Latham.London

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

Introduction

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.

Background

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

UK’s Proposed “Online Harms” Compliance and Enforcement Regime Will Target Platforms

Posted in Emerging Companies and Technology

UK publishes White Paper with hard-hitting regulatory proposals to tackle online harms.

By Alain Traill, Stuart Davis, Andrew Moyle, Deborah Kirk and Gail Crawford

On 8 April 2019, the Home Office and the Department for Culture, Media and Sport (DCMS) published an “Online Harms White Paper”, proposing a new compliance and enforcement regime intended to combat online harms. The regime is designed to force online platforms to move away from self-regulation and sets out a legal framework to tackle users’ illegal and socially harmful activity. Although the regime appears to target larger social media platforms, the proposals technically extend to all organisations that provide online platforms allowing user interaction or user-generated content (not limited to social media companies or even ‘service providers’ in the traditional sense) and set out a potentially onerous and punitive compliance and enforcement regime for a broad set of online providers. Continue Reading

Sections 68 and 69 of the Arbitration Act 1996 Have Bite!

Posted in Dispute Resolution

A rare example of the English High Court varying an arbitral award.

By Oliver E. Browne and Eleanor M. Scogings

In Dakshu Patel v. Kesha Patel [2019] EWHC 298 (Ch), the English High Court upheld an appeal under section 69 of the Arbitration Act 1996 (the Act) against an arbitral award. The court concluded that the tribunal had erred in law in finding that there had been a variation of the profit-sharing provisions of two partnership agreements. The court also indicated that a related section 68 challenge would have succeeded (had it been necessary to decide the point). The court varied the award and held that the parties were entitled to share the profits and losses equally under the partnership agreements.

The case highlights the very high threshold for permission to appeal an award, and is a rare example of an appeal under section 69 succeeding in the English courts. On the facts, there was no conduct or agreement that could be interpreted as a variation. While courts do not usually interfere in the arbitration process, the tribunal had reached what the court described as a “very surprising conclusion” that warranted intervention. Continue Reading

English High Court: Public Interest Outweighed Confidentiality of Arbitration

Posted in Dispute Resolution

Non-parties are entitled to obtain documents related to an arbitration if the case falls within the “interests of justice” exception.

By Eleanor M. Scogings

In The Chartered Institute of Arbitrators v B, C and D,[1] the English High Court granted the Chartered Institute of Arbitrators (Institute) access to documents related to an arbitration for use in disciplinary proceedings. Applying CPR 5.4C(2), the court balanced the Institute’s legitimate interests in obtaining copies of the documents with the duty of confidentiality in arbitration proceedings. The court held that the general public interest “in maintaining the quality of and standards of arbitrators” outweighed the need to preserve confidentiality of the arbitration.

The case highlights the tension between the public interest in accessing documents related to an arbitration and the confidentiality of the proceedings. On the facts, the quality and standard of arbitrators was of public importance, and minimal harm, if any, would be caused by allowing the Institute access to the documents. Continue Reading

MHRA Releases No-Deal Brexit Guidance for Life Sciences Companies

Posted in Brexit, EU and Competition, Life Sciences

The guidance provides helpful clarity on key regulatory changes impacting life sciences companies in the event of a no-deal Brexit.

By Frances Stocks Allen, Oliver Mobasser, Héctor Armengod, Gail E. Crawford, Christoph W.G. Engeler, Robbie McLaren, and Henrietta J. Ditzen

The UK Medicines and Healthcare products Regulatory Agency (MHRA) has published a significant volume of guidance documents on various aspects of the post-Brexit life sciences regulatory landscape in the UK, including in the event of a no-deal Brexit. The guidance provides helpful clarity to life sciences companies operating in the European Economic Area (EEA) and the UK, which continue to face significant uncertainty about how they will be impacted by Brexit — particularly given the ongoing risk of a no-deal Brexit. (For detailed analysis on how a no-deal Brexit scenario would impact life sciences companies, please see this prior Latham blog post.)

Background

On 29 March 2017, the UK Prime Minister gave the European Council formal notification under Article 50 of the UK’s intention to leave the EU, setting the default withdrawal date for the UK’s withdrawal from the EU to 11 p.m. GMT on 29 March 2019. The UK Prime Minister requested an extension to the original withdrawal date in light of the UK Parliament’s failure to approve the withdrawal agreement agreed between the UK Prime Minister and the European Commission. On 21 March 2019, the European Council approved the UK government’s request, permitting an extension of the Article 50 period until either:

  • 22 May 2019, if the UK Parliament approves the withdrawal agreement by the end of the week commencing 25 March 2019
  • 12 April 2019, if the UK Parliament does not approve the withdrawal agreement by the end of the week commencing 25 March 2019, with this period capable of further extension by agreement between the European Council and the UK government, provided that the European Council expects the UK to indicate “a way forward” prior to 12 April 2019

Continue Reading

Directors Beware: UK Court of Appeal Ruling Clarifies Creditors’ Abilities to Challenge

Posted in Dispute Resolution, Finance and Capital Markets

The court offers guidance on reversing lawful dividend payments and when directors need to take into account creditors’ interests.

By Simon J. Baskerville, Daniel Smith, Anna Hyde, Lisa Stevens, and Vanessa Morrison

On 6 February 2019, the UK Court of Appeal published a judgment in BTI v. Sequana that will impact both creditors and directors of English companies.

The court decided that the payment of a dividend — despite its lawfulness under the Companies Act 2006 — can fall within the scope of section 423 of the Insolvency Act 1986, opening the payment up for challenge by a disgruntled creditor even outside of the realm of insolvency. When deciding to make a dividend payment, directors therefore ought to consider carefully not just the corporate statutory regime but also the Insolvency Act 1986 and common-law directors’ duties.

Furthermore, the ruling provides much-needed clarity on how close to insolvency a company needs to be before directors must consider creditors’ interests when fulfilling their duty to promote the success of the company, indicating the trigger of a so-called “duty shift”.

For an analysis of these rulings, see Client Alerts UK Court of Appeal: Creditors Can Seek to Reverse Lawful Dividend Payments and UK Court of Appeal: When to Trigger the Creditor Duty Shift.

Italian Investor Compensation Scheme Under the Brexit Law Decree

Posted in Brexit, EU and Competition, Finance and Capital Markets

CONSOB notice 8/2019 details the requirements under the Italian investor compensation scheme applicable to UK banks and investment firms operating in Italy.

By Antonio Coletti and Isabella Porchia

On 29 March 2019, the Italian Securities Commission (CONSOB) issued a notice detailing the terms and requirements applicable to UK banks and investment firms operating in Italy in connection with the Italian compensation scheme (Fondo Nazionale di Garanzia or the Italian ICS) pursuant to Article 8 of the Brexit Law Decree No. 22 of 25 March 2019.

According to the Decree, after the date of withdrawal, Italian branches of UK banks and investment firms and UK banks and investment firms operating in Italy on a cross-border basis will mandatorily adhere to the Italian ICS. By way of partial exception, firms operating on a cross-border basis may submit to the Italian ICS a statement from the UK ICS certifying that such UK ICS will continue to protect their clients.

CONSOB’s notice clarified that UK banks and investment firms (including those that intend to or are required to terminate operations under the Decree) should:

  • Contact the Italian ICS within 30 days of the date of withdrawal to carry out the required operational and administrative formalities, including the obligation to pay contributions
  • Inform their clients about the protections available to them under the Italian ICS as soon as possible, and in any case within 40 days following the entry into force of Brexit Decree (effective from March 26, 2019); these disclosure notices should be clear and in plain language and should contain all the contact details for further information
  • Inform CONSOB’s Financial Intermediaries Division of the disclosure notices sent to their clients within 55 days of the entry into force of the Brexit Decree

Latham & Watkins will continue to monitor and report on developments concerning Italy and Brexit.

Bank of Italy Issues Instructions for Brexit Law Decree

Posted in Brexit, EU and Competition, Finance and Capital Markets

The instructions clarify the requirements applicable to banking and financial intermediaries under the Brexit Law Decree.

By Antonio Coletti and Isabella Porchia

On 28 March 2019, the Italian central bank (Bank of Italy) published two notices detailing the requirements for Italian banks and financial intermediaries operating in the UK, and for UK banks and financial intermediaries operating in Italy, respectively, further to Brexit Law Decree No. 22 of 25 March 2019. The decree lays down a temporary regime for regulated firms in a no-deal Brexit scenario. (Additional background information is available in this Latham.London post.)

  • The first notice calls on Italian banks and financial intermediaries operating in the UK to notify the Italian central bank at least three days before the no-deal withdrawal date if they wish to benefit from transitional provisions under the Brexit Law Decree. The notice applies to smaller Italian banks under Regulation (EU) 1024/2013, payment and e-money institutions, SGRs, SICAVs, SICAFs, managers of EuVECA, EuSEF, and ELTIF funds, and financial intermediaries under Article 106 of the Italian Banking Act.
  • The second notice instructs UK banks and financial intermediaries operating in Italy to comply with the provisions of the Brexit Law Decree.

Latham & Watkins will continue to monitor and report on developments concerning Italy and Brexit.

Italy Issues Regulatory Instructions for Brexit Law Decree

Posted in Brexit

The notice details the requirements applicable to UK investment firms operating in Italy, and Italian investment firms operating in the UK.

By Antonio Coletti and Isabella Porchia

On 26 March 2019, the Italian Securities Commission (CONSOB) issued a notice detailing the requirements applicable to UK investment firms operating in Italy and Italian investment firms operating in the UK, further to Brexit Law Decree No. 22 of 25 March 2019. The decree lays down a temporary regime for regulated firms in a no-deal Brexit scenario. (Additional background information is available in this Latham.London post.)

Continue Reading

German Real Estate Sellers: Beware Rent Roll Risks

Posted in Commercial, Dispute Resolution, EU and Competition

Sellers may be liable for damages if actual rent is lower than stated in the rent roll, despite contractual exclusion of liability for defects.

By Christian Thiele and Patrick Braasch

The Higher Regional Court of Cologne (HRC Cologne) has ruled that a property seller is liable for the difference between the rent shown in the rent roll attached to a property purchase agreement and the actual rent — irrespective of the general exclusion of warranty claims in a purchase agreement. As a consequence, a seller may have to compensate a purchaser for all future losses resulting from such lower actual rent for up to 30 years. The decision highlights the high commercial relevance of rent rolls and the legal risks resulting from rent rolls in the context of real estate transactions.

Background

The HRC Cologne’s judgment, dated 29 November 2018 (3 U 24/18), involved a case in which the plaintiff had acquired from the defendant a residential building with 14 rental units. The sale and purchase agreement (SPA), which excluded the defendant’s statutory liability for material defects as seller, stated that the plaintiff was aware of the lease agreements. An exhibit listing all leases (names of tenants, location of and rent for the respective rental units) was attached to the SPA, which also stated the annual net rent for the entire building. Continue Reading

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