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England and Wales High Court (Commercial Court) Decisions |
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You are here: BAILII >> Databases >> England and Wales High Court (Commercial Court) Decisions >> Apache North Sea Ltd v Euroil Exploration Ltd & Anor [2019] EWHC 3241 (Comm) (06 December 2019) URL: http://www.bailii.org/ew/cases/EWHC/Comm/2019/3241.html Cite as: [2019] EWHC 3241 (Comm) |
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BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
COMMERCIAL COURT (QBD)
Fetter Lane, London, EC4A 1NL |
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B e f o r e :
SITTING AS A JUDGE OF THE HIGH COURT
____________________
APACHE NORTH SEA LIMITED |
Claimant |
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- and - |
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(1) EUROIL EXPLORATION LIMITED (2) EDISON S.P.A |
Defendants |
____________________
Mr Alec Haydon QC (instructed by Herbert Smith Freehills LLP) for the Defendants
Hearing dates: 28 October 2019
____________________
Crown Copyright ©
HH Judge Pelling QC:
Introduction
The Facts
The FOA, VJOA and their Relevant Terms
The FOA
"WHEREAS:
B. On and subject to the terms and conditions of this Agreement, [ANSL] is willing to transfer the Earned Interests to [EEL] in consideration of the payment by [EEL] of certain costs that would otherwise be borne by Apache.
C. The costs to be borne by [EEL] described in Recital B are in respect of the drilling of up to two (2) separate wells at different times under the Licences
NOW THEREFORE IT IS HEREBY AGREED as follows:
1. Definitions and interpretation
Definitions
1.1 In this Agreement the following expressions shall, except where the context otherwise requires, have the following respective meanings:
"AFE" means an authorisation for expenditure pursuant to the relevant JOA relating to an Earned Interest (including those set out in Schedule 6);
"Agreement" means this deed including the recitals and the Schedules attached hereto;
"Earned Interests" means the Les Arcs Interest and the Val D'Isere Interest, and "Earned Interest" means either of them;
"Earn-In Costs" means the Les Arcs Earn-In Costs and the Val D'Isere Earn-In Costs;
"JOA" means the Les Arcs JOA or the Val D'Isere JOA to be entered into at Completion (substantially in the form set out in Schedule 7) (or either of them as the case may be);
"Les Arcs Earn-In Costs" means (i) twenty-five percent (25%) of the total costs (other than the Back Costs) in relation to the Les Arcs Earn-In Well, whensoever incurred in respect of all works undertaken pursuant to the Well Programme for the purpose of the Les Arcs Earn-In Well, including the planning, surveying, drilling (including side-tracking for mechanical reasons), coring, testing, logging, suspending and abandoning of the Les Arcs Earn-In Well and the mobilisation and demobilisation of the rig (if relevant) provided that in the event that the costs in respect of Les Arcs Earn-In Well net to [EEL] exceed seven million seven hundred thousand Pounds Sterling (£7,700,000), then with respect to any such costs in excess of such amount such percentage shall be reduced to ten percent (10%) of such costs, plus (ii) the Back Costs set out in Schedule 4 Part 1);
"Val D'Isere Earn-In Costs" means (I) (a) in the event that the Val D'Isere Option is not exercised twenty six point twenty five percent (26.25%) of the total costs (other than the Back Costs) in relation to the Val D'Isere Earn-In Well, whensoever incurred, and in respect of all works undertaken pursuant to the Well Programme in connection with the Val D'Isere Earn-In Well, including: the planning, surveying, drilling (including side-tracking for mechanical reasons), coring, testing, logging, suspending and abandoning of the Val D'Isere Earn-In Well and the mobilisation and demobilisation of the rig (if relevant), provided that in the event that the costs in respect of Val D'Isere Earn-In Well (net to [EEL]) exceed ten million five hundred thousand pounds (£10,500,000), then with respect to any such costs in excess of such amount such percentage shall be reduced to seventeen point five percent (17.5%) of such costs; or (b) in the event that the Val D'Isere Option is exercised, thirty-seven point five percent (37.5%) of the total costs (other than the Back Costs) in relation to the Val D'Isere Earn-In Well, whensoever incurred, and in respect of all works undertaken pursuant to the Well Programme in connection with the Val D'Isere Earn-In Well, including: the planning, surveying, drilling (including sidetracking for mechanical reasons), coring, testing, logging, suspending and abandoning of the Val D'Isere Earn-In Well and the mobilisation and demobilisation of the rig (if relevant), provided that in the event that the costs in respect of Val D'Isere Earn-In Well (net to [EEL]) exceed eighteen million Pounds Sterling (£18,000,000), then with respect to any such costs in excess of such amount such percentage shall be reduced to twenty-five percent (25%) of such costs; plus (II) the Back Costs as further set out in Schedule 4 Part 2;
"Val D'Isere Earn-In Well" means the well to be drilled in accordance with the Well Programme pursuant to the Val D'Isere JOA by the Operator;
"Val D'Isere Earned Interest" means an undivided legal interest in the Licence P.1998 and a seventeen point five percent (17.5%) Percentage Interest under the Val D'Isere JOA in the event that the Val D'Isere Option is not exercised, or twenty five percent (25%) Percentage Interest under the Val D'Isere JOA in the event that the Val D'Isere Option is exercised, together with all rights and obligations attaching thereto and including but not limited to: (1) the right to take and receive a consequent share of all Petroleum produced under Licence P.1998 on or after the Completion Date and to receive the gross proceeds from the sale or other disposition thereof; and (ii) all rights, liabilities and obligations associated with such an interest under the Earned Interest Documents and Earned Interest Data;
"Val D'Isere JOA" means the joint operating agreement for UKCS Licence No P.1998, Blocks 21/10b and 21/9b to be entered into at or prior to Completion substantially in the form set out at Schedule 7;
"Val D'Isere Option" means the option as set out in Clause 3.1.8;
"Well Programme" means the well programme and map of the well location and associated budget in respect of each Earn-In Well (as the context requires) approved by [ANSL] and any Relevant Third Parties pursuant to the relevant JOA, as may be amended or re-issued from time to time pursuant to the relevant JOA and as are each set out in Schedule 6 and dated the date of this Agreement;
Interpretation
1.3 The headings in this Agreement are inserted for convenience only and shall be ignored in construing this Agreement.
2. Agreement to Transfer the Earned Interests
2.1 Subject to the terms of this Agreement, in consideration of [EEL] paying the Earn-In Costs in accordance with the provisions of clause 3.1 below, [ANSL] hereby agrees to transfer the Earned Interests to [EEL] free from all Encumbrances (other than any Encumbrances set out in the Earned Interest Documents) and [EEL] hereby agrees to acquire from Apache, the Earned Interests and to pay the Earn-In Costs.
3. Well Programme and Earn-In Costs
3.1 Determination and Payment of Earn-in Costs
3.1.1 Subject to the terms of this Agreement, [EEL] shall pay the Earn-In Costs, in accordance with the provisions of this Clause 3.1. On and from Completion [EEL] shall, for the avoidance of doubt, also pay its Percentage Interest share of any other costs pursuant to or in connection with the relevant JOA and/or the Earned Interests.
3.1.2 [EEL] agrees to pay [ANSL] within three (3) Business Days of execution of this Agreement the sum of five million Pounds Sterling (£5,000,000) in respect of the anticipated Earn-In Costs (the "Upfront Payment"). The Upfront Payment shall be applied by [ANSL] towards payment of the Earn-In Costs following receipt of a corresponding AFE, cash call or invoice issued by [ANSL] in accordance with the relevant JOAs within the applicable time periods as set out in the relevant JOAs.
3.1.3 Upon Earn-In Well Completion, [ANSL] shall calculate the total amount remaining due pursuant to Clause 3.1.1, taking into account the Upfront Payment and payments made pursuant to Clause 3.1.4. [ANSL] shall issue a statement within ten (10) days of the Earn-In Well Completion having occurred, which shall confirm whether or not any payment is due under this Clause 3.1.3 by [EEL] to [ANSL], or by [ANSL] to [EEL] (as applicable) and the amount of such payment (the "Reconciliation Statement"). The Parties shall then discuss and agree the same (taking into account any items which may be the subject of dispute with the Operator under the JOA). If a payment is due under the Reconciliation Statement, such payment shall be made within thirty (30) days of the date of issue of the Reconciliation Statement and any dispute regarding the amounts set forth in the Reconciliation Statement shall be resolved between the Parties in accordance with the JOA.
3.1.4 [EEL] shall pay all sums payable by it with respect to the Earn-In Costs upon receipt of an invoice from [ANSL] (taking into account the Upfront Payment) in accordance with the relevant JOA within the applicable time periods as set out in the relevant JOA, provided that the payment of the Back Costs agreed with respect to Val D'Isere Earn-In Well shall be made within seven (7) Business Days of a demand being made for such payment, such demand to be made no earlier than 1 January 2016.
3.1.8 [EEL] may, by giving notice in writing to [ANSL] at any time prior to the date falling ninety (90) days after Earn-In Well Completion in respect of Earn-In Well Completion of the Les Arcs Earn-In Well (the "Option Expiry Date"), exercise the option to acquire a further 7.5% Percentage Interest under the Val D'Isere JOA. At such time, [EEL] shall pay the amount of any further Val D'Isere Earn-In Costs then due and not yet paid as a result of exercising such Val D'Isere Option..
3.3 JOAs
3.3.1 For the purpose of this Agreement, the parties agree that the Les Arc JOA and Val D'Isere JOA shall, to the extent not otherwise in force and effect, be deemed to be in full force and effect both prior to and after Completion and [ANSL] shall, with respect to the Earn-in Costs, issue AFEs pursuant to and in accordance with the relevant JOAs from the date hereof.
3.3.2 Notwithstanding the provisions of Clause 3.3.1, ANSL may amend the Well Programme, approve or amend any AFEs and make contract awards in respect of the Earn-In Wells without the consent of [EEL] and otherwise in accordance with the JOAs.
4. Interim Period
4.1 In respect of each Earned Interest, from the date of this Agreement until Completion, [ANSL] shall (to the extent it is permitted to do so under the Licences and by the JOAs and subject to any confidentiality obligations by which it is bound):
4.1.6 maintain insurance in relation to the Earned Interests in accordance with the JOA;
11. Costs and Expenses
11.2 Without prejudice to any other rights hereunder, if any amount payable pursuant to this Agreement is not paid when due, the defaulting Party shall pay interest on such amount from the due date of payment (after as well as before judgment) at the Default Rate (on a compounded basis).
19. General
19.1 If there is any conflict between the provisions of this Agreement and the provisions of the Assignment Documents, the Reassignment Documents and/or the JOAs, the provisions of this Agreement shall prevail."
"Definitions and Interpretation
1.1 In this Agreement the words below have the meaning next to them unless the context requires otherwise:
Accounting Procedure the procedure set out in Schedule 1.
AFE authority for expenditure.
Invoice any invoice presented for payment by the Operator to a Participant in accordance with the provisions of the Accounting Procedure in connection with Joint Operations.
3 Scope and Understanding
3.1 Scope
3.1.1 The scope of this Agreement shall extend to:
(a) the exploration for, and the appraisal, development and production of, Petroleum under the Licence;
(b) without prejudice to clause 18, the treatment, storage and transportation of Petroleum using Joint Property;
(c) the decommissioning or other disposal of Joint Property; and
(d) the conditions for the carrying out of Sole Risk Projects in the Licence Area,
3.1.2 This Agreement shall not extend to:
(a) any joint financing arrangements or any joint marketing or joint sales of Petroleum;
(b) the consideration of any commercial terms in connection with the treatment, storage and transportation of Petroleum under the Licence using third party infrastructure;
(c) the consideration of any commercial terms in connection with the use of Joint Property by third parties.
3.1.3 The Operator shall prepare and issue a revised Schedule 5 to the Participants promptly following the execution of any agreement which the Participants have agreed shall be incorporated as an Associated Agreement under this Agreement.
3.1.4 Where the Operator represents the Participants in relation to any Associated Agreement, unless otherwise agreed in such Associated Agreement;
(a) the responsibility and liability of the Operator in relation to such Associated Agreement shall be in accordance with this Agreement; and
(b) the liability of the Participants under any Associated Agreement shall be apportioned in accordance with their Percentage Interests.
3.2 Understanding
This Agreement represents the entire understanding of and agreement between the Participants in relation to the matters dealt with in this Agreement, and supersedes all previous understandings and agreements, whether oral or written, relating to such matters. Each Participant agrees that it has not been induced to enter into this Agreement in reliance upon any statement, representation, warranty or undertaking other than as expressly set out in this Agreement, and to the extent that any such representation, warranty or undertaking has been given, the relevant Participant unconditionally and irrevocably waives all rights and remedies which it might otherwise have had in relation to it. Nothing in this clause shall however operate so as to exclude any right any Participant may have in respect of statements fraudulently made or fraudulent concealment.
4 Interests of the Participants
Subject to the provisions of this Agreement, the licence, all Joint Property, all Joint Petroleum and all costs and obligations incurred in, and all rights and benefits arising out of, the conduct of the Joint Operations shall be owned and borne by the Participants in proportion to their respective Percentage Interests which at the date of this Agreement are as follows:-
[ANSL] 82.5%
[EEL] 17.5%
TOTAL 100.0%
5 The Operator
5.1 Designation
[ANSL] is hereby designated and agrees to act as the Operator under this Agreement for the purposes of the exploration for and the production of Petroleum within the Licence Area.
6 Authorities and Duties of the Operator
6.1 Rights
6.1.1 Subject to all the provisions of this Agreement, the Operator has the right and is obliged to conduct the Joint Operations by itself, its agents or its contractors under the overall supervision and control of the Joint Operating Committee.
6.2 Responsibilities
6.2.2 The Operator shall:
(a) conduct the Joint Operations in a proper and workmanlike manner in accordance with Good Oilfield Practice;
(b) conduct the Joint Operations in compliance with the requirements of the Acts, the Licence and any other applicable Legislation;
(c) do or cause to be done, with due diligence, all such acts and things within its control as may be necessary to keep and maintain the Licence in force and effect; and
(d) save as may otherwise be expressly provided under this Agreement (including the Accounting Procedure), neither gain nor suffer a loss in such capacity as a result of acting as Operator in the conduct of Joint Operations.
6.5 Commitments for Material and Services
6.5.2 In connection with work to be carried out pursuant to an approved Programme and Budget or AFE:
(a) subject to clause 6.5.2(b) the Operator, or any Affiliate of the Operator, may supply necessary Material and services whether owned, leased or otherwise, from its own resources and shall charge the costs to the Joint Account in accordance with the Accounting Procedure;
(b) in the event that the Operator, or any Affiliate of the Operator, proposes to supply Material and/or services from its own resources which it estimates will cost more than £500,000 (five hundred thousand Pounds) the Operator shall obtain the approval of the Joint Operating Committee prior to supplying such Material and/or services;
6.10 Expenditures and Actions
6.10.1 The Operator is authorised to make such expenditures, incur such commitments for expenditures and take such actions as may be authorised by the Joint Operating Committee in accordance with clauses 10 to 14 provided that nothing contained in this clause 6.10.1 shall derogate from the Operator's duties under clause 6.5.
6.10.2 The Operator is also authorised to make any expenditures or incur commitments for expenditures or take actions it deems necessary in the case of emergency for the safeguarding of lives or property or the prevention of pollution. The Operator shall promptly notify all the Participants of any such circumstances and the amount of expenditures and commitments for expenditure so made and incurred and actions so taken.
10 Exploration and Appraisal Programmes and Budgets
10.2 Authorisation for Expenditure
Except as provided in clause 6.10.2, the Operator shall, before entering into any commitment or incurring any capital expenditure or seismic expenditure in excess of £500,000 (five hundred thousand Pounds) under an approved exploration and/or appraisal Programme and Budget submit to the Participants an AFE for it in accordance with the Accounting Procedure. To the extent that the Joint Operating Committee approves an AFE, the Operator shall be authorised and obliged, subject to clauses 6.5 and 10.3, to proceed with such commitment or expenditure. The Operator shall prepare and submit to the Participants a separate APE for each exploration or appraisal well, on a dry-hole basis, Drill stem testing shall be a contingent item.
11 Development Programmes and Budget
11.2 Authorisation for Expenditure.
Except as provided in clause 6.10.2, the Operator shall, before entering into any commitment or incurring any capital expenditure in excess of £1,000,000 (one million Pounds) with respect to the preparation of a development Programme and Budget or under an approved development Programme and Budget submit to the Participants an AFE for it in accordance with the Accounting Procedure. To the extent that the Joint Operating Committee approves an AFE, the Operator shall be authorised and obliged, subject to clauses 6.5 and 11.3, to proceed with such commitment or expenditure. The Operator shall prepare and submit to the Participants a separate AFE for each development well.
13 Decommissioning Programme and Budget
13.2 Authorisation for Expenditure
Except as provided in clause 6.10.2, the Operator shall, before entering into any commitment or incurring any capital expenditure in excess of £1,000,000 (one million Pounds under an approved Decommissioning Programme and Decommissioning Budget, submit to the Participants an AFE for it in accordance with the Accounting Procedure. To the extent that the Joint Operating Committee approves an AFE, such approval not to be unreasonably withheld or delayed where the AFE is consistent with the approved Decommissioning Programme and Budget, the Operator shall be authorised and obliged, subject to clauses 6.5 and 13.3, to proceed with such commitment or expenditure.
16 Costs and Accounting
16.1 The Accounting Procedure
The Accounting Procedure is hereby made part of this Agreement. In the event of any conflict between any provision in the main body of this Agreement and any provision in the Accounting Procedure, the provision in the main body shall prevail.
SCHEDULE 1
Accounting Procedure
Joint Operating Agreement
UKCS Licence No. P.1998
Blocks 21/10b and 21/9b
1 Purpose and Intent
1.1 The purpose of this Accounting Procedure is to define the responsibilities and procedure for accounting for the financial transactions relating to this Agreement.
1.2 It is intended that the Accounting Procedure is fair and equitable as regards the charges, income, losses and gains attributed to the Joint Account, and to their apportionment amongst the Participants, and as regards the rights of the Participants on the disposal of assets and surplus materials. It is further intended that the Operator shall neither gain nor suffer any loss as a result of acting as Operator. The Participants agree that if any Participant considers that the methods described herein are materially inequitable, the Participants shall meet and in good faith endeavour to agree on changes in methods deemed appropriate to correct any inequity. For the avoidance of doubt, any changes made to the Accounting Procedure shall be subject to unanimous approval of the Participants or, where expressly so provided, by decision of the Joint Operating Committee.
1.3 The Operator shall charge and credit the Joint Account for all costs and receipts properly and necessarily incurred to conduct Joint Operations in accordance with the principles set out in this Accounting Procedure and, if the Joint Operating Committee so determines, with the Standard Oil Accounting Procedures issued by Oil and Gas UK from time to time ("SOAPs") in effect on the date on which the transaction is charged or credited to the Joint Account provided that in the event of any conflict between the SOAPs and this Accounting Procedure, this Accounting Procedure shall prevail and in the event of a conflict between the provisions of the Accounting Procedure and the provisions of the Agreement, the Agreement shall prevail.
1.4 Subject to the necessary Budget and AFE being approved in accordance with clauses 10 to 14 (as applicable), expenditures properly and necessarily incurred to conduct Joint Operations from and after the effective date of this Agreement as set out in clause 2.1 shall be charged to and paid by the Participants in proportion to their respective Percentage Interests. The Operator may, in accordance with the Accounting Procedure, Invoice the Participants Monthly in respect of all expenditures to be borne by the Participants incurred pursuant to this Agreement provided, however, that other frequencies and procedures for invoicing may be approved by unanimous decision of the Participants from time to time.
3 Accounting Basis
3.2 Subject to the necessary Budget and AFE being approved in accordance with clauses 10 to 14 (as applicable), the Operator shall charge and credit the Joint Account on the basis of its accounting policies in effect on the date on which the transaction is charged or credited to the account for all the costs and income properly and necessarily incurred and received in accordance with this Agreement, including:
3.2.4 the cost of services, equipment, and/or facilities owned, partly owned, leased or hired by the Operator or its Affiliates and used on behalf of the Joint Account, which shall be charged at rates commensurate with the cost of ownership. The rates shall not exceed rates currently prevailing for like services, equipment and/or facilities if provided by non-affiliated third parties;
..."
Parties Cases in Summary
Applicable Principles
i) The court construes the relevant words of a contract in its documentary, factual and commercial context, assessed in the light of (a) the natural and ordinary meaning of the provision being construed, (b) any other relevant provisions of the contract being construed, (c) the overall purpose of the provision being construed and the contract in which it is contained, (d) the facts and circumstances known or assumed by the parties at the time that the document was executed, and (e) commercial common sense, but (f) disregarding subjective evidence of any party's intentions see Arnold v. Britton [2015] UKSC 36 [2015] AC 1619 per Lord Neuberger PSC at paragraph 15 and the earlier cases he refers to in that paragraph;
ii) A court can only consider facts or circumstances known or reasonably available to both parties that existed at the time that the contract or order was made - see Arnold v. Britton (ibid.) per Lord Neuberger PSC at paragraph 21;
iii) In arriving at the true meaning and effect of a contract, the departure point in most cases will be the language used by the parties because (a) the parties have control over the language they use in a contract; and (b) the parties must have been specifically focussing on the issue covered by the disputed clause or clauses when agreeing the wording of that provision see Arnold v. Britton (ibid.) per Lord Neuberger PSC at paragraph 17;
iv) Where the parties have used unambiguous language, the court must apply it see Rainy Sky SA v. Kookmin Bank [2011] UKSC 50 [2011] 1 WLR 2900 per Lord Clarke JSC at paragraph 23;
v) Where the language used by the parties is unclear the court can properly depart from its natural meaning where the context suggests that an alternative meaning more accurately reflects what a reasonable person with the parties' actual and presumed knowledge would conclude the parties had meant by the language they used but that does not justify the court searching for drafting infelicities in order to facilitate a departure from the natural meaning of the language used see Arnold v. Britton (ibid.) per Lord Neuberger PSC at paragraph 18;
vi) If there are two possible constructions, the court is entitled to prefer the construction which is consistent with business common sense and to reject the other see Rainy Sky SA v. Kookmin Bank (ibid.) per Lord Clarke JSC at paragraph 21 - but commercial common sense is relevant only to the extent of how matters would have been perceived by reasonable people in the position of the parties, as at the date that the contract was made see Arnold v. Britton (ibid.) per Lord Neuberger PSC at paragraph 19;
vii) In striking a balance between the indications given by the language and those arising contextually, the court must consider the quality of drafting of the clause and the agreement in which it appears see Wood v. Capita Insurance Services Limited [2017] UKSC 24 per Lord Hodge JSC at paragraph 11. Sophisticated, complex agreements drafted by skilled professionals are likely to be interpreted principally by textual analysis unless a provision lacks clarity or is apparently illogical or incoherent see Wood v. Capita Insurance Services Limited (ibid.) per Lord Hodge JSC at paragraph 13 and National Bank of Kazakhstan v. Bank of New York Mellon [2018] EWCA Civ 1390 per Hamblen LJ at paragraphs 39-40; and
viii) A court should not reject the natural meaning of a provision as correct simply because it appears to be a very imprudent term for one of the parties to have agreed, even ignoring the benefit of wisdom of hindsight, because it is not the function of a court when interpreting an agreement to relieve a party from a bad bargain - see Arnold v. Britton (ibid.) per Lord Neuberger PSC at paragraph 20 and Wood v. Capita Insurance Services Limited (ibid.) per Lord Hodge JSC at paragraph 11.
Discussion
The Interest Issues
"if any amount payable pursuant to this Agreement is not paid when due, the defaulting Party shall pay interest on such amount from the due date of payment (after as well as before judgment) at the Default Rate (on an compounded basis)."
The default rate is 4% above LIBOR as defined in the FOA. Interest is payable from the "due date". The issue between the parties concerns the true meaning and effect of that phrase.
"Each Participant shall settle the Invoice on or before the due date specified on the Invoice, which shall not be less than ten (10) days from the date of issue of the Invoice "
"Payment of any Invoices shall not prejudice the right of any Participant to protest or question the correctness of any amount included in any Invoice or billing schedule. Any queried or disputed amount in relation to any Invoice shall be promptly brought to the attention of the Operator, who shall address the query or dispute promptly. In the event that a query or dispute arises with an Invoice the undisputed part of such Invoice shall be settled. The part subject to query or dispute may be withheld until the query or dispute is resolved. If a full payment is made prior to settlement of the query or dispute, such payment shall not constitute a settlement of the query or dispute or otherwise waive or affect the rights of any Participant or the Operator. If a Participant fails to settle the undisputed part of the Invoice by the due date, the provisions of clause 17 shall apply in respect of the unpaid amount. If the query or dispute is resolved in favour of the Operator, a financing fee covering the period between the date on which the queried or disputed expenditure was incurred and the date on which such expenditure is settled by the disputing Participant, may be applied by the Operator."
Conclusions