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.
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.
A recent case has provided useful guidance on the availability of the courts' powers to grant interim relief in support of arbitral proceedings in circumstances where similar relief may be available through the arbitral process. This is the first time that an English court has considered the way in which emergency arbitrator provisions (which remain relatively new in the industry) interact with the courts' powers under Section 44 of the Arbitration Act 1996.
As mediation increasingly becomes a routine form of alternative dispute resolution, the format of mediation continues to evolve and the typical procedure continues to adapt itself to different types of dispute in which mediation is used. While a number of recent mediations have employed an interventionist tactic to bridge the gap between the parties, this type of process involves a number of risks.
A recent ruling on the recoverability of third-party funding costs in English-seated arbitrations has caused controversy. The decision contrasts with the restrictive costs regime applicable to litigation in England and Wales, which does not allow recovery of lawyers' success fees. This decision should enhance the attractiveness of London as an arbitral seat for parties wishing to take out third-party funding.
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.
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.
The trading of aircraft assets between industry participants is as dynamic, legally complex and fraught with intense negotiation as ever. Although transacting parties go to great lengths to protect their pre and post-closing positions by attempting to account for all eventualities in the applicable transaction documentation, mistakes that fall outside the protective ambit of such documentation can still occur.
The Court of Appeal has delivered its judgment on the appeal by PK AirFinance and GECAS against the Commercial Court's decision in Alpstream v PK AirFinance. The judgment provides a welcome clarification of duties owed by mortgagees to financiers and lessors.
The Cape Town Convention and Aircraft Protocol recently entered into force in the United Kingdom. The disapplication of the historically vexed lex situs rules in the context of UK Cape Town interests is a welcome step, as it means that English law and jurisdiction are likely to be the best choice for any mortgage or bill of sale on a transaction involving parties situated in the European Union.
While some economists have predicted a bleak outlook for the UK economy in 2018, with Brexit negotiations likely to affect the prospects of any improvement, others are less pessimistic and expect that the fall in the pound following the EU referendum will lead to stronger export growth. The government is advised to broker a deal with the European Union on key issues as soon as possible in order to minimise damage to the economy and avoid handing the advantage to overseas competitors.
The Financial Reporting Council (FRC) has more than tripled the size of its enforcement team over the past five years in response to public criticism over its failure to prosecute auditors for giving clean audits to financial institutions in the months before they were engulfed by the financial crisis. The increased headcount and specialist nature of the team now in place should enable the FRC to move more quickly in instigating and resolving investigations.
The Financial Reporting Council (FRC) has published for consultation its review of the Corporate Governance Code. This follows a fundamental review, with the proposed revised code being a slim shadow of its former self. The FRC has described the result as "shortened and sharpened", but the outcome is not radical. However, there are a number of interesting changes.
The Institutional Shareholder Services recently published its updated 2018 Proxy Voting Guidelines, effective for meetings on or after February 1 2018. As expected, the guidelines support hybrid shareholder meetings and reject virtual-only meetings. Other updates involve overboarding, audit and remuneration committee compositions, threshold vesting levels for long-term incentive plans and share issuances without pre-emption rights.
The Investment Association recently published its annual letter to remuneration committee chairs and updated its Principles of Remuneration. The association has encouraged voluntary disclosure of chief executive officer pay ratios in 2018 directors' remuneration reports, introduced a new requirement to defer bonuses in excess of 100% of salary and kept up the pressure on overall levels of pay. Many companies must take action before their 2018 annual general meeting.
In a recent shipping case, the Supreme Court decided by a three-to-two majority that under the applicable co-insurance scheme, the owners had no claim against the charterers, regardless of whether the insurance monies had been paid. The decision has implications for the construction industry, where this co-insurance arrangement often arises, as it could protect subcontractors which cause a loss insured under a joint names contractors' all-risks policy from a claim advanced by insurers.
The High Court recently held that a hotel developer which resisted enforcement of an adjudicator's decision, claiming that there had been a breach of the rules of natural justice, had waived its right to challenge the decision when it previously invited the adjudicator to exercise powers under the slip rule. The court noted that unless there is an express reservation of rights, decisions must be either wholly accepted or wholly contested.
A recent case highlighted that, because Section 107 has been "unthinkingly repealed", adjudicators must deal with entirely oral contracts and all of the uncertainty and contention that they can involve. Further, in such cases, even if an adjudicator finds an oral contract, the responding party is likely to obtain permission to defend the claim on enforcement, because only rarely will a disputed oral agreement be the subject of a successful summary judgment application.
The 2012 Construction Common Minimum Standards for the Built Environment have been updated. The document introduces no additional standards, instead summarising existing government policy and relevant standards intended to represent the minimum normal threshold for the application of existing government policies.
Another wave of Joint Contract Tribunal 2016 contracts has arrived. The Framework Agreement, the Major Project Construction Contract, the Major Project Construction Sub-contract, the Measured Term Contract and the Prime Cost Building Contract each come with a separate guide. Further, the Constructing Excellence Contract, the Constructing Excellence Contract Project Team Agreement and the Pre-Construction Services Agreement (General Contractor), among others, have been released.
The Department for Business, Energy and Industrial Strategy recently published a green paper setting out the government's proposals to reform and strengthen its powers to scrutinise investments in critical businesses and infrastructure which could provide opportunities for foreign investors to "undertake espionage, sabotage or exert inappropriate leverage". The proposals aim to ensure that any national security issues can be considered in a clear, consistent and proportionate way.
UK groups with members in at least two member states of the European Economic Area can use Societas Europaea or cross-border mergers to redomicile to another European jurisdiction. Both regimes may be helpful to a group looking to redomicile entities to other parts of Europe in the context of Brexit, although both have been the subject of recent judicial decisions regarding the form of transactions which are considered permissible.
The EU Directive on Cross-Border Mergers of Limited Liability Companies, implemented by the Companies (Cross-Border Mergers) Regulations 2007 (as amended), has proven to be a popular means of reorganising European group structures and has been occasionally used in arm's-length cross-border transactions. However, recent transactions have tested the boundaries of the sorts of structure that may be permitted under the regulations, which could reduce the popularity of the procedure.
A cross-border merger is a transaction involving a true merger of European entities, in which one or more of the participants ceases to exist. In the United Kingdom, cross-border mergers are governed by the Companies (Cross-Border Mergers) Regulations 2007. The procedure has been frequently implemented in connection with solvent reorganisations of group structures. Arm's-length cross-border transactions involving UK companies have also incorporated cross-border mergers.
For a public company with a premium listing in the United Kingdom, certain M&A transactions – including acquisitions and disposals of shares, businesses or assets – may be subject to Listing Rule 10 and ultimately require prior shareholder approval. In 2016 over 15 acquisitions or disposals where the consideration was £100 million or more were announced by premium listed companies and required shareholder approval under Listing Rule 10.