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 firstname.lastname@example.org.
We hope that you enjoy reading this sixth edition of the Guide. We would welcome your feedback.
In a recent decision, the High Court found that a claimant’s letter purporting to terminate a contract for the defendant’s repudiatory breach could not take effect as a notice of termination under the relevant contractual provisions. As the court found that the defendant was not in repudiatory breach as alleged, the claimant’s letter itself amounted to a repudiation of the contract: Imperial Chemical Industries Ltd v Merit Merrell Technology Ltd  EWHC 1763 (TCC).
The decision highlights the important distinctions between contractual termination provisions and the common law doctrine of repudiation. Where a party purports to terminate for repudiatory breach and gets it wrong, it cannot necessarily rely on a contractual right of termination to save it from itself being in repudiatory breach.
Where a party wishes to be able to rely on a contractual right to terminate, it is best to say so expressly and ensure any contractual machinery is followed.
James Farrell, a partner, and Michael Barron, an associate in our dispute resolution team, consider the decision further below. Continue reading
Where a share option agreement provided that the option could be exercised only with board consent, the High Court has ordered specific performance of the agreement despite the lack of board consent. The court held that the veto was discretionary, rather than an unconditional right, and such discretion could not be exercised capriciously, arbitrarily or unreasonably: Watson v Watchfinder.co.uk Ltd  EWHC 1275 (Comm).
The decision illustrates the court’s willingness to find that a contractual discretion is limited by reading into the relevant clause a duty not to exercise the discretion capriciously, arbitrarily or unreasonably. While such a limit will not apply in every case, it did here due to the potential conflict of interest arising from the board’s ability to grant or withhold consent.
Where parties are required to exercise a contractual discretion, they should be alert to the potential scrutiny of their decisions and ensure that any discussions at board meetings or otherwise are meaningful and are properly minuted so as to evidence that a proper decision-making process has been followed.
Contractual discretions are also considered in the fourth edition in our contract disputes practical guides series: How far can you act in your own self-interest?: The role of good faith in commercial contracts.
Gregg Rowan and Anthea Brookes, a partner and associate in our disputes team, consider the decision further below. Continue reading
A recent Court of Appeal decision has clarified that financial institutions do not owe duties of care in tort in connection with their conduct of the past business review of interest rate hedging product sales announced by the FCA (then FSA) in 2012: CGL Group Limited & Ors v Royal Bank of Scotland plc & Ors  EWCA Civ 1073. This is a point on which there had been conflicting first instance decisions. The Court of Appeal’s decision was based a number of factors, including that such a duty would undermine the relevant statutory and regulatory regime.
The decision is also of interest more generally in illustrating the courts’ current approach to determining the existence (or otherwise) of a tortious duty of care to protect against economic loss in particular circumstances. Rather than applying a single test, the courts will tend to consider three approaches which, the court said, usually lead to the same answer and can be used as cross-checks on each other. These are: (1) whether the defendant assumed responsibility to the claimant; (2) the threefold test from Caparo Industries plc v Dickman  2 AC 605 (ie foreseeability, proximity and whether it is “fair, just and reasonable” to impose a duty); and (3) whether the addition to existing categories of duty would be incremental rather than indefinable.
For more information see our Banking litigation e-bulletin on the decision.
Lord Justice Jackson’s report on fixed recoverable costs has been published today. The key recommendation is to introduce a new intermediate track for claims between £25,000 and £100,000, which are of no more than modest complexity and could be tried in three days or less. The new track would have streamlined procedures and be subject to a grid of fixed recoverable costs (“FRC”). How this would operate is summarized below, but in broad terms the costs recoverable under the scheme would range from around £19,000 for a straightforward £30,000 claim to around £68,000 for a £100,000 claim at the upper end of the scale of complexity.
The report also recommends extending the current FRC regime to all fast track cases (not just personal injury, as currently) and introducing a voluntary pilot of a capped costs scheme in High Court claims valued at up to £250,000 (as previously announced – see outline here).
As Lord Justice Jackson notes, the next step will be for the government to consider the report and, no doubt, subject any proposals for reform to public consultation. Continue reading
Filed under Costs, Courts
The Court of Appeal has added what it has termed “a modest gloss” to the principles on when the court will restrain use of a privileged document disclosed in error, on the basis that there has been an obvious mistake. The court may grant relief where the solicitor inspecting the document does not spot the mistake, but refers the document to a colleague who appreciates the error before use is made of the document: Atlantisrealm Limited v Intelligent Land Investments (Renewable Energy) Limited  EWCA Civ 1029.
The question before the court is therefore not only what the first reviewer of a document appreciated, but also what other (including more senior) members of the team later appreciated (or presumably should have appreciated) when the document was shown to them. Continue reading
Recent months have seen a number of decisions in which the English courts, both at first instance and on appeal, have re-emphasised the message that those who fail to comply with procedural rules should expect little sympathy, at least where they fail to take prompt steps to put matters right.
Over the past few years the courts have backed off from the excessively draconian approach seen immediately following the high-profile Mitchell decision in November 2013. This more measured approach was prompted in particular by the Court of Appeal's decision in Denton in July 2014 (considered here) which "clarified" the Mitchell guidelines.
However, since Denton we have continued to see cases which illustrate that the courts remain willing to take tough decisions against those who flout the rules. The decisions outlined below are consistent with that trend, and arguably mark an uptick in the frequency with which such decisions are being made in a wide variety of contexts. The obvious overall messages for litigating parties are:
- ensure compliance with rules and orders so far as possible;
- make an early application for more time where it appears a deadline cannot be met; and
- apply promptly for relief from any applicable sanction where things have gone wrong.
The Global Pound Conference (GPC) series concluded on 6 July, with the final conference held at the Guildhall in London. This landmark project (of which Herbert Smith Freehills is the lead sponsor) has seen more than 3,000 corporate and disputes professionals come together in conferences spanning 29 cities across the globe throughout 2016-17, with many more following and discussing the series online and at other events.
Through interactive electronic voting at the individual conferences on a set of core questions, the series has gathered data aimed at improving systems for the resolution of commercial disputes in the 21st century – spanning court processes, arbitration and ADR. We believe this is a unique set of data that has never been collected before. Amongst other things, it will provide a unique insight into what organisations are currently doing to avoid conflict and save money through innovative uses of the key dispute resolution processes.
However, given that many people were unable to attend a local GPC event, GPC has now opened an online voting system, to allow a wider audience to provide input on the core questions. If you were unable to vote and would like to do so, please click here to vote now. The online voting system will be open until 31 July 2017 and should take no more than 15 minutes to complete.
We encourage you to add your voices about how to shape the future of commercial dispute resolution and improve access to justice in the 21st century.
The Competition Appeal Tribunal (CAT) has refused to give the green light to a £14 billion class action, which was brought against MasterCard under the "opt-out" regime for competition law cases introduced from October 2015 (as outlined here).
Under this regime, representatives seeking to bring a collective action on behalf of consumers and/or businesses must apply to the CAT for a collective proceedings order certifying the claim before it can proceed. The CAT must consider (among other things) whether the claims raise the "same, similar or related" issues of fact or law and are "suitable" to be brought in collective proceedings, and whether it is "just and reasonable" for the putative representative to act on behalf of the class (including whether the representative can pay the defendant’s costs if ordered to do so).
Here, the CAT refused the application principally on the basis that it was not satisfied the proposed methodology for calculating aggregate damages could be applied on a sufficiently sound basis, or that there was any plausible way of reaching even a rough-and-ready approximation of the loss suffered by individual claimants. In other words, the proceedings would offend against the governing principle of damages for breach of competition law, namely that claimants should be restored to the position they would have been in but for the breach. That meant the claims were not suitable to be brought in collective proceedings.
The judgment also provides important clarifications as to the use of third party litigation funding in such actions and how funding agreements can be drafted in a manner compatible with the relevant statutory provisions.
The present case is only the second application made to date for a collective proceedings order. The first, at the other end of the spectrum, was brought on behalf of consumer purchasers of Pride mobility scooters seeking damages of around £3 million. The CAT adjourned that application to allow the claimant representative to reformulate her claim in certain respects, but the case was abandoned shortly afterward in light of concerns that the costs of pursuing it would outweigh any damages.
For more information on the most recent ruling see our Competition, regulation and trade e-bulletin on the decision.
A recent High Court decision has highlighted once again the importance of ensuring experts are aware of and comply with their duties to the court. It also demonstrates the potential dangers of repeatedly instructing the same expert and the need to ensure an expert is applying the correct legal standard when giving their opinion: The Governors and Company of the Bank of Ireland and another v Watts Group PLC  EWHC 1667 (TCC).
The court concluded that the written and oral evidence of the claimant's expert quantity surveyor ("V") was unreliable and the evidence of the defendant's expert should therefore be preferred wherever there was disagreement between them. The reasons for this conclusion included:
- V was not, he considered, a properly independent witness. The Bank was his principal client, providing the vast majority of his work and fees. V had spent most of the last few years acting for the Bank as an expert witness in actions against quantity surveyors arising out of the 2008/9 financial crash.
- He had shown a lack of realism and his criticisms were based on an unrealistic expectation of what the defendant was required to do. He had also applied the wrong test, substituting the approach he would have taken, and the result he would have reached, rather than considering what a reasonably competent monitoring surveyor would have done in the circumstances.
- He had attempted to mislead the court with a selective quote from RICS guidance.
- He had adopted an unreasonable approach, failing to make concessions at the experts' meeting and when giving evidence.
Instructing the same expert on a number of similar matters can be time and cost effective. This case illustrates however that there may come a point where the independence of the expert is called into doubt because of the closeness of the relationship with the instructing party. It also demonstrates the importance of ensuring the experts comply with their duties at each stage of the litigation process, and that they understand and give an opinion on the correct questions.