[2025] EWHC 1160 (TCC)

Thirdly, EE places considerable reliance of the use of the word “Term” in the SOW. This occurs in various places. So, for example, under Annex 8 Capacity Management Process, paragraph 1.1 states that “The Service Capacity as described in Fig 1 and Fig 2 below shall be made exclusively available to EE by the Supplier at all times during the Term” and “Avanti agrees not to relocate HYLAS 1 at its current orbital position of 33.SW or HYLAS 2 at its current orbital position of 31E during the Term.”

Then, as part of Schedule 1 Service Description, under Section 4 Spare Parts Management:

“EE may change the Goods support option that it receives by giving the Supplier no less than three (3) months' notice in writing, EE shall not change the option that it receives more than once in any year of the Term and may only change such option after it has received at least one (1) year of Goods support).”

One then goes to Schedule 3 dealing with charges, where, under the table, it is stated “…Avanti will make available 350 Mb/s through the Term but Year 1 shall be subject to a ramp in capacity as set out below in Paragraph 3.2.11.”

EE submits that as the word “Term” is used with a capital “T” but is not defined in the SOW, it must be defined according to the GSA. It is specifically defined there under Clause 3 (cited at paragraph 17 above) to mean the term of the GSA until the GSA terminated according to its terms. Since it is common ground that the GSA has not been terminated, it follows that the “Term” of the SOW must be the same as the Term of the GSA. It follows that the SOW remained operative for a period beyond the first 7.5 years referred to in Schedule 3, even though no prices were agreed for such a following period. If that is so, it suggests that the SOW is a self-contained contract which includes an indefinite obligation to supply.

Before analysing that argument, I need to refer to a related point which is really made in the same context. This concerns some of the specific wording of Schedule 3 to the SOW.

Mr Lavy KC submits that significance must be attached to the words that follow the table in paragraph 3.2.1. This is because the table itself only deals with 5.5 years. The charges for years 5.5 to 7.5, albeit in the same amounts, only come in the text following the table:

“…Post Year 5 (and 6 months) the Monthly Fixed Capacity Charges shall be £168,000 (Annual= £2,016,000) for Years 5.5 to 7.5….”

He submits that this must mean that this provision was indeed stating an obligation to provide, going beyond Year 7.5, because otherwise why not have Years 5.5 to 7.5 simply catered for in the table?

He makes the same point in relation to paragraph 3.3 which deals with Operational Charges. The table there sets the prices for the period up to Year 6.5 and then says below the table:

“From Year 6, Q3 onwards the Operational Charges shall be £20,625.00 for each Quarter for Years 5.5 to 7.5.”

Accordingly, it is submitted, these passages show that it was intended that the SOW should apply beyond 7.5 years, in which case it suggests an indefinite obligation to supply, even if this was to be on the basis of a reasonable charge.

In relation to this point about the wording of these passages, I think that EE’s argument here reads far too much into the words used. I agree that the table could have included all the charges for the following years, but as a scheme of agreed payments, the words used make complete sense without having to give them the interpretation suggested by EE. The underlying reality was that on its face (and subject to the use of the word “Term”), the SOW simply does not provide for a situation after the first 7.5 years.

Accordingly, I do not consider that this point adds weight to or otherwise supports EE’s argument about the use of the word Term or the SOW’s duration and effect generally. I now turn to the use of the word “Term”.

The first thing to note is that there are, strictly, two separate but related questions: (a) what is the duration of the SOW and (b) whatever its duration, did it create an indefinite obligation to supply beyond the last PO? I consider each in turn.

I see the force of the point that the word “Term” in places other than Schedule 3 should be defined by reference to what is said in the GSA and therefore it runs alongside the GSA itself, as it were. However, in my judgement, there are a number of significant counter-arguments which I set out below.

First, the logic of any reference to a term in the SOW is surely to the duration of the standing terms which would then form part of any PO or - on EE’s case - in any event, but that points strongly to 7.5 years for these reasons; EE now accepts that if the SOW were to last longer than 7.5 years, the only charge claimable by Avanti would be a “reasonable charge”. But as a matter of commercial reality, I regard that as absurd and unworkable where, on EE’s case, the duration of the SOW is effectively indefinite subject only to termination of the GSA. The range of services is extensively and highly prescribed and the notion that either party would bind themselves simply to pay or be paid a “reasonable price” in relation to services of this kind I consider to be fanciful.

Indeed, EE did not suggest the applicability of a “reasonable charge” until these proceedings were issued. Rather, (although this was obviously wrong) it had previously suggested that unless terminated Avanti would be bound to continue to supply on the basis of the existing charges.

Next, one only has to ask the rhetorical question as to the intervals at which any “reasonable charge” would have to be agreed to see that a system of pricing like this would be unworkable unless the parties were prepared to have frequent recourse to the Court to determine the question.

EE submits that this is an exaggerated concern, however, because after all, some sort of pre-termination charges were put in place for February and March 2025 although no longer. That is true but they were agreed without prejudice to the parties’ right to argue what the charge should be hereafter. Indeed EE suggested that going forwards, pending a trial, an appropriate amount would be £300,000 per month rather than the previous £168,000 per month but this was rejected by Avanti. In the absence of an agreement and if I were to grant the injunction, it would be left to me to decide what amount to stipulate pro tem. However, none of that means that the concept of charging on a “reasonable basis” long-term would make any commercial sense here. I do not accept that agreeing such reasonable charges would be as straightforward as EE suggests, for example by resort to competitors’ prices.

Further and if one was looking at the SOW alone, it seems to me that the common-sense interpretation of “Term” would be the duration of the pricing agreed, because this is where one found a defined period.

In relation to Schedule 3, Mr Parker KC made the further point that in terms of definition, paragraph 1.2 stated that

“Defined terms used in this Schedule 3 shall have the same meanings given to them in Schedule A and/or Schedule B to the GSA, unless stated otherwise.”

Accordingly, he said, this would be an example of where it was “stated otherwise”, not expressly but by reference to the very fact of the period set out in Schedule 3. Of course, even if this were correct, it would not assist on where the expression “Term” applied other than in Schedule 3. So I do not attach much weight to this further point.

More powerful in my view was his point that it is plain that what Avanti can invoice for (and only invoice for) are its Charges. See Clause 7 of the GSA which sets out a detailed invoicing and payment scheme, including an ability on the part of Avanti to charge interest on unpaid invoices and a procedure for dealing with good faith disputes on any particular amount invoiced. I fail to see how any of that can encompass or operate in relation to an invoice for a “reasonable charge”. Equally, I consider that paragraph 4 of Schedule 3 to the SOW contemplates defined amounts being charged.

In my view, what this means here (and notwithstanding the prima facie identification of the word “Term” as used in the SOW with that used in the GSA), the word Term must be aligned with the duration of the pricing agreed i.e. 7.5 years.

If that is right, any connected argument for an indefinite obligation to supply (i.e. beyond 7.5 years) simply falls away.

However, and in any event, EE has to make good its argument for an indefinite obligation to supply, whatever the term of the SOW. This is because if it is being said that the SOW imposed such an obligation without more, this would immediately conflict directly with Clause 2.3 of the GSA. Unless one is prepared simply to jettison that provision (which I am not) the only answer is to construe “Term” in the SOW for these purposes in a more limited fashion, so that there is no indefinite obligation to supply. Indeed, one would have to do that because of the precedence affording to the GSA in the event of a conflict with the Engagement Form or Order. See Clause 1.3 thereof.

Moreover, the “reasonable charge” point returns here, not now because it is commercially unrealistic to say that the parties would agree that if a PO was made it would be on the basis of a reasonable charge, but because it is equally unrealistic that they would agree that Avanti would be bound to supply on the basis of a reasonable charge, even without a PO.

For all those reasons, but subject to any factual matrix and some other points, I do not accept that EE can show that there was by virtue of the SOW itself, an indefinite obligation to supply, which persists even now. As a matter of construction, that contention seems to me to be plainly wrong.

Before considering factual matrix and some other points, I will deal with the two fallback positions advanced by EE.

The first was that, even if it was necessary to have a PO before Avanti was contractually committed to supply, all that was needed was PO1, to act as a trigger, as it were. However, in my judgement, there is no logic to that position. PO1 was limited to 4.5 years, and so if a PO was necessary to go beyond that, there would need to be a further PO, as indeed there was.

The second fallback, which relies upon Clause 1.4 of the GSA, emerged in the oral submissions made by Mr Lavy KC and was not prefigured in his skeleton argument. It had not been invoked by EE in the course of its negotiations with Avanti from 2023 onwards. The first part of Clause 1.4 incorporates as additional terms, the terms of Schedule B to the GSA which contains very detailed “Flow Down” provisions. The commercial context is where EE is itself a contracting party with a public body. That was so here at the outset because EE had entered into a contract with the Home Office (further detailed below). That said, EE does not rely on any particular provision of Schedule B and there was no consideration of this document. Rather EE relies on the last sentence of Clause 1.4, namely:

“The Supplier undertakes to accept all Engagement Forms and/or Orders where this clause 1.4 applies.”

Since Clause 1.4 does apply, as the SOW states, Mr Lavy KC submits that in this case, Clause 2.3 is redundant because Avanti must accept any Engagement Form or Order and has no choice in the matter. However, that cannot possibly be the correct interpretation of this sentence. If it was, it means that Avanti would be obliged to supply services at any price offered by EE in a PO and on any terms proposed by EE, realistic or not – and in fact even in the first 7.5 years. That does not make sense. What would make sense, and may be what this last sentence is driving at, is that if any of the “flowed down” terms were then to form part of an Engagement Form or Order, then, and to that extent, Avanti could not object to them and would have to accept them.

In any event, this second fallback position was raised far too late to enable it to be fully and properly considered.

However, there is one point which can be taken from Clause 1.4. This is that, whatever its last sentence means, it appears to be astute to recognise that the usual (Clause 2) regime involves and requires acceptance by Avanti, whether of an Engagement Form or an Order.

Finally I examine any factual matrix or wider points which may have a bearing on the issue of the indefinite obligation to supply.