Enforcement of an Award Adjourned Against a Non-Party to an Arbitration Agreement

Posted in Dispute Resolution

Parties should avoid uncertainties by stipulating the applicable law to the arbitration agreement.

By Eleanor M. Scogings and Robert Price

The decision in J (Lebanon) v. K (Kuwait)[i] provides a useful analysis of which law (i.e., the law of the arbitration agreement or the law of the seat) governs the issue of whether a non-party has become party to the arbitration agreement and, more broadly, how to determine which law governs the arbitration agreement if there is no express choice. While in this case there was an express choice, the judgment highlights the uncertainties that arise if the parties have made no express provision regarding the law of the arbitration agreement. Moreover, the case demonstrates the jurisdictional difficulties that arise when arbitration proceedings are brought against a non-party to an arbitration agreement.

The English High Court adjourned the claimant’s (J’s) application to enforce an arbitral award against a non-party to an arbitration agreement (K), pending the outcome of set aside proceedings at the seat of the arbitration in Paris. The Court overturned the tribunal’s decision that the law of the seat (French law) should determine whether K was bound by the arbitration agreement contained in a franchise development agreement (FDA). Rather, the court held that the question was one of English law, as the law governing the arbitration agreement. Applying English law, the Court held that K had not become party to the arbitration agreement in the FDA by novation or joinder, and accordingly adjourned the enforcement of the award pending the decision of the Paris Court of Appeal. Continue Reading

New PSR Industry Code Entitles Victims of Fraud to Reimbursement

Posted in Dispute Resolution

The new code aims to avoid customers being penalised for fraudsters’ actions.

By Andrea Monks and Nell Perks

Estimates indicate that fraudsters stole £1.2 billion from UK bank accounts in 2018 — a 16% increase on the previous year. UK Finance has described fraud as a “major threat to the UK”, and has confirmed that the finance industry is committed to tackling the issue. However, developments in banking that have led to quick and easy payment methods, combined with increasingly sophisticated cyber scams, mean that fraudsters continue to flourish.

There has been a particularly significant increase in authorised push payment (APP) fraud, in which a customer is tricked into making a payment to another account that is controlled by a criminal. Historically, victims of this sort of fraud have struggled to retrieve their money — only 23% of losses were returned last year. Continue Reading

Before Commencing Arbitration, Ensure That the Entity Being Sued Exists Under the Applicable Law

Posted in Dispute Resolution

The English High Court held the tribunal lacked jurisdiction as the defendant ceased to exist.

By Eleanor M. Scogings

In Ga-Hyun Chung v. Silver Dry Bulk Co Ltd,[i] the English High Court upheld a challenge to an award under Section 67 of the Arbitration Act (the Act). The award was made in favour of Silver Dry Bulk Co Ltd (SDBC) against Homer Hulbert Maritime Co Ltd (HH). The claimant, Mr Chung (trustee of HH), successfully challenged the jurisdiction of the tribunal on the grounds that there was not a valid arbitration agreement, and the tribunal had therefore not been properly constituted, because HH had ceased to exist at the time the notice of arbitration was filed.

This case serves as a useful reminder of the importance of carrying out due diligence on defendants prior to commencing arbitration proceedings, especially if they are incorporated in a foreign jurisdiction. If one of the parties to an arbitration agreement has ceased to exist, then a tribunal cannot be properly constituted and the arbitration proceedings cannot produce a valid and enforceable award. Continue Reading

EU Prospectus Regulation: New Format and Content Requirements

Posted in Finance and Capital Markets

The full regulation will come into force in July, imposing new requirements for prospectuses

By James Inness and Connor Cahalane

The new EU Prospectus Regulation will take full effect on 21 July 2019. Issuers and other parties to capital markets transactions can expect changes in the following areas:

  • Prospectus summary: New content requirements and length restrictions will make the summary section more concise while allowing issuers the flexibility to include key information for investors.
  • Risk factors: With some material changes to the rules relating to risk factors and new ESMA guidelines, risk factors are likely to be a particular focus area for regulators.
  • Simplified prospectus: A new reduced disclosure regime will apply to secondary issues, such as rights issues.
  • Growth prospectus: Certain issuers, mainly SMEs, will be able to make public offers using an EU Growth Prospectus with lighter disclosure requirements and a standardised format.

Although the new rules will not take effect until July, competent authorities are already applying the new requirements to any prospectuses under review that are expected to be approved after 21 July 2019. In the coming weeks, Latham & Watkins will publish additional posts that take a more detailed look at the changes to the summary section, risk factors, and other areas that will impact transactions. Continue Reading

Italy Introduces Comprehensive Reform of Class Action Rules

Posted in Dispute Resolution, EU and Competition

New law aims to expand the currently limited application of class actions in Italy.

By Antonio Distefano and Isabella Porchia

The Italian Parliament recently introduced a comprehensive reform of the rules governing class actions with Law No. 31 of 12 April 2019 (the Reform). The Reform, which was published in the Official Gazette on 18 April 2019, will exclusively apply to unlawful conducts carried out after it goes into effect on 19 April 2020. In the meantime, the provisions currently in force shall continue to apply. Continue Reading

Market Participants Welcome Clarity on German Real Estate Transfer Tax Reform

Posted in Commercial, EU and Competition

Federal Ministry of Finance publishes draft tax bill outlining new measures effective 1 January 2020.

By Tobias Klass

The Federal Ministry of Finance has released its first draft tax bill on the contemplated real estate transfer tax (RETT) reform, setting out the general framework to which market participants must conform. German political debate has focused on strengthening German RETT laws for some time. The Conference of the German Ministers of Finance added weight to this political debate in June 2018, requesting that tax department heads of the federal and state ministries of finance transfer the resolution into a draft bill. Consequently, market participants have structured transactions to account for considerable uncertainties as regards RETT consequences.

The proposed draft measures are consistent with those outlined in June 2018, however, for the first time, market participants are gaining more clarity about when the new rules likely will apply. Generally speaking, the new rules will only apply to transactions as of 1 January 2020. Continue Reading

FCJ Decision Updates Shareholders’ Resolution Requirement for Sale of GmbH Assets

Posted in Commercial, EU and Competition

While a shareholders’ resolution is still required, the FCJ left open the question of whether notarization of the resolution is necessary.

By Christian Thiele and Otto von Gruben

The German Federal Court of Justice (FCJ) decided on 8 January 2019 that Section 179a (1) of the German Stock Corporation Act (AktG) does not apply mutatis mutandis to a German GmbH (II ZR 364/18). The decision contradicts the prevailing view in legal literature so far, pursuant to which a notarized shareholders’ resolution approving the sale and transfer of all or substantially all assets of a GmbH was required.


Section 179a (1) AktG provides that an agreement, pursuant to which a German stock corporation undertakes to transfer all of its assets requires an approving shareholders’ resolution. If a respective agreement is executed without such resolution, it remains provisionally invalid until it is approved by way of a shareholders’ resolution in accordance with Section 179a (1) AktG. If the shareholders refuse to approve such agreement, it becomes permanently void. Continue Reading

Lessons for UK Companies From US DOJ Guidance on Corporate Compliance Programs

Posted in Employment and Benefits

The DOJ’s recently updated guidance poses helpful questions for UK corporates evaluating the effectiveness of their internal compliance programmes.

By Stuart Alford QC, Erin Brown Jones, and Nathan H. Seltzer

It is well known that a corporate’s failure to prevent offences can be answered with a defence of “adequate procedures” in a case of bribery or “reasonable procedures” in a case of failure to prevent the facilitation of tax evasion. However, with no case law to aid comprehension of what “adequate” or “reasonable” mean, UK corporates are forced to seek answers elsewhere.

The UK government has issued guidance alongside both the Bribery Act 2010 and the Criminal Finances 2017, and these documents remain the principal source for interpreting those acts. However, UK companies looking to understand the wider expectations of law enforcement — particularly companies that operate in multiple jurisdictions — may find useful the US Department of Justice’s (DOJ’s) updated guidance “Evaluation of Corporate Compliance Programs” and recent comments from Assistant Attorney General Brian Benczkowski introducing the updated guidance, which replaces similar DOJ guidance issued in 2017.

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Making Your Carve-Out a Clean Cut

Posted in M&A and Private Equity

Corporates should leverage growing carve-out and divestment activity across the European market with a strategic approach to deal making.

By Robbie McLaren, Emily Cridland, and Catherine Campbell

In the current deal market, corporates are taking an increasingly strategic and value-centred approach to planning carve-outs and divestments in order to maximise value. According to advisory firm EY, 84% of corporates questioned in late 2018 said they plan to divest an asset within the next two years, up from 20% in 2015. Streamlining operating models and managing a unit’s position in the market are most commonly cited as triggers for divestment. While financial distress can be a factor, EY’s findings demonstrate the analytical approach corporates are taking to divestments. This is echoed in recent deals we have advised on, including Telenor’s sale of its Central and Eastern Europe Business to PPF Group and Allergan’s sale of its global generic pharmaceuticals business to Teva.

In our view, corporates should approach each step of the carve-out process with two key factors in mind — what drives value in the carved-out business and how such value drivers will translate once the business is in the buyer’s hands.

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Fraud Unravels All – Even Post-Judgment

Posted in Dispute Resolution

English Supreme Court rules that there is no reasonable diligence requirement barring a fresh action to set aside a judgment obtained by fraud.

Oliver E. Browne and Alex Cox


In Takhar v Gracefield Developments Limited and others [2019] UKSC 13, the English Supreme Court considered whether a party applying to set aside an earlier judgment on the basis of fraud is required to show that it could not have discovered the fraud by the exercise of reasonable diligence. The court unanimously ruled that there is no reasonable diligence requirement barring fresh actions based on fraud, and allowed the appeal.


The appellant, Mrs. Takhar, acquired a number of properties in Coventry as part of a separation from her husband in 1999. She subsequently suffered personal and financial problems, largely as a result of the poor condition of the properties. In 2004, she became reacquainted with her cousin, Mrs. Krishan, whom she had not seen for many years. Mrs. Krishan and her husband, Dr. Krishan, agreed to provide financial help and practical assistance to Mrs. Takhar. Continue Reading