The Commercial Court hands down judgment in TAQA Proceedings

22 January, 2020

On Friday 17 January 2020, the Commercial Court handed down judgment in TAQA Bratani Ltd v. RockRose UKCS8 LLC [2020] EWHC 58 (Comm) following an expedited trial in December 2019. The case is the latest dispute arising out of the acquisition by new investors of interests in aging North Sea oil and gas infrastructure and the rights and obligations arising under long-term Joint Operating Agreements. The Defendant was the existing Operator of assets in the Brae Fields; the Claimants were the remaining participants in the assets.

The Defendant, which had been acquired from Marathon Oil by RockRose Energy Plc, argued that the Claimants’ attempts to remove it as Operator of the assets, and to replace it with one of the Claimant companies, were legally ineffective.   The express terms afforded no basis for any objection, but they alleged that various terms were to be implied into the relevant JOAs and contended that the decision to remove the existing Operator on notice was subject to review by the Court on “Braganza” grounds.

HHJ Pelling QC (sitting as a Judge of the High Court) held that the Claimants had successfully operated the contractual machinery to remove the Defendant as Operator and that such decision was not subject to review by the Court and that, even if it had been, the Claimants had not acted in breach of any of the alleged implied terms on the facts.

The case therefore illustrates the limits of the implication of terms and of the concepts of Wednesbury unreasonableness and good faith in the context of detailed written contracts between sophisticated commercial parties. It also demonstrates the unwillingness of the Courts to interfere with the exercise of clear contractual rights by commercial parties and to enquire as to the subjective motivations of the parties behind the exercise of such rights.

Philippa Hopkins QC and David Davies acted for the Claimants together with David Foxton QC (now Mr Justice Foxton). They were instructed by Phillip Ashley and Valerie Allan at CMS Cameron McKenna Nabarro Olswang LLP (London and Aberdeen).

A copy of the judgment can be found here.