Part 36 costs sanctions delayed until defendant had information needed to assess quantum

In a recent case where the claimant beat its Part 36 offer to settle, the High Court held that it would be unjust to apply the Part 36 costs sanctions against the defendant (namely, indemnity costs and enhanced interest) until the defendant had received the claimant’s evidence and was in a position to take an informed view of the quantum of the claim: Thai Airways International Public Company Ltd v KI Holdings Co Ltd [2015] EWHC 1476 (Comm).

The court said it was not necessary to decide whether the claimant had failed to disclose evidence in a timely way. What was clear was that the information needed to establish what losses the claimant had suffered as a result of the defendant’s breaches of contract was in the claimant’s own possession. The court took the view that it would be unjust to subject the defendant to the financial risks of not accepting the Part 36 offer until it had been able to consider the relevant information.

In many cases, of course, the information needed to establish a claimant’s losses will be in the possession of the claimant rather than the defendant. This may be a useful decision for defendants who wish to argue that they should not be penalised for a failure to accept a Part 36 offer until they had access to the relevant information. Defendants should not however assume that such an argument will always find favour; each case will be assessed on its own facts. The practical message for claimants who have made Part 36 offers is that it may be in their interests to give early disclosure of information needed to assess the quantum of the claim.

The case is also of interest for the court’s decision to award enhanced interest at 8%, rather than the maximum permitted by Part 36 which is 10% above base rate. Continue reading

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Irish court endorses use of predictive coding for disclosure

A recent decision of the High Court in the Republic of Ireland has endorsed the use of predictive coding for a disclosure exercise, rejecting the opposing party’s insistence on a linear manual review of all the keyword responsive documents and its arguments that this form of technology assisted document review was not compatible with the relevant disclosure obligations: Irish Bank Resolution Corporation Limited & Ors v Sean Quinn & Ors [2015] IEHC 175.

Predictive coding has been endorsed and even advocated by the US courts since 2012. In this period, US case law has moved beyond Magistrate Judge Andrew Peck’s initial decision in Da Silva Moore v. Publicis Group, 287 F.R.D. 182 (S.D.N.Y. Feb. 24, 2012) agreeing to the use of predictive coding (which was the main decision referred to by the Irish High Court) to his more recent 2015 decision in Rio Tinto Plc v. Vale S.A., 1:14-cv-3042 (S.D.N.Y. Mar. 2, 2015) in which he remarked that “In the three years since Da Silva Moore, the case law has developed to the point that it is now black letter law that where the producing party wants to utilize [technology assisted review] for document review, courts will permit it.”

To date, however, predictive coding has been used relatively infrequently in English litigation, though Herbert Smith Freehills has used it in a number of matters on behalf of our clients. The recent Irish decision appears to be the first endorsement of the technology by courts in Europe. Celina McGregor, a senior associate in our London office, and Alan Simpson, deputy practice group lead (disputes) in our Belfast office, outline the decision below. Continue reading

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Importance of frank disclosure of factors that could affect expert’s independence

A recent High Court decision underlines the burden on a litigating party and its expert witness to state frankly, and with sufficient detail, the nature and extent of any connection that could affect the expert’s independence: EXP v Dr Charles Simon Barker [2015] EWHC 1289 (QB).

The court rejected a suggestion that information disclosed in the CVs of the defendant and his expert witness in this case should have put the claimant on notice of a connection between them, which she ought to have pursued. The burden to disclose was fairly and squarely on the defendant and his expert witness; the claimant should not be expected to engage in “time consuming detective work” to try to ascertain the full picture bearing on the expert’s independence.

Where questions are raised about an expert’s independence, the court’s ultimate sanction is to rule that the evidence is inadmissible. However, even if the court concludes that it can fairly admit the evidence, any doubts about the expert’s independence and objectivity may affect the weight the court attaches to it. In either case, the implications for the party putting forward the evidence may be very serious indeed. The message for litigating parties, and expert witnesses, is that any issues should be disclosed fully and frankly at an early stage.

Rachel Lidgate and Ramyaa Veerabathran, a senior associate and graduate solicitor (India) in our disputes team in London, consider the decision below. Continue reading

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Upcoming webinars: freezing orders, class actions and contracts

Over the next few weeks we will be delivering a number of disputes-related webinars for Herbert Smith Freehills clients and contacts, including on: what to do when you’ve been given notice of a freezing order; the increasing risk of class actions in the UK; and how to know when you have a binding contract.

In relation to freezing orders, on Tuesday 9 June Robert Hunter will consider a string of decisions in recent years which have clarified much of the uncertainty as to what freezing orders actually prohibit, and will offer practical advice to those who want to know what they can do after being served with a freezing order.

In relation to class actions, on Thursday 18 June Kim Dietzel, Damian Grave, Kirsten MasseyMaura McIntosh, John Ogilvie and Gregg Rowan will look at a number of current developments which, taken together, increase the potential for large group actions to be brought in this jurisdiction, including competition law claims, securities claims, and claims arising out of human rights and environmental issues, and will consider what businesses can do to manage or mitigate the risks.

In relation to contracts, on Monday 22 June Tim Parkes, Chris Bushell and Robert Moore will look at the requirements for a binding contract and the problems that can arise when what appears to be an agreement is not in fact binding, or vice versa, and look at some practical steps that can be taken to minimise the risks.

All of the webinars are 12.45 – 1.45pm BST. They are part of our series of “Soundbite” webinars, which are designed to update clients and contacts on the latest developments without having to leave their desks. The webinars can be accessed “live”, with a facility to send in questions by e-mail, or can be downloaded as podcasts after the event. If you would like to register for a webinar, or to obtain a link to the archived version, please contact Jane Webber. The webinars, both live and archived, also qualify for one CPD point.

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CJEU confirms validity of jurisdiction clauses agreed electronically by “click-wrapping”

In a very recent decision, the Court of Justice of the EU has clarified the requirement under the Brussels Regulation for a jurisdiction agreement to be “in writing” or “evidenced in writing” in the context of a contract concluded online: El Majdoub v CarsOnTheWeb.Deutschland GmbH (Case C‑322/14).

The seller’s general terms and conditions containing the relevant jurisdiction clause had been incorporated into the contract by way of “click-wrapping”. This means that the webpage containing the terms and conditions does not open automatically upon registration or in the process leading to the individual transaction. Instead, to view the terms and conditions, the contracting party has to click on an additional link. The CJEU held that this was a valid jurisdiction clause, as the click-wrapping method of accepting the terms and conditions was equivalent to writing for the purposes of the Brussels Regulation.

Given that a few national courts had taken a different position, businesses will certainly welcome this decision as many use the click-wrapping method to incorporate terms and conditions in contracts concluded online. Dr Mathias Wittinghofer and Nils Kupka, a partner and associate in our Frankfurt office, comment on the decision below. Continue reading

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Risks of US claims arising from acts of third parties in supply chain

In recent years, we have seen increasing efforts to hold multinational companies legally responsible for acts conducted abroad, particularly in emerging market jurisdictions, either by their own group companies, or by third parties in their supply chains. This is an increasing trend both in the English courts and in the US courts.

Our New York office has published a bulletin which outlines two recent cases that illustrate this trend in the US courts, and considers the implications for multinational businesses. Click here to download a copy.

This trend was also discussed from a UK perspective at our recent conference “The Board’s responsibility to manage risk: Key legal and compliance issues – A disputes perspective” under the heading “The changing face of disputes risk in emerging markets” – click here for a summary.

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French Supreme Court refuses to apply a unilateral jurisdiction clause

In a recent decision, the French Supreme Court (Cour de cassation) has again refused to apply a unilateral jurisdiction clause. A unilateral jurisdiction clause requires one party to bring proceedings in one jurisdiction only, while the other may choose to bring proceedings in other jurisdictions.

The decision, which comes after the much-discussed 2012 French Supreme Court judgment in the Rothschild case (Cass. 1. Civ, 26 September 2012), is a further reminder of the need to give careful consideration to the validity of dispute resolution provisions in the possible jurisdiction of any future proceedings when drafting contracts. Click here to read more about the case on our Arbitration Notes blog.

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Article published on enforcing foreign judgments

Enforcing a foreign judgment is not always a straightforward process. There are defences available to judgment debtors and procedural requirements to comply with.

Anna Pertoldi has published a blog post on Practical Law’s Dispute Resolution blog looking at some of the traps for the unwary illustrated by recent case law. Click here to download a copy (or here for the Practical Law Dispute Resolution blog homepage).

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High Court strikes out warranty claim due to shortcomings in claim notice

The High Court has held that a notice delivered by a purchaser under a sale and purchase agreement did not meet the contractual requirements of a claim notice, even though it alleged a breach of warranty, described the circumstances giving rise to the alleged breach, and provided information about the likely quantum of the claim: IPSOS S.A. v Dentsu Aegis Network Limited (formerly Aegis Group plc) [2015] EWHC 1171 (Comm).

The court found that the letter did not make clear that a claim was being asserted against the seller, and thus did not amount to a claim notice under the relevant provision of the SPA. Because the two-year limitation period provided in the SPA for service of a claim notice had since expired, the claim was barred.

This decision highlights an important practical lesson: those who wish to bring claims for breach of warranty should ensure that they comply carefully with both the form and the substance of any contractual notice requirements.

Donny Surtani, a senior associate in our dispute resolution team, considers the decision further below. Continue reading

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Court of Appeal considers conflicting jurisdiction clauses in insurance service agreements

In the recent case of Trust Risk Group SPA v AmTrust Europe Ltd [2015] EWCA Civ 437 the Court of Appeal held that there was a good arguable case that the jurisdiction clause in an earlier contract gave the English courts jurisdiction, despite an inconsistent clause in a subsequent agreement between the same parties. It found that where, as in this case, the overall contractual arrangements contain two or more differently expressed choices of jurisdiction and/or law in respect of different agreements, the correct approach was not to start with the Fiona Trust “one stop shop” presumption, but instead to apply a careful and commercially-minded construction of the contracts.

From a practical perspective, parties who enter into more than one contract with the same counterparty, either simultaneously or consecutively, should carefully consider the jurisdiction clauses in those agreements and, ideally, make sure they are consistent. If there is a good reason to have different choices or law or jurisdiction in the different contracts, parties should ensure it is clear in what circumstances each is intended to apply. It is important not to dismiss such clauses as boilerplate but to consider in each case whether individual negotiation might be required.

Drawing this case together with the previous authorities, it appears that where there are competing jurisdiction clauses, it will be easiest to determine which clause applies where the dispute clearly falls within the scope of only one of those agreements. Where the dispute transcends two or more agreements which have been entered into separately, over a period of time, the court might attribute a claim to a particular agreement even if that results in different jurisdictions dealing with different aspects of the relationship. However, where the contracts are “part of one package” the court might consider the “commercial centre of the transaction” in order to determine a single applicable jurisdiction.

Joanne Keillor and Rachelle Waxman comment on the decision below. Continue reading

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