Understand Your Rights. Solve Your Legal Problems
Lawyer Monthly speaks with former public prosecutor Simon Bächtold in this feature, gaining his insights into the workings of the prosecutor’s procedure. His advice is a must-read for defence attorneys and sheds additional light on the broader landscape of criminal law in Switzerland, including the growing threat of cybercrime.
A criminal procedure of first instance in Switzerland consists of three main phases: the police inquiry, the prosecutor’s procedure and then – if the case is not dismissed early – the court procedure.
The prosecutor’s procedure is often the most important phase. It takes up the largest amount of time and the most evidence is collected in this phase. It is safe to say that, in most cases, the final outcome of a case is largely determined in this phase already. One could say: the prosecutor’s procedure is where the beef is.
The prosecutor’s procedure gathers most of the evidence. The court procedure mostly relies on the written protocols and does not – for example – question witnesses again (though exceptions do apply).
This is why, by default, during the prosecutor’s procedure, the law grants all parties (defendants as well as criminal claimants/victims) the right to be present during all interrogations and to ask their own questions. This right to participate goes beyond the minimum standard as defined by the European Convention on Human Rights (ECHR). This right can only be exercised once the prosecutor’s procedure has been initiated. But the right can be waived, even tacitly.
The prosecutor’s procedure is deemed initiated at the latest as soon as the prosecutor has ordered coercive measures (most commonly a house search). Every interrogation during this phase that does not respect the defendant’s right to participate cannot be used against him and must be repeated. For a defence attorney it is of utmost importance to be aware when the phase of police investigations ends and the phase of the public prosecutor’s procedure begins. The defence must also make sure not to waive any rights to participate in interrogations, at least not unless it is beneficiary in the case at hand.
One could say: the prosecutor’s procedure is where the beef is.
Obviously this depends largely on the case at hand and on the strategy selected.
However, as just mentioned, this phase is all about gathering evidence and building the facts of the case. The burden of proof is on the side of the prosecution, of course, but it can also be the time for the defence to build their own plausible narrative. The defence can submit briefs at any time and it is often a good idea to do so.
In particular, the defence should make use of its right to request the taking of additional evidence. By law, the prosecution is obliged to gather all relevant evidence, whether it is speaking for or against the defendant. In reality, they usually focus on the incriminating evidence. It is therefore often necessary for the defence to make use of this procedural right.
Also, as the following phase of the court procedure is very short (sometimes just two hours with no additional briefs), it is crucial to sell the defence narrative to the court early on.
Public prosecutors in Switzerland are relatively powerful. They can issue search warrants and seize assets in their own competence and they can issue penalty orders imposing sentences of up to six months’ imprisonment or a monetary fine that is deemed equivalent.
Over 90% of criminal convictions in Switzerland are based on penalty orders, which are in essence an instrument of summary judgment, often without much of an investigation at all. The main problem with this tool, which is focused solely on efficiency, is the fact that any objection against it must be filed within 10 days from the day it is received. This is too short for many defendants, especially if they fail to realise the significance of the penalty order.
On the other hand, public prosecutors are notoriously overwhelmed by their caseload in many cantons. The combination of a high level of discretion and a heavy caseload sometimes opens up room for negotiations with the defence to settle within the scope of a penalty order or to terminate the case entirely. In addition to this favourable option of an informal deal, the Swiss Criminal Procedure Code (SCPC) also officially states the possibility for deals between prosecution and defence. They can be applied for sentences up to five years’ imprisonment and have to be confirmed by a court of first instance.
Public prosecutors in Switzerland are relatively powerful.
Another particularity in Swiss criminal procedure is the fact that the court procedure is very limited – particularly because judges rarely question witnesses directly, but rely on the written protocols in the file. They are obliged to question defendants, but even these hearings are often limited and rarely have an impact on the outcome of the case. The prosecution is not even obliged to take part in the court hearing, except if a sentence exceeding one year’s imprisonment is requested.
As I am also active in the field of cybercrime, I must note that the state of affairs in this field is clearly not satisfactory in Switzerland. The main problem with the Swiss approach to combating cybercrime is that it is the 26 Swiss cantons which are primarily competent for criminal prosecution. Some Swiss cantons are so small that they have fewer than 100,000 Inhabitants. Cybercrime, however, is global and not local. The cantonal competences lead to confusion and to many negative-competence conflicts, where no authority is willing to take on a specific issue.
Since investigations in this field are also time-critical, the unwillingness of the cantons to act leads to the termination of many cases before serious investigations even begin. This is very unsatisfactory form the victims’ point of view and should be addressed by politics. One option would be to create a new prosecution authority on the federal level that would focus on certain cybercrime phenomena in close coordination with the cantonal authorities.
Having worked as a public prosecutor as well as a criminal defence attorney, I have a unique perspective on the criminal procedure. It enables me to understand the position and the concerns of the prosecution as well. This can help in striking deals but also with effective confrontation. I am passionate about reaching the best possible outcome for my clients. If I come across flagrant injustice, I become very passionate and go every extra mile to defend the client affected.
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In the field of cybercrime, I often represent victims. Here it is my aim to boost efficiency by collecting and consolidating individual cases that belong to the same phenomenon. This significantly improves value-for-money for clients and also helps the authorities. I enjoy making my contribution to this win-win approach.
Simon Bächtold, Founding Partner
Bächtold Gallarotti Rechtsanwälte
Rotachstrasse 15, 8003 Zürich, Switzerland
Tel: +41 44 242 20 20
Simon Bächtold is a former public prosecutor who has acted on both the cantonal and federal level. Since 2020 he has acted as a specialised attorney in Zurich, focusing on criminal defence and cybercrime.
Bächtold Gallarotti Rechtsanwälte is a Zurich-based law firm specialising in cybercrime, private prosecution and criminal defence. The firm advises private individuals, companies and Swiss authorities, drawing upon its practitioners’ experience as former prosecutor’s to better understand how the police and public prosecutor’s office work.
This month, Lawyer Monthly hears from Dr. Charles E Rawlings, a neurosurgeon and expert witness as well as a nationally recognised plaintiff’s medical malpractice attorney. He has written extensively on the condition and treated many patients with cauda equina syndrome. Below, he explores why it is important to diagnose and treat cauda equina syndrome early – and the numerous ways in which failure to do so may constitute medical negligence.
Cauda equina syndrome (CES) is a severe neurological disorder that appears to have been first described by Mixter and Barr in 1934. The disorder can be caused by any entity exerting pressure upon the cauda equina including hematomas, tumours, infections or fractures. More importantly, however, between two and six percent of lumbar disk herniations result in cauda equina syndrome. As a consequence, if a patient suffers from cauda equina syndrome, the cauda equina compression is most likely secondary to a disk herniation.
Most authors define cauda equina syndrome as a neurological disorder characterised by clinical features of low back pain, bilateral or unilateral leg pain (radiculopathy) saddle anesthesia (reduced sensation in the perineum, buttocks, anus, groin, and upper thighs), motor weakness, sensory deficit, and bladder or bowel incontinence.
Although patients with cauda equina syndrome may present to their family practitioners or even specialists such as neurosurgeons or orthopedists, a far greater number present to the emergency department for initial evaluation and treatment. Generally, certain acts or omissions by the emergency department staff can lead to medical negligence.
Such acts or omissions include failure of the nursing staff to document and communicate a patient’s symptoms, signs or progression thereof; failure of a physician to obtain an accurate, thorough history accompanied by a complete physical examination, including a rectal examination; failure of the physician to recognise cauda equina syndrome and failure to obtain emergency imaging, consultation, or referral once a patient is diagnosed with cauda equina syndrome.
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The most important aspect of cauda equina syndrome is the need for early diagnosis and early referral leading to surgical treatment within 48 hours of the onset of symptoms. Detailed below are the symptoms and a brief overview of appropriate treatments.
Cauda equina syndrome, however, is a neurological entity caused by pressure upon the cauda equina generally due to a ruptured lumbar intervertebral disc. Cauda equina syndrome is characterised by low back pain, bilateral or unilateral lumbar radiculopathy, motor, and sensory deficits as well as bladder or bowel dysfunction. Most authors define cauda equina syndrome only when bladder dysfunction is present in the patient. In other words, cauda equina syndrome does not exist and cannot be diagnosed in the absence of bladder dysfunction. With regard to treatment, most ruptured lumbar disks can be treated conservatively, either successfully or on an interim basis until surgery becomes necessary.
Cauda equina syndrome is a true surgical emergency and is the only true absolute indication for surgical treatment of a patient with a ruptured lumbar disc. Most authors recommend surgery as soon as possible, with studies indicating much poorer results if the surgery takes place 48 hours or more following the onset of the symptoms.
With regards to the medico-legal implications of cauda equina syndrome, Shapiro notes: “Serious legal implications about emergency room and doctor office management of this problem exist”. To avoid these “serious legal implications”, practitioners must continue to view cauda equina syndrome as a true surgical emergency that requires both emergent diagnostic and treatment actions. Any patient with urinary dysfunction must be studied on an emergent basis, particularly if the patient has suffered an acute change coupled with other discogenic symptoms. The physician must be aware of the condition and must have the skills to diagnose the entity and order an MRI to evaluate the cauda equina and lumbar spine.
Cauda equina syndrome is a true surgical emergency and is the only true absolute indication for surgical treatment of a patient with a ruptured lumbar disc.
Moreover, the physician must recognise that cauda equina syndrome is a surgical emergency requiring immediate referral to or consultation with a qualified spine surgeon. The patient cannot be allowed to linger without studies or consultation. This caveat is especially true with regard to evenings, weekends, or holidays. A patient with acute cauda equina syndrome cannot be treated as a routine pain patient and to do so is medical negligence.
Upon the finding of medical negligence in the diagnosis and treatment of cauda equina syndrome, the victim should be compensated for any residual neurological deficits, permanent paralysis, pain and suffering, lost wages, emergency transportation expenses, current and future medical treatments and costs associated with the victim’s rehabilitation or other necessary therapies or counselling.
If someone believes they have suffered cauda equina syndrome, or damages therefrom, as a result of medical malpractice, deficits in treatment, improper treatments, or delays in treatment, they must first gather all their pertinent medical records. In addition, they must gather all their medical expenses, lost wage documentation (such as W-2s or tax returns), and all associated expenses pertinent to their condition. They should then immediately call The Rawlings Law Firm for further consultation.
Charles E Rawlings, MD
301 N Main St Suite 1020, Winston-Salem, NC 27101, USA
Tel: +1 336-725-6444
E: assistant@rawlingslawfirm.com
Dr. Charles E Rawlings is a Board-certified neurosurgeon who was actively involved in medical malpractice litigation as a consultant, case reviewer, and expert witness for 14 years prior to becoming an attorney. Today, he draws upon many years of expert practice in both the medical and legal spheres to bring his clients’ cases to a successful conclusion. Dr. Rawlings is recognised by Super Lawyers, and as a Top 100 attorney by The National Trial Lawyers and has received numerous other accolades. He has been admitted to the Bar in North Carolina, South Carolina, New Jersey, Texas, and Pennsylvania. He has also successfully managed multiple malpractice claims with regard to cauda equina syndrome.
Lawyer Monthly has had the pleasure of hearing from Swiss attorney Cecile Ringgenberg, who provides an overview of how wills are shaped in Switzerland and what has changed since the new law came into effect on 1 January 2023.
If a foreign national has his last domicile in Switzerland, the judicial or administrative authorities of this domicile are competent to deal with the inheritance procedure, except regarding his immovable property located outside Switzerland, if the state of location claims exclusive competence. (Lex rei sitae)
(Art. 86 Federal Act on International Private Law)
If a foreign national does not have his last domicile in Switzerland, but at the time of death owns property located in Switzerland, the Swiss judicial or administrative authorities of the place where the property is located are competent to deal with the property to the extent that the competent foreign authorities do not deal with it. This applies to movable property (bank accounts) and immovable property (real estate) located in Switzerland.
If several properties and procedures exist in several countries, the procedure takes place in Switzerland if it was first to open the inheritance procedure.
(Art. 88 Federal Act on International Private Law)
However, even if the Swiss judicial or administrative authorities are not competent to liquidate the inheritance, they are competent to take the necessary provisional measures for the protection of the portion of property located in Switzerland,
(Art. 88 Federal Act on International Private Law) Finally, if the inheritance procedure takes place in a country which, like Switzerland, has ratified the Hague Convention on the conflicts of laws relating the form of testamentary dispositions of 6 October 1961, the Swiss will will be valid in the foreign inheritance procedure at least as to its form.
Bilateral conventions between Switzerland and other countries should be examined in this respect before establishing the bill.
If several properties and procedures exist in several countries, the procedure takes place in Switzerland if it was first to open the inheritance procedure.
In principle, Swiss law is applicable to the Swiss inheritance procedure.
However, the foreign national may pronounce a ‘professio iuris’ in his Swiss will submitting his inheritance to the law of his national state, even if the inheritance procedure takes place in Switzerland. This will avoid the application of the compulsory portion (see below) in the Swiss inheritance procedure, leaving the foreign national free to dispose of his assets to whom he wants, an outcome accepted by the Swiss Federal Court.
(Art. 90 al.2 Federal Act on International Private Law) (Swiss Federal Court Decision, 102 II 136)
Furthermore, the ‘professio iuris’ will avoid the application of several laws to an inheritance if the inheritance procedure takes place in several countries, thus avoiding incoherencies and supplementary costs.
Nevertheless, it must first be determined if the law of the national state concerned accepts a ‘professio iuris’ and under what conditions it is accepted.
(Art. 90 al. 2 Federal Act on International Private Law)
The testator mandates a notary public or another designated official and communicates his will to the notary or the official in the presence of two witnesses. The document thus established is dated and signed by all present and registered in the acts of the notary or the official.
The testator writes his will by hand from the beginning to the end indicating place, year, month and day of the writing, signs it by hand and deposits it at the place indicated by the Cantonal law.
The oral will is an emergency solution taking place in front of two witnesses, if the testator is incapable to proceed with a public or handwritten will in cases such as imminent death, breakdown of communications or epidemy. One of the witnesses writes down the contents and notes the place, year, day and hour and the circumstances of the incapacity, writing to be signed by the other witness. The witnesses deposit the writing without delay at the competent judicial authority.
The oral will loses its validity 14 days after the testator has recovered his capacity and is again able to proceed with a public or handwritten will.
In principle, Swiss law is applicable to the Swiss inheritance procedure.
The content of the will is limited by the compulsory portion of the part of inheritance of close legal heirs.
It may only be eliminated by disinheritance due to grave circumstances (Art. 477 Swiss Civil Code) or if the person entitled to the compulsory part has renounced on his right in a pact of inheritance in the form of a public will.
Art. 512 Swiss Civil Code)
Without disinheritance or renunciation, the testator can only dispose within the available quota and respecting the compulsory portion.
The reduction/elimination forms the main part of the present revision of the Swiss law of inheritance entering into force on 1 January 2023 (see below).
The testator may appoint one or several executors to execute the will and to administer the inheritance by using the same form in which the will was established.
The executor has the same rights and duties as the official inheritance administrator.
The appointment of an executor is especially warranted in large and complex inheritances with an international aspect and legal problems that the heirs may not be able to solve themselves. Also, their inability to reach the unanimous decisions required to administer and finalise the inheritance may be a reason to appoint one or more executors.
(Art 518 and 554 Swiss Civil Code)
The will may be revoked at any time by using the legal form in which it was established.
If a new will replacing the old will is written, it is recommended to expressly revoke the old will in the new will.
(Art. 509 ff. Swiss Civil Code)
The purpose of the revision of the more than 100-year-old Swiss law of inheritance is to enable the law to embrace today’s new forms of life and relationships, such as partnerships outside marriage, serial relationships and patchwork families, following the mounting number of divorces.
(Art. 470-472 Swiss Civil Code)
The revision is mainly concerned with the reduction or elimination of compulsory portions of legal heirs. It will permit to better consider non-married partners – who even under the new law are still not legal heirs – as well as step-children and more. It will also leave more room for charities.
Furthermore, it will allow for a greater part of a family enterprise to be transmitted to the heir willing to take over the enterprise, while hopefully enabling him to respect the now reduced compulsory portions of the other heirs. This may help to avoid the compelled sale of family enterprises in order to permit the lawful partition of the inheritance, as this was often the case up to now.
The newly introduced reductions and eliminations of the compulsory portions are the following:
The descendants formerly had a compulsory share equivalent to three quarters. They now have a compulsory share of one half of their part of the inheritance.
(Old Art. 470 and 471 / New Art. 470 and 471 CCS)
The parents formerly had a compulsory share of one half. They have now no compulsory share at all.
(Old Art. 470 and 471.2 / New Art. 470 and 471 CCS, no longer mentioning parents at all)
Should a spouse decease during the divorce procedure, the surviving spouse will lose his or her compulsory share of one half in the joint inheritance, provided the divorce has been jointly introduced and the spouses have lived separately for at least two years. It is noted that the surviving spouse’s compulsory share of one half otherwise remains untouched.
(New Art. 472 CCS)
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The principle is that existing wills stay valid after the new law comes into effect. However, as the new law applies from 1 January 2023, the testator may want to decide if he wants to revoke his existing will and write a new will seizing the opportunity to distribute his assets more freely under the new law.
Also, the existing will may not be clear as if it refers to the then-existing compulsory portion or if it may be replaced by a new revised compulsory portion. Therefore, it is recommended to review the existing will in any case in order to see if it should be retained or replaced by a will under the new law to clarify the situation.
Cecile Ringgenberg, Attorney at Law
Rue Michel-Chauvet 3, 1208 Genève, Switzerland
Tel: +41 22 347 52 53
E-Mail: cecile.ringgenberg@ringlaw.ch
Cecile Ringgenberg practices at the Bar of Geneva in Switzerland. She is a doctor of law of Zurich University with several years of practice in international humanitarian law at the ICRC in Geneva and in Africa, as well as three years of practice in the law of international organisations at the European Organization for Nuclear Research (CERN). Among her achievements are a decision on documentary credit obtained with a colleague at the Federal Tribunal, making jurisprudence (BGer 4C.66/2004 of 01.06.2004), and her successful representation of victims in numerous international investment frauds.
Maxwell Chambers chief executive Ban Jiun Ean expands on the reasons behind Singapore’s explosive ADR growth in this feature.
There are many reasons why parties find Singapore attractive for international ADR work. Here, there is a deep respect for the rule of law, a stable geopolitical climate, a safe business environment and strong transportation links, while being geographically and culturally part of the fastest and largest growing market in the world – located within a six-hour flight of more than half the world’s population.
Other factors that parties have considered in choosing Singapore are the presence of many regional HQs of global MNCs, the deep and varied pool of legal talent available and the ease of doing business. Even factors such as the ease of movement and suitable cuisine for people from all parts of the world have tipped the scales in favour of a decision to arbitrate in Singapore. When parties think of arbitrating in Singapore, it is because of a combination of many factors that encompass the physical environment, the legal and judicial support system, and the presence of good counsel and related services.
For the simple reason that the kind of experience we can provide remains difficult to reproduce elsewhere, even for large companies or law firms. At best, there may be state-of-the-art audio visual equipment and IT capabilities in a conference room or two, but the full suite of offerings in a dedicated hearing centre will likely be missing. This includes soundproof breakout rooms with refreshments and automated locking systems to allow 24-hour access to only authorised individuals, mobile storage within hearing rooms to accommodate document-heavy proceedings, dedicated staff and IT support, privacy and confidentiality, bespoke room layouts to allow ancillary services like transcription and interpretation to operate effectively throughout hearings, and so on.
Proximity to hotels and good transport links are also part of the equation, as well as the availability of good food and coffee. Also, an interesting draw of dedicated centres is the possibility of meeting other arbitrators and arbitration counsel having hearings in the same location – always a pleasant experience for members of a far-flung global community.
The growth has been steady and multifaceted over the years, in some ways exceeding even Asia’s greater economic growth trajectory. Firstly, there has been the increasing maturity of the ADR industry, with both lawyers and clients alike becoming more experienced and sophisticated in using non-court processes for dispute resolution, and companies using ADR clauses by default in more of their contracts and standard forms. This has led to the steady growth of the use of mediation and arbitration as opposed to litigation.
There are many reasons why parties find Singapore attractive for international ADR work.
A second driver has been the shifting of ADR work from outside Asia back into Asia, as the number and quality of Asian neutrals continues to grow and parties become more familiar and comfortable with using a neutral not from the traditional powerhouse jurisdictions. The movement of some of these neutrals from more traditional seats has also contributed to this, with a lot of top ADR practitioners relocating their practice to Asia as a response to the increasing work they have been receiving from the region.
Finally, governments in Asia have also become much more supportive of ADR processes, in no small part due to years of efforts from bodies like UNCITRAL and the many large international arbitral institutions around the world. The Singapore Convention coming into force recently has also helped move the needle in terms of creating awareness among governments about the usefulness of ADR processes in helping to grease the wheels of their economies. As a result of all this, the ADR scene in Asia today, particularly in Singapore, is especially vibrant and deep, with an even brighter future on the horizon.
Without government support, a lot of this growth might possibly have come anyway, but almost certainly at a much slower pace. Government support, whether from the Singapore government or others, has been instrumental in driving change at many levels, whether by passing arbitration and mediation-friendly laws, by helping the courts understand ADR better, by creating specialist bodies like the Singapore International Commercial Court which provide deep support to the ADR processes, or by resourcing various efforts and initiatives that have driven awareness and growth.
Government support has also made large-scale events possible, in terms of making access to a country straightforward and fuss-free, by lending weight in the form of high-profile government officials attending and speaking, and by reaching out to their counterparts in other countries to raise awareness of the event in their respective jurisdictions. The Singapore Convention is a high-profile example of what government support can achieve, where the years of contribution by various bodies from around the world resulted in a groundbreaking international treaty that strengthens the international dispute resolution framework.
Without government support, a lot of this growth might possibly have come anyway, but almost certainly at a much slower pace.
In this example, one major advantage is the ability to shape the nature of the outcome using a negotiated settlement that can cover disputes ranging across multiple jurisdictions. For example, a dispute over a trademark infringement may involve products sold in several countries by both companies. Even if a favourable court judgment is obtained by one side, the effect of enforcing it in each of the many markets concerned will require starting (and for the other side, defending against) legal actions in each of those jurisdictions, potentially relitigating the issue in some places.
A successful settlement agreement, however, can be structured to cover all these markets and jurisdictions simultaneously, saving cost and time and ultimately leading to a better outcome for both sides. There is also, of course, the established advantage of arbitration or mediation where brand damage from the dispute can be reduced as proceedings and even terms of the settlement or award can be kept confidential, whereas court proceedings are public, as are court judgments.
Another advantage is the ability for disputing parties to select an IP specialist to be their neutral, whether as mediator or as arbitrator, which is extremely helpful in complex IP cases. These are just a few of many advantages of using ADR rather than the courts.
It will undoubtedly continue along this trajectory of growth as we see a new generation of lawyers and general counsel begin to increasingly embrace ADR as the approach of choice for dispute resolution. The newfound confidence and maturity of Asian-based dispute resolution institutions contributes in no small part to this, leading to parties increasingly putting their disputes in the hands of local or regional bodies. We expect that the foreseeable future of ADR in Asia will remain bright.
32 Maxwell Road #03-01, Singapore 069115
Tel: +65 6595 9010
Fax: +65 6339 3931
Email: info@maxwellchambers.com
Ban Jiun Ean is the Chief Executive of Maxwell Chambers and has spearheaded its development, helming the company between 2010 and 2016 before leaving to pursue other projects, including authoring several novels and overseeing the development of an arts centre. Since his return to Maxwell Chambers, he has worked to strengthen the firm whether in Singapore or on the world stage.
Maxwell Chambers is a dispute resolution centre centrally located in Singapore. Its purpose-built hearing rooms are equipped with best-in-class hearing facilities and state-of-the-art supporting technology. It also houses arbitral institutions, service providers and legal practitioners under the same roof in Maxwell Chambers Suites. Maxwell strives to be a one-stop shop for clients’ dispute resolution needs.
Assembling the bare facts involved in such a case is a challenge unto itself, to say nothing of proving ultimate liability. Veteran maritime lawyer Adam Lotkin expands upon these difficulties in this feature, illustrating the challenges legal teams must overcome in order to achieve success.
By far, some of the biggest challenges to preparing for and engaging in meaningful litigation involve acquiring proof of the mechanism of injury or death by admissible evidence. ‘Location, location, location’ is an often repeated phrase in the real estate world, but it is equally poignant when describing collecting evidence on large and small vessels in various locations locally, nationally, or around the world.
When a person is injured on a vessel, untangling and connecting the dots to assemble and organise tangible and verifiable evidence is a challenge for attorneys representing the injured person. Maritime cases can happen in a variety of marine settings across the globe; it is never an easy task to have to talk to witnesses, collect evidence by way of statements, live testimony, video or audio and digital formats, conduct surveillance and finally connect that to policies or lack thereof by the defending vessel owners, charters or companies.
Beyond this, an injured person often does not contact a lawyer until days or even weeks later, when disembarked from their work vessel. They may not have a clear chain of events of what happened or why. Counsel for the injured person must create timelines and a chain of medical events and try to figure out – after the event – both how and why it occurred.
Beginning with first-person statements, collecting information about the ownership and company potentially employing the injured party and their safety practices and training becomes vitally important to proving a case days, weeks, or years after the injury producing event.
When a person is injured on a vessel, untangling and connecting the dots to assemble and organise tangible and verifiable evidence is a challenge for attorneys representing the injured person.
One of the initial challenges to plaintiff’s counsel in maritime injury and wrongful death actions, as well as general admiralty injuries and death claims is finding witnesses, colleagues and fellow crew members who are willing to tell the truth despite the potential sacrifice of their own job or adverse job actions for going against another colleague or their employer. Most helpful witnesses are honest people who are put in a tough situation or ‘Catch-22’ when they are asked to testify or provide information that could jeopardize their own employment.
Knowledge of a vessel’s long-term unseaworthiness, a lack of training on the employer’s behalf and failing to recognise dangerous job requirements or unreasonably dangerous job assignments, especially on incidents that occur half way around the world or in foreign ports, is no small task for the practitioner maritime attorney. Soon after incidents occur, there may be multiple safety meetings, changes to policy or assignments or tasks and fixes to an unseaworthy situation or defect of a vessel such that proof thereafter will be difficult. Some vessels and industries (secure ports) have prohibitions on having recording devices such as cell phones on the vessels when they are underway or at sea doing their jobs for various reasons, including national or international safety.
Next, the legal practitioner handling wrongful death and personal injuries in the maritime and general admiralty arena will encounter challenges in obtaining detailed accident reporting by local, state or international organisations related to employee and maritime industries safety. Coast Guard incident reporting, United States OSHA reporting and investigation, as well as their overseas counterparts’ required reporting of incidents, is often inadequate and not generated to assist the injured worker or family of a wrongfully killed passenger, crew member or maritime seaman.
Where root cause analysis is helpful and should be a very detailed and factual analysis by the investigating agency for the international port, association, or government, lawyers often will find these reports will customarily blame the injured employee or crew member. Most international large vessel owners and contractors have their own internal accident reporting forms and investigation, which have been vetted by the defence and insurance industry to make certain there is ample ability for the company and its management to absolve itself of civil liability and jeopardy while setting up legal defenses such as contributory negligence, act of God or nature, and other blameless reasons for the injury producing incident.
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Most witnesses related to the company will not be forthcoming or eager to assist an injured employee that is preparing for litigation against their employer. While this is human nature, it thwarts continuing safety improvements in the maritime industry and will continue to stifle progress and safety advances in the very dangerous maritime industry.
Understanding the differences between the various state and federal laws is critical to effectively prosecuting the case for an injured or wrongfully killed employee, passenger, or crew member. Knowledge of the interplay between the Death on the High Seas Act and the Jones Act is essential, as well as general maritime law for injury and wrongful death cases.
Like any state litigation in wrongful death or personal injury, it is helpful to know what must be proven under the Jones Act or Death on the High Seas Act in state or federal court so your investigation and discovery can be tailored specifically to obtaining provable and admissible evidence far in the future in the presiding court. Notice of unseaworthiness, perils, defects, and a lack of job safety analysis or job hazard analysis and corroborating inadequate training by a maritime owner or employer is critical to overcoming the challenges facing a plaintiff’s attorney in such litigation.
Adam Lotkin, Partner
160 West Brambleton Avenue, Norfolk, VA 23510, USA
Tel: +1 757-622-5000
Adam Lotkin has been practicing law for nearly 28 years and does so with the passion for justice. Adam has helped thousands of clients obtain justice for personal injury and other grievances and has been lead counsel in over 120 jury trials in the Commonwealth of Virginia and Federal Courts. He has also served on the Board of Governors for the Virginia Trial Lawyers Association for nearly a decade and has been an active part of various trial advocacy associations, including the Maritime Lawyers Association.
Rutter Mills LLP is a Virginia-based law firm specialising in personal injury, auto accidents, workers' compensation, social security and maritime injuries.
In this feature, Buckles Solicitors senior associate Sonia Rola takes a look at what mediation stands to offer instead. Can it be an effective solution for families who may not otherwise have their disputes heard?
16 January marked the first day of Family Mediation Week, which is an opportunity to raise awareness of the benefits it can bring to those who have made the decision to end a formal relationship. Family mediation helps people take control, make decisions together and build a positive future for their family, whilst reducing the potential for hostility.
Unless there is a safeguarding issue – namely unless you are at a risk of life or limb – now more than ever you should consider almost anything but the family courts, especially when it comes to children law applications. A children law application will inevitably cause further delay and add to the cost (if you can afford legal representation).
In a recent poll by Resolution, a membership organisation for family law professionals committed to working in a constructive way, over half of the family lawyers surveyed said it now takes an average of between one and two years to resolve family disputes after making an initial children law court application. That time delay could lead to serious consequences to the overall outcome of a court’s decision, especially due to the status quo that may have been developed in the meantime whilst a parent waited for a final hearing.
“New data from HM Courts & Tribunals Service (HMCTS) has once again highlighted the devastating delays and backlogs that continue to hamper the family courts,” the Divorce Surgery UK said in a 2022 release. “As of September, the backlog is sitting at 110,425 cases – a 2% month-on-month increase. This is also a striking increase of 6.4% from the figure of 103,790 seen in September 2021.”
When parents embark on the uncharted waters that are contested children law applications, this may further damage what is probably an already hostile environment within a separating family.
Whilst parents fight it out during the court process, i.e. by asking a stranger to decide on their private family life instead of making their own decision, parents may also risk losing or indeed lose the possibility of there being any future positive communication with one another. This situation, at least in the short term, will inevitably impact your child and cause further unnecessary stress and anxiety to all concerned. No child is built for conflict; they should be allowed to just be children, unburdened.
Unless there is a safeguarding issue – namely unless you are at a risk of life or limb – now more than ever you should consider almost anything but the family courts, especially when it comes to children law applications.
Further, in the near future, the family courts will open its doors to the public. Conflict is often a destructive thing, so what is the answer for separating families?
Mediation remains a very underused tool, which is why it needs an awareness week. It could provide a parent a lifeline and a much-needed opportunity for them to be the best parent that they can be, in a supported space.
Thanks to its very flexible and fluid approach, family mediation offers almost endless possibilities to achieve an acceptable solution. Parents can openly discuss between themselves their child’s specific needs and what is or is not going to work for them, as well as issues that the courts may not necessarily cover or indeed even be interested in.
Family mediation can often help parents communicate more effectively. It can provide for a far more authentic way of parenting, offering concerned parents the opportunity of a private supported conversation in a safe space.
Not only is family mediation typically a quicker and less expensive method to resolve your child arrangements, but it is far more likely that during the process, both parents will be given an opportunity to consider and discuss how the child feels about the outcome, whilst providing the parents with helpful signposting.
In complicated cases, it is possible to co-mediate with another mediator, such as when there are different jurisdictions or laws to consider. Parents could also agree that any solution covers different jurisdictions, without the added expense of applying for mirror orders within different jurisdictions and therefore avoid this further unnecessary cost and delay.
However, there are also some drawbacks to mediation. It is not legally binding and private, so any discussions from such mediation sessions cannot be used in open correspondence or proceedings at a later stage. Further, if parties change their mind, they will need to start the process all over again and go to court, which would be the same process as if parties decided to vary an existing court order(s).
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It is now possible to mediate online, which is useful for those clients who live far away or abroad, as it also saves time and travel costs for all concerned. Parents could agree on a parenting plan to use as a template between themselves and then continue to modify this, catering to the child’s specific needs as they grow up.
In conclusion, it is far more likely that family mediation will help to ensure that a child of separating parents will retain and enjoy their loving connection with their parents and family homes instead of simply dividing their time between two different houses.
Sonia Rola, Senior Associate Solicitor & Accredited Family Mediator
Summit House, 12 Red Lion Square, London, WC1R 4QH, UK
Tel: +44 02070 527826
E: Sonia.Rola@buckles-law.co.uk
Sonia Rola is a member of Resolution and a senior associate at Buckles Solicitors specialising in family law. With over 20 years’ worth of experience in the sector, Sonia aids clients in complex financial disputes and all aspects of children law both in the UK and internationally. She also undertakes her own advocacy in court and provides pro bono services to various charitable organisations to better enable her clients to understand their rights.
Buckles Solicitors is a UK law firm that provides international, commercial and private client legal solutions for businesses and individuals.
This grows especially pertinent when an international element is added to the subject. In this feature, we hear from DPZ Avocats’ Delphine Parigi as she takes a look at the key concerns for HNWIs and other foreign investors in France as we move into the new year.
France has developed a continuous, complex tax and legal system when it comes to investment in real estate by foreign investors, which demands a specific approach.
Whereas real estate investments are clearly secured from a property standpoint with the required involvement of a notary public for any transactions (including the transfer of foreign shares, which are predominantly real estate for French tax purposes), the French tax regimes applicable for ownership, resale and inheritance purposes are extremely numerous and depend on many factors. These include the type of real estate investment, ownership structure, destination, ownership and capital gains involved.
Beyond the potential for double taxation in case of a cross-border investment, France has implemented an extremely detailed patchwork of procedures when it comes to international investors.
As a few examples, any entity (French or foreign) has to be registered in France. In addition, any investment via a special purpose vehicle triggers a 3% tax declaration by 15 May to disclose the channel of investors up to the UBO. In case of a second omission, delay or mistake, the French tax authorities reassess the taxpayer (with a joint liability of intermediary entities) at 3% of the fair market value of the property and generally apply a 40% penalty.
When French real estate assets or rights have been financed abroad, the deductibility of the financing is often challenged if the financing has not complied with French rules. In case of a French property owned by a trust, yearly reporting is also required. Many other specifications apply which require significant administrative and accounting costs to be anticipated upon acquisition. We highly recommend that foreign investors ask their French tax advisors to determine the exact tax and indirect costs upon acquisition, ownership, resale and inheritance upon the acquisition.
France has developed a continuous, complex tax and legal system when it comes to investment in real estate by foreign investors, which demands a specific approach.
It is ideal to insert a substitution clause upon the promise of sale to take the time to define the relevant type of acquisition (direct or indirect) before the final deed. Indeed, modifying the structure after acquisition incurs a significant transfer tax in France.
Due to the French tax declarative system, the burden is put on the investor’s shoulders. Contrary to many overseas authorities, the French tax authorities tend to consider any HNWI or foreign company as potentially fraudulent. The French procedural rules for prosecution of tax fraud have been significantly amended since October 2018 in order to increase the number of tax fraud prosecutions against both individuals and legal entities. Our practice focuses on assisting cross-border investments.
Since October 2018, the French tax authorities automatically refer cases to prosecutors where:
This new procedural rule mechanically increases the number of files which arrive at the prosecutor’s level. Today, the 40% penalty applies almost automatically when there is an omission in any tax filing.
This period is particularly complex as clients have to deal with a lack of responsiveness from the authorities and the tight timeline of the transaction. Today, it takes approximately one year for a deed to be fully registered by the land registry.
The ideal time of action is definitively before the closing of the transaction. This is where one is able to determine a strict costs and modalities plan with the support of a coordinated team of lawyers, surveyors and experts in valuation who are aware of the French tax landscape for international clients. In addition to their technical expertise, the capacity of the advisors to connect with involved parties is key to easing the full process.
In this new environment, it is critical to anticipate the criminal risk as soon as possible in order to limit the risk that the tax audit leads to a criminal enquiry for tax fraud against the HNWI, the legal entity or its directors. The most difficult tax audits often begin due to a mail issue caused by failing to swiftly follow up on a request from the French tax authorities.
Today, it takes approximately one year for a deed to be fully registered by the land registry.
To be tax-efficient today requires first and foremost to set up a consistent SPV with the purpose of avoiding any discussion about artificial settlements. For instance, in case of significant renovation and a decision to rent the real estate, it may be in the scope of the paid VAT to obtain a full reimbursement. However, such steps require a long term renting with services.
If the investment were being made across international borders, perfect coordination between the advisors is absolutely necessary. Although we are part of an integrated world, the tax world is still defined by procedures individual to each country. Many tax-efficient regimes do exist in France, but detailed conditions must be met. As an example, given the objectives of a project, the dividend taxation regime tends to be the most favourable, and therefore the SIIC and the SPPICAV should be the most efficient structuring.
Please find below a summary of the key elements of the SIIC and the SPPICAV:
| French SIIC-type REITs | SPPICAV | ||
| Registered capital | Minimum €15 million | NA | |
| Shares | Listed | Unlisted | |
| Types of assets of the structure | Minimum 80% in real estate assets | - Minimum 51% in real estate assets
- 10% in 12 months’ liquid assets - Others: financial products (at least five different real estate assets representing >20% of the total real estate assets) |
|
| Corporate purpose | Renting
Buying and selling activities may be requalified under the property trader regime (marchand de biens) under certain circumstances |
||
| Tax regime of the structure | Exempt from CIT under certain conditions related to capital split | CIT | |
| Tax regime of the investors | Dividend regime – taxation in the country of residence | ||
The SIIC (listed company) requires the fulfillment of the following obligations:
Furthermore, at least seven investors, in addition to the two main shareholders, should hold a part of the SIIC capital.
The SIIC is also subject to specific distribution obligations every year:
Failure to comply with the distribution obligation may lead to the loss of the benefit of the CIT exemption regime of the SIIC.
In addition, dividends distributed by the SIIC may be subject to withholding tax to its legal investors holding, directly or not, at least 10% of the SIIC in case such investors are not subject to CIT (or, if foreign investors, to an equivalent taxation).
Due to these quite restrictive conditions, the SPPICAV often appears as a more convenient structure. Even if the SPPICAV is subject to CIT, it may be more convenient when compared to the SIIC, notably for the following reasons:
However, the assets repartition of the SPPICAV is limited to the obligation of holding at least 51% in real estate.
Similarly to the SIIC, the SPPICAV is subject to distribution obligations every year:
In this new environment, it is critical to anticipate the criminal risk as soon as possible
Pursuant to article 279-0 bis of the FTC in application of the Finance Bill for 2023, VAT is levied at the reduced rate of 10% on improvement, transformation, development and maintenance work relating to residential premises completed over two years ago. Similarly, pursuant to the provisions of Article 278-0 bis A of the FTC, VAT is collected at the rate of 5.5% on energy quality improvement works in the same dwellings.
At the same time, when the work is carried out by a professional lessor, article 257, II-1-2° of the FTC provides that if this work contributes to the enhancement or extension of the life of the building, it must give rise to the taxation of self-delivery when the building subject to the work is assigned to operations not subject to VAT – which is the case when the building is assigned to a rental activity for residential use (this type of rental being exempt from VAT).
As for the rate applicable to this self-delivery, it is in principle 20% except for works relating to social housing.
The tax developments are mainly issued by the OECD rules with a specific practice and by case law (although France is supposed to be a civil law country). A substantial change concerns VAT with the electronic filing.
The system adopted by article 26 of the Amended Finance Bill for 2022 and the Finance Bill for 2023 is based on two objectives relating to the generalisation of electronic invoicing in transactions between persons subject to VAT and the transmission of transaction data:
In practice, the implementation of electronic invoicing will be done according to a gradual schedule, which will limit the effects of this transition on companies and gradually include them according to their size. The dates will be 1 Janary 2024 for large companies, 1 January 2025 for mid-sized companies (ETI) and 1 January 2026 for SMEs and VSEs.
Article 62 of the Finance Bill for 2023 completes this reform by making two changes. The first complements article 289-VII of the CGI, relating to the terms under which taxable persons can issue or receive invoices. They will now be able to use the qualified electronic seal procedure within the meaning of the European regulation known as the ‘eIDAS regulation’. This procedure is in addition to those already provided for, namely the electronic signature, the reliable audit trail and the structured message.
The second modifies article L. 102 B of the Tax Proceedings Code in order to provide that the books, registers and documents drawn up or received on a computer medium must be kept in this form for a period of six years from the date of the last transaction mentioned in the books or registers or the date on which the documents or records were drawn up. There would therefore no longer be the possibility of keeping them for three years on a computer medium, then of switching to another medium for the last three years.
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I believe I took the journey of international tax law in because I am driven by solving the most complex and challenging legal issues as efficiently as possible. I hesitated with a diplomatic career, but tax law answered just as well to this need by governing the financial foundation of our society and by giving me the opportunity to be involved in cases where the human part is the basis.
Nowadays, with the trend of tax law becoming criminal tax lax, I understand fully my vital need for freedom and defence of taxpayers.
“Liberty is at an end whenever the laws permit that, in certain cases, a man may cease to be a person, and become a thing.” - Cesare Beccaria
I find this question difficult to answer for a lawyer, as the essence of our career is to battle in the shadow and in silence for the interest of our clients.
It would be a lie to say that I feel indifferent to being part of billion-euro transactions, having represented one of the few cases to the French Constitutional Council, being contacted by top leading firms to launch their office, being a speaker at worldwide conferences including at the Harvard Business Club, winning complex cases at transactional level, or solving issues which other advisors said were impossible.
But I think my biggest renewed achievement is that I wake up every day with the chance to do the profession that I have chosen with the people I am grateful to work with. Working happily with a grateful team and clients over the years, whatever the challenges, is an amazing gift.
I received two messages received today, the first from a long-term client: ”I appreciate we are getting into deeper tax advice and I really appreciate you being available at short notice.” The second, from a successful young alumnus trainee who sent me his wishes: “I also wanted to thank you for your time and for everything you gave me during my months of internship in your firm, which are now of great help to me for my new experiences.”
Delphine Parigi, Founding Partner
81 Avenue Raymond Poincaré, 75116 Paris, France
Tel: +33 9 81 25 89 87
Fax: +33 9 81 38 38 77
E: delphine.parigi@dpz-avocats.com
Delphine Parigi has been a tax lawyer since 2005, having begun her career with EY Société d’Avocats in Paris and New York. She launched DPZ in 2011 to better provide high-value technical services to international clients, in addition to working within her values of proximity and accessibility.
DPZ Avocats is a boutique law firm located in Nice and Paris, providing services both in France and abroad. The firm counts clients among the private and public sector, in addition to non-profit organisations, investment funds, banks and individuals, providing both advice and litigation services.
In this article we hear from four Loyens & Loeff team members specialising in insolvency and restructuring matters, who take a look at the corporate insolvency fallout for Luxembourg specifically. How have Schemes and restructuring plans been impacted by the UK’s exit from the EU, and what has it meant for enforceability of judgements?
In Luxembourg (as in many other EU jurisdictions) there is no specific legal framework on automatic recognition of UK judgements following Brexit. That is to say, there is no replacement or equivalent to the previously applicable: (i) EU Insolvency Regulation, (ii) Brussels Recast Regulation on recognition of judgments, and (iii) recognition in certain circumstances where the Hague Convention would typically not apply. The consequences have a significant effect on the use of certain previously common restructuring tools such as the UK Scheme of Arrangement and, more recently, the UK Restructuring Plan.
Whereas Schemes and other UK processes were commonly used to restructure debt prior to Brexit, their use has become less common post Brexit due to this lack of automatic and direct enforceability. The UK restructuring processes can still be used, but their scope of use is now limited, it being noted that parties need to undertake a more detailed factual analysis as to the need for enforceability of the UK judgement in the specific matter and associated risks as to lack of direct enforceability.
Post-Brexit, it appears from practice that a Scheme or other UK restructuring process is limited to use on debt governed by English law only and only with respect to the contractual nature of the debt. This is a change from past practice, where the UK processes could also be used to order positive actions as against the debtors. As positive actions against the debtor require immediate enforceability of the judgement for them to be effective, these positive actions would appear to be no longer viable, thereby limiting the scope of applicability of the Scheme.
As to market trends as a result of Brexit: (i) the overall use of Schemes has decreased, (ii) other restructuring processes in EU countries are considered as options in far more detail (such as the German or Dutch restructuring processes), and (iii) the scope of the Schemes has been reduced to and generally limited only to contractual debt matters.
Whereas Schemes and other UK processes were commonly used to restructure debt prior to Brexit, their use has become less common post Brexit due to this lack of automatic and direct enforceability.
The UK restructuring procedures, however, remain very practical and the UK Courts have significant experience in debt restructuring, making it an objective of parties to attempt to fit facts and circumstances to try and still use these processes. One such trend is the growing popularity of attempting to create a co-obligor structure following the Gategroup model to limit recognition issues.
English Schemes of arrangement (voluntary pre-insolvency proceedings) are not considered to be insolvency proceedings. As a result, prior to the Brexit transposition deadline such orders were generally automatically recognised in the EU under the Brussels Recast Regulation.
However, as no equivalent proceedings, treaties or recognition conventions exist in EU Member States, with the Brussels Recast Regulation no longer being applicable post-Brexit, sanctioned Schemes would now generally be required to undergo the exequatur procedure in order to be recognised in an EU Member State. In Luxembourg, the exequatur procedure is an ordinary civil proceeding without priority and as such may take significant time to achieve in contested proceedings, leaving an uncertainty in the restructuring transaction (which often proves fatal due to time being of the essence).
On the other hand, English Company Voluntary Arrangements (CVAs) are considered to be insolvency proceedings as they are listed under the European Insolvency Regulation[1]. Thus, prior to Brexit, rulings in relation to CVAs were entitled to automatic recognition in all Member States whereby the European Insolvency Regulation had been fully implemented (subject to that European Member State’s public policy). For example, following the Brexit transposition deadline, a Luxembourgish court would need to apply the exequatur procedure for the recognition of foreign judgements, as Luxembourg has not incorporated the European Insolvency Regulation into national legislation.
English restructuring plans were generally equated to those of Schemes of arrangement for the purpose of recognition (i.e. considered to fall under the scope of the Brussels Recast Regulation). However, following the (albeit controversial) Gategroup case[2], restructuring plans are now widely regarded as falling within the description of insolvency proceedings under the European Insolvency Regulation. Therefore, any restructuring plans launched pre-Brexit would likely be automatically recognisable in all Member States whereby the European Insolvency Regulation had been fully implemented, while restructuring plans launched post-transposition period would follow the exequatur (or equivalent) procedure and not be automatically recognised.
The exequatur (or equivalent) procedure is only applicable if there is no existing convention or treaty between the UK and another Member State whereby automatic recognition exists. Previously, the Lugano Convention on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters was seen as a potential means of obtaining recognition of a Scheme or a restructuring plan in Europe. However, since Brexit (and the UK having failed to accede in its own right, outside of being an EU Member State), the Lugano Convention is no longer applicable to the UK.
The Lugano Convention would have been useful for the purpose of recognition of a Scheme (which is not an insolvency procedure). Some parties saw the potential accession by the UK to the Lugano Convention as a means of ensuring recognition of a restructuring plan, but the decision of the English Courts in the Gategroup matter cast significant doubt in this respect.
While the facts of the Gategroup matter differ from restructuring plans launched post-Brexit, (as the proceedings were initiated on the day of the Brexit transposition deadline), this case provided a detailed analysis of an English restructuring plan, and ultimately ruled that it fell within the bankruptcy proceedings exemption of the Lugano Convention. This had the consequence that the choice of the English Courts as the location for insolvency proceedings to be commenced did not fall within the scope of Lugano, and thus did not qualify for automatic recognition.
The concern with a lack of automatic recognition of these judgements is that while in the majority of Member States, a ruling pursuant to a Scheme, a CVA, or a restructuring plan would likely be recognised under their exequatur (or equivalent) proceedings[3], if a Luxembourg entity is the initiator of a UK Scheme of arrangement or a restructuring plan, for the ruling to be recognised in Luxembourg, they must first have had a COMI shift, or shift of place of central administration to England or other procedural steps. Failing this, in the eyes of the Luxembourg court, the English court ruling on the Scheme, CVA, or restructuring plan does not have jurisdiction to hear a Luxembourgish entity’s pre/post-insolvency proceedings.
The exequatur (or equivalent) procedure is only applicable if there is no existing convention or treaty between the UK and another Member State whereby automatic recognition exists.
Secondly, as Luxembourg has a somewhat outdated idea of creditor cramdown through the concordat preventative de faillite procedure[4], and has not yet implemented any of the measures within the European Insolvency Regulation, there is a certain level of uncertainty as to whether a Luxembourg court would recognise the notion of creditor cramdown in the pre/post-insolvency mechanisms which are employed through Schemes, CVAs or restructuring plans in line with their national public policy. This means that, following lengthy exequatur proceedings, companies run the risk that the Luxembourg court finds that Schemes, CVAs and restructuring plans whereby creditor cramdown are ordered are contrary to public policy, meaning that the recognition order cannot be given.
While certain practitioners argue that by virtue of Luxembourg having failed to implement the Insolvency Regulation by transposition deadline, elements of creditor cramdown ought to be recognisable in a Luxembourg court (if the need for recognition should arise), this cannot be guaranteed leaving an air of uncertainty. While this risk is remote, (a lack of public policy is rarely used as grounds to justify a ruling), it cannot be ignored, as was shown in Ireland in Apperley Investments Limited & Others v Monsoon Accessorize Limited [2020] IEHC 523.
An English Scheme/CVA/restructuring plan is perfectly fine to proceed in the UK without being subsequently recognised in a European Member State, unless the proposed procedure expects to make changes within a European Member State whereby recognition is required. As detailed in the DTEK case[5], an English or Welsh judge sanctioning one of these actions should have confirmation that there is a reasonable likelihood of recognition in the relevant Member States before sanctioning such an action.
Generally, there have been no major developments in the area of insolvency law in Luxembourg since the end of the Brexit transposition period. However, it is important to note that the COVID-19 pandemic was ongoing at the time the transition period finished, and the various stays of payments permitted across various jurisdictions had led to a lower number of insolvency proceedings being initiated within Luxembourg, but we have recently seen some signs that this is changing.
Separately, while the European Insolvency Regulation existed prior to the end of the Brexit transition period, more Member States have implemented national measures to harmonise their approaches with that seen in the UK. However, Luxembourg has not yet done so, nor has it implemented the EU Restructuring Directive. This means that Luxembourg currently does not have the restructuring tools that other EU jurisdictions have implemented (such as, for instance, the French safeguard and the German and Dutch Schemes), and thus complex restructurings are not done in court in Luxembourg but rather settled out of court by security enforcement or by using procedures abroad.
That being said, the so called ‘Luxembourg pre-pack’, which is completed using the very advantageous and robust Luxembourg financial collateral legislation, remains a very common means to implement a cross border debt restructuring. This mechanism entails the enforcement of the top Lux share security and thus transferring ownership of the distressed or restructuring group of companies to the relevant creditor groups. The Luxembourg collateral law remains one of the most, if not the most, creditor-friendly laws in Europe.
Luxembourg currently does not have the restructuring tools that other EU jurisdictions have implemented
The new changes have certainly led to a renewed interest and further requests surrounding where Luxembourg stands on matters such as the implementation of the EU Restructuring Directive or the recognition of Schemes, CVAs or restructuring plans, along with an increased push for clarity in this respect in the Luxembourg market itself. Other than adding more complexity to the structuring around restructuring deals, Luxembourg is still a very popular restructuring jurisdiction because of the number of Luxembourg SPVs that are involved in international financings and the very creditor-friendly financial collateral legislation, which brings the enforcement of Luxembourg share security to one of the most popular ways of taking control of a debtor group in Europe.
It is rather unlikely to substantially change, but depending on how Luxembourg will implement the EU Restructuring Directive, using a Scheme may become easier in the future.
Separately, there is discussion as to whether the UK may attempt to accede to the Lugano Convention. While, as per Gategroup, this would not be of assistance to those seeking to initiate restructuring plans or, separately, CVAs, this could certainly aid companies or groups seeking to initiate Schemes out of the UK while having their COMI/headquarters/place of central administration in an EU Member State, or in one of the other countries which are a party to the Lugano Convention.
We anticipate more complex litigation, in particular if recognition of UK judgments are sought in the insolvency context. Once exequatur procedures are launched concerning post-Brexit UK pre-insolvency and insolvency judgments and the Luxembourg judgments are subsequently rendered, creditors will have more clarity on the likely implications, timing and consequences if enforcement of a UK judgment is needed in Luxembourg.
As relayed above, there are very large discrepancies in terms of the recognition of pre-insolvency proceedings initiated in the UK across Europe and within EU Member States. What makes the difference in complex restructuring cases is not only a dedicated team and international restructuring experience but also being familiar with the UK and US regimes and concepts so the best solutions can be found.
The advice required depends on the type of financing involved, i.e. a bonds transaction (where there is actually another potential grounds for justifying a creditor cramdown – if recognition is actually sought in Luxembourg – through Article 470-13 of Luxembourg Companies law) or a credit financing as briefly demonstrated above, which means that legal counsel with experience is needed in this area. This is even more necessary in Luxembourg; given the lack of clarity surrounding this area of law, this is absolutely essential at present.
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Given that most large-sized multijurisdictional debt restructurings entail many different layers of debt, often both loan and bond debt, it is key to have a multidisciplinary team that is familiar with corporate, lending and bonds aspects as well as with restructuring proceedings, mechanics and tools. For us, one of the main added value to our cross-practice restructuring team is also that many of our people have UK or US legal background or training and are thus familiar with both civil law and common law concepts and legal mindsets. In addition, any complex restructuring requires a team comprising corporate, finance, tax and litigation experts to ensure that all aspects are catered for.
We see more litigious cases now that funds tend to be on the sponsor and lender side. There are also more widespread alternatives where not just the UK or the US is driving the restructuring process but other jurisdictions might be key as well, or a local restructuring process may even be needed to ensure the key assets are secured. We have also noted a US influence on the parties and structures now that, in the last decade, more US funds have invested in Europe and some US firms have beefed up their European (or at least London) presence.
[1] Regulation (EU) 2015/848 of the European Parliament and of the Council of 20 May 2015 on insolvency proceedings (recast), as amended, Annex A.
[2] Re Gategroup Guarantee Limited [2021] EWHC 304 (Ch)
[3] For example, Spain, as per Book II of the CIL and Germany under the German Corporate Stabilisation and Restructuring Act, which was modelled on the English Scheme of arrangement and allows for both horizontal and vertical cramdown of dissenting creditors.
[4] It is also worth noting that this procedure can only be initiated if the place of central administration is in Luxembourg, i.e. no consideration of creditor cramdown of a Luxembourg company’s creditors following a COMI shift.
[5] Re DTEK Energy B.V. & anr [2021] EWHC 1456 (Ch) (convening); [2021] EWHC 1551 (Ch) (sanction).
18-20, rue Edward Steichen, L-2540 Luxembourg
Tel: +352 46 62 30
Fax: +352 46 62 34
Michael Scott, partner, is a member of the dedicated Corporate Restructuring Team in Loyens & Loeff’s Luxembourg office and co-heads the overall Luxembourg Restructuring practice. He focuses on complex cross-border distressed debt restructurings for noteholder groups and multinational companies. He mainly advises US and UK based clients with investments in Luxembourg entities owning target groups in EU jurisdictions.
Anne-Marie Nicolas, partner, heads Loyens & Loeff’s Luxembourg Banking & Finance practice and co-heads its Luxembourg Restructuring practice. Anne-Marie focuses on secured lending, including acquisition finance and real estate as well as distressed financings, security enforcements and debt restructurings.
Véronique Hoffeld, partner, is a member of the Executive Committee of Loyens & Loeff Luxembourg and heads the Litigation & Risk Management Practice Group of its Luxembourg office. She focuses on commercial law, financial litigation and international arbitration. She is also recognised for her contentious insolvency prowess.
Patrick Ferguson, associate, is a member of the Banking and Finance practice group in Loyens & Loeff’s Luxembourg office. Patrick specialises in banking and finance law and acts for private equity firms, financial institutions and investors in various types of cross-border finance transactions, including secured lending, acquisition finance, refinancings and restructuring.
Loyens & Loeff is a leading full-service European law firm with home markets in Luxembourg, Belgium, Switzerland and the Netherlands which specialises in legal and tax matters. From its Benelux and Switzerland offices and in key financial centres around the world, its 1,000 advisers are well-prepared to advise on a broad range of issues including in or out-of-court restructurings, pre-insolvency issues, security enforcements, cross-border insolvencies, corporate governance, financing and rescheduling, distressed acquisitions and sales, distressed debt trading and investments, as well as crisis management and debt restructuring.
In this article, Lawyer Monthly hears from Jeff Martin at Fortress BEC, who sheds further light on the state of the construction industry as it currently stands. In this feature he focuses on building envelope consulting, the challenges of modern construction matters and why the legal sector ought to anticipate a wave of construction litigation in 2023 – and even beyond it.
The building envelope is often referred to as the ‘wrap’ of the structure. In basic terms, it is the exterior components of the roofing, walls and below grade (where applicable) waterproofing which help to keep the moisture and air out of the building. Our primary focus is therefore on the details of the construction of that envelope. This often begins at the design phase with assisting the designers in getting proven waterproofing details incorporated into that design.
We can then follow that design into the field and monitor, test and report on the quality assurance of the installed work. We are also engaged in forensic work, which is where we try to find out what went wrong either in the design or in the construction of the project and provide a solution going forward to mitigate the water intrusion issues.
Our firm helps with the design of the roofing, weather barrier (WRB for short), waterproofing and other components. We often help architects and owners to provide better designs, detailing and material selection on new projects. We also undertake design work as the prime firm on many renovations and remodelling projects. Testing during construction and observations for compliance are both important aspects of our services. We also provide condition assessments for building reviews as well as forensic and legal help when things go wrong.
According to the American Institute of Architecture (AIA) as well as other construction-related organisations, moisture-related issues are one of the main causes of litigation in today’s market. When water enters a structure, numerous problems can and will likely develop. These include everything from a minor inconvenience to more severe issues. Water intrusion into any building can, and likely will, damage the building components. This can result in a myriad of problems, such as a loss of R value within the building assembly, unsightly stains, mould, mildew and other biological growth as well as slip-and-fall hazards.
According to the American Institute of Architecture (AIA) as well as other construction-related organisations, moisture-related issues are one of the main causes of litigation in today’s market.
A knowledgeable building envelope expert can help legal firms to determine the cause of the damage, the extent of the problems and pathways for remediation.
We continue to help in the design phase on both new construction and renovation/replacement work for roofing, walls, waterproofing and more. Testing in the form of ASTM water testing methods of high and low voltage of roofs and plaza decks, infrared and capacitance scans and other procedures can be utilised. There remain significant challenges in the construction field due to labour shortages and a lack of proper training increases the need for project oversight.
Since we started in the mid-1980s, the building construction envelope has evolved dramatically. Building materials and construction practices have changed – some for the better, some not so much. We are asking for a lot more of our structures than we used to, mainly in the increased demand for energy efficiency. These demands have moved the market to produce new and more complex materials and construction methods to provide maximum energy efficiency, and we see no end to this advancement in sight.
One of the biggest challenges in our industry has been communication technology. To be able to speak to a person on the jobsite with live video is incredible and the ability to mitigate issues or details in real time and report to all parties so quickly is a game changer.
One negative factor we have noticed is the lack of younger tradespersons entering the construction field. This remains a continuing challenge.
The construction sector has numerous challenges both today and moving forward. I believe the largest impact is the retirement of older skilled personnel and the lack of younger persons entering the construction workforce, especially in the skilled trades. This also exists in the architecture and engineering fields.
The construction sector has numerous challenges both today and moving forward.
The quality and completeness of construction documents provided to builders is at times, to put it bluntly, simply atrocious. This puts the onus on the individual trade contractor to do much of the design work for their trade – or even worse, assume or guess at what was intended.
There is also a severe lack of adequate training for installation crews. We constantly hear the phrase: “Well, that’s the way I’ve always done it”, and this can be detrimental to the integrity of the end product. Training is improving in some sectors but continues to lag behind what is necessary.
Construction time expectations for delivery of projects are extremely tight and we have observed some buildings being rushed to completion. This can lead to improper sequencing of the building components and their eventual failure. Many of these problems become expensive to correct once the structure is complete.
The pandemic’s biggest impact was material shortages, which greatly impaired construction schedules. A fair number of problems arose out of panic to keep the construction schedule on track. Materials that were specified (and unavailable) were switched to ones that were accessible, to the detriment of the design. Many of these may lead to eventual failure.
Starts and stops on some projects have also been a challenge. On some projects, different crews within the company (and in some cases, even different subcontractors) return after work stoppages, which leads to unfamiliarity with the scope and installation.
We do continue to see materials supply chain issues but it has and continues to improve. Most of this was due to the pandemic but construction has been strong for the past several years and the supply chain was somewhat stretched out even before COVID.
We expect the supply chain to continue to moderate and a possible slowdown in the construction field as interest rates increase. One thing we certainly expect this year and for the next several years is additional litigation from construction failures.
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Due to the pandemic, supply chain issues and the shortage of skilled labour, construction over the past several years faced severe headwinds and we observed many projects which were rushed to completion or were not installed per plans and specs. We believe failures will be the result of several factors, including but not limited to the following:
It is our opinion that, due to the above factors, we should expect to see a huge wave of construction litigation in the upcoming months and years. Much of this will be the result of water intrusion through the building envelope and the associated problems.
Jeff Martin and Mark Stewart
Fortress Building Envelope Consulting
Tel: +1 919-730-1785 | +1 864-965-8668
E: jmartin@fortressbec.com | mstewart@fortressbec.com
Jeff Martin is trained in all facets of roofing and building envelope design, with extensive experience in proper construction installation and protecting owners’ interests throughout the entire project process. He has worked as a contractor and a consultant on a range of projects across the healthcare, industrial, institutional, commercial, housing and residential sectors, and holds several certifications in the building envelope area.
Mark Stewart is an RRC (Registered Roof Consultant) and Certified EIFS Inspector with a bachelor's degree in Construction Management from East Carolina University. For over 30 years, Mark has worked in the commercial roofing industry in the roles of project manager and estimator, and in 2013 was named Manager of Estimating and Sales. Mark has significant experience with multitudes of commercial roofing projects from the simple to the complex. He also served as the District 4 director of the local CRSMCA (Carolina Roofing and Sheet Metal Association).
Fortress BEC provides comprehensive building envelope consulting throughout the United States. With over 60 years of experience in contracting and consulting, the firm covers a broad range of services to guarantee building envelope integrity.
In these cases, the use of personalised vehicles and other transportation aids is critical to help restore their standard of living. This month we hear from transport expert witness Niki Sinclaire, who provides an in-depth look at her own role in providing mobility solutions for her clients.
As an expert witness I am instructed by legal professionals and can assist case managers to assess clients for their transport requirements. It is through the assessment process that our other services offered by Personal Mobility Solutions are accessed. The service that is used is very much dictated by the outcome of the meeting. One or more services may be offered at any time.
For example, it may be established during the meeting that the client is without any suitable wheelchair-accessible transport of their own and without the right transport they are unable to gain access to the wider community. It could be that they have a taxi account, but this has proved to be unreliable. In this instance I would make a recommendation in my report for an adapted rental. During the time it takes to write the report, I would also refer the client or their representative to our rental department to obtain a quote for that service as an immediate need.
The option of a rental vehicle is offered as a short-term solution until a permanent vehicle can be sourced, and the client has the choice again to use our services to purchase their new adapted vehicle. Through our Vehicle Supply Service, we will source the base vehicle and oversee the adaptions and modifications that are required, arranging the vehicle transfer between sites and handling all the administration for the client such as the vehicle registration and insurance. By offering this service we can ensure that the vehicle is ordered, adapted,] and delivered to the client without any disruption or stress to themselves.
We are often instructed to oversee the sale of an existing client’s current vehicle. They may have reached the time where it is getting too old and they need to replace it, or it could be that their circumstances have changed and they require a different type of vehicle altogether and we can assist them through our Part Exchange service.
As an expert witness I am instructed by legal professionals and can assist case managers to assess clients for their transport requirements.
I can be instructed on any case where there is a requirement for a transport review. However, I am predominantly instructed on cases of medical or clinical negligence either through birth or an operation that has gone wrong, as well as road traffic accidents, acts of terrorism and anything that has resulted in a life-changing catastrophic injury for the client and has placed them in a position where they can no longer drive or access a vehicle in the conventional manner.
Whilst transport may form the smallest and least important part of a client’s claim, it can often make the biggest difference. Having access to suitable transport can give someone back their independence and enhance their quality of life and wellbeing. It is important to point out that it does not matter about the individual’s disability or whether they are cognitively aware; their rights to be able to travel in safety and comfort are just the same as any able-bodied person. All that changes are their vehicle requirements.
For example, I met a client who, pre-incident, had a high-flying career. They were the main driver for the family days out and they helped with the school runs – they were the one to depend on. Post-incident, they find themselves confined to a wheelchair for all their mobility needs. They are fortunate enough to still have upper dexterity and they can transfer independently, but they are unable to help with the family chores as they did before. They could still drive, but the family vehicle was unsuitable, due to having the wrong transmission, no driving controls and being difficult to access when transferring. They just wanted to be able to do something to help with family life, but they did not have the right equipment to do so.
So, we investigated the option of a vehicle that offered a good access height that the client could transfer into from their wheelchair, with enough space to then dismantle their wheelchair and stow it in the footwell next to them, and with the correct driving controls to enable them to drive without having to use the primary pedals of the brake and accelerator. I suggested a small number of vehicles that I felt would fit the client’s criteria and they were able to find a vehicle that they could transfer in and out of whilst managing their own equipment. They are now able to help with the school runs, and they can take a trip to the shops without requiring assistance. They now have some level of independence back again.
When I meet with the client for their transport assessment, I treat it as though we were having a general conversation and not a tick box exercise. It is important that they feel comfortable and we can build a good rapport. Where possible, I always try to meet with the client in person. From experience I have found that so much detail is lost when carrying out an assessment through a media platform. Meeting face to face enables me to get a better understanding of day-to-day life for the client. I can see how the family dynamics work, everyday struggles with equipment, etc. It is through this process that I can obtain the information I require to build a picture of what the clients vehicle needs are.
When I meet with the client for their transport assessment, I treat it as though we were having a general conversation and not a tick box exercise.
By asking open questions I can establish what their vehicle requirements were pre-incident and how they may have changed post-incident. I ask questions such as how they wish to travel, how they are going to access a vehicle, are they going to be a driver or a passenger. There are many factors that will have an impact on my vehicle recommendation, and everything must be taken into consideration to get the right outcome and ensure that the correct transport is provided.
So many times, I have met with a client who has the wrong vehicle sat on their driveway. It has been provided without knowing all the facts or the specific needs of that client. The provider has not taken into consideration the dimensions of the wheelchair, the headroom required, how many passengers it will need to seat or how the vehicle will be driven and by who! It has been provided because it was available and it will probably be okay. I have been told by clients that when they raised the issue about how unsuitable their transport was, the response was “See it as a learning curve, we will know better for next time”. And the client is stuck with a very expensive vehicle that is not fit for purpose.
As a company we do not manufacture or sell anything, so when it comes to finding the right adaptions, driving controls and transport, we have built relationships with a select choice of adaptors and specialist engineers. This enables Personal Mobility Solutions to offer a fully bespoke modified vehicle that has been tailored to the client’s specific driver or passenger requirements.
There are so many variations of what is essentially the same wheelchair-accessible vehicle or driving adaptions, so when I produce a driving assessment report I make sure that I have taken the time to really research all the options available to the client. It is my duty as a transport expert witness to ensure that I have shown due diligence in my findings and not just recommended a vehicle because that is the one the client likes or it is the most expensive and therefore will be the right one.
Every vehicle adaptor has their own conversion that they offer, and it will not be appropriate for all clients. My role is to have a good understanding and excellent knowledge of the modifications available by different adapters and to be able to recommend a specific vehicle adaption because I know that the conversion will offer the correct headroom for someone seated in a powered wheelchair, or that the base vehicle is compatible and can be adapted with specialised driving controls such as Paravan Space Drive.
Adapting a vehicle for someone with disabilities is not a one-size-fits-all. There are so many aspects of the client’s daily life that must be considered. When I write my report, this is what I am trying to put across to the reader. I have to justify the reasons why I am making my recommendations for a particular vehicle or vehicles and I have to make it clear that I am recommending that vehicle with those specific adaptations because they offer the right solution for the client.
Adapting a vehicle for someone with disabilities is not a one-size-fits-all. There are so many aspects of the client’s daily life that must be considered.
I must also show that I have taken into account all other vehicles available and explained that I have eliminated them on the grounds that they cannot be adapted to suit the client. As an example, they may not allow enough head height for someone travelling in a Permobil powered wheelchair. They may not offer a drive from wheelchair position or they are too small internally compared with other vehicle makes and models. There can be quite a difference in price between various vehicle adaptions, but this does not influence my decision. The wrong vehicle is the most expensive vehicle.
To establish any adapted wheelchair-accessible vehicles value, we first look at the value of the vehicle itself based on its age, mileage and condition as a regular, unadapted vehicle. We then look to establish the desirability of the vehicle as it is presented. This includes the type of access, the number of seats, any driver adaptations, etc.
Having supplied many bespoke new vehicles over 20+ years, we have very good knowledge of which vehicle conversions are more commonly supplied and are therefore more desirable and of greater value as a used vehicle. This information, combined with our newest enquiries along recent sales reports from specialist sales outlets, helps us to confidently respond to any enquiries.
Aftercare, or PMS Service Care as we offer it, is available to all our clients whether we supplied their vehicle or not. We can provide as little or as much support as is required. We can send out maintenance reminders for scheduled jobs such as MOT dates and equipment checks and services, which in some instances are Legal requirements. As many of our clients rely so heavily on their vehicle and cannot be without it, we can arrange for ‘on-site’ visits for equipment maintenance.
We also arrange workshop bookings for vehicle repairs, including collection and delivery where offered. Personal Mobility Solutions can settle the workshop accounts on the client’s behalf and then recharge the costs, where applicable, NET of VAT to the deputy or client directly, as instructed. We are also available to help with ‘vehicle off road’ situations and accidents and, where available, can assist with the provision of a rental vehicle to keep clients mobile. We charge a small service fee for our administration and provide all of this information with every new vehicle we supply.
There are many challenges that we face when assessing a client for their transport needs. Putting together a criteria of their requirements is just the beginning. Once the criteria has been established we then need to determine which set of specialists we can liaise with to bring it all together.
No two clients are the same and whilst they both might require a vehicle that they can either access in a wheelchair or carry out a wheelchair transfer into the driver’s seat, once they are on board they may need specific equipment to make the travelling experience safer and more comfortable. This may not be an off-the-shelf product or available through the adaptor and a bespoke solution will need to be sought.
To give an example, I met a client who had severe burns to their torso and face and needed regular operations and skin grafts. Each operation left them in quite a lot of pain and discomfort whilst they were recovering. They found something as simple as having the seat belt across their chest and stomach extremely unpleasant and they became quite distressed when travelling. They had tried seat belt deflectors that were available on the market but to no avail. They needed something more tailored to them. They needed something that would enable them to wear a seatbelt so it would still function as it should, but that did not press against them. It also needed to be adjustable to allow for when they were wearing thicker clothing such as a winter coat.
I had the knowledge that the right equipment did not exist. I also knew that this was something that a vehicle adaptor would not offer and would need to be a specialised piece of kit manufactured by an engineer. Working closely with the client I was able to design a mechanism that was fixed to their seat and that allowed the seatbelt to be worn without it pressing against their stomach. This proved to be very successful and enabled them to travel in comfort.
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This is just one of many examples where, as a company, we have had to find a tailored solution for our clients as it cannot be picked off the shelf. Another brief example is fitting a medical table and power inverter in the rear of a wheelchair-accessible vehicle that enabled a cough assist machine to be transported, powered and used whilst the client was travelling in their wheelchair. Again, this was not a product that could be found on the shelf and required a more bespoke approach.
Niki Sinclaire, Personal Transport Expert Witness
Personal Mobility Solutions Ltd
Cedarmount House , 90a Owlsmoor Road, Sandhurst, Berkshire, GU47 0SS, UK
Tel: +44 01344 989140
E: niki.sinclaire@pmslonline.com
Niki Sinclaire
“I have worked in the automotive industry for over 20 years and have been with Personal Mobility Solutions for five years. I have a background in litigation and worked for a leading car hire company as a litigation manager. Wanting to add to my qualifications, I studied as a counsellor and spent time working on an all-female acute forensic ward with patients of varying mental and physical ability under the Mental Health and Mental Capacity Act. On average I see between three and four clients a week for both passenger and driver needs, including all wheelchair-accessible vehicle requirements.”
Personal Mobility Solutions is an established expert witness service that is recognised by the Court of Protection, with extensive experience in the assessment and provision of transport related mobility solutions throughout the UK. The firm has a proven track record working with legal professionals and deputies and is well equipped to provide consultation and implementation of automotive adaptations and conversions.
