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England and Wales Court of Appeal (Civil Division) Decisions |
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You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Scottish Power UK Plc v BP Exploration Operating Company Ltd & Ors [2016] EWCA Civ 1043 (01 November 2016) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2016/1043.html Cite as: [2016] EWCA Civ 1043 |
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ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
MR JUSTICE LEGGATT
2013FOLIO305
Strand, London, WC2A 2LL |
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B e f o r e :
LORD JUSTICE CHRISTOPHER CLARKE
and
LADY JUSTICE KING
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Scottish Power UK PLC |
Appellant |
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- and - |
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BP Exploration Operating Company Ltd and Others |
Respondents |
____________________
Helen Davies QC and Richard Eschwege (instructed by Herbert Smith Freehills LLP) for the Respondents
Hearing dates: Wednesday 5th October 2016
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Crown Copyright ©
Lord Justice Christopher Clarke:
"Throughout the Contract Period the Seller will, in accordance with the Standard of a Reasonable and Prudent Operator, provide, install, repair, maintain and operate those Seller's Facilities which are (in the opinion of the Seller and the other Sellers) necessary to produce and deliver at the relevant times the quantities of Natural Gas from the Andrew Field which are required, in accordance with the terms of this Agreement, to be delivered to the Buyer at the Delivery Point."
The "Seller's Facilities" were defined in Article 1 of the Agreements to mean:
"the production wells, platforms, separation, processing and treating equipment, pipelines and other equipment … whether or not owned by the Seller and the Other Sellers installed or used for the purpose of producing Natural Gas from the Andrew Field and delivering the same at the Delivery Point under this Agreement."
A "Reasonable and Prudent Operator" was defined in Article 1 as:
"...a Person seeking in good faith to perform its contractual obligations and, in so doing and in the general conduct of its undertaking, exercising that degree of skill, diligence, prudence and foresight which would reasonably and ordinarily be expected from a skilled and experienced operator engaged in the same type of undertaking under the same or similar circumstances and conditions, and the expression the 'Standard of a Reasonable and Prudent Operator' shall be construed accordingly."
"…a failure by the Seller to deliver an amount of Natural Gas which the Seller was obliged to deliver in accordance with the Buyer's proper nomination and of which the Buyer was able to accept delivery and 'underdeliver' and 'underdelivered' shall be construed accordingly."
"In respect of any Day … on which an underdelivery occurs, a quantity equal to the difference between the amount properly nominated under this Agreement … and the amount delivered by the Seller shall be calculated and such quantity shall be classified (subject to the provisions of Clause 16.3) as 'Default Gas'."
"…..are of the opinion that the amount nominated by the Buyer is greater than the maximum amount which it is reasonably to be anticipated that in the absence of the Seller's notice ... and the knowledge thereby obtained by the Buyer of the restriction in the Seller's ability to make deliveries the Buyer would have properly nominated for the purposes of and in the ordinary course of its business ('the amount actually required by the Buyer')."
Article 16.6.
"The delivery of Natural Gas at the Default Gas Price and the payment of sums due in accordance with the provisions of Clause 16.4 shall be in full satisfaction and discharge of all rights, remedies and claims howsoever arising whether in contract or in tort or otherwise in law on the part of the Buyer against the Seller in respect of underdeliveries by the Seller under this Agreement, and save for the rights and remedies set out in Clauses 16.1 to 16.5 (inclusive) and any claims arising pursuant thereto, the Buyer shall have no right or remedy and shall not be entitled to make any claims in respect of any such underdelivery."
"...in full satisfaction and discharge of all rights, remedies and claims howsoever arising whether in contract or in tort or otherwise in law on the part of the Buyer against the Seller in respect of underdeliveries by the Seller under this Agreement".
(a) Scottish Power, although nominating the full amount, would have nominated less if there had been no shut-in; or
(b) instead of nominating the full amount, Scottish Power had nominated less, but would have nominated more if there had been no shut-in.
Lady Justice King
Lord Justice Moore-Bick
APPENDIX
15.1. For the purposes of this Agreement "Force Majeure" shall mean any event or circumstance which is beyond the control of the Person affected acting and having acted as a Reasonable and Prudent Operator resulting in or causing the failure by the person affected to perform any one or more of its obligations under any relevant agreement including this Agreement (but excluding any agreement between the Buyer and any purchaser or potential purchaser or user of Natural Gas acquired by the Buyer under this Agreement) and shall include but not be limited to the aftermentioned events or circumstance (to the extent that such events or circumstances are beyond the control of the Person affected acting and having acted as a Reasonable and Prudent Operator and have resulted in or caused a failure as aforesaid), namely:-strikes, lock-outs, labour and civil disturbances, acts of God, unavoidable accidents, laws, rules, regulations or orders of any national municipal or other governmental agency, whether domestic or foreign, acts of war or conditions arising out of or attributable to war (declared or undeclared), shortage of or limitation on the use of necessary equipment or materials, labour restrictions or limitations upon the use thereof, delays in transportation, collapse or destruction of structures and failure or breakdown of plant or machinery.
Provided that where an event or circumstance beyond the control of the Buyer or, as the case may be, of its Gas Carrier acting, and having acted, as a Reasonable and Prudent Operator causes or results in the total or partial destruction, breakdown or mechanical inoperability of the Gas Carrier's facilities at any point up to the Delivery Point, such event or circumstance shall be deemed to be a Force Majeure occurrence, to the extent only that a reduction in ability to accept Natural Gas in the Gas Carrier's facilities, has resulted from such occurrence and caused the Buyer to be unable to take delivery of the relevant part of the Natural Gas properly nominated by it under this Agreement and/or tendered by the Seller for delivery.