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Speed Up Britain welcomes clear guidance from Scottish appeal court on the renewal of existing Code agreements

In EE Limited & Hutchison 3G UK Limited v Duncan, the Inner House of the Court of Session (the Scottish appeal court) has provided some welcome guidance on the renewal of existing agreements between mobile network operators and site providers under the Electronic Communications Code (“the Code”).

EE Limited and Hutchison 3G UK Limited (“EE and H3G”) appealed against a decision of the Lands Tribunal for Scotland (“the Tribunal”) dismissing their application for an order to terminate an existing agreement and replace it with a new agreement under the Code, for failure to prove a “business and technical need” (pursuant to paragraph 34(13) of the Code) for the new agreement. 

The appeal court accepted EE and H3G’s argument that the Tribunal had set the bar higher than the Code intended, stating:

“…Parliament has identified certain minimum rights for operators, including sharing/upgrading abilities and reduced outlays resulting from valuation on a no scheme basis.  The view was taken that these are required if network operators and infrastructure providers are to be in a position to deliver the modern low cost electronic communications system which Parliament wants and which business and the public at large expect.” 

Reflecting on the policy aims of the Code, the appeal court observed that “new code rights would be phased in for existing sites when such agreements ended, with the old code becoming obsolete over time”.

In considering the decision of the Tribunal, the appeal court commented: “we part company with the tribunal in its assertion that the operators required to do more than point to the current arrangements as being out of step with the minimum rights available under the new code, for example in terms of assignation, upgrading, sharing and rent”. 

The appeal court found that the Tribunal “erred in its approach to the requirement to have regard to the operators’ “business and technical needs”. In particular there is no sound basis for requiring demonstration of a provision in the lease which is thwarting a specific project or is rendering the arrangement unduly onerous.”

EE and H3G’s appeal was therefore allowed, and the original order of the Tribunal was quashed.

The Site Provider had lodged a cross appeal on two points concerning, firstly, the application of the Code to agreements continuing under the Scottish principle of tacit relocation and, secondly, the validity of a Paragraph 33 notice which specified a date for termination of the lease which was not an anniversary of its ish (the day when the agreed term expired). The Site Provider was unsuccessful, and the cross appeal was refused. 

This Scottish appeal court’s decision highlights the aims of the Code regarding the transition of old Code agreements to new Code agreements, and provides much needed clarity on the availability of orders under Paragraph 34 of the Code for assisting all parties in negotiating the renewal of existing agreements.