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Legal update for energy lawyers - January 2021

  • Market Insight 28 January 2021 28 January 2021
  • Energy & Natural Resources

This newsletter provides general information and is not intended to be comprehensive or to provide specific legal advice. Professional advice appropriate to a specific situation should always be sought.

Legal update for energy lawyers - January 2021

Contents

  1. Effect of 'subject to contract'

The English Court of Appeal has highlighted the significance of using the 'subject to contract' label during settlement negotiations. In Joanne Properties Ltd v Moneything Capital Ltd, the High Court held that the parties had settled an issue, despite using the label in all correspondence. However, the Court of Appeal disagreed, explaining that the label should be taken at face value, regardless of what the parties thought they were doing, unless there is a formal contractual or clear factual basis for inferring that they intended the label not to apply. In this case there was neither, and so settlement had not been reached. The case is a reminder of the need to remove the 'subject to contract' label from final settlement documentation.

  1. Does a reference to legal advice automatically waive privilege?

Under English law, privilege over legal advice can be waived by explicitly referring to and relying on it in witness statements and other court documents. However, this is not always the case, as shown in the English Commercial Court's recent decision during the trial of PJSC Tatneft v Bogolyubov and others. Here, the claimants provided information about legal advice they had received, but did not actually volunteer that information. Instead they provided it to challenge assertions their opponents had made about the advice. In the court's view, this did not amount to a waiver of as there had been no voluntary disclosure. Notwithstanding the court’s decision, the case serves as a reminder of the potential dangers of referring to legal advice in any circumstances in court proceedings.

  1. Supreme Court clarifies limitation rules concerning mistake of law

In litigation concerning the UK's tax regime, the Supreme Court has decided a discrete limitation issue, reversing an earlier decision of the House of Lords. The issue in Test Claimants in the Franked Investment Income Group Litigation v HMRC was the effect of section 32(1)(c) of the Limitation Act 1980, which says that in claims arising from a mistake, the usual six year limitation period runs from when the mistake is discovered (or ought to have been discovered), not when it was made. Where a claim is for restitution of money paid by mistake, the mistake may be one of fact or of law, but in the latter case it is not clear what the date of discovery should be. Previously, the House of Lords ruled that a legal mistake is 'discovered' when the relevant law is established by a judicial decision that cannot be appealed. However, the Supreme Court has now decided that 'discovery' occurs when the claimant realises (or should with reasonable diligence realise) that it has a worthwhile claim. This highlights the importance of carefully considering when potential claims may have arisen and bringing a claim for mistake promptly.

  1. Parent company guarantee can be adequate security for costs

The English Technology & Construction Court has ordered that a parent company guarantee should be given by way of security for costs, because the company was 'good for the money' and likely to honour the guarantee. In any case, if failed to do that, the guarantee could be enforced with relative ease. In EA Chiverton Ltd v Jolyon Maugham, the defendant argued that only a bank guarantee or payment into court would be adequate security, given the commercial pressures on the parent company caused by Brexit and the COVID-19 pandemic. However, the court found that the company's financial information showed it to be in good financial health and that it had the £300,000 needed to meet any costs order in favour of the defendant. The decision demonstrates, once again, how arguments based on Brexit or the pandemic will not be accepted uncritically by the courts. Instead, they will look at the specific facts when taking these events into account.

  1. Supreme Court decision regarding expansion of Heathrow Airport

In early 2020, the Court of Appeal declared that the Secretary of State for Transport had acted unlawfully in failing to consider the UK's commitments under the Paris Agreement on climate change when he took steps to allow the expansion of Heathrow Airport. The UK government did not appeal that decision, but Heathrow Airport Ltd did, and now the UK Supreme Court has ruled in its favour (R (Friends of the Earth Ltd and others) v Heathrow Airport Ltd). Among the reasons given for the ruling is the fact that the Paris Agreement and related government announcements do not constitute 'government policy' for the purposes of section 5(8) of the Planning Act 2008 (the Act), and so did not have to be taken into account by the Secretary of State in the relevant policy statement on the construction of a third runway. In addition, the Secretary of State had not breached his duty under section 10 of the Act by failing to take into account the effect of greenhouse gas emissions created by the expansion scheme after 2050, or the effect of non-CO2 emissions, as the UK's policy on these matters was in development at the relevant time.

  1. Service by Instagram

The rules on service set out in the Civil Procedure Rules (Part 6) are strict in themselves, and often strictly applied by the courts. However, judges are sometimes willing to be flexible in relation to modern technology. In a recent case before the High Court (QB Division), Clyde & Co obtained an order for service of a judgment in default via Instagram, after unsuccessfully attempting to serve it by post and personal service. In fact, serving documents via Instagram or similar messaging software is difficult, because turning documents into legible images is technically challenging. This problem was solved in this case by linking to the documents rather than attaching an image of them. More

  1. Negotiating with the SFO - revised guidance published

The Serious Fraud Office (SFO) is updating its internal Operational Handbook, and has published, in the interests of transparency, the chapter dealing with Deferred Prosecution Agreements (DPAs). This offers guidance on how the SFO approaches DPAs. In particular, the chapter offers guidance on how the SFO deals with companies where a DPA is realistic possibility, including what they expect from the companies in return. Guidance in this area is helpful because DPAs are still relatively new, and the SFO's approach to them has evolved in the last few years.

Meanwhile, the SFO's ninth DPA has been approved by the courts. The DPA is with Airline Services Limited, which has accepted responsibility for three counts of failing to prevent bribery in connection with its use of an agent to win contracts. The contracts were to refit commercial airliners and had a combined value of £7.3m.

  1. Unexplained Wealth Order survives final appeal

Unexplained Wealth Orders (UWOs) were introduced as an anti-money laundering measure in January 2018, so as to allow the authorities to identify and then seize property purchased with criminal funds. However, the new orders have been slow to get off the ground. In October 2020 a UWO was used successfully to seize 45 properties and other assets worth almost £10 million in total, but that was in the context of a settlement. Now the National Crime Agency has secured its first conclusive court win, with the UK Supreme Court refusing to hear an appeal against a UWO made in the High Court and then confirmed by the Court of Appeal. This means that the subject of the order is obliged to comply with a strict timetable of disclosure, failing which more than £22 million worth of properties will be forfeited.

  1. UK government publishes Energy White Paper

The UK government has published an Energy White Paper entitled Powering our net zero future. The document builds on previous initiatives, including an earlier Ten Point Plan and National Infrastructure Strategy, and has three main themes: transforming energy, supporting a green recovery from the pandemic, and creating a fair deal for consumers. In particular, the government confirms that it will set up a UK Emissions Trading Scheme, and will bring at least one large-scale nuclear project to Final Investment Decision by the end of the current parliament. The long-term goal is net zero emissions by 2050, but a number of interim targets are also set, including achieving 40GW of offshore wind power by 2030, and growing the installation of electric heat pumps from 30,000 to 600,000 every year by 2028.

  1. Government advice to lawyers on disputes and Brexit

Following the end of the Brexit transition period on 31 December, the UK government has issued fresh advice to lawyers on the effect on cross-border disputes with a European connection. Three areas are principally affected: the jurisdiction of the courts, the service of documents, and the enforcement of court judgments. However, in each case 'separation' provisions help smooth over any disruption that would otherwise be caused.

End

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