First published in 2002, the Commercial Code of Practice (“CCOP”) was designed to promote co-operative value generation by means of best practice commercial processes and senior management commitment. The 2016 CCOP replaces this, revising the Code to bring it in line with the obligations and expectations of the MER UK Strategy. Industry will be broadly familiar with the contents of the 2002 CCOP. How does this newcomer compare?
Refreshed and Repackaged
Overall, there is considerable alignment between the two versions. In fact, much of the material is identical: both CCOPs encourage parties to establish and agree a timetable to completion, maximise the use of standard forms and precedents, empower staff, use appropriate resources, and conduct post-activity reviews and analyses. Other elements may be rephrased but are, ultimately, moves in the same direction – for instance, “co-operative” and “non-blocking approaches” have been repackaged as “collaboration”.
The MER UK Addition
However, beyond updated wording, almost half of the 2016 CCOP is now dedicated to ensuring that parties comply with the MER UK Strategy, which came into force in March this year. Under the MER UK heading, acceding companies are required to, amongst other things:
- Promote awareness of the MER UK Strategy among all relevant staff, external advisors and counterparties;
- Recognise the “Central Obligation” of the MER UK Strategy;
- Facilitate collaboration and co-operation; and
- Analyse circumstances internally (and with JV partners, external advisors and counterparties) in light of the MER UK Strategy and any relevant OGA Plans, such as regional development plans.
A consequence of this MER perspective is that the 2016 CCOP includes “teeth” perhaps lacking in its earlier counterpart, as it carries the prospect of sanctions. Although the new Code is not directly enforceable (it is, after all, still a voluntary agreement), failure to comply with the Code may be taken into account by OGA in considering whether or not a relevant person is behaving in a manner which is MER UK compliant. The level of compliance – and perhaps even whether a party chooses to sign up at all – may serve as an indication to OGA of how collaborative a party is being. A perceived failure to collaborate risks being interpreted as a sanctionable failure to comply with the MER UK Strategy.
The 2016 Code is peppered with references to OGA and its powers. For example, companies are to review commercial activity and provide a summary in accordance with any OGA stewardship request. They are to report on progress regularly to OGA, but to only seek OGA’s involvement when “asking them to opine on a company’s compliance with the Central Obligation or, where necessary and appropriate, to exercise their powers with respect to dispute resolution or third party access”. OGA notes that it is not a mediator, and should not be used as such.
For the most part, the 2016 edition places the original CCOP themes into the context of the new regulatory framework and adopts the language of the MER UK Strategy. However, it may be that citing this Strategy within the Code and explicitly referencing OGA’s role and approach has given the 2016 CCOP more significance than its 2002 predecessor. Whether this is indeed the case will only become clear over time, as examples arise of OGA’s approach to CCOP in the context of the wider MER UK Strategy. As of 13 December, 30 companies have registered their commitment to the revised version.