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By Catriona E. Paterson

In its recent decision in L R Avionics Technologies Limited v. The Federal Republic of Nigeria & Attorney General of the Federation of Nigeria[1], the Commercial Court found that that premises owned by Nigeria were not “in use […] for commercial purposes” within the meaning of section 13(4) of the State Immunity Act (SIA) and therefore were not capable of being attached in proceedings for the enforcement of an arbitral award and judgment against the State.

In consequence, although successful in an underlying arbitration, L R Avionics Technologies Ltd (the Claimant) had its attempts to enforce its arbitral award frustrated by the rules of State immunity from enforcement as articulated in the SIA.

By Paul Davies

Unprecedented globalisation, coupled with significant concerns around climate change, has taken environmental and social responsibility from a voluntary concept to something more obligatory and enforceable. Consequently, corporate governance has increasingly become a binding legal obligation in a number of jurisdictions. Demonstrable of such progression, the EU Directive 2014/95 will be enforced from 2017 – a Directive which increases reporting obligations of non-financial information. Member States will need to assess domestic legislation to ensure compliance with the new obligations under the Directive. For example, France notably revised its Commerce Code in August this year to accommodate the latest EU environmental and social governance (ESG) requirements.

Regional and international policy has have led the way. Since the Organisation for Economic Co-operation and Development (OECD) adopted its Guidelines for Multinational Enterprises in 1976, ESG has progressively featured in the legislation guiding businesses. Global Compact, undertaken by the UN in 2000, introduced voluntary participation to comply with its Ten Principles – principles which enhanced ESG. This move prompted the EU Commission to debate how Europe could better promote corporate social responsibility (CSR) to achieve greater transparency and accountability among its member states.

By Paul Davies, Gary Gengel and Andrew Westgate

In April 2015, the Final Report of the People’s Bank of China’s Green Finance Task Force made 14 recommendations to facilitate the establishment of China’s green finance system. Recommendation 13 proposed the imposition of lender liability on banks to force financial institutions “to take environmental impact into consideration in making investment and financing decisions”.

The practical consequence would be that banks and other financial institutions become liable for environmental pollution or…

By Paul Davies and Michael Green

Prior to the G20 Leaders’ Summit on 4 September, China and the US ratified the Paris Climate Agreement during a ceremony in Hangzhou, China. This commitment from the world’s largest carbon dioxide emitters is expected to prompt developed nations in Europe to follow suit.

The adoption of the Paris Agreement by 195 countries is widely considered to be one of the most ambitious international environmental agreements, whereby parties committed to limiting the increase in the global average temperature to 2˚C above pre-industrial levels while striving to limit the temperature increase to 1.5˚C.

China and the US join 25 other signatories who have ratified the Paris Agreement – the majority of whom are islands particularly vulnerable to climate change, for example, the Bahamas and Nauru. With China and the US now among the signatories, it is likely to accelerate the entry into force of the Paris Agreement.

By Dan Smith and Anna Hyde

The UK Supreme Court has rejected a formal “reliance” test to determine whether a defendant to a civil claim can rely on the claimant’s wrongdoing to defeat the claim, replacing it with a more fact-sensitive “range of factors” approach, which may expand cases in which the defence operates.

“No court will lend its aid to a man who founds his cause of action upon an immoral or an illegal act”, Lord Mansfield’s dicta in Holman v Johnson (1775)[i], encapsulate the English common law defence of illegality to civil claims.  The defence is based on the public policy that a person should not be able to benefit from their own wrongdoing and that the courts should not enforce claims that harm the integrity of the legal system.  It is a potentially far-reaching defence which can apply in any civil claim, and the recent case of Patel v Mirza[ii] indicates that all litigants should now consider it whenever allegations or evidence indicate wrongdoing.

However, whilst the rationale is clear, authorities have been less so. As Gloster LJ put it in the Court of Appeal, “it is almost impossible to ascertain or articulate principled rules from the authorities”[iii], either for the recovery of money or other assets paid or transferred under illegal contracts, or for the range of cases to which the defence might apply (e.g. to claims for contractual damages or performance, to claims in tort, or to restitutionary claims for unjust enrichment).

By Paul Davies and Andrew Westgate

Now in its eleventh year, The G20 Summit heads to the city of Hangzhou, China – the first time a G20 summit has been held for heads of state in China. As this years’ destination, China is maximising its role as the host nation to not only highlight its position as an economic superpower, but also to push for continued commitment to climate change and showcase its market-leading role in green finance.

In preparation for the summit, China has not only spruced-up its host city, but has cleaned up its skies. Chinese authorities implemented strict controls on factories operating in the provinces of Zhejiang (where Hangzhou is located), Jiangsu and the city of Shanghai, as part of its short-term air quality plan to ensure blue skies during the G20. As significant industrial centres, the restrictions introduced impact global supply chains across various industries, yet such impact has not deterred the priority of air quality.

By Paul Davies and Andrew Westgate.

According to a recent report released by Clean Energy Pipeline, global clean energy backing in the first half of 2016 totalled US$116.4 billion. China was the largest investor, financing US$15.3 billion worth of solar and wind projects and accounting for nearly 30% of the world’s total solar and wind investment.

Yet despite its significant investment, the output of China’s push into renewable technologies continues to be limited by its grid system, and subsequent curtailment. Curtailment occurs when energy is available, but the operator does not allow that energy to be delivered to the grid because there is no demand and/or the energy cannot be stored. According to the central government, nearly 15% of wind-generated electricity went unused in 2015. Also contributing to this challenge is the disconnect between where energy is generated and where it is needed. As an example, in 2014, 46% of wind power curtailment was caused by a failure to use electricity generated in the province of Gansu.

By Paul Davies, Charles Claypoole and Michael Green

We have commented previously about the Transatlantic Trade and Investment Partnership (TTIP) and its relationship with environmental obligations. Here, following Brexit, we turn our attention to future trade arrangements for the UK and the implications for environmental law.

As a member of the EU, the UK was not able to negotiate its own trade agreements with non-member countries, and could only do so as part of the EU Common Commercial Policy (CCP). Following Brexit, and assuming that a post-Brexit relationship between the EU and the UK does not involve UK participation in the CCP as a means for participating in the Internal Market, the UK can negotiate in its own trade agreements with non-member states and put in place trade arrangements with the EU following its withdrawal (assuming Brexit proceeds).  As such, the UK Government has already suggested that discussions will take place on a new free trade deal with China – which has never had a free trade agreement with any EU country.  Further, Commonwealth countries, such as Canada, Australia, India and Singapore, have also expressed interest in negotiating trade agreements with the UK.

By Jonathan Hew

Investor-state arbitrations frequently raise issues of public importance that parties other than those to proceedings, such as NGOs, may want to address. “Amicus briefs” afford them a limited opportunity to do so, as demonstrated in Infinito Gold v Costa Rica.[1]

Amicus briefs

Provisions on amicus briefs can be found in certain arbitral rules.[2]  One prominent example is Article 37(2) of the ICSID Arbitration Rules, which gives ICSID tribunals the discretion to admit an amicus brief.  In deciding whether to do so, a tribunal must consider, among other things, the extent to which:

  • the brief would assist the tribunal in determining a factual or legal issue related to the proceeding by bringing a perspective, knowledge or insight that is different from that of the disputing parties;
  • the brief would address a matter within the scope of the dispute;
  • the third party has a significant interest in the case.

The tribunal must also ensure that the amicus brief does not disrupt proceedings or unduly burden or unfairly prejudice a disputing party, and that disputing parties can make observations on the brief.

By Paul Davies and Aaron Franklin

China has become the world’s largest green bond market, with green bonds issued in the first half of 2016 reaching 75 billion yuan (US$11 billion), 33% of the world total. This figure is approximately two percent of the total assets of China’s commercial banks, and demand for green bonds is expected to rise to 20 times that much.

Green bonds provide access to an ever-growing and important market to corporate issuers and international investors. Bloomberg Business estimates that China’s green bond market may be worth US$230 billion in the next five years – an opportunity too big for the international business community to ignore.