Commercial

Subscribe to Commercial via RSS

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.

The Court of Appeal decision, which considered standard form wording and the “mandatory” nature of US sanctions laws, upholds a High Court ruling exempting a borrower’s non-payment of interest, albeit on different grounds.

By Charles Claypoole, Nell Perks, Robert Price and Thomas Lane

In the recent case of Lamesa Investments Limited v. Cynergy Bank Limited [2020] EWCA Civ 821, the Court of Appeal upheld — albeit on different grounds — a High Court decision (described here) that US secondary sanctions constituted a “mandatory provision of law”, and that the borrower’s compliance with these sanctions excused its default on payment obligations under a facility agreement.

The judgment has important implications for the competition law compliance responsibilities of company directors.

John Colahan and Peter Citron

On 3 July 2020, the High Court disqualified[1] Michael Martin from acting as a director for seven years. The court found that Mr Martin had contributed to a breach of competition law by his former company, which owned and ran an estate agency (Berryman’s) in Burnham-on-Sea. This finding was made despite the fact that Mr Martin was not concerned with day-to-day sales, had not attended any of the meetings with the other estate agents where the competition law infringement had taken place, and had taken some steps following the inspection of the company by the Competition and Markets Authority (CMA) including the obtaining of legal advice that led to compliance actions.

Parties may struggle to establish issue estoppel based on a foreign judgment, even when they agreed exclusive jurisdiction of English courts.

By Oliver Browne, Yasmina Vaziri, and Tom Watret

MAD Atelier International BV v. Manès [2020] EWHC 1014 (Comm) considers key aspects of the law of issue estoppel and abuse of process in relation to foreign judgments. The decision highlights that even when parties have chosen exclusive jurisdiction clauses in favour of the English courts in their transaction documentation, they could unexpectedly find themselves re-litigating issues in multiple courts. It also shows that whether issue estoppel will be available, or whether another party can be prevented from “abusively” re-litigating, in England, issues that have already been determined by a foreign court, may depend on the foreign court’s view as to the binding and preclusive effect of its own decisions. This introduces an element of uncertainty into the finality of international litigation, which is why parties in multi-jurisdictional disputes should always take advice early.

The new service encourages UK consumers to report exploitative sales and pricing practices.

By John D. Colahan and Anuj Ghai

On 4 April 2020, the Competition and Markets Authority (CMA) launched an online service called “Report a business behaving unfairly during the Coronavirus (COVID-19) outbreak” (the Online Service) to allow businesses and consumers to report unfair practices related to COVID-19.

The Online Service launch follows the CMA’s recent guidance warning businesses against exploitative sales and pricing practices. In particular, the CMA cautioned traders to behave responsibly and not charge inflated prices or make misleading claims, for example about the efficacy of protective equipment. The CMA noted that members of the public who resell goods, including on online marketplaces, may be subject to the same restrictions. In terms of enforcement, the CMA indicated that it will consider any evidence of breaches of competition and consumer protection law, take direct enforcement action in appropriate cases, and assess whether it should advise the UK government to take direct action to regulate prices.

By Frances Stocks Allen and Oliver Mobasser

Recent legal and regulatory developments pave the way for an increased commercialisation opportunity in cannabis-based medicines, but complex rules require careful navigation.

The National Institute for Health and Care Excellence (NICE) recommended the reimbursement of two plant-derived cannabis products for the first time on 10 November 2019. This follows Epidyolex becoming the first cannabis-derived medicine to be granted a marketing authorisation by the European Commission when it was approved for the treatment of…

In a leading case, the Court examined the extent of the duty of care that a bank owes to its customers when executing their orders.

By Andrea Monks and Nell Perks

On 30 October 2019, the UK Supreme Court dismissed Daiwa’s appeal in the case of Singularis Holdings Ltd (In Official Liquidation) v Daiwa Capital Markets Europe Limited [2019] UKSC 50. The decision marks the first successful claim for breach of the Quincecare duty that banks owe to their customers. Latham & Watkins expects to see further examination of the duty as instances of fraud continue to rise and the courts consider the degree of responsibility that banks should bear for stopping financial crime.

The Quincecare duty, which Justice Steyn set out in 1992, refers to an implied term of the contract between a bank and its customer that the bank will use reasonable skill and care in and about executing the customer’s orders. A bank will be in breach of this duty if it executes an order that it knows to be dishonestly given, shuts its eyes to the obvious fact of the dishonesty, or acts recklessly in failing to make reasonable enquiries.

The 2019 Convention on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters offers certainty in cross-border enforcement of judgments.

By Robert Price and Isuru Devendra

On 2 July 2019, the Hague Conference on Private International Law adopted the 2019 Convention on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters (2019 Hague Convention or the Convention). The Convention aims to provide a new global regime for the recognition and enforcement of civil and commercial judgments, much like the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention) does with respect to arbitral awards and EU Regulation No 1215/2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (recast) (the Recast Brussels Regulation) does with respect to the recognition and enforcement of civil and commercial judgments within the European Union.

If successful, the 2019 Hague Convention will provide a single uniform instrument pursuant to which civil and commercial judgments may be enforced worldwide, instead of the existing patchwork of bilateral and regional arrangements for the cross-border enforcement of court judgments. As the Minister of Foreign Affairs of the Netherlands, Stef Blok, observed, this uniform global regime would offer “certainty and legal security in cross-border transactions and litigation”. The success of the 2019 Hague Convention will depend, however, on a significant number of states ratifying and acceding to the Convention, to make its coverage as comprehensive as the New York Convention.[i]

The Berlin government’s envisaged five-year rent cap on residential properties has caused significant uncertainty among investors in housing portfolios.

By Constanze Kugler and Christian Thiele

On 18 June 2019, the Berlin Senate published a position paper specifying details of an envisaged five-year rent cap on residential properties in the German capital. The cap would significantly strengthen current restrictions on rent increases, which can only occur subject to certain rules and within certain limits. Berlin’s government aims to pass the statute later this year and enter it into force no later than January 2020.

Key Provisions

The position paper outlines the following key terms of the rent cap:

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.