Understand Your Rights. Solve Your Legal Problems
The Arts industry has changed over the years, with the expansion of globalisation due to the rapid development of the internet, buying and selling art has taken a new stance. We speak with Jessica Franses, an Art Law Barrister, who discusses these changes and how her team at 36 Group developed the Art Due Diligence Group to help enhance the Arts industry even further.
What are the main issues that arise during Fine Art sales and out of all these issues, which is the most difficult for you to tackle?
Interestingly, no art case is ever the same and often many different issues arise. However, the main types of disputes relate to title or ownership of art, breach of contract, misrepresentation, misstatement or mistake, negligence concerning attribution of an artwork and fakes and forgeries.
Our team have found that the complex cases tend to involve multiple parties or institutions, such as trusts or museums or governmental bodies, or are cross border disputes such as in restitution cases, or cases involving national treasure laws or stolen artworks. Fakes and forgery cases and disputes over authenticity, attribution and auction negligence claims, are also complex.
What are key things to be aware about in the Arts industry? How is this different to other commercial industries?
The arts industry is not regulated in the same way as the financial sector and there is not the same level of awareness about fiduciary duties, money laundering, bribery and fraud, all of which can arise in fine art sales. Art usually consists of moveable assets which can be untraceable, and the scope for criminality is very real. Unless detailed questions are asked by advisers, traders and private individuals, they can become the victims of criminal activity and unwittingly facilitate crime.
As with all industries, there has also been a decline in the value of expertise. However, we believe that there is an even greater need to consult experts and professional art advisers. There have been a number of high profile cases involving fakes and forgeries and alleged breaches of fiduciary duties where excessive agents’ commissions have been charged, and it is clear that collectors, as well as the professionals within art galleries and auction houses, are vulnerable to fraud or unethical practices.
You and your team have been active in this sector for over 7 years how has it changed over the years and how has this affected your role?
Up until 10 years ago, the art market was still a closed world, where the dealers and galleries knew each other and their customers well. There were ethical codes of conduct and the market would self-regulate informally. The art market has now expanded considerably. There are many platforms or routes through which people can buy and sell art and, whilst this is an extremely positive development, it brings challenges, for example, many more outlets through which unprofessional trading practices can occur. (We advised a client who bought many fake artworks online from a business thought to be operating in the UK but was in fact overseas; we have advised an art dealer who believed he had been the victim of an auction ring in the UK.)
With many new collectors from different cultural, professional and financial backgrounds, there is a new type of consumer—one who demands greater professionalism from the trade, and this is forcing a change. Equally, galleries and art advisers want the protection of contracts for transactions with new customers and are rapidly adapting their business models to meet the challenges.
Moreover, what changes do you foresee in the future that will continue to enhance the industry?
There have been calls for greater regulation of the marketplace. There are many laws that govern transactions and with greater education in the industry on the laws that apply and, through greater consumer awareness, there will be less scope for problems to arise.
Buying high value art can be a risky business unless proper due diligence is conducted. At 36 Art, we advocate that both buyers and sellers need to undertake due diligence to obviate potential legal risks as we have seen just as many problems for sellers as we have for buyers.
Earlier this year, our team helped to develop the Art Due Diligence Group. This company brings together leading service providers who conduct all stages of due diligence for art transactions, from provenance research, title checks, forensic checks, KYC and background checks on buyers and sellers, to assistance with the sales process, reputation management and specialist assistance to resolve any disputes through mediation, other forms of ADR and litigation. (See www.artduediligencegroup.com)
We believe that other groups like ours will emerge to provide support for the Industry, to help protect against various criminal threats and unethical practices and to enable it to regulate itself even more effectively.
Jessica Franses
Art Law Barrister
36 Art
Part of the 36 Group
36 Bedford Row
London
WC1R 4JH
Telephone: +44 (0) 20 7421 8030
Email: clerks@36civil.co.uk
www.36group.co.uk/art
Jessica Franses is an art law barrister at the 36 Group. She works within an art law team of 7 barristers all of whom have worked on art and luxury asset cases.
The 36 Group Art Law team have very specific sector knowledge. Art Law is a niche specialist area and our barristers have immersed themselves in the arts and understand very well the needs of their clients. We also have the technical knowledge across the commercial, civil, criminal and international law that applies, such as theft of art, criminal damage to art, money laundering, the sale of or making of fakes and forgeries. We are public access qualified, which means you can come directly to us without first instructing a solicitor. Our ethos is to bring matters to a satisfactory conclusion avoiding court litigation through formats of alternative dispute resolution, wherever possible.
Amid ever-tightening global data regulation, Lawyer Monthly invited Todd Ruback, Chief Privacy Officer & VP of Legal Affairs at Evidon, to share his insight on navigating the new data protection compliance climate.
Todd discusses shifts in the ways companies view data protection, how they impact the legal community, and the best way firms can adapt. As Chief Privacy Officer and VP of Legal Affairs at Evidon, a global technology company that produces governance, risk and compliance tools for data protection laws, at Evidon, he has plenty of experience to draw upon.
Privacy law is undergoing a shift: what’s changing and why?
Laws naturally follow evolving business practices and privacy is no exception. Business today is digital, which needs data to flow easily and almost anywhere, forcing a paradigm shift away from the traditional notion of borders toward a borderless world—at least as far as commerce is concerned. Thus, we are seeing the emergence of global standards — in the form of laws or principles. The EU's General Data Protection Regulation (GDPR) is such an example. Fundamentally, an update of current EU data protection laws, the GDPR aims to give control over personal data back to consumers by establishing new individual rights, while at the same time beefing up obligations of the companies that collect personal data. What makes the GDPR especially important is its remit, namely that it applies to any organisation that offers its services to an EU resident, is established in the EU, or is engaged in website monitoring. The remit sweeps up just about everyone.
Yet while the GDPR is proscriptive in nature, it is not prohibitive, and will serve as a single global standard for many multi-national organisations to benchmark against. Since the US doesn’t have its own national privacy law and the EU is a critical trading partner, many US based multinational companies will adopt the GDPR as its global data protection standard. In fact, the GDPR will become the de facto national privacy law in the US.
How do law firms need to prepare their clients for regulatory changes?
Now more than ever, organisations need trusted business advisers, who not only have a deep understanding of what regulations entail, the details and nuances, but also how the law affects the particulars of the business. The GDPR will force companies to re-think their relationship to data — what they collect, the way it is stored, and how they use it — as well as change how websites work. Consent management, an emerging discipline, will become a central pillar for any website in the near future. There are many law firms that explain laws to their clients, but what clients really need to know is how it affects them and what they can do to turn new regulations and obligations into a strategic advantage. That's true added value. This unique knowledge set is what will separate the winners from the herd in the legal community.
Are businesses fully aware of the effects of the General Data Protection Regulation?
It depends on the business, industry, and jurisdiction. Generally, I see organisations that are already operating in heavily regulated areas, like financial services, taking the GDPR in their stride. Yet there is a need for greater awareness in industries, such as martech and adtech, of the challenges it presents for digital advertising. For example, the GDPR introduces a new consumer right — the right to object to profiling — which will directly impact the way advertisers, and their supply chain partners, track consumers.
Firstly, they will be legally required to obtain unambiguous permission from individuals to use their data. Secondly, advertisers will need to have comprehensive knowledge of how data is collected, stored, deployed and protected, both internally and by third-party vendors. So, ensuring every stage of processing is compliant will be a significant activity for advertisers, necessitating constant database assessment, organisation and cleansing to avoid a breach. But many are waiting for a few leaders to step forward, and thinking they can find regulatory safety by hiding in the shadows. This is not a wise strategy.
The legal world has been focused on the General Data Protection Regulation for a few months now; is the industry paying enough attention to the ePrivacy Regulation?
The GDPR and ePrivacy are both critically important. The ePrivacy Directive is presently going through it’s own legislative overhaul, specifically to close any gaps ePrivacy may have with the GDPR. The proposed legislation most likely won’t be effective contemporaneously with the GDPR, on 25 May 2018, but it may not matter because ePrivacy will adopt the existing data protection framework, in this case the GDPR. That means that whatever the outcome of the ePrivacy overhaul, the ‘consent’ as defined by the GDPR will be the new standard. We can expect then, that both ‘implied’ and ‘explicit’ consent—the existing form of consent in today’s ePrivacy Directive—to be replaced by the GDPR’s ‘prior consent’ approach, which promotes specific, clear and unambiguous consent to process someone’s personal data. This heightened level of consent will be especially vexing for the martech industry, which often collects personal data on websites, but doesn’t have a nexus with the website visitor. It will be left to the website itself to get consent on behalf of these invisible companies.
However, caveat emptor with regards to the ePrivacy Regulation, because it not only will adopt a tough new level of consent, but not getting consent right will open the door to GDPR levels of penalties, up to €20 million or 4% of global turnover, whichever is more. Where the ePrivacy Directive was inconsistently enforced and didn’t have much monetary risk for non-compliance, the ePrivacy Regulation, will be just the opposite: well enforced because it’s easy for the enforcement authorities to see a consent solution, and the penalties can be crippling, if not fatal. It will be a shame if this happens, but it will also be the catalyst to nudge the market into compliance.
How do you expect privacy law to change in the future, and what advice should firms give to prepare their clients for this?
I would suggest firms be on the lookout for the emergence of more notice and consent laws, most likely through revisions to existing national privacy laws around the world. These laws will be aligned and both the GDPR and the ePrivacy Regulation will require companies to be more accountable for their actions and rethink their data strategies. Companies will also need to consider how they can go beyond simple compliance. By exceeding legal standards, they can be ahead of consumers’ increasing privacy expectations and may be able to future proof themselves.
Todd is the Chief Privacy Officer & VP of Legal Affairs at Evidon, Inc. where his responsibilities include overseeing the company’s privacy practices, engaging with the privacy community, and managing the legal department. He holds privacy certifications as a CIPP-US/E and CIPT through the International Association of Privacy Professionals. Prior to Evidon, he was head of the privacy and technology practice at the law firm of DiFrancesco, Bateman, Coley in Warren, New Jersey and was also President of the Privacy Special Section of the New Jersey State Bar Association. Todd attended the University of Denver where he received both his BA and his JD.
Evidon is a global technology company focused on simplifying the complex world of Digital Governance. As companies add more marketing and advertising technology to maximize the return on their digital investment, building consumer trust has become ever more important. Fulfilling this promise requires organizations to have a comprehensive approach to govern data collection across their sites, apps, and ads while staying in compliance with global regulations. The world’s leading brands rely on Evidon to empower their Digital Governance success across millions of web pages and apps that drive billions of online revenue.
A key aspect behind a successful verdict and settlement for your client, says Deborah Gander, Partner at Colson Hicks Eidson, is: “Recognising a wrong and having the drive to do something about it – to make it right for my client and, oftentimes, to make the world a safer place for those who follow.”
She expands, “I choose cases where I feel the impact of what my clients have been through, and how it has changed their lives, and I communicate that to the jury.
“Understanding and being able to clearly explain the ways in which a defendant wronged my client and must be held accountable, provides the jury the incentive they need to right the wrong.”
We speak more with Deborah about her notable cases, the importance behind seeking justice over personal injury and malpractice cases, and, most importantly, what drives her to achieve the best for her clients.
Throughout all the areas of practice, from wrongful death to professional liability, can you share with Lawyer Monthly the area which can pose the most challenge for you?
How do you overcome said challenge? All of my areas of practice are challenging, and across all areas there is the constant drive to give voice to someone who cannot speak for themselves, or stand up for themselves, or fight the necessary battle on her own behalf. For me, challenge is motivation. All of my cases require an intimate knowledge of the medical records, and many of them require knowledge and understanding of engineering plans and documents or statutes and ordinances. Each case requires fully immersing myself in a new subject to become expert in a short amount of time. Over the years, much of the knowledge from one case translates well to others, but every case involves learning something completely new and fascinating. Because my practice involves catastrophic injuries and death, it requires significant involvement with my clients who, time and again, inspire me with the sheer power of their love and human connection. The largest person, both physically and professionally, crumbles when he loses a child or sees his spouse left disabled. The tiniest, seemingly most fragile human shows a spine of steel and superhuman grit when someone they love needs them as a caretaker, or case manager, or simply to hold and share the memories of who a loved one was and what their life meant to those left behind.
Can you speak us through the process you undergo when given a case involving insurance companies’ bad faith?
Typically my involvement with bad faith comes from being the lead attorney in the underlying tort case, in which an insurance company fails to settle the case within policy limits and protect its own insured from an excess judgment that could financially wipe out the insured. At the conclusion of the underlying case, the “wronged insured” (who had been the defendant who my client sued) makes an assignment of rights to my client who then is legally permitted to pursue full damages against the insurance company. From the outset in the underlying case, it is important to provide the insurance company with all the information they request, and any information I can anticipate they might need, and to document the file accordingly to prove I offered them a reasonable time to resolve the case once they had full knowledge of the risks posed to their client.
You completed a case that was the largest ever in Federal Tort Claims Act Case; can you speak on the challenges this case posed and how your expertise developed post this case?
The Bravo v. USA case was the largest Federal Tort Claims Act award ever at the time and remains the only case in which the US Government has been held liable for the acts of an independent contractor, which prevented the Government from shifting blame to a civilian doctor who carried insufficient insurance to compensate for this child’s injuries. In addition to these novel issues of agency and “legal employment”, the case required significant understanding of medicine, as it was a case against a military hospital for obstetrical negligence that resulted in catastrophic injuries to an unborn child. On a personal level, I was inspired by my client, who poured endless, tireless, selfless love into her child who would never see her, hear her, or recognise her. All she hoped in return was that her love and loving actions could provide him comfort during life. I still use that client as the yardstick by which I measure my own parenting skills.
After serving as an adjunct professor, what do you think is vital for aspiring lawyers to be aware of whilst training in the sector?
Be clear, be concise, and always be prepared. We all, including judges and clients, are strapped for time and have numerous demands on our attention at once. Know your case and the legal authorities cold. Get quickly to the point. Tell the judge what you want them to do – a lot of attorneys forget this obvious but often overlooked part of the argument.
As former Chair of the Civil Litigation Committee of the Dade County Bar Association and current Membership Chair of the Miami-Dade Chapter of the American Board of Trial Advocates, what changes do you think Civil Litigation should undergo to enhance the legal sector in your jurisdiction of practice?
Trial attorneys need a formal mentoring process, in which younger attorneys are paired with more experienced trial attorneys so that they get into the courtroom early and often under the tutelage of experienced, skilled attorneys. The average age of trial attorneys with real experience is getting older and older as it becomes harder for young trial attorneys to get the necessary experience to handle cases on their own or even as part of a team. In the long term, this will have devastating consequences on the legal system that relies on experienced advocates on both sides to achieve justice.
Mini Questionnaire – ‘Food for Thought’:
What has been your biggest achievement in the past 12 months?
Trying a case for the wrongful death of two college student pedestrians, that resulted in a verdict in excess of $8 million, and then working closely with bankruptcy counsel to collect on the verdict after the defendant tried to have the judgment discharged in bankruptcy. Because of our efforts, the parents of these students will have financial security in their golden years, and they were able to tell the story of their amazing children to a jury and know, through the verdict, that the jury understood and cared.
What do you want to achieve in 2017?
Continue to bring important, inspiring cases to the forefront of our profession, to effect positive change for my clients and the community.
What’s most important to you?
My ability to wake up every morning and know that I am changing lives for the better. My work is fascinating and intellectually stimulating, but the most important aspect for me is that it allows me to be involved in something I care about and am inspired by, and to fight for people I care about and am inspired by, and for causes I care about and am inspired by. It gives me purpose, and that gives me strength and energy to always fight one more day.
Notable Cases:
1.Bravo v. USA – Obstetrical negligence case against a naval hospital where the negligence resulted in catastrophic birth injuries that left the child vegetative. The award was the largest against the US Government in the history of the Federal Tort Claims Act, and the only time the government has been held liable for the acts of an independent contractor. As a result of the trial, US Senator Bill Nelson initiated an investigation of the hospital that resulted in its temporary closure while new protocols and protections were put in place.
Deborah J. Gander
Partner | Colson Hicks Eidson | 255 Alhambra Circle, Penthouse | Coral Gables, FL 33134 | tel: 305.476.7400
web: www.colson.com
I am Deborah J. Gander, a Board Certified Trial Attorney and Partner at a boutique trial firm, Colson Hicks Eidson. My practice specialises in catastrophic personal injury and wrongful death, medical negligence, products liability, and heavy trucking.
Over the past decade, we have seen nations fall in love with Brazil; the country’s natural beauty has not been their only asset, with the World Cup and Olympics showing the world what talent Brazil truly has. Alongside their flair for gaining international attraction, their M&A and investment scope has also thoroughly developed. We speak with Martim Machado, an experienced corporate legal expert, on how Brazil has developed in the M&A world and what he expects in the near future.
You have practised law for over 20 years, both in Brazil and abroad (in New York and Washington, DC). How have you seen Brazil developed in regard to the M&A legal practice?
Brazil has been adversely affected by many “plagues” during its recent history (economic crisis, political instability, corruption scandals). And these “plagues” tend to cloud our judgment and prevent us from seeing what the country has been able to accomplish in many different areas (social, economic, political) over the past 20 years.
Brazil has a consolidated democracy, with strong institutions (that have been recently tested and have withstood the pressure), a very large economy (one of the largest in the world), and a society that, in spite of dwelling with urban violence, has been spared from terrorist acts, civil wars and regional conflicts, and is better educated, less unequal and more vigilant and conscious about its rights and roles. Without a doubt, Brazil is a much better country now than it used to be 20 years ago. And the same may be said to its M&A legal practice.
Generally speaking, laws and regulations have evolved, best practices have been adopted (in how we approach, conduct and document M&A transactions), alternative dispute resolution methods – notably arbitration – have provided M&A players with a more efficient way to settle their differences without having to resort to the not always reliable Brazilian judicial system, and the legal market has become more mature, competitive and prepared to handle sophisticated transactions (mainly with the flourishing of new, highly qualified local law firms). More specifically, our legal M&A market has been strongly (and positively) influenced by the constant interactions between Brazilian and non-Brazilian lawyers since the late 90’s, which were fostered by an increasing number of international transactions involving Brazil. These interactions, among other benefits, resulted in the introduction of New York/English style M&A documents – nowadays the market standard – to the local market, sparked young Brazilian lawyers to seek knowledge and experiences in the US and Europe, gave international law firms an opportunity to set up shops in Brazil (in spite of some initial resistance from the local Bar), and contributed to an information and best practices sharing that has added certainty to M&A transactions and has improved the M&A legal practice.
How have you seen the M&A investment change over the years? Have international opportunities, such as the Olympics, helped the country to further progress? And what to expect from the near future?
Many in Brazil dispute the benefits of the 2014 Soccer World Cup and the 2016 Summer Olympics. Critics claim that the World Cup and the Olympics drained public funds from areas where they were more needed and provided corrupt politicians and businessmen one more opportunity – and what an opportunity – to profit. But, despite the criticism, these two world class events, without a doubt, put Brazil in the spotlight and have helped foreign investors to see the country as a viable investment option.
The M&A market had been active for decades before the World Cup and the Olympics took place. But the wave of optimism generated by the choice of Brazil as a venue for these two events (a wave that began to roll out years before the events actually happened), coupled with what at the time appeared to be sound and promising economic/social indicators, boosted foreign direct investment and M&A transactions for at least 5 years beginning in 2010.
The current crisis and the uncertainties that followed it have clearly affected the M&A market. 2015 and 2016 were difficult years. 2017 sees signs of recovery, but the Brazilian economy is too big to ignore, too large to crash. Even in a slower pace economy, there will be M&A opportunities for strategic multinational players with a long-term view, for competitors weakened by the crisis to consolidate their operations, and for international investors with a higher appetitive for risk to find the potential of big returns in distressed assets or good bargains.
2018 will see presidential elections again. The election process should bring more political stability to the country. And depending on which political forces prevail at the election (the scenario is still uncertain), the Brazilian economy should be positively impacted by the greater political stability. So, after years of recession and low growth, Brazil may see another period of boom beginning in 2019 and 2020.
Aside from effective due diligence, what else do you think accounts towards a successful M&A transaction? What challenges do you often witness along the way?
Every M&A transaction is different. No matter how experienced one might be, there is always something new to learn from and deal with in an M&A transaction. And this is particularly true in Brazil. The size of the deal is not often commensurate to the challenges it presents. Smaller deals involving targets which are medium-sized, family-owned companies tend to be much more complicated than high profile transactions between sophisticated players.
Taxes, labour and environmental issues are usually the villains in every Brazilian deal, but the lack of proper accounting controls and systems, the unreliability of financial statements and other difficult-to-believe-problems that not even a very keen investor is able to anticipate (and, trust me, these problems exist) also play an important role in “killing” transactions.
I believe that more important than effective due diligence (and I am not diminishing the importance of good due diligence being exercised), having a good understanding of the parties’ goals (including the adverse party’s goals) and the ability, knowledge and experience to properly deal with the issues that a thorough due diligence exercise will uncover, is very key to a successful M&A transaction. Spotting the issues is not always the problem (although they hide well sometimes); however, not knowing how to address the issues in a sensible and mutually acceptable way, is.
Martim Machado
Partner
T: + 55 11 2394 8960 l + 55 11 2394 8900 l M: +55 11 9 9246 8484
Av. Brig. Faria Lima, 1.663 – 5º andar l 01452-001 l São Paulo, SP l Brazil
martim.machado@cgmlaw.com.br l www.cgmlaw.com.br
Martim Machado is one of the founders of CGM Advogados, a leading Brazilian firm with a full-service practice based in São Paulo, Brazil’s most populous and important city. CGM represents clients from different sizes and industry sectors (including international companies doing business in Brazil) on a variety of legal matters. A marathon runner and a long distance road biker in his free time, Martim is an experienced corporate/M&A Partner who has been “enduring” in the challenging Brazilian market for over 20 years. He has been involved in a number of M&A transactions representing both sellers and buyers.
Natacha Onawelho-Loren worked as a UK private client tax solicitor for a number of years in the City of London before becoming in-house counsel at the Geneva subsidiary of an international trust group. This month she discusses with Lawyer Monthly all about trusts and matters business start-ups should consider. After joining Investec Trust (Switzerland) SA in 2007 as Legal Adviser, she was appointed Legal Director for the Trust group in 2011, and thus she has a vast amount of knowledge on “how to be a good trustee”.
You provide advice on all aspects of trust & fiduciary matters – what are common aspects and regulations that non-experts are often unaware about?
The most common aspect that people are unaware of, or tend to forget, is that trusts are relationships and not entities (except for Foreign Account Tax Compliance Act (FATCA) and Automatic Exchange of Information (AEOI)/ Common Reporting Standard (CRS) purposes). To establish a trust does not require registration anywhere; there is no such thing, for example, a certificate of good standing for trusts (which is a request we received no later than last week!). This bilateral relationship between the trustee and trust's beneficiaries is regulated by law and the terms of the trust deed with the trustee being held to very high standards.
As a lecturer on trusts, what do you think is most important to advise on?
I lecture for STEP, both in Geneva and Zurich, on "how to be a good trustee". The session focuses on the dos and don'ts of acting as trustee and highlights the various risks inherent to the position. I remind trustees (externally and internally) of the high level of care they need to display at all times, as anything they do may, and will one day, be scrutinised. The session also serves as a reminder that ultimately it is the trustee who will be called to account for any potential wrongdoings or mismanagement of the trust's assets. Therefore, the trustee should take all the decisions and avoid being directed by the settlor. The duty and level of care is high. Being a trustee can be very rewarding but is not without risks.
Moreover, do you think your advice will change due to Brexit, when regarding trusts to the intermediary market in London?
It is a bit early to feel the effect of Brexit on the London intermediary market. London is a sophisticated international financial and wealth structuring centre and as such will continue to attract wealthy families. Its property market remains an attractive asset class for many internationals subject to geopolitical instability. Going forward however, Geneva and Zurich will probably grow more in importance, owing principally to Switzerland's political, tax and financial stability and its educated workforce.
What advice would you offer start-up businesses when regarding fiduciary trusts?
Scope your risks and understand your fiduciary responsibilities. The trustee carries the legal and fiduciary risks of any act he undertakes which acts upon 3rd parties and the trust's beneficiaries. It is therefore important to have a precise understanding of what the role entails and what standard is expected, in particular in relation to the administration of the trust's assets. Holding a bank's portfolio requires a different skill set, team organisation, intermediary network and monitoring tools than, for example, operating a mine in Kazakhstan.
You are based in London, Geneva, Zurich and Moscow; which place do you think is the most advanced when regarding business law?
For trust law, Jersey and the UK are the most advanced, although UK matrimonial courts have displayed a certain aggressive nature towards trusts in the last couple of years.
Moreover, do you think each city could benefit from adopting certain regulations from other cities?
At Accuro, we welcome the new legislation to come into force in Switzerland in January 2018, on the regulation of trustees and trustees' activities (LeFIN). This will put the Swiss trust industry on a par with other established trust's jurisdictions and will increase the attractiveness of Switzerland as a centre of trust's administration with strong reputable players.
Are there any changes in regulations to which you have an eye on?
The group is currently in the middle of the reporting for AEOI (early adopters). FATCA, dare I say it, has become almost routine. We are getting to grips with the legal entity identifier (LEI) legislation which was introduced into Swiss law under the Financial Market Infrastructure Act) which requires us to register certain of our trusts and companies where they hold derivatives. Last month, the UK enacted a new legislation in the form of regulations ("the Money Laundering, Terrorist Financing and Transfer of funds Regulations 2917 "MLR2017") whereby trustees, whether they be UK or foreign, will have to register and report on their trusts to the UK authorities where there is an exposure to UK tax.
Natacha Onawelho-Loren
Legal Director
Telephone: +41 (0)22 807 2042
Facsimile: +41 (0)22 807 2005
Email: n.onawelho-loren@accurofiduciary.com
Natacha is Legal Director of Accuro and is a solicitor qualified in English law. She works with intermediaries and external advisers to set up bespoke structures while, as in-house Legal Counsel, she provides internal advice to Salamanca Trust and Fiduciary on all aspects of its trust business across its network of offices. A fluent English, French and Russian speaker, Natacha also actively participates in developing the business with a particular focus on opportunities in Russia and Eastern Europe.
She holds a degree in business law, is an active STEP member and lectures on trusts to the intermediary market in London, Geneva, Zurich and Moscow.
Accuro is a multi-jurisdictional Trust and Family Office business that works in partnership with international families holding cross-border assets.
We administer and oversee over USD 10 Billion of financial and non-financial assets on behalf of wealthy families and entrepreneurs around the world.
Our team consists of over 100 employees including a large number of qualified lawyers, STEP members, chartered accountants and other experienced practitioners.
Patent rights are crucial value drivers for individuals and technology companies, large or small. We speak with George Schlich for a selection of best practice pointers under the law of the European Patent Office (EPO) on how to get the most out of patent applications, especially the “first filing” that establishes a priority date for and sets the framework for future patent rights.
Who is the most important person when it comes to getting decent patents?
Of all people involved in the filing, prosecution, grant and enforcement of patent rights, it could be argued that none are as important as the drafters of the “first filing” (i.e. the first patent application for an invention, relied on to establish the date of the invention via a priority claim in later foreign or International patent applications, the “foreign filings”). Headlines in the IP news highlight victories skilfully won in court but regardless of the skill and experience of the litigators, certain errors or omissions made by the drafters may be irrecoverable, while stoutly created rights should withstand all slings and arrows, however outrageous.
For those not expert in patent law, can you set out the significance of a priority claim linking the foreign filings and the first filing?
The first filing is typically filed in just one patent office. Within 12 months foreign filings are made in multiple patent offices, around the world. These are linked back to the first filing by a claim to priority under the Paris Convention. If that link is accepted then the foreign filings are examined on their merits (e.g. for sufficiency, novelty and inventive step) as if filed on the day of the first filing.
What factors compete with each other when these ‘first filings’ are being prepared?
The fortune of the desired patent rights will rest heavily on the combined teamwork of the inventor(s) (the client) and the patent attorney. This may be tested by tension between the needs of the client and the recommendations of the attorney when making the first filing. Often the client requires a speedy first filing as they are eager to disclose their invention. For smaller applicants, funding may be limited and therefore cost is also a factor that the drafting patent attorney must manage. With premature or inadequate first filings, however, comes the danger that the invention may develop and therefore the patent eventually granted will no longer cover the commercial product or the first filing cannot be validly amended to cover the product, resulting in an effective waste of patent prosecution costs. If a first filing is made without enough data, it could be more vulnerable to refusal during prosecution or the patent exposed to revocation after grant, resulting in a loss of protection.
How should the client / patent attorney deal with those developments in the invention?
First, such developments are to be expected. Next, it is a reality that clients will want to tell the world of their invention at the earliest possible moment, but it is really best, as far as getting valid rights is concerned, to wait. Once the hard work of submitting the first filing is complete, applicants are sometimes of the belief that they are free to disclose their invention, without implications for later foreign filings because of the link to the first filing by the priority claim. It is then very tempting to believe the invention is “safe” from one’s own disclosures by the act of the first filing. But it is not safe, because no one can completely control events between the first filing and the later foreign filings.
In order to validly claim priority from the first filing, current EPO law per decision G2/98 requires that the claimed subject matter be directly and unambiguously derived from the first filing, using common general knowledge alone. It is almost inevitable, however, that there will be some features of the invention that change. Rights may also be threatened by an intervening publication which includes a feature not disclosed in the first filing. It is therefore advisable to monitor developments to the invention that occur after the first filing. If there are important changes to the invention that are not yet covered, these should be captured in one or more “follow-up” filings. When the applicant is intending to disclose these improvements, these follow-up filings should, of course, be filed before the disclosure.
Applicants should be informed of the importance of communicating developments to their patent attorney, and preferably regular meetings should be arranged to go over any developments, paying attention even to what may seem like minor details that have changed since the first filing.
In both follow-up filings and foreign filings desired to be linked by priority back to the first filing, it is important not to change the wording or vocabulary used to describe the invention without good reason. A simple change of wording can lead to a loss in priority for a certain feature where the meaning of the wording is not identical, breaking the link. If a change of wording is required, it is recommended to retain the original wording (with the new wording added) to ensure that you leave open the option of relying on the first filing for the original wording and at least partially maintaining that link.
How does the inventor know there is enough data for a first filing?
In short, filing on a hunch will give no valid patent rights – other than in exceptional cases you will need some data. According to EPO case law, in order to validly establish priority for subject matter in a first filing, the subject matter must be sufficiently disclosed, this usually means with enough data for the claimed invention to be plausible. The EPO can be generous to a limited extent: post-filing evidence can bolster validity of the first filing but only provided it is not being used to cure a fundamental insufficiency through lack of data and is instead confirming the underlying teachings in the first filing (decision T1205/07). The need for support can vary between technical fields, for example: in second medical use patents, data should link the activity of the compound to the disease mechanism. So, don’t file on a hunch but wait, accumulate data and file when you have enough to render the invention plausible.
If the invention develops, what other options are there to protect those down the line?
Drafters of first filing should appreciate one aspect of patent examination at the EPO: that selection inventions can be patented. This gives some interesting options, one of which is to draft the first filing in a way such that there is basis for multiple combinations of one or more or all features of the invention. This should remove those combinations from being patented by the competition. Alternatively, the drafter may wish to purposefully not specify certain combinations so that these can be protected in a later application as a selection invention, with a later filing date extending the patent lifetime for the combination. This approach is of general application and commonly seen in the pharmaceutical field, where a first filing may not specifically disclose the lead compound (often as it is not yet known) but broadly encompasses it in the claims. As lead compounds have advantageous properties (which are often unpredictable based on their structure), a later filing directed specifically towards the lead compound (or a narrowly defined family of compounds) can be held as new and inventive. Drafters can decide at the time of filing whether to leave opportunities for later selection filings. As with many decisions, it must be taken there and then in the first filing.
Can you sum up the key points for our readers?
As the text of the patent application develops from the first filing file updated applications for developments, keeping track of and retaining reference to the original wording in the first filing – you might have to guarantee the link back to this for valid rights as they occur. Separately, only file when you have enough data. This latter point is on the one hand a simple statement of a desideratum, but on the other vital also to valid rights; you will have to make the call as to when the data you have means the invention is plausible. Finally, understand how the patent world (particularly in Europe) deals with selection inventions. You may have the option to choose whether to leave some or no room for extra patent filings in the future.
George Schlich
Director, Schlich Ltd
European and UK Patent and Trade Mark Attorneys
About George Schlich:
George Schlich MA (Cantab) is a European Patent Attorney who drafts, files and prosecutes patents covering life sciences, pharmaceutical and mechanical subject matter. He conducts inter partes Oppositions and Appeals at the EPO and represents amongst others Intellia Therapeutics in IP proceedings relating to CRISPR technology. He is a tutor for UK and European “final” patent attorney examinations and has his fingers crossed that the UK will ratify and join the UPC, Brexit or not!
Firm Profile:
Schlich is a full service patent and trade mark attorney firm specialising through its 9 attorneys in chemical, pharmaceutical, biochemical, life sciences and mechanical technologies. The firm has an active EPO opposition practice and has supported flotations on AIM and NASDAQ listings for its start-up clients.
It was perhaps with a degree of irony that I happened to turn on my television on the 4th July to be confronted with a controversial news story regarding independent experts or, to be more precise, potentially ‘tainted’ independent experts.
Let me explain.
Most people will be aware of the terrible fire that occurred on 14th June at Grenfell Tower in West London and the appalling loss of life that ensued as a result. Understandably, many questions have been asked as to what exactly happened and why the fire apparently spread so fast.
In response to these concerns Theresa May, the Prime Minister, ordered a full public inquiry into the disaster and stated that people needed to know what happened. She announced that the inquiry would be led by Sir Martin Moore-Bick QC.
On 26th June the Communities Secretary, Sajid Javid MP, appointed an Independent Expert Advisory Panel to advise the Government on any immediate steps to be taken on fire safety … and this is where the controversy starts.
Included in the panel of four experts are Sir Ken Wright (Chairman) and Dr Peter Bonfield both of whom are associated with the BRE (Building Research Establishment) Group. In fact, Dr Bonfield is the current Chief Executive.
The BRE were previously commissioned by the Government and produced a report on fire safety of buildings. A Barrister for the Grenfell victims, Mr Jo Maugham QC, stated that he believed the experts appointed by the Government may be tainted. Mr Maugham commented in a BBC interview that there would be a potential conflict if, as part of the public inquiry, the experts found they needed to contradict advice they had previously given and he questioned whether they would be prepared to do that. His point being that he was concerned they will already be minded to form an opinion that aligns with their previous advice and thus their ‘independence’ could be compromised or, as he put it, ‘tainted’.
As a Construction Quantum Expert I am regularly appointed to give ‘Independent Expert Advice’ and this led me to thinking about the term ‘independent’ and its practical and literal meaning.
A quick search on the internet revealed the following when asking for the meaning of being independent:
· Not influenced or controlled by others in matters of opinion, conduct, etc; thinking or acting for oneself.
· Not subject to another’s authority or jurisdiction; autonomous; free.
· Not influenced by the thought or action of others.
· Not influenced or controlled in any way by other people, events or things.
It seems clear that the common theme is that someone acting independently does so when they are not influenced or controlled by others. This accords nicely with the judgment of Mr Justice Cresswell in the case known as the Ikarian Reefer, where he stated that expert evidence presented to the Court should be, and should be seen to be, the independent product of the expert uninfluenced as to form or content by the exigencies of litigation. He also went on to say that an expert witness should provide independent assistance to the court by way of objective unbiased opinion in relation to matters within his expertise.
In practice however, I would suggest that being independent is trickier than the theory. Ordinarily an expert will be paid by the party instructing him/her, so does this pass the test of ‘not being influenced’? Is it possible to be truly independent if, no matter how much you’ve put it to the back of your mind, you’re being paid by one party?
To my mind, expert witnesses often fail the test of acting independently. I’ve encountered instances where experts appointed separately by both parties come to completely opposing views/opinions, yet curiously they are always in favour of their own client. Coincidence?
An independent expert ought to be able to draw exactly the same conclusion regardless of which party has appointed him/her even if it is to the detriment of the client’s case. Experienced and competent experts will embrace this principle of acting in a consistent manner and conduct themselves accordingly for the benefit of the Tribunal, to whom they owe a duty.
But what about the notion of being ‘tainted’ and how remote can this be? In construction disputes we know that a construction consultant who prepares claims for the client cannot act as an independent expert in any subsequent proceedings, because they would have already performed the role of an advocate which would taint their independence.
What about if you prepared those claims whilst at a previous firm. Could you later act as an independent expert? I would suggest not.
Consider the position whereby a consultant has given advice to a sub-contractor and then years later is asked to act as an expert by the employer. Is that too remote? It’s likely to depend upon the circumstances.
So that brings me to the question, who determines whether your independence has been compromised or not?
In my profession, we invariably raise any potential issue with our instructing lawyer and then discuss the implications with them. If there is any doubt about independence the expert is likely to be invited to resign.
What about the two Government appointed experts, Sir Ken Knight and Dr Peter Bonfield? Well this is a public inquiry and one that will be severely scrutinised by potentially millions of people. I refer back to Mr Justice Cresswell’s judgment where he stated that expert evidence should be, and should be seen to be, the independent product of the expert.
I can sympathise with Mr Maugham’s position that having provided previous advice to the Government on the same matter of substance, the experts are likely to be seen to be ‘tainted’. And I say ‘seen’ because it’s ‘seen’ by the public and they are the people that need to be convinced of the experts independent nature to feel confident that the conclusions drawn have been derived from independent, objective and unbiased opinion.
Paul Taplin FRICS
Head of DIALES (Middle East)
DIALES Expert Services
We speak with Dr. Richard Brunner, MBA – Global Head of Legal, Dennemeyer Group, on how technology and blockchain will majorly impact the legal profession.
How do you currently see the global IP landscape evolving?
Technology and globalisation are the key drivers for the creation and protection of intellectual property. The increasing speed of technology development and shortening innovation cycles, on the one hand, and a progressing territorial expansion of sales markets on the other hand, challenge the traditional mechanisms of protecting intellectual property amid intensified competition that comes along with this development. Seen in this light, it is not surprising that the number of registered patents, trademarks, and designs are still on the upswing; however, a territorially fragmented protection of IP rights is in contradiction to globalisation and dearly bought, especially considering that effective legal enforcement of intellectual property rights is still not at the level it should be in many jurisdictions.
Can you exemplify this?
IP strategists usually look at the importance of an innovation for the company’s business, the market, and eventual other use cases, when making the decision if and where to apply for patents. IP protection comes at a cost that has to be measured in time, money, and the fact that one must disclose the invention even if the patent is not granted in the end. The grant procedure before the European Patent Office takes three to five years and requires validation in its 38 member states; for a more global coverage, PCT nationalisations and other national applications have to be considered. Obtaining and maintaining international patent protection is a costly venture, taking into account official fees alone. This contrasts the need for speed and cost efficiency in an environment of increasing competition. Consequently, companies have to find the optimal ratio between protected territory, speed, costs, risk of infringements, enforceability, and the importance of the IP right. Such evaluations should also look at alternative approaches to find the right balance.
What is on the horizon in this regard?
More and more often companies decide not to patent new technology, but seek to protect their know-how as trade secrets. Such protection is immediate and unlimited in time and space – at least, as long as sufficient measures are applied to keep one’s know-how confidential. However, securing know-how at all is even more important: innovators will increasingly become project workers who regularly move on to new projects and take their know-how with them. Technology, especially software, helps secure and manage know-how. Combined with artificial intelligence and analysis of big data it can efficiently link, process, and selectively share knowledge in order to support creation of new innovation. Other considerations involve the blockchain technology.
Everybody is talking about blockchain, Bitcoin & Co. these days. Can you shortly explain for the non-tech lawyer what’s it all about?
Blockchain is a decentralised peer-to-peer network of computers that validate and relay online transactions. A transaction is the transfer, and not only a copy, of a certain amount of units from A to B. Each transaction is validated by a defined minimum number of computers, called nodes, and stored in an identical and chronological order by all nodes of the network with multiple stored transactions building a block on the chain of computers. The interesting thing about blockchain is that it is public and private at the same time, transactions are time-stamped, and information once stored cannot be manipulated or destroyed anymore. The systematic recording of transactions in a public ledger allows that anybody can look-up a specific transaction and check if it was executed. On the other hand, the transaction as such is encrypted and does not reveal who initiated the transaction. Only who is in possession of an individual private key has authority on certain units of accounts. These features make blockchain interesting for digital currencies, and Bitcoin is the most prominent example. However, there are hundreds of blockchains, each having its proprietary digital coin.
Which use cases seem relevant for the IP community?
Blockchains are based on trustless consensus. They don’t require a middleman such as banks, notaries, copyright registries, or patent offices that centrally control assets, transactions, or record keeping. Therefore, they can be used to prove ownership and priority without trusting in institutions that set the terms on their own. Blockchains offer new means for registering digital works of art, like music files, images, texts, contracts, and software files. We can think of securing priority of inventions and logos, but also personal identity or property information can be registered in an immutable way. For example, a document like a patent specification can be registered on a blockchain to prove that the inventor was the first who came up with this idea. Interestingly, it is not necessary to disclose the invention at this point, as only an encrypted digital signature, called hash, is actually stored on the blockchain. More advanced blockchains, like Ethereum, even execute transactions only if defined criteria are met. Such coded terms and conditions are called “smart contracts”. Applications based on this technology can be used to create dependencies between the use of a musical work and the payment of a digital fee for example.
What’s in it for lawyers?
I understand my role as General Counsel of a global IP legal service provider to be a thought leader in our industry and anticipate developments in this space that may transform or even disrupt our business. Not only blockchains, but also artificial intelligence and big data create manifold challenges for lawyers. While blockchains may provide alternatives to registering patents or other IP assets, artificial intelligence will definitely replace many tasks lawyers are currently performing – if not to say to replace lawyers. I’m sure and certain that especially the combination of blockchain technology, artificial intelligence, and big data analysis will have a deep impact on the legal profession in the near future.
Download the study “The future of IP” free of charge at: http://go.dennemeyer.com/study-future-of-ip
Richard Brunner
Head of Trademarks
Richard is a general practice lawyer with a strong intellectual property, commercial and corporate law background, complemented by a Master of Business Administration of Augsburg University (Germany) and Katz Business School in Pittsburgh (PA, USA). This enables him to fill the roles of Global Head of Legal and Global Head of Trademarks at Dennemeyer Group alike. Before joining Dennemeyer in 2007 he practised as outside legal counsel for the German Society for Musical Performing and Mechanical Reproduction Rights (GEMA) and other media ventures.
About Dennemeyer Group
Dennemeyer Group stands out as the leading global full service provider in intellectual property legal services since more than 55 years. Covering worldwide patent and trademark renewal services, cutting-edge IP management software, IP legal advice, and IP business strategy consulting, it serves the IP community with offices in 17 countries.
In a thought provoking interview, Eugenio Grageda speaks on how international tax is making a huge, impacting change, and what this means for all those who pay tax.
What the BEPS is everyone talking about?
The Base Erosion and Profit Shifting (BEPS) is a project initiated in 2012 by the G-20 and the Organisation for Economic Co-operation and Development (OECD) that encompasses the most overwhelming change in cross-border tax policies in a century.
It consists of 15 action plans where the aim is to curtail rampant tax avoidance strategies and to close gaps that have allowed multinational entities (MNEs) to exploit loopholes and mismatches in tax rules to artificially reduce their tax base, and shift profits to low or no-tax locations where the MNEs have little or no economic substance.
The BEPS project originated during the latest economic recessions, when governments’ concern grew on the low amount of taxes being paid by certain MNEs and the media started unveiling their international tax schemes. The public started accusing them of dodging taxes, and tax laws started being criticized for not having kept pace with international tax planning.
With an increased perception that the tax systems distort competition and that taxes are paid only by the naive, the necessity of a paradigm shift in the international tax playground gathered momentum.
What are BEPS principal objectives?
Who should be worried?
Almost any person with an international component in their operations.
How will BEPS be implemented?
In general, BEPS outputs were set as a menu of options for jurisdictions to choose from. To become enforceable, some measures will require domestic law implementation and others will need changes in bilateral tax treaties.
It is expected to see BEPS-driven legislation in the 100 countries which, as of 21 June 2017, have committed to the implementation of BEPS. Even countries like Andorra, Liechtenstein, The Netherlands, and some tax havens have surrendered some of its tax appeal to the international pressure.
On the other hand, tax treaties will be amended through the implementation of a multilateral instrument (MLI), a super tax treaty whose terms will become obligatory after its articles have been cherry-picked by each country and recognised as applicable in all their tax treaties. This will be the biggest shockwave caused by BEPS(zilla) this year.
Conversely, reforms to TP guidelines will mostly become immediately applicable as many jurisdictions make them legally binding via a direct reference to them in their domestic laws.
How can I be affected by BEPS?
BEPS will reinstate taxation where income would have otherwise been untaxed.
Even when you have been a model taxpayer with a structure already reflecting the underlying economic reality, there are aspects of BEPS that could have an impact on your operations.
Chief amongst the measures that could adversely affect MNEs, is the huge increase in information to be gathered and exchanged for TP purposes (e.g. country-by-country revenue, capital, tangible assets, functions performed, intangibles, taxes paid, etc.). This will (has been) a rough increment in MNEs´ administrative burden. Parallelly, profits from transfers of goods, services, capital and intangibles within a multinational group would probably need to be reallocated based on the new substance criteria adopted by BEPS. More audits and disputes between tax authorities in this regard are to be expected.
Moreover, MNEs with no PE in a foreign jurisdiction could end up having one as a result of the lower thresholds to create a PE. Many companies would need to look closely at their stages of supply chain, services rendered and placement of their workforce internationally. For instance, enterprises generating substantial revenues from customers through digital means in another country may be considered to have a taxable presence therein (e.g. amazon case).
Other nasty impacts regard the limitations on the deductibility of certain royalty payments, interests paid in intercompany loans and products and services payments where they are not recognised as taxable income in the recipient country.
Lastly, access to treaty benefits could be denied by the new edges set forth by the MLI. No source taxation or reduced withholding scenarios would need to be reconfirmed under the scope of the MLI.
What to do?
MNEs need to revise their business models and adopt compliance policies within their organisation. Pressure will rise to justify prices, operations, payments abroad, use of tax treaty benefits and international distribution of operations.
Taxpayers will require to monitor BEPS developments to assure an opportune reaction and not to belittle potential effects even if the MNE has considered itself having proper business substance and intercompany prices that mimic that of third parties. BEPS provisions could be a catch-all net that traps both abusive and benign structures.
It could also be prudent to simplify their organisation structure by reducing the entities and countries involved to minimise the number of jurisdictions where potential litigation could arise.
In the famous US case Gregory v Helvering, it was said that companies are “not bound to choose that pattern which will best pay the Treasury; there is not even a patriotic duty to increase one's taxes”. However, BEPS has made it difficult to leave it to patriotism the obligation to pay taxes. Now, it will be a matter of law.
Yet, it is unlikely that companies will stop looking for opportunities to be more profitable. After all, generally, that is a duty they owe to its investors. They will always be free to find ways to ameliorate their tax positions worldwide so long as, of course, its practices do not fall in tax evasion. As put in the US case Commissioner v. Newman “nobody owes any public duty to pay more than the law demands: taxes are enforced exactions, not voluntary contributions. To demand more in the name of morals is mere cant”.
Will tax advisory change?
Yes. Now international tax lawyers are to provide BEPS-sensitive advisory. There will be new anti-abuse provisions, alterations to all tax treaties, new interpretation issues and rules that could make whatever previously learned, obsolete. It is of utmost importance for international tax advisors to study all the new relevant tax measures, study them more and reinvent their approach when aiding clients addressing their global tax issues.
Eugenio Grageda
egrageda@turanzas.com.mx
Eugenio Grageda is an international tax attorney based in Mexico who advises multinational companies and high-net worth individuals with cross-border activities, including reorganizations, financing and international investments.
Christopher specialises in litigation and dispute resolution primarily in construction law; his experience includes traditional High Court litigation, arbitration as well as construction-focused adjudication. He discusses with Lawyer Monthly the ways in which South Africa’s legal sector has advanced in relation to construction.
What tends to be the main driver behind construction disputes?
South African construction projects suffer from many of the issues which plague construction projects generally – employers wish to minimise cost and ensure timeous completion of the project, whilst contractors seek to ensure they get adequate compensation, particularly in circumstances of delay, and to avoid incurring penalties for the inevitable delays to completion of the project. South Africa’s uncertain and sometimes volatile labour environment adds a further layer of complexity. Employer interference in industrial relations between contractors and their labour force also presents difficulties.
How often do disputes dismiss mediation and result in litigation? What are the reasons behind not being able to resolve disputes in mediation?
Whilst mediation is used in South Africa generally, its application in construction disputes is more limited. Of the four most commonly used standard form contracts in South Africa (FIDIC, NEC, JBCC and GCC), only two provide for voluntary mediation. Construction disputes generally proceed to adjudication prior to formal litigation. Adjudication is a common and increasingly used form of construction dispute resolution as it allows parties to resolve disputes during the lifetime of a project in an efficient and robust manner, so as not to impact on the continuation of the works. Adjudication will continue to grow as the government has initiated a process to implement a scheme of compulsory statutory adjudication. Disputes not resolved by adjudication usually end up in arbitration, save in certain government-related contracts which stipulate litigation before the courts. Arbitration is very widely used in South Africa.
As Thought Leader, can you share how you apply your leadership skills to heated disputes?
I believe that resolving construction disputes requires more than just an understanding of the law. In every problem presented to me, I try to understand the commercial and technical difficulties underpinning the dispute. To add true value, one needs to both understand and have an interest in the project and the intricacies of project planning from a time and cost perspective, as these are the principle issues which underlie disputes between construction contract parties.
Can you share to how your background in Politics, Philosophy and Economics (PPE), enhances your role as a legal expert?
I believe that my PPE studies provided with me a broad base of knowledge in areas which are fundamental to the context within which the law operates. The law seeks to create a framework within which people conduct their affairs. An understanding of economic and political theory and history allows one to better understand the broader societal policy rationales which underpin the law. Philosophical studies provided me with a solid grounding in critical thinking and reasoning, whilst also instilling in me an awareness of the bigger picture. This informs my approach to solving legal problems.
Have you noticed any trends in disputes regarding construction in South Africa?
The increased use of private arbitration in the construction dispute field has resulted in less disputes coming before our courts. This, in my view, has a stifling effect on the development of South Africa’s construction common law. Adjudication and arbitration tribunals readily apply to foreign law, particularly the United Kingdom, to construction disputes in areas where our law is less developed. This occurs particularly in relation to the application of principles for extension of time claims (eg: concurrency and float) and quantification of cost claims. From a commercial perspective, we have seen an increase in construction disputes on existing projects which commenced prior to the economic downturn after 2008. With the slowdown in economic activity, existing projects become fertile ground for disputes as employers seek to save money whilst contractors try to make up what they are not earning on new projects with an increased number of claims for additional compensation.
Moreover, how has construction developed in South Africa? Is there anything you are looking forward to witness?
There is a high degree of policy and political uncertainty in South Africa at the moment which, together with the difficult economic conditions, has resulted in decreased investment which has impacted the construction sector. If South Africa can resolve this uncertainty and create an enabling environment for business, then the country’s outlook looks very promising. South Africa’s currently stalled Renewable Energy Independent Power Producer Programme involving the construction of multiple renewable power plants in various parts of the country. In addition, full implementation of the government’s National Development Plan envisages, inter alia, significant public infrastructure investment at 10% of GDP focused on transport, energy and water. These programmes present significant and exciting opportunities for the construction sector.
Christopher Picas
Partner
Johannesburg
+27 11 586 6053
+27 11 586 6153 (fax)
cpicas@fasken.com
Christopher specialises in construction related litigation and dispute resolution. He advises and represents both employers and contractors in construction disputes, including claims for extension of time, payment of additional cost and disputes relating to workmanship and quality. Christopher represents clients in the power, transportation infrastructure and mechanical engineering industries. He is intimately involved in South Africa's power expansion mega projects.
Fasken Martineau is a leading international business law and litigation firm with more than 700 lawyers. The firm has eight offices in Canada, Europe and Africa. Our practice spans every sector of business, industry and government. We provide strategic advice to a broad range of clients including close to half of the Fortune 100 companies. We work with corporate clients (large, medium and small companies), government agencies, regulatory authorities, non-profit bodies and individual clients. We offer expertise in both common law and civil law in English and French.
