High Court can grant retrospective permission to continue a derivative claim

The High Court has held that it has the power retrospectively to validate service of a claim form and particulars of claim in proceedings brought as a derivative claim under the Companies Act 2006, where the claimant was in breach of the statutory requirement to obtain the court’s permission to continue the claim and where a new claim would have been time-barred: Wilton UK Limited v John Shuttleworth and others [2017] EWHC 2195 (Ch).

It is fair to say that Wilton is an unusual case – claimants in derivative claims will usually follow the prescribed procedure and no issue as to validity will therefore arise. In this case the judge deferred for further argument the question of whether he should exercise his power in the claimant’s favour. So, while the decision confirms that the court may retrospectively validate service in these circumstances, the situations in which such an order will be made remain unclear.

Andrew Cooke, a senior associate, and James Leadill, an associate, in our disputes division consider the decision further below. Continue reading

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Filed under Collective actions, Interim applications

Hong Kong corporate crime team publishes article addressing the thorny issue of privilege in Asia investigations

Given the variety of civil law and common law systems across Asia, and the fact that corporate investigations in the region almost always involve multi-jurisdictional elements, protecting privilege is a complex topic. With the differing approaches to privilege adopted both in Asia and in aggressive enforcement jurisdictions like the US and the UK, this topic occupies lawyers, law enforcement agencies and regulators alike.

This article, first published in Global Investigations Review’s The Asia-Pacific Investigations Review 2018, summarises the position in Asian civil law countries as well as in key common law jurisdictions like Hong Kong and Singapore. It also highlights recent developments in the UK including in the RBS Rights Issue and ENRC cases, as well as the position in the US. Finally, it covers practical steps to be taken to maintain privilege over relevant documents and evidence in the context of investigations.  The article, authored by Kyle Wombolt, Christine Cuthbert and Anita Phillips, is available to download here. The Asia-Pacific Investigations Review 2018 is available to download here.

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Supreme Court restates test for dishonesty in criminal proceedings

The Supreme Court has held that the correct test for dishonesty in criminal proceedings is whether or not the defendant’s conduct is dishonest by the objective standards of ordinary reasonable and honest people: Ivey v Genting Casinos (UK) Ltd t/a Crockfords [2017] UKSC 67.

Albeit that the Court did not need to rule on the point, the judgment would remove the second limb of the previous two-phase objective and subjective test for dishonesty as set out in R v Ghosh [1982] QB 1053. The Court also concluded that the tests for dishonesty in criminal and civil proceedings should be the same. Please click here for a full briefing from our corporate crime team.

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High Court prevents in-house lawyer acting against former employer due to risk of subconscious use of confidential information

The High Court has granted an injunction preventing an in-house lawyer from acting in proceedings adverse to her former employer: Western Avenue Properties Ltd v Soni [2017] EWHC 2650 (QB).

The judge accepted that the defendant was well aware of her professional responsibility of continuing confidentiality and was unlikely to have any conscious intention to breach it. However, that did not avoid or reduce the risk of her subconsciously using the claimants’ confidential information. An injunction was therefore appropriate.

It was common ground between the parties that the principles established in Prince Jefri Bolkiah v KPMG [1999] 2 AC 222 apply to in-house lawyers as well as those in private practice. Accordingly, where an in-house lawyer was in possession of material confidential information of a former employer, an injunction would be granted unless he or she could establish that there was no real risk of disclosure or misuse.

This is in contrast to Generics (UK) Limited v Yeda Research & Development Co Ltd [2012] EWCA Civ 726 (considered here) in which the Court of Appeal expressed uncertainty as to whether the Bolkiah principles applied in the in-house context, or whether it was up to the former employer to satisfy the court that an injunction was appropriate – though it did not have to decide the point as on the facts of that case there was no real risk of disclosure. Yeda was not referred to in the judgment in the present case. Continue reading

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Filed under Confidentiality, Injunctions

Supreme Court confirms that the situs of a debt due under a letter of credit is the location of the issuer

In a departure from previous authority, the Supreme Court has confirmed that the situs of a debt created by a letter of credit is the place of residence of the issuing bank: Taurus Petroleum Limited v State Oil Marketing Company of the Ministry of Oil, Republic of Iraq [2017] UKSC 64.

In the previous authority on this issue, Power Curber International Ltd v National Bank of Kuwait SAK [1981] 1 WLR 1233, a majority of the Court of Appeal had held that the situs of a debt created by a letter of credit was the place of payment. This contradicted the long standing principle in English law that the situs of a debt is the place of the residence of the debtor.

The principle from Power Curber stood for over 35 years and created some uncertainty as to why debts which arose under a letter of credit were treated differently to other debts under English law. The Supreme Court has now confirmed that it was wrong in principle and should not be followed.

For more information see our Banking Litigation e-bulletin.

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Article published – Don’t forget: the Recast Brussels Regulation can apply to non-EU defendants

It is easy to fall into the trap of thinking that the Brussels jurisdiction regime applies to EU domiciled defendants and the common law rules apply to everyone else, so that you need the court’s permission to serve proceedings on a defendant outside the EU. In fact that’s not always the case.

Anna Pertoldi has published a post on Practical Law’s Dispute Resolution blog which outlines when the regime applies to non-EU defendants. Click here to read the post (or here for the Practical Law Dispute Resolution blog homepage).

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Filed under Announcements, Jurisdiction

Court of Appeal clarifies approach to exclusive jurisdiction provisions of Brussels regime relating to validity of corporate decisions

The Court of Appeal has held that the English courts had exclusive jurisdiction to hear a claim brought by an English subsidiary company against Turkish domiciled defendants including its parent company: Koza Ltd & Anor v Akcil & Ors [2017] EWCA Civ 1609.

The judgment helps to clarify the scope of article 24(2) of the recast Brussels Regulation (1215/2012). This provides that, where proceedings have as their object the validity of a company’s constitution or the decisions of its organs, the EU member state of that company’s seat will have exclusive jurisdiction over the proceedings. The exclusive jurisdiction provisions under article 24 apply regardless of the defendant’s domicile. Where the defendant is EU domiciled, they also act as an exception to the general rule under the Brussels regime that defendants should be sued in the courts of the member state where they are domiciled.

The decision confirms that when considering whether article 24(2) applies, it is necessary to look at the proceedings as a whole and determine what they are principally concerned with. A mere link to a decision of the company which is ancillary to the heart of a contractual or other dispute is insufficient. In contrast where, as here, the validity of decisions of the organs of the company is at the heart of the claim, it does not matter that other issues are also raised, nor does it matter who the defendants are. The position is however different where two independent claims are made in the same proceedings.

The decision is also of interest in considering, obiter, that the Turkish parent had not submitted to the jurisdiction by counterclaiming. This is the latest in a number of recent cases which have found that steps taken in the proceedings do not necessarily amount to an unequivocal submission to the jurisdiction.

Adam Johnson QC and Kevin Kilgour consider the decision further below. Continue reading

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Cross-Border Litigation – international perspectives

We are pleased to publish the second issue of our periodic publication “Cross-Border Litigation”, designed to highlight legal and practical issues specific to litigation with an international aspect.

Tapping into the expertise of the firm’s leading commercial litigators across the globe, the publication gives readers the benefit of their hands-on experience and flags key developments that should be on commercial parties’ radars.

The topics covered in this issue include:

  • Highlights of recent developments from across the globe
  • The Singapore International Commercial Court
    Has it lived up to the hype?
  • Cross-border litigation and Brexit
    What we know so far
  • Partner Spotlight on Helmut Görling
    His journey from a police detective to head of our corporate crime team in Frankfurt
  • Using disclosed documents for multiple proceedings
    Recent judgments suggesting a restrictive approach
  • Jurisdiction disputes
    When will the English courts take into account politics, corruption and other obstacles to justice in foreign jurisdictions?
  • India related commercial contracts
    Getting your dispute resolution and governing law clauses right

To download the publication, click here.

To read the previous Issue 1 (March 2017), click here

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Filed under Choice of law, Courts, Disclosure, Enforcement, Fraud, Jurisdiction

Getting your just deserts: Remedies for breach of contract

Establishing that a counterparty is in breach of contract is only the first hurdle to obtaining proper redress. It is just as important for the innocent party to show that it has suffered a loss as a result of the breach, and to prove what that loss is, or to establish that it should be entitled to some other remedy such as an injunction.

Otherwise, the innocent party is likely to be awarded only nominal damages and may even be required to pay legal costs.

In this ninth of our series of contract disputes practical guides, Natasha Johnson, Rachel Lidgate and John Ogilvie consider the principal remedies available for breach of contract, focusing in particular on damages and how they are assessed, and provide some practical tips. You can click here to download the PDF guide.

Continue reading

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Filed under Contract, Remedies

Working group proposes pilot of new rules for disclosure

A disclosure working group set up last year, chaired by Lady Justice Gloster, yesterday published its proposals for reforms to the rules governing disclosure of documents in English litigation. The proposals are subject to consultation with a view to setting up a two-year pilot in the Business and Property Courts, in London and elsewhere. Comments on the proposals are requested by 28 February 2018, after which the proposals will be considered by the Civil Procedure Rule Committee.

The working group was set up in light of concerns that the changes to the disclosure process introduced by the Jackson reforms in April 2013 were not achieving their aims. Those reforms removed the previous presumption in favour of “standard disclosure” (ie documents that support or adversely affect any party’s case) and introduced a “menu” of disclosure options from which the court must choose “having regard to the overriding objective and the need to limit disclosure to that which is necessary to deal with the case justly”. However, despite those reforms, there is a general perception that standard disclosure is still being adopted in most cases, and that disclosure remains one of the main drivers of litigation costs.

Under the new proposals, in broad summary, the current  disclosure “menu” would be replaced by a new list of “models”. Although it’s fair to say the list of models does not look dramatically different from the current menu, the proposed rules contain clear signs steering the parties, and the court, toward a more restrained approach to disclosure. These include that the court will only make an order that one of the disclosure models should apply where it is persuaded that it is appropriate to do so in order fairly to resolve one or more of the Issues for Disclosure (which are to be agreed between the parties before the first case management conference). Although one of the models, Model D, is roughly equivalent to standard disclosure, that term is not used – presumably to remove the suggestion that there is anything “standard” about this option.

The proposed rules contain an express duty to disclose documents a party is aware of which are adverse to its case (unless they are privileged), regardless of any order for disclosure. There is also an express duty to refrain from providing irrelevant documents.

The draft rules also provide that where a party wishes to claim a right or duty to withhold a document, or part of a document, or a class of documents (eg on grounds of privilege), it must describe the document (or part or class) and explain “with reasonable precision” the grounds upon which the right or duty is being exercised. It is not clear whether this is intended to signal any change in the current practice of describing privileged documents in generic terms.

The proposals are outlined in more detail below. Continue reading

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Filed under Disclosure, Privilege