The recent success of the Business Energy Claim (BEC) brought by Weardale Entertainments Limited against ENGIE Power Limited marks a significant development in the landscape of energy contract disputes.

This victory, securing over £10,000 in damages for the Claimant, underscores the potential for businesses to seek redress from Energy Providers in relation to widespread non-disclosure of the commission paid to Energy Brokers leading to significant increases in their bills.

What did this landmark case highlight?

• Conflict of Interest: The manner in which broker commissions were structured gave rise to a conflict of interest. Brokers had significant authority in determining commissions without sufficient reference to the interests of the claimant.

• Fiduciary Duty: The court found that a fiduciary relationship existed between the broker and the claimant, based on the broker’s authority to negotiate, and bind the claimant to contracts.

• Disclosure: The broker had a duty to disclose commission amounts to the claimant, which was not fulfilled in this case. Lack of full disclosure prevented the claimant from giving informed consent.

• Breach of Duty: The judge ruled that the claimant did not provide informed consent due to inadequate knowledge of the broker’s interests and commission arrangements. ENGIE was held liable for the broker’s breach of fiduciary duty.

What does this judgement mean for the legal sector?

It sets important precedents for the conduct of similar claims, boosting confidence in pursuing actions against unfair energy contracts. Solicitors will need to focus on understanding clients’ knowledge and sophistication as buyers to ensure informed consent in such cases.

What role will ATE play for Business Energy Claims?

After-the-event (ATE) insurance remains crucial for Business Energy Claims due to the financial burden associated with litigation. ATE schemes provide necessary protection for clients’ litigation risks, particularly as cases are increasingly likely to proceed to trial.

The rise in litigation funders allows firms to pursue these cases in volume, but the high costs associated with running financial misselling matters necessitate ATE coverage to mitigate risks.

Overall, this is the first well publicised decision in relation to unfair energy contracts and given the basis on which the decision was made there is now a clear pathway and model developing to ensure ongoing success in the future.

The interaction between all stakeholders in this process is crucial to ensure ongoing success and incorporating funding aligned with ATE provides a protected structure for Firms to be able to grow their book.

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We’re industry renowned for providing tailored ATE insurance policies. Let us build you a bespoke policy that works for your needs and case requirements. Email us today at info@amberis-ate.com or call us on 0161 703 9300