Court of Appeal clarifies guidance on “serious harm” requirement under Defamation Act 2013

In an important decision for the law of defamation, the Court of Appeal has clarified the meaning and effect of the requirement to show “serious harm” under the Defamation Act 2013: Lachaux v Independent Print & Ors [2017] EWCA Civ 1334. In doing so, it has departed from the approach adopted at first instance (see here for our post on the High Court decision).

Section 1(1) of the Defamation Act 2013 provides that “[a] statement is not defamatory unless its publication has caused or is likely to cause serious harm to the reputation of the claimant”. The High Court found that this required a claimant to show actual or probable harm on the balance of probabilities before a statement was actionable, and so displaced the common law presumption of damage in libel claims.

The Court of Appeal disagreed. It held that section 1(1) raised the threshold of harm that must be proved from “substantial” (as it was under the common law) to “serious”, but that this did not affect the presumption of harm itself or the principle that the cause of action arose upon publication.

As a matter of case management, the Court of Appeal also held that where the “serious harm” requirement is in issue, it should not ordinarily be tried at a separate preliminary hearing (as it was before the High Court).

Alan Watts, partner, Neil Blake, partner, and Angela Liu, associate, in our disputes team consider the decision further below. Continue reading

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Privacy at work: Limits on employers’ ability to monitor private communications

The Grand Chamber of the European Court of Human Rights’ (ECtHR) ruling in Barbulescu v Romania (61496/08) is a timely reminder of the limits of employers’ ability to monitor their employees’ private activity on work IT systems. Although the decision does not substantively alter UK law on employees’ privacy at work, it is notable for:

  • finding that the right to respect for private life under Article 8 of the European Convention on Human Rights applies to communications made from the workplace even when it is questionable whether the employee had a reasonable expectation of privacy; and
  • giving guidance on the factors that domestic courts should consider when deciding whether Article 8 has been breached (involving a balancing of the employee’s right to respect for his private life and the employer’s interests) in cases where private communications have been monitored.

This ruling highlights the broad interpretation that the ECtHR gives to the term “private life” when applying Article 8 to communications. It appears that the content of communications is more important than the context in which they are made. Thus, the fact that a platform is explicitly reserved by an employer for professional communications only does not mean that private communications made on it lose their private status; accessing such communications is a potential breach of employees’ human rights. This was held to be so even when the employee insisted that he had only engaged in professional communications on the employer’s system.

The ECtHR’s guidance to domestic courts is also instructive for employers as to how such monitoring will be viewed by the courts. The ECtHR made it clear that without clear and advance notice warning of the operation of monitoring and detailing its extent and nature, the monitoring is likely to be unlawful. The guidance also indicates that extreme caution should be used when accessing and using the content of employees’ private communications, and that it should be avoided if at all possible.

Whilst decisions of the ECtHR do not automatically become law in the UK, they are (at the moment) required to be taken into account by the domestic courts. Data monitoring activities are, however, already regulated by domestic legislation such as the Data Protection Act 1998 (DPA 1998) (on which the Information Commissioner has published guidance covering the monitoring of employees) and the Regulation of Investigatory Powers Act 2000 and these will remain the primary sources of UK employers’ legal duties in this area.

Alan Watts, Sara Scott and Anna Henderson outline the decision in more detail below. Continue reading

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Recast European Insolvency Regulation introduces new jurisdiction rules for insolvency-related claims

As a result of the Recast European Insolvency Regulation (“REIR”), which applies to insolvency proceedings commenced since 26 June this year, insolvency practitioners in EU Member States have been given more freedom to commence insolvency-related claims in jurisdictions other than the jurisdiction of the insolvency proceedings (ie the court proceedings by which the affairs of the insolvent company are administered – eg liquidation or administration). In certain circumstances, the REIR permits the insolvency practitioner to commence an insolvency-related claim in any Member State in which a defendant is domiciled.

Andrew Cooke, a senior associate in our contentious restructuring, turnarounds and insolvency team, explains in more detail below. Continue reading

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High Court decision illustrates limits of the cherry-picking rule

The High Court has concluded that, where a claimant waived privilege in certain emails to rebut a suggestion of recent fabrication, only a small number of other privileged documents had to be disclosed as a result of the cherry-picking rule: Holyoake v Candy [2017] EWHC 387 (Ch). (The decision dates from February, but a transcript has only recently become available.)

Whenever a party to litigation deploys privileged material to support its case on the merits, the principle of collateral waiver, also known as the “cherry picking” rule, may come into play to result in a wider waiver than intended. In general terms, the court will require disclosure of any further privileged material that forms part of the same “transaction” or “issue”, and any further material required to avoid unfairness or misunderstanding of the material disclosed.

On the facts of the present case, the court found that the relevant “transaction” was relatively narrow; in effect, it was limited to the particular series of emails that had been relied on. It did not extend to later privileged communications on the same topic, and fairness did not require their disclosure.

In practice, however, parties who are considering deploying privileged material to support their case should take a cautious approach. Although the judge in this case indicated that his decision was based on a wish for a consistency and predictability, the courts’ approach to this question is anything but predictable – in particular, because it is highly fact-dependent. Accordingly, a decision to waive privilege should never be taken lightly.

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Supreme Court considers extent to which an appellant’s relationship with a wealthy third party is relevant in considering whether a payment condition will stifle its appeal

A court may impose conditions when granting permission to appeal. These conditions may include a requirement that the appellant pay money into court before an appeal can proceed – most notably in the form of security for costs, or payment of the judgment sum awarded by a lower court.

In a recent decision the Supreme Court has considered the proper approach to imposing such conditions where the appellant has limited financial means, but is closely connected to a wealthy third party who could feasibly pay the required amount on behalf of the appellant. In particular, it has considered whether the third party’s position can be taken into account in determining whether the imposition of conditions will stifle the appeal and therefore breach the appellant’s right to a fair hearing: Goldtrail Travel Limited (in Liquidation) v Onur Air Tașimacilik AȘ [2017] UKSC 57.

The decision establishes that the relationship can be taken into account, but the relevant question is whether the appellant can pay – including by raising the required sum from the relevant third party – not whether the third party can do so.

Nick Chapman from our disputes team considers the decision further below. Continue reading

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Court of Appeal clarifies test for establishing existence of assets for freezing injunctions

The Court of Appeal has held that, to obtain a freezing injunction, an applicant must establish either a “good arguable case” or “grounds for belief” that assets exist. It rejected the higher threshold of a “likelihood” that assets exist, but held that it is not enough for the applicant to assert that the respondent is apparently wealthy and must have assets somewhere: Ras Al Khaimah Investment Authority & Ors v Bestfort Development LLP & Ors [2017] EWCA Civ 1014.

This decision provides greater clarity as to the test for the existence of assets, though it is not helpful that the Court of Appeal referred to either a “good arguable case” or “grounds for belief”. Although Longmore LJ indicated a preference for “grounds for belief”, and commented that “there is, no doubt, not much difference between the two”, introducing two potentially different thresholds risks creating uncertainty.

The decision also suggests that the courts may be willing to be more lenient than had previously been thought in relation to delays in applying for a freezing injunction. However, an applicant would be wise to treat this with extreme caution and always to apply as soon as possible. Not only does delay risk allowing the respondent actually to dissipate the assets before an injunction has been obtained, but (notwithstanding the comments in this case) on different facts a lengthy delay may well be a basis for refusing an injunction.

Gareth Keillor and Tom Brown consider the decision further below. Continue reading

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Court of Appeal considers that merits of claim against anchor defendant are relevant in establishing jurisdiction under Brussels Regulation against co-defendants domiciled in member states

In a recent decision, a majority in the Court of Appeal held, obiter, that the courts should consider the merits of a claim against an “anchor defendant” when exercising their ancillary jurisdiction under Article 6(1) of the Brussels Regulation 44/2001 (now Article 8(1) of the Brussels I (Recast) Regulation (1215/2012)). If there was no serious issue to be tried against the anchor defendant, then it could be inferred that the claim had been brought to remove the co-defendants from the courts of their domicile, which was not permitted: Sabbagh v Khoury [2017] EWCA Civ 1120.

The relevance of the merits of the claim against the anchor defendant for the purposes of Article 6(1) of the Brussels Regulation has proved to be a difficult and controversial question. There has been academic debate on the issue and there are a number of relevant English and CJEU decisions. None, however, address the question squarely.  The fact that the Court of Appeal was split on this issue highlights the difficulties parties face regarding the correct approach to the application of Article 6(1); a difficulty that is likely to remain until this issue is considered by the CJEU.

John Ogilvie, partner, James Allsop, senior associate, and Gabriella Polledri, associate, in our disputes team, consider the decision further below. Continue reading

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Court of Appeal clarifies that “mandatory rules” do not override chosen law in contracts with an international element

In two recent decisions, the Court of Appeal has clarified that Article 3(3) of the Rome Convention does not apply to override the chosen law where there is an international element to the contract. In both cases, defendants seeking to set aside interest rate swaps entered into under ISDA master agreements subject to English law were therefore unable to rely on mandatory rules in their home jurisdictions: Banco Santander Totta SA v Companhia de Carris de Ferro De Lisboa SA [2016] EWCA Civ 1267 and Dexia Crediop SPA v Comune di Prato [2017] EWCA Civ 428.

Article 3(3) provides that, where a law is chosen to govern a contract but all the other elements relevant to the situation are connected with another country, the choice of law will not prejudice the application of the mandatory rules of that other country. The Court of Appeal held that it was legitimate, when considering whether all elements were connected with another country, to look to elements pointing to the contract having an international aspect, rather than a purely domestic one.

The decisions provide some comfort for commercial parties regarding the risk of a foreign country’s mandatory laws being applied to contracts governed by English law (whether pursuant to Article 3(3) of the Rome Convention or the equivalent provision of the Rome I Regulation, which is in similar terms).

It remains to be seen what will amount to an “international element” in any given case. These decisions suggest this may include the use of international forms of documentation, the international nature of the market and the existence of related contracts entered into in another jurisdiction. Continue reading

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UK clarifies negotiating position on choice of law, jurisdiction and enforcement of judgments post-Brexit

On Tuesday 22 August, the UK Government published a paper which outlines its position on the extent to which current EU rules on choice of law, jurisdiction and enforcement of judgments should continue to apply as between the UK and the EU27 post-Brexit. The paper, Providing a cross-border civil judicial cooperation framework, responds to the Position Paper on Judicial Cooperation in Civil and Commercial Matters published by the European Commission on 29 June (see our post).

Broadly, other than seeking wider enforcement of judgments, the Government agrees with the Commission’s proposals on the terms of separation, if no agreement on a future relationship can be reached. More interesting, however, are the comments on what that future relationship might look like.

Commercial parties will be pleased to see the Government has taken on board the importance of agreeing reciprocal rules, closely mirroring the current EU system, which will support cross-border trade after Brexit.

Read more of this post on our Brexit notes blog.

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Filed under Choice of law, Enforcement, Judgments/Orders

India related commercial contracts: dispute resolution and governing law clauses

Herbert Smith Freehills has published a new edition of its well-regarded Guide on dispute resolution and governing law clauses in India-related commercial contracts. The Guide is intended to assist in-house counsel who handle India-related commercial contracts on behalf of non-Indian companies and who need to have a practical understanding of the nuances of drafting dispute resolution and governing law clauses in the Indian context.

The full digital edition can be downloaded in PDF by clicking on this link.  If you would like to request a hard copy please email asia.publications@hsf.com.

We hope that you enjoy reading this sixth edition of the Guide. We would welcome your feedback.

 

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