It is significant that Lord Justice Green found that it was in the nature of joint actions that OpCom`s approval covered costs that might be uncertain at the time of approval of a programme and budget as to their nature and scope, which is why the accounting procedure required detailed information on the estimates to be submitted to OpCom: “As the commitments were much larger than expected, it didn`t change the underlying analysis. The operator was entitled to write a cheque to cover pensions of any kind. The call was filed by Spirit Energy Resources Limited, TAQA Bratani Limited and TAQA LNS Limited (the “Participants”). The participants are, together with JX Nippon, parties with untapped interests for a joint venture agreement (the JOA) and a corporate unit and unification agreement (the UUOA) concerning the Brae Fields in the UK North Sea sector. The defendant, Marathon Oil U.K. LLC, is (and was at the time of the dispute) the operator of each of the JOA and the UUOA (the operator). In all the JOAs, parties retain an aspect of their original organization, whether it is the editorial voice, religious affiliation, vision or the ability to exploit the company`s resources. All parties participate in the financial risks of the joint venture and acquire the potential for an increased market presence and thus an increase in profits. Any contract, agreement, joint venture or other agreement entered into by two or more undertakings grouping together the operations and physical facilities of a failing entity, although each undertaking retains its status as a separate entity in terms of profits and individual mission. The purpose of a Joint Operating Agreement (JSA) is to protect a company from failure while preventing monopolization within a sector by allowing each party to maintain a separate form of exploitation. JOas are used in newspapers, healthcare, the oil and gas industry and other sectors. Two or more oil and gas operators can take an JOA to share the risk and cost of oil and gas exploration.
One party is held responsible for the day-to-day operation, with costs often drawn from other JOA participants in the statement. The operator is able to keep costs low and other subscribers retain rights to their share of gas and oil that they can use as they see fit. The parties are rarely considered to be in partnership, unless the agreement expressly states that they are. For JOA participants with untapped interests, the shutdown may create uncertainty as to their liability in the event of unforeseen and/or unforeseen costs incurred by an operator that have not been expressly approved under a work programme and budget. However, the fact remains that in this case it was the responsibility of joa participants for financing a pension deficit for employees involved in joint operations – it is not clear how the English courts would assign responsibility for other categories of unforeseen costs. In dismissing the appeal, the Court of Appeal gave useful guidance on the rights of an operator in the context of an OJA to charge participants the costs if those costs had not been provided for or approved by the works council in the context of an approved work programme and budget. The case will therefore be of interest to operators and non-operators if such joint operating agreements are governed by English law. .
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