Understand Your Rights. Solve Your Legal Problems
Sterling is a Nasdaq-listed company that provides identity and background checks to more than 50,000 clients across all sectors, allowing companies to improve their work environments as well as their relationships with partnerships and users. Sterling performed more than 95 million identity verification searches in 2021.
Since its founding in Brazil in 2003, Socrates has expanded its operations to Colombia and Mexico. Among its offering, the firm provides its clients with services for criminal and background checks, credit record checks and employment and education qualification checks. Sterling has acquired the firm as part of a move to expand its services throughout Latin America and improve its offering to its regional clients.
Robert Jones, CEO of Socrates, celebrated the move in a statement. “We are very pleased to join Sterling and are proud of this next chapter for our company. We look forward to combining our regional experience in Latin America with Sterling’s best-in-class customer service model,” he said.
Lawyer Monthly had the pleasure to speak with Alejandro Salas de la Borbolla at DEFOREST Abogados to give us some further insight into this transaction:
DEFOREST was a key player in the purchase and sale transaction. Thanks to its experience in the field, it managed to work with more than six international firms in different countries to properly review and organise the financial and corporate legal information of the acquired companies. DEFOREST recommended this transaction since acquiring a company can provide several advantages:
The timely and thorough review of the corporate legal documentation was essential to have in order and properly classified the information to be delivered to the client.
There were several advantages to working with other firms as a ’legal team‘ in this transaction. Here are a few:
The timely and thorough review of the corporate legal documentation was essential to have in order and properly classified the information to be delivered to the client.
There were several challenges during the acquisition of the company, such as:
These are just some of the many challenges faced during an acquisition. It is worth remembering that proper preparation and planning can mitigate the risks and uncertainties associated with any merger or acquisition.
Yes, since the motto of our firm defines us: We work with passion.
Sterling Check will give a lot of benefits to their customers in Latin America. Some examples are:
The partnership represents ISIF’s largest direct commitment to date under its €500 million investment programme for Cork, Galway, Kilkenny, Limerick and Waterford, which was announced in 2022. The aim of the programme is to direct significant investment towards each city, creating new places to work and live, with the eventual goal of regenerating their respective city centres.
The joint venture will see the development of One Opera Square. The site is located at the corner of Michael Street and Ellen StreetLimerick and covers six flexible-use floors. This location provides for around 10,000 square metres of Grade A office space, with the ability to accommodate several tenancies per floor and up to 1,000 employees in the building. Once completed, the development will offer restaurant and retail units at ground level with an external seating area in the public square, external landscaped roof terraces and world-class cycle facilities for employees.
Holmes advised LTT with a team led by Partners Sandra Egan and Lisa Killeen and Of Counsel Caroline Connolly. Lorraine Power, Partner, Gillian Butler, Senior Solicitor and Nicola Hackett, Solicitor also advised. The team provided multi-disciplinary services to LTT, including input from lawyers advising from across the firm’s commercial real estate, banking and finance, corporate and construction teams throughout the transaction.
Lawyer Monthly had the pleasure to speak with Sandra Egan, Real Estate Partner at Holmes to give us some further insight into this transaction:
Holmes advised LTT on all aspects of this JV Partnership with ISIF. Led by myself and Lisa Killeen, our multi-disciplinary team collaborated with our colleagues across our commercial real estate, banking & finance, corporate and construction teams to deliver this project for LTT.
As with any project of this nature, part of Holmes’ role involved liaising and coordinating the delivery of services with LTT’s non-legal advisors including tax advisors, insurance, architects and other construction professionals.
As with all large property investments and collaborative ventures, there are a number of stakeholders involved. It is important to keep the lines of communications open at all times and to make sure that all parties’ perspectives are understood.
In terms of the overall Opera development, Holmes facilitated a strategic workshop at the master planning stage which involved collaboration with and input from both legal and non-legal advisors including procurement, insurance, engineering and finance. The One Opera Square project was one of a number of significant projects generated from that workshop.
Once this project was operational, we held weekly all-party calls to keep track of the various aspects of the transaction, with completion checklists being maintained and updated and timelines set for all relevant streams of due diligence to ensure the transaction progressed as smoothly as possible.
Sustainability will be at the heart of Opera Square’s design and build, with the project developed to the highest international sustainability standard by achieving LEED Platinum accreditation as well as achieving a ‘Nearly Zero Energy Building’ (nZEB) rating and WiredScore. LEED-certified buildings have the highest energy efficiency, lower carbon emissions and create healthier places for people to work and live. They are a critical part of addressing climate change and meeting ESG goals, enhancing resilience and supporting more equitable communities.
Holmes advised LTT on all aspects of this JV Partnership with ISIF.
Works on One Opera Square have commenced, which has led to construction job creation in the region.
One Opera Square is one of the flagship projects in the overall Opera Square project and will be developed over six flexible-use floors. It will provide for circa 10,000 sqm of Grade A office space and accommodate several tenancies per floor with up to 1,000 employees in the building. This building will also offer restaurant and retail units at ground level with an external seating area in the public square and external landscaped roof terraces.
The wider Opera Square development will be a landmark commercial development in a regional and national context and one that will reflect Limerick’s status as a leading city in sustainability and innovation. It will encourage people to build their lives in Limerick and the surrounding areas, boosting its status as a vibrant place to live, work and play in. It will deliver significant economic benefit for the city and region.
We have acted for LTT since inception. We are delighted to have been involved in large projects to date, such as Project Opera and Limerick Gardens International office, block which was valued at €23 million.
In the near future, we look forward to working with LTT on the development of the Cleeves Riverside Quarter. LTT have successfully secured a €35 million grant under Urban Regeneration Development Fund (URDF) to help unlock and enhance the site.
Once fully developed, Cleeves Riverside Quarter has the potential to help build a strong local economy through the construction of residential units, commercial real estate and mix-use of educational and cultural/visitor attractions.
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Holmes is a multi-disciplinary firm with a national presence. Our clients include national and international companies across a diverse range of sectors including energy and natural resources, education, real estate, construction and engineering, insurance, financial services, healthcare, pharma and life sciences, food, beverage and agribusiness, hospitality and leisure, technology, media and telecom, which means we are very well positioned to advise on similar projects in the future.
Limerick Twenty Thirty is a dynamic property development company established as a special purpose vehicle of Limerick City and County Council to plan and develop key strategic sites in Limerick City and County. These sites will act as anchors for enterprise and investment development across Limerick and the Mid-West Region.
The 3.7 acre Opera Square project will be a landmark commercial development in a regional and national context and one that will reflect Limerick’s status as a leading city in sustainability and innovation. The 1.62 hectare project is funded, thanks in the main through lending from the European Investment Bank, the Council of Europe Development Bank and now ISIF.
A transformational project for Limerick, the fully developed site will be capable of employing up to 3,000 people across 450,000 sq ft campus accommodation. Sustainability will be at the heart of Opera Square’s design and build, with the project developed to international best practice ‘Leadership in Energy and Environmental Design (LEED) Platinum’ and ‘nZEB’ standards. A day-time employment hub, it will transform into a bustling night-time destination complete with restaurants, bars and open entertainment spaces. The design will also be entirely complementary to and protect existing important Georgian architecture. The project will deliver significant employment opportunities and act as a catalyst for other major city centre investment.
Boasting four subsidiaries acquired during 2021, Pölkky employs around 420 people across its five Finnish locations and recently reported annual sales of €200 million. The company delivers wood products to customers across 35 countries, with around 70% of its wood products ultimately being exported. Pfeifer intends to retain the company’s management, staff and locations following the completion of the deal, which awaits regulatory approval. This will mean the retention of Petteri Virranniemi from the previous owning family as CEO.
Pfeifer is a market leader in pallet blocks and formwork panels, as well as one of Europe’s largest producers of sawn timber, pellets, framework supports and glued laminated timber. The company employs around 2,200 people across its eight locations in Austria, Germany and Czechia, and projects post-acquisition sales of €1.4 billion in 2023. Prior to its acquisition of Pölkky, 90% of its sales have come from European markets.
Lexia advised Pfeifer on corporate and M&A matters with a team comprising partner Samuli Koskela and counsel Olli Kotila.
Lexia acted as Pfeifer’s comprehensive partner in the arrangements for the acquisition and practically managed the entire team of advisers. Large-scale transactions always involve many areas that require specific expertise, and a successful transaction and smooth project require legal services as well as advising in economic and tax-related matters.
For Lexia’s client Pfeifer, all the necessary support was handled through just one contact, as Lexia managed the whole. In the background, several trusted partners worked as subcontractors, such as Hill Audit as financial adviser and Alder & Sound as legal adviser on tax matters. Lexia’s task was to lead the entire advisory team, report to the head of Pfeifer’s M&A (mergers and acquisitions) department and comprehensively take care of the smooth progression of the project.
We participated extensively in the process in its various stages, and we were also involved in the commercial negotiations with the buyer’s representative. Therefore, throughout the negotiations and the entire business restructuring process, Pfeifer had a very comprehensive partner in Lexia.
We have more than 20 years of very strong experience in law related to mergers and acquisitions as well as experience in completing large-scale acquisitions. The experience has also given us an ability to move negotiations forward with a solution-oriented approach and, if necessary, lead even a large group of advisors.
Our expertise supported the smooth progress of the acquisition, and we were able to offer our client comprehensive support throughout the entire process. Negotiations require a solution-oriented approach, and with our experience we were able to guide the process as a whole and find solutions that satisfied all the parties involved.
Both parties to the transaction were family-owned companies, which affects the companies’ decision-making culture and processes. The owners of the companies are close to decision-making, and both parties have a responsibility for their family businesses, which have a long history. In order to find good solutions for all the parties in the negotiations, it was important to understand the companies’ background, history and the deeper motives of both parties.
We participated extensively in the process in its various stages, and we were also involved in the commercial negotiations with the buyer’s representative.
In international trade, two different cultures always meet. On a practical level this can be seen, for example, in legislation-related issues and different cultures of decision-making. In order for the acquisition to be successful, it was important that Lexia was able to act between the parties as an interpreter between two cultures.
We also operate locally in Northern Finland, and therefore we have particularly good knowledge of the region’s market, local actors and culture. In the past, we have also acted as an advisor to other wood processing companies, so our good knowledge of the industry and strong regional knowledge provided a solid foundation for this acquisition as well.
The main challenges were related to understanding different cultures, and it was there that our experience helped to move the process forward to a successful outcome for all the parties. In the negotiations, we helped the parties to bring into the open what was important to each party. It is essential to understand why something is important to one of the parties, because not everything is always said out loud in negotiations and there can be a lot of things in the background that the parties are unable to put into words.
Problems, disagreements and challenges cannot be avoided in negotiations. We were led forward from these by a solution-oriented approach and a genuine desire to find an end result that satisfied everyone. Throughout the entire process, there were also regular discussions about the details and challenges that had to be solved – both among top-level decision makers and among the project team concerning practical measures. Regular and open discussion on every level helped the project to proceed according to plan at all times.
Legal expertise and mastery of practical matters are important when completing business restructuring, but the best outcome is achieved when the motives and wishes of the parties are understood more deeply and the best possible negotiation result is found for everyone based on this. Here, the successful outcome was supported by our extensive experience in various negotiations and business restructuring processes as well as a broader understanding of the local market, industry and culture.
For the buyer, Lexia’s client Pfeifer, the acquisition was a significant strategic step. Even before it happened, the company was already a significant player in the wood industry on an international scale. The acquisition clearly strengthens their position even more, as the company took a strong position in the Northern European wood market. Regionally, this was a new territorial conquest for Pfeifer; the company’s position as a global operator is strengthened and its production capacity increases. With the acquisition, Pfeifer will now be one of the largest wood processing companies in the world.
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For Pölkky too, the transaction was a significant step and part of deliberate development work. With the merger, the company’s efficiency will improve and more jobs will be created in the region. Pölkky has already been one of the largest employers in the region. With the merger, the company is now becoming an even more important regional actor, for example from the point of view of employment.
I believe there will be changes in the sawmill industry even in the future; the industry is going in a more uncertain direction. There will be turmoil, and mergers of a similar type will probably take place in the near future as well. Lexia’s strong expertise in the industry and in carrying out large-scale business restructuring is strong, so it is natural that we will be involved in similar processes in the future as well. I estimate that, in 2023, we will see at least one acquisition of the same type, and maybe even a couple.
Lexia’s way of working locally in Northern Finland and its strong knowledge of the regional actors and culture as well as its versatile expertise in corporate law created an excellent basis for carrying out this type of business acquisition. In business arrangements of this scale, it is exceptional that a legal partner can support the client in such a comprehensive way. For the client, this brings ease and peace of mind in the middle of an enormous process.
Steve Whiter, director at Appurity offers his advice to potential early adopters of this technology on what challenges they should be aware of and what risks they will be taking.
The way we communicate, do business and even complete simple tasks is changing – all thanks to artificial intelligence (AI). And while AI tools have existed for some time, interest in this new technology recently soared when Open AI released its artificial intelligence chatbot, ChatGPT.
ChatGPT captured the public’s imagination overnight. Its ability to generate copy at speed, complete research tasks and even participate in humanlike conversations opens up multiple operational possibilities for businesses and organisations across the globe. Law firms are no exception.
A report released by Thomson Reuters in April 2023 surveyed 440 lawyers across the UK, US and Canada about their attitudes and concerns on ChatGPT and generative AI in law firms. The survey found that 82% of respondents believe ChatGPT and generative AI can be “readily applied to legal work.” The bigger question, of course, is an ethical one. Should law firms and their employees use ChatGPT and generative AI for legal work? “Yes”, replied 51% of the survey’s respondents.
Many firms are cautious about the growing use of ChatGPT. They understand that the tool may streamline operational processes, but they are worried about how they can leverage the benefits of AI in a way that is secure, upholds confidentiality and privacy requirements and, crucially, remains ethical. Can ChatGPT be used by law firms to aid productivity? What are the relevant risks? To all partners and fee earners thinking about how to use ChatGPT or other AI tools at their firm, here are the key considerations:
AI has the potential to assist lawyers with a range of tasks. Automating clerical work, legal research and even drafting briefs could significantly improve a firm’s productivity and efficiency. However, any such use of AI comes with risks. And as sophisticated as ChatGPT may be, it is not always accurate.
Should law firms and their employees use ChatGPT and generative AI for legal work? “Yes”, replied 51% of the survey’s respondents.
For starters, AI tools are known to fabricate information. These ‘hallucinations’ are concerning because they are unknown. A user has no way to know when ChatGPT provides completely false information, because that content isn’t flagged as wrong, or incorrect, or missing crucial context. The only way a user can guarantee the accuracy of any AI proclamation is by verifying that information themselves. So while there may be some operational gains in time or cost savings when relying on AI to take over menial tasks, these benefits may be counteracted by requiring a human element: a user who checks and verifies all the AI’s outputs.
A related concern inherent in language processing tools is their bias – something that even the best fact-checker might not be able to mitigate against. How a language processing tool is trained will determine its output information. This means that the people used to create the tool, the decisions they make about where the training information is sourced and how, is critical to the output information a user receives. This bias may not be necessarily malicious, but it will be present – especially when the tool is used to deliver ‘opinions’ or make human-like decisions. There may well be future regulatory requirements that firms will have to adhere to around the use of language processing in law to tackle the difficult task of bias elimination.
Accuracy and bias concerns also go hand-in-hand with ethical considerations. Lawyers must serve the best interests of their clients – can they still do so if they are relying more heavily on AI to deliver content and complete tasks? And what does it mean for the profession as a whole if lawyers spend their time fact-checking the work done by language processing tools? Firms and their lawyers go through rigorous training and are bound by strict regulations. They have an ethical obligation to uphold professional standards; ChatGPT does not. But it is the firms themselves which will be held liable if content from ChatGPT is used inappropriately. The malpractice implications could be huge.
Firms must keep their clients’ data confidential and secure. This is an existential obligation; data mishandling or misuse could violate data protection laws or industry codes of conduct. The problem with AI tools is that users often do not know what’s happening with the data they input. Relinquishing control of data in this way is a risk that firms really shouldn't take.
Before using any AI tool to assist with legal studies, firms should understand exactly how inputted data is processed and used. Where is this data stored? Is it shared with third parties? What security systems are in place to ensure that the risk of data leaks are minimised? Firms already have multiple systems and processes in place to protect their clients’ data, with separate approaches for data stored on premise, in the cloud and across multiple devices. With the introduction of AI tools, it is not enough anymore for firms just to secure their own infrastructures. Are there processes in place to protect specifically against a data leak or misuse of data by AI technology?
Lawyers must serve the best interests of their clients – can they still do so if they are relying more heavily on AI to deliver content and complete tasks?
Firms might want to consider how their digital communications policies and procedures could be extended to language processing tools like ChatGPT. Where fee earners and partners currently use SMS or WhatsApp to communicate with clients, their messages should be backed up, managed, and secured. A firm’s IT team should also have a complete record of all messages sent via modern communication methods. Firms might consider adopting the same approach to AI. Keeping comprehensive registers of all data that is shared with language processing tools is the minimum.
Cybersecurity concerns should be front and centre for any firm considering using language processing tools. It goes without saying that when any new tool or technology is introduced to a firm’s workflow, it must be treated as a potential attack vector which must be secured. And if a user does not know exactly who has authority over the tools and technology they use for work, how these tools hold, manage and potentially manipulate data – then they are leaving the door open to vulnerabilities.
ChatGPT’s advanced language capabilities means that well-articulated emails and messages can be generated almost instantaneously. Bad actors can leverage this to create sophisticated phishing messages or even malicious code. While ChatGPT will not explicitly create malicious code, where there’s a will, there’s a way, and hackers have already discovered how to use ChatGPT to write scripts and malware strains.
As other and newer AI tools emerge, too, firms will need to remain vigilant and educate their lawyers about the present risks and the responsibility of everyone to protect themselves and the firm against potential attacks. Firms might need to conduct more in-depth security awareness training, or even invest in new technologies to combat AI-generated phishing attempts. Some newer, more advanced malware protection tools scan all incoming content, flagging or quarantining anything that looks suspicious or shows signs of having a malicious footprint.
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AI natural language processing tools may well transform how we work forever. By leveraging the advanced capabilities of ChatGPT and other AI innovations, businesses are not far away from automating clerical or low-value tasks. However, as is the case when any new tool or technology is touted as the next big thing in business, potential adopters and users must be aware of both the risks and rewards. Partners and their firms must think critically about whether their infrastructures are ready for this disruptive tech, and how they can stay protected against any new security risks and threats. In doing so, we can embrace the AI revolution and make it a success for firms, partners, fee-earners, and clients.
Steve Whiter, Director
Clare Park Farm, Unit 2 The Courtyard Upper, Farnham GU10 5DT
Tel: +44 0330 660 0277
Steve Whiter has been in the industry for 30 years and has extensive knowledge of secure mobile solutions. For over 10 years, Steve has worked with the team at Appurity to provide customers with secure mobile solutions and apps that enhance productivity but also meet regulations such as ISO and Cyber Essentials Plus.
Appurity is a UK-based company that offers mobile, cloud, data and cybersecurity solutions and applications to businesses. Its staff draw upon a wealth of in-depth knowledge in industry-leading technologies to aid their clients in developing secure and efficient mobile strategies. Working closely with its technology partners that include Lookout, NetMotion, Google, Apple, Samsung, BlackBerry and MobileIron/Ivanti, Appurity is delivering mobile initiatives to customers across multiple verticals such as legal, financial, retail and public sector.
In this article by Robert Pollock-Hill, partner in Rosling King’s Dispute Resolution Group, we take a look at the judgment in the case of PJSC National Bank Trust & Anor and assess its implications.
The Russian sanctions regime and its interpretation in the context of UK litigation, where the claimant is a designated person under the sanctions regime of the Sanctions and Anti-Money Laundering Act 2018 (‘SAMLA’) and the Russia (Sanctions) (EU Exit) Regulations 2019 (‘RSR’), was the focus of examination in the case of PJSC National Bank Trust & Anor v Mints & Ors [2023] EWHC 118 (Comm).
In June 2019, the claimant Russian banks, PJSC National Bank Trust (‘C1’) and PJSC Bank Otkritie Financial Corporation (‘C2’), issued proceedings claiming damages of $850 million from a number of Russian businessmen (‘D1-D4’), on the basis that they had conspired with representatives of C1 and C2, to cause the banks to enter into uncommercial transactions (the ‘proceedings’).
Shortly after Russia’s invasion of Ukraine, C2 was placed on the sanctions list by the UK government.
The effect of the sanctions regime is that all the assets or economic resources of a designated person are frozen, and no one can deal with them. Further, no person may make assets or economic resources available to a designated person. To do either of these things is a criminal offence.
D1-D4 applied to the High Court for the proceedings to be stayed and to be released from various undertakings that they had given in connection with freezing orders made against them on the basis that:
The effect of the sanctions regime is that all the assets or economic resources of a designated person are frozen, and no one can deal with them.
Mrs Justice Cockerill rejected each of these grounds and dismissed D1-D4’s application. In so doing she held that the entry of judgment in favour of a sanctioned entity is not unlawful. Although SAMLA and the RSR were intended to curtail some fundamental rights (such as the right of peaceful enjoyment of property), they did not, in the absence of clear wording, operate to curtail other fundamental rights such as the right of access to the court. It followed that if a party was entitled to access the court, they were entitled to pursue its case to a judgment.
Although Cockerill J accepted it was arguable when reading certain provisions of the SAMLA and the RSR in isolation that it would be unlawful to enter judgment in favour of C1 and C2, it was also arguable that entering judgment would not be unlawful. However, where the legislation did not clearly express a derogation from the right of access to the court, the principle of legality compelled the answer that judgment can be entered in favour of a sanctioned claimant and that there was no requirement for a licence from the Office for Sanctions Implementation (‘OFSI’) for the entry of judgment.
The Judge held that payment of an adverse costs order by a sanctioned entity while prima facie in breach of the RSR, was licensable under paragraph 3 of Schedule 5 of the RSR, which provides that licence may be given to enable the payment of reasonable professional fees and expenses associated with the provision of legal expenses.
In particular, Cockerill J observed:
For similar reasons, it was held that payments by the sanctioned claimant for security for costs were also licensable under paragraph 3 of Schedule 5 of the RSR.
Cockerill J also held that the scope of the wording of paragraph 3 of Schedule 5 is sufficiently wide to extend to not just to the payment of costs by a sanctioned party but also to the payment of costs in their favour. In support of this, she observed that the making of a favourable costs order does not serve to benefit the designated party; merely to put them back in the same position it would have been in costs wise had it not been for the bad point taken by the other side. If such payments were not licensable, it would leave the door open for abusive conduct by non-designated litigants to make unmerited applications against the designated person without the risk of being threatened with real-world consequences.
It was held that payments by the sanctioned claimant for security for costs were also licensable under paragraph 3 of Schedule 5 of the RSR.
The judge held that a payment for damages on the cross undertakings given in support of a freezing order is licensable within the scope of Schedule 5 paragraph 5 of the RSR, which permits a licence to be given “to enable an extraordinary expense of a designated person to be met”. While acknowledging that the payment of damages was a possible outcome arising from a claimant giving a cross undertaking, it only arose after a detailed enquiry by the court, the Judge pointed out that anyone who had been involved in a claim for damages on a cross undertaking would likely regard it as out of the ordinary and not an ordinary or routine cost. She also observed that it was unlikely that OFSI would refuse a licence for the payment of such damages where they had been awarded pursuant to a decision of the English Court and had the effect of diminishing the designated person’s assets.
On the control issue, it was held C1 was not controlled by either Mr Putin or Ms Nabiullina for the purposes of the RSR. While the control issue was no longer live given her decision on the earlier points, Cockerill J considered, albeit tentatively, after a careful review of Regulations 7(2) and 7(4) of the RSR that while control, as defined in the RSR, probably did extend to control exercised by a designated person as an employee or as a corporate officer, it did not extend to control by reason of a designated person’s public or political office. Were it to be the case, it would lead to major institutions being sanctioned “by a sidewind in circumstances where they would have no notice of the sanction and be unable themselves to challenge the designation under s.38 [of the SAMLA].”
In light of the considerable importance of the matters raised, Mrs Justice Cockerill granted permission to appeal. That appeal has been listed to be heard in early July 2023. Notwithstanding the outcome of that appeal, the judgment provides a detailed and clear analysis of the sanctions legislation framework and its interpretation in the context of litigation where the claimant is a designated person under the RSR.
The decision illustrates (to the relief of sanctioned and non-sanctioned claimants alike) that while the SAMLA and the RSR undoubtedly impact on the conduct of litigation where a party is subject to sanctions, they are not intended to operate as a bar to access to the English Courts, prevent the progress of on-going litigation or prohibit the entry of judgment following trial.
Robert Pollock-Hill, Partner
55 Ludgate Hill, London EC4M 7JW, UK
Tel: +44 02072 468027
E: robert.pollockhill@rkllp.com
Robert Pollock-Hill has more than 15 years’ experience advising on a variety of shipping and commercial disputes both in the English High Court and in arbitration. Robert has also acted in arbitration proceedings under the LMAA, LCIA and UNCITRAL rules in relation to a variety of charterparty and other contractual disputes.
Rosling King LLP is a London-based law firm specialising in serving the needs of financial institutions, corporates and individuals.
Statistics and trends revealed in The Solicitors’ Charity Big Report have highlighted a significant increase in the number of legal professionals who have been newly supported over the past year.
Our charity helped 50% more new clients in 2022, who accessed emotional wellbeing and mental health care, financial advice and support, benefits advice and career transition counselling provided through our own caseworkers and partner services.
Almost £1 million was spent on funding support to solicitors and their dependants in England and Wales during the past 12 months.
The annual Big Report shows that our charity awarded £962,229 – with an additional £25,316 in secured loans – to help people in the solicitors’ profession who were in need or crisis. In 2021, we awarded £1,024,218, which included some ongoing COVID-19 support.
Payments were a mix of one-off financial awards covering a range of necessities, such as household equipment, medical aids and adaptations to housing; grants and payments to partner organisations to provide services; and living allowances. This range allows us to provide the support that really matters to solicitors in need.
To help address the impact of the cost-of-living crisis, in spring 2022 we made additional one-off payments to help all our primary clients with their domestic fuel bills. In the autumn, we increased our daily living allowance rates in line with changes to the Joseph Rowntree Minimum Income Standard, averaging a 20% increase.
The number of new clients experiencing multiple health conditions increased by 50% last year, and there were 60% more new cases where clients had mental health issues compared to the year before.
The Big Report shows that 27% of all primary clients were experiencing mental health issues and 34% had multiple health conditions or disabilities, whilst only 27% had no health conditions.
To help address the impact of the cost-of-living crisis, in spring 2022 we made additional one-off payments to help all our primary clients with their domestic fuel bills.
Working with our partners, we funded access for 284 solicitors to LawCare for mental wellbeing support. Mental health assessments, with the possibility of subsequent therapy, were carried out for eight clients by our new partners at One Bright mental health service; seven clients accessed career transition counselling from Renovo; 21 clients benefited from AdviceWorks money management advice and a further 19 clients received welfare benefits or debt advice from Citizens Advice Manchester (CAM).
The Big Report illustrated that the majority of our new clients last year were aged 50 or below, with nearly half (47%) being aged between 31 and 50. New clients aged between 50 and 71 accounted for 34% of those we helped; 11% were aged under 30; and 8% were aged over 71.
We also supported more women clients in 2022, compared to the previous year – 60% of our clients (new and existing) were women and 40% men. The vast majority (90%) of primary clients were current or former solicitors, and 10% were solicitors’ dependents.
The annual report shows that 50% of our primary clients had worked for small firms or were sole practitioners. In 2022, 1 in 7 new clients had worked for large firms, up from 1 in 10 in 2021.
Nearly half (45%) of the solicitors we supported had been practising for less than 10 years – 25% had post qualification experience of 0 to 5 years; 20% had 6 to 10 years’ experience; while 36% of our clients had been in the legal profession for 11 to 20 years, and 19% had more than 20 years’ experience.
A quarter (25%) of our new and existing clients were London-based, with 13% from the South East; 12% from the South West; 15% from the North West; 3% from the North East; 9% from the West Midlands; 4% from the East Midlands; 7% from the Eastern region; 7% from Yorkshire and Humberside; 2% from Wales and 3% from other areas.
Nearly half (45%) of the solicitors we supported had been practising for less than 10 years.
A total of 40% of those we helped lived in rented accommodation. Significantly, although 64% of all our clients lived alone, only 46% of the new clients last year lived alone, indicating a rising number of couples and people with children getting in touch for support in 2022.
Research revealed that 39% of new cases over the past 12 months were from ethnic minority groups, though this was a fall from 54% in 2021. The overall percentage of people we supported from these demographic groups was 33%. These figures continue to be ahead of the representation of solicitors from ethnic minority groups in the profession.
The figures showed that 61% of new clients were white (a total of 67% new and existing); 18% were black (14% new and existing); 12% were Asian (12% new and existing) and 9% were from other demographic categories (7% new and existing).
The Big Report 2023 shows that 30% of the solicitors we helped have worked in general law; 12% of our clients have worked in family law; 10% in property law; 7% civil law; 5% commercial law; 5% criminal law; 7% personal injury; 5% public sector law; 3% private and 16% other types of law.
The Solicitors’ Charity CEO Nick Gallagher said: “I am delighted that this year’s Big Report has shone a spotlight on the positive impact we have made in 2022 to an increased number of legal professionals needing support in times of hardship.
“Our charity helped 50% more new clients to access support and advice for their pressing needs. We are proud to have awarded a total of £962,299 to those solicitors facing financial and personal difficulties, particularly during the UK’s cost-of-living economic downturn.
"The Big Report clearly demonstrates the activity that our charity has undertaken in the last 12 months and compares the new statistics to previous years, giving a clear view of the nature, volume and profile of support we deliver for solicitors when times get tough.”
One of the clients helped by The Solicitors’ Charity was London property conveyancer ‘Dan’ (not his real name) who contacted us when he hit his lowest point – with no job, in debt and a family fallout which had left him homeless.
The charity helped him on the first steps to recovery. Temporary hotel accommodation was found, and Dan’s caseworker helped him arrange to live in supported housing.
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Dan was also given a financial award to clear his debts, and a further award to help him with daily living costs until he found employment.
The charity’s caseworker also discussed the services he could be referred to for help with mental wellbeing and with career transition support.
“The financial support and accommodation provided by The Solicitors’ Charity really helped me get back on my feet,” Dan said. “The best thing now is being debt-free, having a roof over my head and a warm room. If the charity hadn’t been there for me, I don’t know what would have happened. They’ve been massively helpful and a real lifesaver.”
You can download a copy of The Big Report or find out more about The Solicitors’ Charity online.
We discover more in this interview with partner Béatrice Stahel and associates Arthur Seppey and Catherine Lagger-Fournier at MC AVOCATS SA, a leading Swiss business law firm that specialises in the relocation of individuals and entrepreneurs.
Switzerland has a stable political and economic environment which allows for greater predictability, which is much appreciated by entrepreneurs. Its natural beauty and safe environment are all highly appreciated, and the Swiss financial marketplace is very strong and influential. Swiss policy is based on the economic development of entrepreneurs, both medium-sized and multinational companies.
In addition, Switzerland is the home of many important NGOs and headquarters of various types of companies, with outward-looking government policy and a welcoming attitude towards foreign entrepreneurs. Its world-renowned health system and education system, including private, public and international schools, continue to be highly valued by individuals and families. In addition to this, the Swiss tax system is recognised as being advantageous to entrepreneurs.
This being said, our law firm’s experience tends to confirm that over the last few years the trend has changed, as a result of which people are looking less at the tax advantages and more towards the many other benefits of living in Switzerland.
Since the Agreement on the Free Movement of Persons between the European Union and Switzerland (AFMP)’s entry into force on 1 June 2002, the gap between Swiss citizens and foreigners with a self-employed activity in Switzerland has slightly decreased (in 2002 there was a difference of 7.8 points; in 2017 this had become a difference of 6.5 points). According to the last official statistics, 7.9% of the Swiss working population are self-employed foreigners.
We wish to point out that foreigners who have been naturalised are counted as Swiss citizens in these statistics.
Furthermore, Switzerland encourages innovation, ranking second to the US in the Global Entrepreneurship and Development Index (GEDI).
This question cannot be answered simply, as Swiss law is different depending on the country of origin of the foreigner. Furthermore, the conditions are different according to the type of foreign permit that the entrepreneur wants to obtain from the Swiss state.
Even if the rules governing the foreigners are mainly federal, cantonal authorities have a major input in the decision-making process. Variations exist, depending on the cantonal interpretation and application of the federal law. Our law firm is particularly familiar with these practical aspects, as that legal field is at the heart of our business.
Switzerland encourages innovation, ranking second to the US in the Global Entrepreneurship and Development Index (GEDI).
The key regulations and statutes which govern this practice are the Federal Act on Foreign Nationals and Integration (FNIA), the above-mentioned AFMP, various Free Trade Agreements concluded by Switzerland and the cantonal laws applying the aforementioned FNIA.
From a Swiss corporate law perspective, a foreign company wishing to establish itself in Switzerland to develop a business must register a branch or a subsidiary with its headquarters in Switzerland in the Commercial Register. This branch or subsidiary must be represented by at least one person residing in Switzerland.
During the registration process, the compliance of the company's articles of association with Swiss law will be verified, in particular the fact that it has a share capital in accordance with Swiss law (CHF 20,000 for a private limited company and CHF 100,000 for a limited company).
From a Swiss labour law perspective, the company must apply for and obtain work permits that are eligible for entrance into Switzerland before employees may work for a company.
From a Swiss foreigners’ law perspective, there are many differences between European nationals and non-European nationals. For non-European nationals, it is almost impossible to obtain a residency permit for people who are not self-employed. As a result, for non-European nationals, setting up a business is often an interesting option to explore for obtaining a residency permit in Switzerland. To obtain this permit, the applicant has to prove in particular that his business is viable, including producing a business plan.
The first consideration would be a person’s eligibility for entry to Switzerland. EU nationals are allowed to enter to Switzerland freely (AFMP). Most non-European nationals need a Schengen visa to enter Switzerland.
The second step is a work permit. For this matter, non-European nationals have to demonstrate very specific capacities, which often makes it difficult – if not impossible – for them to obtain a residency permit as employees.
There are a number of incentives encouraging wealthy individuals to reside in Switzerland – for instance, the so-called lump-sum taxation.
For non-European nationals, it is almost impossible to obtain a residency permit for people who are not self-employed.
The expertise of an experienced law firm, providing bespoke advice and having an international know-how is paramount in assisting persons seeking a B permit. A residency permit based on a self-employed activity (setting up a business) can be particularly interesting option for non-European citizens under the age of 55 years, who are not eligible to apply for residency as retirees unless they enrol for an expensive lump sum regime based on ‘major public interest’.
Entrepreneur immigrants may encounter legal and administrative issues in this process. As said above, the difficulties may arise according to the type of foreign permit that the entrepreneur wants to obtain, as well as his country of origin and the cantonal State in which he is applying for a permit.
It is therefore essential for foreign entrepreneurs setting up a business in Switzerland to seek tailor-made advice from a law firm having extensive experience in these matters, taking into consideration all relevant parameters.
Choosing a law firm which has extensive, transversal and, above all, practical experience with applying for residency based on setting up a business in Switzerland. Such a permit necessitates the coordination of a very wide range or parameters, being pragmatic and understanding the spirit of entrepreneurship. It also includes various legal issues such as the regulations from the point of view of both company law and labour law.
It is essential to choose a law firm which has the global know-how to establish a business plan, engage in estate planning and tax simulation (examination of the best options from a tax point of view) and give valuable real estate advice, as well as holding experience in family office matters – in a nutshell, a law firm that delivers all-round pragmatic and tailor-made services.
The selected law firm must also have a close and regular contact with the various competent authorities, thus facilitating the process for a foreign company wishing to start its activity in Switzerland. The choice of the seat, subsidiary, or branch may all be important, as might the legal form of the company.
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Yes. Between the French, the Italian and the German speaking parts of Switzerland there are many cultural differences. Both French and Italian parts are considered the Latin part of Switzerland.
Switzerland’s differences are its strength. In a nutshell, Switzerland is a mix of innovation and tradition, both of which are highly valued.
The local mentalities vary a lot from one part to another, which can be an important aspect for an entrepreneur to consider when choosing exactly where in Switzerland to set up a business, ideally choosing the best place according to his business plan and commercial strategy.
Béatrice Stahel, Founder and Partner
Arthur Seppey, Associate
Catherine Lagger-Fournier, Associate
Sion, Geneva, Gstaad, Switzerland
Tel: +41 27 324 80 90
E: beatrice.stahel@mc-avocats.com | arthur.seppey@mc-avocats.com | catherine.lagger-fournier@mc-avocats.com
Béatrice Stahel is the founder of MC AVOCATS SA. With 15 years of experience at the Bar, she has developed her expertise in domestic and international contract law, international private law, commercial and company law and specific enforcement law, and has acted as leading counsel in multiple judicial and arbitral proceedings with international ramifications.
Binational (Swiss and British)
Catherine Lagger-Fournier joined MC AVOCATS SA as an associate in November 2016. Her experience includes more than eight years of membership at the Valais Bar, which has allowed her to develop sound skills in contract law, commercial law, matrimonial and inheritance law, and in assisting people from abroad in taking up residency in Switzerland.
Binational (Swiss and Belgian)
Arthur Seppey joined MC AVOCATS SA as an associate in September 2021. Prior to this he spent two years as a trainee attorney at the RITZ law firm, during which he became familiar with many legal fields, including civil law, criminal law and public law and the related legal proceedings.
Binational (Swiss and Italian)
MC AVOCATS SA is a perfectly multilingual boutique law firm active in business law. The firm is active throughout Switzerland, with services particularly well-tailored to an international, cosmopolitan and demanding clientele seeking highly individualised advice. One of its specialties is in relocating individuals and entrepreneurs in Switzerland.
Experienced lawyer and mediator Zineb Kouoidri explains the unique benefits that mediation has to offer the construction sector in this feature.
The construction field is made up of many different business spheres. It involves layers of engineers, architects, general contractors, workers, suppliers and experts of all kinds. All these people must work together to complete a common construction project.
Personalities are often strong in this field and responsibilities are shared and intertwined on more than one scale. These factors of intertwining responsibilities favour the creation of disputes between the different actors in this field and at each stage of the realisation of the project.
However, the judicial delays necessary to treat disputes in the field of construction can be counted in years. This not a particular quirk of Canada, but rather an international plague.
These delays paralyse a project when it is at the stage of realisation and can increase in time when the litigation appears after the project is completed. In such cases, the damages and costs incurred can be aggravated and the interests of the various parties to the dispute can be significantly affected.
Because of its immediate access and its open communication methods, mediation is an ideal solution that should be taken more into consideration in the construction field. It will be quick and efficient when the parties invited to the negotiation table have a real will to reach an amicable solution.
Mediation is a strictly confidential process, which makes it a means of settlement without putting pressure on the various parties in a construction dispute. Indeed, the word of the parties is thus liberated since nothing in their statement can be used against them in a subsequent judicial procedure. The parties remain masters of the final decision which will be made by them together.
In construction, especially for large projects, internal standing committees for dispute resolution can be set up to manage any conflicts that arise during project execution. These committees can be very quick and efficient in managing disputes. However, the decision remains imposed by the committee even if it is not final. Indeed, the parties always have the right to take action before the common law courts if the decision does not suit them, which brings us back to square one for certain cases.
The judicial delays necessary to treat disputes in the field of construction can be counted in years.
Unlike arbitration or litigation, mediation is a process that focuses on respecting the respective interests of the parties rather than directly applying the applicable law or taking the form of a consensual tribunal.
In mediation, the solution does not reflect the mediator's view or interpretation of the law or the dispute but results from the sole will of the parties. The final decision will be by mutual agreement of the parties and is not made or imposed by the mediator. The parties will in some way judge themselves.
Finally, mediation is a low-cost process compared to other alternative dispute resolution methods in the construction field. It preserves and strengthens long-term business relationships by restoring dialogue between the different actors in the dispute.
Mediation is a unique form of participatory justice because it brings the parties to discuss the dispute by their own will. They will be led to listen to each other to better understand each other's position in a dispute. It sounds easy in a sentence, but it is quite a challenge in the mediator's field.
The mediator's construction skills will be important, but managing the different parties in a mediation is even more important. The personality of the mediator must inspire confidence in all parties. The mediator must also be careful with body language that may indicate a position that is being interpreted by one of the parties, which will lead to a certain failure of the mediation.
The management methods for conducting a mediation remain more or less the same in many areas. However, the mediator must be a good listener, eloquent and open-minded. The mediator must be patient and calm in all circumstances. Essentially, he or she must have poise and demonstrate unquestionable impartiality.
Mediation should be a prerequisite to any other alternative dispute resolution. It should be automatically advised as the preferred method of settlement to the parties by their legal counsel. It is recommended that all model construction contracts and service agreements include sections detailing the mediation process as the first resort for dispute resolution.
Mediation should be a prerequisite to any other alternative dispute resolution.
It is also important that third-party mediators be selected through a list of criteria. It is imperative that the chosen mediator have knowledge of the subject matter of the dispute as well as a number of years of experience as a mediator.
Often the appointment of a particular mediator is already pre-established at the conclusion of the contract. The parties will need to be informed of what mediation is and its benefits in business before the contract is concluded.
These procedures will allow the parties to start the mediation process quickly from the appearance of a conflict and will help to promote the chances of success of the mediation.
The use of mediation has often been timid during the majority of our years of practice as lawyers and accredited mediators in commercial and civil law, the tendency in construction law having always been for an attitude of confrontation between the parties in dispute.
However, we have found that the mediation process did not necessarily occur at the beginning of the dispute but rather at a certain stage of its maturity between the parties. After becoming aware of the loss of time and costs generated by the dispute, the parties create a common interest – which is that of resolving their conflict quickly in the interest of all. They then agree to suspend their legal proceedings and resort to mediation. In these cases, we have recorded success rates that exceed 80%.
We have noted that mediation is not welcomed in the same way in all areas of law. Only in certain areas of law where there are government funded programs will litigants be more inclined to use mediation at the outset of a dispute.
Indeed, in an effort to reduce the caseload in the courts, government-subsidised mediation programs have been developed in Canada, particularly in family law. The subsidy was only available for a few sessions but the public response to the program was immediate.
We therefore encourage that these types of programs be generalised to all areas of law and not be an exception. We are certain that this will promote the interest of the public and the different business actors to use them. This will facilitate to these different actors the awareness of the interest and the utility of mediation in the management of their cases and will benefit the good management of justice by the same occasion.
Zineb Kouidri, Lawyer
75 Bd des Châteaux, Blainville, QC J7B 2A4, Canada
Tel: +1 514-992-6333
Zineb Kouidri is a lawyer and an associate at BTK Avocats, and an accredited mediator in commercial and civil matters. With over 17 years of experience in the legal field, during which she has worked on several large-scale projects in Quebec and abroad, she is an active member of several notable organisations, including the Board of Directors of the Regroupement des Jeunes Chambres de Commerce du Québec (RJCCQ) between 2015 and 2018,and Business Professional Woman Montreal, where she worked as a director in 2019. She also sits on the board of UniAction.
BTK Avocats is a Montreal-based law firm that specialises in business law, real estate and construction law and family law, as well as civil and commercial litigation and drafting contracts.
In this article, we hear from experienced family law attorney Thomas Stahl as he takes a closer look at alimony, the common factors involved in alimony-related disputes and how such difficulties can be averted.
While each state’s law varies, the following is based on Maryland law.
Historically, alimony, also known as spousal support, was meant to compensate spouses after a divorce – mostly women – who gave up their careers during their marriage to raise children. Following changes to the law in the 1970s and early1980s, alimony could be awarded to either spouse regardless of gender and became designed to make the economically dependent spouse in a divorce self-supporting. It was not meant to equalise the parties’ incomes.
When the terms of the parties’ divorce are determined by a court, an award of alimony is separate from an award of child support. When the parties resolve the issues of their divorce by agreement and enter into a marital settlement agreement, they usually have more flexibility to set the terms of financial support between the spouses.
During the course of the parties’ divorce, the court can order pendente lite or interim alimony paid by one spouse to the other. Such an award only lasts until the court issues a final judgment of absolute divorce. To make such an award, the court need only consider the recipient’s need for such alimony and the paying party’s financial ability to pay alimony.
At the divorce trial, the court can award either rehabilitative alimony or indefinite alimony. Unlike child support, which is determined by a mathematical calculation, an alimony award is determined by a judge using a series of statutory factors such as the length of the parties’ marriage, the parties’ respective ages, health, education, the standard of living the parties enjoyed during their marriage, the financial needs and resources of the parties, the ability of the party seeking alimony to becoming wholly or partially self-supporting, and the time necessary for that party to gain sufficient education or training to enable that party to find suitable employment, among others.
Historically, alimony, also known as spousal support, was meant to compensate spouses after a divorce – mostly women – who gave up their careers during their marriage to raise children.
It is important to remember that among the factors that the court considers is whether the person being asked to pay alimony can afford it. Even if a party is entitled to receive alimony, if the other party cannot afford to pay it and all other financial obligations, a court will not award alimony.
An award of rehabilitative alimony usually comprises a set dollar amount for a specific period of time. This award is intended to make the recipient self-supporting, such as going back to school to obtain further education or certification or for the time required to advance in a particular job. In the event that, after a review of the statutory factors, the court determines that the parties’ standards of living would still remain unconsciously disparate or so different from one another that the result would be unfair, it can make an award of indefinite alimony. An award of indefinite alimony usually based on the recipient party’s advanced age, poor health, and/or their education or work experience or lack thereof.
For child support purposes, alimony is considered as income to the recipient spouse and is usually added to the recipient spouse’s income and deducted from the paying spouse’s income, which can affect the calculation of a party’s child support obligation. It does not have the same impact on a party’s income tax obligation. Prior to the changes in federal tax law in 2017, alimony had federal tax benefits for the spouse paying alimony. Now, for divorces after 1 January 2019, no such benefit exists.
One of the main issues that pertains to alimony is its future modification and termination. Alimony awards made by a court are generally modifiable as to the amount or duration of the award. Marital settlement agreements made by the parties need to make sure to include specific language that makes the alimony award either modifiable or non-modifiable by a court as the parties wish. Failure to include language making the agreement terms non-modifiable by a court may likely have unintended consequences. Likewise, alimony awards usually terminate upon the re-marriage of the recipient spouse or the death of either party.
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The statute governing the termination of alimony awards does not include a provision terminating alimony upon the recipient spouse cohabiting with another individual. However, many settlement agreements may include additional language that an alimony obligation would terminate upon the cohabitation of the recipient spouse with another individual. In such cases, it is important for such language to be specific as to what is meant by the term ‘cohabitation’ and whether this cohabitation just involves the recipient spouse living with an unrelated individual or if that unrelated individual needs to be a romantic partner or is contributing to the recipient spouse’s expenses.
While they are not as common, courts will enforce a properly drafted prenuptial agreement. Although a prenuptial agreement cannot address child custody or child support, it can address alimony or the waiver of the parties to a right to pursue alimony in a divorce. Like marital settlement agreements, prenuptial agreements must carefully include terms as to whether the right to receive alimony is modifiable or non-modifiable by a court at a later time and the precise terms as to the termination of a right to receive alimony.
Thomas B. Stahl, Lead Attorney
8850 Columbia 100 Parkway, Suite 402 Columbia, MD 21045, USA
Tel: +1 410-696-4326
Thomas Stahl is Lead Attorney at the Law Offices of Thomas Stahl. His practice focuses on providing reliable and effective guidance to Maryland and DC individuals and families when contemplating divorce. Thomas’s ongoing dedication and commitment to his clients has been recognised by the Maryland Super Lawyers, American Institute of Family Law Attorneys, Best Lawyers and Lawyers of Distinction, and he currently serves as Co-Chair on the Rules of Practice Committee in the Maryland State Bar Association.
The Law Offices of Thomas Stahl are a Maryland and Washington, DC-based family law and estate planning practice. The firm’s seasoned attorneys provide full-service representation in matters related to divorce, child custody, guardianship and wills and estate planning.
In this feature we hear from Cook Islands Finance CEO Alan Taylor, who offers a deep dive into the legislative measures that enable the Cook Islands jurisdiction to maintain a competitive presence in wealth protection.
The strength of the Cook Islands offshore jurisdiction is in its ability to pass laws to meet the needs of today’s society. The Cook Islands has used this ability to focus on what is an essential, but oftenneglected, element of wealth planning – the protection of assets – making it an industry leader in the preservation and protection of wealth. The Cook Islands has developed within its trust, foundation and company laws a wealth protection framework to benefit all HNWIs.
Cook Islands trust law is derived from English common law, as modified by the International Trusts Act 1984 (‘ITA’). In 1989 the ITA was amended to introduce comprehensive asset protection provisions seeking to protect the rights of individuals whose wealth is exposed to those who may attempt to take it by force, litigation or legislation whether through illegal, unethical or immoral means. The new laws were innovative and ground-breaking at the time, their success reflected in the number of jurisdictions that have since copied them in part or in whole.
The asset protection features of the ITA include:
Foreign judgments – a Cook Islands court will not recognise any judgment that is based upon any law inconsistent with the ITA or which relates to a matter governed by the laws of the Cook Islands. Any claim against assets in a Cook Islands international trust must therefore be
commenced de novo in a Cook Islands court.
Forced heirship – no Cook Islands international trust, or any settlement on it, shall be void or voidable, and nor shall the capacity of a settlor be questioned, in the event such trust or settlement may defeat the heirship rights of any person related to the settlor.
Bankruptcy – no Cook Islands international trust or any settlement on it shall be void or voidable in the event of the settlor’s bankruptcy in his home jurisdiction.
Spendthrift beneficiaries – any interest in trust assets given to a beneficiary shall not, during their lifetime, be alienated or pass by bankruptcy, insolvency or liquidation or be seized or taken in execution, by process of law.
The most significant trust law changes, however, were with respect to a creditor’s action against a transfer or transfers to a Cook Islands international trust, strengthening the position of the settlor in protecting his/her wealth. In that regard, the starting point was to abolish the Statute of Elizabeth.[1] From an asset protection point of view it is extremely important that trust assets are not in a jurisdiction which remains subject to the Statute. In its place, rules were enacted with statutory limitation periods providing certainty in determining whether a disposition to a Cook Islands international trust is fraudulent or not.
The Cook Islands has developed within its trust, foundation and company laws a wealth protection framework to benefit all HNWIs.
Those rules are detailed in s 13B of the ITA and include provisions deeming settlements and dispositions of property not to be fraudulent against a creditor in specified circumstances, as follows:
Section 13B(8) of the ITA provides that the date of the cause of action “shall be, the date of that act or omission which shall be relied upon to partly or wholly establish the cause of action”. Where there is more than one act or a continuing omission, the date shall be the date of the very first act or when the omission commenced.
Where a creditor’s claim is not precluded by the above deeming provisions, then the creditor must make a claim in the High Court of the Cook Islands within two years of the date of settlement or transfer of the property in question to the trust (s 13K(2)).
In summary, a creditor must commence an action in a court of competent jurisdiction within one year of the date of the disposition he is claiming against and in the Cook Islands High Court within two years of that same disposition. These rules provide a great deal of certainty for advisers and clients alike as well as the existing and future creditors of those clients.
Where a disposition is within the relevant periods, the creditor may be in a position to challenge that disposition as having been fraudulent. However, in doing so he/she must prove beyond reasonable doubt that the disposition was made with the principal intent to defraud that creditor. The standard of proof is therefore the criminal standard.
Under the ITA, where a fraudulent disposition is deemed to have taken place, it will not void the trust completely. The court will only allow the creditor access to the transfer or disposition the subject of the creditor’s claim. Accordingly, other transfers to the trust and the trust relationship itself will remain on foot.
The new laws were innovative and ground-breaking at the time, their success reflected in the number of jurisdictions that have since copied them in part or in whole.
Since the amendments to its trust laws, the Cook Islands has enacted limited liability company and foundation laws which also incorporate a number of asset protection features.
Limited Liability Companies Act 2008
The Cook Islands Limited Liability Companies Act 2008 (‘LLC Act’) contains several specific features designed to provide and enhance the protection afforded to a client’s wealth when holding, managing and investing assets through a Cook Islands limited liability company (‘CI LLC’).
Foundations Act 2012
The Act incorporates a number of the asset protection features contained in the ITA, including those in relation to foreign judgements and forced heirship rights, but most significantly it has adopted the fraudulent conveyance rules providing dates and events to give certainty to creditors seeking to claim against transfers to the foundation.
Whilst supporting the offshore industry by passing laws to develop and enhance wealth protection, the Cook Islands government has also passed laws and regulations to ensure the Cook Islands is not included in the blacklists published by organisations such as the FATF, OECD and EU. The government’s commitment to meet its international obligations and ensure the Cook Islands is not a target for money laundering, tax evasion and other financial crimes, has cemented its international reputation and good standing ensuring the Cook Islands remains open for business and a wealth protection jurisdiction of choice.
Alan Taylor, CEO
P.O. Box 3255, Clarkes Building, Parekura, Rarotonga, Cook Islands
Tel: +682 21175
E: alan.taylor@cookislands.gov.ck
Alan Taylor is currently the interim CEO of Cook Islands Finance. He graduated from Auckland University in New Zealand with degrees in law and economics and is admitted to the bar in New Zealand, with working experience in the international financial services industry in the Cook Islands, Jersey and Singapore. Alan has held legal, business development and senior management positions in both public and private organisations and is a member of STEP, the Institute of Leadership and Management and the New Zealand Institute of Directors.
Cook Islands Finance is the operating name of the Financial Services Development Authority, the Cook Islands government agency responsible for the promotion and development of the country’s financial services industry. It seeks to increase awareness of the industry internationally in order to generate and sustain long term professional and client relationships.
[1] 13 Elizabeth 1 Ch 5 (1571).
