Commercial Dispute Resolution September 2012 Newsletter

Breach of Civil procedure Domestic International Intellectual Settlement confidence Page 7 arbitration arbitration property/ Page 15 Page 1 Directors Page 10 Page 12 information News Page 9 Jurisdiction technology Page 16 Page 2 Page 10 Page 14

Breach of confidence

Court finds that Formula One racing car designs were copied for a competitor and assesses

Force India Formula One Team v 1 Malaysia Racing Team SDN BHN & Ors (2012)

The High Court offered valuable terminated in 2009, the Consultants guidance on the ingredients necessary worked for Lotus. Force India claimed to found an action for breach of that the design files were misused by confidence and the measure of Lotus. The defendants conceded that damages claimants can expect some of the Consultants’ employees to receive. had engaged in some copying of the files containing Force India’s The claimant was a Formula One car designs. racing team operator, Force India. The first and second defendants operated The High Court emphasised that “Lotus”, another Formula One racing to found an action for breach of team. The third defendant, Mr confidence the information had Gascoyne, worked as chief technical to have the necessary quality officer first for Force India and of confidence, communicated then for Lotus. The fourth and fifth in circumstances importing an defendants were aerodynamic design obligation of confidence and that consultants (the Consultants) who there was an unauthorised use of had created computer aided design the information to the detriment files for the purpose of designing of the party communicating it. In cars for Force India, pursuant to so far as the Force India design files their development contract with were used to take a short cut for the it. This contract provided that they benefit of Lotus, the Court found would deal in the utmost good faith, that the Consultants’ employees had that intellectual property created misused confidential information or developed by the Consultants akin to a trade secret, commenting became Force India’s sole property that the “files were the product and that they and their employees of a considerable degree of skill were under a duty of confidentiality and labour… comprised valuable and obligation of non-disclosure. information… were not in the public After its contract with Force India was domain; they were protected by

The merged firm of Clyde & Co and Barlow Lyde & Gilbert

1 express contractual obligations of confidence, including information would have been “sold” but for the breach, the obligations directly affecting [the Consultants’] employees.” claimant can recover the market value of the information Accordingly, the Court decided that there had been a as between a willing seller and a willing buyer; and (iv) breach of confidence by the Consultants’ employees but where a claimant cannot prove financial loss as a result not by Lotus or Mr Gascoyne as the misuse of the design of the misuse, it may recover such sum as would be files had not been at their request. negotiated between a willing licensor and a willing licensee acting reasonably as at the date of breach. The Court emphasised that the same approach to assessing damages should be adopted whether the breach NB: The Court held that a willing licensor and willing of confidence is contractual or equitable. The Court licensee acting reasonably would have negotiated a explained that: (i) where confidential information is used fee of €25,000. That figure was fair, equitable, effective, to manufacture and sell products and the claimant’s proportionate and dissuasive, as is required by article profits have been diminished as a result of the breach, he 13 of the Directive on the enforcement of intellectual can recover for loss of profit; (ii) where the confidential property rights 2004/48 which applied as the confidential information is exploited by granting licences to others, and information here amounted to technical trade secrets licence revenue has been diminished, the claimant can which are classed as intellectual property rights within recover the lost revenue; (iii) where the confidential the Directive.

Contract

Court of Appeal supports the Supreme Court’s common sense approach to interpreting

In the case of Chalabi & Others v Agha-Jaffar & Another (2012)

Endorsing the Supreme Court’s approach in Rainy Sky v The relevant clause under dispute stated that: Kookmin (2011), the Court of Appeal confirms that when “the consideration price stated in Clause 3 above represents faced with two possible interpretations of a contract, it will and amounts to three fifths or more of the sum which prefer the more commercially sensible one. the Purchasers are to and will receive for the sale by The defendant purchasers warranted to the claimant the Purchasers of the entire issued share capital of the vendors in a share sale and purchase agreement that the Company”. price paid for certain companies would amount to three Dismissing the appeal, the Court of Appeal held that the tax fifths or more of the sum that the defendants would later payment did not form part of the purchase price received for receive from their onward sale of the same companies to the sale and was therefore not recoverable by the claimants. a third party. The onward sale was structured differently The purpose of the payment was to cover an expense and in such a way that it increased the defendants’ tax incurred by the defendants as a result of structuring the liability. The third party buyer in the onward sale agreed sale in a particular way. The Court held that it did not make to cover the cost of any additional tax payable. Hence, on commercial sense to treat the tax payment as part of the completion of the onward sale, in addition to the purchase purchase price. To do so would effectively allow the claimants price, the third party buyer paid $3.17m to the defendants to pocket three-fifths of the tax payment whilst leaving the to cover the additional tax liability. The claimants defendants to pay virtually the whole of the increased tax commenced proceedings, claiming that the $3.17m was liability. Following the approach advocated by the Supreme part of the price that the defendants had received for the Court in Rainy Sky S.A. v Kookmin (2011), the Court of sale and therefore they were entitled to three fifths of the Appeal unanimously agreed that such an interpretation total sum received by the defendants under the terms of would be unfair on the defendants as it would not lead to a their agreement. commercially sensible result.

2 High Court follows suit and interprets agreement in line with business common-sense

RGI v Synergy Classic (2012)

This is another case where the courts have seen fit to The High Court decided that the word “investor” in a share interpret a contract in line with “business common sense” subscription and option agreement did not only mean where the clause in question had two possible alternative legal and beneficial owners of shares but also included meanings. beneficial owners of shares held by a nominee. This was because the agreement envisaged the shares being credited Synergy Classic Ltd (Synergy) entered an investment to a CREST account. Shares so held were commonly held agreement with RGI International Ltd (RGI). This envisaged through nominees. Therefore to construe “investor” as only that Synergy would acquire two different tranches of applying to legal and beneficial owners would run contrary shares, first shares and option shares. If Synergy paid the to the contractual scheme whereby shares were to be held consideration for the option shares but RGI failed to allot through the CREST system. If “investor” was construed in and issue them to Synergy within five days in accordance the narrow and limited manner suggested then there were with clause 5.2(b), the agreement provided that Synergy other provisions of the agreement that would be rendered could, via a put option notice, require RGI to purchase the unworkable or nonsensical. The judge expressly stated that first shares from Synergy for a set price – US$99 million. the literal construction of the relevant clause should “yield to Synergy later alleged that there had been a breach of business common sense, the importance of which has been clause 5.2(b) as the option shares had not been allocated re-emphasised in the recent Supreme Court decision in The properly as they had been registered in the name of a Rainy Sky (2011)”. Hence there was no breach of clause 5.2(b) nominee. Hence, Synergy alleged that it was entitled to and Synergy had no right to exercise the put option. serve the put option notice. The net effect of this would be such that Synergy would get back more than it had paid for all the shares, whilst also keeping the option shares.

Airport’s contractual obligation to use best endeavours took precedence over looking after its own commercial interests

Jet2.com v Blackpool Airport Ltd (2012)

The Court of Appeal clarified the lengths that one party Dismissing the appeal, the Court of Appeal found that should go to when obliged to use its “best endeavours” or the parties to the agreement had intended that clause 1 “reasonable endeavours” in a contract. Besides finding that should give rise to legally binding obligations and that the these phrases were not too uncertain to be unenforceable, obligations to use reasonable or best endeavours were not the Court found that a party’s obligation to use its best too uncertain to be enforceable, provided that the object endeavours may in certain circumstances, amount to of the endeavours could be ascertained with sufficient having to act contrary to its own commercial interests. certainty. There is a difference between a clause whose content was so uncertain that it could not create a binding The appellant airport operator, Blackpool Airport Ltd, obligation, and a clause which gave rise to a binding refused to continue to handle flights operated by the obligation, the precise limits of which were difficult to respondent airline, Jet2.com, outside its normal operating define, but could be given practical content. hours. However, clause 1 of the parties’ agreement provided that Blackpool Airport would use: (i) best endeavours The use of the phrase to “use all reasonable endeavours” to promote the respondent’s low cost service; and (ii) imposed an obligation on Blackpool Airport to use all all reasonable endeavours to provide a low cost base to reasonable endeavours, and not second best endeavours, facilitate low cost pricing. Blackpool Airport claimed that to enable the respondent’s business to succeed by keeping clause 1 was similar to a preamble and not intended to its unit costs down. That said, the Court conceded that the create legally binding obligations; was too uncertain to give wording requiring reasonable endeavours was opaque and rise to an obligation and, even if there was an obligation that it was “difficult to identify its content”. on it, this was only to use best or reasonable endeavours and there was no obligation to act contrary to its own commercial interests.

3 However, the obligation to use “best endeavours” obliged expect the parties to have contemplated that BAL should Blackpool to do all it reasonably could to enable Jet2.com’s be able to restrict Jet2’s aircraft movements to normal business to succeed and grow. This extended to keeping the opening hours simply because it incurred a loss each airport open to accommodate flights outside normal hours, time it was required to accept a movement outside those subject to any right Blackpool Airport might have to protect hours, or because keeping the airport open outside normal its own financial interests which “depended very much on hours proved to be more expensive than it had expected”. the nature and terms of the contract”. Blackpool Airport’s However the Court added that “..on the other hand… claim that it could refuse to accept aircraft movements if, for example, it were to become clear that Jet2 could outside normal hours if that caused it to incur a loss had never expect to operate low cost services from Blackpool to be approached with caution, given that the ability to profitably, BAL would not be obliged to incur further losses schedule aircraft movements outside normal hours was in seeking to promote a failing business”. essential to Jet2.com’s business and therefore fundamental to the agreement. The Court stated that “one would not

A salutary reminder by the Court of Appeal that however well intentioned parties are, if they fail to set out the terms of their agreement clearly, it may not be enforceable

Geogi Velichkov Barbudev v (1) Eurocom Cable Management Bulgaria Eood & Ors (2012)

Even if parties can demonstrate a clear intention to create the parties to create legal relations by virtue of it having legal relations, a failure to actually agree upon and set out been drafted by a professional law firm and by the nature the terms of their agreement renders it unenforceable and of the wording used, it did not follow that the side letter at risk of being deemed merely an “agreement to agree”. was a legally enforceable contract. Its terms remained to be negotiated. The side agreement was therefore no more The appellant, Mr Barbudev, was the major shareholder than an agreement to agree, rendering it unenforceable. and chief executive of a company that was being sold. The leading judge stated “ It is an agreement to offer Mr Because Mr Barbudev wanted to retain an interest in Barbudev “the opportunity to invest in the Purchaser on the the company, he and the defendant entered into a side terms to be agreed between us”. That is not the language of agreement whereby after the sale, the defendant would as a binding commitment and no amount of taking account soon as reasonably practicable after the signing of the sale of the commercial context and Mr Barbudev’s concerns and agreement, offer Mr Barbudev the opportunity to invest in aims can make it so. Moreover, the next phrase makes it the purchaser on terms to be agreed and to be set out in an clear that the terms of the Investment Agreement are not investment agreement negotiated in good faith. Following agreed; they are to be negotiated “in good faith with you”. the sale, there were investment negotiations but no agreement was reached. Mr Barbudev brought proceedings The Court went on to find that even if the document was to try to enforce the side agreement but at first instance the not an agreement to agree, the drafted terms were too judge held that the side agreement was unenforceable. uncertain and several terms which were essential to the investment agreement were not included. On appeal the Court of Appeal held that, although the side agreement did demonstrate an intention between

Even if the pressure applied by one party towards another is lawful, it may amount to duress

Progress Bulk Carrier v Tube City (2012)

The High Court has taken the opportunity to clarify that The owners of a vessel (Progress Bulk) were in repudiatory even if a party’s conduct towards another party is not breach of a charterparty agreement with Tube City as strictly unlawful or criminal, it may nevertheless amount a result of allocating the chartered vessel to another to illegitimate pressure, or “duress” such that the resultant charterer. Progress Bulk assured Tube City that it would contract may be vulnerable to being set aside. provide a substitute vessel and pay it full compensation

4 in respect of its breach. However, Progress Bulk went on to pressure must have caused the “victim” to enter into a make Tube City a “take it or leave it” offer which involved contract. The Court clarified that illegitimate pressure can only providing a substitute vessel if Tube City waived be constituted by conduct which is not in itself unlawful, all its claims for damages in respect of the repudiatory although it conceded that “it will be an unusual case breach. Under protest, Tube City agreed to this waiver in a where that is so, particularly in a commercial context”. The settlement agreement. However, in subsequent arbitration Court exonerated Progress Bulk from illegal or criminal proceedings, the arbitrators agreed that Tube City had conduct but decided that it was not legitimate for Progress agreed to the terms of the settlement under economic Bulk to produce the “take it or leave it” offer, having, as a duress and that that this agreement was voidable. Progress result of its breach and deliberate refusal to comply with Bulk appealed against the arbitration award under section its assurances about providing a substitute vessel and 69 of the Arbitration Act 1996, arguing that the arbitrators full compensation for that breach, put Tube City into the had been wrong in law because economic duress only position where it had no option but to accept the offer in operates where there has been unlawfulness, whereas here order to ship its cargo to China and avoid further losses on the owners had merely taken advantage of market forces. its sale contract to its Chinese receiver. The Court explained The High Court disagreed. It stated that two elements that past unlawful acts, as well as the threat of a future were necessary to establish economic duress: illegitimate unlawful act, can also amount to “illegitimate pressure”. pressure and causation in the sense that the illegitimate

High Court finds that the terms of loan facilities were fair

Rahman & Ors v (1) HSBC Bank PLC (2) Rodger (3) Phillips (2012)

In a decision which will be of particular interest to banks, The High Court found that the claimants’ was the High Court disagreed that the terms of HSBC’s loan inconsistent with the loan documentation. The Court facilities were unfair or breached section 140 of the concluded that the bank had never agreed to a 15 year Consumer Credit Act 1974. term. It followed that the loan facilities had expired in September 2011 when the receivers were appointed. The claimants, a family group of entities, including Regarding whether the terms with the bank were unfair, individuals, companies and trustees, challenged a bank’s the Court concluded that they were not. The claimants decision to appoint receivers over some of their properties. were not in a weaker bargaining position and although they The properties had been provided as security for various had complained about certain terms of the loan agreement, loan facilities that had not been paid on their expiry they had never complained about the terms which they dates. The facility letters indicated that the term of the now suggested were unfair. Moreover, the requirement loans was five years. A cross-default clause entitled the that overdraft facilities were repaid on demand was bank to demand repayment of all monies outstanding if commonplace. In any event, the five-year loans were not the claimants defaulted on any debts or liabilities. The repayable “on demand” but only after expiry of the five- claimants argued that the facilities had been extended year period. Neither was the cross-default clause unfair, by oral agreement in June 2006 to 15-year terms and since multiple loan facilities had been offered to various that the bank’s appointment of receivers was therefore entities within the claimants’ family group, all of which invalid. Relying on section 140 of the Consumer Credit Act were supported by multiple securities, hence there were 1974, the claimants requested the Court to discharge the sound commercial reasons for such a cross-default clause. receivership, on the basis that their relationship with the Deciding not to discharge the receivership, the Court bank was unfair. In support of this contention, the claimant commented that the bank had adopted a patient attitude relied on the cross-default clause, the requirement that and that this was not a case where the bank had arbitrarily outstanding liabilities must be paid on 24 hours’ notice, decided to serve a demand for repayment and then the bank’s entitlement to appoint receivers when any part appoint receivers. of a due debt was not paid and the bank’s appointment of receivers even though the loan facilities still had 10 years left to run.

5 Parties to joint ventures must act in good faith to each other

(1) Ross River Ltd (2) Blue River Ltd Partnership v (1) Waveley Commercial Ltd (2) Peter Barnett (3) Paul Harney (4) Westbury Properties Ltd (2012)

This High Court decision emphasises that parties to joint transaction depending on the circumstances. It found that ventures owe a duty to their joint venture partners to act in Waveley was a fiduciary and therefore under an implied good faith towards them. obligation to act in good faith in its conduct of the joint venture and in its accounting to the claimants in respect Waveley Commercial Ltd (Waveley) and its directors, Messrs of the net profits. It had an obligation not to do anything Barnett and Harney, entered a joint venture agreement with relating to the handling of the joint venture revenues which the claimants, Ross River Limited and Blue River Limited favoured itself to the claimants’ disadvantage, although Partnership to develop property. The joint venture agreement this duty did not extend to not making a profit. The Court provided that upon the sale of part of the development site, also found that the circumstances were special enough the claimants were to receive a share of the net profits. A to find that Mr Barnett owed fiduciary duties in the same side agreement gave the claimants a priority profit-share. terms as Waveley. The Court did not, however, go so far as Without informing the claimants, Mr Barnett arranged, via to imply the terms sought by the claimants to the effect: three contracts to sell or lease the properties comprising (a) that Waveley should be prevented from conducting any the development site to himself in his personal capacity or business other than that necessary for implementing the a company incorporated by him of which he was the sole development; and (b) that both Waveley and Mr Barnett director and shareholder. The claimants only found out about should be prevented from acting in a way that would these transactions by making a search against the properties’ prejudice Waveley’s ability to pay the sums owing to the registered title. The claimants brought proceedings claiming claimants. After determining the sums properly to be taken breach of implied terms of the joint venture agreement and into account as revenue in order to calculate net profits breach of fiduciary obligations by Messrs Barnett and Harney and finding that the side agreement was not a sham, the and Waveley. Court went on to construe the terms of the joint venture The High Court clarified that it was possible to find agreement in accordance with established principles fiduciary duties between parties engaged in a commercial in Rainy Sky v Kookmin (2011) i.e. according to business common sense.

Parties must look beyond petty grievances when their contract involves working together to deliver a public service

Compass Group UK and Ireland (t/a Medirest) v Mid Essex Hospital Services NHS Trust (2012)

The High Court applied a high standard when considering the trust, or…any beneficiary to derive the full benefit of the extent of parties’ duties to cooperate with each other the contract”. In 2008, the Trust noted a number of minor in good faith when they have contracted with each other service failures which Compass remedied immediately. In to deliver a service to the public, here a catering service to January 2009, the Trust deducted over £587,000 in respect various NHS hospitals. of those failures. Compass disputed the Trust’s calculation and alleged that it was in material breach of clause 3.5. The claimant company (Compass) entered a seven year public sector contract with an NHS Trust, for Compass The High Court interpreted the parties’ duty to cooperate to provide catering services in the Trust’s hospitals. The with each other broadly and explained that it obliged contract permitted the Trust to reduce its payments to them to work together to resolve problems and not take Compass if it failed to perform and the Trust could award actions which could damage their working relationship, “service failure points” to calculate appropriate deductions especially since the contract provided a benefit to the in its payments to Compass. Clause 3.5 required the public. In a long-term contract such as this, the duty parties to “cooperate with each other in good faith and to required the parties to work together constantly at all take all reasonable action as necessary for the efficient levels of their relationship, as any lack of cooperation may transmission of information and instructions and to enable have significant ramifications for patient well-being. This

6 encompassed working together to resolve problems and wrongful of its powers under the contract. Compass’s not taking unreasonable actions that might damage their breaches did not justify the Trust’s breaches. The Trust had working relationship. The wording “to enable the trust, or acted without common-sense; “It was difficult to imagine, in … any beneficiary to derive the full benefit of the contract” practice, behaviour more likely to result in a breakdown in meant that the Trust, in particular, was under a duty to the relationship with [Compass] than that which the Trust have regard to the wider interests of the other beneficiaries engaged in…the commercial effects of the breach were of the contract (i.e. the patients) and had to act reasonably substantial…. The Trust’s refusal to back down on those to avoid damaging its relationship with Compass and claims when Medirest reasonably disputed them went to the thereby undermine the purpose of the contract. heart of the commercial viability of the contract and gravely damaged the necessary working relationship between the The Trust’s conduct had effectively “poisoned and destroyed” parties.” The net effect of the Trust’s conduct was that it had its working relationship with Compass by making “absurd committed a repudiatory breach of the contract although calculations” of the service failure points and failing to its effect was abated by the Trust subsequently reducing the respond positively when Compass disputed the calculations amounts claimed and entering into a more sensible dialogue and tried to resolve matters. Hence the Trust was in breach of with Compass. its duties in clause 3.5 and its conduct amounted to a

Civil Procedure

A low Part 36 offer may, if beaten, still attract advantageous costs consequences

Wharton v Bancroft (2012)

This case, where the High Court remarked that even low to resolve the dispute, as opposed to making an offer which Part 36 settlement offers cannot necessarily be written created no real opportunity for settlement but was merely a off as merely “tactical” will offer some comfort to offerors tactical step designed to secure the benefit of the incentives who wish to avail themselves of the advantageous costs provided by Part 36. In that case, the judge commented that consequences of Part 36 where they go on to “beat” their there was a discretion to refuse indemnity costs for a tactical own low offer. offer such as to accept 99.9% of the full value of the claim. The claimant, Ms Maureen Wharton, sought to prove the will After considering Huck v Robson (2002), the High Court of her partner in the face of a challenge to it by her partner’s commented that the concept of a tactical offer was not daughters, the defendants. After the defendants rejected Ms easy to apply since Part 36 offers are always tactical in Wharton’s low Part 36 offer, she succeeded in beating her own the sense that they are designed to take advantage of the offer at trial. However, the defendants argued that the usual incentives provided by Part 36. The judge stated that “a low costs consequences whereby the defendants should pay the offer in a case where the offeror considers that the offeree’s claimant’s costs on the indemnity basis from the date that position has no merit cannot be written off as self evidently the offer expired, should not be ordered because the offer ‘merely a tactical step’”. In any event, in this case the offer had not been a genuine attempt to settle and had, instead, had not been derisory or tactical as its real effect was been a “tactical” offer. The defendants referred to the case of significant. The Court ordered that the defendants pay Ms Huck v Robson (2002), which suggested that a Part 36 offer Wharton’s costs on the indemnity basis. must represent a genuine and realistic attempt by the offeror

7 Failing to hold a meeting as required by the Pre-action Protocol not necessarily a breach of it

Higginson Securities (Developments) Limited; (2) Spiritualist National Union Trust v Kenneth Hodson (2012)

This judgment of the Technology and Construction Court Dismissing the stay application, the Court observed that demonstrates that the Court is inclined to take a practical the wording of the Protocol does not state that a meeting approach to deciding whether parties should meet under the is absolutely mandatory, but should “normally” take place. terms of the Pre-action Protocol and will not require them to Accordingly, the “default position” is that a meeting should do so if there is a reasonably good reason for a meeting not to take place unless there is a reasonably good reason for it not take place. to. The judge suggested that usually one party’s indication that it would like a meeting would be a good reason for The claimant, Higginson Securities (Developments) Ltd, a meeting to take place. On the other hand, if there is a had sent the defendant architect, Mr Hodson, a letter of reasonably good reason for a meeting not to take place, for claim under the Pre-Action Protocol for Construction and example if a meeting would have been unlikely to produce Engineering Disputes making allegations of professional any resolution, the failure to arrange a meeting would not of and over-charging for services. Mr Hodson firmly itself constitute a breach of the Protocol. Here the claimant refuted the allegations. Neither party suggested a without had taken the view that the meeting was unlikely to produce prejudice meeting and Higginson subsequently issued a a resolution given that Mr Hodson had rejected the claim in claim against Mr Hodson. Mr Hodson responded stating his protocol response. The Court stated “I am not altogether that the protocol’s pre-action steps had not been exhausted, surprised that the Claimants took the view that a meeting namely that there had not been a without prejudice meeting was unlikely to produce any resolution, given the absolute in accordance with paragraph 5.1 of the protocol, and said and uncompromising rejection of the claim in the Protocol that he intended to apply to stay the proceedings. Higginson response. However, if the Defendant and his advisers thought replied that there was no merit in a meeting given Mr that it was a good idea to have such a meeting, they could just Hodson’s outright denial of liability. Mr Hodson applied for as easily themselves have suggested it; they did not”. a stay of proceedings to enable without prejudice meetings to occur between the parties. The Pre-Action Protocol for The Court added that it was also necessary to have regard Construction and Engineering Disputes provides that “after to the costs implications of holding a meeting, especially in receipt by the defendant of the claimant’s letter (of response low value claims. to the counterclaim) the parties should normally meet”. In this case however, the claimant (Higginson Securities Limited) had issued and served proceedings before a meeting had taken place. The key issue therefore, was whether a meeting was an absolute requirement under the Protocol.

Commercial Court refuses to penalise party’s reasonable refusal to mediate a spurious claim

Euroption Strategic Fund v Skandinaviska Enskilda Banken AB (2012)

The Commercial Court saw no reason to penalise the The Court agreed that there was no merit in the claim and successful party in costs for refusing to enter a mediation there was no reason why the defendant should have incurred with the party bringing the claim, given that the claim was the additional costs of mediation. There was doubt whether speculative, exaggerated and lacking any merit. the claimant would have accepted a mediated outcome based on either side bearing its own costs, and for reputational and After the defendant, Skandinaviska Enskilda Banken other reasons, there was no reason for the defendant to pay AB, successfully defended a claim brought against it, the the claimant anything to avoid the claim being brought. In Commercial Court had to decide whether the winning light of the fact that the claim was speculative, involved a high defendant should have its costs award reduced to reflect risk of failure, grossly exaggerated, opportunistic, conducted the fact that it had chosen not to mediate the claim. The in a manner that displayed very little regard to proportionality defendant had made it clear to the claimant that it saw no or reasonableness and given that all issues were pursued at merit in its claim but was prepared to forego its costs if the full length to the end of the trial, the Court held that this was claim was dismissed. a case that went outside the norm and justified an order for costs in Skandinaviska’s favour on the indemnity basis.

8 High Court urges parties to think twice before making a freezing order application without notifying the other party

O’Farrell v O’Farrell (2012)

The High Court has expressed concern about a party’s There was no suggestion that Mr O’Farrell would receive failure to give the other party notice of its application for the discharge payment earlier than suggested and hence, an order to freeze his assets. The Court called upon parties advance notice did not create a risk of dissipation. The to consider carefully whether there really is a risk that the judge commented that he was “shocked at the volume other party’s assets will dissipate its assets if notice is given. of spurious ex-parte applications that are made in the Queen’s Bench Division….in these days of mobile phones The respondent, Mr O’Farrell, applied for the discharge of a and emails it is almost always possible to give at least freezing injunction which had been made against him as a informal notice of an application. And it is equally almost result of a without notice application by his ex-partner. Mrs always possible for the Judge hearing such an application to O’Farrell had made the application in light of the fact that communicate with the intended defendant or respondent, he had failed to make maintenance payments to her over either in a three way telephone call, or by a series of calls, the previous three years and given that he was shortly to or exchanges of e-mail. Judges do this routinely, including receive a lump sum payment upon his discharge from his when on out of hours duty. Cases where no notice is employment in the Army. required … are very rare indeed”. Moreover, the judge went The Court held that there was no basis for making the on, “the giving of informal notice of an urgent application is application without notice. No good reason had been given not only an elementary requirement of justice. It may also by Mrs O’Farrell and the evidential requirements of Civil result in a saving of costs. The parties may agree an order, Procedure Rules 25.3(2) and (3) had not been fulfilled. thereby rendering unnecessary a second hearing…”.

Directors

Where directors put their own interests over those of their company’s creditors, they fail to “promote the success of the company”

GHLM Trading Ltd v (1) Anil Kumar Maroo (2) Nita Anilkumari Maroo (3) Brocade International Ltd (4) Jose Paulo De Oliveiro Loureiro (2012)

This decision throws the spotlight onto the duties that Shortly before being suspended as directors, Mr and Mrs directors are under and must comply with when their Maroo sold their stock in GHLM to Brocade as a means company is suffering from financial difficulties. It reminds of repaying themselves for a personal loan which was directors that even if a transaction is not strictly a outstanding. Mr Binani brought proceedings against Mr and “preference” under section 239 of the Insolvency Act 1986, Mrs Maroo as well as Brocade which included a claim for it may still fall foul of their duty to promote the success of sums owed and damages for the Maroos’ breach of duty the company for the benefit of its members as a whole” in in respect of the sale of their stock in GHLM shortly before section 172 Companies Act 2006, which applies equally their removal. to the company’s creditors when a company is in The High Court observed that under s.172 Companies financial difficulties. Act 2006 a director must act “in the way he considers, in Mr Maroo owned several European clothing companies good faith, would be most likely to promote the success of including GHLM Trading Ltd (GHLM) and Brocade the company for the benefit of its members as a whole”. International Ltd (Brocade). In 2004, Mr Maroo approached Further, that when a company is in financial difficulties, a friend, Mr Binani, for a loan. Mr Binani agreed to buy a this duty applied similarly to the interests of its creditors as £1 million shareholding in GHLM and retain Mr and Mrs a class. Even if the transaction was not a “preference” under Maroo as salaried directors. Over the years, Mr Binani section 239 Insolvency Act 1986, advancing the interests of loaned Mr Maroo an additional £577,500. By 2007, Mr Binani a particular creditor without believing the action to be in had lost confidence in Mr Maroo and closed GHLM’s shops. the interests of the whole class of creditors would breach

9 the s.172 duty. Secondly, where a director pursued his own their stock to Brocade was void as they had entered the interests in this manner, disregarding the interests of the transaction with a view to advancing their own interests company, its members and its creditors and the other rather than those of GHLM, its members or its creditors. As contracting party had notice of that fact, the contract they were also directors of Brocade, Brocade had had the would be void. In light of this analysis, the Maroos’ sale of requisite notice of the breach of duty.

Domestic Arbitration

High Court underlines the limited scope to appeal against arbitration awards for “error of law”

Harvey v MIB (2011)

This decision underlines the narrow scope for appeals arrived at by the arbitrator”. The Court explained that against arbitrators’ awards for error of law under section 69 the provisions governing appeals on points of law were of the Arbitration Act 1996 where the complaint relates, in highly restrictive and reflected the increasing recognition reality, to the arbitrator’s decision on the facts. accorded to the autonomy of the tribunal process. It was fundamentally important to maintain a proper distinction The claimant, Mary Harvey, had suffered serious injury between questions of fact and questions of law. Accordingly, whilst crossing a road. She was dissatisfied with the questions as to the admissibility, relevance or weight of any compensation awarded to her by the Motor Insurers’ evidential material were matters for the arbitrator. Bureau (MIB) and appealed to an arbitrator (pursuant to the terms of the Untraced Drivers’ Agreement 2003). The The Court conceded that a question of law for the purposes arbitrator held that she was not entitled to compensation of section 69 might arise if, on the basis of the facts found as there was no evidence to show negligent driving of an by the arbitral tribunal, the conclusion which it reached untraced motorist. Ms Harvey sought permission for an “was outside the range which could properly have been appeal under section 69 Arbitration Act 1996, on the basis arrived at by a tribunal which had properly directed itself that the arbitrator failed to apply or properly consider the as to the applicable law” but it emphasised that it must untraced driver’s towards her and had erred still be possible to conclude that the error arose from in law in failing to conclude that the untraced driver was some misapprehension or misapplication of the law. Here, primarily liable to her in negligence. however, the arbitrator’s assessment of liability had to be based on evidence. Whatever view was taken of his The High Court decided that the tribunal had not findings, they all involved factual matters which were committed an error of law as there was no point of law in entirely a matter for him and did not give rise to a question issue. It commented that the “real thrust of Ms Harvey’s of law for the purposes of s.69. Accordingly, despite some complaint was that the arbitrator had made unreasonable sympathy for Ms Harvey, the Court concluded that it would and unsafe findings of fact. She was in reality inviting the be wrong to grant her permission to appeal as there was no Court to reach different factual conclusions from those point of law and the arbitrator was not obviously wrong.

Jurisdiction

Dispute over the validity of the decisions of a company should be heard in the state where the company has its seat

Ferrexpo v Gilson & Ors (2012)

The Commercial Court has clarified that where a dispute The parties’ dispute was over their respective shareholdings concerns the validity of the decisions of a company’s in a Ukrainian mining company. The defendant English organs, it may stay English proceedings in favour of companies, (Gilson), brought proceedings in the Ukraine proceedings in the state where the company is situated, to restore their shareholders’ interest in the company. pursuant to article 22 of the Brussels Regulation, even The claimant Swiss company, Ferrexpo, challenged the where this is a non EU member-state. jurisdiction of the Ukrainian court on the basis that there was a risk of an unjust result and brought proceedings in

10 England seeking a declaration regarding its shareholding. It where the dispute fell within article 22 of the Regulation. also stated that it intended to seek an anti-suit injunction Article 22 provides that the courts of the country in which from the English court in relation to the Ukrainian a company has its seat shall have exclusive jurisdiction to proceedings. Gilson applied for a declaration that the hear proceedings concerning the validity of the decisions English court either had no jurisdiction and should set of the company’s organs. Even though the Ukraine is not a aside the court proceedings brought by the claimant Swiss member-state of the EU, and not bound by the Regulation, company (Ferrexpo) or if the court did have jurisdiction, the article could nevertheless be applied “reflexively” that it should stay the proceedings. i.e. as if the Ukraine were a member-state. The dispute did fall within this article as it concerned the validity Exercising its discretion to grant the stay, the Commercial of the resolutions of the company’s general meetings court decided that although there was general concern and of entries in a public register in Ukraine. Having the regarding the independence of the Ukrainian judicial proceedings heard in the Ukraine would enable further system, Ferrexpo had failed to produce cogent evidence of a parties to be joined to the Ukrainian proceedings and the real risk of injustice occurring. Furthermore, previous case- Court stated would “avoid a multiplicity of proceedings and law (Owusu v Jackson (2005)), holding that pursuant to the therefore a risk of inconsistent decisions will be avoided”. Brussels Regulation, an English-domiciled defendant could not challenge the English court’s jurisdiction, did not apply

Missing English law governing law clause prevented claim being heard in the English courts

Global 5000 v Wadhawan (2012)

This decision that a claim could not be heard in the English The Court of Appeal decided that the English Court did courts, highlights the importance for parties of including a not have jurisdiction to hear the claim. It gave careful governing law clause in all contracts, including contracts consideration to what has to be shown to prove that a which are ancillary to the main agreement, such as in claim is “in respect of” a contract. The Court concluded this case, a guarantee agreement. Failing to do so, will risk that here, the relevant contract in respect of which the claims (which arise out of the ancillary, rather than the claim was made was the guarantee rather than the main main, agreement) not being heard in the English courts. contract. It stated that this was “the contract under or pursuant to which the claim is made.....If it were otherwise, Here the claimant sought to bring a claim under a then an application to serve out which could not succeed if guarantee which did not contain an English law clause. reliance were placed on the real contract which founds the That guarantee was collateral to a separate aircraft claim might be able to succeed if some merely collateral purchase contract which did contain an English law clause. contract were relied on. That would make no sense at Under the Civil Procedure Rules, a claim form can only be all”. The judge went on to point out that if he had decided served out of the jurisdiction with the permission of the otherwise, this would potentially allow claims to be heard court on certain specific grounds. In this case, the claimant here against foreign defendants by reference to a contract had to establish that his claim was being made “in respect to which they may not even be party, a result which would of” a contract governed by English law in order to be able to be “highly anomalous”. bring his claim here.

11 Court of Appeal sets aside English court’s anti suit injunction against Russian court proceedings

Star Reefers Pool Inv v JFC Group Co Ltd (2012)

This is a relatively unusual instance of the Court of Appeal in England. When JFC Group had issued its claim in Russia, setting aside an anti-suit injunction against Russian no proceedings had been commenced against it in England, proceedings on the basis that it was unjustified. only the arbitration proceedings. JFC Group had never promised to litigate or arbitrate in England. Nor did it The respondent shipowner, Star Reefers, had brought submit to the English courts’ jurisdiction once proceedings arbitration proceedings claiming unpaid hire under two were commenced. time charters against a Cypriot company, Kalistad, as well as against a Russian company, JFC Group. It alleged that JFC The fact that the Russian proceedings were commenced Group had guaranteed Kalistad’s obligations. JFC disputed without warning or any express prior rejection of liability that it was a party to the charterparties or their arbitration under the guarantees was not unconscionable or vexatious. agreements and commenced Russian proceedings seeking The judge had overlooked that JFC Group could legitimately declaratory relief to the effect that the guarantees were have Russian law applied to the guarantees in the Russian ineffective under Russian law as they were merely offers courts - an advantage unavailable to it in England. Further, which had not been accepted by Star Reefers. Star Reefers the case brought in Russia was not “utterly absurd” or then commenced English proceedings against JFC Group, “bound to fail”. Finally, Russia was not an inappropriate which JFC Group did not submit to, seeking payment under forum. It was the place where any obligation under the JFC Group’s guarantees for unpaid hire and damages for guarantees fell to be performed and the place where, if repudiation of the charterparties. Star Reefers successfully there were contracts of guarantee created by the posting obtained an anti-suit injunction ordering JFC Group not to of the guarantee letters to Star Reefers from Russia, those take any further steps in the Russian proceedings. contracts were made. The Court of Appeal set aside the anti-suit injunction, This judge commented that this ”was not the typical stating that there was “something of a touch of egoistic case of vexatious conduct created by the issue of foreign paternalism in an English court injuncting continuation proceedings in the face of English proceedings in which of the foreign proceedings in such a case”. JFC Group’s the foreign defendant had participated and from the conduct was not vexatious and the Russian proceedings consequences of which he was seeking to extricate himself had not been commenced in order to frustrate the dispute by the multiplication of litigation abroad”.

International Arbitration

English courts willing to enforce declaratory arbitration awards

West Tankers Inc v (1) Allianz Spa (2) Generali Assicurazione Generali SpA (2012)

In this landmark decision, the English Court of Appeal West Tankers owned a ship which collided with a pier demonstrated its willingness to enforce a declaratory owned by the ship’s charterers, causing damage. Arbitrators arbitration award as a court judgment and in doing so, appointed under the charterparty declared that West provided an effective shield against the enforcement of Tankers was not liable to the charterers and their insurers a later inconsistent judgment from the Italian courts. It (Generali) in respect of the collision. Whilst the arbitration is a further twist in this ongoing litigation which began was pending, Generali brought proceedings against with the English Court issuing an anti-suit injunction West Tankers in the Italian courts in respect of the same against the Italian court proceedings, this injunction being incident. West Tankers went on to obtain permission from later overturned by the European Court of Justice on the the English courts to enforce and enter judgment in terms basis that it ran “counter to the trust which the Member of the arbitral award, under sections 66 of the Arbitration States accord to one another’s legal systems and judicial Act 1996. This meant that any subsequent Italian judgment institutions and on which the system of jurisdiction under obtained by Generali would not be recognised in England Regulation No 44/2001 is based”. under article 34 of the Brussels Regulation. Generali argued

12 that the Court could not enter judgment in the terms of of the rights which the judgment or award has established”. a declaratory award, especially a negative one which did The Court pointed out that parties to an arbitration who not require action and was therefore incapable of being have obtained a declaratory award in their favour may, in “enforced” for the purposes of s.66. any event, bring a court action on the award. The court, if it thinks appropriate, could itself make a declaration in the The Court of Appeal disagreed, finding that s. 66 required same terms and this would amount to a judgment for the a broad interpretation. It held that the argument that by purpose of article 34. The purpose of s.66 was to provide enforcing a declaratory award, the court was not enforcing an alternative route of enforcement which is simpler than an award but only the rights determined by an award was parties having to bring an action on the award. “an over subtle and unconvincing distinction” and “the enforcement of any judgment or award is the enforcement

Commercial Court decision that arbitral tribunal has power to award damages for breach of duty to arbitrate

West Tankers Inc v Generali Assicurazione Generali SpA (2012)

Following the Court of Appeal’s decision that it could reach decisions which are inconsistent with those of courts enforce the arbitrators’ declaratory award, the Commercial of the EU member-states, given that arbitration is excluded Court has decided that the arbitral tribunal had power to from the scope of the Brussels Regulation. The key reasons award equitable damages against the party who pursued for the decision were that: court proceedings (in Italy, in this long-running case) in –– There was a clear breach of the duty to arbitrate by breach of the parties’ duty to arbitrate in accordance with Generali commencing the proceedings in the Italian their arbitration agreement. court. Further, the obligation to arbitrate had been The background facts to this case are reported above. West endorsed by the English Commercial Court and Tankers appealed against a decision of the arbitration subsequently, the House of Lords tribunal that Generali were not liable for damages in –– The principle in the Brussels Regulation that there relation to their commencement of the Italian court should be effective judicial protection (by way of court proceedings and not liable to indemnify West Tankers action) of specific rights does not limit or circumscribe against any judgment made against West Tankers in the the jurisdiction of arbitral proceedings, which simply Italian proceedings. West Tankers successfully appealed fall outside the scope of the Regulation. Nor does the against this decision to the Commercial Court, the principle in the Brussels Regulation that the courts of Court deciding that the arbitral tribunal did in fact have a member-state cannot review the decision the court jurisdiction to order that Generali pay equitable damages which was first seised, apply to prescribe the jurisdiction to West Tankers for losses flowing from the breach of of arbitral tribunals, which are free to make their Generali’s obligation to arbitrate. The Court explained own (divergent) rulings and are not obliged to decline that there was no principled basis upon which it could jurisdiction until a member-state has ruled in the matter distinguish such an award of damages from earlier awards –– There is no logical distinction between a decision on the made in the arbitration proceedings which for example, merits and an award of damages for breach of the duty dealt with the merits of the claim. Its decision derived from to arbitrate the fundamental premise that arbitral tribunals are free to

13 Engaging in Indian court proceedings obliged the claimants to proceed there instead of in their chosen arbitration venue

Enercon v Enercon (India) (2012)

The Commercial Court required the claimants to litigate claimants “having made that choice [to engage fully in the in India given their misguided engagement in Indian Indian proceedings] and now some years down the line, proceedings and their failure to pursue their application in it seems to me that the English court should at least be the English courts that the parties were bound to arbitrate in extremely cautious to intervene at this stage and…“wrest” England. The Commercial Court clarified that the venue of an back the proceedings to England” (wording in square arbitration is usually also the “seat” i.e. the state whose laws brackets added). will be applicable to the arbitration proceedings. Had the claimants not so engaged with the Indian The parties’ arbitration agreement provided that the “venue of proceedings, the Court found that the proper seat the arbitration proceedings shall be London”. In 2008, the first would have been England, given that the matter to be claimant, Enercon GMBH, appointed an arbitrator pursuant determined was a matter of English law. Although the seat to the terms of the arbitration agreement. The claimants can be different from the venue i.e. the place where the then started English proceedings seeking a declaration that arbitration hearings take place, in most cases the place the defendants were bound by the arbitration agreement. where the arbitration takes place will also be the seat of However, the defendants commenced proceedings in the arbitration. Clear evidence to the contrary is needed to India. Various applications were made by both sides to the oust that conclusion. Although the arbitration agreement English High Court (the claimants seeking the court’s help in provided that “the provisions of the Indian Arbitration and appointing a further arbitrator, the defendants challenging Conciliation Act 1996 shall apply” that was not sufficient to the English court’s jurisdiction). constitute a shift of the seat to India. The Court added that the reference to the Indian Act could have been a reference Expressing reluctance, the Commercial Court concluded either to its enforcement provisions or to any provisions that, since the claimants had not pursued their original which were not inconsistent with the English Arbitration application to the English courts and had instead fully Act. The key factor determining the seat was that the engaged in the Indian proceedings, the English proceedings parties had chosen London not merely for its convenience should be stayed pending the resolution of certain petitions geographically. before the Indian courts. The Court stated that the

Intellectual Property/Information Technology

Software licencees may use ideas appearing in the software to develop rival software

SAS Institute Inc. v World Programming Ltd (2012)

The European Court of Justice (ECJ) has decided that Its competitor, World Programming Limited, (“WPL”) copyright protection does not extend to the functionality, developed its own version of the SAS system called the programming language and file format of a computer World Programming System. SAS’s action against WPL program. Hence, licensees may now use the same ideas as alleged infringement of its copyright in the SAS software appear in the licensed software to develop rival software and its manuals. SAS claimed that WPL had indirectly to do the same thing, provided user manuals and other copied components of the SAS system by replicating its materials protected by copyright are not themselves copied. functionality and had therefore, infringed the copyright in the SAS manuals. SAS Institute (“SAS”) developed computer programs which allowed its customers to carry out statistical analysis of The High Court found that there was no evidence that WPL data. A key component of the SAS system was the unique had any access to the SAS source code, copied any of the programming language used to write and run applications. text of the code nor copied any of its structural design. It

14 concluded that it was not an infringement of copyright in functionality as such would stifle technological progress the source code of software for a competitor to study the and industrial development and allow software developers program and to write its own program which emulated the to monopolise ideas. In relation to the programming functionality. It referred the case to the ECJ. language and format of data files the ECJ stressed that if a third party were to obtain part of the source code and use The ECJ agreed that neither the functionality of a computer it to create similar elements in its own computer program program, the programming language nor the format of that would amount to reproduction of the program. data files used to exploit its functions constituted a form However, WPL did not have access to the source code of expression protected by copyright under Article 1(2) and just to reproduce the functionality, albeit using the of the software copyright directive. To the extent that same programming language and data file format, did not logic, algorithms and programming languages comprised infringe copyright. ideas and principles they were not protected either. The object of protection was the source code, object code and NB: Despite this decision the ECJ held that the reproduction preparatory design which would all allow for reproduction in a computer program of a software user manual is or the subsequent recreation of the program. capable of constituting an infringement of copyright in the manual if the reproduction constitutes the expression of The ECJ stated that to accept copyright protection for the “intellectual creation” of the author of the user manual.

Settlement

Court construes settlement agreement in accordance with what the parties intended

Nasser Kazeminy v Kamal Siddiqi & Others (2012)

This common-sense judgment of the Court of Appeal will in broad language with the intention of precluding the offer some comfort to parties that even where the strict claimant from bringing any further claims. wording of a contract produces a particular (unintended) The Court of Appeal held that, whilst the wording of the result, the Court is prepared to construe their words in agreement was very wide, had been intended to encompass their proper context and disallow a result if this was not all rights and obligations between the parties and was within the contemplation of the parties when negotiating capable of being construed as excluding the claimant’s the wording. third party rights, the true scope of the settlement could The claimant, Mr Kazeminy, had brought proceedings only be determined by reference to its context. At the time against the defendant, Mr Siddiqi, for the recovery of of the agreement, the third party’s rights were known loan monies. The two parties entered an agreement “in of, but the assignment of those rights to the claimant full and final settlement of all and any claims… in any was not envisaged as a possibility and the amount paid way connected… with the dealings between the parties in settlement did not take into account the value of the concerning loans or investments in the defendant… by… third party’s claims. Though the agreement was intended any person whosoever”. A third party, who had similar to have a wide scope, it did not follow that the claimant claims against the defendant, subsequently assigned all of had intended to reach a compromise in relation to these his rights against the defendant in favour of the claimant. subsequent claims. The fact that an agreement can be The claimant then started fresh proceedings against the construed widely does not mean that it should be and the defendant in reliance upon the rights newly conferred Court held that the judge at first instance was entitled not upon it. The defendant applied to strike out the claim on to do so. the basis that the settlement agreement had been drafted

15 NEWS

The Financial Services Bill will fundamentally reform our regulatory system

The Financial Services Bill was published in January 2012. Financial Conduct Authority. The proposals will give the This proposed a new regime which would fundamentally Chancellor new powers over the Bank of England where reform our existing regulatory system. Its aim is to safeguard public money is at risk in order to protect the taxpayer financial stability and protect consumers. Unlike the current during times of crisis. Authorities will also be empowered system which divides responsibility for financial stability to look beyond “tick-box” compliance. The proposals between the Treasury, the Bank of England and the Financial are intended to foster a regulatory culture of judgment, Services Authority, the proposed new system will give the expertise and proactive supervision. The Bill is currently Bank of England overall responsibility for protecting and in committee stage before the House of Lords and enhancing financial stability. amendments will need to be made to take into account the Wheatley Review on Libor regulation. However Royal Assent The Financial Services Authority will be abolished and for the Bill is still anticipated by the end of the year so that replaced with three authorities: the Financial Policy the new regime will be operational by spring 2013. Committee, the Prudential Regulation Authority and the

County Court reform

The Ministry of Justice has published its response to its In the field of alternative dispute resolution, it recommends consultation on reforming the county court system in that all small claims should be automatically referred to order to increase more efficient use of court resources mediation and that more small claims should be dealt and encourage early dispute resolution. It proposes with on paper if possible. Regarding higher value claims, various structural reforms, which include increasing the the Ministry of Justice plans to work closely with the Law jurisdiction of the county court for certain types of dispute Society to reinforce the legal profession’s role in explaining from £30,000 to £350,000, raising the threshold value of the ADR options to clients. Measures are also proposed to non-personal injury claims for the High Court from £25,000 prevent escalation of costs. Some of the changes are likely to £100,000 and establishing a single county court for to be implemented by the end of 2012 with the increase in England and Wales. It also proposes measures to improve jurisdiction by 1 April 2013. debt recovery and enforcement.

Implementation of Jackson reforms delayed to April 2013

The implementation of funding reforms set out in part 2 no longer be recoverable by a winning from a losing party, of the Legal Aid, Sentencing and Punishment of Offenders will now come into force on 1 April 2013 along with the Act, under which conditional fee agreement (CFA) success majority of the recommended reforms made by Lord fees and after-the-event (ATE) insurance premiums will Justice Jackson.

16 New European Law expected in areas of data protection, ADR, collective redress and intellectual property

Data protection: The proposed new regulation on data to band together to bring claims for compensation. The protection is intended to provide a single data protection European Commission is due to put forward proposals on law for the whole European Union, safeguard privacy and collective redress and the measures are expected to come reduce the administrative burden of data protection to into force later this year. businesses. The draft rules include a “right to be forgotten” Intellectual Property: The European Commission has and an obligation to notify national supervisory authorities proposed two regulations establishing a unified EU in the event of any breach of EU residents’ personal data system. Member states are also currently negotiating within 24 hours of becoming aware of the breach. The the terms of an agreement for a unified patent court to Regulation is expected to come into force in two or three hear disputes relating to EU-wide . Currently a years time. “European Patent” obliges the patent holder to apply for ADR: The European Commission supports a proposed validation of it in each country where patent protection directive on ADR for disputes between consumers is sought, potentially incurring over 32,000 Euros in and businesses and a regulation to create an online translation and administrative costs where protection is disputes resolution platform for consumers. They are sought in all member states. Under the proposed system, currently before the European Parliament and Council a EU-wide patent granted by the European Patent Office for consideration and are expected to be adopted by the would provide uniform protection and have equal effect end of 2012, at which point member states will have across all participating member states. Translation and 18 months to implement the ADR Directive. The online administrative costs would be vastly reduced. It is unlikely disputes resolution platform should become available that these measures will be implemented before 2014. We approximately six months after that i.e. early 2015. will update you on the progress of these proposals in future issues of this newsletter. Collective redress: The European Parliament supports an EU-wide collective redress system enabling consumers

Litigation rises in the Royal Courts of Justice

The Ministry of Justice has published its statistics for levels of claims. Our briefing note discussing the trends in judicial and court activity in England and Wales for 2011. the data in more detail is available here: The figures show that in 2011, the volume of litigation dealt http://www.clydeco.com/uploads/Files/Publications/2012/ with by the High Court in London has increased slightly, CC001519_Litigation_trends_01_08_12.pdf by 7%. In view of the continuing economic difficulties, it is possible that this is the start of a new wave of increased

17 Dispute resolution at the merged firm of Barlow Lyde & Gilbert and Clyde & Co On 1 November 2011 Barlow Lyde & Gilbert LLP and expertise across the world. We compliment our Clyde & Co LLP merged. The merged firm of Clyde & Co pre-eminence in the UK with strengths in Asia Pacific, combines two world class law firms that share a common, North America and the Middle East. Our expertise pioneering heritage and a resolute focus on commercial combines “on the ground” experience with a deep and financial services dispute resolution. awareness of the cultural nuances and subtleties of each region. This expertise extends well beyond our office With 1,350 lawyers and fee earners operating from locations and into other jurisdictions. 30 offices across 6 continents and a network of more than 500 legal correspondents, Clyde & Co has the ability to Recognised as an “elite” practice by the legal directories provide legal solutions in a large number of the world’s across all areas of dispute resolution, including jurisdictions. international arbitration and mediation, we combine substantial technical ability and experience with deep The combined firm offers one of the largest dispute sector knowledge. This gives our clients an unrivalled resolution practices of any leading UK law firm, with advantage when they need our support and advice.

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19 Further information If you would like further information on any issue raised in this newsletter please contact: Neil Jamieson Sapna Garg, Editor Partner Professional Support Lawyer [email protected] [email protected]

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