[2025] EWHC 1160 (TCC)

It is common ground that from around May 2023 the parties started negotiating for new pricing for the period beyond 31 December 2023. On 9 June 2023, Avanti produced detailed new pricing proposals for either a 3 or 5 year commitment. Further proposals were sent by Avanti on 4 July, 8 August, 8 and 29 September, 23 October and 2 November 2023. In fact Avanti offered to reduce prices for EE but this depended on migrating the services then provided through HYLAS 2 to HYLAS 4, so that HYLAS 4 was the only satellite being used. However, as at the end of 2023, no agreement had been reached. In particular, EE opposed the migration from HYLAS 2 to HYLAS 4. See, for example, the email from Mr Chopra of EE dated 11 December 2023.

On 29 December 2023 Mr Vines of Avanti emailed Mr Chopra as follows:

“As you know, the current GSA expires on 31st December. Therefore we have prepared for your review and signature the attached CCN008, which enables the existing contract to be extended on a rolling month-by-month basis whilst the parties negotiate and agree CCN007. I trust this is acceptable and would be grateful if you could please share your signed version once done. Please don’t hesitate to contact me in case of any questions.”

CCN7 was proposed to create a “renewed term of the GSA for a further 5 years”.

On around 23 January 2024, Mr Chopra sent a revised draft CCN8 to Mr Vines. However, this was not ultimately agreed.

As from 1 January 2024, Avanti kept on providing the services to EE pursuant to POs at the original rate but with Avanti reserving its position. In particular, Mr Vines emailed Mr Chopra as follows on 9 May 2024:

“…Please find attached an invoice for equipment ordered in November under PO PO4501449063, as well as monthly invoices for January, February, March and April. These monthly invoices relate to services Avanti continues to provide pending renewal of the General Supply of Goods and/or Services Agreement, agreed between the Parties dated May 2016 (“GSA”). We acknowledge that the parties have had differing views on the expiration date of the GSA but Avanti has continued to provide services on a monthly basis as a token of commercial good faith. Both the submission and payment of these invoices is without prejudice to the position each party has taken. We will continue to provide these interim services on a rolling monthly basis whilst the parties continue to discuss the terms for the renewal, but we can only do so on the basis of payment of those services.

We will continue to provide services in good faith, and we continue to work on the 5-year contract renewal, as we are very motivated to extend our partnership for many more years to come. We will continue to work on the migration, and this will maintain our full focus, however it is imperative that we resolve the cash position as a matter of urgency.

It would be appreciated if you could confirm the payment of the Q1 services by 10 May 2024 to confirm that the payments will be made on 15 May 2024, as we will need this information to support our cash forecasting.

Whilst the POs attached do correctly reflect the charges, our invoice against these services will be issued expressly on the basis of a reservation of the parties position regarding the status of the GSA (with Avanti maintaining that it has terminated and that these services are being provided on a good will basis outside the term). We specifically reject the applicability of EE General Conditions. We will proceed to issue invoices on this understanding…”

On 30 May 2024, Avanti sent to EE headline terms for CCN7 which included some changes to the GSA. This was rejected by EE on 11 June. There were further negotiations and drafts between July and December 2024 but without an agreement.

In the meantime, Avanti had received several offers to supply its satellite services to others. In particular, on 21 November 2024, it signed a letter of intent for a new long term contract worth up to $147.5 million (“the LOI”). A copy of the LOI has been provided to EE in a redacted format on a confidential basis. I was not provided with a copy and was not asked to look at it. So I have not seen it. However at paragraph 36 of RT1 he says this about it:

“36.1

The letter of intent provides for a seven-year contract, with the final two years being optional.

36.2

The price of the services over the five-year period amounts to USD 112.5 million, and for the seven years USD 147.5 million.

36.3

The letter of intent contains an exclusivity period up to 31 January 2025, which was amended by a letter dated 17 February 2025 to 28 February 2025 and further amended by a letter dated 7 March 2025 to 31 March 2025. Avanti and the third party are currently engaging in discussions around a further extension of the exclusivity period.

36.4

Avanti is continuing to negotiate the detailed terms of the New Contract with the customer. However, I am instructed by Bridget Sheldon-Hill, Avanti's General Counsel ("Ms Sheldon-Hill"), that there is urgency to concluding the New Contract – and that, if the dispute with EE is protracted, there is a real and significant risk that the opportunity will be lost.”

Initially on 17 December 2024 and then formally on 10 January 2025, Avanti proposed a new 7 year agreement with a much increased monthly price of £812,500. According to paragraph 40 of RT1, the background to the making of this offer was not merely the LOI, where there was a time-factor, but the fact that this was the sort of charge which Avanti could make to others for the supply of these services.

On 30 January 2025, EE responded as follows:

“Thank you for your letter dated 17th January 2025, in which Avanti seeks to increase service charges to £812,500 per month (approximately four times the current charges) and to change the terms of the Agreement, effective 1 February 2025.

Having undertaken a detailed review of your correspondence, the General Services Agreement (GSA), and the associated Change Control Notices (CCNs), we find no legal or contractual basis for this proposed increase or the changes to the terms of the Agreement. Accordingly, we dispute and reject both the price increase (as well as any associated invoices that include the revised charges) and the changes to the terms.

The GSA explicitly requires that any changes to charges be agreed through the formal Change Control process. No such agreement exists in relation to your proposed increase. While we acknowledge that CCN005 has expired, this does not grant Avanti the right to impose new pricing unilaterally. In the absence of a validly executed replacement CCN or other mutual agreement, the pricing set under the existing GSA remains binding.

We note that your letter suggests invoices may be issued without a Purchase Order (PO) or Authorisation to Invoice (ATI). However, this position is inconsistent with the GSA, which ties the validity of invoices to compliance with agreed procedural requirements.

We understand that Avanti may wish to discuss adjustments to the current arrangement, and we are willing to engage in constructive discussions about the future of the services. That said, Avanti remains obligated to continue providing services at the current agreed rates under the GSA unless and until a properly executed CCN or amendment is in place.

We are confident this matter can be resolved amicably without the need to invoke formal dispute resolution mechanisms. Please feel free to contact me directly at your earliest convenience to discuss this matter further.”

That prompted the following response from Avanti on 31 January 2025:

“As you acknowledge, the Updated Statement of Work for the services (CCN005) has expired, and there is therefore no contractual or commercial coverage for the services which we have been providing, on a monthly rolling basis, on a good will basis. I do not understand EE’s suggestion that the expired commercial terms of CCN005 continue to apply to these services in perpetuity until some different agreement is negotiated – that would not make commercial sense and is directly inconsistent with the express terms of Clause 2.3 of the GSA.

CCN005 provided the proposed Charges for the services for a fixed 7.5-year period ending on 31 December 2023. Continuation of services beyond this period requires the parties to agree new commercial terms. Although we have continued to provide services on a good will basis, there is no contractual obligation for us to do so, and certainly not on the financial terms agreed in 2018.

As we discussed, the updated charges we have proposed are not arbitrary, but rather reflect the commercial terms that a third party has indicated to us that they would be willing to commit to through a long-term contract. In those circumstances, it is difficult to see how EE could reasonably expect us to continue to provide services at a substantially lower price, nor indeed how our directors could, in the discharge of their fiduciary obligations to the company and its shareholders, accept anything else.

We will therefore be issuing an invoice for £812,500 in respect of February services. If this is not paid within 30 days, we cannot continue to provide services on the same basis. In the event of non-payment, we will have no option than to start taking steps to redeploy the capacity to third parties on market commercial terms at the beginning of Q2 2025. It goes without saying that we would prefer to reach a long-term commercial agreement to continue to support EE on this project. However, we cannot continue to provide services at a substantial loss.”

In the meantime, on 28 January 2025, EE issued a Request for Proposal (“RFP”) to identify a replacement supplier for Avanti on the closest like for like solution. According to LP2, an alternative supplier has been found, offering a 3 year contract at £3.5m per annum which is some £6.25m less than Avanti’s offer.

On 4 February 2025, Avanti issued an invoice to EE for £812,500 which EE then disputed. There were further attempts to find a way forward which did not succeed, and on 7 March, Avanti wrote to say that it now reserved the right to suspend services for non-payment. Payment was not received and on 14 March 2025, Avanti wrote to say that it would commence a phased withdrawal of its services on 24 March over a period of 6 weeks.

On 21 March, EE’s solicitors (CMS) wrote to say that an application for an injunction would be made unless the threat to suspend services was withdrawn.

On 24 March 2025, CMS wrote to Jones Day, Avanti’s solicitors, to say that it would pay the February 2025 invoice in full if Avanti agreed not to suspend any services until 14 April. On the same day, this application for an injunction was made. Avanti agreed not to suspend services until 14 April but EE would have to pay the March 2025 invoice on the same basis as well.

The upshot was that EE then did pay the February 2025 invoice in the full amount under protest. The parties also agreed that pending the outcome of the hearing before me, Avanti would continue to provide the services, with EE paying 50% of the March 2025 invoice, and there the position rests.