Table of Contents:
1. The Claim
2. A Pattern of Vexatious Litigation in The CAT?
3. Might the Role of Artificial Intelligence (AI) Also Contribute to This Emerging Pattern?
4. Final Thoughts
A public authority was recently copied into an email principally addressed to the Competition Appeal Tribunal (CAT) purporting to notify the CAT of an intention to bring an appeal under the Subsidy Control Act 2022 (SCA) on the grounds that the authority had awarded an unlawful subsidy.
The email was received against the backdrop of a sharp increase in subsidy control challenges. Four challenges were brought under section 70 SCA in 2025, with the latest judgment handed down on 26 February 2026. One other has been brought under the Competition Act 1998 (CA98) (see further below). More recently, further claims have continued to emerge – the most recent being a second case brought by Zenobē Energy Limited against the Gas and Electricity Markets Authority on 31 March 2026, and others are likely waiting in the wings.
In this context, one might have expected the threatened challenge to set alarm bells off at the public authority in question. Far from it. The threatened challenge was entirely without merit. A concise letter, threatening a costs order, was enough to nip this prospective claim in the bud.
Examples of such claims, brought without reasonable grounds, primarily to burden the other party with additional delay or expense, are often termed “vexatious”. As will be explained, the email itself was deemed as such, owing to issues in both legal and factual merit, as well as the proposed challenge being out of time in any event. The principle of “undue delay” as set out in section 72(8) SCA would have no doubt applied had this challenge gone any further.
But why is the UK’s subsidy control regime attracting vexatious litigation such as this? And what can public authorities and prospective appellants alike learn from this case study and the case of Thomas & Others v Durham County Council, lodged in the latter part of 2025?
The Claim
The prospective appellant argued that the public authority, pursuant to a competitive grant allocation process, had awarded a subsidy in excess of £2m to a direct competitor. They surmised that the authority had done so in breach of the SCA, alleging numerous grounds.
The grounds focused on the authority’s apparent inability to comply with the requirements of the SCA. The prospective appellant argued that the alleged subsidy was a) inconsistent with the subsidy control principles, and b) was not publicised on the subsidy database (but should have been).
The prospective appellant requested a number of remedies, including an order requiring the authority to fully fund its own grant application and a review of the authority’s subsidy award process to ensure ongoing compliance.
The prospective claim was fundamentally flawed.
First, an appeal was threatened pursuant to Schedule 3 SCA. Schedule 3 SCA sets out rules governing subsidies provided by means of primary legislation. It does not relate to the challenge regime and cannot be read as a gateway into the CAT.
Second, the prospective claim stated that the allegedly unlawful subsidy awarded by the authority was £2m. The grant competition in question had not resulted in an award greater than £1m.
Third, the prospective appellant argued that the authority had breached the substantive and procedural requirements of the SCA. However, the authority did not consider that a subsidy had arisen (and therefore such requirements were not engaged). The prospective claim failed to address why it was considered that a subsidy arose in the first place.
Fourth, the email alleged a breach of subsidy control principle A on the grounds that the alleged subsidy was disproportionate. The proportionality assessment should be conducted under subsidy control principle B.
Fifth, the claim was threatened months after the prospective appellant had become aware of the allegedly unlawful subsidy. It was plainly out of time: rule 98A of the CAT Rules 2015 provides that an application to the CAT must be made within one month of the ‘transparency date’ on which the interested party first knew or became aware of the subsidy decision. In the recent New Lottery case, the CAT extended this timeframe to scenarios where the public authority has not treated the assistance as a subsidy.
Finally, even if a subsidy was unlawfully awarded, that is not to say that the prospective appellant’s application would necessarily have succeeded. As such, it is unclear on what basis the CAT could make an order to fund the prospective appellant’s application. There is also no mechanism for the CAT to order investigations into a public authority’s general compliance with the SCA.
In response to the above, the authority wrote to the prospective appellant, succinctly describing why the claim was without merit. The authority clarified that it would seek its costs in full if proceedings were formalised.
The authority received no further response.
A Pattern of Vexatious Litigation in The CAT?
We were reminded of this case study when reading the CAT’s notice of claim in Thomas & Others v Durham County Council.
That claim was summarised by Jamie Dunne in a previous edition of the UK Subsidy Control Insider. Without repeating the detail, it is fair to say that aspects of the claim (at least as summarised publicly) appeared to sit uncomfortably with the pleaded statutory route and forum.
The claim was brought under section 47A CA98. Section 47A allows for claims for damages in the event of an alleged infringement of the Chapter I or II prohibitions. That is to say, in respect of an alleged anti-competitive agreement or the abuse of a dominant position.
However, on the face of the published summary, the claim did not particularise any purported breach of either the Chapter I or II prohibition. Instead, the claim focused on alleging that Durham CC had awarded a series of unlawful subsidies. But the claim was not brought under the SCA, so it is unclear on what basis these submissions were relevant in the context of a section 47A CA98 claim.
For good measure, Mr Thomas threw in a procurement angle, arguing that the grants were awarded in breach of Regulation 18 PCR 2015 (which sets out the general principles of procurement under the previous legislative regime). Grants are not “public contracts” which are subject to procurement rules. So, unless the Council mislabelled services contracts as “grants”, this part of the claim also seemed to be a non-starter. In any event, PCR 2015 challenges should be brought in the High Court, not the CAT.
A hearing to consider the claimants’ application to amend their claim form and the defendant’s application to strike out proceedings was listed for 25 March 2026. This hearing was due to consider an application made in BEK Developments Ltd and Others v Durham County Council, which appears to be a refined version of this earlier challenge. It should be acknowledged that, at least on the face of the publicly available summary, corrective steps were clearly taken to reformulate the arguments into a more recognisable subsidy control challenge, drawing focus to what should be identified as an identifiable “subsidy decision” (including a decision taken “in principle”) and alleged non-compliance with the subsidy control principles.
That said, it appears that the case was not heard on its listed date in the end, and it is currently unclear whether it will be relisted for a later date.
For us, this raises a wider question about whether the UK subsidy control jurisdiction is at risk of attracting a “snowball” of claims that generate interim activity but may never reach a full merits hearing. That is not necessarily a reflection on the CAT; as will be discussed later, it may reflect the incentives created by a new, fast-moving regime and the practical difficulty for prospective claimants in accessing sufficiently early legal advice to finesse arguments into an arguable SCA case within tight time limits. If so, there is a role for the legal sector, not just policy makers, to educate clients and colleagues (including in adjacent disciplines such as public procurement law) and to reduce avoidable uncertainty, because the regime’s “newness” can only justify misconceived claims for so long.
Might the Role of Artificial Intelligence (AI) Also Contribute to This Emerging Pattern?
Examples of AI hallucinations have been well publicised, including in High Court litigation. Put simply, AI is capable of quoting the wrong law, and such mistakes are not always picked up by laypersons (or even lawyers). AI can draft reasonably compelling arguments, but once one scratches the surface, such arguments are found wanting.
To illustrate the point, we asked an AI model to draft us a letter:
I want to bring a claim against a public authority. The authority has awarded a £10m grant to my competitor. It should have gone to me! Write me a letter to send to the relevant court. I am very angry.
The model responded with a relatively brief, nondescript letter – warning that “a letter to a court needs to stay measured”. So far, so good. To further assist, the model asked if we would like help drafting a particulars of claim.
The particulars of claim – based solely on the prompt quoted above – included the following legal inaccuracies:
| Legal inaccuracy | Correct answer |
| The subsidy did not comply with principle D (need to address a market failure or equity objective). | Principle D provides that subsidies should not compensate for costs that would have been funded in the absence of the subsidy. The model conflated principle D with principle A. |
| A public authority must keep contemporaneous records demonstrating compliance (section 33 SCA). | There is no express requirement in section 33 for a public authority to keep contemporaneous records demonstrating compliance. Section 33 relates to the transparency rules. |
| The claimant seeks an order quashing the subsidy decision under section 73 SCA. | Section 73 relates exclusively to the CAT’s powers in Scottish cases. We are not based in Scotland. |
On the basis of a 40 word prompt, the model (a) drafted particulars of claim, (b) incorrectly quoted the law, and (c) created new facts to strengthen the claim (for instance, “the defendant misapplied its scoring methodology”; “the evaluation process was inconsistent”; and “the subsidy materially alters competitive conditions in the relevant market”).
Aside from the proliferation of AI use, there are specific features of the subsidy control regime that unintentionally create an environment in which vexatious or misconceived claims can arise, such as:
1. There Is No Fee to Bring a Challenge in the CAT
Unlike judicial review or many civil proceedings, there is no issue fee or filing fee for SCA challenges. This removes an early financial barrier that would normally deter weak, speculative, or impulsive claims.
2. Public Descriptions of the Regime are Likely to Entice More Challengers
The CAT has been described as a “fast, cheap and simple” jurisdiction for subsidy control challenges. While the volume of claims under the SCA originally expected has not materialised, one can see that this description makes the CAT a relatively attractive jurisdiction for appellants. Combined with the no-fee structure, this creates low-risk, low-cost conditions for vexatious litigants to “have a go”.
3. Contextually, the Foundation of Subsidy Control Is Built Around “Winners vs. Losers”
Subsidy control challenges frequently arise out of competitive funding rounds with clear winners and losers. Aggrieved losers are – in certain cases – motivated to challenge awarded processes simply to rerun grievances or attempt to disrupt awards already made, notwithstanding the veracity of supporting legal arguments.
Final Thoughts
Our analysis above is not to say that AI is an unhelpful tool. Nor is it an attempt to extol the virtues of human lawyers. But it is important for public authorities to recognise a potential pattern of vexatious litigation in the CAT – and understand a potential cause of the same. It is also important for prospective appellants to recognise the implications of spurious claims: namely, reputational damage and costs orders.
Further, the additional features of the regime, which perhaps enable vexatious litigants highlighted above, are not unmanageable. However, a core problem with the regime is that our oversight architecture is too “light touch” to filter out weak cases and arguably too narrow to catch the right ones. The Subsidy Advice Unit can only issue non-binding reports on referrals and has no initiative or remedial powers of its own, while August 2025’s uplift of the SSoPI threshold to £25m has further reduced the flow of large cases into scrutiny, leaving the CAT to shoulder enforcement with JR-style review. The result is an enforcement gap (fewer cases than expected until a recent uptick) paired with occasional misconceived filings that waste public resources, as explained above.
To address both dynamics, there are several potential ways the regime could be bolstered. In addition to those suggested by Alexander Rose and Schellion J. Horn in a previous edition of the UK Subsidy Control Insider, in relation to vexatious claims, it may be prudent for the government to:
- Publish clearer guidance on key time limits and the concept of “undue delay”, with a structured pre-action notice specifically for s70 SCA claims;
- In the same vein, issue clear costs guidance signalling adverse costs for claims entirely without merit; and
- Introduce a claim fee, as even a nominal sum may have the effect of nipping such spurious claims as those referenced above in the bud.
That said, meaningful improvement is not a one-way street for the government to address alone. Legal practitioners also have a key role to play: early, specialist engagement with prospective claimants in a still-developing regime can help to test, narrow and (where appropriate) reframe grievances into properly arguable challenges – while deterring claims that are misconceived in law or out of time.
Alongside that, as discussed above, there is a practical need for the legal sector to educate clients and colleagues on the basic architecture of the regime (what is challengeable, in what forum, and by when), so that issues are identified and triaged early rather than litigated late. The fewer weak claims that are issued, the more capacity there is for the CAT (and wider sector) to focus on disputes that genuinely engage the SCA, producing clearer and more usable case law on how the subsidy control regime should operate in practice. In that sense, early legal advice to prospective claimants and respondents, and a better shared understanding of subsidy control law throughout the legal sector, are not merely defensive measures. They are part of a virtuous cycle that improves the quality of litigation, accelerates legal clarity, increases legal certainty, and in turn reduces the scope for avoidable misinterpretation.
With the CMA’s statutory review under s65 SCA into “the effectiveness and impact on competition and investment in the UK of the UK’s Subsidy Control Act” due to report in Summer 2026, practitioners also have a clear opportunity to reflect on these findings and shape the regime by engaging with future consultations and submitting evidence on what is and is not working. We would encourage active participation from all stakeholders in the coming year, a year which is already shaping up to be legally richer and more dynamic than any since the UK’s Subsidy Control regime came into force.