The Court of Appeal’s decision in EE Ltd v Virgin Mobile Telecoms Ltd [2025] EWCA Civ 70 provides valuable insight into the interpretation of exclusion clauses in commercial contracts, particularly those concerning “anticipated profits.”
At the heart of the dispute was whether EE’s claim for lost revenue fell within the scope of an exclusion clause.
Background of EE Ltd v Virgin Mobile Telecoms Ltd
In 2013, EE and Virgin entered into a Telecommunications Supply Agreement (TSA) whereby EE gave Virgin access to its mobile network, allowing Virgin to provide its own customers with 2G, 3G and 4G services. Virgin agreed to use EE’s network exclusively for these services.
In 2016, the TSA was amended to allow Virgin to negotiate separately for 5G services. In the absence on any agreement, Virgin could source 5G services from another mobile network provider but at the same time could also then receive 2G, 3G and 4G services from the alternative provider.
In January 2021, Virgin entered into an agreement with another mobile network provider and began migrating its customers across to the new provider. EE alleged that Virgin had breached the exclusivity provision and brought a claim for approximately £24.6 million for lost revenue it would have received if Virgin had remained with EE.
Virgin denied any breach and argued that the claim fell within the exclusivity clause, which provided that,
“neither Party shall have liability to the other in respect of (a) anticipated profits; or (b) anticipated savings”.
The High Court held that EE’s claim fell within the exclusivity clause. EE appealed this decision.
Court of Appeal Decision
EE’s argued that the claim was for diminution in price and not loss of profit, and therefore the exclusion clause should not apply to expectation losses.
Virgin argued that EE’s claim was for anticipation profits and therefore fell within the exclusivity clause.
The Court of Appeal, by majority, upheld the High Court’s decision. It found that expectation losses were included in the phrase ‘anticipated profits’, which is what EE were claiming had the contract been performed. The Court’s rationale was that the exclusion clause must be interpreted in their natural and ordinary meaning
This case highlights the importance of careful drafting of contracts to ensure the contract is interpreted as intended and therefore minimising the risk of litigation.
This case serves as a reminder to businesses to carefully draft and review exclusion clauses in commercial contracts. If a dispute arises, seeking advice from experienced commercial litigation solicitors is essential. Our team can advise on the enforceability of exclusion clauses and represent clients in negotiations, mediations, or litigation to protect their interests and resolve matters efficiently.
How can Nelsons help?
Anika Zahid is an Associate in our Dispute Resolution team, specialising in commercial litigation and professional negligence claims.
If you would like advice in relation to the points raised in this article, please contact Anika or another member of the team in Derby, Leicester, or Nottingham on 0808 258 0461 or via our online form.
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