Court of Appeal takes a more nuanced approach to delay in Bulb appeal

In R (on the application of British Gas Trading Limited & Ors) v The Secretary of State for Energy Security and Net Zero [2025] EWCA Civ 209, the Court of Appeal considered an appeal from British Gas Trading and E.ON (the "Appellants") against the Divisional Court's refusal to grant permission for judicial review of the decisions by the Secretary of State for Business, Energy and Industrial Strategy (the "SoS") regarding the transfer of the business of Bulb Energy ("Bulb") to Octopus Energy ("Octopus"). While the Court of Appeal dismissed the appeal, it did reconsider the position in relation to delay, finding that even though the first instance claimants unduly delayed in seeking a quashing of the decision for the transfer, the same could not be said in relation to the claim for financial relief.

Key points

• The refusal of permission for judicial review based on undue delay relies on a balancing of various factors including the impact of the remedy sought, with potentially different considerations where quashing is sought as compared to financial relief.
• Despite taking a different position on certain aspects of the delay issues, the Court of Appeal upheld the substantive decision of the Divisional Court on the application of subsidy control principles.
• The TCA did not require the UK to widen the scope or grounds of review beyond existing domestic judicial review principles of irrationality, error of law and procedural fairness.

Background

For an overview of the Divisional Court decision and background to the case, see our previous blog.

In brief, Joint Energy Administrators ("JEAs") were appointed and initiated a bidding process following Bulb running into serious financial difficulties. The accepted bid was from Octopus and included the transfer of all of Bulb's assets and debts to Octopus. The relevant SoS decisions were published on 29 October 2022 and 9 November 2022, followed by a court hearing to fix the date of the transfer on 11 November. Three energy companies (including the Appellants) issued judicial review proceedings on 28 and 29 November 2022, arguing that the decisions were in breach of subsidy control provisions in the Trade and Co-operation Agreement between the UK and the EU (the "TCA") and public law principles. The Divisional Court refused permission for judicial review on the basis of undue delay, but upon evaluation of the substantive merits, indicated it would have dismissed the claim in any event.

The appeal

The grounds of appeal were:

1. that the Divisional Court erred in law and/or fact in the refusal of permission on the grounds of delay;
2. that the Divisional Court erred in law in applying the wrong standard of review in assessing whether there had been compliance with the TCA; and
3. that the Divisional Court erred in law in the application of the subsidy control principles under the TCA.

Court of Appeal decision

Delay

Despite the judicial review proceedings being lodged within a matter of weeks, the Divisional Court refused permission for judicial review, emphasising the urgency of the matter and the catastrophic impact delay could have. In this context the Divisional Court considered it was enough to have knowledge of the essential complaint the claimants wished to make, without necessarily needing to wait for full details.

The Court of Appeal, however, took a more nuanced view. While acknowledging the urgency of the situation and the potential for severe consequences if the transfer were reversed, the Court of Appeal distinguished between seeking to quash or undo the decisions and claiming purely financial relief (such as the recovery of the subsidy or damages). The passage of time between the first instance proceedings and the Court of Appeal proceedings meant that an order to reverse the transfer was no longer feasible and the only possible remedy was now financial.

The court held that the reasons underpinning the Divisional Court's conclusion on delay did not justify refusing permission for claims seeking only financial remedies. Neither granting recovery of the subsidy nor awarding damages would cause the same level of chaos as reversing the transfer, thus significantly reducing the potential harm to third parties.

Furthermore, the Court of Appeal considered article 369(5) of the TCA, which required the SoS to provide interested parties (such as the Appellants) with information allowing them to assess the application of subsidy control principles within 28 days of a written request, to make an informed decision on whether to make a claim. In relation to seeking financial relief, the Court of Appeal found that until the Appellants received key documents (the Subsidy Control Assessment and the Accounting Officer’s assessment) on 23 November 2022, they did not have sufficient information to properly assess whether to make a claim. The three working days it took to make their applications after receiving these documents could not be considered undue delay. Therefore, the Court of Appeal concluded that delay did not provide a sufficient basis to refuse permission for the claims for purely financial relief, whilst upholding the Divisional Court's position in relation to quashing or reversal of the transfer.

Subsidy control

Standard of review

The Divisional Court had applied a relatively "light touch" standard of review taking the view that weight should be given to the expertise of the decision-maker in matters of commercial judgment, leading it to conclude that the distinction between rationality and proportionality review may not be that significant.

The Appellants argued that the TCA required the UK to ensure that subsidies respected the subsidy control principles and imposed "outcome obligations" meaning that any subsidy granted by the SoS must comply with the subsidy control principles, such that the Divisional Court should have assessed for itself whether these principles were met, specifically reaching its own conclusion on whether the subsidy was proportionate. The SoS, on the other hand, argued that the standard of review should be limited to conventional domestic law principles of judicial review, i.e. rationality, and proportionality should not have been applied.

Zacaroli LJ (with whom the rest of the court agreed) distinguished between proportionality first as a legal standard of review of a relevant decision and second as a component of the decision under review. The legislation specifically requires the decision-maker to determine whether the subsidy is proportionate, but it does not follow that in a review of that decision the court is required itself to apply a proportionality standard of review.

The Court of Appeal held that the TCA did not oblige the UK to create new grounds or widen the scope of review beyond existing domestic law. It also considered that the legislative regime, including the subsequent Subsidy Control Act 2022, was consistent with the position that only domestic conventional judicial review principles needed to be considered, and thus the Divisional Court was wrong to conclude that the standard of review included proportionality.

However, Zacaroli LJ explicitly refused to accept the SoS' contention that the standard of review is limited to rationality, noting that conventional domestic principles of judicial review include error of law and procedural fairness where the court considers issues for itself.

Subsidy control principles under the TCA

The Appellants raised several arguments concerning whether the SoS had correctly applied the subsidy control principles in the TCA, on which the Divisional Court had made a number of factual and evaluative findings. On appeal a court will not lightly interfere with such findings.  

The Court of Appeal accordingly rejected an argument that the bidding process was not "open, non-discriminatory, transparent and competitive", relying on the Divisional Court's factual findings and broader conclusions.

The Appellants also alleged that the application of temporary subsidies to the restructuring of Bulb was not a response to a national and global economic emergency, as required under the TCA. The Appellants argued that a subsidy to an already ailing entity could not be justified as "responding" to a national or global economic emergency (the impact of the Russian invasion of Ukraine) merely because the emergency exacerbated the existing problems and Bulb's financial difficulties had preceded the invasion. The Court of Appeal disagreed, emphasising that the economic emergency the SoS sought to address was the potential disruption to energy supply to Bulb's 1.5 million customers and the wider energy market. The SoS was therefore fully entitled to decide that the subsidy responded to a national or global economic emergency.

Comment

The Court of Appeal's judgment provides some limited relief in contrast to the approach to timing taken by the Divisional Court and clarifies that the remedy sought by the claimant plays an important role in determining whether there has been undue delay. This approach may be of wider relevance across public law cases that involve a claim for damages under the Human Rights Act.

The Court of Appeal also made some interesting comments in relation to the standard of review which will be of broader application, including for future subsidy control cases which are now governed by domestic legislation rather than the TCA and subject to review on judicial review principles.