Update: Stricter EU Environmental Performance Standards to Apply to Large Combustion Plants by 2021

Posted in Environment

By Jörn Kassow and Patrick Braasch

Emissions from approximately 2,900 large combustion plants in the EU, including coal-fired power stations as well as peat, oil and gas power plants, are now likely to be subject to stricter environmental performance standards. These updated standards (“Best Available Techniques Conclusions for Large Combustion Plants” – BREF LCP), based on a decision adopted by the Industrial Emissions Directive (IED) Article 75 Committee on 28 April 2017, are expected to be formally adopted by the European Commission as a Commission Implementing Decision. The negotiations leading up to the Committee‘s decision have been covered by a previous blog post on 25 April 2017. Continue Reading

The European Conflict Minerals Regulation – What are the Key Take Away Points?

Posted in Environment

By Paul Davies and Michael Green

The European Conflict Minerals Regulation (the Regulation) was approved by the European Council on 3 April 2017. Publication in the Official Journal of the European Union will be the next step in the process and this could take 3-6 weeks. The Regulation will be directly applicable in all EU member states when it takes effect in January 2021.

This has been many years in the making – the European Commission (the Commission) issued the first draft regulation in 2014. The EU Council and European Parliament each considered this and produced their own versions. Tripartite negotiations were then undertaken to achieve a regulation text that would be workable for all three institutions. On 22 November 2016, these negotiations were successfully concluded.

The Regulation sets out certain rules for all importers into the EU of minerals or metals containing or consisting of tin, tantalum, tungsten or gold (3TG). It includes an annex that provides a more detailed description of the specific metals and minerals that are covered, including tin ores and concentrates, tungsten oxides and hydroxides, carbides of tantalum and unwrought or semi-manufactured from gold. The Regulation will apply to minerals and metals listed in Annex 1 of the Regulation that are obtained as by-products. Significantly, recycled metals are exempt from the application of the Regulation. By way of summary, “recycled” means reclaimed end-user or post-consumer products. Minerals that are partially processed, unprocessed or a by-product of another ore are not considered to be “recycled”. Existing stocks of minerals, held before 1 February 2013 will not fall within the scope of this Regulation. The Commission will be required to review the Regulation (in terms of its functioning and effectiveness) every three years, taking into account its impact on the ground and on the main EU economic actors.

Continue Reading

Buy and Build Strategy Increases Antitrust Risk for Private Equity

Posted in M&A and Private Equity

By Sophia Stephanou, Luca Crocco and Hector Armengod

Private equity firms have sought a greater number of buy and build opportunities in recent years, amid high valuations and competition for primary deals. In our view such deals carry higher antitrust risks and warrant careful consideration of antitrust issues by both private equity teams and portfolio company management. We are seeing increased scrutiny by some antitrust authorities around the globe and M&A strategy should be considered from an antitrust perspective at the time of the initial acquisition.

Continue Reading

Shareholder Liability a Cause for Concern for Private Equity Firms

Posted in M&A and Private Equity

By Huw Thomas

The global regulatory environment has become increasingly challenging for private equity in recent years. In our view, this trend will continue as politicians in the UK and elsewhere seek new tools to hold business accountable.

A key principle of English law is that the liability of a shareholder in a limited company is restricted to the value of the shareholder’s investment. The circumstances in which the courts will override that principal (referred to as “piercing the corporate veil”) are limited. However, we are seeing increasing instances where the veil of incorporation, instead of being pierced, is being side stepped by legislation or court judgments that impose liability directly on parent undertakings for the acts of their subsidiaries.

Continue Reading

Trouble Ahead? Lobbying Underway to Prevent the Extension to the Industrial Emissions Directive

Posted in Environment

By Paul Davies, Michael Green and Kristof Ferenczi

The Industrial Emissions Directive (IED) is the main EU instrument that regulates emissions from industrial installations (including power stations) and came into force on 6 January 2011.

Its objective is to achieve a high level of protection for the environment and human health by reducing harmful industrial emissions. It creates an obligation for all plants to operate using Best Available Techniques (BAT) and to be issued with a permit setting emission limits in line with BAT. Regular sector-based discussions then take place to update BAT to reflect new technology.

As such, by the end of April 2017, the reference document on Best Available Techniques for large combustion plants (BREF) will be subject to approval by a special commission set up by member states under the provisions of Article 75 of the Directive on Integrated Pollution Prevention and Control (IPPC Directive). Continue Reading

Traditional UK Employment Law Means Gig Economy Could Be Hard Work for Private Equity

Posted in Employment and Benefits, M&A and Private Equity

By Sarah Gadd

Companies that operate in the “gig economy”, using a largely self-employed workforce, have enjoyed enormous growth in recent years but in the UK, these companies have come into conflict with long-established UK employment law. In our view, current laws are not fully equipped to deal with new staffing models in which staff and companies alike are looking for more flexibility than the traditional “master-servant” employment relationship affords. Private equity deal teams should closely consider employment status when they evaluate deals, particularly if a significant proportion of the workforce is self-employed. This is not only an issue in the newer gig economy sector but also in industries that operate a self-employed model, particularly where small, independent businesses become part of larger corporate entities, as we have seen with the dental industry in recent years.

Continue Reading

Modern Slavery – An Update

Posted in Dispute Resolution

By Paul Davies, Jumana Rahman and Michael Green

26 March 2017 marked two years since the introduction of the Modern Slavery Act 2015.  As the signature legislation of the then Home Secretary (Theresa May – now Prime Minister), it heralded greater focus on an issue that impacts many around the world.  The Modern Slavery Act was also a further acceleration of legislative and other requirements and drivers for large corporations to undertake heightened diligence in respect of its supply chains. Continue Reading

Will New Spanish Dividend Rules Cause Pain for Private Equity in Spain?

Posted in M&A and Private Equity

By Ignacio Dominguez

Recently effected reforms to Spanish dividend protections for minority shareholders should cause European dealmakers to review deal terms more closely in 2017. Outright acquisition of businesses is unusual in Spain, 83% of Spanish private equity transactions completed since January 2016 involve the acquisition of less than 100% of the target. In our view, the reforms could significantly affect buyout firms that invest alongside minority shareholders or management in Spain.

What Is New?

Effective from the start of 2017, any shareholder in a Spanish company can demand a dividend distribution of a minimum of a third of the company’s operating profits obtained during the previous financial year, and which are legally distributable. If the company declines to declare such a dividend, any minority shareholder who had voted in favour of the dividend can exercise a “separation right”, requiring that the company acquires their shares at a “reasonable value”. If parties disagree on valuation, the Spanish Commercial Registry will appoint an independent expert to carry out a binding valuation. The reform applies to all private companies registered for five years or more, so captures completed deals as well as prospective deals. Continue Reading

France Adopts a New Law Requiring Companies to Diligence their Supply Chains in Relation to Human Rights, Environmental, and Health and Safety Issues

Posted in Environment

By Paul Davies and Michael Green

On March 27, 2017, the French Parliament adopted a Law On The Duty Of Vigilance For Parent And Subcontracting Companies. The law amends the Commerce Code and requires companies to establish and implement a plan for diligencing human rights, environmental, and health and safety issues in their supply chains.

The law is limited in scope. It applies to any company (an SA or SAS) that, at the end of two consecutive financial years, employs (i) at least five thousand employees within the company and its direct or indirect subsidiaries whose head offices are located in French territory, or that has (ii) at least ten thousand employees within its direct or indirect subsidiaries whose head offices are located in French territory or abroad.

Records suggest that some 243 entities employ more than 5000 employees in France (based on 2015 figures). Out of this number, it is estimated that only about 117 of them will be subject to the new requirements. The remainder, for now, fall outside of the scope of this new requirement (as they are partnerships or public bodies) Although some commentators had hoped for more companies to be included, it is likely that in due course this new law will be extended to others. Continue Reading

ICSID Tribunal Upholds a State’s Right to Investigate Criminality in Arbitral Proceedings

Posted in Dispute Resolution

By Charles Rae

An ICSID tribunal has unanimously rejected a claimant’s attempt to temporarily suspend a State-initiated criminal investigation involving two of its witnesses. In Italba Corporation v Uruguay[1] Italba Corporation (Italba) had applied to the tribunal for provisional measures enjoining Uruguay from proceeding with its investigation until after completion of the arbitration, arguing that the State’s conduct undermined the procedural integrity of the arbitral process.


In the course of the arbitration, Italba filed witness statements by Dr Gustavo Alberelli and Mr Luis Herbón, an expert report and its exhibits. Shortly thereafter, an investigation was launched by the state prosecutor into allegations that some of the documents submitted by the claimant had been falsified and forged in contravention of the Uruguayan Penal Code. Mr Herbón was subsequently served with a notice to appear before a criminal court in Montevideo to give evidence, however neither he nor Dr Alberelli were charged or detained in connection with the investigation. Upon becoming aware of the notice, Italba requested that Uruguay terminate the criminal proceedings. After the State refused, Italba filed an application for provisional measures in the arbitration seeking to enjoin the investigation pending resolution of the arbitration. Continue Reading