part 3 (Vessels and Ports);
FOISA means the Freedom of Information (Scotland) Act 2002 (as amended or replaced by any successor legislation) and any subordinate legislation made under that Act from time to time, together with any guidance and/or codes of practice issued by the Scottish Information Commissioner (or any successor or replacement from time to time) in relation to such legislation;
Force Majeure Event means:
- war, civil war (whether declared or undeclared) or armed conflict;
- nuclear explosion, radioactive, biological or chemical contamination, ionising radiation (but not arising from any act of terrorism); or
- substantial damage arising from the effect of sonic booms,
in each case occurring after the Commencement Date;
Framework Agreement means the framework agreement entered into by CFL and David MacBrayne Limited with the Scottish Ministers dated on or about the date hereof;
Grant means the grant in aid paid or to be paid by the Scottish Ministers in connection with the Services pursuant to the Grant In Aid Letter and this Agreement;
Grant In Aid Letter or GIA Letter means the offer for grant in aid issued by the Scottish Ministers and accepted and signed by CFL and dated on or about the date hereof;
Grant Period means the period commencing on the Commencement Date and finishing on the Expiry Date or, in the event of early termination, the Termination Date;
Group will be construed in accordance with the ompanies Act 2006;
Handover Assistance Plan means the timetable and activity plan for handover assistance with respect to the Services (or the relevant elements thereof), which must include details of all forward bookings and reservations made and deposits received;
Harbour means each and any of the harbours listed at Part C of Schedule Part 3 (Vessels and Ports – Ports and Harbours);
Heraldic Device Agreement means the agreement for the licence of the heraldic device entered into by CFL and CMAL on or about the date hereof;
Incoming Operator means any person other than CFL with whom the Scottish Ministers enter into a New Contract;
Insolvency Event means the occurrence of any of the following events (or any event analogous to any of the following in any jurisdiction) in relation to the relevant entity:
- the entity passing a resolution for its winding up or a court of competent jurisdiction making an order for the entity to be wound up or dissolved or the entity being otherwise dissolved or circumstances arise which would enable a court to make such an order;
- the appointment of an administrator of, or the making of an administration order in relation to, the entity or the appointment of a receiver or administrative receiver over the whole or part of the entity’s undertaking, assets, rights or revenue, or the arising of circumstances which would entitle a court or a creditor to appoint such a receiver, manager, administrator or administrative receiver;
- the entity being unable to pay its debts or being deemed unable to pay its debts within the meaning of section 123 of the Insolvency Act 1986; or
- the entity entering into any arrangement, compromise or compromise or composition in satisfaction of its debts with its creditors;
provided always that a resolution by the relevant entity or a court order that such entity be wound up for the purpose of a bona fide reconstruction or amalgamation shall not amount to an Insolvency Event;
Insurances means all policies of insurance taken out from time to time and in accordance with Schedule Part 12 (Insurance) in respect of any Vessel throughout the Grant Period together with all variations, modifications, extensions, or other alterations thereof;
Intellectual Property Rights means:
- copyright, rights related to or affording protection similar to copyright, rights in databases, patents and rights in inventions, semi-conductor topography rights, trade marks, rights in Internet domain names and website addresses and other rights in trade names, designs, know-how, trade secrets and other rights in Confidential Information;
- applications for registration, and the right to apply for registration, for any of the rights listed at (a) that are capable of being registered in any country or jurisdiction; and
- all other rights having equivalent or similar effect in any country or jurisdiction;
Key Performance Indicators or KPIs means all or any of the key performance indicators for the Services as set out in Schedule 11 (Performance Review and Reporting – Initial KPI Framework) and as may be updated from time to time by the Scottish Ministers;
Legislation means any Act of Parliament, including any local, personal or private Act of Parliament, any subordinate legislation (as that expression is defined in section 21(1) of the Interpretation Act 1978) and any exercise of the Royal Prerogative and any bylaws, statutory instruments, orders, notices, directions, codes of practice, consents or permissions properly and lawfully made or given under any of the foregoing (including, for the avoidance of doubt, any legislation enacted by any Scottish Parliament or assembly or similar body and any subordinate or delegated legislation made by the Scottish Ministers or other person deriving authority from such legislation);
Minor Changes means a change which aligns with Service user and community needs and which results in no negative impact and is cost neutral;
MCA means the Maritime and Coastguard Agency and any successor body or bodies;
Month means each calendar month during the Grant Period, provided that where the Commencement Date does not fall on the first day of a calendar month that Month shall be deemed for the purposes of this Agreement to commence on the Commencement Date and where the Termination Date does not fall on the last day of a calendar month that Month shall be deemed for the purposes of this Agreement to end on the Termination Date;
New Contract means any arrangement or contract of whatsoever nature entered into by or on behalf of the Scottish Ministers in relation to the provision of public transport services by sea to all or some of the Clyde and Hebrides commencing subsequent to the expiry or termination of this Agreement or the removal of any part or parts of the Services from the scope of this Agreement pursuant to a Variation;
Operational Management Systems will be construed in accordance with Schedule Part 10 Part A (Operational and Technology Management – Operational Management Systems);
Party means either of the parties to this Agreement;
Pension Schemes means each of the CalMac Pension Fund, the Merchant Navy Officers Pension Fund, the Merchant Navy Officers Pension Plan and the Merchant Navy Ratings Pension Plan;
Performance Regime means the performance regime in respect of the Services, which forms Schedule Part 11 (Performance Review and Reporting);
Personal Data has the meaning given in section 3(2) of the Data Protection Act 2018;
Plans means all plans, strategies and assessments agreed or to be agreed with CFL in respect of the Services and shall include the Marketing Plan including the Supplements, the Health and Safety Plan, the Environmental Management Plan, the Customer Care and Accessibility Process, the Equalities Impact Assessment, and the Human Resources Strategy, all as set out and/or referred to in any Schedule Part, and as appropriate any Cure Plan;
Port has the meaning given to it in Part C of Schedule Part 3 (Vessels and Ports – Ports and Harbours);
Principal Contracts means:
- the Grant In Aid Letter;
- the Ship Charters,
- the Property and Equipment Licence,
- the Trade Mark Licence Agreement, and
- the Heraldic Device Agreement;
Property and Equipment Licence means the licence in respect of various property and equipment entered into between CFL and CMAL on or about the date hereof;
Provisional Staff List means a list prepared and updated by CFL and/or any Associated Company of all employees who are engaged in or wholly or mainly assigned to, the provision of the Services or any part of the Services as at the date of such list;
Public Sector Contribution means any contribution in connection with the Services (except the Grant) either in cash or in kind from any public sector body (including any government body, institution or fund of the European Union, local authority, statutory undertaking or other body wholly or substantially funded by public money);
Published Tariff Scheme means:
- for the 2025/26 Tariff Period, the fares set out on the CFL website; and
- for each subsequent Tariff Period, the fares for the 2025/26 Tariff Period as adjusted pursuant to Schedule Part 2 (Fares),
in each case as published by CFL pursuant to Schedule Part 2 (Fares);
Quarter means each period of three months during the Grant Period where the first Quarter commences on the Commencement Date and ends on the preceding day in the third following Month or, if the third following Month has no numerically preceding day, on the last day of the appropriate Month and where the Termination Date does not fall on the last day of a Quarter that Quarter shall be deemed for the purposes of this Agreement to have ended on the Termination Date;
Regional Transport Partnership means any such partnership created by the Scottish Ministers pursuant to the Transport (Scotland) Act 2005;
Relevant Transfer means a transfer of employment to which Employment Regulations applies or is treated as applying;
Scheduled Ferry Service shall have the meaning given to it in Schedule Part 1 (Services);
Scheduled Maintenance Programme means the programme for scheduled maintenance of the Vessels, set out in Part C of Schedule Part 3 (Vessels and Ports – Ports and Harbours);
Scheduled Unavailability means, in respect of each of the Vessels a period during which the Vessel is scheduled to be unavailable to provide the Services whilst scheduled maintenance is taking place as specified in the Scheduled Maintenance Programme;
Scheme Employer means an employer which is a member of an occupational pension scheme;
Scottish Ministers’ Representative means the individual or individuals nominated from time to time by the Scottish Ministers to be the main point of contact with CFL during the Grant Period;
Services means the Scheduled Ferry Services and the Unscheduled Ferry Services and all other activities of (or required of) CFL and/or any of CFL’s agents, employees, contractors and subcontractors in connection with the performance of this Agreement;
Service Transfer has the meaning given to it in paragraph 2.1 of Schedule Part 14 (TUPE);
Service Transfer Date means the date upon which the Service Transfer takes place;
Ship Charters means:
- the charterparties in respect of the Fleet Vessels entered into between CFL and CMAL pursuant to the Fleet Bareboat Charterparty on or about the date hereof;
- the Fleet Bareboat Charterparty; and
- any other charterparty entered into by CFL in connection with all or some of the Services;
Staffing Information means written information about each CFL (and Associated Company) employee, in such format as the Scottish Minsters may request, which shall include in particular: the percentage of working time spent by each of them in the provision of the Services; job title; remuneration (meaning salary and benefits and any enhanced redundancy terms); age; length of service; notice period; particulars of employment in accordance with section 1 of the Employment Rights Act 1996; the applicability of any collective agreement to such staff; any disciplinary action taken against any of them in the preceding two (2) Financial Years; details of any grievances raised by any of them in the preceding two (2) Financial Years; any Court or employment tribunal proceedings brought by any of them in the preceding two (2) Financial Years; any potential proceedings which CFL or its Associated Companies and their subcontractors reasonably consider may be raised by any of them; and information about any of them who have been absent from work for one (1) Month or more regardless of the reason at the time the staffing information is requested;
Summer Timetable shall be construed in accordance with paragraph 1.6.8 of Schedule Part 1 (Services);
Tariff Period means the period in any calendar year from the earlier of (a) the commencement of the Easter holidays of the majority of the Scottish schools and (b) Good Friday until the commencement of the next Tariff Period;
Tariff Index Linking means in respect of a fare that the fare (excluding any element of the tariff which is set at nominal prices by a third party) is applied from the start of the Tariff Period after being multiplied by the following factor:
CPI Jc
CPI Jp
Where:
CPI Jc is the Consumer Price Index published for the Month of August prior to the Summer Timetable period in which Tariff Index Linking is being applied, and
CPI Jp is the Consumer Price Index published for the Month of August in the previous Financial Year,
and cognate expressions will be construed accordingly
(e.g. for a Tariff Index Linking change to be applied from the start of the Summer Timetable period 2026 then the indices CPI Jc will be that for August 2025 and CPI Jp that for August 2024);
Termination Date means the date of termination of this Agreement prior to the Expiry Date;
Timetable means the relevant timetable for the Services which as at the Commencement Date means the timetable referred to in Clause 7.2 (Timetable) and as the same may be updated from time to time in accordance with Clause 7 (Timetable) and Schedule Part 1 (Services);
Trade Mark Licence Agreement means the agreement for the licencing of various trade marks entered into between CFL and CMAL dated on or about the date hereof;
Transfer Assistance Period means the period from 12 months prior to the Expiry Date, or such earlier date on which CFL becomes aware that the provision of the Services is to cease in advance of the Expiry Date, until the Expiry Date or Termination Date as appropriate;
Transferring Employees means those employees of CFL (or any Associated Company or CFL’s subcontractors) engaged in or wholly or mainly assigned to the provision of the Services (or any part of the Services) to which the Employment Regulations will apply on the Service Transfer Date;
TS Accountable Officer means the individual identified as such in accordance with the Framework Agreement;
TUPE means the Transfer of Undertakings (Protection of Employment) Regulations 2006;
UK GDPR means the terms of the General Data Protection Regulation (EU) 2016/679 as transposed into UK law as a consequence of the United Kingdom leaving the European Union;
Urgent Variation means a variation undertaken in the circumstances referred to in Clause 9.3 (Variations to the Services);
Unscheduled Ferry Services shall have the meaning given to it in Schedule Part 1 (Services);
Variation means any variation to the Services carried out pursuant to Clause 9 (Variations to the Services);
Vessels means the Fleet Vessels and such other vessel employed from time to time by CFL for the provision of all or any part of the Services as has been approved by the Scottish Ministers in accordance with Clause 5 (Services); and
Winter Timetable shall be construed in accordance with paragraph 1.6.8 of Schedule Part 1 (Services).
In this Agreement, except where the context otherwise requires:
all references to Clauses are references to Clauses of this Agreement;
all references to the Schedule is to the Schedule to this Agreement and all references to Parts and paragraphs are references to parts of and paragraphs contained in the Schedule;
words importing the singular include the plural and vice versa;
words indicating one gender include all genders;
any reference to any Applicable Law, enactment, order, regulation or other similar instrument will be construed as a reference to the enactment, order, regulation or instrument as from time to time amended, replaced, consolidated, extended or re-enacted;
all references to agreements, documents, or other instruments include a reference to that agreement, document or instrument as amended or supplemented from time to time or to any replacement or superseding agreement, document or instrument;
the headings to the Clauses are inserted for convenience only and shall not affect the interpretation of this Agreement;
the words “including”, “other”, “in particular”, “for example” and similar words shall not limit the generality of the preceding words and shall be construed as if they were immediately followed by the words “without limitation”;
the terms “Harbour” and “Port” are used interchangeably, any reference to “Harbour” shall be construed as “Port” and any reference to “Port” as “Harbour”;
reference to a “person” includes any individual, company, corporation, firm, partnership, joint venture, consortium, association, foundation, organisation, trust, government, state, statutory body or government department or agency of a state (in each case, whether or not having separate legal personality);
any notice, instruction, notification, direction, request, consent or approval contemplated herein will be made or given in writing;
“written” or “in writing” means hand written, type written, printed or electronically made, and resulting in a permanent record;
anything which may be done by the Scottish Ministers may be done by any person duly authorised by the Scottish Ministers for that purpose; and
if the CPI is rebased at any time in the period between the Commencement Date and the Expiry or termination of this Agreement, it shall nonetheless be determined as if such rebasing had not occurred. In the event of the abolition or a fundamental variation in the basis of the said Index (other than rebasing), the manner in which any sums referred to in this Agreement which are to be varied by reference to CPI are to be varied will be as agreed between the Scottish Ministers and CFL. In the event that such agreement has not been reached by the date on which the Grant next falls to be calculated (or re-calculated) using CPI the manner in which any sums referred to in this Agreement are to be varied must be determined in accordance with Clause 26 (Dispute Resolution Procedure).
CFL Acknowledgement
CFL acknowledges that, in the period immediately prior to the Commencement Date, it has been providing services similar to or the same as the Services and accordingly is fully aware of and sighted on the nature and extent of the risks and obligations assumed by it under this Agreement and the GIA Letter.
Grant Period
This Agreement and the GIA Letter shall take effect and be binding upon each of the parties at 00.00 hours on 1 October 2025 (the Commencement Date).
Unless terminated earlier in accordance with Clause 29 (Termination), this Agreement and the GIA Letter shall continue until the Expiry Date provided always that the Scottish Ministers have the right to extend the Expiry Date from time to time, each time on not less than one (1) year’s written notice to CFL.
The Scottish Ministers intend to carry out a review of the provision of ferry services in and around the Clyde and Hebrides in the period 2031-2034 inter alia in order to consider any extension to the Expiry Date and/or changes to all or any of the Services. CFL shall assist with that review as requested.
General Obligations
CFL shall perform its obligations under this Agreement and the GIA Letter in accordance with their terms and with that degree of skill, diligence, prudence and foresight which would be exercised by a skilled and experienced operator of ferry services.
Any obligation on the part of CFL to use all reasonable endeavours shall extend to consequent obligations to adequately plan and resource its activities, and to implement those plans and resources, with all due efficiency and economy.
CFL shall co-operate with the Scottish Ministers and act reasonably and in good faith in and about the performance of its obligations and the exercise of its rights pursuant to this Agreement in the interests of the passenger and the sustainable and economic and social development of Scotland through the provision of ferry services. In this regard, “sustainable” shall include the meaning of that term when applied in environmental, social and economic contexts.
With the exception of agreements entered into with the Scottish Ministers, CFL shall ensure that every contract or other arrangement or transaction to which it may become party in connection with this Agreement and the GIA Letter with any person is on bona fide arm’s length terms.
CFL shall perform all of its obligations under the Principal Contracts and shall not exercise any right to terminate the same without giving Scottish Ministers 30 days’ advance notice.
Services
CFL shall employ the Vessels to provide the Services in accordance with the Timetable from the Commencement Date and throughout the Grant Period.
CFL shall provide the Services in accordance with:
Applicable Law including all Applicable Law relating to the Vessels, their registration, operation and maintenance, all vessel and crew safety requirements and all relevant health and safety requirements;
and, save where prevented from doing so by CMAL’s non-compliance with its obligations under the Property and Equipment Licence, the Fleet Bareboat Charterparty and the Ship Charters,
the provisions of Parts 1 to 14 of the Schedule to this Agreement;
the Performance Regime;
the KPIs; and
the Plans.
CFL may not use the Vessels for any purpose other than the Services without the prior written consent of the Scottish Ministers.
In providing the Services CFL may Cascade such of the Vessels as it considers appropriate from time to time providing that such Cascade does not, without the consent of the Scottish Ministers, materially or permanently change the Scheduled Ferry Services. CFL shall inform the Scottish Ministers as soon as practicable on each occasion that a Vessel is Cascaded, including the reason for and expected duration of the Cascade.
If at any time any Vessel is unable to undertake or complete a voyage for any reason and the Scheduled Ferry Services cannot be provided by Cascading, CFL shall, following discussion with Scottish Ministers, wherever possible provide the Services by employing a vessel or vessels other than the Vessels in accordance with Schedule Part 3 (Vessels and Ports). As soon as the need to employ a replacement or substitute vessel arises, CFL shall provide the Scottish Ministers with all of the following documents in relation to that substitute vessel, all in form and substance satisfactory to the Scottish Ministers:
a charterparty or other evidence of CFL’s entitlement to the employment of such vessel;
evidence of insurance at least equivalent to that required for the Vessel which is being replaced;
all certificates required by the MCA and other relevant regulatory bodies; and
such other information as the Scottish Ministers may reasonably require to satisfy themselves that the proposed vessel is capable of providing the Services,
provided always that in the event of an emergency or if the need to employ a replacement or substitute Vessel (other than a Cascaded Vessel) is urgent then CFL shall provide Scottish Ministers with the foregoing documents as soon as reasonably practicable.
CFL shall comply with and implement each of the Plans in accordance with the relevant Schedule Parts and provide the Services in accordance therewith.
CFL shall:
comply with Schedule Part 2 (Fares); and
publish the fares for the Services,
and CFL shall not, without the consent of the Scottish Ministers, charge rates in excess of the Published Tariff Scheme at any time during the Grant Period.
The Scottish Ministers may at any time contact any of the Ports to obtain information about or relating to the Services and CFL shall sign such documents and carry out such acts as required to facilitate the provision of such information by the relevant Harbour and will use its reasonable endeavours to procure that any relevant Harbour complies with such a request.
During periods of Scheduled Unavailability CFL shall:
use all reasonable endeavours to minimise the disruption to the Services; and
provide reasonable notice and reasonable assistance to users of the Services to minimise the disruption suffered by them.
During periods of Scheduled Unavailability, CFL shall comply with the Scheduled Maintenance Programme and the Performance Regime.
Throughout the Grant Period CFL shall regularly review the Services via the continuous improvement process set out in Schedule Part 10 Part C (Innovation and Continuous Improvement).
As and when requested by the Scottish Ministers and as otherwise required in connection with CHFS3, CFL shall take part in local community liaison throughout the Grant Period. The Scottish Ministers are entitled to be represented at such meetings and their representatives are entitled to speak at such meetings.
CFL shall liaise with the Scottish Ministers in good faith throughout the Grant Period, inter alia in accordance with Schedule Part 11 (Performance Review and Reporting), in relation to all matters relevant to both the Services and this Agreement, in order to facilitate the continued provision of the Services.
CFL shall following a request from Scottish Ministers provide expertise and assistance in relation to the development and evaluation of proposals and/or feasibility assessments in connection with the Services which may include, management, operational or financial advice. If CFL is unable to provide such advice from its own resources and is required to engage third party specialist advisors to provide such advice CFL shall notify the Scottish Ministers prior to engaging such third party advisors and shall provide the Scottish Ministers with an estimate of the cost of engaging such third party advisors. Following agreement between the Parties as to such costs Scottish Ministers shall reimburse to CFL the reasonably and properly incurred cost of such third party advisors.
Information Relating to the Services
CFL shall throughout the Agreement collect and preserve all information regarding the Services including (without limitation) the Vessels and their operation, employees, passenger numbers and other matters (including corresponding information as regards key subcontractors).
CFL shall supply the Scottish Ministers with such of the information referred to in Clause 6.1 which the Scottish Ministers may require (of which the Scottish Ministers will be the sole judges) regarding the business and affairs of CFL (and of any Associated Company of CFL employed in connection with the provision of the Services), the provision of the Services, and any other matters connected with or affecting the foregoing or the performance by CFL of its obligations under this Agreement or the performance by the relevant parties of their obligations under the agreements set out in Schedule Parts 1, 3 and 7 at any time during the Grant Period.
Any request made under Clause 6.2 must be complied with within any such timescale as the Scottish Ministers may specify in any such request, and may not only require the provision of data or information which is held by CFL in the format requested, but also the collection and collation of that information or data where considered necessary by the Scottish Ministers.
Timetable
CFL shall publish timetables in respect of each Financial Year in accordance with Schedule 1 (Services).
The Winter Timetable for the period from the Commencement Date until the commencement of the Summer Timetable of the 2025/2026 Financial Year shall be the Timetable set out at https://www.calmac.co.uk/en-gb/timetables/#/.
CFL shall provide the Scheduled Ferry Services in accordance with the Timetable except:
during any period of Scheduled Unavailability;
where it is necessary to adjust the times as a direct and unavoidable consequence of weather or tidal conditions; or
where additional services are required to meet demand for circumstances and special events (as contemplated in Schedule Part 1 (Services)) by instruction of the Scottish Ministers.
CFL may make Minor Changes without prior consent of the Scottish Ministers. CFL may, with the prior consent of the Scottish Ministers, make changes to the departure and arrival times of any sailing set out in the Timetable.
On making changes pursuant to this Clause 7, CFL shall publish a revised Timetable at least 20 Business Days prior to the revised Timetable coming into effect and shall take all necessary steps to publicise such changes to the public and the travel trade.
CFL may provide additional sailings in accordance with the Additional Sailings Protocol set out in Schedule Part 11 (Performance Review and Reporting) Annex B.
CFL shall provide the Unscheduled Ferry Services to meet seasonal or other demand in accordance with Schedule Part 1 (Services).
Assets
CFL shall;
maintain the Asset Register throughout the Grant Period, ensuring that it details all Assets acquired or improved by CFL during the Grant Period together with their acquisition and/ or improvement costs, current condition and current value;
update the Asset Register on an ongoing basis; and
make the Asset Register available to Scottish Ministers at all times.
CFL shall use the Assets exclusively used for the provision of the Services and shall ensure that all Assets are clearly marked to identify that they are the property of CFL.
CFL shall maintain, repair or replace all Assets unless otherwise directed by the Scottish Ministers, and unless so directed the Assets must be presented in good working order, such that each Asset is fully fit to perform the functions for which the Asset has been designed and having a residual life expectancy of the greater of one year or that pertaining when the Asset was taken over (subject always to the effects of reasonable wear and tear).
CFL shall ensure that on expiry of the Grant Period the Assets transfer at no charge to the Incoming Operator or to the Scottish Ministers in the event that there is no Incoming Operator.
Variations To The Services
The Scottish Ministers may from time to time issue a notice (a Variation Notice) requesting a variation to the Services, which may include the termination of any part or parts of the Services. As soon as practicable and in any event within 40 Business Days after having received a Variation Notice CFL shall deliver to the Scottish Ministers a written evaluation of the proposed variation setting out such information as the Scottish Ministers may require (or, in the absence of any relevant direction, such information as CFL considers reasonable in the circumstances.
Where the Scottish Ministers wish (at their sole discretion) to proceed with the relevant variation they shall issue a Variation Form which CFL shall sign and return to the Scottish Ministers and CFL shall thereafter implement the variation. The financial consequences of the variation shall be reflected through the Annual Budget process.
The Parties acknowledge that there may be circumstances where a variation to the Services requires to be implemented urgently to protect the safety of passengers, crew, employees, livestock, cargo, the Vessels and/or the ports or to ensure the continued provision of the Services (an Urgent Variation). On the verbal instructions of the Scottish Ministers’ Representative an Urgent Variation shall be implemented by CFL without delay, shall be confirmed in writing by Scottish Ministers within 7 days and shall be ratified via the Annual Budget process in due course.
Amendments to this Agreement or variations of its terms will only be effective where constituted in writing and signed by or on behalf of each of the Parties.
Handover Assistance
CFL shall provide the Scottish Ministers and/or any potential Incoming Operator access on reasonable notice to the Vessels and any other facilities employed in the provision of the Services (or the relevant elements thereof) for the purposes of inspection and carrying out due diligence (including the carrying out by any potential Incoming Operator of passenger surveys) provided that such rights of access and inspection do not interfere with the performance by CFL of its obligations under this Agreement, the GIA Letter or any of the Principal Contracts.
Where the Scottish Ministers have appointed an Incoming Operator, CFL shall cooperate with the Scottish Ministers and the Incoming Operator to ensure a smooth handover and uninterrupted provision of the Services (or the relevant elements thereof). CFL shall on request transfer any rights that it may at the relevant time have in relation to the trade mark or trade name under which the Services (or the relevant elements thereof) are operated or marketed to the relevant Incoming Operator.
CFL will, within three months after a request from the Scottish Ministers, deliver to Scottish Ministers a Handover Assistance Plan which:
sets out CFL’s proposed methodology during the Transfer Assistance Period for achieving an orderly transition of Services (or the relevant elements thereof) from CFL to the Scottish Ministers and/or their proposed Incoming Operator on the Expiry Date or on the termination of this Agreement or on the removal of any part or parts of the Services from the scope of this Agreement pursuant to a Variation; and
complies with the requirements set out in Clause 10.4 below.
The Handover Assistance Plan will contain, as a minimum:
separate mechanisms for dealing with expiry, termination and/or relevant Variation, the provisions relating to early termination and/or relevant Variation being prepared on the assumption that CFL may be unable to provide the full level of assistance which is required by the provisions relating to expiry, and in the case of early termination and/or relevant Variation makes provision for the supply by CFL of all such reasonable assistance as the Scottish Ministers shall require to enable the Scottish Ministers or its subcontractors to provide the Services (or the relevant elements thereof);
the management structure to be employed during both transfer and cessation of the Services (or the relevant elements thereof), on expiry, termination and/or relevant Variation; and
a detailed description of both the transfer and cessation processes, including a timetable, applicable in the case of expiry, termination and/or relevant Variation as well as procedures to deal with requests made by the Scottish Ministers and/or an Incoming Operator for Staffing Information pursuant to Schedule Part 9 (Human Resources and Core Personnel).
CFL shall implement the Handover Assistance Plan in accordance with its terms to the satisfaction of Scottish Ministers.
Grant
Grant shall be payable to CFL in accordance with and pursuant to the GIA Letter.
The Grant must be used solely to meet the costs and expenses of provision of the Services in accordance with this Agreement and the GIA Letter and for no other purpose whatsoever.
It is hereby specifically declared that the Grant is a subsidy only and not a payment for services provided or to be provided to the Scottish Ministers. Accordingly, any payment made by the Scottish Ministers to CFL under this Agreement and/or the GIA Letter does not represent consideration for a taxable supply for VAT purposes and so VAT will not be payable in respect of any such payment.
If it is determined by HM Revenue and Customs that CFL is liable to account for VAT in respect of any payment made by the Scottish Ministers to CFL, the Scottish Ministers must pay VAT in addition to such payment within 14 days after delivery of:
written evidence of such determination;
a valid VAT invoice; and
an undertaking from CFL:
- promptly to refund to the Scottish Ministers such VAT if it is determined not to be chargeable; and
- to make (at the expense of the Scottish Ministers) such representations and appeals as the Scottish Ministers may reasonably request in respect of such determination.
Public Sector Contributions
CFL shall notify the Scottish Ministers immediately if:
CFL makes an application for any Public Sector Contribution in connection with the Services;
CFL receives notification that it will receive, or will receive an offer of, any Public Sector Contribution in connection with the Services; or
CFL receives any Public Sector Contribution in connection with the Services,
and any such notification must give full details of the Public Sector Contribution applied for, offered or received as the case may be.
Where any Public Sector Contribution is received by CFL, the Scottish Ministers may withhold payment of the Grant or any part of it.
Subsidy Determinations: Recovery Of Grant
The Scottish Ministers may withhold payment of the Grant or any part of it or reclaim the Grant (or any part of it) and CFL shall repay any such sum within 20 Business Days should the Scottish Ministers at any point believe that not withholding or reclaiming the Grant or any part of it would put Scottish Ministers in breach of the requirements of the Subsidy Control Act 2022.
In the event of any determination or order by any Court of competent jurisdiction which requires repayment of the Grant or any part of it then the provisions of Clause 29 (Termination) will apply.
In the event of any interim determination or order by any Court of competent jurisdiction which requires the Scottish Ministers to do so, the Scottish Ministers may withhold payment of the Grant or any part of it or take any other action required under said interim determination or order until the Scottish Ministers are no longer required to do so by the terms of the relevant interim determination or order.
TUPE, HR and Core Personnel
The Parties acknowledge and agree that:
the commencement of this Agreement does not constitute a Relevant Transfer for the purposes of the Employment Regulations; but
the expiry of or termination of all or part of this Agreement and the GIA Letter may constitute a Relevant Transfer for the purposes of the Employment Regulations and accordingly the provisions of Schedule Part 14 (TUPE) will apply.
CFL shall:
comply with Schedule Part 9 (Human Resources and Core Personnel) and Schedule Part 14 (TUPE);
implement the HR Strategy to the satisfaction of the Scottish Ministers; and
review the strategy from time to time or when so required by any change of circumstance or when so requested by the Scottish Ministers.
CFL acknowledges that the Core Personnel are essential to the proper provision of the Services and accordingly CFL shall:
obtain the prior written consent of the Scottish Ministers before removing or replacing any member of the Core Personnel; and
ensure that any replacement is as or more qualified and experienced as the previous incumbent of such role and is fully competent to carry out the tasks assigned to the role of the member of Core Personnel whom he or she has replaced.
Pensions
CFL shall, and shall procure that any Associated Company and subcontractor which employs personnel within the UK who are engaged in the provision of all or any of the Services (Relevant Sub-Contractor) shall:
in respect of each of the Pension Schemes, remain a Scheme Employer (to the extent that they are currently a Scheme Employer) in respect of each of the Pension Schemes with effect from the Commencement Date, and
ensure that for the duration of the Grant Period:
- each Existing Employee who is an active member of (or was entitled to become a member of) a Pension Scheme at the Commencement Date will be entitled, during the whole period that such Existing Employee is involved in the provision of the Services, to remain (or become) an active member of that Pension Scheme on substantially the same terms as at the Commencement Date; and
- all Eligible Employees are offered membership of the CalMac Pension Fund, subject to the trustees of the CalMac Pension Fund consenting to the admission of new members to the CalMac Pension Fund who are employed by CFL wholly or mainly in the provision of the Services.
The provisions of Clause 15.1 shall be directly enforceable by an affected employee against CFL or any Relevant Sub-Contractor and the Parties agree that, notwithstanding the provisions of Clause 38 (Third Party Rights), such employees shall have a third party right to the extent necessary to ensure that any affected employee shall have the right to enforce any obligation owed to such employee by CFL or any Relevant Sub-Contractor under Clause 15.1.
Data Protection
CFL will be a Controller in respect of any Personal Data it obtains through the operation of this Agreement and the GIA Letter.
CFL shall comply at all times with all Data Protection Law.
Freedom Of Information
Each Party acknowledges that the other Party is subject to the requirements of the FOISA and the EIRs and may require to disclose data or information in relation to this Agreement pursuant to the provisions of the FOISA and the EIRs.
Where a Party receives a written Request for Information (as defined in the FOISA) which is covered by the FOISA or the EIRs and which relates to any Confidential Information of another Party (the Requested Information) each Party shall comply with the procedure set out in this Clause 17.2:
the Party who receives the request (Request Receiver) shall before making any disclosure of the Requested Information and as soon as reasonably practicable after receiving the Request for Information notify the other Party (Other Parties) of the receipt of such request for information and of the nature and extent of the information covered by the Request for Information;
following receipt of notification under Clause 17.2.1, the other Party may make representations in writing to the Request Receiver as to whether and on what basis the Requested Information is covered by any exemption in the FOISA or the EIRs and should not therefore be disclosed, including where relevant any representations as to the balance of the public interests in disclosure and nondisclosure;
the Request Receiver shall reasonably consider any representations made by the other Party under Clause 17.2.2 before reaching a decision on whether it must and shall disclose the Requested Information. However, each Party acknowledges that in all cases it is for the Request Receiver (having full regard to any guidance or codes of practice issued by the Scottish Information Commissioner or the Scottish Government) to determine whether it is obliged to disclose the Requested Information under the FOISA or the EIRs including where the public interest lies in relation to disclosure; notwithstanding Clause 17.2.1 the Request Receiver shall not notify the other Party under Clause 17.2.1 where the Request Receiver has already decided that it does not intend to disclose the Requested Information because the FOISA or the EIRs do not apply to the Request for Information or an exemption under the FOISA or the EIRs can be applied, provided that should the Receiving Party determine at a later date that the FOISA or the EIRs do apply to the Requested Information, the process set out in this Clause 17.2 shall apply;
if the Request Receiver takes a decision to disclose the Requested Information, it shall notify the other Party of this decision not less than 5 Business Days in advance of the disclosure being made; and
for the avoidance of doubt, references to the Requested Information under this Clause 17.2 shall include both queries as to whether Confidential Information exists and requests for the disclosure of Confidential Information.
Without prejudice to the specific provisions above, each Party shall co-operate and aid the other so as to enable them to meet their obligations under the FOISA or the EIRs or any successor legislation to either of the foregoing. Where a Party receives a Request for Information then such co-operation shall include without limitation the provision of the Requested Information to the Request Receiver within a reasonable timescale to enable the Request Receiver to comply with the Request for Information within the timescales required by the FOISA or the EIRs.
Confidentiality
CFL shall keep secret and not disclose (and procure that CFL’s employees keep secret and do not disclose) any information of a confidential nature obtained by CFL by reason of this Agreement except information which is in the public domain otherwise than by reason of a breach of this provision.
The Scottish Ministers may publish or disclose this Agreement or any part of it, any information concerning the Agreement or matters arising out of or in connection with it, the performance of CFL under the Agreement and any other information as it may deem appropriate from time to time. The Scottish Ministers must use their best endeavours to notify CFL prior to publishing or disclosing any such information directly relating to CFL, and must take account of any representations which CFL may make in connection herewith.
Notwithstanding any other provision of this Agreement, either Party may disclose any information acquired by it under or pursuant to this Agreement and/or the GIA Letter without the prior written consent of the other Party if such disclosure is made in good faith:
as required by law or judicial order to be disclosed;
to its professional advisers provided always that the recipient of the information is subject to the same obligation of confidentiality as that contained herein;
in the case of CFL, to any Affiliate to the extent necessary to enable CFL to perform its obligations under this Agreement and/or the GIA Letter; and/or
to any third party consultants or advisers engaged by or on behalf of such Party and acting in that capacity, upon obtaining from such consultants or advisers an undertaking of confidentiality.
CFL shall not, and must ensure and procure that its agents, employees, representatives and subcontractors do not, except with the prior approval of the Scottish Ministers (which may be granted subject to such conditions as the Scottish Ministers see fit):
communicate with representatives of the press, television, radio or other communications media on any matter concerning the Agreement; or
disclose to third parties any information obtained by it from the Scottish Ministers under or in connection with the Agreement.
The provisions of this Clause 18 will not apply to any information which may reasonably be required to be disclosed to any party by the Scottish Ministers for the purposes of seeking an Incoming Operator, including any information requested by the Scottish Ministers in accordance with Clause 5.13.
The obligations imposed by this Clause 18 will continue to apply after the expiry or termination of this Agreement.
Intellectual Property Rights
CFL agrees that the ownership of and the right to exploit all forms and aspects of Intellectual Property Rights in any Assets, or created by CFL in connection with the provision of the Services (including without limitation any IT systems, booking tools or website), shall belong to the Scottish Ministers and accordingly CFL hereby assigns to the Scottish Ministers all property rights which it may have in such assets, including Intellectual Property Rights and that for the full term of such Intellectual Property Rights and all renewals and extensions thereof and waives such rights (including but not limited to moral rights) as are not capable of assignation.
CFL shall not acquire any right, title or interest in or to the Intellectual Property Rights of the Scottish Ministers or their licensors, including, without limitation any Intellectual Property Rights in IT systems, booking tools and websites.
The Scottish Ministers hereby grant to CFL a royalty-free, non-exclusive, non-transferable licence during the Grant Period to use the Assets (including where applicable any IT systems, the booking tools and websites). The licence is granted solely to the extent necessary for performing the Services in accordance with this Agreement. CFL shall not use the licensed Assets for any other purpose or for the benefit of any person other than the Scottish Ministers.
CFL shall ensure that nothing contained in any materials produced or submitted to the Scottish Ministers by CFL or anyone acting on its behalf nor the reproduction of such materials, constitutes an infringement of any third party copyright or intellectual property right and CFL hereby indemnifies the Scottish Ministers against all actions, proceedings, claims and demands resulting from any such infringement.
Compliance With The Law
In providing the Services, and otherwise when performing its obligations pursuant to this Agreement and the Grant In Aid Letter, CFL shall comply in all respects with Applicable Law.
CFL shall not commit or attempt to commit any offence in its activities relating to this Agreement, the Grant In Aid Letter and/or the Services:
under the Bribery Act 2010; or
of fraud, uttering, or embezzlement at common law,
and a breach of this Clause 20.2 will be treated as a material breach for the purposes of Clause 27.1 (Events of Default).
CFL shall not unlawfully discriminate against any person in breach of the Equality Act 2010 in its activities relating to the Agreement, the Grant In Aid Letter and/or the Services.
Bookings And Ticketing
CFL shall ensure that all bookings and reservations are dealt with on a first come first served basis unless CFL is otherwise instructed by Scottish Ministers.
CFL shall continue to sell tickets up to the earlier of the Expiry Date or the Termination Date (or, in the case of the removal of any part or parts of the Services from the scope of this Agreement pursuant to a Variation, the date on which the variation takes effect) and shall in pursuance of the Handover Assistance Plan pay to the Incoming Operator the value of tickets sold for the provision of ferry services (or the relevant elements thereof) following the Expiry Date or Termination Date or the coming into effect of the relevant Variation (as the case may be).
Operational Undertakings
CFL undertakes at all times during the Grant Period:
immediately to notify the Scottish Ministers of the commencement of any Insolvency Event affecting CFL;
to send to the Scottish Ministers, at the same time as they are dispatched, copies of all communications that are dispatched to CFL’s shareholders;
to provide to the Scottish Ministers details of any legal or regulatory action involving CFL or the Vessels as soon as such action is instituted.
Payment and Recovery Of Sums Due
Subject to Clause 13 (Subsidy Determinations: Recovery of Grant) and Schedule Part 1 Part 2 (Payment of the Grant) of the Grant In Aid Letter, each Party must pay all sums due to the other within 20 Business Days of receipt of a valid invoice and such supporting documentation as may be reasonably required by the other Party.
Wherever under the Agreement and/or the GIA Letter any sum of money is recoverable from or payable by CFL, the Scottish Ministers may deduct that sum from any sum due to CFL whether under the Agreement and the GIA Letter or otherwise.
CFL shall make any payments due to the Scottish Ministers without any deduction whether by way of set-off, counterclaim, discount, abatement or otherwise unless CFL has a valid court order requiring an amount equal to such deduction to be paid by the Scottish Ministers to CFL.
If the payment or deduction of any amount referred to in Clause 23.3 above is disputed then any undisputed element of that amount must be paid and the disputed element must be dealt with in accordance with Clause 26 (Dispute Resolution Procedure) as appropriate in the circumstances.
Audit, Expenditure And Accountability
CFL shall ensure and procure that adequate internal expenditure controls are in place and that all resources are used economically, effectively and efficiently so as to comply with the terms of this Agreement and the GIA Letter.
CFL shall ensure that there is no cross-subsidisation between CFL and any other Associated Company and that all transactions with any Associated Company are conducted on an arm’s length basis and are so identified in all records and books of accounts.
CFL must have clear, separate and transparent accounting systems for the financing and operating of the Services (in accordance with the Financial Transparency (EC Directive) Regulations 2009/2331) as amended by the State Aid (Revocations and Amendments) (EU Exit) Regulations 2020/1470 to ensure that the Grant is only used for the Services and not for any other activity of CFL and shall deal with the Scottish Ministers on an open book basis.
CFL shall, and shall ensure that their Associated Companies shall, keep and maintain throughout the Grant Period and thereafter, until 10 years after the final payment by the Scottish Ministers to CFL pursuant to the Grant In Aid Letter and/or this Agreement, adequate and proper records of and books of accounts recording the financial affairs of CFL and their Associated Companies, the provision of the Services, and all receipts and expenditures of monies advanced to CFL by the Scottish Ministers by way of the Grant.
CFL shall, allow the Scottish Ministers and persons appointed by them access to the premises, the Vessels and the employees of CFL and all records and books of account of CFL and must procure that any Associated Company with which CFL has contracted for purposes connected with this Agreement or the Services must allow similar access.
CFL shall provide to the Scottish Ministers (or any other person appointed by the Scottish Ministers) such information as they may reasonably require from time to time, including access to and/or copies of all records maintained by CFL and their Associated Companies concerning any of the Services and the Scottish Ministers must reimburse to CFL its reasonable costs incurred in complying with this Clause24.6.
CFL shall throughout the duration of the Grant Period and for a period of 5 years after the final payment has been made to CFL by the Scottish Ministers pursuant to this Agreement provide the Auditor General for Scotland access at all reasonable times and on reasonable notice to its books and records for the purposes of carrying out any audit or examination which he is empowered to carry out pursuant to the Public Finance and Accountability (Scotland) Act 2000 or any other Legislation.
Assignation And Sub-Contracting
CFL shall not assign any portion of the Agreement or sub-contract any material portion of the Agreement without the prior written consent of the Scottish Ministers. Sub-contracting any part of the Agreement will not relieve CFL of any obligation or duty (or part thereof) attributable to CFL under the Agreement.
CFL shall provide the Scottish Ministers with a copy of the deed or document formally recording any assignation of this Agreement.
Where the Scottish Ministers have consented to the placing of sub-contracts, copies of each sub-contract shall be sent by CFL to the Scottish Ministers immediately after they are issued.
Where CFL enters a sub-contract for the purpose of performing any part of this Agreement, CFL shall ensure a term is included in such sub-contract which:
requires payment to be made to the subcontractor within a specified period not exceeding 30 days from receipt of a valid invoice from subcontractor and provides that, where the Scottish Ministers have made payment to CFL in respect of the Services and the contractor’s invoice relates to such Services then, to that extent, the invoice must be treated as valid and, provided CFL is not exercising a right of retention or set-off in respect of a breach of contract by subcontractor, or in respect of a sum otherwise due by the subcontractor to CFL, payment must be made to subcontractor without deduction;
notifies subcontractor that the sub-contract forms part of a larger contract between CFL and the Scottish Ministers and that should subcontractor have any difficulty in securing the timely payment of an invoice, that matter may be referred by the subcontractor to the Scottish Ministers; and
is in the same terms as that set out in this Clause 25.4 (including this Clause 25.4.3) subject only to modification to refer to the correct designation of the equivalent party as the Scottish Ministers and subcontractor, as the case may be.
CFL shall keep and maintain, in such format as is required by Scottish Ministers, a register detailing all subcontracts and other agreements for supplies and services on which the provision of all or some of the Services depend. The register shall include the title of the subcontract, the contracting parties, the nature of the supplies or services, the dates of commencement and expiry and the value of the contract.
CFL shall (unless otherwise agreed by the Scottish Ministers) ensure that all sub-contracts and other agreements with third parties (other than CMAL) which are required for the performance of the Services shall be assignable and/or capable of novation to the Scottish Ministers and/or their nominee in the event of CFL ceasing to provide the Services, such right of assignation or novation to be on request and without restriction (including any need to obtain any consent or approval) or requirement for payment.
Dispute Resolution Procedure
Any disputes between SM and CFL will be discussed in the first instance by the Scottish Minister’s Representative and the Chief Executive of CFL and if a resolution cannot be agreed, the dispute will be escalated to the TS Accountable Officer and the CFL board of directors for discussion and resolution. Ultimately the TS Accountable Officer may determine the course of action to be taken (except to the extent that CFL can adequately evidence that such course of action would lead to safety concerns or constitute a breach of applicable law) and CFL will implement that course of action, and the TS Accountable Officer may instruct CFL directly should this be required (and CFL shall comply with such instruction(s)).
Events Of Default
The occurrence of any of the following circumstances or events constitute an Event of Default:
the taking place of any one or more of the events set out in paragraph 10.1.1 to 10.1.9 (inclusive) of the Grant In Aid Letter;
CFL knowingly and deliberately giving any fraudulent written information to the Scottish Ministers or giving any other written information to the Scottish Ministers which read as a whole is incorrect or misleading, in a material respect;
an Insolvency Event affecting CFL;
a Financial Distress Event affecting CFL;
CFL ceasing or threatening to cease to carry on business or to provide the Services or any part of them;
the occurrence of any event which allows or which with the lapse of time would allow any party to any of the Principal Contracts to terminate a Principal Contract before its expiry date;
the arrest or detention of any Vessel unless the Vessel in question is free from arrest or detention within 7 days;
failure to meet any of the KPIs and/or any material objectives contained in the benefits realisation plan for a rolling period in excess of 3 months;
any authorisation, approval, consent, licence, exemption, filing, registration or notarisation or other requirement necessary to enable CFL to comply with any of its obligations hereunder which are material (as determined by the Scottish Ministers) and which CFL is responsible for procuring and/or maintaining, being modified, revoked or withheld or ceasing to remain in full force and effect and not being reinstated in full force and effect or replaced by an equivalent, unless lack of the same does not affect the provision of the Services and said reinstatement or replacement is achieved with 7 Business Days; and
there is any Change in Control.
Cure
The Scottish Ministers may at any time issue a notice to CFL (a Cure Notice) if:
CFL persistently fails to meet any of the KPIs;
CFL fails to comply with any of its obligations under this Agreement; or
there is an Event of Default which is capable of remedy,
which Cure Notice shall require CFL to submit within 14 days a Cure Plan which will, if performed, cure or remedy the matters referred to in the Cure Notice to the satisfaction of the Scottish Ministers within a period acceptable to the Scottish Ministers.
The Cure Notice shall contain sufficient detail so that it is clear what CFL is required to remedy. CFL is required, within 14 days of receipt of a Cure Notice (or such other period agreed by the Parties) even if CFL disputes that it is responsible for the matters complained of, to submit a draft Cure Plan which will, if performed, cure or remedy the matters referred to in the notice to the satisfaction of the Scottish Ministers within a period acceptable to the Scottish Ministers.
If the Scottish Ministers consider that the draft Cure Plan is insufficiently detailed to be properly evaluated, or will take too long to complete or will not remedy the matters complained of then they may either agree a further time period for the development and agreement of the Cure Plan or escalate any issues with the draft Cure Plan using the Escalation Process. If despite the foregoing measures a Cure Plan cannot be agreed then the Scottish Ministers may elect to end the Cure Plan process.
When the Cure Plan has been approved by the Scottish Ministers CFL will implement the Cure Plan in accordance with its terms to the satisfaction of the Scottish Ministers.
If at any time the Scottish Ministers are not satisfied with the progress being achieved by CFL in relation to the Cure Plan, then the Scottish Ministers may by notice to CFL declare that the payment of the Grant will be suspended whereupon the liability of the Scottish Ministers in respect of the Grant will be suspended immediately and the Dispute Resolution Procedure will be triggered.
If:
the terms of the Cure Plan have not been agreed;
the actions specified in the Cure Plan to be taken by CFL or otherwise have not been taken within the period specified in the Cure Plan; and/or
the matter(s) referred to in the Cure Notice have not otherwise been resolved to the satisfaction of the Scottish Ministers,
an Event of Default which is not capable of remedy will be deemed to have occurred.
Termination
This Agreement may be terminated at any time by the Scottish Ministers giving written notice to CFL, including on an Event of Default and/or in the event of a determination or order by any Court of competent jurisdiction requiring repayment of the Grant by CFL either in full or in part.
This Agreement shall terminate automatically on termination of the Grant In Aid letter.
Consequences of Termination
Notwithstanding the provisions of Clause 29 (Termination) and this Clause 30, the following will survive termination of this Agreement:
Clause 1 (Definitions),
Clause 10 (Handover Assistance),
Clause 14 (TUPE, HR and Core Personnel)
Clause 16 (Data Protection),
Clause 17 (Freedom of Information),
Clause 18 (Confidentiality),
Clause 20 (Compliance with the Law),
Clause 24 (Audit, Expenditure and Accountability),
Clause 26 (Dispute Resolution Procedure),
Clause 32 (Indemnity),
Clause 36 (Waiver),
Clause 37 (Severability)
Clause 40 (Governing Law),
Schedule Part 14 (TUPE),
along with any other Clauses or Schedule Parts necessary to give effect to those provisions.
Termination will not prejudice or affect any right of action or remedy which has accrued or accrues to either Party.
The termination of any element or elements of the Services, but not the whole of the Services, shall be dealt with via the variation process set out in Clause 9 (Variations to the Services).
Warranties
CFL warrants and undertakes to the Scottish Ministers that as at the Commencement Date:
it is a limited liability company, duly incorporated and validly existing and not in liquidation or apparently insolvent under the laws of Scotland or any jurisdiction outside Scotland;
it has full power and authority to enter into, and to fulfil its obligations under, this Agreement and the Principal Contracts and that the Agreement is executed by a duly authorised individual;
all authorisations, approvals, consents, licences, registrations and other matters, official or otherwise, required or advisable in connection with the entry into, performance, validity and enforceability of this Agreement and in connection with the operation of the Services have been obtained or effected and are in full force and effect and there are no circumstances which indicate that any of the same are likely to be revoked in whole or in part in the ordinary course of events;
in entering the Agreement it has not committed any offence under the Bribery Act 2010 or of fraud or uttering at common law;
no claim is being asserted and no litigation, alternative dispute resolution procedure or administrative proceeding is presently in progress or, to the best of its knowledge and belief, pending or threatened against it or any of its assets which will or might have a material adverse effect on its ability to perform its obligations;
it is not subject to any contractual obligation, compliance with which is likely to have a material adverse effect on its ability to perform its obligations under the Agreement;
no proceedings or other steps have been taken and not discharged (nor, to the best of its knowledge, are threatened) for the winding up of CFL or for its dissolution or for the appointment of a receiver, administrative receiver, liquidator, manager, administrator or similar officer in relation to any of CFL’s assets or revenue;
it owns, has obtained or is able to obtain, valid licences for all Intellectual Property Rights that are necessary for the performance of its obligations under the Agreement;
in the 3 years prior to the Commencement Date:
- it has conducted all financial accounting and reporting activities in compliance in all material respects with the generally accepted accounting principles that apply to it in any country where it files accounts;
- it has been in full compliance with all applicable securities and tax laws and regulations in the jurisdiction in which it is established;
it has not done or omitted to do anything which could have a material adverse effect on its assets, financial condition or position as an ongoing business concern or its ability to fulfil its obligations under the Agreement;
there are no actual or potential conflicts between the interests of CFL and the duties owed to the Scottish Ministers under the Agreement.
Indemnity
Without prejudice to any rights or remedies of the Scottish Ministers, CFL indemnifies the Scottish Ministers against all claims, proceedings, actions, damages, demands, losses, charges and costs, together with expenses which the Scottish Ministers may suffer or incur:
as regards damage to property resulting from any act or omission of CFL;
in respect of any injury (whether fatal or otherwise) to any person which may result directly or indirectly from any negligent or wrongful act or omission of CFL; or
as a result of CFL’s breach of this Agreement.
Force Majeure
Each Party is relieved from liability for performance of its obligations under this Agreement and the GIA Letter to the extent that it is not able to perform such obligations due to a Force Majeure Event.
If either Party is affected by a Force Majeure Event, it must immediately notify the other Party of the nature and extent of the circumstances in question.
If at any time CFL claims a Force Majeure Event in respect of any of its obligations under this Agreement and the GIA Letter, the Scottish Ministers are entitled at their own cost to procure one or more third parties to provide the Services in so far as CFL is unable to provide the Services or part of them for so long as the Force Majeure Event or its effect continues to prevent CFL from performing all or any of its obligations under this Agreement and the GIA Letter.
The Scottish Ministers shall decide how best to alleviate the effects of the Force Majeure Event or establish such alternative arrangements as the Scottish Ministers consider appropriate in the circumstances which may include terminating this Agreement (in whole or in part).
The Parties must, at all times following the occurrence of a Force Majeure Event, use all reasonable endeavours to prevent and mitigate the effects of such Force Majeure Event on the Services and CFL shall at all times during which a Force Majeure Event is subsisting take all steps to overcome or minimise the consequences of the Force Majeure Event.
The Party affected by a Force Majeure Event must notify the other Party as soon as practicable after the Force Majeure Event ceases or no longer causes such Party to be unable to comply with its obligations under this Agreement and the GIA Letter. Following such notification this Agreement must continue to be performed on the terms existing immediately prior to the occurrence of the Force Majeure Event, unless the Scottish Ministers have exercised their rights under Clause 9 (Variations to the Services).
If this Agreement is terminated as a result of a Force Majeure Event CFL shall comply with Clause 10 (Handover Assistance) to the extent possible in the circumstances.
CFL’s Status
Nothing in this Agreement or the GIA Letter establishes a contract of employment, a relationship of agency or partnership, or a joint venture between the Parties. Accordingly, neither Party is authorised to act in the name of, or on behalf of, or otherwise bind the other Party save as expressly permitted by the terms of the Agreement and the GIA Letter.
CFL shall not say or do anything that might lead any other person to believe that CFL is acting as the agent of the Scottish Ministers.
Notices
Any notice, or other communication, which is to be given by one Party to the other under this Agreement and the GIA Letter must be:
given in writing;
addressed in accordance with Clause 35.3 below; and
sent by letter (delivered by hand, first class post or by recorded delivery or special delivery) or email.
Provided the relevant communication is not returned or rejected as undelivered, the notice or communication is deemed to have been given:
two (2) Business Days after the day on which the letter was posted; or
four (4) Business Hours, being any time between 9:00am and 5:00pm on any Business Day, in the case of an email.
For the purposes of this Clause the address of each Party is:
The Scottish Ministers
Transport Scotland
Ferries Directorate
177 Bothwell Street
Glasgow G2 7ER;
and
Calmac Ferries Limited
Ferry Terminal
Gourock
PA19 1QP
Either Party may change its address details by serving a notice in accordance with this Clause.
Notices under Clause 35 may be sent to CFL’s trustee, receiver, liquidator or administrator, as appropriate.
Waiver
No waiver is effective unless it is expressly stated to be a waiver and communicated to the other Party in writing in accordance with Clause 35 (Notices).
No failure or delay by either Party to enforce any provision of the Agreement and the GIA Letter, will prejudice or restrict the rights or remedies of that Party, nor will any waiver by any party of any of the requirements of this Agreement and the GIA Letter, or any of its rights or remedies under this Agreement and the GIA Letter or at law release either Party from full performance of their other obligations under this Agreement and the GIA Letter.
No failure or delay by either Party to enforce any provision of the Agreement and the GIA Letter will be deemed to result in that Party affirming this Agreement and the GIA Letter (unless that Party makes such an affirmation in writing in accordance with Clause 35 (Notices).
No single or partial exercise of any right or remedy under this Agreement and the GIA Letter or at law will prevent any further exercise of the same right or remedy or any other right or remedy under this Agreement and the GIA Letter or at law.
A waiver given pursuant to Clause 36.1 of a breach of any of the terms of this Agreement and the GIA Letter will not constitute a waiver of any other breach and will not affect the other terms of this Agreement and the GIA Letter.
A waiver given pursuant to Clause 36.1 of a breach of any of the terms of this Agreement and the GIA Letter will only apply in the particular circumstances for which it is given and will not prevent the Party giving it from subsequently relying on the relevant provision in other circumstances or on another occasion.
A waiver in respect of any Event of Default is not a waiver of any subsequent Event of Default.
The rights and remedies provided by this Agreement and the GIA Letter are cumulative and may be exercised concurrently or separately, and the exercise of any one remedy is not to be deemed an election of such remedy to the exclusion of other remedies. The rights and remedies provided by this Agreement and the GIA Letter are not exclusive of any rights or remedies provided by law.
Severability
If any provision of the Agreement and the GIA Letter is held to be invalid, illegal or unenforceable for any reason by any court of competent jurisdiction, such provision is severed and the remainder of the provisions of the Agreement and the GIA Letter continue in full force and effect as if the Agreement and the GIA Letter had been executed with the invalid, illegal or unenforceable provision eliminated.
Third Party Rights
This Agreement does not create any rights in favour of third parties to enforce or otherwise invoke any provision of this Agreement whether under the Contract (Third Party Rights) (Scotland) Act 2017 or otherwise.
Entire Agreement
Except where expressly provided in this Agreement, this Agreement together with the GIA Letter constitute the entire agreement between the Parties in respect of all matters dealt with herein. The Agreement and the GIA Letter supersede all prior negotiations between the Parties and all representations and undertakings made by one Party to the other, whether written or oral regarding any matters dealt with in this Agreement and the GIA Letter.
CFL acknowledges that it has entered into this Agreement and the GIA Letter on the basis of their terms only and has not relied upon any statement or representation or warranty or other provision (in any case whether oral, written, express or implied) made or agreed by any person (whether a Party to this Agreement or not) except those repeated or referred to in this Agreement.
In the event of, and only to the extent of, any conflict between the Clauses of the Agreement, the Schedules and any document referred to in the Agreement, including the GIA Letter, the Scottish Ministers shall determine the order of precedence.
Governing Law
The Agreement and any dispute or claim (including non-contractual disputes or claims) arising out of or in connection with it or its subject matter or formation shall be governed by and construed in accordance with Scots Law and the Parties irrevocably submit to the jurisdiction of the Scottish Courts.
IN WITNESS WHEREOF this Agreement and the Schedule in 14 Parts annexed hereto has been duly executed by the Parties as follows
SIGNED for and on behalf of THE SCOTTISH MINISTERS
Signature
NamE
Position
Witness
Witness’ full name
Witness’ address
Date
Place (town)
SIGNED for and on behalf of CalMAc Ferries Limited
Signature
Name
Position
Witness
Witness’ full name
Witness’ address
Date
Place (town)
This is the Schedule in 14 Parts referred to in the foregoing Agreement between the
Scottish Ministers and CalMac Ferries Limited