The Electronic Communications Code set out in the Digital Economy Act 2017 (‘the Code’) confers statutory rights on telecommunications operators to facilitate the creation and operation of their networks. Code rights can be acquired by an operator either by written agreement with a landowner or by an agreement imposed by court order. A Code agreement does not need to be by deed and does not need to be a lease; however, for the purposes of this blog, we will focus on Code agreements in the context of a lease.
What are Code Rights?
Briefly, Code rights include rights for telecommunications operators to:
Install telecommunications apparatus on, under or over land.
Upgrade the telecommunications apparatus and share its use with another operator and carry out works on the land or elsewhere in connection with these rights.
Connect to a power supply.
Interfere with or obstruct an access.
As well as being relatively wide ranging, Code rights can be freely assigned to other operators and some restrictions that would be permissible in normal commercial leases are not permitted in Code leases.
Features of Code Leases compared to Commercial Leases
Leases granting Code rights have unique features as compared to leases that do not grant Code rights.
To take assignment first, a commercial lease will usually set out circumstances in which the landlord may withhold consent to an assignment, and conditions subject to which any such consent may be granted. This enables the landlord to keep control over the identity of the tenant and to check that it is likely to be able to meet its commitments under the lease. The position in a Code lease differs significantly. A term in a Code lease that prevents or restricts an operator from assigning the lease to another operator is void, with the result that a landlord of a Code lease has no control over the assignee operator and the operator can assign the lease to another operator whatever that assignee operator’s financial standing.
Another notable feature of Code leases is that operators are given an express right to upgrade their electronic communications apparatus provided that there is no (or only minimal) adverse impact on its appearance and no additional burden is imposed on the landlord. A term in a Code lease that prevents or restricts this right where those conditions are met is void. This again limits a landlord’s control over its land, and case law has made it clear that operators are free to seek wider rights to upgrade their apparatus and landlords must consider these requests in good faith having regard to the business interests of the tenant.
A final point worth noting is that Code agreements can be imposed on a landowner. An operator can require a landowner to confer a Code right on them or require it to be bound by a Code right that is exercisable by the operator. If a landowner does not agree, it must give a counter notice within 28 days to that effect. In these circumstances, an operator may apply to court for an order imposing an agreement. A court may impose an agreement if it is satisfied that any prejudice caused to the landowner can adequately be compensated in money, and the benefit to the public from making the order would outweigh any prejudice to the landowner. This is contrary to the position of courts in relation to commercial leases whereby in usual circumstances, a court would not impose a lease between parties.
Terminating Code Leases
An important feature of Code rights is that they statutorily continue after the agreement granting them has expired. This means that in order to terminate a Code lease, a landlord must follow a prescribed procedure. A landlord must serve notice on the operator, specifying a proposed termination date and a ground on which the landlord relies to end the agreement. This step is complicated by the fact that there are rules governing the validity of a proposed termination date, and the grounds on which a landlord can rely are limited. From the day notice is given by the landlord, the operator has a three-month period in which to serve a counter notice, and a further three-month period in which to apply for a court order once the counter notice is served. As can be seen, the process is a potentially time consuming and uncertain one.
Why Seek Legal Advice?
This blog was intended to be a very brief introduction to agreements conferring rights under the Electronic Communications Code. If you would like any more information or advice in relation to agreements conferring Code rights, such as advice in relation to a telecommunications lease, please contact us on 0845 287 0939 or contact us by email.