DAC Beachcroft has assisted Ofwat in successfully defending an urgent injunction application that sought to prevent the publication of its proposed enforcement decision following an investigation into South East Water's compliance with section 37 of the Water Industry Act 1991 and Licence Condition P12.
In a judgment handed down on 4 March 2026 by Mr Justice Chamberlain (judge in charge of the Administrative Court List), the High Court confirmed that a compelling case must be made out for the Court to take the exceptional course of granting injunctive relief restraining the performance of a regulatory body's statutory functions.
Background
The Water Services Regulation Authority ("Ofwat") was established by the Water Industry Act 1991 and is the economic regulator of the water sector in England and Wales. Ofwat monitors water companies' performance, governance and financial resilience – and has powers to intervene where it identifies failures or those at high risk of failure. This includes making enforcement orders and penalties where water companies do not comply (or at high risk of failing to comply) with statutory obligations and/or licence conditions.
Where Ofwat is satisfied that a licensed water undertaker (i.e a water company) is contravening a licence condition or statutory requirement (or is likely to do so), it must issue a "final enforcement" order (which can include a penalty) unless an exception applies. Before doing either of these things, Ofwat must give notice of the order it proposes to make and/or the penalty it proposes to impose, allow a period for representations or objections to made and consider these before deciding whether to withdraw, vary or confirm the decision.
South East Water Limited is a water-only undertaker, supplying 2.3 million customers in the south east of England. As a result of multiple supply interruptions in Kent and Sussex between 2020 and 2023, Ofwat launched an investigation into South East Water in November 2023. That investigation focussed on whether South East Water was complying with its duties under section 37 of the Water Industry Act 1991, and Licence Condition P12 (which requires South East Water to act in a manner best calculated to ensure that it has in place adequate financial resources and facilities, management resources and systems of planning and internal control).
The multi-stage investigative process culminates in a draft decision which is published by Ofwat, and will then be subject to consultation for a statutory minimum period of 21 days. That consultation is open to all stakeholders, including South East Water's customers.
On 18 February 2026, Ofwat indicated to South East Water that it was intending to issue a proposed enforcement order and financial penalty in due course. On 24 February 2026, South East Water filed a claim for judicial review and an urgent injunction application to prevent Ofwat from publishing that draft decision.
Interim relief
South East Water contended that it had compelling reasons to restrain the publication of the draft decision, namely that publication would lead to irreparable harm to its business interests. In advancing that position, it explained that publication could result in the downgrading of South East Water's credit rating so as to cause it to fall below investment grade rating, would make it harder for South East Water to secure additional financing on beneficial terms, and could threaten South East Water's ability to retain existing sources of investment. Conversely, South East Water contended that there would be limited prejudice to Ofwat or the public interest in granting interim relief to restrain publication.
Ofwat contested the application in full. It advanced the position that there is a well-established line of authority that the Court will only in exceptional circumstances restrain a public authority from publishing a report in the exercise of its statutory functions, and such exceptional circumstances did not exist here. That applied with even greater force in circumstances where the injunction sought to restrain publication of a proposal in respect of which Parliament had expressly provided for a process involving the making and considering of representations, including by consumers.
Mr Justice Chamberlain explained at paragraph [49] of the judgment that "it is far from clear that the publication of the proposed decision will cause harm that is “grave” or “irreparable”, as alleged". He went on to analyse the balance of harm caused to South East Water in refusing the application for injunctive relief, against the harm caused to others by granting an injunction to restrain publication – namely (1) South East Water's potential/existing lenders, (2) South East Water's customers (and in particular the 286,645 customers affected by the matters falling within the scope of the investigation); and finally (3) the impact of conducting the entire judicial review proceedings in private on the public interest in open justice.
The Court concluded as follows:
"For all these reasons, any harm that would be caused to SEW in the scenario where interim relief is refused and the claim later succeeds is very firmly outweighed by the harm that would be caused to potential and existing lenders and investors, customers and the public interest generally in the scenario where interim relief is granted and the claim otherwise fails. On no view does SEW’s claim and evidence establish the “pressing grounds” or “most compelling reasons” needed to justify the grant of interim relief to restrain publication of a regulatory decision which (given its provisional findings) Ofwat is under a statutory duty to publish."
The interim application was dismissed on all grounds.
Comment
The Administrative Court's judgment in R(South East Water) v Ofwat [2026] EWHC 479 (Admin) is the latest in a line of authorities where the Administrative Court and Court of Appeal have considered the high threshold at which they will allow urgent injunctions to prevent public authorities from publishing information which it is obliged or empowered to publish. These includes R (Governing Body of X School) v Office for Standards in Education [2020] EWCA Civ 594 and R (Barking and Dagenham College) v Office for Students [2019] EWHC 2667 (Admin). These principles are now well established and summarised at paragraph 16.6.3 of the Administrative Court Guide as follows: "where a claimant seeks to restrain publication of information by a public authority which is obliged or empowered to do so, the Court must consider the rights of those who would otherwise be entitled to receive the information…. Interim relief will only be granted for the "most compelling reasons" or in "exceptional circumstances". Whereas most of the previously reported authorities have arisen from the education sector, this decision confirms the application of the same principles and thresholds for the grant of interim relief beyond that sector.
Ofwat instructed Darryn Hale, Nico Tilche and Awen Edwards of DAC Beachcroft and Tom Cleaver and Femi Adekoya of Blackstone Chambers.
A copy of the judgment can be found here.
