Marathon Oil UK LLC v Centrica Resources Ltd (and others)
Joint Ventures are rarely successful – they require the melding together of two (or more) different corporate regimes to one end. The equitable division of costs, especially high final salary pension costs, can be difficult.
So, it’s not surprising that the various parties to this joint venture ended up in the Commercial Court over a dispute about how to apportion properly final salary pension liabilities.
The joint venture was for Brae oil operations in the North Sea.
The Court decided that it was possible for the key operator of a joint venture to reclaim pension monies needed to reduce the overall pension deficit from all other joint venture participants. This was because the operator of the joint venture had to have the freedom to be able to run the operation as it felt fit on a day to day basis. If this involved incurring defined benefit (DB) costs due to employing people with DB pension promises, then so be it.
The decision was reached partly due to the wording of that joint venture agreement itself but the type of wording is not particularly unusual.
It’s not uncommon for parties to a joint venture to fall out hugely over DB pension costs so it’s useful for the Commercial court to set out some general principles to apply in these types of cases.
Published: July 2018
Pensions Law Update - July 2018
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