UK Court of Appeal further clarifies Electronic Communications Code renewals

The Court of Appeal has added to the increasing list of reported judgments relating to renewals under the Electronic Communications Code, with the ruling in Vodafone Limited v Potting Shed Bar and Gardens (formerly known as Gencomp (No.7) Ltd) & AP Wireless II (UK) Ltd (APW).   

AP Wireless (APW) appealed the earlier Upper Tribunal decision, which determined that part 5 of the Code could not be used against concurrent lessees to secure the renewal of an existing Code agreement. Instead, the Upper Tribunal determined that electronic communications operators must seek a new Code agreement from a concurrent lessee under part 4 of the Code. The Court of Appeal allowed the appeal in part, and determined that the part 5 of the Code, not part 4, should in fact be used in those circumstances. This has bought welcome clarity on this point.

Concurrent leases and Code renewals

The scope of the Court of Appeal's decision was limited to Code renewals involving concurrent leases. This covers the factual scenario where an entity originally granted a Code agreement to an operator, and that entity (or its successor in title) subsequently granted a (concurrent) lease of the same land to a third party, the concurrent lessee. 

What was the law before the appeal?

Paragraph 10 of the Code addresses which persons or entities with interests in land are treated as a party to a Code agreement relating to that land, in particular where they acquired an interest in the land after the existing Code agreement was granted. Under part 5 of the Code, only parties to a Code agreement (or those treated as a party to a Code agreement) can, for example, serve or receive notice to trigger the renewal of a Code agreement. 

Under paragraph 10 of the Code, it is possible for an entity to be bound by a Code agreement without being party to it. The language of paragraph 10 envisages that this is the case for concurrent lessees.  

The Upper Tribunal determined that paragraph 10 was an exhaustive list of the persons or entities who become a party to a Code agreement. On that basis, the part 5 renewal procedure could not be used against concurrent lessees. 

In order to ensure that operators could still secure a new agreement under the Code in line with the objective of the Code, the Upper Tribunal determined that part 4 of the Code should instead be used by the operator. As a result, the six-month notice period that usually applies to trigger renewal proceedings was reduced to 28 days.

What is the law now?

Importantly the Court of Appeal determined that operators should not be "locked out" of the Code and unable to renew existing Code agreements under part 4 or part 5, where concurrent lessees are involved.

The Court of Appeal disagreed, however, with part of the Upper Tribunal's reasoning and found that paragraph 10 of the Code was not exhaustive. Instead it determined that, because APW (the concurrent lessee in this case) is entitled to the benefit and the burden of the existing Code agreement held by Vodafone as a matter of common law outside of the Code, it is to be treated as a party to that agreement for the purposes of part 5. This new test formulated by the Court of Appeal means that the part 5 renewal procedure is to be used where there is a concurrent lessee involved, and the usual six-month notice period will apply.

Osborne Clarke comment

This decision will be welcomed by operators in that it confirmed that operators were not "locked out" of renewing existing Code agreements where the is a concurrent lessee. Equally, it provides much-needed clarity on the correct procedure to use when seeking the renewal of an existing Code agreement against a concurrent lessee. This should streamline the renewal process for operators, eliminate the need for an operator to seek Code rights under both part 4 and part 5 of the Code in a number of cases. We anticipate, however, that  further judicial guidance may be required to address the new test formulated by the Court of Appeal.