Marathon Oil UK LLC v Centrica Resources Ltd & Ors [2018] EWHC 322 (Comm) (21 February 2018)

Marathon Oil UK LLC v Centrica Resources Ltd & Ors [2018] EWHC 322 (Comm) (21 February 2018)

Participants are contractually liable to meet a share of a proportion of DRCs in respect of the defined benefit pension scheme for employees engaged in operations, as these costs are part of remuneration authorised by approval of operations. Approval of operations by the Operating Committee constitutes approval of associated employee costs, including pension arrangements. There was no lack of good faith or improper disclosure by the Operator.

Citation
[2018] EWHC 322 (Comm)
Parties
Claimant: Marathon Oil U.K. LLC; Defendant: Centrica Resources Limited; Defendant: TAQA Bratani Limited; Defendant: TAQA Bratani LNS Limited
Jurisdiction
England and Wales
Judgment Date
21 February 2018
Procedural Posture
Commercial Court Contractual Dispute / Judgment on Liability
Outcome
Participants are liable for a share of DRCs; counterclaim dismissed except for possible adjustment for past overpayments.
Legal Topics
Joint Operating Agreements, Defined Benefit Pension Schemes, Deficit Recovery Charges, Fiduciary Duties, Good Faith, Remuneration, Budget Approval, Accounting Procedures
Contract Law Commercial Law Oil and Gas Law Joint Operating Agreements Defined Benefit Pension Schemes Deficit Recovery Charges Fiduciary Duties Good Faith +3 more

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Parties

Marathon Oil U.K. LLC

Claimant

Centrica Resources Limited

Defendant

TAQA Bratani Limited

Defendant

TAQA Bratani LNS Limited

Defendant

Procedural Posture

Commercial Court Contractual Dispute / Judgment on Liability

Legal Issues

  1. 1 Are Participants contractually liable for a share of deficit recovery charges (DRCs) relating to a defined benefit pension scheme for Operator's employees?
  2. 2 Does the Operator owe fiduciary or contractual duties affecting liability for DRCs?
  3. 3 Is approval by the Operating Committee required for reimbursement of pension-related costs?

Ratio Decidendi

Participants are contractually liable to meet a share of a proportion of DRCs in respect of the defined benefit pension scheme for employees engaged in operations, as these costs are part of remuneration authorised by approval of operations. Approval of operations by the Operating Committee constitutes approval of associated employee costs, including pension arrangements. There was no lack of good faith or improper disclosure by the Operator.

Court Disposition

Participants are liable for a share of DRCs; counterclaim dismissed except for possible adjustment for past overpayments.

Orders

  • Declaration of liability for Participants to meet a share of DRCs in respect of the defined benefit pension scheme.
  • Counterclaim dismissed except for quantum adjustment if overpayment established.