On 31 July 2023, the High Court handed down its decision in EE Limited v Virgin Mobile Telecoms Limited [2023] EWHC 1989 (TCC), dismissing a claim by EE against Virgin Mobile. Adam Zellick KC, Philip Ahlquist and Gillian Hughes appeared for the applicant Virgin Mobile Telecoms Limited, instructed by Baker & McKenzie LLP.
The case concerned EE’s provision of 2G to 4G mobile network services to Virgin Mobile. EE’s claim alleged that Virgin Mobile had breached an obligation of exclusivity owed under the contract between the parties. EE sought substantial damages in alleged lost charges which it claimed Virgin Mobile would have been obliged to pay under the contract but for any breach. Virgin Mobile denied this claim in full, including on the grounds that there had been no breach of the exclusivity obligation at all; but that, in any event, the claim was precluded by a clause providing that neither party could claim for “anticipated profits”.
In a comprehensive decision Mrs Justice Joanna Smith granted Virgin Mobile’s application for summary judgment, dismissing the claim on the basis that the terms of the clause applied to it.
The Judge accepted Virgin Mobile’s arguments that EE’s claim was to be characterised as a claim for loss of profits, identifying that the issue of whether it was precluded by the exclusion clause depended on the true interpretation of that clause.
Applying the legal principles applicable to the construction of exclusion clauses (summarised at [25] to [27] of the judgment), the Judge held that the terms of the clause did apply to preclude EE’s claim. This broad construction reflected the parties’ agreed allocation of risk and was supported by: (i) the language of the clause; (ii) the nature of the contract as a bespoke, lengthy and detailed contract between two sophisticated parties; and (iii) features of the clause itself, which was a tailor-made, stand-alone provision forming part of a detailed regime governing the parties’ liabilities and capable of affecting the rights of both parties alike.
The Judge also carefully considered the authorities relied on by EE in seeking a narrower construction of “anticipated profits” and concluded that there was no reason for anticipated profits not to be construed in accordance with the natural and plain meaning of the wording in the context of the agreement. She also concluded that it was not an appropriate case for the Court to invoke an “illusory bargain” principle to depart from the natural meaning of the words “anticipated profits”. This was not least because, if there had been a breach of the exclusivity obligation as alleged by EE, there were remedies available to EE including a strong claim for injunctive relief.
The judgment contains a thorough analysis of the approach to exclusion clauses by reference to the relevant authorities and illustrates the importance of such clauses (including their potential application for summary judgment).
