Uber wins court battle to continue operating in London

Uber has won a crucial court battle to continue operating in London, following a lengthy spat between the ride-hailing company and the city regulator Transport for London over concerns about its safety practices.

Deputy chief magistrate Tan Ikram said the court was satisfied that Uber was a “fit and proper” company to operate in the capital, after the ride-hailing company appealed against Transport for London’s decision last November not to renew its licence in the city.

Uber’s victory at Westminster magistrates’ court comes as a rare bright spot for the company, which has faced protracted legal challenges around the world and the pressures of sustaining its business through the coronavirus lockdown, which has led to a 75 per cent drop in gross ride-share bookings globally, offsetting a surge in its Uber Eats division.

London is one of Uber’s most important markets, with 45,000 licensed drivers and 3.5m regular passengers in the city.

Uber’s spat with TfL dates back to 2017, when the regulator first deemed it not “fit and proper” to operate, citing Uber’s “lack of corporate responsibility” in its approach to reporting serious criminal offences as one of several factors.

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In June 2018, that decision was reversed by judge Emma Arbuthnot, who granted it a 15-month licence after concluding that new governance arrangements were sufficient.

However, last November the transport regulator chose not to renew Uber’s licence after another spate of safety issues. According to TfL, among the most egregious was a technical loophole that allowed drivers to fraudulently upload their photos to other drivers’ accounts.

Tim Ward QC, representing Uber, sought to show that the company had made major changes over the past year, updating its technical and management systems. “[Driver identity fraud] was a matter of immense regret to Uber that this happened,” he said, but there were very powerful reasons to believe that “[the platform] has tackled the risk of this kind of thing”.

Mr Ikram acknowledged the “historical failings” of the company, including the driver identity fraud. However, he did not agree with the Licensed Taxi Drivers Association’s argument that the company had sought to deliberately conceal the issue, considering it “misplaced optimism rather than an attempt to mislead”.

The ruling comes as Uber faces increasing pressure from rivals in London, such as the Estonian Bolt, Daimler-backed start-up Kapten — which merged with taxi app Free-Now this year — and India’s Ola, which launched in the capital in February.

Figures from Sensor Tower show that the Uber app was downloaded 2.9m times in the year to August 31, down from 4m downloads in the same period from 2018 to 2019. By contrast, Bolt’s downloads rose from 576,000 to 1.4m, while Ola’s increased from 443,000 to 1.2m.

Uber’s new London licence has been granted for 18 months — some way short of the maximum possible period of five years.

Anna McCaffrey, senior counsel at Taylor Wessing, said that the relatively short reprieve meant the company would have to continue to work hard to prove itself to TfL and the court. “If not, Uber is likely to find itself back in court facing the same battle next year,” she added.

The new licence comes with 21 conditions, jointly suggested to the magistrate by Uber and TfL, including appropriate identity checks for drivers, verification of insurance and other documentation, and systems to prevent drivers from tampering with Uber’s system.

“This decision is a recognition of Uber’s commitment to safety and we will continue to work constructively with TfL,” said Jamie Heywood, Uber’s regional general manager for northern and eastern Europe.

A TfL spokesperson said that Uber had implemented a number of changes to address issues it identified as a result of its decision last November. “This 18-month licence with a number of conditions allows us to closely monitor Uber’s adherence to the regulations and to swiftly take action if they fail to meet the required standards.”

London mayor Sadiq Khan said TfL had been right not to renew Uber's licence last year, but added that he was pleased the company had since made improvements to its practices. “I can assure Londoners that TfL will continue to closely monitor Uber and will not hesitate to take swift action should they fail to meet the strict standards required to protect passengers,” he said.

However, the LTDA described the decision as “a disaster” for the city. “Uber has demonstrated time and time again that it simply can’t be trusted to put the safety of Londoners, its drivers and other road users above profit,” it said. “Sadly it seems that Uber is too big to regulate effectively, but too big to fail.”

Uber is also facing a number of other court battles in its biggest markets, most of which focus on how it retains and treats its workforce. Following a hearing in July, and separate from the TfL dispute, the UK’s Supreme Court is expected to rule soon on whether drivers in the country should be treated as employees instead of independent contractors.

“If the Supreme Court says that Uber’s drivers are workers, and not genuinely self-employed as Uber maintains they are, drivers will be entitled to holiday pay, the national minimum wage and certain other entitlements,” said Joseph Lappin, head of employment at Stewarts. “I suspect that Uber will lose in the Supreme Court. Uber’s costs would swell.”