United Kingdom updates

Arbitration & ADR

Contributed by Clifford Chance LLP
High Court refuses to restrain EU court proceedings brought in breach of arbitration agreement
  • United Kingdom
  • 16 August 2018

The English courts will not grant anti-suit injunctions to restrain court proceedings brought in breach of arbitration clauses in the courts of other EU member states, as seen in the High Court's recent refusal of an application for anti-suit relief to restrain court proceedings in Cyprus and its grant of an anti-suit injunction targeted at court proceedings in Russia. This decision provides, at least for now, clarity in an area of law that has been subject to debate.

Court of Appeal rules on arbitrators' duty to disclose
  • United Kingdom
  • 07 June 2018

The Court of Appeal recently found that there was no appearance of bias where an arbitrator had accepted multiple arbitral appointments from one party to several arbitrations where the subject matter of the arbitrations was the same or overlapping. Nevertheless, the court held that the arbitrator had had a duty in law and as a matter of good practice to disclose issues where there was a real possibility of bias.

Commercial Court sets aside partial award of LCIA tribunal – time limits for objections to jurisdiction
  • United Kingdom
  • 15 March 2018

It is relatively rare for the English courts to overturn awards of arbitral tribunals. However, a recent decision of the Commercial Court did just that, setting aside a London Court of International Arbitration partial award made by a panel of three queen's counsel. The partial award was challenged on the basis that the arbitral tribunal had lacked substantive jurisdiction and the application had been made pursuant to Section 67 of the Arbitration Act 1996.

Court orders trial for fraud allegations raised post-award
  • United Kingdom
  • 11 January 2018

In a recent case regarding the enforcement of an arbitral award against Kazakhstan, the English court ruled that in light of new evidence that had not been before the tribunal when the award was rendered, the allegations of fraud raised by Kazakhstan should be fully investigated before a view could be taken as to whether the award could be enforced in England. The court confirmed that public policy is a matter for each state to consider, regardless of whether the courts of another country have ruled on the matter.

Unilateral option clauses – what about Brexit?
  • United Kingdom
  • 23 March 2017

Dispute resolution clauses providing for arbitration, but giving one party the exclusive right to elect to refer a particular dispute to litigation before the courts – known as 'unilateral option clauses' – are a common feature in many transaction documents. In light of the result of the UK referendum on membership of the European Union, it is worth considering whether unilateral option clauses remain fit for purpose.


Contributed by Vedder Price LLP
Slots can be traded for value even after insolvency
  • United Kingdom
  • 16 May 2018

Monarch Airlines Limited's administrators have won an appeal with the Court of Appeal regarding Monarch's rights in and to certain 'slots' at Luton and Gatwick airports after it went into administration. The case is significant, as it reaffirms the value ascribed to slots by airlines and their financiers as rights of the airline and the fact that, as a result, they can be traded for value even after insolvency.

Operating lessor financings: structural overview
  • United Kingdom
  • 28 March 2018

With competition among aircraft lessors remaining fierce, airlines are taking an increasing proportion of aircraft on operating leases. The 'wholesaling' of debt financing – where the primary recourse entity on financings is the lessor rather than the airline – is an important recent trend in the aircraft financing market that is likely to continue. Aircraft financiers should be aware of the structural items to consider in executing operating lessor financings and the pitfalls to be avoided.

Split closings: a divide in methods
  • United Kingdom
  • 21 March 2018

The inclusion of engine pooling arrangements and rigorous maintenance requirements in operating leases frequently results in engines which formed part of a leased aircraft at delivery being off-wing. Off-wing engines create complications for transaction parties attempting to execute a sale of the aircraft. While these complications are not insurmountable, the marketplace has developed different approaches to address the off-wing engine scenario.

Necessary regulation or the government droning on?
  • United Kingdom
  • 23 August 2017

The Department for Transport recently published its response to a public consultation concerning the safe use of unmanned aircraft systems in the United Kingdom. Both in the consultation and the response, it is clear that the government's focus is on ensuring safety, particularly relating to operational issues in the leisure market. However, the response also provides insight into the direction of the government's policy as it affects commercial operators and its determination to develop world-class systems.

Commitment letters not to be taken lightly: how committed are we?
  • United Kingdom
  • 14 December 2016

At the outset of a transaction, parties often use a commitment letter, letter of intent or memorandum of understanding to set out the principal terms on which they wish to establish their commercial relationship. The principal terms are often non-binding in nature. The High Court recently referred to an objective test established by the Supreme Court to determine whether a party's intentions were accurately reflected in its initial documentation.

Company & Commercial

Contributed by Squire Patton Boggs
Revised UK corporate governance coming
  • United Kingdom
  • 25 June 2018

The United Kingdom will be getting a revised Corporate Governance Code, most likely effective as of January 2019. The House of Commons Library recently published a briefing paper on corporate governance reform, which provides an overview of the corporate governance framework, including the history of the UK corporate governance code and its interaction with directors' duties under the Companies Act 2006.

Court of Appeal decides that electronic supply of software does not amount to sale of goods
  • United Kingdom
  • 30 April 2018

The Court of Appeal has allowed an appeal of the judgment of a High Court case which concerned the question of whether a licence to use electronically supplied software amounts to the sale of goods under the Commercial Agents (Council Directive) Regulations 1993. This question is important, given the significant protections and post-termination payouts afforded to agents who qualify under the regulations.

Public register of shareholder dissent
  • United Kingdom
  • 26 February 2018

At the request of the Department for Business, Energy and Industrial Strategy, the Investment Association has launched a public register of Financial Times Stock Exchange All-Share companies, showing occasions where these companies have experienced substantial shareholder dissent. The purpose of the register is to identify companies which receive a high vote against or withdraw a resolution and to understand the process used by those companies to identify and address their shareholders' concerns.

Carillion and the 'failure' of clawback
  • United Kingdom
  • 05 February 2018

A press release by the Institute of Directors suggesting that in 2016 Carillion relaxed the clawback conditions that applied to bonuses has raised questions over remuneration governance. The change seems to have removed 'corporate failure' as a clawback or malus event, substituting conditions so that pay could be clawed back only in the event of a misstatement of financial results or gross misconduct of an individual.

Contracts via email – potential pitfalls
  • United Kingdom
  • 29 January 2018

A recent High Court decision has provided a useful reminder of the care that must be taken when administrators enter into pre-contract negotiations and the risk of inadvertently entering into a binding contract before terms are finalised. It also deals with the risks of disposing of assets, even those that are difficult to value, without due process.


Contributed by Fenwick Elliott Solicitors
Know your position: an overview of the role of the certifier
  • United Kingdom
  • 13 August 2018

Certifiers hold a key role in construction contracts. Certificates, statements and decisions issued by certifiers can have a huge impact on cash flow. Their actions can also provide a recipe for disputes where the certifier is viewed as, or is, one-sided or biased. So, what are the basic laws governing certification and what can be done when something goes wrong in the process?

Victory House General Partner Ltd v RGB P&C Ltd
  • United Kingdom
  • 18 June 2018

An application was recently made to restrain notice being given of a winding-up petition which sought payment of some £820,000 following an adjudicator's decision in respect of goods supplied and services rendered for the development and conversion of Victory House. The adjudicator had rejected Victory House's argument that it was not liable to pay the sum identified in the interim application because the parties had entered into a memorandum of understanding which provided for other payments to be made.

Cleveland Bridge UK Ltd v Sarens (UK) Ltd
  • United Kingdom
  • 21 May 2018

CBUK and Sarens recently sought a determination, following an adjudicator's decision, of a dispute over the terms and interpretation of a subcontract. Sarens had been engaged by CBUK to provide cranes and other equipment for the installation of six bridges along the M6 link road. CBUK had been engaged as subcontractor to Costain under a modified NEC3 contract. The dispute was about what, if anything, CBUK and Sarens had agreed about the provision of liquidated damages.

Gosvenor London Ltd v Aygun Aluminium UK Ltd
  • United Kingdom
  • 14 May 2018

After Gosvenor agreed to perform certain cladding works for Aygun, disputes arose and Gosvenor applied to enforce an adjudicator's decision. Aygun accepted that adjudicators' decisions will be enforced by the courts, regardless of errors of fact or law, but alleged fraud on the part of Gosvenor, stating that "a substantial proportion" of the adjudication award had been based on sums which were fraudulently invoiced. However, no allegations of fraud had been raised in the adjudication proceedings.

Complying with instructions: Oil States Industries (UK) Ltd v Lagan Building Contractors Ltd
  • United Kingdom
  • 30 April 2018

In 2014 OSI and Lagan entered into a contract for the design and construction of a new production facility. During the course of the contract, OSI's agent issued certain instructions and in July 2016 OSI gave notice to Lagan that it was in default in failing to comply with four of these instructions. OSI said that Lagan did not remedy the default and accordingly gave notice of termination. In a preliminary hearing, Lagan held that two of the contract instructions had been invalid.

Corporate Finance/M&A

Contributed by Davis Polk & Wardwell LLP
Private M&A trends: the use of a 'locked box' pricing mechanism
  • United Kingdom
  • 12 September 2018

For the sale of a company using a European-style share purchase agreement governed by English law, the use of a 'locked box' as the seller's preferred pricing mechanism is now more commonplace than the traditionally popular closing accounts. The 'locked box' is an alternative pricing mechanism to closing accounts, under which the parties agree a price payable for the target based on a balance sheet that is drawn up and settled between the parties on an agreed date in advance of signing.

Private M&A trends: use of warranty and indemnity insurance
  • United Kingdom
  • 05 September 2018

Driven by private equity sellers seeking a clean break and no post-closing liability for a breach of business warranties or under a tax covenant, and by buyers requiring a source of meaningful financial recourse, warranty and indemnity insurance is now a common feature of most private M&A transactions governed by English law. Cover is available for up to the full amount of consideration under a share purchase agreement if required.

Cross-border mergers: recent case law upholding freedom of establishment
  • United Kingdom
  • 07 March 2018

The Court of Appeal recently confirmed that a company was entitled to use and benefit from the EU cross-border merger regime for its corporate reorganisation, even though the only cross-border element was the inclusion of a single, dormant foreign entity solely to allow the otherwise domestic reorganisation to benefit from the cross-border rules. The court's purposive approach to the interpretation of the rules may be relevant in a broader context when determining the effectiveness of corporate actions.

Takeover Panel updates rules governing bidder's intentions for target and its business
  • United Kingdom
  • 21 February 2018

The existing framework for the regulation of statements governing a bidder's intentions for a target and its business was introduced to the City Code on Takeovers and Mergers in January 2015. The panel recently published Response Statement 2017/2 to its September 2017 consultation on statements of intention and post-offer undertakings. The resulting amendments to the code set out in this response statement took effect on January 8 2018.

Takeover Panel introduces new rules on asset sales
  • United Kingdom
  • 14 February 2018

The Takeover Panel recently published Response Statement 2017/1 to its July 2017 consultation on the sale of a target's assets in competition with a takeover offer and related matters. The amendments to the Takeover Code set out in the response statement took effect on January 8 2018 and include measures to prevent a bidder from circumventing the application of the Takeover Code by purchasing a target's significant assets and a target's board from taking any action which may result in an offer being frustrated.