Introduction

The judgment in British Gas Trading Ltd & Ors, R (On the Application Of) v Secretary of State for Energy Security and Net Zero ([2025] EWCA Civ 209) represents a significant decision of the England and Wales Court of Appeal (Civil Division). This appeal follows a controversial judicial review permission refusal by the Divisional Court (the “DC”) relating to two decisions made by the Secretary of State for Energy Security and Net Zero. At the heart of the dispute are the decisions approving government funding (the “Funding Decision”) and the subsequent transfer of the business of Bulb Energy Limited (an entity facing insolvency and financial distress) to Octopus Energy Group. The appellants – companies operating within the UK retail energy sector – challenged the procedural timeliness and legal standards, particularly focusing on whether domestic judicial review and subsidy control under the Trade and Cooperation Agreement (TCA) were applied appropriately.

Key factual elements include Bulb’s financial collapse amid soaring wholesale energy prices, the issuance of an Energy Supply Company Administration Order under the Energy Act 2011, a competitive sales process managed by the Joint Energy Administrators (JEAs) with the aid of Lazard, and the crucial role of government funding. The dispute involves complex interactions among the JEAs, the Secretary of State, the energy regulator Ofgem, and commercial bidders such as Octopus and others, making the case a landmark exploration of the interplay between business rescue mechanisms, subsidy control, and judicial review jurisprudence in a post-Brexit framework.

Summary of the Judgment

The Court of Appeal dismissed the appellants’ challenges on several grounds. Central to the decision was the DC’s finding that any delay in launching judicial review proceedings was justified given the urgent and complex commercial context, especially considering the potential catastrophic consequences were the transfer to be unwound. The court held that, although a four- to ten-day delay occurred, such a delay was permissible under domestic rules of promptness and the specific exigencies of the transaction.

Additionally, the judgment clarified the appropriate standard to review decisions involving subsidies. While the appellants argued that the DC should have applied a pure proportionality standard, the appeal court accepted that the established domestic principles of judicial review – incorporating elements of rationality, error of law, and procedural fairness – are sufficient to assess the compliance of a subsidy decision with the SC Principles under the TCA. Furthermore, the decision confirmed the use of a “light-touch” review in situations where commercial judgment and market dynamics are at the forefront.

The judgment further considered the interplay between the statutory requirements under the TCA (and its domestic implementation through EUFRA 2020) and the procedural framework provided by the Senior Courts Act. It held that the domestic implementation of subsidy controls does not necessitate a wholesale departure from conventional judicial review principles even under the transformative influence of international obligations post-Brexit.

Analysis

Precedents Cited

The judgment heavily referenced prior decisions to contextualize the approach taken by the DC and the appellate court:

• Heathrow Airport Limited v HMRC [2021] – This case was cited extensively for its exposition on how s.29 of EUFRA 2020 mechanistically transposes the TCA into domestic law. The Court noted that while the TCA does not have direct effect per its own terms, legislative implementation via domestic law can yield binding “outcome obligations” for public authorities.
• R v Monopolies and Mergers Commission, ex parte Argyll Group plc [1986] – Reiterated the importance of timeliness in judicial review proceedings and highlighted that even a delay of a few days in the financial regulatory context can cause significant harm to third parties. This precedent was central to the justification for the DC’s measured approach in assessing delays.
• R (Young) v Oxford City Council [2002] – While touched upon by the appellants, this case was ultimately distinguished by the court from the circumstances in the present dispute.
• R (Dalston Projects Ltd) v Secretary of State for Transport [2024] – Provided guidance on the “light-touch” review approach in decisions based on commercial judgment and proportionality, particularly relevant to the subsidy control decision in the present case.
• Lipton v BA Cityflyer Ltd [2024] – Although only briefly mentioned, this decision was considered in relation to the evolving interpretation of s.29 of EUFRA 2020 and the scope of its transformative effect on domestic law.

The confluence of these precedents provided a robust framework allowing the Court to reconcile international subsidy control requirements with established domestic judicial review norms.

Legal Reasoning

The court’s legal reasoning in this decision is multifaceted and reflects a careful balancing of competing interests:

• Timeliness and Delay: The decision underscores the importance of prompt judicial review in cases involving high-stakes commercial transactions. The court adopted the view that strict adherence to filing deadlines (as stipulated in CPR 54.5 and s.31(6) of the Senior Courts Act 1981) must be balanced against the potential harm to third parties if a correct decision is delayed. Drawing on established case law, the court affirmed that in complex matters — particularly where undoing a transaction could trigger “catastrophe” in the market — short delays measured in days could be justified.
• Standard of Review: A central issue was whether a proportionality standard should be applied independently or incorporated within the conventional domestic review framework. The court concluded that while proportionality is a critical consideration embedded within the SC Principles, domestic judicial review already encapsulates the necessary elements of rationality, error of law, and procedural fairness. The “light-touch” approach adopted recognizes commercial judgment, thereby granting public authorities a margin of appreciation that is appropriate given the technical and market-based nature of subsidy decisions.
• Implementation of the TCA: The court also analyzed how the TCA, as implemented by section 29 of EUFRA 2020, affects domestic law. By referencing Green LJ’s analysis and subsequent clarifications, the Court of Appeal held that the “mechanistic” approach to transposing the TCA does not compel courts to depart from established domestic principles when reviewing decisions concerning subsidy compliance. Rather, the assessment must balance both the international obligations under the TCA and traditional judicial scrutiny.
• Evidence-Based Commercial Judgment: On the matter of the open, non-discriminatory, transparent, and competitive sales process, the court gave significant weight to the expertise of the JEAs and Lazard, emphasizing that the commercial judgment underlying the sales process — and the resulting “market value bid” — is an objective indicator of the subsidy’s propriety. The court stressed that this process, even if subject to challenge by parties with alternative commercial interests, was not irrational or procedurally flawed given the context.

Impact

The decision is poised to have significant ramifications both practically and doctrinally:

• Future Subsidy Control Cases: By affirming the legitimacy of a “light-touch” review in evaluating subsidy decisions that incorporate proportionality, the judgment may encourage public authorities to rely on commercial judgment when selecting or designing support measures, provided they remain within the bounds of rationality and legal standards.
• Judicial Review Timelines: The ruling reinforces the strict but flexible approach towards claims submitted with a short delay. Parties challenging administrative decisions—even if delayed by a few days—may find that the exceptional circumstances of particular commercial transactions could justify a waiver of the ordinarily rigid timing requirements.
• Domestic Application of International Law: The judgment clarifies the interaction between international agreements (the TCA) and domestic judicial review mechanisms. It confirms that while international obligations impose outcome-based requirements on subsidy decisions, domestic courts are not required to adopt novel review standards but can rely on established doctrines.

Complex Concepts Simplified

Several highly technical legal issues are at play in this judgment. Below is a simplified explanation of some key concepts:

• Proportionality vs. Rationality: In simple terms, "proportionality" requires that a decision (in this case, the size and form of a subsidy) is not excessive in relation to the intended public interest goal. Meanwhile, "rationality" is a broader standard in judicial review which looks to see if a decision is one that a reasonable decision-maker could have reached based on all the facts. Here, the court found that domestic review already contains a proportionality element even if it is not labeled as such.
• Mechanistic Transposition: Section 29 of EUFRA 2020 automatically adapts the TCA’s provisions into existing domestic law. Rather than requiring further legislative action, it makes the provisions “come to life” in the UK’s legal framework. This means that domestic decisions on subsidies must now mirror the obligations set out in the TCA, while still using traditional judicial review tests.
• Judicial Review Delay: Courts require that any challenge to a decision be brought promptly to ensure fairness and legal certainty. However, when a decision involves high-stakes commercial outcomes (such as an energy market transaction), even a brief delay may be acceptable if it prevents significant disruption. This is because the potential harm to third parties—those not part of the litigation—can be disastrous if remedial orders were to be made after the fact.

Conclusion

In summary, the Court of Appeal’s decision in this case is a comprehensive reaffirmation of traditional principles of judicial review while navigating the complex landscape of international subsidy control obligations. The judgment confirms that:

• Delays in launching judicial review may be justified under particularly urgent commercial circumstances.
• The standard of review applied by the DC – incorporating elements of rationality, error of law, and a “light-touch” proportionality check – is appropriate when assessing whether the Secretary of State’s decisions conform to the SC Principles of the TCA.
• The mechanistic transposition of the TCA into UK law via EUFRA 2020 does not require courts to depart from established domestic principles, even as the international obligations inform the substantive outcomes.

Ultimately, this decision offers clear guidance to both public authorities and affected market participants. It underscores that judicial review in subsidy matters remains fundamentally grounded in established domestic law principles, even while dealing with the transformed legal landscape brought about by Brexit and evolving international agreements.

For practitioners and stakeholders alike, this judgment is a landmark in demonstrating that flexibility in administrative oversight, combined with judicial deference to commercial judgment, can coexist with rigorous standards that protect public interests and maintain market stability.