The decision confirms that an arbitration agreement will be upheld in the face of insolvency proceedings only if it can be shown that the petition debt is genuinely disputed on substantial grounds.
By Martin Davies, Dominic Geiser, and Oliver Middleton
The Privy Council’s decision in Sian Participation Corp (in liq) v. Halimeda International Ltd [2024] UKPC 16 (Sian Participation) is the latest in a series of judgments clarifying the common law position on whether the court can
Will the UK join the Lugano Convention 2007?
By Oliver Browne and Tom Watret
Introduction
Conflicting reports have emerged in recent days as to whether the EU will approve the UK’s application to join the Lugano Convention 2007, the UK’s preferred regime for governing jurisdiction and the enforcement of judgments with EU Member States after Brexit. This post briefly describes what the Lugano Convention 2007 is and why the UK wants to join it, and provides an update on the accession process.
Previous posts in this series consider the Lugano Convention 2007 in more detail (Part 1: here) and explain the rules that now apply to jurisdiction and enforcement of judgments in the UK following the end of the Brexit transition period on 31 December 2020 (Parts 2-4: here, here, and here).
The Court found that the Administration of Justice Act 1920 should be interpreted purposively rather than literally.
By Oliver E. Browne and Callum Rodgers
The English Court of Appeal has considered for the first time whether the Administration of Justice Act 1920 should be interpreted as permitting the registration of a Commonwealth State judgment in England and Wales, which was itself a judgment enforcing an original judgment given by the courts of a third State.
English law, courts and arbitral tribunals may become more relevant and popular after Brexit, not less.
By Oliver Browne, Sophie J. Lamb QC, Sanjev D. Warna-kula-suriya, and Tom Watret
Introduction
English law, courts, and arbitral tribunals may become more relevant and popular after Brexit, not less, and parties should continue to feel confident about including English governing law and jurisdiction clauses in their agreements.
In particular, the breadth of English common law jurisdiction and the powerful tools at the English courts’ disposal – notably, the anti-suit injunction and damages for breach of jurisdiction clauses – are likely to ensure that jurisdiction clauses in favour of English courts and tribunals are complied with.
High Court holds that English law legal advice privilege can extend to such communications regardless of whether or not the lawyers are in-house practitioners.
In PJSC Tatneft v Gennady Bogolyubov & Ors.,[i] the English High Court held that legal advice privilege can apply to communications with foreign lawyers in certain circumstances. Specifically, privilege can extend to such communications if:
The communications are between a client and its lawyers (whether or not they are acting “in-house”).The English courts will not look into whether the foreign lawyers are “appropriately qualified” or recognized / regulated as “professional lawyers” as a matter of local law.
The decision overturns a series of cases deemed to have over-expanded a principle preventing shareholders from claiming against third parties for falls in a company’s value.
By Oliver Middleton and Thomas F. Lane
On 15 July 2020, the UK Supreme Court unanimously overturned a Court of Appeal decision that had barred a creditor of companies owned and directed by an individual from bringing tort claims against him for allegedly asset-stripping the companies in order to prevent them paying a court-ordered debt to that creditor. In Sevilleja v. Marex Financial Ltd,[1] the Supreme Court ruled that the “reflective loss” principle — restricting third parties from suing persons alleged to have harmed a company in a manner that caused “reflective loss” — should be narrowed so as only to apply to situations involving shareholders claiming for diminutions in value.
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.
Facts
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.
English Court of Appeal reaffirms privilege over internal investigation documents prepared in contemplation of litigation.
By Jon Holland, Andrea Monks, Stuart Alford QC, Nate Seltzer, Dan Smith, and James Fagan
In a much anticipated decision, the Court of Appeal has reaffirmed legal privilege protection for documents prepared during internal investigations (e.g., interview notes, forensic accounting analysis) whose dominant purpose is preparing for litigation reasonably in contemplation, and on the facts confirmed that this can occur even in the early stages of a government investigation.
This decision affirms that English law remains in line with other jurisdictions, including the work-product privilege in the United States, and should permit corporates to conduct internal investigations in anticipation of litigation without fear that external counsel will be required to turn over interview notes or other documents to authorities or to adversaries in collateral litigation.
Corporates should bear in mind the following practical tips:
Arbitrators should disclose subsequent appointments to related arbitration proceedings, particularly if cases materially overlap.
By Oliver E. Browne and Robert Price
In the Halliburton v Chubb ruling, the Court of Appeal held that an arbitrator who did not disclose subsequent appointments to related arbitration proceedings should have disclosed those subsequent appointments both as a matter of good practice and as a matter of law. The lack of disclosure did not however constitute sufficient grounds for the removal of the arbitrator under section 24(1)(a) of the Arbitration Act 1996 for justifiable doubts as to his impartiality.
Background
The explosion on the Deepwater Horizon oil rig spawned a number of related arbitration proceedings involving various parties. Transocean was the owner of the rig, BP was the lessee of the rig, and Halliburton provided cementing and well-monitoring services to BP. Both Transocean and Halliburton obtained insurance from Chubb.
Although there remains no widely accepted definition of good faith under English law, and English law has committed itself to no overriding principle of good faith, English law has developed piecemeal solutions in response to demonstrated problems of unfairness.
The variety of these solutions, and the pace with which they are being adopted, is increasing. Indeed, the English courts are starting to embrace the idea of good faith, bringing English law more in step with the laws of other developed jurisdictions.
What does good faith mean?
Unfortunately there remains some doubt. Some cases have described the duty to act in good faith as an obligation to observe reasonable commercial standards of fair dealing, others have addressed the notion of acting consistently with the justified expectations of the parties. Judges have also referred to acting within the spirit of the contract and working together / honestly endeavouring to achieve the stated purposes expressly linked to the duty. They have also emphasised the objective nature of the assessment of good faith in a number of cases, however, courts will take into account the context of the situation and relationship between the parties. A breach of an obligation of good faith is often evidenced by an act of bad faith.