US Secondary Sanctions Are a “Mandatory Provision of Law” in an English Contract

Posted in Dispute Resolution

High Court ruling acknowledges the extraterritorial effect of US secondary sanctions.

By Charles Claypoole and Nell Perks

In the recent case of Lamesa Investments Ltd v. Cynergy Bank Ltd [2019] EWHC 1877 (Comm), the High Court found that US secondary sanctions constituted a “mandatory provision of law” excusing non-payment under a Facility Agreement.


Lamesa is a Cypriot company indirectly owned by Mr. Viktor Vekselberg, a Ukrainian individual. In December 2017, Cynergy (an English bank) entered into a Facility Agreement with Lamesa, under which Lamesa lent Cynergy £30 million and Cynergy was obliged to make interest payments every six months. The Facility Agreement was governed by English law.

At the time the parties entered into the Facility Agreement, Cynergy was aware that it was possible that US sanctions would be imposed on Lamesa. Three months later, OFAC added Mr. Vekselberg to the list of Specially Designated Nationals and, consequently, Lamesa became a Blocked Person for purposes of US sanctions.

As a result, Cynergy was at risk of having secondary sanctions imposed on it by the US government under the Ukraine Freedom Support Act 2014, if it made payments to Lamesa. This would have been “ruinous” for Cynergy, so the bank stopped doing so. Continue Reading

Will the Increase in Cross-Channel Deals Require an Anglo-French Approach to Management Equity?

Posted in M&A and Private Equity

As management terms converge, deal teams must still navigate cross-border differences in ratchets, put and call options, and management warranties.

By Alexander Benedetti, Tom Evans, David Walker, Neil Campbell, Catherine Campbell, and Eric Loubet

French and UK private equity firms are increasingly looking across the Channel for attractive buyout opportunities. Cross-border transactions involving French and UK sponsors have grown steadily since the global financial crisis, with an uptick in activity in recent years. According to PitchBook, French sponsors bought 33 UK-headquartered companies last year, the highest volume at any point in the past decade. Meanwhile, UK sponsors acquired 56 French-headquartered companies in 2018, up from 34 companies 10 years ago. The long history between the two nations continues to facilitate a strong level of deal flow.

Given the prevalence of pan-European management advisors and the increased number of cross-border deals, cross-pollination of deal terms is occurring. While we expect management equity terms in France and the UK to continue to converge, specific conditions under local tax regimes mean that there are still key areas of distinction. In our view, sponsors considering a buyout across the Channel must carefully navigate differences in the treatment of management equity terms in each jurisdiction. In a sellers’ market, appealing to management can help to win a deal. However, sponsors should proceed cautiously and avoid a one-size-fits-all approach, taking note of the following key developments. Continue Reading

4 Key Reasons Why European P2P Deals Fail – and How Private Equity Deal Teams Can Avoid Them

Posted in M&A and Private Equity

Adherence to secrecy, pre-announcement preparations, realistic expectations-setting, and strategic plans for taking control are keys to P2P deal success.

By Richard Butterwick, Pierre-Louis Clero, Manuel Deo, Tom D. Evans, Tobias Larisch, David J. Walker, Suneel Basson-Bhatoa, Phillippe Tesson, Connor Cahalane, and Catherine Campbell

The deal market has seen a resurgence in public to private (P2P) transactions — global P2P volumes exceeded €115 billion in 2018, and have already surpassed €88 billion as of September 2019. As PE firms increasingly target complex and ambitious European P2P deals, deal teams need to consider tactics and understand local requirements. In our view, buyout firms can maximise the likelihood of successfully closing a P2P deal by considering these key issues.

Manage Your Information Expectations — Public Diligence Is Different

Public deals can falter over diligence, particularly if information requests are sizeable or require significant management time. Additional diligence will likely be carried out post agreement of headline terms — e.g., review of key legal documents, management presentations, etc. — but this is typically more limited than on a private deal, particularly with respect to time. In the UK, France, and Spain, equal information must be provided to bidders — target boards will be conscious that information shared with a bidder may need to be more widely distributed in due course. In Germany, while bidders do not need to be treated equally, access to information will only be granted by the target if it considers this to be in the best interests of the shareholders and the company. In all cases, buyers need to act quickly, with clear and realistic expectations of the public diligence process, in order to keep the board onside. Continue Reading

Big-Ticket Fines and Veil-Piercing Cases Raise Portfolio Company Liability Risks for PE Parents

Posted in Data Protection, M&A and Private Equity

How can private equity firms identify and mitigate inherited liability risk from vulnerable portfolio companies?

By Tom Evans, Gail Crawford, Fiona Maclean, David Walker, Katie Peek, Catherine Campbell, and Amy Smyth

Ongoing big ticket regulatory fines coupled with high profile corporate veil cases indicate that private equity deal teams must remain alert to the risk of buyout firms inheriting liabilities from vulnerable portfolio companies. Increasing GDPR fine activity, including the UK Information Commissioners’ intention to fine British Airways £183 million and an international hotel group £99 million for GDPR failings, is of particular concern. In parallel, the UK Supreme Court recently examined the circumstances in which a parent company can be held accountable for its subsidiary’s actions. In our view, private equity firms should take careful but active steps to identify and mitigate this inherited liability risk; there is no doubt that PE funds are increasingly in the firing line.

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Private Equity in Japan: With Opportunities Come Continuing Challenges

Posted in M&A and Private Equity

Firms targeting assets divested by conglomerates still face obstacles, though barriers to PE investment in Japan are gradually falling.

By Stuart Beraha, Noah Carr, Tom Evans, Hiroki Kobayashi, Ivan Smallwood, David Walker, and Catherine Campbell 

Many hurdles that traditionally challenged private equity firms looking to invest in Japan have been lowered in recent years. The Japanese government is increasingly supportive of overseas buyers, addressing legal, structural, and cultural obstacles and creating renewed interest in the country’s conglomerates, many of which house non-core assets ripe for acquisition. While the environment for foreign private equity buyers has improved considerably, deal teams should be aware that significant general and target-specific challenges remain.

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English High Court Confirms Mediation Can Be Condition Precedent to Litigation

Posted in Dispute Resolution

By Eleanor M. Scogings

English High Court stays litigation pending mediation.

In Ohpen Operations UK Limited v. Invesco Fund Managers Limited,[i] the English court held that mediation was a condition precedent to the commencement of litigation and, accordingly, stayed the proceedings to enable mediation to take place. The decision confirms that an alternative dispute resolution provision can be an enforceable condition precedent to formal proceedings.


Invesco Fund Managers Limited (Invesco) entered into an agreement with Ohpen Operations UK Limited (Ohpen), under which Ohpen was to develop and implement a digital online platform through which Invesco’s customers could buy and sell investments (the Agreement). Pursuant to the Agreement, between the effective date of the Agreement and the launch of the platform, the parties would enter into a development and implementation phase. Post launch, Ohpen would operate the platform. Continue Reading

A New Global Regime for Cross-Border Enforcement of Civil and Commercial Judgments

Posted in Commercial

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] Continue Reading

English Court of Appeal Confirms Proper Test for Common Mistake Rectification

Posted in Dispute Resolution, Finance and Capital Markets

Objective test applies if a prior concluded contract exists, but subjective test applies if there is a continuing common intention.

By George Schurr and Alex Cox

In the recent case of FSHC Group Holdings Limited v. GLAS Trust Corporation Ltd [2019] EWCA Civ 1361, the English Court of Appeal held that for rectification to be granted on the basis of common mistake, a claimant must establish that either:

  1. the disputed document does not give effect to a prior concluded contract (objectively determined); or
  2. at the time the disputed document was executed, there existed a common intention between the parties in relation to a particular matter (subjectively determined) which, by mistake, was not recorded in the final document as executed.

Rectification is a discretionary remedy that is available to the court in circumstances in which a written contract does not reflect the terms as agreed between the parties, i.e.,where there has been a mistake, not in the making, but in the recording, of a contract[i]. Continue Reading

UK SFO Releases Guidance on Corporate Cooperation Credit

Posted in Dispute Resolution

Guidance sets out the SFO’s expectations for investigations but leaves open questions, particularly for cross-border investigations.

By Stuart Alford QC, Nathan H. Seltzer, Christopher M. Ting, and Harriet Slater

On 6 August 2019, the UK Serious Fraud Office (SFO) issued its much-anticipated Corporate Cooperation Guidance (the Guidance) outlining, in substantial detail, the steps that the SFO expects corporations to undertake in order to be eligible for cooperation credit when the SFO makes charging decisions, including in relation to whether a deferred prosecution agreement would be appropriate in lieu of full criminal prosecution.

In many respects, the Guidance is unsurprising and provides the types of investigative best practices that sophisticated companies and their advisers are already familiar with – particularly companies familiar with US regulators’ expectations regarding cooperation credit. Continue Reading

Derivatives Market Reform – Progress Report

Posted in Finance and Capital Markets

10 Key Regulatory Focus Areas for UK/European Wholesale Markets in 2019

By David BermanCarl Fernandes  Nicola HiggsRob Moulton, Charlotte Collins, and Christopher Sullivan.

In the fifth post of this 10-blog series, we identify key milestones in the derivatives market for the year ahead. This is taken from our wider publication: 10 Key Regulatory Focus Areas for UK/European Wholesale Markets in 2019 – Progress Report. Read the full publication here.

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