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The deadline is fast approaching for in-scope financial entities and their ICT service providers to conform to the EU’s new digital operational resilience regulation.

By Christian F. McDermott and Alain Traill

With effect from 17 January 2025, a broad range of EU financial entities will be subject to the new EU regulation on digital operational resilience for the financial sector (DORA), with significant impact for firms and their third-party ICT service providers. As the new landscape takes shape, below is an overview of some of the key changes and steps that impacted financial entities and providers should be taking ahead of the deadline.

The letters ask senior management to prioritise implementing the Duty.

By David Berman, Nicola Higgs, Rob Moulton, Becky Critchley, Ella McGinn, Jaime O’Connell, and Dianne Bell

On 3 February 2023, the FCA published Dear CEO/Director letters underscoring the immediate (i.e., during the implementation period up until 31 July 2023) and longer-term expectations, priorities, and demands under the Consumer Duty. For further information, see Latham’s recent blog on the FCA’s multi-firm review summarising areas of improvement for firms’ implementation plans.

The FCA has reviewed firms’ progress to embed the Duty into their businesses, providing good and poor practice examples for firms to improve and direct their implementation work.

By Nicola Higgs, Becky Critchley, Jaime O’Connell, and Dianne Bell

The Consumer Duty (Duty) rules (as set out under the FCA’s Policy Paper (PS22/9) and guidance document FG22/5) come into force at the end of July 2023. On 25 January 2023, the FCA published feedback on firms’ current implementation progress via its Multi-firm review: Consumer Duty Implementation Plans. While the FCA notes a number of positives, the overall impression is that firms need to do more and do it quickly.

The UFLPA aims to clamp down on the import of items produced by alleged forced labor in and relating to the XUAR.

By Erin Brown Jones, Les P. Carnegie, Paul A. Davies, Nathan H. Seltzer, James Bee, and Allison Hugi

On 16 December 2021, the US Senate unanimously passed the Uyghur Forced Labor Prevention Act (UFLPA), following its approval in the US House of Representatives earlier the same week. The UFLPA is one of several measures that the US hopes to use to prevent what it views as forced labor and human rights abuses in the Xinjiang Uyghur Autonomous Region (the XUAR) of China. The UFLPA is the culmination of bipartisan attempts over a number of months to introduce a bill that would restrict imports from the XUAR.

Importantly for commercial parties, the decision indicates that parties are assumed to be aware of this approach.

By Daniel Smith and Rebecca Angelini

Liquidated damages clauses provide pre-agreed remedies for contracting parties in the event of particular breaches of contract. This allows the innocent party to avoid the time and effort of quantifying its loss, and provides the parties with commercial certainty in respect of the remedies available for a particular breach. On 16 July 2021, in Triple Point Technology, Inc v. PTT Public Company Ltd,[1] the UK Supreme Court overturned a Court of Appeal decision and affirmed several important principles in relation to liquidated damages:

  • Liquidated damages cease to accrue upon termination of a contract, but rights accrued as at the date of termination survive.
  • Following termination of a contract containing a liquidated damages clause, the contracting parties must seek damages for breach of contract under the general principles of English law.
  • Contracting parties do not have to include provisions concerning the effect of termination on the accrual of liquidated damages. Instead, they can reason that such consequences are assumed.

The decision highlights a potential tactical advantage of late acceptance in certain circumstances.

By Jon Holland and Anna James

In Roxanne Pallett v. MGN Limited,[1] the High Court held that the usual costs consequences of accepting a Part 36 offer do not apply if a party accepts a Part 36 offer outside the “relevant period”, meaning the offeree is not bound to pay the offeror’s costs. The offeree is entitled, in appropriate circumstances, to invite the court to make a different order, based on all the circumstances of the case.

The decision highlights a potential tactical advantage of late acceptance in circumstances in which an opponent’s conduct justifies a departure from the usual costs consequences of accepting a Part 36 offer. The decision will be of particular interest to parties that settle litigation for commercial reasons.

The bloc, accounting for 30% of the world’s population and 30% of global GDP, is larger than the European Union.

By Oliver E. Browne and Isuru Devendra

As the United Kingdom continues to negotiate trade agreements with the European Union and other trading partners, 15 Asia-Pacific countries recently signed a new multilateral trade agreement named the Regional Comprehensive Economic Partnership (RCEP). That agreement, the subject of negotiations since 2012, is expected to shape the Asia-Pacific economy in the decades ahead by establishing a single set of harmonised and predictable trading rules applicable across developed and developing economies in the region. The new framework presents economic opportunities for many countries, including those outside the Asia-Pacific region, and provides the United Kingdom and its private sector new opportunities in a post-Brexit economy.

Two cases illustrate the narrow scope of application for exceptions to the without prejudice rule of legal privilege.

By Stuart Alford and Clare Nida

Background

In two recent judgments, the High Court found exception to the ‘without prejudice’ rule of legal privilege. The rule protects statements made by parties to a dispute (whether written or oral statements) in a genuine attempt to settle the dispute. There are certain situations in which this public policy justification will be outweighed by other factors if the fairness of judicial proceedings is at risk. Motorola Solutions, Inc. v Hytera Communications Corporation Ltd[1] and Berkeley Square Holdings v Lancer Property Asset Management Limited[2] clarify the scope of certain aspects of these exceptions, namely the “unambiguous impropriety”, misrepresentation/fraud, and the “Muller” exceptions.

A recent Privy Council decision examines the extent to which formal shareholder resolutions may be bypassed by relying on the Duomatic principle.

By Daniel Smith and Alanna Andrew

The ability for shareholders to pass resolutions — or assent to a course of action — quickly and informally is a potentially useful tool at any time, and even more so in times of financial and business uncertainty. Shareholders may wish to ensure time-pressured deals or restructurings are completed at speed. Companies may face liquidity challenges or expiring business opportunities, which require shareholder resolution. For creditors or bondholders, there may be an incentive to move swiftly, for example, if a receiver (who is appointed pursuant to the terms of a debenture and empowered to exercise the company’s voting rights) wishes to amend Articles of Association in order to effect a contentious restructuring.

The CMA’s efforts include investigations into the package holiday and hand sanitizer industries.

By John D. Colahan and Anuj Ghai

CMA announces package holiday sector investigation

On 10 July, the CMA announced that it was investigating suspected breaches of consumer protection law in the package holiday sector. The investigation was launched on the back of work carried out by the CMA’s COVID-19 Taskforce. As noted in previous updates (see here), the Taskforce received a number of complaints about allegedly unfair practices concerning cancellations and refunds, including in relation to package holidays. The investigation specifically relates to concerns that businesses have not been respecting customers’ statutory rights to a refund for package holidays that were cancelled by either party due to lockdown restrictions. Notably, the CMA is carrying out the investigation under its consumer protection powers, rather than under competition law.