![Global rules on foreign direct investment](https://www.nortonrosefulbright.com/-/media/images/nrf/nrfweb/knowledge/publications/us_24355_legal-update--fdi-alert.jpeg?w=265&revision=a5124a65-abf9-40e4-8e96-9df39ffdb212&revision=5250068427347387904&hash=96B456347C3246E5649838DF281C5F5D)
Publication
Global rules on foreign direct investment (FDI)
Cross-border acquisitions and investments increasingly trigger foreign direct investment (FDI) screening requirements.
United Kingdom | Publication | July 2024
In a judgment handed down on July 9, 2024, the Court of Appeal has upheld the earlier decision in BBC v BBC Pension Trust [2024] that “interests” of active members includes future service benefits as well as rights earned by past service.
The amendment power in the BBC pension scheme trust deed and rules included a proviso that stated that changes to the trust deed or rules which affected the "interests" of active members would be ineffective unless:
The Court of Appeal held that the High Court judge had been correct to conclude that the interests protected under the proviso included the terms on which active members accrued benefits on an ongoing basis in the future. The use of the word "interests" was a deliberately simple, broad and open-textured word. Unlike other examples of fetters on powers of amendment, it was not tied to "rights"; or to rights that had "accrued" or been "secured". Nor was it limited by reference to any cut-off date, or to contributions already made.
The Court of Appeal found that one of the most valuable interests that an active member had was the ability to continue to accrue benefits on particular terms as their length of pensionable service increased, even if they had no enforceable legal right under the scheme to continue in employment with the BBC. That reading was reinforced by a consideration of the circumstances in which an amendment could be made that did affect the active members' interests. Thus the High Court decision was upheld.
Comment
This interpretation will place limitations on future exercises of the amendment power and will not be the result hoped for by the BBC. The Court was asked to consider only specific questions as to the scope of the amendment power, rather than any proposed amendments. The judgment did note that the parties had agreed that any future questions that arise might be answered (if at all) in later proceedings.
It is unlikely that the decision will have wider application as the terms of the proviso were quite unusual. The case does illustrate that the interpretation of a pension scheme's amendment power will depend on the specific words used and the context in which they appear. Here, the Court noted that the word "interests" was "untethered to any composite phrase".
It should be noted that this judgment does not impact on the 2017 unanimous Court of Appeal decision that the BBC scheme rules permitted the BBC to determine which elements of pay constituted pensionable salary. Members’ interests protected by the proviso under the amendment power would still be limited to the increases in pensionable salary as determined by the employer as far as future salary linkage is concerned.
Publication
Cross-border acquisitions and investments increasingly trigger foreign direct investment (FDI) screening requirements.
Publication
Artificial intelligence (AI) raises many intellectual property (IP) issues.
Publication
Taking place across three webinars, our team of experienced lawyers and consultants, along with industry professionals and regulators, explore the latest ESG developments and trends within financial services regulation. This series takes a cross jurisdictional perspective, covering ESG financial services regulation and trends from across the globe.
Subscribe and stay up to date with the latest legal news, information and events . . .
© Norton Rose Fulbright LLP 2023