The ruling propels UK law enforcement to increase its investigative powers under POCA, and businesses to enhance their supply chain due diligence.
By Paul A. Davies, Clare Nida, Pamela Reddy, Michael D. Green, James Bee, Annie Birch, and Esha Marwaha
On 27 June 2024, the UK Court of Appeal found that the National Crime Agency’s (NCA’s) decision not to launch an investigation into the importation of cotton products originating from the Xinjiang Uyghur Autonomous
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.
Sponsors should consider leveraging technologies and diligence practices to tackle today’s increasingly complex supply chains.
By Paul Davies, Tom Evans, David Walker, Michael Green, Hannah Berdal, and Catherine Campbell
Global supply chains have come under significant pressure in recent years, compounded by the effects of this year’s pandemic and shifting global policy agendas. In our view, supply chain analysis and management will remain critical for sponsors in the coming year as they seek to avoid risks including reputational damage, loss of revenue, and loss of goodwill. Performing diligence on a target is no longer enough — rather, the target’s value chain and broader supply chain require careful analysis to determine resilience and uncover risk areas, but such review can also identify opportunities.
Shijiazhuang Intermediate People’s Court declares arbitration agreement providing for ICC Rules arbitration seated in China invalid.
By Ing Loong Yang, Oliver Browne, and Isuru Devendra
In a dispute between Hebei Zhongxing Automobile Manufacturing Co., Ltd. (HZAM), a Chinese company, and Automotive Gate FZCO (FZCO), a UAE company, the Shijiazhuang Intermediate People’s Court declared invalid two related arbitration agreements that provided for arbitration in accordance with the Arbitration Rules of the International Chamber of Commerce (ICC) and to be held “in China”.
Drawing on Latham’s Sixth Private M&A Market Study, we explore trends and developments in consideration mechanics and deal conditionality.
Richard Butterwick, Martin Saywell, Simon J. Tysoe, Catherine Campbell, and Richard George
Uncertainty has been a significant market factor in 2019. The UK’s decision to leave the European Union, protectionist responses to China as a global investor, market volatility, and trade tensions have all given dealmakers pause for thought. With these growing pressures on international M&A, deal teams and in-house counsel are increasingly required to work with advisors to find strategies and solutions to get deals done — a task that requires an intimate knowledge of deal terms and current market trends. In our view, geopolitical factors can impact how parties approach deal architecture and key provisions of transaction documents.
Drawing on data from Latham & Watkins’ sixth Private M&A Market Study, we will examine how consideration mechanics and conditionality deal terms are responding to the current M&A market.
Parties must draft arbitration agreements with Chinese parties clearly and precisely to ensure validity and avoid unwanted litigation.
By Oliver E. Browne and Isuru Devendra
A Beijing court recently adopted a pro-arbitration approach in upholding the validity of an arbitration agreement designating a non-existent arbitral institution. While the decision reflects the increasingly pro-arbitration attitude of Chinese courts, the case also highlights the importance of drafting arbitration agreements involving Chinese parties clearly and precisely.
Background and decision
In Chinalight International Trade Co. Ltd v Tata International Metals (Asia) Ltd, the Beijing No. 4 Intermediate People’s Court was asked to determine the validity of an arbitration agreement designating a non-existent arbitral institution to administer disputes submitted to arbitration under the agreement.
By Paul Davies, Richard Butterwick, Terry Charalambous, and Catherine Campbell
In recent years, China has taken significant steps in developing its environmental policy. In 2014, China’s Premier Li Keqiang declared a “war on pollution”, which began in earnest in 2017. Since then, regulators have been more proactive in enforcing environmental regulations. Factory closures have become a key part of this strategy, causing significant disruption to the global supply chain this year.
In our view, M&A dealmakers and corporates should carefully consider environmental and supply chain due diligence in China, as companies work out how to navigate the factory shutdown process. Corporates should, as part of their environmental, social, and governance (ESG) strategy, review whether their group entities and target companies are likely to be affected in the event that critical supply chains are broken. Engagement with environmental agencies in China is useful, but environmental policy and consistent regulatory enforcement are still maturing. The appropriate level of due diligence could prove to be critical to a company’s ongoing operations.
By Paul Davies and Catherine Campbell
In recent years, China has taken significant steps in developing its environmental policy. In 2014 China’s Premier Li Keqiang declared a “war on pollution”, which began in earnest in 2017. Since then, regulators have been more proactive in enforcing environmental regulations. Factory closures have become a key part of this strategy, causing significant disruption to the global supply chain this year.
In our view, dealmakers should carefully consider environmental and supply chain due diligence in China, as companies work out how to navigate the factory shutdown process. PE firms should review whether portfolio investments and target companies are likely to be affected in the event that critical supply chains are broken. Engagement with environmental agencies in China is useful, but environmental policy and consistent regulatory enforcement are still maturing. The appropriate level of due diligence could prove to be critical to a portfolio company’s ongoing operations.
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.
By Paul Davies, Bridget Reineking, and Andrew Westgate
The Chinese government has announced a US$4 trillion investment in developing infrastructure globally under the “Belt and Road Initiative” (BRI). Under the BRI the Chinese government will spend US$750 billion on overseas investments in the next five years alone. Although China often cites the BRI as the country’s way of fostering sustainable economic development, there are concerns regarding management of environmental risks, especially in countries lacking environmental governance. In response, the Chinese government has recently issued two publications encouraging sustainable investment practices overseas.
China’s National Development and Reform Commission, Ministry of Commerce, Ministry of Foreign Affairs, and the People’s Bank of China have jointly issued an Opinion on further Guiding and Regulating Outbound Investment (the Guiding Opinions). The four bodies intend that the Guiding Opinions will endorse foreign investment in strategically important areas, and discourage or ban investments that conflict with China’s national interests.