Digital Economy Bill (HC Bill 45)

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Part 4 Power of court to impose agreement

Introductory

18 This Part of this code makes provision about—

(a) 5the circumstances in which the court can impose an
agreement on a person by which the person confers or is
otherwise bound by a code right,

(b) the test to be applied by the court in deciding whether to
impose such an agreement,

(c) 10the effect of such an agreement and its terms,

(d) the imposition of an agreement on a person on an interim
or temporary basis.

When can the court impose an agreement?

19 (1) This paragraph applies where the operator requires a person (a
15“relevant person”) to agree—

(a) to confer a code right on the operator, or

(b) to be otherwise bound by a code right which is exercisable
by the operator.

(2) The operator may give the relevant person a notice in writing—

(a) 20setting out the code right, and all of the other terms of the
agreement that the operator seeks, and

(b) stating that the operator seeks the person’s agreement to
those terms.

(3) The operator may apply to the court for an order under this
25paragraph if—

(a) the relevant person does not, before the end of 28 days
beginning with the day on which the notice is given, agree
to confer or be otherwise bound by the code right, or

(b) at any time after the notice is given, the relevant person
30gives notice in writing to the operator that the person does
not agree to confer or be otherwise bound by the code
right.

(4) An order under this paragraph is one which imposes on the
operator and the relevant person an agreement between them
35which—

(a) confers the code right on the operator, or

(b) provides for the code right to bind the relevant person.

What is the test to be applied by the court?

20 (1) Subject to sub-paragraph (5), the court may make an order under
40paragraph 19 if (and only if) the court thinks that both of the
following conditions are met.

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(2) The first condition is that the prejudice caused to the relevant
person by the order is capable of being adequately compensated
by money.

(3) The second condition is that the public benefit likely to result from
5the making of the order outweighs the prejudice to the relevant
person.

(4) In deciding whether the second condition is met, the court must
have regard to the public interest in access to a choice of high
quality electronic communications services.

(5) 10The court may not make an order under paragraph 19 if it thinks
that the relevant person intends to redevelop all or part of the land
to which the code right would relate, or any neighbouring land,
and could not reasonably do so if the order were made.

What is the effect of an agreement imposed under paragraph 19?

21 15An agreement imposed by an order under paragraph 19 takes
effect for all purposes of this code as an agreement under Part 2 of
this code between the operator and the relevant person.

What are the terms of an agreement imposed under paragraph 19?

22 (1) An order under paragraph 19 may impose an agreement which
20gives effect to the code right sought by the operator with such
modifications as the court thinks appropriate.

(2) An order under paragraph 19 must require the agreement to
contain such terms as the court thinks appropriate, subject to sub-
paragraphs (3) to (8).

(3) 25The terms of the agreement must include terms as to the payment
of consideration by the operator to the relevant person for the
relevant person’s agreement to confer or be bound by the code
right (as the case may be).

(4) Paragraph 23 makes provision about the determination of
30consideration under sub-paragraph (3).

(5) The terms of the agreement must include the terms the court
thinks appropriate for ensuring that the least possible loss and
damage is caused by the exercise of the code right to persons
who—

(a) 35occupy the land in question,

(b) own interests in that land, or

(c) are from time to time on that land.

(6) Sub-paragraph (5) applies in relation to a person regardless of
whether the person is a party to the agreement.

(7) 40The terms of the agreement must include terms specifying for how
long the code right conferred by the agreement is exercisable.

(8) The court must determine whether the terms of the agreement
should include a term—

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(a) permitting termination of the agreement (and, if so, in
what circumstances);

(b) enabling the relevant person to require the operator to
reposition or temporarily to remove the electronic
5communications equipment to which the agreement
relates (and, if so, in what circumstances).

How is consideration to be determined under paragraph 22?

23 (1) The amount of consideration payable by an operator to a relevant
person under an agreement imposed by an order under paragraph
1019 must be an amount or amounts representing the market value
of the relevant person’s agreement to confer or be bound by the
code right (as the case may be).

(2) For this purpose the market value of a person’s agreement to
confer or be bound by a code right is the amount that, at the date
15the market value is assessed, a willing buyer would pay a willing
seller for the agreement—

(a) in a transaction at arm’s length,

(b) on the basis that the buyer and seller were acting
prudently and with full knowledge of the transaction, and

(c) 20as if the transaction were subject to the other provisions of
the agreement imposed by the order under paragraph 19.

(3) The market value—

(a) must be assessed on the basis of the value of the right or
agreement to the relevant person, and

(b) 25must not be assessed on the basis of the value to the
operator of the right or agreement or having regard to the
use which the operator intends to make of the land in
question.

(4) The market value must be assessed on the assumption that—

(a) 30there is more than one site which the operator could use for
the purpose for which the operator intends to use the land
in question (whether or not that is actually the case), and

(b) paragraphs 15 and 16 (assignment of code rights and
upgrading and sharing of apparatus) do not apply to the
35code right or any electronic communications apparatus to
which the code right could apply.

(5) The terms of the agreement may provide for consideration to be
payable—

(a) as a lump sum or periodically,

(b) 40on the occurrence of a specified event or events, or

(c) in such other form or at such other time or times as the
court may direct.

What rights to the payment of compensation are there?

24 (1) If the court makes an order under paragraph 19 the court may also
45order the operator to pay compensation to the relevant person for
any loss or damage that has been sustained or will be sustained by

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that person as a result of the exercise of the code right to which the
order relates.

(2) An order under sub-paragraph (1) may be made—

(a) at the time the court makes an order under paragraph 19,
5or

(b) at any time afterwards, on the application of the relevant
person.

(3) An order under sub-paragraph (1) may—

(a) specify the amount of compensation to be paid by the
10operator, or

(b) give directions for the determination of any such amount.

(4) Directions under sub-paragraph (3)(b) may provide—

(a) for the amount of compensation to be agreed between the
operator and the relevant person;

(b) 15for any dispute about that amount to be determined by
arbitration.

(5) An order under this paragraph may provide for the operator—

(a) to make a lump sum payment,

(b) to make periodical payments,

(c) 20to make a payment or payments on the occurrence of an
event or events, or

(d) to make a payment or payments in such other form or at
such other time or times as the court may direct.

(6) Paragraph 80 makes further provision about compensation in the
25case of an order under paragraph 19.

Interim code rights

25 (1) An operator may apply to the court for an order which imposes on
the operator and a person, on an interim basis, an agreement
between them which—

(a) 30confers a code right on the operator, or

(b) provides for a code right to bind that person.

(2) An order under this paragraph imposes an agreement on the
operator and a person on an interim basis if it provides for them to
be bound by the agreement—

(a) 35for the period specified in the order, or

(b) until the occurrence of an event specified in the order.

(3) The court may make an order under this paragraph if (and only if)
the operator has given the person mentioned in sub-paragraph (1)
a notice which complies with paragraph 19(2) stating that an
40agreement is sought on an interim basis and—

(a) the operator and that person have agreed to the making of
the order and the terms of the agreement imposed by it, or

(b) the court thinks that there is a good arguable case that the
test in paragraph 20 for the making of an order under
45paragraph 19 is met.

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(4) Subject to sub-paragraphs (5) and (6), the following provisions
apply in relation to an order under this paragraph and an
agreement imposed by it as they apply in relation to an order
under paragraph 19 and an agreement imposed by it—

(a) 5paragraph 19(3) (time at which operator may apply for
agreement to be imposed);

(b) paragraph 21 (effect of agreement imposed under
paragraph 19);

(c) paragraph 22 (terms of agreement imposed under
10paragraph 19);

(d) paragraph 23 (payment of consideration);

(e) paragraph 24 (payment of compensation);

(f) paragraph 80 (compensation where agreement imposed).

(5) The court may make an order under this paragraph even though
15the period mentioned in paragraph 19(3)(a) has not elapsed (and
paragraph 19(3)(b) does not apply) if the court thinks that the
order should be made as a matter of urgency.

(6) Paragraphs 22, 23 and 24 apply by virtue of sub-paragraph (4) as
if—

(a) 20references to the relevant person were to the person
mentioned in sub-paragraph (1) of this paragraph, and

(b) the duty in paragraph 22 to include terms as to the
payment of consideration to that person in an agreement
were a power to do so.

(7) 25Sub-paragraph (8) applies if—

(a) an order has been made under this paragraph imposing an
agreement relating to a code right on an operator and a
person in respect of any land, and

(b) the period specified under sub-paragraph (2)(a) has
30expired or, as the case may be, the event specified under
sub-paragraph (2)(b) has occurred without (in either case)
an agreement relating to the code right having been
imposed on the person by order under paragraph 19.

(8) From the time when the period expires or the event occurs, that
35person has the right, subject to and in accordance with Part 6 of
this code, to require the operator to remove any electronic
communications apparatus placed on the land under the
agreement imposed under this paragraph.

Temporary code rights

26 (1) 40This paragraph applies where—

(a) an operator gives a notice under paragraph 19(2) to a
person in respect of any land,

(b) the notice also requires that person’s agreement on a
temporary basis in respect of a right which is to be
45exercisable (in whole or in part) in relation to electronic
communications apparatus which is already installed on,
under or over the land, and

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(c) the person has the right to require the removal of the
apparatus in accordance with paragraph 36 but the
operator is not for the time being required to remove the
apparatus.

(2) 5The court may, on the application of the operator, impose on the
operator and the person an agreement between them which
confers on the operator, or provides for the person to be bound by,
such temporary code rights as appear to the court reasonably
necessary for securing the objective in sub-paragraph (3).

(3) 10That objective is that, until the proceedings under paragraph 19 or
any proceedings under paragraph 38 are determined, the service
provided by the operator’s network is maintained and the
apparatus is properly adjusted and kept in repair.

(4) Subject to sub-paragraphs (5) and (6), the following provisions
15apply in relation to an order under this paragraph and an
agreement imposed by it as they apply in relation to an order
under paragraph 19 and an agreement imposed by it—

(a) paragraph 19(3) (time at which operator may apply for
agreement to be imposed);

(b) 20paragraph 21 (effect of agreement imposed under
paragraph 19);

(c) paragraph 22 (terms of agreement imposed under
paragraph 19);

(d) paragraph 23 (payment of consideration);

(e) 25paragraph 24 (payment of compensation);

(f) paragraph 80 (compensation where agreement imposed).

(5) The court may make an order under this paragraph even though
the period mentioned in paragraph 19(3)(a) has not elapsed (and
paragraph 19(3)(b) does not apply) if the court thinks that the
30order should be made as a matter of urgency.

(6) Paragraphs 22, 23 and 24 apply by virtue of sub-paragraph (4) as
if—

(a) references to the relevant person were to the person
mentioned in sub-paragraph (1) of this paragraph, and

(b) 35the duty in paragraph 22 to include terms as to the
payment of consideration to that person in an agreement
were a power to do so.

(7) Sub-paragraph (8) applies where, in the course of the proceedings
under paragraph 19, it is shown that a person with an interest in
40the land was entitled to require the removal of the apparatus
immediately after it was installed.

(8) The court must, in determining for the purposes of paragraph 19
whether the apparatus should continue to be kept on, under or
over the land, disregard the fact that the apparatus has already
45been installed there.

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Part 5 Termination and modification of agreements

Introductory

27 This Part of this code makes provision about—

(a) 5the continuation of code rights after the time at which they
cease to be exercisable under an agreement,

(b) the procedure for bringing an agreement to an end,

(c) the procedure for changing an agreement relating to code
rights, and

(d) 10the arrangements for the making of payments under an
agreement whilst disputes under this Part are resolved.

Application of this Part

28 (1) This Part of this code applies to an agreement under Part 2 of this
code, subject to sub-paragraphs (2) to (4).

(2) 15This Part of this code does not apply to a lease of land in England
and Wales if—

(a) its primary purpose is not to grant code rights, and

(b) it is a lease to which Part 2 of the Landlord and Tenant Act
1954 (security of tenure for business, professional and
20other tenants) applies.

(3) In determining whether a lease is one to which Part 2 of the
Landlord and Tenant Act 1954 applies, any agreement under
section 38A (agreements to exclude provisions of Part 2) of that
Act is to be disregarded.

(4) 25This Part of this code does not apply to a lease of land in Northern
Ireland if—

(a) its primary purpose is not to grant code rights, and

(b) it is a lease to which the Business Tenancies (Northern
Ireland) Order 1996 (SI 1996/725 (NI 5)SI 1996/725 (NI 5)) applies.

(5) 30An agreement to which this Part of this code applies is referred to
in this code as a “code agreement”.

Continuation of code rights

29 (1) Sub-paragraph (2) applies if—

(a) a code right is conferred by, or is otherwise binding on, a
35person (the “site provider”) as the result of a code
agreement, and

(b) under the terms of the agreement—

(i) the right ceases to be exercisable or the site
provider ceases to be bound by it, or

(ii) 40the site provider may bring the code agreement to
an end so far as it relates to that right.

(2) Where this sub-paragraph applies the code agreement continues
so that—

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(a) the operator may continue to exercise that right, and

(b) the site provider continues to be bound by the right.

(3) Sub-paragraph (2) does not apply to a code right which is
conferred by, or is otherwise binding on, a person by virtue of an
5order under paragraph 25 (interim code rights) or 26 (temporary
code rights).

(4) Sub-paragraph (2) is subject to the following provisions of this
Part of this code.

How may a person bring a code agreement to an end?

30 (1) 10A site provider who is a party to a code agreement may bring the
agreement to an end by giving a notice in accordance with this
paragraph to the operator who is a party to the agreement.

(2) The notice must—

(a) comply with paragraph 85 (notices given by persons other
15than operators),

(b) specify the date on which the site provider proposes the
code agreement should come to an end, and

(c) state the ground on which the site provider proposes to
bring the code agreement to an end.

(3) 20The date specified under sub-paragraph (2)(b) must fall—

(a) after the end of the period of 18 months beginning with the
day on which the notice is given, and

(b) after the time at which, apart from paragraph 29, the code
right to which the agreement relates would have ceased to
25be exercisable or to bind the site provider or at a time
when, apart from that paragraph, the code agreement
could have been brought to an end by the site provider.

(4) The ground stated under sub-paragraph (2)(c) must be one of the
following—

(a) 30that the code agreement ought to come to an end as a result
of substantial breaches by the operator of its obligations
under the agreement;

(b) that the code agreement ought to come to an end because
of persistent delays by the operator in making payments to
35the site provider under the agreement;

(c) that the site provider intends to redevelop all or part of the
land to which the code agreement relates, or any
neighbouring land, and could not reasonably do so unless
the code agreement comes to an end;

(d) 40that the operator is not entitled to the code agreement
because the test under paragraph 20 for the imposition of
the agreement on the site provider is not met.

What is the effect of a notice under paragraph 30?

31 (1) Where a site provider gives a notice under paragraph 30, the code
45agreement to which it relates comes to an end in accordance with
the notice unless—

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(a) within the period of three months beginning with the day
on which the notice is given, the operator gives the site
provider a counter-notice in accordance with sub-
paragraph (3), and

(b) 5within the period of three months beginning with the day
on which the counter-notice is given, the operator applies
to the court for an order under paragraph 33.

(2) Sub-paragraph (1) does not apply if the operator and the site
provider agree to the continuation of the code agreement.

(3) 10The counter-notice must state—

(a) that the operator does not want the existing code
agreement to come to an end,

(b) that the operator wants the site provider to agree to confer
or be otherwise bound by the existing code right on new
15terms, or

(c) that the operator wants the site provider to agree to confer
or be otherwise bound by a new code right in place of the
existing code right.

(4) If, on an application under sub-paragraph (1)(b), the court decides
20that the site provider has established any of the grounds stated in
the site provider’s notice under paragraph 30, the court must
order that the code agreement comes to an end in accordance with
the order.

(5) Otherwise the court must make one of the orders specified in
25paragraph 33.

How may a party to a code agreement require a change to the terms of an agreement
which has expired?

32 (1) An operator or site provider who is a party to a code agreement by
which a code right is conferred by or otherwise binds the site
30provider may, by notice in accordance with this paragraph,
require the other party to the agreement to agree that—

(a) the code agreement should have effect with modified
terms,

(b) where under the code agreement more than one code right
35is conferred by or otherwise binds the site provider, that
the agreement should no longer provide for an existing
code right to be conferred by or otherwise bind the site
provider,

(c) the code agreement should—

(i) 40confer an additional code right on the operator, or

(ii) provide that the site provider is otherwise bound
by an additional code right, or

(d) the existing code agreement should be terminated and a
new agreement should have effect between the parties
45which—

(i) confers a code right on the operator, or

(ii) provides for a code right to bind the site provider.

(2) The notice must—

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(a) comply with paragraph 84 or 85, according to whether the
notice is given by an operator or a site provider,

(b) specify—

(i) the day from which it is proposed that the modified
5terms should have effect,

(ii) the day from which the agreement should no
longer provide for the code right to be conferred by
or otherwise bind the site provider,

(iii) the day from which it is proposed that the
10additional code right should be conferred by or
otherwise bind the site provider, or

(iv) the day on which it is proposed the existing code
agreement should be terminated and from which a
new agreement should have effect,

15(as the case may be), and

(c) set out details of—

(i) the proposed modified terms,

(ii) the code right it is proposed should no longer be
conferred by or otherwise bind the site provider,

(iii) 20the proposed additional code right, or

(iv) the proposed terms of the new agreement,

(as the case may be).

(3) The day specified under sub-paragraph (2)(b) must fall—

(a) after the end of the period of 6 months beginning with the
25day on which the notice is given, and

(b) after the time at which, apart from paragraph 29, the code
right to which the existing code agreement relates would
have ceased to be exercisable or to bind the site provider or
at a time when, apart from that paragraph, the code
30agreement could have been brought to an end by the site
provider.

(4) Sub-paragraph (5) applies if, after the end of the period of 6
months beginning with the day on which the notice is given, the
operator and the site provider have not reached agreement on the
35proposals in the notice.

(5) Where this paragraph applies, the operator or the site provider
may apply to the court for the court to make an order under
paragraph 33.

What orders may a court make on an application under paragraph 31 or 32?

33 (1) 40This paragraph sets out the orders that the court may make on an
application under paragraph 31(1)(b) or 32(5).

(2) The court may order that the operator may continue to exercise the
existing code right in accordance with the existing code agreement
for such period as may be specified in the order (so that the code
45agreement has effect accordingly).

(3) The court may order the modification of the terms of the code
agreement relating to the existing code right.