Electronic Communications Code: Recent case marks victory for the Telecom Operators
Last month we saw the first Scottish appeal court decision on the new Electronic Communications Code, which came into force in December 2017, with the outcome generally considered to favour the telecoms operator.
The appeal followed on from the Lands Tribunal for Scotland’s ruling in EE Limited & Hutchison 3G UK Limited v Duncan & Others which provided the UK’s first judicial determination on the interpretation and application of Part 5 of the new Code concerning renewals.
The operators, either together or separately had 9 leases all of which were agreed under the old Code. The leases were all continuing on tacit relocation (whereby the lease continues on a yearly basis after the termination date provided for in the lease). The operators could have served notice to terminate the leases then apply for new leases to be granted by the landowners under the new Code however in order for the operators to qualify for this, they would have to completely remove themselves and all equipment from the existing site in the period of time between the old lease ending and the new lease commencing. This is a very expensive and inconvenient way of securing a new lease under the new Code therefore, in the absence of an agreement with the landowners, the operators applied to the Tribunal to terminate the old leases and replace them with new leases under the new Code. In order for this right to be available to the operators, they must be able to demonstrate that there are subsisting agreements which the operators argued was the case due to the principle of tacit relocation.
In this case, the Lands Tribunal confirmed that leases continuing by tacit relocation were deemed to be subsisting agreements, therefore, continued to enjoy the protection of transitional Code rights in terms of the new Code, overturning a previous ruling on the matter. However, it was not all good news for the operators as the Tribunal’s ruling created a “high bar” in relation to the application of Part 5 of the new Code when considering the operator’s business and technical needs in terms of Paragraph 34(13)(a) of the new Code. This decision was deemed to be more favourable for the landowner as the operators had to demonstrate, on a case by case basis, that there was a specific technical need to modify or replace an existing agreement and it was not enough for the operator to simply refer to the benefits conferred on them by virtue of the new Code as a good enough reason for such application.
EE Limited and Hutchison 3G UK Limited appealed the Tribunal’s decision in the case of EE Limited and Hutchison 3G UK Limited v Duncan with the Inner House of the Court of Session handing down a significant judgement stating that the Tribunal “erred in its approach to the requirement to have regard to the operator’s business and technical needs” and that it was “wrong” to impose the “high bar” element in considering such needs.
The Court did agree with the Tribunal that a written lease continuing on the basis of tacit relocation when the new Code came into force was a subsisting agreement for the purpose of the new Code and therefore modification under Part 5 of the Code was available to the operators thus allowing for greater rights relating to site sharing and upgrading apparatus amongst other things as well as the possibility of reduced rental payments.
With this recent judgement seen to be very much in favour of the operators, it is expected that they will now seek to renew outdated old Code leases bringing them into line with the new Code which will see greater rights being available to the operator including on matters such as upgrading, site sharing with reduced rents all being imposed on the landowner.