Legal update for energy lawyers - June 2022
Market Insight 27 June 2022 27 June 2022
UK & Europe
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.
- Oil companies obtaining injunction against protestors
- US oil company sues Slovakia for USD 2.1bn
- Commercial Court judge criticises wastefulness in interim applications
- Redaction of documents in the Disclosure Pilot Scheme
- Chinese courts more likely to enforce foreign judgments
- New whistleblowing regime in Dubai
- Nigerian Senate passes new arbitration law
- EU makes WTO complaint against UK re low-carbon energy subsidies
- UK government’s legislative programme supports transition to clean energy
Esso and Exxon Mobil have obtained an injunction against protestors, preventing them from trespassing on eight of their sites. The claimants argued that the protestors might cause "grave and irreparable" harm, given the highly flammable or even explosive nature of the materials being handled. They further argued that the sites were also part of the critical national infrastructure on which businesses, emergency services, and hospitals relied. Before ordering the injunction, the judge weighed the protestors' right of freedom of expression under Article 10 of the European Convention on Human Rights against the claimants’ right to peaceful enjoyment of their property (Article 1 of Protocol 1 to the Convention). He emphasised that although some have strongly held views about fossil fuels and the environment, parties in the claimants’ position “must be entitled, as are all companies and individuals, to seek the protection of the courts”.
In October 2021, Texas-registered Discovery Global LLC brought a claim under the US-Slovakia bilateral investment treaty, alleging that its drilling operations in Slovakia were no longer viable following protests from activists, lack of support from Slovakian courts and local regulatory insistence that the company carry out lengthy environmental reviews (Discovery Global LLC v. Slovak Republic). It has now emerged that Discovery Global LLC is claiming more than USD 2.1 billion, including the USD 21.9 million it invested in the drilling projects and allegedly lost profits.
In Invest Bank PSC v El-Husseini, which concerned an insolvency and the enforcement of a judgment debt from Abu Dhabi, an English Commercial Court judge has criticised lawyers for wasting legal costs. Despite the claim being valued at approximately £20m, the lawyers’ approach to an interim hearing was deemed “disproportionate and unreasonable” and a waste of both their clients’ and the court's resources. The judge criticised in particular “the kind of interlocutory battling that is readily explicable only by a failure to focus on what was sensibly required to do justice to any applications that might reasonably be pursued”. The result was a two-day hearing (which overran), hearing bundles running to over 6,000 pages, nearly 160 pages of skeleton arguments and associated materials, and legal authorities bundles containing more than 3,600 pages. The overall costs were in the region of £1m.
In JSC Commercial Bank Privatbank v Kolomoisky, the proceedings were governed by the Disclosure Pilot Scheme which requires parties to draw up a list of issues for disclosure and consider separately what approach should be adopted in relation to each of them. However, the list is of limited relevance, and in this case the judge criticised a party for using it as the basis for the redaction of disclosure documents. Instead, this should have been done by reference to all the issues in the proceedings - potentially a much longer list of issues. On this basis, the judge ordered the first defendant to re-review all the disclosure documents, including several thousand WhatsApp messages. The decision is a warning that the parties’ list of issues for disclosure help determine which documents are to be disclosed, but not which parts of those documents, which is a separate question. The Disclosure Pilot Scheme is expected to be revised again shortly, and to become a permanent feature of the English Civil Procedure Rules.
After obtaining approval from China’s Supreme People's Court, the Shanghai Maritime Court has issued a ruling recognising a commercial judgment issued by the English High Court (case no. (2018) H72XWR No.11). This changes the meaning of the ‘principle of reciprocity’, which underpins the Chinese courts’ recognition and enforcement of foreign judgments. Instead of referring to ‘factual reciprocity’, which is how the principle has historically been understood, it now refers to ‘legal reciprocity’. This may make it easier to enforce foreign judgments in China, particularly where they originate in countries that have not yet established ‘factual reciprocity’ with the same. More
The Dubai Financial Services Authority (DFSA) has launched a regulatory regime for whistleblowing which applies to all DFSA Regulated Entities operating in or from the Dubai International Financial Centre. Its purpose is to protect individuals who report misconduct, as well as to increase transparency regarding the handling of regulatory concerns. Entities are required, among other things, to put in place measures to protect the identity of whistle-blowers and prevent them suffering any detrimental effects from engaging with the DFSA. The chief executive of DFSA has warned that they “expect all Regulated Entities to be ready to discuss and demonstrate the application of their policies and procedures when engaging with the DFSA.” More
The Nigerian Senate has passed the Arbitration and Mediation Act 2022, which aims to modernise the country’s arbitration and ADR regimes in several key respects. If approved by President Muhammadu Buhari, the statute will protect the immunity of arbitrators and appointing authorities, support interim measures ordered by tribunals, and generally reflect the latest version of UNCITRAL’s Model Law. The statute also follows Hong Kong’s and Singapore’s example by allowing third party funding for arbitration and related court proceedings.
The EU has made a formal complaint to the WTO regarding subsidies put in place by the UK to promote the production of low-carbon energy, especially through offshore wind. The subsidies take the form of ‘contracts for difference’ (CfDs) offered to developers of projects with high upfront costs, and provide them with a predictable income regardless of the fluctuation of wholescale energy prices. According to the EU, these CfDs violate the UK’s obligations under Article III:4 of the GATT 1994 because they prioritise local content and therefore accord less favourable treatment to imported goods when compared with similar domestic goods. If the EU and UK do not resolve the dispute within 60 days of the complaint, the EU is entitled to request adjudication.
The UK government has set out its legislative programme for 2022/23 in the Queen’s Speech, delivered on 10 May 2022. It has promised to bring forward its Energy Bill, which will build on the achievements of COP26 and underpin the transition to “cheaper, cleaner, and more secure energy”. This follows the announcement in April of the government’s Energy Security Strategy, which aims to ensure that 95% of electricity comes from low carbon sources by 2030. In addition, the government has promised to establish a UK Infrastructure Bank, which will support economic growth and the delivery of net zero.