When is it unreasonable to withhold consent?

Jason Rix

In Apache North Sea v Ineos, the court considered a provision that a party must “not unreasonably withhold its consent”.

Apache wanted to amend part of an agreement with Ineos for transporting and processing hydrocarbons. It asked for Ineos’ consent to do so. Ineos said it would agree if Apache changed a tariff under the agreement. The agreement stated that Ineos could not “‘not unreasonably withhold its consent” to amendments of this kind.

The court said that, normally, you could not impose a condition to improve your own rights, but you could where you were doing so “to protect or compensate for a benefit … enjoyed under the contract which the course for which consent is sought would impair” (ie if the condition was aimed at protecting you against a legitimate concern that would stem from you giving consent).

On the facts the court found that the condition Ineos was seeking to impose was a fundament change of the parties’ bargain and not a means of providing legitimate protection.