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)

The Court of Appeal dismissed the appellants' challenge to two decisions of the Secretary of State: the Funding Decision (an amendment to the Administration Funding Agreement) and the Approval Decision (approval of an Energy Transfer Scheme under Schedule 21 to the Energy Act 2004). Key legal questions concerned (i) delay and promptness in judicial review (Senior Courts Act 1981 s.31(6); CPR 54.5), (ii) the domestic effect of the Trade and Co-operation Agreement (the TCA) as implemented by section 29 of the European Union (Future Relationship) Act 2020 and the appropriate standard of review, and (iii) the application of the TCA subsidy-control principles (Article 366 and Article 367) and related transparency and recovery rules (Articles 369 and 373).

The court held that: (1) the Divisional Court was entitled to refuse permission to challenge the Decisions insofar as the remedy sought would have the effect of undoing the transfer because of extreme prejudice to third parties and the urgent commercial context, but permission should not have been refused for claims seeking purely financial relief (recovery or damages) once the claimants had received the documents specified by Article 369(5); (2) section 29 EUFRA 2020 does not convert the TCA subsidy-control principles into a novel hard-edged domestic standard that displaces conventional domestic judicial review principles; the legality of subsidy decisions is to be determined by domestic judicial-review grounds (error of law, irrationality, procedural fairness), although proportionality forms part of the substantive principles to be applied by the decision-maker and may inform review; and (3) applying the correct standard of review (a context-sensitive, relatively "light-touch" review of commercial judgments), the Secretary of State was reasonably entitled to conclude that the sales process was open, non-discriminatory and competitive, that the subsidy was temporary and responsive to a national/global economic emergency (Article 364(3)), and that reliance upon Ofgem and CMA engagement was permissible.

Background and parties: Bulb Energy Limited entered an Energy Supply Company Administration Order under s.94 of the Energy Act 2011. The Joint Energy Administrators conducted a sales process, with Lazard as adviser, which produced a single bidder, Octopus. The Secretary of State provided funding (the Funding Decision) and approved a transfer under an Energy Transfer Scheme (the Approval Decision). Appellants were large retail suppliers (British Gas, E.ON group and ScottishPower), who sought judicial review of both decisions. Relief claimed included quashing the Decisions and, alternatively, financial remedies (recovery of subsidy or damages).

Procedural history: The Companies Court (Adam Johnson J) appointed the effective time for the scheme (20 December 2022) and directed that challenges to the Secretary of State should be raised in the Administrative Court. Swift J ordered expedition but could not resolve the matters before the effective time. The Divisional Court (Singh LJ and Foxton J) refused permission on grounds of undue delay in respect of relief that would reverse the transfer, considered the public law and subsidy-control grounds and refused judicial review on the merits. Permission to appeal to the Court of Appeal was granted.

Issues framed by the Court: (i) whether the Divisional Court erred in refusing permission for delay, particularly in light of Article 373 TCA and Article 369(5) (information obligations and the one‑month window for challenge); (ii) whether s.29 EUFRA 2020 required courts to apply proportionality as a distinct and elevated standard when reviewing subsidies under the TCA (or whether conventional domestic standards of judicial review apply); and (iii) whether the Decisions complied with the subsidy-control principles (Article 366), including whether the subsidy was permissible as a response to an economic emergency (Article 364(3)) and, if not, whether restructuring rules in Article 367 applied.

Court's reasoning and conclusions: On delay, the court accepted that the Divisional Court was entitled to treat urgency and prejudice to third parties as justifying refusal of permission for relief that would unwind the transfer. However, where only financial remedies were sought, those considerations were materially weaker; Article 369(5) required a granting authority to supply information within 28 days and reinforced the view that, having received the SCA and AOA on 23-24 November 2022, issuing claims three working days later did not amount to undue delay. On standard of review, the court concluded that s.29 implements the TCA only to the extent necessary to comply with the UK’s international obligations and does not prescribe a distinct procedural standard displacing domestic judicial-review principles. Article 372(3) and Article 373(2) confirm that the domestic standard of review remains a matter for national law. Thus conventional review (error of law, irrationality and procedural fairness), with appropriate deference in commercial and policy decisions, governs challenges to subsidy decisions; proportionality is part of the substantive principles to be applied but does not automatically convert the review into a different remedial procedure. On merits, applying a context‑sensitive, relatively light-touch review to commercial and evaluative judgments, the court upheld the Divisional Court’s findings that the sales process was adequately open and competitive in the circumstances, that the subsidy was temporary and properly characterised as responding to a national/global emergency, and that recourse to Ofgem and CMA input was legitimate. The appeal was dismissed.

Appeal dismissed. The court held that (i) the Divisional Court was justified in refusing permission for relief that would reverse the transfer because of urgency and prejudice to third parties, but permission should not have been refused for claims seeking only financial remedies once Article 369(5) material had been provided and the claims were brought promptly thereafter; (ii) section 29 EUFRA 2020 does not transform the TCA subsidy-control principles into novel hard-edged legal standards displacing conventional domestic judicial-review grounds, so the court reviews subsidy decisions under domestic principles (error of law, irrationality and procedural fairness) with appropriate deference to commercial judgment; and (iii) on that standard the Secretary of State was reasonably entitled to conclude the subsidy complied with the relevant TCA principles (including Article 364(3) emergency relief), and the challenged decisions were lawful.

This is an appeal from the Divisional Court (Singh LJ and Foxton J) following a rolled-up hearing in the Administrative Court in which permission to seek judicial review had been considered and refused on delay grounds and the claims were considered on the merits. The Companies Court (Adam Johnson J) earlier appointed the effective time for the Energy Transfer Scheme (reported at [2022] EWHC 3105 (Ch)). The Divisional Court handed down its judgment on 31 March 2023. Permission to appeal to the Court of Appeal was granted. The Court of Appeal delivered this judgment on 5 March 2025 ([2025] EWCA Civ 209).