Benefit of agreement is sufficient to seek renewal rights under the Electronic Communications Code

Summary  

The Court of Appeal has confirmed in On Tower UK Limited v AP Wireless II (UK) Limited [2026] EWCA Civ 43 that an operator is only required to hold the benefit of an agreement under the Electronic Communications Code (the “Code”), in order to be treated as a "party to a Code agreement" for the purposes of seeking a renewal lease under Part 5 of the Code. The operator does not need to hold the burden of obligations under the agreement.

Issue

For a number of subject sites, the operator (On Tower, which was at the time called "Arqiva Services Limited") had taken an assignment of the benefit of a Code agreement which was in the form of a licence. However, because the agreement was in the form of a licence rather than a lease, the burden of the obligations under the licence were incapable of being assigned as a matter of general contract law.

On Tower served notices under paragraph 33 of the Code seeking a new lease at a much-reduced rent. AP Wireless was the site provider. On Tower made a reference to the First-tier Tribunal (“FTT”) for an order for a new lease under paragraph 34 of the Code. AP Wireless argued that the reference should be struck out, because On Tower was not a "party to a code agreement".

The FTT decision

The FTT held that it was enough for the operator to hold the benefit of the agreement.

The Upper Tribunal (“UT”) decision

On appeal, Fancourt J in the UT concluded that it was also necessary for the operator to assume primary responsibility for  the burden of the obligations under the agreement, which requirement could be satisfied (among other ways) where the assignee operator had covenanted with the assignor to perform the obligations in the licence agreement (whether a full covenant or a covenant by way of indemnity only). If the assignee assumed such responsibility, it would sufficiently stand in the shoes of the assignor licensee, at least for the purposes of Part 5 of the Code.

The Court of Appeal decision

AP Wireless appealed to the Court of Appeal, arguing that a direct covenant with the site provider was required to enable the operator to hold both benefit and burden as against the site provider. 

Dismissing APW's appeal but for different reasoning from that of the UT, the Court of Appeal, held that only the benefit of the agreement is required for the operator to be a "party to a code agreement". In the lead judgment, with which Holgate and Foxton LJJ agreed, Newey LJ determined that holding the benefit of a Code agreement is sufficient to constitute qualifying an operator as a "party to a Code agreement" with standing to seek renewal under Part 5.

Adopting a purposive approach to interpretation, Newey LJ stated at paragraph 63:

“In the end, notwithstanding the Judge’s careful and thoughtful decision, I have arrived at a different conclusion on when an operator will be a “party to [a code/the] agreement” within the meaning of Part 5 of the Code. In my view, an operator with merely the benefit of a code agreement is such a party. That approach is not in every respect easy to reconcile with the terms of Part 5, but it seems to me to fit those terms better than either the Judge’s solution or APW’s. Part 5 says nothing about “assuming the primary responsibility for performing the obligations” or entering into a deed of covenant in favour of the site provider, nor uses the word “burden”…”

Key takeaways

The key takeaway from the decision is that, if an operator is in situ under (with the benefit of) a subsisting licence agreement, it can instigate renewal under Part 5 of the Code (rather than having to seek new rights under Part 4) and without having to enter into further documentation with the site provider.

For site providers, this means that the operator has access to Paragraph 35 of the Code. This paragraph permits either party to seek an interim order to vary the payments due under the existing agreement or otherwise modify restrictive terms for the period until the renewal agreement is put in place. However, due to the sharp decrease in Code rents under the new regime, this is more valuable to operators.

The ruling once again demonstrates that the public policy behind the Code (of improving connectivity through the installation of electronic communications infrastructure) continues to guide the Courts towards a purposive approach to interpretation, even where that approach is difficult to reconcile with the express wording in the legislation. The judgment of the Court of Appeal can be found here.