Class action developments: In April, the Federal Court refused to order disclosure of the respondent's insurance policies to the applicant, holding that the court's case management powers and the overarching purpose of the legislation (which have previously been successfully relied on) did not empower the court to make that order. In May, the Federal Government announced that litigation funders operating in Australia must hold an Australian financial services licence and comply with the managed investment scheme regime. The Government also announced temporary easing of the Corporations Act continuous disclosure rules until late November. In August, the Parliamentary Joint Committee on Corporations and Financial Services completed its inquiry into litigation funding and regulation of the class action industry.

Read more... here, here, here and here

Arbitration: In May, the New South Wales Court of Appeal, reinforcing the need for precise drafting of arbitration clauses, held that a dispute was improperly referred to arbitration because the claim for unliquidated damages was outside the scope of the arbitration agreement.

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New evidence rules came into force: Book 8 is the first book of the new Civil Code to have been adopted in 2019 and came into force on 1 November 2020. Book 8 adapts the Belgian rules on evidence to the needs of the modern legal world. It codifies concepts developed by case law and legal doctrine (e.g. the duty to collaborate in the administration of evidence); provides for uniform and contemporary definitions of concepts such as ‘signature’ and ‘document’; lessens the formalistic approach to the evidence rules (e.g. by raising the threshold above which documentary evidence is required from EUR 375 to EUR 3,500); and introduces new techniques (e.g. the reversal of the burden of proof in exceptional circumstances).

Digitalisation of the judicial system: In the framework of the digitalisation of the judicial system, the Law of 20 May 2020 concerning various provisions with regard to justice further allows the electronic filing of new categories of procedural documents. This measure remains in force until 31 March 2021. This expanded use of electronic platforms is likely to become permanent as digitalisation of the judicial system is at the top of the agenda of the new Belgian federal government.

Setting up chambers for the amicable settlement of disputes: On 1 September 2020, the Brussels Court of Appeals and the French-speaking Enterprise Court of Brussels established a chamber dedicated to the amicable settlement of disputes. This initiative aims to foster the opportunity for litigants to come to a negotiated solution in less time and with lower costs. The procedure is voluntary and confidential. The parties must appear in person but can be assisted by their lawyers. An agreement reached by the parties can be ratified by the court. However, if no agreement can be reached, this does not affect the ability of the parties to continue normal court proceedings.

Serious Fraud Office guidance: New guidance issued by the SFO during 2020 consider two aspects of their investigations.

The first issued in January, stresses that the SFO will consider the effectiveness of an organisation’s compliance policy as part of any investigation into possible wrongdoing.

The second publication, issued in October, aims to provide further transparency on what it expects from companies looking to co-operate with the agency with a view to being offered a deferred prosecution agreement.

Read more here… and here…

Economic Crime Levy proposed: In the March 2020 Budget, the government announced its intention to introduce a mandatory economic crime levy on regulated businesses as part of its commitment to tackle economic crime, in particular, money laundering, in the UK. In July 2020 it issued a consultation on key aspects of the proposed levy, which is intended to raise £100 million a year to complement existing and additional government resources.

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New insolvency legislation fast-tracked: The UK government fast-tracked the Corporate Insolvency and Governance Act 2020 through parliament. The purpose of the Act is to ensure that the UK maintains a leading edge in insolvency and to “re-invigorate its rescue culture”. The Act provides temporary Covid-19-related measures which affect wrongful trading and winding up petitions, and introduce a new cram-down procedure, a new moratorium and a prohibition on the enforcement of contractual rights. The Act represents the biggest shake-up to the UK insolvency regime since the Enterprise Act came into force 17 years ago. The Covid-related provisions will assist and perhaps spare struggling companies through this unprecedented time, while the more substantive amendments are aimed at aiding companies that might be suitable for restructuring.

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Legal professional privilege under the spotlight: In SDl PLC v the FRC [2020] EWCA Civ 177 the Court of Appeal examined whether a regulator could obtain from an entity under investigation, a third party’s privileged material. Read more… Meanwhile, in Jet2.com [2020] EWCA Civ 35, it examined legal advice privilege in relation to multi-addressee emails and applied a “dominant purpose test”.

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Supreme Court considers important aspects of English arbitration law: In a landmark decision in October (Enka Insaat Ve Sanayi AS v OOO “Insurance Company Chubb” & Ors [2020]) the UK Supreme Court examined the rules applicable before the English courts as to what law governs an arbitration agreement (Read more…). Following that decision, at the end of the year, in the case of Halliburton v Chubb [2020] UKSC 48, it decided important issues relating to an arbitrator’s duty of impartiality, apparent bias and disclosure in English seated arbitrations.

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Supreme Court paves the way for UK collective actions in landmark decision: In its much-anticipated judgment in Walter Merricks CBE v Mastercard Incorporated [2020], the Supreme Court has (largely) upheld the decision of the Court of Appeal, remitting the proceedings to the CAT for further consideration of whether a CPO should be granted. 

Mass tort claims against multi-national groups blocked: In two high profile decisions, the High Court rejected significant group actions brought against multinational groups. In Jalla and others v Shell [2020], important observations were made about the nature of representative actions and their use. In the Municipo di Mariana case [2020] EWHC 2930, one of the largest mass tort claims ever before the English courts was dismissed for abuse of process.

Read more: Jalla; Municipo de Mariana

Paris Court of Appeal clarifies place of international sanctions in French international public policy: In a decision of 3 June 2020 denying an action to set aside an arbitral award, the Paris Court of Appeal clarified the test for determining whether an international sanctions regime should be considered a part of French international public policy. The Court upheld the award against the contention that it failed to consider international sanctions against Iran. The Court held that US sanctions against Iran do not form part of French international public policy, as they do not reflect an international consensus and are opposed by both European and French authorities. On the contrary, UN sanctions and EU sanctions against Iran were found by the Court to carry values which fall within French international public policy, but the Court determined that the dispute did not fall within the material and/or temporal scope of those sanctions, and so the Court held that the award did not breach French international public policy.

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Publication of a guide on gifts and hospitalities by the French Anti-Corruption Agency: The French Anti-corruption Agency (AFA) has published a short and practical guide on 11 September on gifts and hospitalities, following a public consultation. Although non-legally binding, these guidelines target all private entities operating in France and invite them to adopt a policy on gifts and hospitalities to mitigate their bribery and influence peddling risks.

The guidelines aim at providing private entities with concrete guidance and best practices on (i) the drafting and (ii) the implementing of a gifts and hospitalities policy. These guidelines have already been in place for a number of years for banks and listed societies but were rarely used for small and medium businesses.

France/UK/US: Airbus agreed record global settlement for bribery: Airbus reached a record-breaking €3.6bn global settlement with French, UK and US authorities regarding allegations of bribery and corruption. This involved deferred prosecution agreements reached after a joint investigation by the UK’s SFO and the French Financial Prosecutor (PNF) and a parallel US investigation, together covering 16 jurisdictions. A further €8.5m were agreed to be paid for the three year monitoring of Airbus by the French anti-corruption agency. The global settlement provides key insights into the conduct of international investigations, a warning on the far-reaching implications of wrongdoing and guidance on best practice for multi-nationals.

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Collective Redress: Since the introduction of the Model Declaratory Action Act (Musterfeststellungsklagengesetz) in November 2018, less than a dozen proceedings of that kind have been launched. The public focused on the action against VW, which ended with an out-of-court settlement in spring 2020. In parallel, the EU institutions agreed, after highly controversial discussions, on a “Directive on representative actions for the protection of the collective interests of Consumers” in June 2020, that goes far beyond existing collective redress mechanisms in Germany.

Read more…

UPC Ratification: The Federal Constitutional Court (BVerfG) ruled the German ratification act for the Agreement on a Unified Patent Court (UPC) unconstitutional because the parliament did not approve it with the required two-thirds majority. The government presented a new draft ratification act which was passed in accordance with the majority requirements but remains unchanged in substance. However, the BVerfG has received two constitutional complaints challenging the new ratification act.

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Follow-on damages claim in truck cartel dismissed: The Regional Court of Munich has dismissed Germany’s largest follow-on action relating to the truck cartel. 3,200 truck buyers had assigned alleged claims relating to more than 84,000 trucks to the plaintiff financial right claims GmbH, which is seeking damages in excess of €600m from the truck manufacturers Daimler, MAN, Volvo/Renault, DAF and Iveco. In its ruling, the Regional Court held that financial right claims GmbH had violated the Out-of-Court Legal Services Act (Rechtsdienstleistungsgesetz), by exceeding the bounds of its debt collection licence, rendering the assignment of the damages claims invalid. The court also ruled that the assignment model results in an irresolvable conflict of interests for the plaintiff. The judgment is ground-breaking for the so-called assignment model which, in the absence of a genuine class action in Germany, is chosen for many mass proceedings (also outside of competition law).

Hong Kong National Security Law and US-China relations: On 30 June 2020, the Hong Kong National Security Law (“NS Law”) came into effect, criminalising acts of secession, subversion, terrorism and collusion with a foreign country or external elements. The U.S. in turn revoked Hong Kong’s “special status” and implemented a Hong Kong-related sanctions program. Blocking sanctions, which require U.S. persons to freeze property and refrain from almost all dealings with blocked persons, were initially imposed on 15 individuals. Secondary sanctions may be imposed on any foreign financial institution that knowingly conducts significant transactions with blocked persons. From 11 January 2021, U.S. persons are prohibited from engaging in any transaction in publicly traded securities (or their derivatives) of designated Communist Chinese military companies.

Asymmetric jurisdiction clauses: The Hong Kong courts held that asymmetric jurisdiction clauses did not confer exclusive jurisdiction in favour of the courts in Hong Kong and therefore did not constitute a “choice of Hong Kong court agreement” for the purpose of enforcement in the PRC under the Mainland Judgments (Reciprocal Enforcement) Ordinance in Industrial and Commercial Bank of China (Asia) Ltd v Wisdom Top International Ltd [2020] HKCFI 322.

Asymmetric clauses, which usually provide that one party must sue the other party in the courts of a specified jurisdiction while the other party is free to sue in the jurisdiction of its choice, are commonly found in international financial documents. However, one must carefully consider this option where enforcement action may potentially be required in the PRC. The “choice of court agreement” has been removed in the new Arrangement on Reciprocal Recognition and Enforcement of Judgments in Civil and Commercial Matters between the Courts of the Mainland and the HKSAR (Arrangement), which has been signed but has yet to take effect pending implementation.

Read more…

Increased coordination between courts: In January 2020, the Hong Kong courts for the first time recognised and granted assistance to PRC court-appointed administrators in Joint and Several Liquidators of CEFC Shanghai International Group Ltd [2020] HKCFI 167 and further sanctioned a scheme involving cancellation of PRC law governed debts, in the first ever application of its kind. We expect increased coordination between the PRC and Hong Kong courts, with recent insolvency matters demonstrating the potential for and benefits arising from closer collaboration.

Read more…

Criminal liability of companies: The law transposing Directive (EU) 2017/1371 for the protection of the EU's financial interests was published on 12 March 2020. In particular, the law amends article 34 of the Criminal Code which states the criminal liability of legal entities under Luxembourg law. The reform is in line with the current case law and does not represent a major legal upheaval.

International data transfers: In Schrems II, the CJEU decided the EU-U.S. Privacy Shield no longer justified transfers to the U.S. and transfers based on Standard Contractual Clauses must be individually risk-assessed. This will complicate international data transfers.

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Collective Damages Act: The Collective Damages Act (WAMCA) came into force on 1 January 2020. Its key element is the possibility of claiming monetary damages in a collective action based on Section 3:305a of the Dutch Civil Code. It also includes stricter requirements for the representative organisations filing the collective action, such as transparency regarding their funding. In addition, there are changes that make proceedings more efficient and effective. For example, an Exclusive Representative will be appointed, collective actions relating to similar events will be dealt with together and there is a focus on the (collective) settlement of the claims. The EU institutions agreed, after highly controversial discussions, on a “Directive on representative actions for the protection of the collective interests of Consumers” in June 2020. This could lead to changes in the WAMCA, although the government believes not.

Read more...

Virtual court hearings: As a consequence of the COVID-19 outbreak, on 17 March 2020 the judiciary in the Netherlands decided to immediately close down court premises, meaning that judges and the courts’ staff were largely working from home (to the extent possible). New cases, submissions in pending court proceedings or correspondence with the court could still be filed (by post, fax or email). With respect to commercial disputes in particular, “in person” hearings were held only in “extremely urgent” cases. In order to move pending cases forward, the courts started to request the parties to submit their preferred way of continuance of the case, whereby a virtual hearing was stated as one of the options. The adopted Emergency Act COVID-19 expressly provides that the court may hold hearings through audio-visual equipment without the consent of one or more of the parties.

E-signing: COVID-19 has resulted in the increased use of e-signing tools for commercial agreements. The past year also has also seen cases where a party has disputed the authenticity of an e-signed document. In those cases, the Dutch courts found that the e-signing protocols followed did not qualify as advanced electronic signature under the EU’s eIDAS Regulation. This will not in itself invalidate any Dutch law agreements signed in this way, unless there is a legal requirement that the agreement be signed in person. However, the party seeking to rely on agreement will be worse off under civil evidence rules, leaving parties that accept e-signings somewhat more exposed to authenticity defences than parties that still require wet-ink signatures. In a commercial practice where there is trust between the parties, we still do see parties continuing to use electronic tools.

Linklaters succeeds before the new Commercial Court: The Netherlands Commercial Court (NCC), which opened on 1 January 2019, is competent to hear international civil and commercial matters in the English language if the Court of Amsterdam is competent and parties agree to submit their case to the NCC in English. EU lawyers and other foreign lawyers – acting together with Dutch lawyers – can appear before the Court. These advantages, together with the excellent reputation of the Dutch courts, are likely to encourage international parties to submit their disputes to the NCC. 

Dutch Supreme Court rules on issues of sovereign immunity: On 18 December 2020, in a case between Kazakhstan and Samruk (a Kazakh sovereign wealth fund) against the Stati investors (arising out of an arbitration under the Energy Charter Treaty), the Dutch Supreme Court ruled that there is a presumption that – based on the doctrine of sovereign immunity – state property is not subject to execution unless it is proven that the relevant assets are not ultimately held for sovereign purposes. In this context, the Supreme Court found that the burden of proof falls on the party seeking enforcement and execution against State property, and that a State is not obliged to provide information showing that the relevant assets have a sovereign purpose.

The judgment is available (in Dutch) here.

New rules of resolving disputes with sanctioned companies: On 19 June 2020 a new law amending the provisions of the Arbitrazh Procedure Code of Russia (the “New Law”) came into force. These amendments introduce new rules of resolving disputes with Russian individuals or Russian or foreign companies which are under economic sanctions imposed by other states.

Read more…

Success fee was recognised as a valid fee structure: On 1 March 2020 the amendments for the Federal Law dated 31 May 2002 No. 63 “On Advocate’s Activity and the Bar in the Russian Federation” came into force. These amendments legalised the success fee structures. The amendments expressly allow success fee structures in legal service agreements which: (1) are concluded with advocates; (2) cover only civil law cases; (3) contain a success fee structure that corresponds to the rules which should be developed by the Federal Chamber of Advocates.

Read more (in Russian)…

Amendments to International Arbitration Act: Following a public consultation exercise in 2019, two key amendments to the International Arbitration Act came into force in December. The amendments relate to (i) powers to enforce confidentiality obligations, and (ii) the introduction of a default mode of appointment of arbitrators in multiparty situations.

Read more…

Key dispute resolution cases: In BNA v BNB [2020], the Singapore Court of Appeal held that where a dispute resolution clause is silent as to the governing law of the arbitration agreement, the starting point is generally that the law of the arbitration agreement would follow the main agreement unless displaced by indications to the contrary.

Read more…

In BP Singapore Pte Ltd v Jurong Aromatics Corp Pte Ltd [2020], the Singapore Court of Appeal held that there is no mutuality and insolvency set-off is not available as between unsecured debts owed by a company to trading partners incurred prior to receivership, and secured debts owed by the same trading partners to the company incurred during the receivership.

In AnAn Group (Singapore) Pte Ltd v VTB Bank (Public Joint Stock Co) [2020] 1 SLR 1158, the Singapore Court of Appeal clarified the position under Singapore law that where there is a disputed debt or a cross-claim that is subject to an arbitration agreement, the courts will apply a prima facie standard of review such that winding-up proceedings should be stayed or dismissed so long as (i) there is a valid arbitration agreement between the parties, and (ii) the dispute falls within the scope of that arbitration agreement, provided that the dispute is not raised by the debtor in abuse of the court’s process.

Setting aside of arbitral awards: In its ruling on 15 June 2020, the Spanish Constitutional Court lay down limits to the expansive interpretation of public policy that had been followed by the Madrid High Court of Justice.

Read more…

The SCC adopts a model agreement for submission of an existing dispute to arbitration: The Arbitration Institute of the Stockholm Chamber of Commerce (“SCC”) has adopted a new model agreement for submission of existing disputes to arbitration. The new model agreement is intended for disputes that are either pending in court or are about to be referred to court. The purpose of the new model agreement is to facilitate the use of arbitration in relation to disputes where the parties have not previously agreed on arbitration as the applicable dispute resolution method. Submission agreements can be entered into after a dispute has arisen and may include a reference to a specific disputed matter. According to the SCC, submission agreements have been a highly requested tool in the last few months due to the increasingly high backlogs in courts as a result of the Covid-19 pandemic.

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Dubai Court judgment enforced in England: The English High Court recognised and enforced a judgment of the Dubai Courts in Lenkor Energy Trading DMCC v Irfan Iqbal Puri [2020]. The case was decided on common law principles, as there is no enforcement treaty between the UAE and the United Kingdom.

FCPA developments: In February 2020, in U.S. v. Hoskins, the Court of Appeal for the Second Circuit overturned the controversial conviction of a former Alstom executive for FCPA violations, which potentially limits the U.S. government’s ability to bring charges against non-U.S. nationals for conspiring to violate, or aiding and abetting violations of, the FCPA.

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In July 2020, the DOJ and SEC updated the FCPA Resource Guide to address the Hoskins decision, among other things.

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Meanwhile, the U.S. government settled major FCPA cases, including against Goldman Sachs (US$2.9bn in global penalties) and Airbus (US$3.9bn in global penalties).

SEC disgorgement authority upheld: In an important decision governing the SEC’s enforcement ability, Liu v. SEC, the Supreme Court issued a decision affirming the SEC’s authority to continue using disgorgement as a remedy in federal court enforcement actions, as long as the disgorgement does not exceed a wrongdoer’s net profits and is awarded for victims. 

DOJ, CFTC update corporate compliance guidance: In June, the DOJ published updated guidance on its approach to the evaluation of corporate compliance programs, reflecting a more nuanced approach that places greater emphasis on data analysis and takes into account lessons learned over the past three years and feedback from the business community. 

The CFTC also issued further enforcement guidance this year, including civil monetary penalties guidance and guidance outlining factors that the CFTC will consider when evaluating corporate compliance programs in enforcement actions. 

U.S. sanctions focus on China, Iran, Venezuela, North Korea: In 2020, the U.S. continued to increase sanctions pressure on Iran, Venezuela and North Korea, while also taking new measures against China in connection with China’s alleged human rights abuses in Hong Kong and with respect to its Uyghur minority. In July, President Trump signed the Hong Kong Autonomy Act, which requires the Secretaries of State and the Treasury to submit a report identifying persons who have materially contributed to China’s actions in violation of the 1984 Joint Declaration or Hong Kong’s Basic Law. The Secretaries must also report to Congress if they have determined that any foreign financial institutions have knowingly conducted a significant transaction with a person identified under the Autonomy Act. 

DOJ updates corporate compliance guidance: The U.S. Department of Justice (“DOJ”) has published updated guidance on its approach to the evaluation of corporate compliance programs. The guidance assists federal prosecutors assess the effectiveness of a corporation’s compliance program for the purposes of determining the appropriate form of resolution or prosecution. 

U.S. ramps up sanctions pressure on Iran after record-breaking year of enforcement: On January 10, 2020, President Trump issued a new executive order authorizing the U.S. Department of Treasury’s Office of Foreign Assets Control (OFAC) to designate entities operating in Iran’s construction, mining, manufacturing, textile, or other sectors on a sanctions list and impose secondary sanctions against any entity that supports such designated Iranian companies. OFAC also designated several senior Iranian government officials, Iran’s largest steel, aluminium, and iron manufacturers and certain Iranian metal producers, as well as several non-Iranian entities involved in the purchase of Iranian metals. 

U.S. court makes clear non-U.S. entities cannot avoid discovery because of potentially conflicting GDPR obligations: In January 2020, a New York federal judge ordered Telegram Group Inc. to produce to the U.S. Securities and Exchange Commission (SEC) in discovery a series of “highly sensitive” bank records but permitted the company to redact personal data given the company’s concerns about violating the GDPR. In February 2020, a New Jersey federal judge ordered Daimler AG and Mercedes-Benz to make unredacted disclosures of names, positions, titles and contact information of relevant employees as part of U.S. discovery proceedings despite concerns over GDPR given the protective order in place. The court rejected Mercedes-Benz’s argument that a confidentiality order was not sufficient to protect the “weighty interests” provided for under GDPR. . Both decisions serve as an important reminder that non-U.S. entities will not be immune from U.S. discovery because of potential conflicts with GDPR.

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