Legal update for energy lawyers – February 2022

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.

Contents

• Sanctions on Russia
• OGUK changes its name and mission
• Cyber-attacks on oil companies in Europe
• European Commission's abandons investigation into Qatar contracts
• Court of Appeal rules on relationship between the courts and regulatory bodies
• Can a claim be amended after expiry of limitation period?
• Parties’ disclosure obligations
• Commercial Court deems Covid-19 a force majeure event
• New Commercial Court Guide reinforces ability of the courts to dismiss speculative arbitral challenges
• New pre-action procedure proposed
• Iraq joins the New York Convention

1. Sanctions on Russia

The activities by Russia in or in relation to Ukraine have prompted numerous international financial and trade sanctions. The complex cross jurisdictional nature of these sanctions regimes, where US, EU and UK sanctions can all affect a business, requires careful consideration. For the most up to date overview of the sanctions and how they affect your business, please see our Geopolitical and Sanctions page.

2. OGUK changes its name and mission

OGUK (previously known as Oil and Gas UK) has changed its name to Offshore Energies UK (abbreviated to OEUK). This reflects the expansion of its operations, which now encompass a range of low-carbon energy technologies being developed by its members. However, the new name does not signal a sudden change in direction. Chief executive Deirdre Michie has emphasised that “oil and gas is still a fundamental part of what we do and how we do it, but hydrogen, carbon capture and storage, offshore wind - those are all part of an integrated energy mix that we see being developed today.” The rebranding took effect on 14 February 2022. More

3. Cyber-attacks on oil companies in Europe

A number of European oil transport and storage companies have been the target of cyber-attacks. It is not clear whether the attacks were co-ordinated or connected in any way to the Russia-Ukraine conflict, but they took place in neighbouring countries (Belgium, the Netherlands and Germany) and it is possible that the companies concerned all use the same or similar software. The attack on Oiltanking Deutschland GmbH & Co. KG, in particular, may have involved ransomware. Given the scope of the companies’ operations, terminals around the world have been affected by the attacks. More

4. European Commission's abandons investigation into Qatar contracts

The European Commission has decided to close an investigation it opened in 2018 into supply agreements between QatarEnergy (previously Qatar Petroleum) and European importers. The Commision's concern was that the agreements breached EU antitrust rules by impeding the free flow of gas within the European Economic Area. It is not clear whether the investigation has been halted because of the results of the Commission’s investigations, or because of concerns for Europe’s energy security and its increasing dependence on the supply of LNG from Qatar. However, the move appears to be motivated in part, at least, by recent global events. It was reportedly contemplated for the first time last year, when prices rose steeply in response to the worldwide shortage of gas. 

5. Court of Appeal rules on relationship between the courts and regulatory bodies

In R (on the application of Richards) v Environment Agency, the Court of Appeal has ruled that a court should not have imposed specific goals and deadlines on the UK’s Environment Agency (EA) aimed at ensuring that it complied with the European Convention on Human Rights. The case concerned gases emitted by a landfill site which were allegedly harming the health of local residents. At the time of the original court hearing, the EA was considering advice provided by Public Health England as to how to tackle the problem. That advice did not amount to a legally binding standard and the EA was not acting unlawfully. This case reinforces that the role of the courts is to “adjudicate on whether a claim as brought is made out, and, if so what remedy is appropriate”, not to prescribe regulatory standards and actions.

6. Can a claim be amended after expiry of limitation period?

In a dispute concerning the cladding of high-rise residential buildings (Mulalley & Co Ltd v Martlet Homes Ltd), the English Court of Appeal has considered the extent to which a claimant’s case may be amended once a limitation period ends. Rule 17.4 of the English Civil Procedure Rules states that amendments which effectively add or substitute a claim are allowed, so long as the claim does not rest on new (or substantially new) facts. The Court of Appeal had already interpreted this provision liberally (in Goode v Martin), so that the new claim may rest on facts introduced in the defence, or “flowing naturally” from them. It has now gone further, explaining that facts pleaded in a defence may be “turned back on the defendant by way of a new claim, with some modest degree of leeway permitted for expansion or elaboration or explanation.” This flexibility is welcome, but it is not clear when a claimant may rely on it. The question of whether particulars of claim may be amended at this late stage is ultimately a matter for the court’s discretion.

7. Parties’ disclosure obligations

The Commercial Court has emphasised the importance of solicitors making their clients aware of their disclosure obligations, especially if they are unfamiliar with English litigation. In this particular case (Provimi France SAS and others v Stour Bay Company Ltd) there was a gap in the claimants’ disclosure because they had permanently deleted all Outlook items from before 2016, which was in accordance with their document retention policy but in breach of their disclosure obligations. In another recent case (Sheeran and others v Chokri and others), the High Court criticised the first claimant for delegating the disclosure exercise to his manager. Holding that even “very busy people”, such as pop musicians, should take responsibility for their own disclosure, he ordered Mr Sheeran to make a witness statement confirming that he had personally satisfied himself that his disclosure obligations had been met.

8. Commercial Court deems Covid-19 a force majeure event

In European Professional Club Rugby v RDA Television LLP, the English Commercial Court held that the Covid-19 outbreak was a force majeure event, justifying termination of a media rights agreement. The relevant clause provided explicitly for ‘epidemics’, and Covid-19 had been declared a pandemic in March 2020. The clause was in any case widely drafted, covering not only the listed events but also other circumstances beyond a party’s reasonable control. The case is a reminder that in agreements governed by English law, the precise wording of a force majeure clause is crucial, and one that is narrowly drafted may be of little use in practice.

9. New Commercial Court Guide reinforces ability of the courts to dismiss speculative arbitral challenges

The 11^th edition of the English Commercial Court Guide was published on 3 February 2022. It takes into account new rules on disclosure and trial witness statements, as well as new working practices that have developed during the pandemic. In addition, Section O has been revised to make it (even) harder to challenge arbitral awards issued in England, including for lack of “substantive jurisdiction” (Arbitration Act 1996 section 67). It confirms the wide powers of the courts to deal appropriately with speculative challenges and to impose sanctions on parties making them. A new edition of the Queen’s Bench Guide has also been published, and changes have been made to the existing Chancery Guide.

10. New pre-action procedure proposed

One feature of litigation in England is the requirement to take certain steps before commencing proceedings, including explaining one's case in correspondence, exchanging key documents and information, and attempting settlement or narrowing areas of dispute. However, the Civil Justice Council is concerned that the procedure is not followed closely enough, and is not as productive as it should be in terms of reducing litigation or making it more efficient. It has therefore made a number of proposals for reform, including introducing a new practice direction featuring tighter rules and a stricter approach to enforcing them. Clyde & Co took part in a consultation on the proposals that has now closed. More

11. Iraq joins the New York Convention

The New York Convention 1958 entered into force for Iraq on 9 February 2022, allowing arbitration awards from other contracting states to be enforced there, and vice versa. The Convention also ensures that arbitration agreements are respected internationally where they meet with the relevant criteria. Iraq is now one of 169 countries to join the Convention, vastly outnumbering the 31 countries that are currently bound by the Hague Convention on Choice of Court Agreements 2005, which serves broadly the same function in relation to court judgments. More