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 Frank Sun
Chinese acquirers are playing an increasingly important role as buyers of private equity sponsored companies — nearly 200 portfolio companies were sold to Chinese entities in 2016. However, in our view, measures taken by the Chinese government to scrutinise transaction fundamentals more closely and slow capital outflows have impacted deals. The number of deals completed so far in 2017 has fallen to 63, compared to 109 at the same point last year. With Chinese deals now facing higher abort risks, we consider what buyout firms must know and do in order to achieve a successful exit.
Chinese regulators are focusing on the authenticity and commercial purpose of deals by Chinese companies. Acquisitions with a solid rationale that benefit the Chinese economy are unlikely to be rejected outright. So-called “irrational” deals (outside of a Chinese buyer’s core sector, particularly in the real estate, media, sports or hospitality sectors) will face greater regulatory hurdles. Private equity firms and their advisers need to factor this into any approach from a Chinese buyer.
By Paul Davies, Michael Green and Andrew Westgate
Leaders from around the world, including 20 heads of state, attended the Belt and Road Forum for International Cooperation in Beijing on May 14-15. The attendees at the forum agreed on guiding principles for the initiative, and the Asian Development Bank, the European Investment Bank, the New Development Bank, the World Bank and China’s Finance Ministry also signed an agreement promoting the initiative.
The US was represented at the forum by Matthew Pottinger, the National Security Council’s senior director for Asia. A few days prior, on May 12, the US and China announced a series of trade measures to improve access to Chinese markets for American beef and natural gas exports, among other sectors. Mr. Pottinger’s attendance at the forum, a change from the original plan to send a Commerce Department official, was widely seen as a response to the trade dea
By John. D Colahan and David Zhou
Background
On 2 May 2017, China’s Ministry of Commerce (MOFCOM) announced its conditional clearance of the proposed US$130 billion all-stock merger of equals between the Dow Chemical Company (Dow) and E.I. du Pont de Nemours and Company (DuPont), marking the first conditional clearance that MOFCOM has granted this year. MOFCOM imposed structural and behavioural remedies on both parties — which are active in plastics, chemicals and agro-chemicals, among other sectors — to address various competition-related concerns. The transaction has been subject to merger control clearance from more than 25 competition authorities globally, including the European Commission, which granted conditional clearance on 27 March 2017.
MOFCOM’s concerns
MOFCOM found that the parties horizontally overlapped in nine different national agrochemical markets and seven different global material sciences and specialty products markets. MOFCOM also found that vertical relationships existed between the parties in an additional nine relevant global material sciences and specialty products markets. MOFCOM identified four markets where it believed that there was a risk of competition being eliminated or limited: (i) Chinese rice selective herbicides ,(ii) Chinese rice pesticides,(iii) global acid co-polymer market, and (iv) global ionomer market.