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Court Rules that Arbitrators Must Disclose Related or Overlapping Appointments

Posted in Dispute Resolution

Arbitrators should disclose subsequent appointments to related arbitration proceedings, particularly if cases materially overlap.

By Oliver E. Browne and Robert Price

In the Halliburton v Chubb ruling, the Court of Appeal held that an arbitrator who did not disclose subsequent appointments to related arbitration proceedings should have disclosed those subsequent appointments both as a matter of good practice and as a matter of law. The lack of disclosure did not however constitute sufficient grounds for the removal of the arbitrator under section 24(1)(a) of the Arbitration Act 1996 for justifiable doubts as to his impartiality.

Background

The explosion on the Deepwater Horizon oil rig spawned a number of related arbitration proceedings involving various parties. Transocean was the owner of the rig, BP was the lessee of the rig, and Halliburton provided cementing and well-monitoring services to BP. Both Transocean and Halliburton obtained insurance from Chubb. Continue Reading

Locked Box Lands in the US

Posted in M&A and Private Equity

By Jason Morelli, Howard Sobel, and Maarten Overmars

In the US, unlike in Europe, deals are traditionally transacted on the basis of closing accounts, with adjustments made post-closing for working capital, indebtedness, cash, and transaction expenses.

This is now changing. Recent deal activity shows US private equity vendors, having become accustomed to the concept of a locked box in European sales processes, increasingly pivoting toward a locked box pricing structure in US domestic deals. These vendors are attracted to the fixed price certainty, as compared to the closing accounts approach.

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FCA Sets Expectations for Robo-Advisers

Posted in Emerging Companies and Technology, Finance and Capital Markets

Many auto advisers and automated discretionary investment managers risk poor outcomes for customers by falling short of FCA expectations.

By Nicola Higgs and Brett Carr

The Financial Conduct Authority (FCA) has issued a statement outlining its expectations of firms providing automated online discretionary investment management (ODIM) services and retail investment auto advisers (auto advisors). The FCA uses its statement to remind firms that the regulator’s rules, including those in relation to suitability and advice, apply equally to services regardless of the medium through which they are offered. Current providers and planned new market entrants should heed the warnings and the learnings of this statement.

What was the FCA analysing?

The FCA conducted two reviews:

  • The first review looked at seven ODIM providers (at the time these firms represented more than half of the firms in this particular market).
  • The second review looked at three auto advisers (being three of the early entrants to this nascent market).

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Could Spotify’s Direct Listing Process Be Used In Europe?

Posted in Finance and Capital Markets, Media and Entertainment

By James Inness and Sean Meehan

Latham & Watkins recently advised the largest global music streaming subscription service in the world, Spotify, on its successful New York Stock Exchange (NYSE) listing using a novel direct listing process.

Spotify’s direct listing did not involve a primary or secondary offer. In addition, no underwriters were appointed, no roadshow process was undertaken, and no IPO-specific lock-up agreements were entered into with existing shareholders.

Instead, these pillars of a typical underwritten IPO were replaced with an offer structure based on a purely market-driven approach to price setting with existing shareholders being free to sell all or part of their shares from day one without the usual 180 – 360 day post-admission restrictions. In addition, the roadshow process was replaced with a public investor day that was available to view live on its website by both institutional investors and retail investors. While certain banks acted as financial advisors in respect of the listing, they had no role in advising on investor meetings, facilitating price discovery activities, or conducting after-market stabilisation activities. Continue Reading

Is Good Faith a Bad Choice Under English Law?

Posted in Dispute Resolution, M&A and Private Equity

By Oliver Browne

Although there remains no widely accepted definition of good faith under English law, and English law has committed itself to no overriding principle of good faith, English law has developed piecemeal solutions in response to demonstrated problems of unfairness.

The variety of these solutions, and the pace with which they are being adopted, is increasing. Indeed, the English courts are starting to embrace the idea of good faith, bringing English law more in step with the laws of other developed jurisdictions.

What does good faith mean?

Unfortunately there remains some doubt. Some cases have described the duty to act in good faith as an obligation to observe reasonable commercial standards of fair dealing, others have addressed the notion of acting consistently with the justified expectations of the parties. Judges have also referred to acting within the spirit of the contract and working together / honestly endeavouring to achieve the stated purposes expressly linked to the duty. They have also emphasised the objective nature of the assessment of good faith in a number of cases, however, courts will take into account the context of the situation and relationship between the parties. A breach of an obligation of good faith is often evidenced by an act of bad faith. Continue Reading

Scheme of Arrangement: Lessons From Bibby Offshore to DTEK

Posted in Finance and Capital Markets

By John Houghton and Marc Hecht

Latham lawyers, John Houghton and Marc Hecht, discuss insights gained from Latham’s work on major schemes of arrangement over the past few years, including Bibby Offshore, PrivatBank, DTEK, and Avangardco.

The Debtwire podcast covers many of the scheme considerations stakeholders face, with particular reference to DTEK’s hat-trick of schemes as well as the recent “loan to own” scheme in Bibby Offshore. The speakers also share their views on trends and potential challenges for future schemes.

To listen to this podcast, please click here.

 

 

 

You might also be interested in:

UK Restructuring Scheme Case Study: Guiding Bibby Offshore Into Safe Waters

The DTEK Restructuring – The Final Chapter

The DTEK Scheme: A New Way to Restructure US Law Bonds?

New Kid on the Block – New UK Payment System Operator Takes Over

Posted in Emerging Companies and Technology, Finance and Capital Markets

The consolidation of UK payment system operators marks another big step in delivering on the New Payments Architecture.

By Stuart Davis and Brett Carr

What happened?

Operational responsibility for the Bacs and Faster Payments systems, which process a combined £6.3 trillion worth of payments annually, has transferred to the New Payment System Operator (NPSO).

The successful consolidation of the operators (and planned consolidation of the Cheque and Credit Clearing Company in late 2018) has been a key focus for both the Payment Systems Regulator (PSR) and the Bank of England. Proponents argue that by bringing the operators together, the NPSO will help not only to simplify access to payment systems and promote competition, but will also help deliver other identified solutions (see What’s next?). As a single, primary deliverer of many of these solutions, the NPSO will be more efficient than the current three entities and it will be able to realise projects and their benefits more quickly and cost effectively. The consolidation plan has been articulated in the Payment System Operator Delivery Report issued in May 2017. Continue Reading

Cryptocurrencies and Prepaid Cards Face Closer AML Regulation in the EU

Posted in Emerging Companies and Technology, EU and Competition, Finance and Capital Markets

New EU anti-money laundering measures have been approved by European legislators.

By Stuart Davis and Charlotte Collins

The European Parliament and Council have finally signed off on the text of the fifth Anti-Money Laundering Directive (known as MLD5).

Overview

The new directive is of particular interest to the FinTech sector as, amongst other things, MLD5 includes measures to increase transparency around more recently developed instruments of payment — namely cryptocurrencies and prepaid cards. Both these instruments lend themselves to anonymity and raise concerns that they could be used to help fund terrorist activities.

MLD5 will lower the threshold for identifying the holders of anonymous prepaid cards from €250 to €150. It will also require know-your-customer (KYC) checks to be performed for remote payment transactions exceeding €50, or if a withdrawal of more than €50 is made. The new provisions will also mandate that prepaid cards issued outside the EU can only be used in the EU if they comply with equivalent anti-money laundering (AML) standards (although it seems that this is left for the EU acquirer to judge). This is largely driven by European lawmakers’ concerns that individuals can fund terrorism “on a shoestring”, as evidenced by the fact that rental cars used in terror attacks have been paid for using prepaid cards. Continue Reading

UK Ratifies the Unified Patent Court Agreement

Posted in EU and Competition

Patent holders must prepare a patent strategy before the Unified Patent Court system takes effect.

By Deborah J. Kirk

On 26 April 2018, the UK government confirmed that the UK has now ratified the international agreement (the Agreement) to set up a Unified Patent Court for Europe (the UPC). Whilst the government promised this move in November 2016, the UK’s decision to leave the EU cast doubt on whether the UK would formally ratify the Agreement. The confirmation demonstrates the UK government’s commitment to continue to engage with European regulatory activity post-Brexit.

The UPC will allow patent holders to defend their rights with a single patent and single legal system across Europe, rendering patents less expensive and more readily enforceable throughout the EU, as opposed to the current procedure which requires patents to be registered and enforced on a country-by-country basis. The aim is to both enhance the European market, and to make the European market more competitive with the US and China in terms of patent protection. On the other hand, the unified system raises the risk of centralised revocation of a patent, which could have serious implications on high value patents. Continue Reading

Poised for Next Payments Boom

Posted in Emerging Companies and Technology, Finance and Capital Markets, M&A and Private Equity

By Christian McDermott

In recent years, PE firms have been paying to play in the payment processing sector. From Worldpay and Nets, to Bambora and Paysafe, payment processing companies have proven to be attractive investments for European PE. In our view, a wave of regulation in the FinTech sector will unleash further growth potential, and PE firms may be well-positioned to take advantage of this.

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The number of M&A transactions in the payment services industry has increased in Europe over the past five years, and we believe the sector will remain hot. A wave of regulation has been designed to stimulate competition and encourage new market entrants. Chief among this is EU Directive (EU) 2015/2366 on payment services in the internal market (known as “PSD2” since it replaces the existing EU payment services directive). PSD2 came into effect in EU Member States in January 2018, and has been designed to help newer market entrants (including FinTech startups) compete with traditional banks. Under PSD2, banks must open up their consumer data to FinTech companies. This is designed to allow these companies to use the data to take a bigger slice of the payment processing market, which has been typically dominated by banks and more established payment processors.

In our view, PSD2 will result in the creation of innovative financial products and potential investment opportunities. It allows FinTech companies to launch financial services products that link into banks’ infrastructure. The two key business models contemplated by PSD2 are: (i) “account information service providers”, who provide consolidated account information to consumers (e.g., via a smartphone app on which users will be able to see their various balances all in one place); and (ii) “payment initiation service providers”, who facilitate online payments from consumer bank accounts (while avoiding the costs associated with maintaining the account itself). Continue Reading

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