Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Water companies could face a series of legal challenges after a landmark judgment from the Supreme Court ruled that private landowners and individuals can seek redress for sewage released into UK waterways.
The legal challenge was one of a number faced by water companies as anger mounts over the mixture of storm water and raw sewage that is pouring into rivers and coastal waters, threatening human health and the environment.
United Utilities had argued that the owners of the 129-year-old Manchester Ship Canal could not seek redress for the release of “untreated foul water”. They argued that the 1991 Water Industry Act, which privatised the sector, meant only regulators could take action.
However, the Supreme Court on Tuesday ruled unanimously that Manchester Ship Canal Company Limited was entitled to claim for damages from sewage pollution.
“Owners of waterways may now consider taking action against sewerage undertakers for polluting water, and it is very possible that we could now see an increase in this type of legal claim,” said Andrew Ross, partner at Charles Russell Speechlys.
Although the High Court and Court of Appeal have previously ruled in favour of United Utilities, the Environmental Law Foundation, supported by the Good Law Project, had intervened to support the Manchester Ship Canal, which is owned by Peel Ports, to try to overturn the decision.
Jennine Walker, interim head of legal at the Good Law Project, said: “We hope this landmark ruling empowers people and businesses to use the courts to challenge industrial-scale polluters like United Utilities, who have put profits and the shareholder interest over protecting our environment.”
Environmental campaigner Feargal Sharkey said the ruling was “massive”. Writing on X, he said it opened the way for “1,000s of claims by fishing clubs, swimmers, riparian owners” against water companies.
The slew of legal cases threatens to overhaul the regulatory landscape for water companies, which have already been forced to increase transparency as a result of previous court rulings.
In 2012, Yorkshire Water and United Utilities went to the European Court of Justice to claim that England’s water monopolies were private businesses, not “public authorities”, and should be exempt from disclosing when or how much sewage they were releasing.
The UK government supported their “right to secrecy” but FishLegal, a fishermen’s charity, ultimately won. A second case by FishLegal in 2015 forced water companies to open up to freedom of information style requests.
Faced with public pressure, regulators the Environment Agency and Ofwat have also been setting tougher targets, raising the possibility of claims for not meeting them, lawyers said.
The regulators have long-running investigations into whether companies have complied with environmental permits which allow a certain amount of sewage to pour into watercourses during times of heavy rain.
The threat of legal challenges could make it harder for water companies to raise equity from investors. Thames Water, the largest water utility which is fighting for its financial survival and needs to raise at least £3bn by 2030, has already asked for leniency from Ofwat on regulatory fines, including for sewage pollution.
United Utilities said: “We are considering the implications of the Supreme Court’s ruling and the clarification of the circumstances in which private owners could bring proceedings in respect of discharges.”
“We understand and share people’s concerns about the need for change,” it added.
