British Gas Trading Limited & Ors, R (on the applications of) v The Secretary of State for Energy Security and Net Zero (formerly Business, Energy and Industrial Strategy)

Promptness in judicial review is contextual. Where relief could unwind an urgent transaction and cause serious harm to third parties, knowledge of the essential grounds may require proceedings within days; full disclosure is not a prerequisite. The same urgency does not automatically govern claims for purely financial relief. Where information reasonably required to assess subsidy compliance remains outstanding, refusal for delay is ordinarily inappropriate.

The Trade and Co-operation Agreement, implemented by section 29 of the European Union (Future Relationship) Act 2020, requires the grantor to respect the subsidy control principles but does not impose a free-standing proportionality standard of judicial review. Conventional domestic review applies. A competitive sales process may provide important evidence that the subsidy was necessary and represented the best available terms.

British Gas and E.ON challenged funding and approval decisions concerning the transfer of Bulb Energy’s business to Octopus. The decisions were made during Bulb’s energy supply company administration and involved substantial government support.

The Divisional Court refused permission on grounds of delay, but considered the merits and rejected the subsidy-control grounds. It granted permission on those grounds before dismissing the claims. The appeal concerned delay, the applicable standard of review under the Trade and Co-operation Agreement, and alleged errors in applying the subsidy-control principles, including the restructuring-subsidy provisions.

The court, in the judgment of Zacaroli LJ with which Dingemans and Underhill LJJ agreed, dismissed the appeal.

1. Delay. For relief that might reverse an urgent transfer, the Divisional Court was entitled to measure delay in days. The potential chaos and prejudice to third parties justified refusing permission even though the appellants lacked full disclosure. The principle in [1986] 1 WLR 763 was applicable. For purely financial relief, however, those considerations had substantially less force.
2. Information requests. Article 369(5) of the Trade and Co-operation Agreement ordinarily meant that permission should not be refused while reasonably required information remained outstanding. The appellants received the key subsidy assessment documents on 23 or 24 November 2022 and issued proceedings within three working days. That was not undue delay.
3. Standard of review. Section 29 of the European Union (Future Relationship) Act 2020 modified the existing domestic power to grant assistance under section 165 of the Energy Act 2004 so that the grantor had to respect the subsidy-control principles. Articles 372(1) and 372(3) did not require a wider or different scope of review than existing domestic law. The Divisional Court was wrong to apply proportionality as a free-standing standard. Review nevertheless included error of law and procedural fairness and was not confined to rationality.
4. Evaluative decisions. A precise, binary legal question was for the court. Where the relevant criterion was imprecise and rational decision-makers could disagree, intervention was justified only for irrationality. The market economy operator test involved commercial judgment and a wide spectrum of reasonable reactions; aid would be established only where it was clear that no rational market operator would have entered the transaction on those terms.
5. Subsidy assessment. The sales process was important evidence of the best bid available in the circumstances and therefore of the minimum subsidy necessary. The Secretary of State was entitled to consider the expertise of the energy administrators and Lazard, while making his own informed assessment. The process was reasonably found to be open, non-discriminatory, transparent and competitive.
6. Emergency restructuring subsidy. Article 364(3) was not confined to assistance made available to every undertaking affected by an emergency. It could apply where the subsidy responded to the consequences of the Russia-Ukraine crisis for the continuity of energy supply and the wider market, even though Bulb’s insolvency preceded the invasion. The Article 367 conditions therefore did not need to be determined.
7. On appeal, the court would not interfere with the Divisional Court’s factual and evaluative findings absent an identifiable error or a conclusion that could not reasonably be explained or justified. The same restraint applied where the first-instance judicial review decision was based on documents alone. Ofgem’s review and the CMA’s decision not to call in the transaction were matters to which the Secretary of State could have regard.

• Court of Appeal (Civil Division): The appeal was dismissed. The court held that delay did not justify refusing permission for claims seeking purely financial relief, but upheld the rejection of the claims on their merits.
• Divisional Court: Following a rolled-up hearing, permission was refused on grounds of undue delay. The court nevertheless considered the subsidy-control grounds and dismissed them on the merits.