A recent ruling confirms judicial discretion to stay proceedings and instruct parties to seek non-court-based alternatives to litigation.

By Nell Perks and Duncan Graves

The English Court of Appeal has ruled that the court has the authority to stay proceedings and direct the parties to engage in a “non-court based dispute resolution process”. The court can exercise such authority provided the order does not impair the essence of the claimant’s right to proceed to a judicial hearing and is proportionate to achieving the aim of settling the dispute fairly, quickly, and at reasonable cost.[1]

Consistent with the overriding objective which requires the court to actively manage cases and facilitate alternative dispute resolution (ADR), the ruling clarifies the court’s case management powers and signals a potential move toward court-mandated dispute resolution processes.

Court of Appeal sets out correct approach to transfer of long-term Insurance.

By Victoria Sander, Jon Holland, Alex Cox, and Duncan Graves

Latham & Watkins has won an appeal on behalf of Rothesay Life Plc (Rothesay) in an unprecedented challenge to the High Court’s refusal to sanction the transfer of around 370,000 annuity policies in August 2019 (comprising total policyholder liabilities of approximately £11.2 billion) from The Prudential Assurance Company Limited (PAC) to Rothesay.

The Court of Appeal overturned the High Court’s refusal to sanction the scheme in a judgment[1] handed down on 2 December 2020, and set out the correct approach for a court to adopt when dealing with applications to sanction transfers of insurance business under Part VII of the Financial Services and Markets Act 2000 (FSMA).  The case is the first time an application under Part VII FSMA has been considered in detail by the Court of Appeal.

The Court of Appeal held that the judge was “not justified in making an adverse comparison between the financial strength, record and expectations of PAC and Rothesay”; that his reasoning had been based on a misunderstanding of the applicable financial metrics; and that he did not give adequate weight to the views of the independent actuarial expert or the on-going regulatory role of the PRA.  The Court of Appeal also held that, although non-actuarial factors may be relevant to the assessment of some Part VII applications, the subjective choice of provider by policyholders is not a relevant factor to be considered.

The decision confirms that the UK government can recognise one person as de jure head of state of a foreign state and implicitly recognise another person as the de facto head of state.

By Charles Claypoole and Isuru Devendra

The English Court of Appeal’s recent decision in The “Maduro Board” of the Central Bank of Venezuela v The “Guaidó Board” of the Central Bank of Venezuela & Ors[i] concerned who controls Venezuela’s gold reserves in England: the ad hoc board of the Central Bank of Venezuela appointed by Mr. Juan Guaidó (the Guaidó Board) or the board of the Central Bank of Venezuela appointed by Mr. Nicolás Maduro (the Maduro Board).

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.

A new decision signals the Court’s readiness to interpret section 44(2)(a) of the Arbitration Act 1996 broadly.

By Oliver E. Browne and Robert Price

In A and B v C, D and E (Taking evidence for a foreign seated arbitration),[1] the Court of Appeal unanimously allowed the taking of evidence from a witness by way of deposition in support of a foreign-seated arbitration, even though the witness was not a party to the arbitration agreement.

Background

The Appellants and the First and Second Respondents were co-venturers in an oil field in Central Asia, and were parties to a New York seated arbitration (the New York Arbitration).

An issue arose in the New York Arbitration as to the nature of certain payments made by the First and Second Appellants and whether those amounts were properly deductible when quantifying sums due in respect of certain interests in the oil field. Although the evidential hearing in the New York Arbitration had concluded, the Appellants obtained permission from the tribunal to bring an application in the High Court under section 44(2)(a) of the Arbitration Act 1996 for an order for the compulsory taking of evidence from an individual in England who worked for their counterparties as the lead commercial negotiator of the production-sharing agreement (the Third Respondent).

The Court examined “without prejudice” privilege and litigation privilege as they apply to settlement agreements and their inspection by co-defendants.

By Oliver E. Browne

In BGC Brokers LP & Ors v. Tradition UK & Ors,[i] the English Court of Appeal unanimously dismissed an appeal against an order for a settlement agreement to be disclosed in unredacted form. The Court found that neither “without prejudice” privilege nor litigation privilege applied to the settlement agreement, even though it reproduced confidential communications that would themselves fall squarely under one or both heads of privilege. The Court held that the reproduction and incorporation of confidential communications within the settlement agreement formed part of a new and distinct communication, the purpose of which was neither to negotiate a settlement agreement nor to gather evidence for the purposes of the litigation.

“Without prejudice” privilege applies to written or oral communications that are made for the purpose of a genuine attempt to settle a dispute between the parties.[ii]

Litigation privilege applies to confidential communications between a client and its solicitor, or either of them and a third party, for the dominant purpose of obtaining information or advice in connection with existing or reasonably contemplated litigation.[iii]

Decision confirms parties’ statutory right to challenge awards under s.67 and s.68.

By Oliver E. Browne

The Court of Appeal has overturned a High Court decision which granted a stay of an application challenging an award pending the determination of related further arbitrations (the Second Arbitration Proceedings), pursuant to s.67 and s.68 of the Arbitration Act 1997 (the Arbitration Act).

The Court’s decision in Minister of Finance (Inc) v International Petroleum Investment Co [2019] EWCA Civ 2080 is a helpful reminder that parties agreeing to an arbitration with a London seat cannot circumvent the mandatory provisions of the Arbitration Act. Parties have a statutory right to challenge an award under s.67 for lack of substantive jurisdiction and s.68 for serious irregularity and cannot contract out of these provisions, notwithstanding any written agreement to the contrary.

The Court recognised that challenges under the mandatory provisions often “lack merit and are nothing more than an attempt by the losing party to put off the day of reckoning”. In such cases, the courts have “adequate powers to bring the challenge to a prompt end”. Indeed, the requirement of proving serious irregularity and substantial injustice is a high hurdle to overcome.

The ruling serves as a helpful reminder that parties must enter into well-drafted contracts in proper legal form.

By Daniel Smith

In Philip Barton v. Timothy Gwyn-Jones & Others [2019] EWCA Civ 1999, the Court of Appeal recently allowed a claim for a success fee payable to an agent for finding a buyer for a property, even though the contract only specified a success fee if the agent achieved an agreed higher price.

The Court of Appeal identified a liability in unjust enrichment based on quantum meruit for the value of the agent’s services, bypassing the need to identify (or imply) a contractual term, and instead basing the liability on the commercial factual background.

The case demonstrates that, without an agreed allocation of risk of a particular event, the courts may be willing to fill in the gaps. Contracting parties should ensure their drafting caters for all eventualities (always consider: what if something else happens?), and parties in dispute should consider whether this decision allows them to go outside the contract to claim a remedy when the contract doesn’t answer the “what if …?” question.

By Stuart Alford QC, Daniel Smith and Clare Nida

The English Court of Appeal provides further guidance, approving ENRC, on when litigation privilege will not apply to information gathering materials.

The English Court of Appeal (Criminal Division) has ruled that litigation privilege does not apply to a statement an employee makes to his employer’s solicitors as part of their investigation into a death in the workplace. The court’s ruling in R (for and on behalf of the Health and Safety Executive) v Paul Jukes [2018] EWCA Crim 176 is the third judgment on litigation privilege in just nine months.

By Robert Price and Eleanor Scogings

Two recent English court decisions provide useful reminders that parties to arbitration agreements must take care to properly serve arbitration proceedings on the other party. In doing so, parties will avoid the risk of the court setting aside an award on the grounds that service was defective and that the tribunal did not have jurisdiction.

In Sino Channel, the Court of Appeal confirmed that only in rare cases will an agent have anything other than express actual authority to accept service of a notice of arbitration.[1] However, in the unusual circumstances in Sino Channel, the Court of Appeal held that the agent had both implied actual and ostensible authority to accept service. In Glencore Agriculture, the High Court confirmed that a notice of arbitration sent by email to a junior employee is unlikely to amount to effective service, unless the nature of that individual’s role implies that they possessed authority to accept service on their employer’s behalf.