Marathon Oil UK LLC v Centrica Resources Ltd & Ors

Marathon Oil UK LLC v Centrica Resources Ltd & Ors

The 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 properly incurred under the Agreements and do not require further specific approval from the Operating Committee. The Operator acted in good faith and within its contractual discretion; no breach of fiduciary or contractual duty was established.

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 Contractual Dispute / Judgment on Liability Only
Outcome
Participants liable for share of DRCs; counterclaim dismissed (except for possible quantum adjustments for overpayment)
Legal Topics
Joint Operating Agreements, Pension Scheme Deficits, Cost Allocation, Fiduciary Duties, Good Faith in Contractual Discretion
Contract Law Commercial Law Oil and Gas Law Joint Operating Agreements Pension Scheme Deficits Cost Allocation Fiduciary Duties Good Faith in Contractual Discretion

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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 Contractual Dispute / Judgment on Liability Only

Legal Issues

  1. 1 Are the Participants liable under the Agreements to meet a share of deficit recovery charges (DRCs) in respect of the defined benefit pension scheme for employees engaged in operations?
  2. 2 Does the Operator require specific further approval from the Operating Committee to recharge pension deficit costs?
  3. 3 Did the Operator act in good faith or breach any fiduciary or contractual duties in relation to the DRCs?

Ratio Decidendi

The 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 properly incurred under the Agreements and do not require further specific approval from the Operating Committee. The Operator acted in good faith and within its contractual discretion; no breach of fiduciary or contractual duty was established.

Court Disposition

Participants liable for share of DRCs; counterclaim dismissed (except for possible quantum adjustments for overpayment)

Orders

  • Declaration that Participants are liable to meet a share of a proportion of DRCs in respect of the Scheme for relevant employees
  • Counterclaim dismissed except for quantum adjustments if overpayment established