EE v Virgin - The Importance of Wording in Exclusion Clauses

The recent Court of Appeal decision in EE Ltd v Virgin Mobile Telecoms Ltd [2025] EWCA Civ 70 serves as a critical reminder of the importance of precise wording in exclusion clauses within commercial contracts.

Case Overview

EE and Virgin entered into an exclusivity agreement under which EE would provide Virgin with access to its mobile network for 2G, 3G and 4G services. The agreement did not include the provision of 5G and Virgin subsequently entered into an agreement with Vodafone for 5G services.

EE claimed that Virgin had breached the exclusivity agreement by migrating customers to Vodafone’s network, including those not using 5G. EE claimed £24m in lost revenue.

Central to the dispute was an exclusion clause within the agreement between EE and Virgin which stated “neither party shall have liability to the other in respect of anticipated profits”.

Virgin stated that this clause barred EE’s claim for lost revenue as the claim was essentially one for anticipated profits. EE stated that the term “anticipated profits” was intended to refer to profits expected from external ventures, not those arising directly under the agreement.

Decision

In a majority (albeit close) decision, the Court of Appeal upheld the interpretation that the exclusion clause did indeed obstruct EE’s claim. The reasons given included:

• The agreement referred to “anticipated profits” and “loss of profits” interchangeably suggesting there was no special or restricted meaning to one or the other;
• There was no basis under the agreement on which “anticipated profits” should be limited to profits outside of the contract; and
• EE’s claim for lost revenue was, in essence, a claim for loss of profits anticipated under the agreement.

Key Takeaways

The reasons for this decision reinforce the overarching approach of the Court that it is reluctant to interfere in the interpretation of commercial contracts, particularly where the parties are of ‘equal bargaining power’. 

Further, this case emphasizes the importance of careful drafting where it comes to exclusion clauses, in particular:

1. Ensuring exclusion clauses are drafted with clear and unambiguous language.
2. Considering all potential scenarios in which the exclusion clause might apply and setting out the exceptions where it should not operate e.g. breaches of key contractual obligations.
3. Ensuring that an exclusion clause does not undermine the fundamental purpose of the contract.