GENERAL COUNSEL UPDATE - A MULTIJURISDICTIONAL GUIDE 30 JUNE 2021 - Herbert Smith Freehills
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GENERAL COUNSEL UPDATE A MULTIJURISDICTIONAL GUIDE 30 JUNE 2021
HERBERT SMITH FREEHILLS GENERAL COUNSEL UPDATE 01
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UK developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 05
1. Covid-19 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 06
1.1 What has happened since the last edition? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 06
1.2 Foreign travel* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 07
1.3 UK vaccines roll-out programme . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 07
1.4 Government support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 07
1.5 What should businesses consider? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 08
2. Brexit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 08
2.1 Where are we now? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 08
2.2 Delay to the implementation of the new UK border model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 08
2.3 Ongoing talks on the Northern Ireland Protocol . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 08
3. Competition, regulation and trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 09
3.1 UK National Security and Investment Act 2021 granted Royal Assent . . . . . . . . . . . . . . . . . . . . . 09
3.2 EU Commission publishes guidance on Article 22 referrals for transactions falling
below national thresholds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4. Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.1 The new JCT Dispute Adjudication Board Documentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.2 Fire Safety Act 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5. Corporate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.1 Corporate governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.1.1 Audit reform . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.1.2 BEIS consultation on climate-related disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.2 Capital markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.2.1 Listing regime review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.3 M&A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.3.1 Takeover Code changes relating to conditions to an offer and the offer timetable . . . . . . . . . . 12
5.3.2 National Security and Investment Act 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6. Dispute resolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.1 Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.1.1 High Court considers principles from Halliburton v Chubb in decision on
arbitrator bias . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.1.2 UK Jurisdiction Taskforce releases Digital Dispute Resolution Rules for arbitration
of digital disputes in smart contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
6.1.3 Record years for arbitral institutions' caseloads . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
6.2 Banking Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
6.2.1 Court of Appeal confirms that the Quincecare duty does not extend to
protect creditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
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6.2.2 High Court determines that reliance issues in context of a section 90A FSMA
claim should be heard at first trial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
6.2.3 High Court finds that a claimant’s “awareness” of a representation is an
essential prerequisite to a claim for misrepresentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.3 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.3.1 European Commission recommends rejection of UK's bid to join
Lugano Convention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.3.2 Commercial Court considers new Practice Direction 57AC on trial
witness statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.3.3 Cases considering force majeure and frustration in Covid-19 context . . . . . . . . . . . . . . . . . . . . . . 15
6.3.4 Supreme Court decision in high profile jurisdictional challenge relating to
parent company duty of care . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
7. Employment and pensions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
7.1 Employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
7.1.1 Covid-19 developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
7.1.2 Employment law reform still on the agenda but subject to delay . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
7.1.3 Worker status: Supreme Court gives landmark ruling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
7.1.4 Service provision changes: employment contracts can be split between
multiple transferees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
7.2 Pensions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
7.2.1 Annual Funding Statement 2021 – Key messages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
7.2.2 DWP proposes new transfer conditions to combat pension scams . . . . . . . . . . . . . . . . . . . . . . . . 17
7.2.3 Regulator issues draft guidance on policing new pensions offences . . . . . . . . . . . . . . . . . . . . . . . . 17
8. Finance: banking, insolvency and restructuring . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
8.1 LIBOR transition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
8.2 Environmental, social and corporate governance (ESG) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
8.3 National Security and Investment Act 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
8.4 Corporate Treasury proves resilient to Covid-19 challenges and ESG rises up
the corporate agenda . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
8.5 Part 26A restructuring plan – most significant change in 20 years . . . . . . . . . . . . . . . . . . . . . . . . . 19
9. Finance: debt capital markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
9.1 LIBOR transition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
9.2 ESG Bonds: 2021 editions of the ICMA Green and Social Bond Principles and
other guidance published . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
10. Financial services regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
10.1 Bank of England discussion paper on new forms of digital money . . . . . . . . . . . . . . . . . . . . . . . . . . 20
10.2 Digital money: Other recent and upcoming developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
10.3 A new Consumer Duty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
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11. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
11.1 Insurance items on the Board's agenda . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
11.2 Insolvency and insurance issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
11.3 High Court dismisses Covid-19 business interruption claim under "closed list"
disease wording . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
11.4 FCA confirms remedies to address "price-walking" in general insurance markets . . . . . . . . . . 22
12. Intellectual property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
12.1 Exhaustion of IP rights – time for a change post-Brexit? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
12.2 UK Intellectual Property Office plans policy on the protection of AI generated
inventions and creations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
12.3 EU IP Action Plan – the challenge ahead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
13. Public and administrative law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
13.1 Government's Consultation on judicial review reform . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
14. Real estate and planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
14.1 Real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
14.1.1 Ground rents in residential leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
14.1.2 Commercial rent arrears during the Covid-19 pandemic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
14.1.3 Further extension to restrictions on commercial landlords . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
14.2 Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
14.2.1 Queen's Speech, 11 May 2021 – planning related legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
14.2.2 Building safety – Planning gateway one and the proposed RPDT . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
14.2.3 Affordable housing – Introduction of First Homes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
15. Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
15.1 G7 reach agreement on global tax reform . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
15.2 Real estate property development tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
15.3 Finance Act 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
16. Technology, media and telecommunications, sourcing and data . . . . . . . . . . . . . . . . . . . . . . . . . 26
16.1 International Data Transfers: Further re-papering exercise ahead as
European Commission issue new finalised Standard Contractual Clauses . . . . . . . . . . . . . . . . . . 26
16.2 International Data Transfers and Brexit: European Commission adopts
UK adequacy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
16.3 EU Commission releases regulatory proposal to increase trust in AI . . . . . . . . . . . . . . . . . . . . . . . 27
International developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
17. Hong Kong . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
17.1 Hong Kong Monetary Authority finalises principles for mandatory reference
checking scheme to address “rolling bad apples” phenomenon . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
17.2 Hong Kong Government finalises principles for regulating virtual asset service
providers and other AML/CFT regulatory enhancements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
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17.3 Hong Kong Securities and Futures Commission and Stock Exchange increase efforts to
combat IPO-related misconduct . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
17.4 Mutual recognition of insolvency in Hong Kong and Mainland China – first steps . . . . . . . . . . 30
17.5 Hong Kong Court of First Instance lays the foundation for disclosure orders against
bank accounts in overseas branches of Hong Kong banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
17.6 Hong Kong: Updates on maternity pay, discrimination, statutory holidays and offsetting
severance pay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
18. Indonesia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
18.1 Indonesia's New Investment List: liberalisation of foreign investment in the energy,
resources and infrastructure sectors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
18.2 New procedural rights as Indonesia-Singapore BIT comes into force . . . . . . . . . . . . . . . . . . . . . . . 31
19. Malaysia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
19.1 High Court clarifies limits of post-award court intervention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
19.2 Federal Court streamlines corporate veil piercing principles with modern
English law approach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
20. Russia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
20.1 The Real Estate Law Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
20.2 The Public-Private Partnership Law Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
20.3 ICC and SIAC attain "Permanent Arbitration Institution" status in Russia . . . . . . . . . . . . . . . . . . 32
21. Singapore . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
21.1 Monetary Authority of Singapore proposes to extend mandatory reference
checks proposal to stop rolling bad apples . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
21.2 Monetary Authority of Singapore proposes to extend cross-border business
exemption to foreign head offices and branches . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
22. United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
22.1 US federal appeals court upholds first divestment order for private
antitrust plaintiff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
22.2 US laws attempt to deal with the complex and often-changing landscape
of gaming . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Please do not hesitate to contact any of the named people for further information on the items set out below. We would also like to hear
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HERBERT SMITH FREEHILLS GENERAL COUNSEL UPDATE 05 UK developments
06 GENERAL COUNSEL UPDATE HERBERT SMITH FREEHILLS
UK developments
1. Covid-19 September 2020 and hospital admissions and patients in hospital
continued to decrease with numbers close to those in July 2020.
1.1 What has happened since the last edition?
From 17 May, indoor hospitality and entertainment was allowed to
On 22 February 2021, the Prime Minister announced England’s re-open, including cinemas, museums and theatres. The rest of
four-step roadmap on the gradual release of the lockdown the accommodation sector also saw relaxation of the measures,
measures. According to the plan, four tests needed to be met with hotels, hostels and B&Bs re-opening. Indoor exercises and
before England could move to each stage, namely: classes re-started, face coverings were no longer compulsory in
schools and colleges and in-person teaching in universities
•successful deployment of the vaccine programme;
resumed. Up to six people or two households could meet indoors,
•evidence that vaccines sufficiently reduce hospitalisations and while up to 30 people could gather outside, including for weddings
deaths in those vaccinated; and receptions.
•infection rates do not present risk for rapid increase in
The easing of the measures saw a return of outdoor performances
hospitalisation numbers that would put unsustainable pressure
such as cinemas and theatres and allowed up to 10,000 people
on the NHS;
(or a quarter-full, whichever is lower) in the largest outdoor
•assessment of the risks is not significantly changed by new venues and larger performances and sporting events in indoor
"variants of concern". venues with up to 1,000 people or 50% capacity occupancy
(whichever is lower).
Each stage lasts at least five weeks with seven days' notice before
the next stage could take place. Step 4
The fourth stage of the lockdown was set to be released no earlier
Step 1 than 21 June. Following the spread of the Delta variant across the
Lockdown easing began on 8 March with the first step of the plan. UK and the conclusion that the four-test criteria had not been met,
Children and students returned to face-to-face teaching in schools on 14 June the Prime Minister announced that the expected release
and colleges and rapid testing twice a week was introduced for would be delayed until 19 July, when all adults in the UK would have
secondary and college pupils. Outdoor exercise and recreational been offered a first jab of the vaccine. The vaccination programme
activities with one’s household, support bubble or another person was further accelerated in order to contain the spread of the new
were also allowed, which meant that people could leave their variant – see below for more details on the vaccination targets. A
homes for picnics or coffee outside. two-week break point was introduced which would serve as
check-point on whether restrictions could be eased on 5 July.
On 29 March, the Monday before Easter, a further set of measures
were released when outdoor gathering of two households or up to While most existing measures remained in place beyond 21 June,
six people became possible and outdoor sport facilities could weddings and wakes were allowed to host more than 30 guests,
re-open. The "stay at home" rule ended then. provided that social distancing measures were respected. Large
pilot events could continue, including Euro 2020 games.
Step 2
On 5 April, the Prime Minister announced that the next step of the On 28 June, the Health Secretary Sajid Javid confirmed that the
lockdown easing would take place on 12 April as originally stated. lockdown easing remained planned for 19 July.
At the time, more than 31 million people had been vaccinated. From
12 April, a number of businesses were allowed to re-open, including It is expected to include lifting of all legal limits on social contact,
all non-essential retail; personal care services, such as hairdressers re-opening of remaining closed premises, including nightclubs, and
and nail salons; most outdoor attractions, such as zoos and theme easing the restrictions on large events and performances that
parks; libraries and community centres; gyms and indoor swimming applied during step 3.
pools. Restaurants and pubs could open doors for outdoor seating.
Self-contained accommodation where there was no sharing of ---
indoor facilities was also allowed to re-open.
The devolved administrations in Scotland, Wales and Northern
Step 3 Ireland put their own rules and roadmaps out of lockdown and have
also been gradually releasing the measures with various breaks due
On 11 May, the Prime Minister confirmed that step 3 of the
to the spread of the Delta variant.
roadmap out of lockdown would go ahead as planned on 17 May.
At the time, infection rates had reached their lowest level sinceHERBERT SMITH FREEHILLS GENERAL COUNSEL UPDATE 07
Scotland put in place a five-tier system with different levels of only need to take a variant surveillance test on or before day 2 of
restrictions applying across the country. It was planned that the entering the UK.
whole country would move to level 0 on 28 June. On 22 June, the
Scottish First Minister announced that the expected easing of the *The information provided is valid as of 25 June 2021. For updates
measures would be delayed until 19 July, when a number of on current travel restrictions, please see the Government
restrictions would be lifted, including cutting the social distancing webpage here.
rule from 2m to 1m and an increase on the number of people allowed
to attend weddings and funerals to 200. Nightclubs would remain 1.3 UK vaccines roll-out programme
closed. Further easing of the measures is planned for 9 August.
On 28 May, the UK approved the Janssen vaccine (by Johnson &
Johnson) which became the fourth Covid-19 vaccine to be
Wales has paused its lockdown lifting and it is planned to be
authorised for use in the UK, after Oxford University-AstraZeneca,
reviewed again on 15 July, although some measures have been lifted
Pfizer-BioNTech and Moderna, and the first one that relies on a
from 21 June, including the limit on the number of people able to
single dose. The UK has been on track with its vaccination
attend a wedding, civil partnership reception or wake – this is now
programme, being among the leading countries in the world per
determined by the size of the venue and a risk assessment. Small
number of vaccinated individuals.
music and comedy venues are allowed to operate on the same basis
as hospitality venues, namely to host groups of six people. Other
Following concerns over the spread of the Delta variant and
existing restrictions remained in place, such as on meeting indoors
evidence that vaccine efficacy against the variant increases
where one can only meet their extended household and the limit of
significantly after a second dose, the delivery of a second dose for
up to 4,000 people standing or 10,000 people sitting down in large
people over 40 and those from vulnerable groups has been brought
outdoor events.
forward. By 19 July, the Government aims to have provided two jabs
to about two thirds of the adult population, including everyone over
Northern Ireland also postponed lifting some of its restrictions – it is
50, all vulnerable individuals, frontline health and care workers and
planned that from 5 July live music at background or ambient levels
everyone over 40 who had their first dose by mid-May. The
will be permitted in premises that serve food and drink; 10 people
Government has also accelerated vaccination efforts for younger
from two households will be allowed to meet inside a home and
individuals and has committed to offer first dose to all adults in the
gatherings outdoors can be of the maximum number of people
UK by 19 July. Extra vaccination venues have been opened to speed
allowed under the venue's risk assessment. 22 July may see lifting
up vaccination.
of all restrictions on live music and dance in premises where food
and drink is offered.
From 17 May, people who have had both doses of a vaccine are able
to demonstrate their vaccination status via the NHS app (the
1.2 Foreign travel*
information is also available in paper format and on the NHS
The ban on foreign travel for leisure purposes was lifted on 17 May website), which may be used when travelling to a country that
and a "traffic light" system was introduced. People are allowed to go accepts proof of vaccination.
on holidays to green-list countries, among which are Australia and
Israel, without having to quarantine upon return. Hotel quarantine 1.4 Government support
remains in place for red-listed countries and passengers back from
In addition to existing support, the 2021 Budget, on 3 March,
a country on the amber list need to quarantine at home (or at
provided for extensions to a number of Government support
another place they are staying) for 10 days when back. The lists are
schemes, including fourth and fifth grants for self-employed
reviewed every three weeks and countries could move within lists
individuals covering the period until the end of September 2021,
either way on short notice.
business rates relief and government-backed loans to businesses.
From 1 April 2021, the Local Restrictions Support Grants for
All people entering the UK need to present a negative Covid-19 test
businesses which were forced to close and for those which were not
taken up to 72 hours before arrival. During quarantine, passengers
but nonetheless suffered losses were replaced by Restart grants of
arriving from countries on the red and amber lists have to take a
up to £6,000 per premises for non-essential retail businesses and
test for variant surveillance on or before day 2 of isolation and
up to £18,000 per premises for hospitality and other businesses
present negative Covid-19 test results from a test taken on or after
that had to remain closed for longer, such as gyms and personal
day 8. The Test to Release scheme allows passengers from
care services.
amber-listed countries to take a Covid-19 test after five full days in
England and to end their quarantine early, if they test negative
The job retention scheme (also known as the “furlough” scheme)
(although they still need to have a test on or after day 8). Apart
was once again extended, until 30 September 2021, with employees
from the pre-arrival test, travellers from countries on the green list
receiving 80% of their current salary for hours not worked, up to a08 GENERAL COUNSEL UPDATE HERBERT SMITH FREEHILLS
UK developments
maximum of £2,500. From July, employers will need to contribute to Minister for the Cabinet Office, announced that the introduction of
their employees' salary, namely with 10% in July and 20% in August stages 2 and 3 will be delayed with six months and therefore will take
and September. More detail on government employment support place from 1 October 2021 and 1 January 2022, respectively. This
schemes is set out in the employment section of this update. means that the implementation of a number of measures has been
postponed, including the requirement to submit pre-notification and
1.5 What should businesses consider? health documentation for imports of products of animal origin and to
provide safety and security declarations. Physical sanitary and
For our latest analysis and updates in relation to the COVID-19
phytosanitary checks for products of animal origin, certain animal
pandemic, please visit our Catalyst hub.
by-products, high risk plants and high risk food not of animal origin
will start from 1 January 2022 rather 1 July 2021 and will take place at
For further information, please contact your usual Herbert
Border Control Posts.
Smith Freehills’ contact.
Please see the Government's document for more details on the UK
2. Brexit
border model and what each stage entails.
2.1 Where are we now?
For further information, please contact Lode Van Den Hende
On Christmas Eve 2020, the UK and EU finalised the Trade and
or Eric White.
Cooperation Agreement (TCA) that governs their future trading
and security relationship. The TCA came into effect provisionally at
2.3 Ongoing talks on the Northern Ireland Protocol
11pm on 31 December 2020 when the status quo transition period
ended. According to the Northern Ireland Protocol part of the Withdrawal
Agreement between the UK and the EU, Northern Ireland, while
The European Parliament finally consented to the Council remaining in the UK customs territory and included in any UK free
concluding the TCA clearing the way for its definitive conclusion on trade agreements, will apply most EU customs rules and most of its
30 April 2021, the day on which the extended period of provisional regulatory regime for goods, both agricultural and manufactured.
application expired. The TCA came into force on 1 May 2021. This creates a customs and regulatory border in the Irish Sea
between Ireland and Great Britain. Although the Protocol has
The consent of the European Parliament was never really in doubt, allowed the UK to dispense with most checks and other obstacles
but what is interesting is the fact that it has extracted from the to goods entering Great Britain from Northern Ireland, goods
Commission and the Council commitments on involving the entering Northern Ireland from Great Britain, apart from some
Parliament in the management of relations with the United Kingdom. transitional reliefs, are subject to much the same checks and costs
as if they were entering the EU from the UK.
We look into the key aspects of the agreement in our initial
commentary here. Our latest View from Brussels discusses the TCA’s Following the end of the transition period, the difficulties of
unprecedented level playing field provisions and their enforcement. implementing the Protocol, particularly for exports from Great
Britain to Northern Ireland, have started to become evident. The
Please subscribe to our Beyond Brexit blog to get the latest updates. new requirements have disrupted traditional supply chains, added
Our Beyond Brexit Legal Guide is being updated to reflect the costs for Northern Ireland importers and consumers and led many
implications of the TCA and the end of transition across different UK firms to decline to deliver to Northern Ireland at all for
sectors and practice areas. commercial reasons.
For further information, please contact Paul Butcher. In December 2020, the UK-EU Joint Committee decided to allow
grace periods for the implementation of parts of the Protocol
2.2 Delay to the implementation of the new UK related to certain products (including meat and fish products and
border model medicines) in order to help businesses adapt to the new measures.
Following the end of the transition period and the need for the UK to The first set of grace periods was set to end on 1 April 2021.
operate a full external border with the EU as a sovereign nation, the
On 3 March, the UK Government unilaterally proposed to extend
UK has introduced a Border Operating Model that provides for
these grace periods for at least another six months to mitigate the
phased introduction of full customs and regulatory checks on imports
disruption caused to businesses. It has also announced relaxation of
from the EU. The model envisages three stages which were to take
rules in relation to trade in parcels and plants and travel of pets. In
effect from 1 January, 1 April and 1 July 2021. However, on 11 March
response to the UK's unilateral actions, the EU launched a legal
2021, Michael Gove, Chancellor of the Duchy of Lancaster andHERBERT SMITH FREEHILLS GENERAL COUNSEL UPDATE 09
action against the UK on 15 March arguing that the UK breached its non-UK investors (although the Government has acknowledged
obligations under the Protocol, the Withdrawal Agreement and that UK investors will be less likely to give rise to national security
international law. While the initiated infringement procedure may concerns in practice), and may capture acquisitions of non-UK
find the UK and the EU in front of the Court of Justice of the entities or assets in certain circumstances.
European Union, negotiations between the two parties are ongoing
in order to settle the dispute prior to court proceedings. A mandatory notification obligation (and a corresponding
prohibition on completion prior to clearance) will apply to certain
The UK has requested an extension to the existing grace period transactions involving target entities which carry out specified
for exports of chilled meat products from Great Britain to activities in the UK in 17 sectors (including energy, transport,
Northern Ireland that is due to end on 30 June 2021. It has been communications, defence, artificial intelligence and other
suggested that the EU may agree to grant a three-month tech-related sectors). Such transactions include the acquisition of
extension. As of 25 June 2021, it has not been confirmed whether shareholding/voting rights of more than 25%. This mandatory
that would be agreed and under what terms. notification obligation will be combined with an extensive call-in
power enabling the Government to call in qualifying transactions for
For further information, please contact Lode Van Den Hende review, which extends to any sector and is not subject to any
or Eric White. materiality thresholds in terms of target turnover or transaction
value. Acquirers will also have a corresponding option to voluntarily
3. Competition, regulation and trade notify a qualifying transaction to obtain clearance.
3.1 UK National Security and Investment Act 2021
Formal commencement of the new regime will be delayed until later
granted Royal Assent
this year (exact date to be confirmed). However, the Government
On 29 April 2021 the UK National Security and Investment (NSI) will have retroactive powers to call in for review at the
Bill received Royal Assent. The NSI Act 2021 introduces significant commencement date (or potentially up to five years thereafter) any
legislative reforms which will overhaul the review of transactions qualifying transaction completed between 12 November 2020 and
and investments on national security grounds in the UK. The new the commencement date.
regime represents an important new execution risk factor, with a
similar risk profile to merger control rules. See our detailed briefing here.
Broadly speaking, the new regime will apply to any acquisition of For more information, please contact Veronica Roberts or
“material influence” in a company (which may be deemed to exist in Tim Briggs.
relation to a low shareholding, potentially even below 15%), as well
as the acquisition of control over assets (including land and
intellectual property), which potentially gives rise to national
security concerns in the UK. It will apply equally to both UK and10 GENERAL COUNSEL UPDATE HERBERT SMITH FREEHILLS
UK developments
3.2 EU Commission publishes guidance on Article 4. Construction
22 referrals for transactions falling below
4.1 The new JCT Dispute Adjudication Board
national thresholds
Documentation
On 26 March 2021 the EU Commission published revised guidance
On 4 May 2021, the Joint Contracts Tribunal (JCT) released its new
on the referral mechanism set out in Article 22 of the EU Merger
Dispute Adjudication Board Documentation (DAB 2021), which
Regulation (EUMR), under which the Commission will now accept
comprises the following documents:
referrals from Member States for deals that fall below the domestic
jurisdictional thresholds of the referring country, in order to 1. JCT/CIArb Dispute Adjudication Board Rules (the Rules);
capture more transactions involving nascent competitors and
2. JCT Model Dispute Adjudication Board Tripartite Agreement;
innovative companies.
3. Enabling provisions for each of the JCT 2016 Design and Build
Under Article 22 of the EUMR, one or more Member States can Contract and Major Project Construction Contract; and
request the Commission to examine a concentration that does not
4. Guidance notes.
have an EU dimension and does not therefore meet the
jurisdictional thresholds of the EUMR, where that transaction
According to the JCT, DAB 2021 is designed for use with the JCT
affects trade between Member States and threatens to significantly
2016 Design and Build Contract and JCT Major Project
affect competition within the Member State making the request.
Construction Contract, and on larger and longer-term projects for
Previously the Commission developed a practice of discouraging
which the cost of establishing a dispute adjudication board (DAB) is
referral requests under Article 22 from Member States that did not
more likely to be proportionate.
have jurisdiction over the transaction at stake under their national
regimes, as it considered that such transactions were not likely to
The Rules enable contracting parties to appoint a standing DAB
have a significant impact on the internal market.
consisting of either a single member or panel of three members
and, among other things, provide for the DAB to make periodic site
The revised approach was motivated by the need to address the
visits. The DAB can be required to issue either a non-binding
issue of so-called "killer acquisitions" after the Commission decided
recommendation or a decision that is temporarily binding until the
not to amend the current thresholds of the EUMR in order to
dispute is finally determined by legal proceedings, arbitration or by
capture transactions involving the acquisition of innovating
agreement between the parties. Either party can also seek an
companies with strong competitive potential but low turnover.
informal advisory opinion from the DAB, although they are not bound
to act upon such advice. Subject to exceptions, parties cannot
The Commission guidance indicates that under the new referral
commence arbitration or legal proceedings unless the dispute has
approach it is targeting deals where the turnover value does not
first been referred to adjudication and decided by the DAB.
reflect the actual or future competitive potential of a business.
This will include instances where a business has access to
Notably, the adjudication procedures under the Rules have been
competitively significant assets, such as raw materials,
drafted to be compliant with the requirements of section 108 of the
infrastructure, intellectual property rights or data, or where the
Housing Grants, Construction and Regeneration Act 1996 (the
products or services a business provides are key inputs for other
Act). Accordingly, under the Rules, the DAB is to act as an
industries. The Commission will also take into account whether
adjudicator under the Act. However, the Rules also clarify that a
the deal consideration is high compared to the current value of a
determination for the issue of a recommendation (as opposed to a
target business.
decision) is not an adjudication pursuant to section 108 of the Act.
See our detailed briefing here.
For further information, please contact Noe Minamikata or
James Doe.
For more information, please contact Kyriakos Fountoukakos
or Daniel Vowden.
4.2 Fire Safety Act 2021
The Fire Safety Act (the Act) received Royal Assent on 29 April 2021
and applies to England and Wales. Separate fire safety legislation
applies to Scotland and Northern Ireland. The Act amends the
Regulatory Reform (Fire Safety) Order 2005 (the Order).
The Order brought together different pieces of fire legislation
designating those in control of premises as the "responsible
person", with duties including to undertake assessments andHERBERT SMITH FREEHILLS GENERAL COUNSEL UPDATE 11
manage risks. The Order applies to all non-domestic buildings, for For further information, please contact Sarah Hawes,
example commercial premises and workplaces and as well as to Gareth Sykes or Ben Ward.
"the common areas of multi-occupied residential buildings". This
led to uncertainty about what it actually covered. 5.1.2 BEIS consultation on climate-related disclosures
BEIS launched a consultation on mandatory climate-related
The Act therefore amends the Order and clarifies that the
disclosures by publicly quoted companies, large private companies
responsible person (typically owners or managers) for
and limited liability partnerships (LLPs) in March 2021. The
multi-occupied, residential buildings must manage and reduce the
consultation paper proposes that the new disclosure requirements
building’s risk of fire. It also clarifies that the Order will apply to the
would apply to:
building's structure, including external walls and common parts.
This includes doors or windows in external walls and common •UK companies that are currently required to produce a
parts, anything attached to the exterior of those walls (including non-financial information statement (that is, companies with
any cladding, insulation, fixings and balconies), and doors between more than 500 employees which are listed, or are banking or
domestic premises and common parts. insurance companies);
•AIM companies with more than 500 employees; and
The Secretary of State for Housing, Communities and Local
Government may amend the list of qualifying premises within •other companies and LLPs which have more than 500 employees
scope of the Order. and a turnover of more than £500 million.
The Fire and Rescue Service has the power to take enforcement For accounting periods starting on or after 6 April 2022, companies
against the responsible person for non–compliance. Accordingly, all that are in scope will be required to include climate-related financial
responsible persons should review their Fire Risk Assessments so disclosures in the non-financial information statement within their
that it covers all the parts of the building within their control. strategic report.
For further information, please contact Susannah Davis or The disclosures will have to be in line with the Recommendations of
Nick Downing. the Task Force on Climate-related Financial Disclosures (TCFD) on:
(i) governance; (ii) strategy; (iii) risk management; and (iv) metrics
5. Corporate and targets. The proposed new rules would not require disclosures
in line with the 11 more detailed TCFD recommended disclosures.
5.1 Corporate governance
For more information see our briefing. The consultation closed on
5.1.1 Audit reform 5 May 2021 and legislation to introduce the new disclosure
requirements will be introduced when parliamentary times allow.
In March 2021, the Department for Business, Energy and Industrial
Strategy (BEIS) published its long-awaited consultation paper on For further information, please contact Jannis Bille,
audit and governance reform, "Restoring trust in audit and Sarah Hawes or Gareth Sykes.
corporate governance". It proposes fundamental reforms to the
audit process, product and market. If implemented, the proposals 5.2 Capital markets
would lead to considerable changes to the way that companies
approach their financial statements and financial reporting, 5.2.1 Listing regime review
requiring additional processes and procedures to be put in place In November 2020, the Government began a review of the UK
and additional reporting on the company’s resilience. Directors of listing regime, chaired by Lord Hill, with the objective of proposing
companies will be particularly interested in the proposals to reforms to the UK listing regime that will attract the most innovative
strengthen directors’ accountability, with proposals to give the new and successful firms and help companies access the finance they
regulator greater powers to sanction directors for failures in need to grow (the Hill Review).
connection with financial reporting.
The Government published the outcome of the Hill Review in March
We have published two briefings in which we discuss the proposals 2021. The recommendations made by the Review include changes
in more detail: to the rules around the free float requirement and liability for
•to read more about the impact of the proposals on UK listed forward-looking information, as well as an overhaul of the
companies, click here; and prospectus regime, in particular for further issuances by companies
that are already listed. For further information on the key proposals
•to read more about the impact of the proposals on large AIM and
please see our briefing.
UK private companies, click here.12 GENERAL COUNSEL UPDATE HERBERT SMITH FREEHILLS
UK developments
While many of the reforms can be taken forward by the Financial bidder should be able to invoke a condition, in particular where the
Conduct Authority (FCA) amending the Listing Rules, others will condition relates to an official authorisation or regulatory clearance.
require primary legislation and so are likely to take longer.
For further information, please contact Mark Bardell,
The FCA welcomed the report and has said it will carefully consider Antonia Kirkby, or Robert Moore.
the recommendations. In May 2021, it published a consultation
paper on investor protection measures for special purpose 5.3.2 National Security and Investment Act 2021
acquisition companies (SPACs). It is proposing to amend the Listing
On 29 April 2021 the National Security and Investment (NSI) Bill
Rules for SPACs that have stronger investor protection features.
received Royal Assent. The NSI Act 2021 introduces significant
The FCA also stated that it will consider a separate listing category
legislative reforms which will overhaul the ability of the UK
for SPACs in due course, but this will come later as part of its review
Government to review transactions on national security grounds,
of primary markets and response to the Hill Review.
and potentially prohibit their completion or require remedies to
allow them to proceed. For more information see the competition,
In addition, in June 2021, the Treasury published a consultation on a
regulation and trade section above.
new Government power to block listings on national security
grounds. It says that concerns have been raised about the possible
links between a listing and national security and therefore it
6. Dispute resolution
wants to take a precautionary power to block listings on national 6.1 Arbitration
security grounds.
6.1.1 High Court considers principles from Halliburton v
For further information, please contact Mike Flockhart, Chubb in decision on arbitrator bias
Sarah Hawes, or Michael Jacobs. In Newcastle United Football Company Limited v The Football
Association Premier League Limited [2021] EWHC 450 (Comm) the
5.3 M&A High Court grappled with the principles on arbitrator impartiality
5.3.1 Takeover Code changes relating to conditions to an laid down last year by the Supreme Court in Halliburton Company
offer and the offer timetable (Appellant) v Chubb Bermuda Insurance Ltd [2020] UKSC 48. In
doing so the court dismissed an application under section 24 of the
The Takeover Panel published its response statement (RS 2020/1) Arbitration Act 1996 to remove an arbitrator for apparent bias.
setting out changes to the Takeover Code relating to the conditions
to an offer, particularly those relating to regulatory/merger control The court concluded that none of the grounds pleaded individually,
clearance, and to the offer timetable in March 2021. or cumulatively, would lead to a "fair minded and informed
observer, having considered the facts, to conclude that there was a
The rule changes will come into force on 5 July 2021 and will apply real possibility of bias". The grounds of challenge concerned past
to all firm offers which are announced (Rule 2.7 announcement) on instructions and advice given by the arbitrator; appointments as an
or after that date. arbitrator in other references (by and involving the Premier League's
lawyers); and failures by the arbitrator to disclose these
The key changes are: circumstances.
•Conditions relating to clearance by the European Commission
and Competition and Markets Authority (CMA) – The Takeover The court reiterated that in considering whether disclosure should
Code will no longer distinguish between EC/CMA conditions and be made, the IBA Guidelines on Conflicts of interests provide a
other merger control clearance conditions, and a bidder will only "practical benchmark", and are not binding, and as in Halliburton,
be able to invoke a condition to an offer relating to merger control although disclosure should have been made in respect of some
clearance in the EU and UK if the circumstances on which it is circumstances (here previous instructions), the failure to do so did
seeking to rely are material in the context of the offer (as is not give rise to an appearance of bias. The unilateral
already the case for merger control conditions in jurisdictions communications from the arbitrator to the lawyers for the Premier
outside the EU/UK). League were considered by the court to be an "error of judgment",
but there was nonetheless no appearance of bias.
•Guidance on when a condition can be invoked – Panel Practice
Statement No. 5 will be updated to set out additional guidance on You can read more about the decision in our blog post here.
the factors that will be taken into account in deciding whether a
For more information, please contact Chris Parker or
Vanessa Naish.HERBERT SMITH FREEHILLS GENERAL COUNSEL UPDATE 13
6.1.2 UK Jurisdiction Taskforce releases Digital Dispute 6.2 Banking Litigation
Resolution Rules for arbitration of digital disputes in
6.2.1 Court of Appeal confirms that the Quincecare duty
smart contracts
does not extend to protect creditors
In April, the UK Jurisdiction Taskforce published the Digital Dispute
The Court of Appeal struck out Quincecare duty and dishonest
Resolution Rules which aim to enable the rapid resolution of
assistance claims brought by the liquidators of a company running a
blockchain and crypto legal disputes. Under the Rules, users are
Ponzi scheme against a correspondent bank operating accounts for
offered a choice of arbitration (under the English Arbitration
the company. The Court of Appeal confirmed that the Quincecare
Act 1996) or expert determination. Arbitration is uniquely suited to
duty is limited to protecting customers of the financial institution,
resolving digital disputes. For example, the New York Convention,
and does not extend to protect the customer’s creditors: Stanford
which allows for the enforcement of arbitral awards across the
International Bank Ltd v HSBC Bank plc [2021] EWCA Civ 535.
globe, may address the jurisdictional issues posed by the
decentralisation of blockchain. Parties can also benefit from
The Court of Appeal found that the company had no Quincecare
appointing arbitrators with technical understanding, and where
claim because it suffered no loss. Under the Ponzi scheme,
confidentiality is a concern, arbitration is the natural choice over
payments made by the bank to genuine investors reduced the
litigating in public.
company’s assets, but equally discharged the company’s liabilities.
The High Court erred in its reasoning by confusing the company’s
The rules may be incorporated into a contract, digital asset or
position before and after the inception of an insolvency process.
digital asset system, and provide for the tribunal to use its best
Before an insolvency process commences (and the statutory
endeavours (unless otherwise agreed by the parties) to resolve the
insolvency regime applies), the fact that a company has slightly
dispute within 30 days from its appointment.
lower liabilities is a corresponding benefit to its net asset position,
even if the company is heavily insolvent. Having more cash available
You can read more about the rules in our blog post here.
upon the eventual inception of its insolvency for the liquidators to
pursue claims and for distribution, is a benefit to creditors, but not
For more information, please contact Craig Tevendale,
to the company while it is still trading.
Chris Parker, Dorothy Livingston, Vanessa Naish or
Charlie Morgan.
The Court of Appeal upheld the High Court’s decision to strike out
the dishonest assistance claim, emphasising that dishonesty and
6.1.3 Record years for arbitral institutions' caseloads
blind-eye knowledge allegations against corporations (large or
A number of leading arbitral institutions have announced their small) must still be evidenced by the dishonesty of one or more
caseload statistics for 2020, with the LCIA, ICC and SIAC recording natural persons. Blind-eye knowledge must be constituted by a
record numbers of new cases. The LCIA saw 444 arbitrations decision not to enquire into a targeted and specific suspicion; and
referred in 2020, with 407 conducted under the LCIA Arbitration the liquidators could not hide behind the fact that the defendant
Rules, while the ICC saw 929 ICC Rules arbitrations registered. bank was a large corporation.
SIAC reported 1,080 new cases in 2020, breaking its 2019 record,
but a smaller number of arbitrations with 143 arbitrators appointed. See our banking litigation blog post for more details.
HKIAC reported 318 new arbitrations (its highest since 2010), while
the SCC reported 213 (its highest since 2009). For further information, please contact Chris Bushell or
Ceri Morgan.
The LCIA's caseload report has described 2020 as being an
"exceptional year" for the LCIA. Continuing its long-standing 6.2.2 High Court determines that reliance issues in context
commitment to diversity, the overall percentage of female of a section 90A FSMA claim should be heard at
arbitrators appointed by the LCIA was up to 33% in 2020 (from first trial
29% in 2019), and appointed female arbitrators in 45% of its
At a recent case management conference where a split trial was
institutional appointments.
proposed by the parties in relation to a section 90A Financial
Services and Markets Act 2000 (FSMA) claim, the High Court held
You can read more about the institutions' caseload statistics in our
that reliance issues should be heard at the first trial rather than held
blog post here.
over to the second trial: Allianz Global Investors GmbH & 76 Ors v RSA
For more information, please contact Paula Hodges QC, Insurance Group plc [2021] EWHC 570 (Ch).
Andrew Cannon, or Vanessa Naish.
Trial structure tends to be a key case management battleground in
securities class actions. For strategic and practical reasons,
claimants often seek to postpone issues involving reliance,14 GENERAL COUNSEL UPDATE HERBERT SMITH FREEHILLS
UK developments
causation and quantum (ie issues which concern the conduct of the post on the Court of Appeal decision) and Marme Inversiones 2007 v
claimants) to the second trial and render issues surrounding the Natwest Markets [2019] EWHC 366 (Comm) (see our blog
issuer’s alleged liability the sole focus of the first trial (see our post here). These decisions pointed towards an established position
banking litigation blog post on The Tesco Litigation: lessons learned that, in misrepresentation cases of this type, there is a relatively
from split trial orders in the context of securities class actions for stringent awareness requirement. In the present case, this required
further details). each claimant to prove that the alleged representations were “actively
present” in their mind. As the claimants failed to plead awareness in
The judgment therefore provides noteworthy and helpful guidance the sense required, the claims were struck out.
to issuers faced with securities claims in advocating for a trial
structure with a fairer allocation of the burden of preparing for trial. See our banking litigation blog post for more details.
The court referred to various factors which influenced its decision
that reliance issues should be heard at the first trial. In summary, For further information, please contact Harry Edwards or
the court was of the view that an early determination on reliance Ceri Morgan.
may increase the chance of a settlement, and that since questions
concerning reliance are primarily factual, these should be 6.3 Litigation
determined as early as possible during the trial process, particularly
6.3.1 European Commission recommends rejection of UK's
where the claimants had issued proceedings deep into the
bid to join Lugano Convention
limitation period.
On 4 May 2021, the European Commission released a
See our banking litigation blog post for more details. communication recommending that the EU should not consent to
the UK’s application to accede to the Lugano Convention. If this
For further information, please contact Simon Clarke or position is reflected in the EU’s formal response to the UK’s
Ceri Morgan. application, the UK will not be able to accede to the Convention as it
requires the unanimous consent of current contracting parties.
6.2.3 High Court finds that a claimant’s “awareness” of a However, the decision will ultimately be for the Council by qualified
representation is an essential prerequisite to a claim majority voting (ie 55% majority, or 15 out of the 27 Member States,
for misrepresentation representing at least 65% of the EU population).
In an important decision for financial institutions, the High Court
The Commission’s communication also notes that it is planning to
confirmed that a claimant’s awareness of a representation is an
propose that the EU joins the 2019 Hague Judgments Convention
essential prerequisite to a claim for misrepresentation, by striking
“in the near future” – in which case, if the UK also joins that
out implied fraudulent misrepresentation claims in relation to
Convention, it would apply to future judicial cooperation between
LIBOR against a defendant bank. The claimants had failed to plead
the UK and the EU. That would be a positive step, although in
that the alleged representations were actively present in their mind
practical terms it would still likely be some years before judgments
when entering into the products in question and therefore the claim
could be enforced between the UK and the EU under Hague 2019.
stood no realistic prospect of success: Leeds City Council and others v
Barclays Bank plc and another [2021] EWHC 363 (Comm). For further information, please see our blog posts here and
here or contact Anna Pertoldi or Maura McIntosh.
The court explained that the requirement for awareness means that
a representee must have had some appreciation that a
6.3.2 Commercial Court considers new Practice Direction
representation in the sense alleged was being made, and is a
57AC on trial witness statements
necessary part of the reliance or inducement analysis in
misrepresentation claims. Without it, a claim must fail. What is In Global Display Solutions Ltd v NCR Financial Solutions Group Ltd
required to satisfy the awareness requirement will depend upon the [2021] EWHC 1119 (Comm), the Commercial Court rejected a
precise circumstances. The answer may be one which requires party’s witness evidence on a key issue, commenting that the fact
conscious thought, or for the representation to have been “actively the witnesses did not refresh their memories from
present” in the representee’s mind, or some less stringent element contemporaneous documents meant their evidence was “far less
of awareness (depending on the facts). likely to be reliable than it might otherwise have been”.
Considering the awareness requirement in the context of the present The witness statements were signed before 6 April and so were not
case, the court commented that the present claim was not being subject to the new requirements relating to trial witness statements
considered in a vacuum and referred to two previous cases based on in the Business and Property Courts, including the requirement to
similar LIBOR-related representations: Property Alliance Group Ltd v list documents a witness has referred to or been referred to for the
The Royal Bank of Scotland plc [2016] EWHC 3342 (Ch) (see our blog purpose of providing the evidence set out in their statement.You can also read
