KEY ISSUES IN ARBITRATION OF DERIVATIVES AND COMPLEX FINANCIAL DISPUTES: VIRTUAL PUBLIC CONSULTATION ON THE REVISION OF THE P.R.I.M.E. FINANCE RULES

Arbitration can provide an effective alternative to the courts for the resolution of disputes concerning derivatives and other complex financial products. In particular, given the inherent flexibility and emphasis on party autonomy, the arbitral process can be crafted to address the specific issues most likely to arise. Further, an arbitral tribunal experienced in financial markets law and practice can be appointed to resolve the dispute where appropriate. The advantages of arbitrating such disputes are explored in more detail in our article here.

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DEALING WITH SOVEREIGN WEALTH FUNDS: IMMUNITY CONCERNS AND PRACTICAL STEPS TO MITIGATE THEM

Sovereign wealth funds invest across a range of asset classes and engage in capital markets and loan transactions. Their engagement in these activities is consistent with that of any other commercial actor. However, the connection between a sovereign wealth fund and the State by which it has been created raises the question of whether the fund will benefit from state immunity.

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ENGLISH HIGH COURT GRANTS NIGERIA EXTENSION OF TIME TO CHALLENGE USD 6.6 BILLION AWARD FOR FRAUD

In The Federal Republic of Nigeria v. Process & Industrial Developments Limited [2020] EWHC 2379 (Comm), the English High Court (“Court”) granted the Federal Republic of Nigeria (“Nigeria”) an extension of time to bring challenges to an arbitral award of US$6.6 billion in damages and approximately US$4 billion in costs and interest (“Final Award” or “Award”) in favour of Process & Industrial Developments Limited (“P&ID”) under Sections 67 and 68(2)(g) of the English Arbitration Act 1996 (“Act”), nearly three years after the award was made.

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SIERRA LEONE BECOMES THE 166TH STATE PARTY TO THE NEW YORK CONVENTION 1958

On 28 October 2020, Sierra Leone deposited its instrument of accession to the UN Secretary General, acceding to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “Convention“).

Sierra Leone will become the 166th state party to the Convention, following the recent accession of Ethiopia and Tonga earlier this year. Under Article XII (2), the Convention will come into force for Sierra Leone on 26 January 2021.

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DISPUTE RESOLUTION CHOICES FOR BANKS AND FINANCIAL INSTITUTIONS: MAXIMISING THE CHANCES OF SUCCESSFUL ENFORCEMENT – WEBINAR RECORDING NOW AVAILABLE

Choice of dispute resolution forum can have a fundamental impact on the ability of banks and financial institutions to enforce contractual obligations.

In our client webinar on 23 September, Dispute Resolution Choices for Banks and Financial Institutions: Maximising the Chances of Successful Enforcement, Julian Copeman, Nick Peacock and Hannah Ambrose discussed recent trends in dispute resolution choices in the banking and finance sector in the context of Brexit, before addressing:

  • the use of the English courts, providing guidance as to enforcement of English court judgments in the EU in the context of Brexit;
  • the risks and rewards associated with unilateral clauses which enable a choice of forum to be made once a dispute has arisen; and
  • the key points which banks and financial institutions need to be aware of if choosing arbitration, such as the powers of arbitral tribunal with respect to remedies and the award of interest, and the increasing use of summary judgment procedures to resolve unmeritorious claims.

The speakers also touched on practical points to bear in mind for successful enforcement in Russia, Africa, India and China, and addressed questions from clients on the restatement of English court jurisdiction clauses after the end of the Brexit transition period to minimise enforcement risk, and the availability of interim relief from the court to support arbitral proceedings.

The webinar recording is now available for clients and contacts. To access the recording, please contact Hannah Ambrose (here) or your usual Herbert Smith Freehills contact.

For more information, please contact Julian Copeman, Partner, Nick Peacock, Partner, Hannah Ambrose, Senior Associate or your usual Herbert Smith Freehills contact.

Julian Copeman
Julian Copeman
Partner
+44 20 7466 2168
Nicholas Peacock
Nicholas Peacock
Partner
+44 20 7466 2803
Hannah Ambrose
Hannah Ambrose
Senior Associate
+44 20 7466 7585

NAVIGATING THE LOW OIL PRICE ENVIRONMENT PODCAST: HOW INVESTMENT TREATIES CAN PROTECT FOREIGN INVESTMENTS AGAINST STATE ACTION

Oil prices have recently reached historic lows and oil companies are faced with a number of potential legal issues as the prices impact their trading and operational agreements. In this podcast series, our energy disputes lawyers consider some of the key issues triggered by the current low oil price environment.

Even investments into relatively stable ‎jurisdictions may be affected by changes in the political and financial landscape. No investor can completely insulate their investment from such changes, but access to an investment treaty can be critical: Andrew Cannon, Laurence Franc-Menget and Hannah Ambrose discuss how investment treaties can protect foreign investments against state action in the second episode in the series.

The episode can be listened to here.

For more information, please contact Andrew Cannon, Partner, Laurence Franc-Menget, Partner, Hannah Ambrose, Senior Associate, or your usual Herbert Smith Freehills contact.

Andrew Cannon
Andrew Cannon
Partner
+44 20 7466 2852

Laurence Franc-Menget
Laurence Franc-Menget
Partner
+33 1 53 57 73 70

Hannah Ambrose
Hannah Ambrose
Senior Associate
+44 20 7466 7585

Update: The discontinuation of LIBOR: issues of substance and procedure for parties and arbitrators

The global financial markets are currently preparing for the phasing out of the London Inter-bank Offered Rate (or LIBOR) and other Inter-bank Offered Rates (or IBORs). LIBOR is the most widely used benchmark interest rate globally, employed in an estimated US$350 trillion worth of financial contracts worldwide. LIBOR may also be used in commercial contracts – for example, in price adjustment mechanisms in share purchase agreements, price escalation clauses or as a reference rate for contractual interest on late payments. LIBOR may also be specified in arbitration clauses as a benchmark rate for interest on the award.

The clock is now ticking towards the deadline of the end of 2021 for the market to be ready but there is concern that many contracts will not be amended voluntarily by that time. Recognising the impact on existing contracts of the transition, the Tough Legacy Taskforce, part of the industry-led Working Group on Sterling Risk-Free Reference Rates, was set up to provide market input regarding the ‘tough legacy’ of products that may prove unable to be converted or amended to include robust fallbacks to address the end of LIBOR. Last month the Tough Legacy Taskforce published its report (the Tough Legacy Paper). As discussed in detail in our blog post here, the Tough Legacy Paper serves to highlight the difficulties in amendment of contracts, and particularly the complex relationship between contracts in different asset classes in many transactions.

Many financial instruments affected by the discontinuation of LIBOR will include arbitration clauses. As discussed below, whilst the substantive disputes arising from the end of LIBOR will be the same whether they are resolved in a court or by an arbitral tribunal, there are some additional considerations particular to the arbitration process which are relevant in the context of LIBOR discontinuation disputes. Further, even when determining a dispute which does not arise from the end of LIBOR, arbitral tribunals may have to grapple with how to award interest where an arbitration clause uses LIBOR as a reference point. Read more in the E-bulletin here.

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ENGLISH COURT CONSIDERS CHALLENGES TO A FURTHER AWARD MADE AFTER REMISSION TO THE TRIBUNAL FOLLOWING AN EARLIER SUCCESSFUL CHALLENGE

In Reliance Industries Ltd and another company v The Union of India [2020] EWHC 263 (Comm), the English Commercial Court (the “Court”) considered a series of challenges under sections 67 and 68 of the Arbitration Act 1996 (the “Act”) to a further award (the “Further Award”) made on issues remitted to the Tribunal after earlier challenges to parts of an arbitration award (the “Final Partial Award” or “FPA”) brought under sections 67, 68 and 69 of the Act.

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