Harbour Energy’s legal team has said their recent court case against Shell has underscored the “far reaching” impact of sanctions on Russia.
Bracewell represented London-listed Harbour (LON: HBR) in the English High Court in a contract dispute over the sale of oil from the West of Shetland to Shell’s trading arm (LON: SHEL).
“The impact of the sanctions imposed on Russia has been far-reaching,” said Bracewell in a blog post following the ruling last month.
“Here they have affected the pricing of an agreement between two English companies for the sale of North Sea crude oil, triggering an expert determination process.”
Harbour and Shell’s agreement on the sale of oil from the Clair and Schiehallion fields was partly calculated by the price of Urals crude from Russia.
The introduction of European sanctions on Russia in 2022 brought the price mechanism in dispute, and a referee had to be nominated to develop a new calculation based on another fuel source.
Harbour and Shell each accused the other of trying to influence the referee’s powers for their own benefit in creating a new deal.
However, the judge decided not to intervene, noting there was “no evidence” the referee would apply powers to widely or narrowly, and that giving a ruling would create “danger” of restricting the new deal being determined.
The judge sided with Harbour in saying the scope of the referee’s powers were as set out in the original contract.
Bracewell said the ruling was a “useful reminder of how contractual provisions referring disputes to an expert should be interpreted and applied and when the court will intervene in the process”.
They added: “In this decision, the court has confirmed that it will not usually intervene in an expert determination process and will not re-write the terms of the dispute resolution mechanism.
“If a contract provides for a matter to be determined by an expert, then that is what should happen and, in most cases, no further guidance or instruction is required.”
Harbour Energy and Shell are now taking next steps via the London Court of International Arbitration.
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