Infinis Plc Infinis (Re-Gen) Ltd, R (on the application of) v Gas & Electricity Markets Authority & Anor

An arrangement is an “NFFO arrangement” or “qualifying arrangement” only while it remains contractually effective to secure the provision and purchase of generating capacity. Where an agreement expressly becomes of no force and effect because conditions precedent were not fulfilled by the agreed deadline, residual obligations such as confidentiality, arbitration or reasonable endeavours do not preserve that statutory status. The exclusion for non-commissioned stations therefore does not apply merely because the parties once entered into an NFFO arrangement. Nor does the exclusion for termination following an unremedied breach apply where the contract term never began and no such breach or termination occurred. A lawful statutory entitlement denied by an unlawful accreditation decision may support damages for breach of the right to property, with restitution in integrum as the guiding principle.

The claimants sought judicial review of the Authority’s decision of 30 March 2010 refusing accreditation for the Candles and Welbeck landfill-gas generating stations. The Authority relied principally on article 21 of the Renewables Obligation Order 2009 and article 6(3) and (4) of the Renewables Obligation Order 2006, treating replacement power purchase agreements as continuing NFFO or qualifying arrangements despite their contractual lapse.

The agreements had become of no force and effect on 31 December 2008 because conditions precedent had not been fulfilled by the final agreed deadline. The central questions were whether the residual contractual provisions preserved an NFFO arrangement, whether the alternative exclusion for termination following an unremedied breach applied, and what relief followed from an unlawful refusal of accreditation.

1. Claim allowed. The Authority’s decision of 30 March 2010 was quashed. Mandatory relief required accreditation of Candles from 28 January 2009 and Welbeck from 24 March 2009, together with the issue of all ROCs due to the claimants up to 31 March 2011.
2. Under article 6 of the Renewables Obligation Order 2006 and article 21 of the Renewables Obligation Order 2009, the relevant arrangement had to be contractually effective to secure the provision of generating capacity by one party to another. It also had to contain active and enforceable provision for the building of the specified generating station at the specified location.
3. The RPPAs initially satisfied those requirements. Their core provisions secured the buyer’s entitlement to contracted capacity, the seller’s obligation to make it available, operation of the facility, installation of the facility, and purchase at the contracted price. When clause 2.3 operated, those provisions ceased to have force and effect. The surviving provisions did not preserve the essential character of an NFFO arrangement. Clause 20.7 offered only the possibility of a new arrangement being agreed.
4. The article 21 exclusion therefore did not apply. The Authority’s reliance on doubts about compliance with the reasonable-endeavours obligation in clause 2.4 was misplaced, because article 21 depended on the existence of an NFFO arrangement and the non-commissioning of the specified station, not on breach of that covenant.
5. Article 20 of the Renewables Obligation Order 2009 also did not apply. There was neither an extant nor a terminated NFFO arrangement. In any event, the contract term had never begun, no termination notice had been given, and there was no convincing allegation of an unremedied breach.
6. The statutory scheme did not prohibit the parties from agreeing contractual provisions which allowed the arrangement to lapse when conditions precedent were unmet. The claimants were not obliged to revive or terminate the agreements in another way. The unlawful refusal denied them a pecuniary statutory benefit and breached article 1 of the First Protocol to the Convention.
7. Under section 8 of the Human Rights Act 1998, damages were necessary to afford just satisfaction. Applying the restitution in integrum principle identified in Anufrijeva v Southwark London Borough Council [2004] QB 1124 and the Strasbourg approach considered in Basarba OOD v Bulgaria, the CP7 and CP8 claims were to be assessed after 1 November 2011. The CP9 claim was stayed with liberty to apply.