Legal update for energy lawyers - November 2023

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:

1. Greenpeace loses judicial review against UK’s new North Sea oil and gas licences
2. North Sea Annual Oil and Gas Licensing Bill unveiled by the UK Government
3. Unprecedented Climate Case Heard at European Court of Human Rights
4. No rule preventing enforcement of foreign judgment due to unenforceability in state of origin
5. Disclosure of without prejudice material renders adjudicator decision unenforceable for bias
6. House of Lords fails to widen scope of the Economic Crime and Corporate Transparency Act
7. UK and Germany team-up with international hydrogen partnership

1. Greenpeace loses judicial review against UK’s new North Sea oil and gas licences

The English High Court has dismissed judicial review challenges brought by Greenpeace, ruling that the UK’s decision to authorise new oil and gas licences was not unlawful. The environmental campaign group argued, amongst other things, that the government had acted unlawfully by not including in its assessment the downstream emissions of greenhouse gases from the end use by consumers and that it had failed to properly consider the effects on the environment of reasonable alternatives. 

The Court found that the government’s decision not to consider the end-user greenhouse gases was not irrational and rejected Greenpeace’s criticisms of the contemporaneous reasonings used by the government in its strategic environmental assessment. The Court also held that the government was not irrational in its conclusion that oil and gas imports would have a higher emissions intensity than UK produced hydrocarbons, stating that “the Claimants appeared to be losing sight of the wood for the trees”. 

2. North Sea Annual Oil and Gas Licensing Bill unveiled by the UK Government

Prime Minister Rishi Sunak has revealed his plans for a new bill mandating the annual North Sea oil and gas licensing rounds (the Bill). The planned legislation was confirmed in the King’s Speech on 7 November 2023. 

The Bill will authorise companies to bid each year for licenses in the North Sea for exploring and extracting fossil fuels. The prime minister argues that the Bill protects jobs and strengthens the UK’s energy security. This comes after Russia’s invasion of Ukraine highlighted the volatility of international energy markets. The Bill has come under attack from environmental campaigners who say it undermines the UK’s commitment to achieving net zero. 

3. Unprecedented Climate Case Heard at European Court of Human Rights

The European Court of Human Rights (ECHR) has heard an unprecedented climate case brought by six Portuguese applicants against 27 EU member states as well as the UK, Switzerland, Norway, Russia and Turkey. In Duarte Agostinho and Others v. Portugal and 32 Others (no. 39371/20) (or Youth vs Europe), the claimants argue that the failure of the 32 states to take urgent action on climate change is a breach of their human rights and governments have a legal duty to take action in this regard. The case is the largest ever to be heard by the ECHR and highlights the extent to which climate litigation is growing. If upheld, ramifications could include orders from national courts to cut climate emissions at a rate faster than currently planned. A ruling is expected in early to mid-2024.  

4. No rule preventing enforcement of foreign judgment due to unenforceability in state of origin

The English High Court has clarified that there is no rule which prevents a foreign judgment being enforced in England and Wales where that judgment would be unenforceable in the relevant foreign jurisdiction. 

In Invest Bank PSC v Ahmad Mohammed El-Husseini & Ors, the Court held that Abu Dhabi judgments for amounts due under two guarantees remained enforceable in England despite a change in the United Arab Emirates (UAE) law which precluded their enforcement there. The claimant sued for the amounts due as a debt on the foreign judgment. The Court identified that the key requirement to successfully doing so was whether the foreign judgment was final and conclusive in its jurisdiction and found that this was unaffected by the fact it could not be enforced in the UAE. 

5. Disclosure of without prejudice material renders adjudicator decision unenforceable for bias

The Technology and Construction Court (TCC) has held that an adjudicator’s decision was unenforceable because, having reviewed without prejudice communications that had not been legitimately deployed, there was a real possibility that he was unconsciously biased. 

The policy underlying the without prejudice rule is that parties should be encouraged to settle their disputes without resorting to litigation and should not be discouraged by the knowledge that anything said in the course of negotiations may be used against them in proceedings. In AZ v BY, the without prejudice material had been relied on by AZ (and “placed front and centre within the Adjudication”) to establish an inconsistency in BY’s open position and the contractual position it was arguing for. The TCC held that this “is not a purpose for which without prejudice material may be legitimately deployed” and concluded there was an inevitable question mark that it had shaped the result of the adjudication. 

6. House of Lords fails to widen scope of the Economic Crime and Corporate Transparency Act 

The House of Lords has failed in an attempt to widen the scope of the Economic Crime and Corporate Transparency Act (the Act).  As first discussed in our May Legal Update, the Act will make organisations criminally liable where a fraud offence is committed by an employee or agent for the organisation’s benefit and the organisation did not have reasonable fraud prevention procedures in place. 

In terms of the scope of the Act, the House of Commons sought to only apply it to ‘large organisations’ which had two or more of: (1) a turnover of more than £36 million; (2) a balance sheet total of more than £18 million; or (3) more than 250 employees. In turn, the Lords proposed that the Act captures all companies except ‘small organisations’ which satisfy the following: (1) a turnover of not more than £10.2 million; (2) a balance sheet total of not more than £5.1 million; or (3) not more than 50 employees. The Commons rejected these amendments on 25 October 2023, with the result that only large organisations will be affected.  The Act has now been approved and received Royal Assent on 26 October 2023. It is expected to come into force in stages over the next 1-2 years.

7. UK and Germany team-up with international hydrogen partnership

The UK and Germany have signed a Joint Declaration of Intent which aims to accelerate the development of an international hydrogen industry. Both countries have already invested heavily in the development of hydrogen as an alternative fuel. They hope that the declaration will lead to increased trade of hydrogen and its derivates and encourage innovation through cooperation and shared technologies. The leaders agreed to five pillars of collaboration:

1. Accelerating the deployment of hydrogen projects for industry and consumers.
2. Establishing international leadership on hydrogen markets and regulating to aid trade.
3. Research and innovation on hydrogen, from production to end use.
4. Promoting trade for hydrogen, plus related goods, technologies and services.
5. Joint market analysis, to support planning and investment by government and industry.