UK Budgets for Fintech Growth

Posted in Dispute Resolution, Finance and Capital Markets

By Andrew Moyle and Stuart Davis

The UK government’s 2017 Autumn Budget included some measures of particular interest for fintech firms, demonstrating the government’s continued commitment to making the UK a world-leading fintech hub.

The government has provided only scant detail on these measures at present, but no doubt firms will be watching closely to see how they are developed, and what benefits they can bring for the fintech sector.

Pioneer Fund

First, the government is planning a “Regulators’ Pioneer Fund” — a £10 million fund to help unlock the potential of emerging technologies. The aim is to help regulators develop innovative approaches aimed at getting new products and services to market. Continue Reading

ESMA Provides Further Clarity on Initial Coin Offerings in Europe

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

By James Inness and Stuart Davis

Following our 7 November 2017 blog “Europe as a Hub for Initial Coin Offerings”, the European Securities and Markets Authority (ESMA) has published two statements on Initial Coin Offerings (ICOs). The statements underline ESMA’s interest in ICOs as a means to raise capital for enterprises, particularly given their rapid growth in recent months, as well as highlighting ESMA’s concerns for investor protection given the potentially high risks to investors.

Interestingly, one of the issues ESMA has focussed on is the requirement for ICO issuers intending to raise capital in the EU to comply with the EU Prospectus Directive in circumstances in which the ICO is structured as a security offering (as opposed to a non-security utility offering). ESMA acknowledges that the exemptions from the requirement to publish an approved prospectus under the EU Prospectus Directive would potentially be available to ICO issuers in the same manner as for issuers in relation to other types of securities offering, as noted in Latham’s earlier blog. Continue Reading

ECB Announces Support for Fintech Bank Applicants

Posted in Finance and Capital Markets

By Andrew Moyle, Stuart Davis, and Charlotte Collins

On 15 November 2017, the European Central Bank (ECB) published a newsletter containing an article on how the ECB is dealing with the increasing number of fintech bank applications. The ECB is the banking supervisor, alongside national regulators, for all “significant” banks authorised in Eurozone countries. As such, the ECB is involved with the authorisation of such entities.

The ECB also reports that it is in the process of implementing a fintech hub, which will serve as a central point amongst Eurozone countries for information and questions about fintech.

Acknowledging the need to balance scope for innovation against maintaining appropriate safeguards, such as adequate regulatory capital requirements, the ECB has developed a “Guide to the assessment of fintech bank licence applications”. This guide is meant to help fintech bank applicants better understand the authorisation process and the ECB’s assessment criteria.

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High Court Ruling Helps Protect Confidentiality of Arbitral Awards

Posted in Dispute Resolution

By Daniel Harrison

The High Court recently held that a party was not free to disclose an arbitral award even though that award had already entered the public domain. Notably, the ruling may have significant implications for parties considering whether or not to resolve disputes through arbitration.

Background: UMS Holdings Limited v Great Station Properties S.A.

UMS Holdings Limited challenged an arbitral award on the ground of serious irregularity under section 68 of the Arbitration Act 1996 before the High Court. Because the judge had quoted parts of the arbitral award in the judgment refusing the application,[1] UMS claimed that the award was a public document and that UMS could therefore use the award as it wished. The defendant, Great Station Properties, rejected this position and argued that the parties were still bound to keep the award confidential pursuant to Article 30 of the London Court of International Arbitration Rules (LCIA Rules), which provides:

The parties undertake as a general principle to keep confidential all awards in the arbitration, together with all materials in the arbitration created for the purpose of the arbitration and all other documents produced by another party in the proceedings not otherwise in the public domain, save and to the extent that disclosure may be required of a party by legal duty, to protect or pursue a legal right, or to enforce or challenge an award in legal proceedings before a state court or other legal authority.[2]

Great Station applied to the High Court for an order preventing UMS from using the award for any purpose other than the court proceedings or from disclosing the award to any third parties. In response, UMS claimed that the court should not issue an order for confidentiality because the award had entered the public domain by virtue of references, as well as quotation at the hearing and in the judgment in the court proceedings — thereby nullifying Article 30’s confidentiality obligations.

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Pharma and Biotech: Key Trends and Legal Risks

Posted in EU and Competition

By Hanna Roos, Oliver Browne and Robbie McLaren

How to thrive amid uncertainty? This was the question we explored at the 35th FT Global Pharmaceutical and Biotechnology Conference. Here are five key industry trends and corresponding practical legal tips to help companies stay protected and seize opportunities.

“Access”, Not “Excess”

The industry is facing pressure on pricing to expand access to crucial therapies in both developed and developing markets. Increasingly, regulators and legislators measure success not only by clinical breakthroughs, but also by how many patients end up receive a treatment. Regulators and legislators have begun to examine how pricing correlates with the cost of R&D, and the value that a treatment delivers. The UK Competition and Markets Authority’s recent £90 million fine for “excessive and unfair” pricing is an example of this increased scrutiny (for more information, please see our blog here). Such pressure has led to streamlined drug development and flexible pricing models linked, for example, to ability to pay. Regulators are adopting conditional approval mechanisms, which revisit therapeutic efficacy to ensure that drugs deliver “bang for the buck” before they are granted long-term marketing authorisation and/or purchase commitment. Continue Reading

China Strengthens Regulation of Pesticides and Creates Centralized Pesticide Bureau

Posted in Environment

By Paul Davies, Bridget Reineking, and Andrew Westgate

China, the world’s largest producer and consumer of pesticides, is strengthening its regulation of agrochemicals. The Ministry of Agriculture (MOA) recently issued revisions to the country’s pesticide registration requirements, which officially came into effect on November 1, 2017. Pesticide use in China accounts for over one-third of total world pesticide usage, so the new rules will affect a significant number of national and multinational entities and a large percentage of the country’s population.

The MOA issued the revisions pursuant to the new Regulation on Pesticide Administration (RPA) and Pesticide Registration Management Measures (MOA Order No. 3, 2017). The new rules, entitled “Data Requirements on Pesticide Registration” (MOA Proclamation No. 2569), require all pesticide chemistry and toxicology tests required under the RPA to be conducted by laboratories located in China, or overseas laboratories possessing a mutual recognition agreement with China. The new rules do not offer much granular detail with respect to how laboratories would obtain such recognition or the applicable requirements — for example, the rules do not indicate whether application data prepared in a foreign language must be translated into Chinese prior to submission. The revisions also follow the MOA’s recent elimination of temporary pesticide registrations, which effectively prolongs the timeline for the review and use of all pesticides in China. Continue Reading

Europe as a Hub for Initial Coin Offerings?

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

By James Inness and Stuart Davis

Initial coin offerings (ICOs) involve issuers offering virtual coins or tokens that are created and disseminated using blockchain or distributed ledger technology. Virtual coins resemble cash in a number of ways but may also afford holders additional rights, such as the ability to access the platform or software, or participate in the profits, of the issuer of the virtual coins or tokens. Post-issuance, virtual coins or tokens are tradeable on a secondary market.

Tokens as securities

The popularity of ICOs as a funding mechanism has mushroomed in 2017. In response, regulators in key financial centres around the globe have warned issuers that existing regulatory regimes for securities offerings may apply to the person(s) making or marketing ICOs. Some regulators have gone further, adopting a blanket ban on fundraising though ICOs. Continue Reading

European Parliament Calls for Tougher Environmental Liability Rules

Posted in Environment

By Paul Davies and Michael Green

The Environmental Liability Directive (ELD) aims to prevent, remedy and/or compensate for environmental damage. ELD seeks to achieve this through the “polluter pays principle”, ensuring businesses are held legally and financially accountable for environmental degradation that results from their operations. However, Member States have varied considerably in implementing ELD, significantly reducing its effectiveness. The European Parliament is the latest of several European authorities to review ELD’s effectiveness.

A report published by the European Parliament sets out the primary areas of concern with ELD, namely: (i) the lack of certainty surrounding key definitions; and (ii) narrowness of scope. For example, the European Parliament considers there is “total uncertainty” regarding the “significance threshold”. As the significance threshold determines whether an incident triggers liability under ELD, the European Parliament considers the clarity of the threshold crucial. Furthermore, ELD only imposes strict liability on operators that cause environmental damage in the course of activities specified in an exhaustive list. Beyond this list, liability for environmental damage is fault-based. Continue Reading

UK Supreme Court Redefines Criminal Dishonesty Test

Posted in Dispute Resolution

By Stuart Alford QC, Daniel Smith and Clare Nida

The UK Supreme Court has unanimously ruled that the criminal dishonesty test in R v Ghosh is wrong and that courts should no longer follow this test. The recent decision in Ivey v Genting Casinos clarifies that the test for dishonesty in all proceedings (criminal and civil) is objective, and to be determined by reference to the standard of ordinary, decent people, without reference to whether the defendant realised that ordinary people would regard his or her conduct as dishonest.

The Facts: Ivey v Genting Casinos (UK) Ltd t/a Crockfords [2017] UKSC 67

The claimant, a professional gambler, used a technique called “edge sorting” during a game at the defendant’s casino, in which he and his associate represented to the dealer that he was superstitious, thereby persuading the dealer to turn the cards in a way which allowed the claimant to later identify those cards in later deals. The claimant won £7.7 million, but the defendant refused to pay out on the basis that the claimant was cheating. Continue Reading