British Gas Trading Ltd v Amerada Hess Ltd & Anor

British Gas Trading Ltd v Amerada Hess Ltd & Anor

The requirement in Article XIX.3(b) for the sellers to 'give reasons' for their belief that continued production will no longer be economic is satisfied by stating the reason for that belief, even if concisely. The contract does not require the sellers to provide detailed financial analysis or particulars in the notice. The notices, which stated that production would no longer be economic due to natural decline in reservoir pressure and that production costs would exceed gross revenue, complied with the contractual requirement.

Parties
Claimant/appellant: British Gas Trading Ltd; Defendant/respondent: Amerada Hess Ltd; Defendant/respondent: Perenco UK Limited
Jurisdiction
England and Wales
Judgment Date
15 May 2006
Procedural Posture
Civil Appeal / Appeal From Commercial Court Judgment
Outcome
Appeal dismissed
Legal Topics
Contractual Interpretation, Termination of Contract, Notice Requirements, Gas Supply Agreements
Contract Law Commercial Law Contractual Interpretation Termination of Contract Notice Requirements Gas Supply Agreements

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Parties

British Gas Trading Ltd

Claimant/appellant

Amerada Hess Ltd

Defendant/respondent

Perenco UK Limited

Defendant/respondent

Procedural Posture

Civil Appeal / Appeal From Commercial Court Judgment

Legal Issues

  1. 1 Whether the termination notices served by the sellers under Article XIX.3(b) of the Principal Agreements contained 'reasons' as required by the contract and were therefore valid.

Ratio Decidendi

The requirement in Article XIX.3(b) for the sellers to 'give reasons' for their belief that continued production will no longer be economic is satisfied by stating the reason for that belief, even if concisely. The contract does not require the sellers to provide detailed financial analysis or particulars in the notice. The notices, which stated that production would no longer be economic due to natural decline in reservoir pressure and that production costs would exceed gross revenue, complied with the contractual requirement.

Court Disposition

Appeal dismissed

Orders

  • The appeal by British Gas Trading Ltd is dismissed.