Contents:
- UK Arbitration Act to come into force on 1 August 2025
- The Court of Appeal rules that exclusion for “anticipated profits” bars claims for lost charges
- High Court allows broad reading of dispute resolution clause
- Guidance on the admissibility at trial of settlement terms with other parties
- Applicability of without prejudice privilege rule to communications with third parties
- U.S. Supreme Court declines to revive youth-led climate lawsuit
- UK Government Consultation on New Oil and Gas Price Mechanism
- Establishment of the Marine Recovery Fund for offshore wind development
On 24 February 2025, the Arbitration Act 2025 secured Royal Assent and will come into force on 1 August 2025.
The Act introduces substantial reforms aimed at reinforcing London’s position as a top international arbitration centre, including:
- Section 6A, which introduces a new default rule that the governing law of the arbitration agreement will be the law of the seat of the arbitration, unless expressly agreed otherwise by the parties.
- A mandatory provision that the arbitrator has a duty to disclose relevant circumstances, of which they should reasonably be aware, that may reasonably give rise to justifiable doubts as to their impartiality.
- Section 39A, which provides the tribunal with the power to make an award on a summary basis if it considers that a party has “no real prospect of success” regarding the claim, defence, or other matter. Giving emergency arbitrators the power to make peremptory orders and grant parties permission to apply to court for a section 44 order.
The 2025 Act clarifies and simplifies the existing law and provides a welcome update for English arbitration practitioners and all those involved in arbitral proceedings seated in England and Wales.
Broadly worded exclusions like “anticipated profits” can now bar claims for expected revenue under a contract. This was the finding in the recent 2:1 Court of Appeal decision of EE Limited v Virgin Mobile Telecoms Limited [2025] EWCA Civ 70. The Court upheld the High Court’s ruling that EE’s £24.6m damages claim against Virgin Mobile was barred by an exclusion for “anticipated profits” in the parties’ Telecommunications Supply Agreement. EE alleged that Virgin had breached exclusivity terms by migrating customers to another network, but the Court held that the lost charges EE sought were expectation losses falling within the scope of the exclusion clause.
Key takeaways from the decision:
- “Anticipated profits” covered profits EE expected under the Agreement, even if described as “lost charges”.
- Standard principles of contractual interpretation applied: clearly worded exclusions between commercial parties must be enforced.
- EE’s claim, based on lost revenue minus avoided costs, was deemed a classic expectation loss.
- Prior case law turned on materially different wording or context and did not establish a general rule that such claims fall outside “anticipated profits”.
- Phillips LJ dissented, arguing the clause should not exclude damages for breach of a core contractual obligation. However, the majority ruled that clear risk allocation in negotiated contracts must be respected, even if it denies one party an effective damages remedy.
In SMT Global Logistics Ltd v Georgian Airlines LLC [2025] EWHC 739 (Comm), the Commercial Court confirmed it had jurisdiction over SMT’s breach of contract claim in respect of cancelled cargo flights. The dispute resolution clause in the relevant agreement stated that:
“in case that any possible dispute remains unresolved despite peaceful approaches, such disagreement or trial will be submitted to the court in accordance with current legislation of United Kingdom, which solution shall be final and obligatory for the parties.”
SMT argued that the above clause was an express choice of forum clause in favour of the High Court of England and Wales, entitling SMT to serve Georgian Airlines out of the jurisdiction.
Georgian Airlines made an application contesting the jurisdiction of the claim. It argued that: (1) the contract wording did not give the English courts jurisdiction to determine the claim; (2) that England and Wales was not the appropriate forum for the dispute, which it said was Georgia; and (3) the above clause had no relevant meaning in light of the Montreal Convention.
The Court allowed a broad reading of the clause. It held that the contract did validly confer jurisdiction on the English courts, that the contract was governed by English law and rejected the Airline’s argument that the Montreal Convention applied in the circumstances. SMT was therefore entitled to serve out of the jurisdiction.
The recent case of Omanovic v Shamaazi Ltd [2025] EWHC 110 (KB) offers important guidance on the admissibility at trial of settlement terms with other parties. The claimant, Mr Omanovic, sought to rely on settlement agreements reached with two former claimants to support an allegation of dishonesty against the second defendant. Mr Omanovic also argued that the quantum of the settlements would indicate the extent to which the merits of the former claimant’s claims were acknowledged.
The Judge found that using the agreements to imply dishonesty was legally flawed, potentially unfair due to issues of legal privilege, and contrary to the public interest in promoting settlement. The Judge noted that the decision to settle could have been based on a multitude of reasons, none of which recognised the validity of Mr Omanovic’s claim or any dishonesty on the part of the second defendant.
This judgment reinforces the principle that, until or unless there is a close nexus between the settlement and the issues to be decided by the court, settlement terms should not be disclosed to the trial judge.
In BNP Paribas Depositary Services Ltd v Briggs & Forrester Engineering Services Ltd [2024] EWHC 2575 (TCC), the High Court ruled that survey reports commissioned unilaterally and outside the context of negotiations were not protected by without prejudice privilege (WPP). The decision clarifies the extent to which WPP applies to communications with third parties, rather than between the negotiating parties themselves.
The parties were in dispute over who was responsible for locating and removing asbestos-containing materials under a contract for building works. Before proceedings were issued, they corresponded on a without prejudice (WP) basis. The claimants unilaterally obtained survey reports from a third party, which they hoped would assist further negotiations, and later shared those reports with the defendants under password protection. Access to the reports was provided under cover of a letter which expressly stated that the documents were being provided on a WP basis, and that opening the folder would constitute acceptance that the defendants would not rely on the reports at trial. The defendants declined to accept these conditions until they had reviewed the reports to determine whether they were privileged. The claimants subsequently applied to the court to prevent the defendants from relying on the reports, arguing that the reports were protected by WPP and that the defendants were bound by the conditions set out in the covering letter.
The High Court held that the survey reports were not protected by WPP. The reports had been commissioned unilaterally and not pursuant to any mutual agreement or understanding between the parties. Referring to Rabin v Mendoza & Co [1954] 1 WLR 271, the Court confirmed that WPP may apply to third-party documents only where they form part of a joint settlement effort. It rejected the claimants’ argument that the defendants were bound by the terms of the cover letter, and ordered disclosure of the reports for use at trial.
The U.S. Supreme Court has declined to hear the youth plaintiffs’ petition for a writ of certiorari in their long-running climate change lawsuit. The petition sought review of a May 2024 decision by the Ninth Circuit Court of Appeals, which directed the Federal District Court in Oregon to dismiss the plaintiffs’ second amended complaint.
The case centred on allegations that the U.S. government had knowingly permitted, authorised and subsidised the extraction and use of fossil fuels, despite longstanding evidence that these policies accelerate global warming and worsen the impacts of climate change. The plaintiffs argued that this conduct violated their constitutional rights by exposing them to environmental harm not faced by previous generations and denying them the same fundamental safeguards.
In its order, the U.S. Supreme Court declined to hear the plaintiffs’ appeal and directed the Federal District Court in Oregon to dismiss the case on the grounds that the plaintiffs lacked standing. Under U.S. constitutional law, plaintiffs must demonstrate a specific and concrete injury that is traceable to the defendant’s conduct and likely to be redressed by a favourable court decision. The Court acknowledged the seriousness of the plaintiffs’ concerns but held that they had not met these legal requirements. This decision effectively ends a decade-long effort to establish a constitutional right to a stable climate.
In March this year, the Government opened a consultation on implementing a new oil and gas price mechanism.
The current mechanism is the Energy Profits Levy (EPL) which was brought into force in 2022. This is due to expire on 31 March 2030 or potentially earlier, if the energy security investment mechanism is triggered by the average oil and gas prices over the six-month reference period falling at or below the threshold price.
The Government has proposed two possible options to permanently replace the EPL:
- A revenue-based model, which would tax only the portion of revenue earned above a set price threshold for oil or gas, for example if oil sells for £80 with a £60 threshold, £20 would be taxed. This would target excess income during high-price periods, regardless of overall profitability.
- A profit-based model, which would tax the share of a company’s profits attributed to unusually high prices, based on how much the average market price exceeds the threshold. This model focuses on windfall profits and accounts for company costs.
The Government’s preference is to introduce a revenue-based model, on the basis that it allows for a more effective targeting of gains arising from unusually high prices, ensuring the impact on investment decisions is minimised as well as being able to distinguish between oil and gas. However, it invited public views on the strengths and weaknesses of each approach and on the specific design choices of each model.
The consultation closed on 28 May 2025. The Government will shortly publish the outcome of the consultation following public feedback.
The UK Government’s Department for Environment, Food and Rural Affairs conducted a public consultation between 31 March and 12 May 2025 on the establishment and operation of the Marine Recovery Fund (MRF).
The MRF is hoped to support offshore wind deployment by enabling strategic, industry-funded environmental compensation for adverse impacts on Marine Protected Areas. The aim is to significantly speed up the consenting process for the development of offshore wind projects.
The MRF will come into existence in Autumn of this year. It will allow offshore wind developers to pay into a centralised fund to deliver compensatory environmental measures, drawn from a pre-approved library of Strategic Compensatory Measures. This will replace the current system whereby developers must pay specific compensation directly related to the specific project. The new arrangement should streamline the consenting process, reduce project delays, and enhance ecological outcomes by essentially aggregating compensation at scale.
The scheme is voluntary, covers England, Wales, and Northern Ireland, and is designed to be cost-neutral to the Government in the long term. A separate but coordinated Scottish MRF is being developed.
