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Topics covered in this edition
The UK’s intention to withdraw from the Energy Charter Treaty
In February 2024, following a comprehensive review process, the UK Government announced its intention to withdraw from the ECT. The UK’s announcement comes after several unsuccessful attempts to modernise the treaty and is the latest in a series of recent withdrawals by ECT members. On 26 April, the UK formally gave notice of its withdrawal, which will take effect from 27 April 2025. Although the UK’s withdrawal will not have immediate effect, investors should monitor the situation closely and seek advice as to how the UK’s withdrawal may impact their investment protections.
The English courts’ reluctance to intervene to save a commercial party from a bad bargain
The sanctity of a freely negotiated agreements is one of the fundamentals of English contract law. As the case of Pinewood demonstrates, an English court will have little sympathy for a party seeking to argue that an exclusion clause, however unbalanced, is unenforceable (pursuant to UCTA or otherwise) in circumstances where the terms of the clause have been freely negotiated. The case serves as a reminder of the importance of ensuring that the terms of exclusion clauses, and their impact on recoverable losses, are clearly understood by both parties at the drafting stage.
New law on the interrelationship between issue estoppel, foreign judgments and state immunity
In a case that highlights the potential benefits and pitfalls of waging a legal battle in multiple jurisdictions simultaneously, the English courts have, for the first time, ruled that issue estoppel based on a foreign judgment is available against a foreign state. In another instalment of the Yukos saga, the Court found nothing in the State Immunity Act 1978 that would make issue estoppel inapplicable, however it did note that it may sometimes be inappropriate to uphold a plea of issue estoppel because of "special circumstances".
The primacy given to arbitration agreements under English law
The English courts have once again confirmed their willingness to issue anti-suit injunctions where a party attempts to circumvent an arbitration clause providing for arbitration seated in London. The ruling should serve as a reminder that attempts by parties to circumvent arbitration agreements in favour of litigation will be met with short shrift. Parties must abide by the terms that they have agreed. The decision also confirms that the English courts will continue to apply the guidance set out in Enka v Chubb: if parties have not specified the governing law of an arbitration agreement, it will be the same as the main contract; and if that has not been chosen, it is likely to be the law of the seat of arbitration.
The English courts demonstrate reluctance to overturn an FCA decision, even in the face of pressure from climate change activists
ClientEarth’s application for judicial review of a decision of the Financial Conduct Authority has been denied by the English Courts. Faced with what was a creative attempt by ClientEarth to use existing legal and regulatory regimes to raise the profile of climate change issues, the court showed its unwillingness to interfere in decisions made by the FCA that had not been shown to be irrational, err in law, or to have failed to take into account relevant considerations. Although this case demonstrates the limits of judicial review, it also exemplifies the novel and creative ways environmental organisations seek to bring attention to their mission.
Good faith and relational contracts – the never-ending story
Some practitioners view the English law position on good faith as straightforward, whilst others see it as uncertain and inconsistent. Whichever camp you are in, the judgment in Phones 4U v EE Limited provides helpful detail and guidance on the factors to be considered when assessing whether a contract is relational in nature, and as such, may benefit from an implied good faith obligation. The judgment is also an important reminder that a specific express duty of good faith cannot be used as a basis to imply a more general good faith obligation across the whole contract.
Fraud uncovered in international arbitration – lessons and consequences
The judgment in Nigeria v PI&D highlights that clients and tribunals need be alive to the possibility of fraud within arbitration proceedings and raises the question as to whether tribunals should be taking a more proactive approach to uncovering fraud when high risk jurisdictions are involved.
