Understand Your Rights. Solve Your Legal Problems
A Delaware court ruled in favour of South Korean investment bank Mirae Asset Dewoo Co Ltd and affiliates in a suit against China’s Anbang Insurance Group over the termination of a $5.8 billion contract to buy 15 luxury US hotels.
Last year, a consortium led by Mirae agreed to purchase the hotels from Anbang, which had come under the control of the Chinese government in 2018 and was selling its overseas assets. However, Mirae did not close the deal on the scheduled April 2020 date, claiming that Angang’s “representations and warranties were inaccurate” and that the insurer had “failed to comply with its covenants under the sale agreement”.
Anbang then filed suit against Mirae in Delaware in an attempt to force the company to fulfil its promised payment, according to the court filing.
The Delaware Court of Chancery found that the Anbang subsidiary that owns the hotels had made extensive changes to its business to cope with the COVID-19 pandemic, including employee layoffs, furloughs and the closure of amenities. These measures led to a failure to meet a condition in the contract that business be “conducted in the ordinary course of business”, thus allowing Mirae to terminate the agreement, the court found.
The court ruled that Anbang should return contract payment to Mirae Asset along with an additional $3.685 million to cover transaction cost and related litigation expenses. Mirae said in a regulatory filling that will respond through its legal representative depending on whether the plaintiff appeals.
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The case could set a precedent for deals that have had their valuations drop since the onset of the COVID-19 pandemic.
Mirae Asset shares closed 6.5% higher in Seoul following the news.
Australia’s financial services watchdog on Tuesday filed a civil lawsuit against the country’s largest bank for charging more than 2,200 customers an interest rate that was higher than advertised over a seven-year period.
The Australian Securities and Investments Commission (ASIC) alleged that a systems error at the Commonwealth Bank of Australia caused the bank to charge 34% interest on business overdraft accounts between December 2011 and March 2018, more than double the advertised rate of between 14.55% and 16%.
The difference caused the bank to gain more than $2.9 million, ASIC said in its filing.
Customers continued to face higher rates than stated even after a complaint in 2013 prompted the bank to try (unsuccessfully) to fix the overcharging error, the regulator continued. The average customer lost around $1,500 due to the error, while one customer was overcharged by $17,522.
ASIC asked the Federal Court to find that CBA made false or misleading statements in breach of federal laws, and that the bank broke its obligations under the Corporations Act regarding financial services laws. For these, the regulator seeks a fine “as the court determines to be appropriate” and an order forcing CBA to publicly acknowledge any such fine and determination.
“CBA has cooperated fully with ASIC’s investigation and does not intend to defend the proceedings,” the bank said in a statement on Tuesday, adding that the problems behind the error had been dealt with and the 2,269 affected customers had been refunded a total of $3.74 million.
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The suit stems from a case study from a Royal Commission into the Australian banking industry two years ago. ASIC said in its statement that, between December 2014 and March 2018, CBA breached financial services laws 12,119 times.
Taylor Wessing has become the latest international law firm to revise its remote working policy, as it recognises that lawyers show “clear preference” to divide their hours between the office and home.
The firm’s new “hybrid” model of working will allow staff, including trainees, to conduct between 20% and 50% of their work outside of the office – allowing for anywhere between one day per week to a maximum of five days across two weeks to be spent working from home.
The new policy will come into effect once the government encourages a return to office-based working, which is likely to occur in 2021.
“We were already on a journey towards more flexible working before the pandemic as part of our strategic commitment to inclusivity,” said Shane Gleghorn, managing partner at Taylor Wessing. “Our experience this year has shown that we can continue to exceed our clients’ expectations regardless of where we work. We are confident that a hybrid model, underpinned by a spirit of teamwork and collaboration, will deliver benefits for our people, our business and our clients.”
Taylor Wessing is not the only firm to institute a shift away from the office. Dentons closed several of its UK offices during the summer as part of a broader move towards remote working, and Slater and Gordon also announced office closures to allow for easier remote operations. Both firms, and many others, have discussed implementing a framework for remote working even after the COVID-19 pandemic has abated.
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Squire Patton Boggs and Linklaters have instituted policies most similar to Taylor Wessing’s, allowing lawyers and staff to work remotely for 20-50% of their usual hours in the office.
In a ruling on Thursday, the Hong Kong High Court found that the government’s failure to establish an independent mechanism for the handling of complaints of ill-treatment by police officers violated the Hong Kong Bill of Rights.
The court maintained that the government was obliged to “establish and maintain” this mechanism according to Article 3 of the 1991 Bill of the Rights, which states: “no one shall be subjected to torture or to cruel, inhuman or degrading treatment or punishment.”
The case was brought against the Commissioner of Police and Secretary for Justice by the Hong Kong Journalists Association, which alleged incidents of police brutality against protesters on 12 June, 2019.
The court’s finding comes in the wake of a report from international experts who quit a Hong Kong police brutality enquiry in 2019, which said that the police’s crowd-control tactics had worsened public perception of the force’s legitimacy and had a radicalising effect on protesters. It also follows a statement from Hong Kong’s leader, Carrie Lam, saying that there was no need for a complaints system outside of the existing police-overseen one.
Under Hong Kong’s current system, there is a two-tier mechanism for investigating complaints against police. The complaint is first sent to the Complaints Against Police Office – itself part of the police force branch – and then to the Independent Police Complaints Council, which is separate from the police force but does not have the authority to overturn decisions made by the Complaints Against Police Office.
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An independent investigation into police handling of demonstrations in 2019 has been one of the main demands of Hong Kong’s pro-democracy movement. Thursday’s court decision also comes after a senior Chinese official said that Beijing intends to review Hong Kong’s legal system, which pro-democracy groups fear could further damage the independence of Hong Kong’s courts.
Coca-Cola will be required to pay the bulk of a $3.4 billion IRS tax bill linked to the multinational operations the company uses to produce its famous beverages.
The case relates to a dispute over Coca-Cola’s shifting of its profits to foreign affiliates operating plants in Brazil, Mexico, Ireland and a number of other countries with lower corporate tax rates than the US, bringing large tax savings to the affiliates in these countries. It also concerns transfer pricing, or how a company values its intercompany transactions.
The Tax Court on Wednesday ruled in favour of the IRS, upholding two adjustments that jointly increased Coca-Cola’s taxable income between 2007 to 2009 by over $9 billion. However, the Tax Court ruled in Coca-Cola’s favour on a secondary issue relating to how it would price dividends paid by overseas manufacturing affiliates to satisfy royalty obligations, meaning $1.8 billion must be deducted from the IRS’s reallocations.
In writing the Tax Court’s decision, Judge Albert Lauber took aim at Coca-Cola’s pricing of its branding trademarks and other intangible assets during the two years in question, noting the apparently backwards dispersal of profits this created between the company’s US branch and its foreign affiliates.
"Why are the supply points, engaged as they are in routine contract manufacturing, the most profitable food and beverage companies in the world?” Judge Lauber asked. "And why does their profitability dwarf that of [Coca-Cola], which owns the intangibles upon which the company's profitability depends?"
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Coca-Cola argued that its pricing for the use of its intangible assets was reasonable, especially taking the marketing and research conducted by its local affiliates into consideration.
The exact sum that the soft drink company will owe as a result of the judge’s decision is yet to be determined.
Some 200 individuals have issued a class action lawsuit against South Korean automaker Hyundai over a string of battery fires in their electric vehicles (EVs).
One of the plaintiffs, a Hyundai Kona EV owner who asked to be identified only by his surname Kim, was among those seeking compensation from Hyundai for what they believe to be the reduced value of their EVs and other losses. The plaintiffs also want the company to replace the Kona EVs’ entire battery pack, not just update the software, as Hyundai’s recall provides; the battery is by far the most expensive part of the vehicle.
A lawyer representing Kim said that they were initially seeking 8 million won ($7,200) per plaintiff but this figure could increase as the trial develops.
Meanwhile, General Motors has issued a recall of nearly 70,000 EVs with batteries from LG Chem Ltd, the same manufacturer that supplies the batteries used in the Hyundai Kona EV. GM said that five EV owners had reported fires, and two had suffered minor injuries.
Hyundai itself has issued a global recall of over 74,000 Kona EVs after 16 caught fire across South Korea, Europe and Canada within two years. The Kona EV is the company’s top-selling electric car.
South Korea’s safety regulator is currently investigating the cause of the fires in Kona vehicles. Depending on the results, analysts estimate that Hyundai and LG Chem could be made liable for costs up to $540 million if they are forced to replace all of the affected batteries. Hyundai has said that it is not considering setting money aside for recalls, as it expects that its incoming software fix will be able to detect and prevent internal problems before they become fires.
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This court filing of the class action suit is not a public record, according to Reuters.
Julius Baer, Switzerland’s third-largest private bank, announced on Monday that it has come to an agreement with the US Department of Justice to settle allegations concerning its role in a corruption case involving FIFA.
The bank is setting aside $79.7 million for the settlement, which also includes a three-year deferred prosecution agreement. Provision for the financial portion of the settlement will be noted in the bank’s 2020 financial results.
The case concerns a probe by the DOJ into the banking sector’s links with suspected money laundering and corruption involving FIFA officials, marketing companies and sports media, the Swiss bank said. In 2017, a former Julius Baer banker was convicted in the US for facilitating bribes, including one issued to the late president of the Argentinian football federation.
The bank has since come under pressure from regulators to improve its anti-money laundering protections, and in February the Swiss financial watchdog FINMA blocked the bank from making large acquisitions, judging that it fell “significantly short in combating money laundering” between 2009 and 2018.
In its announcement, the bank hailed the agreement as “another step in Julius Baer management’s continued efforts to pursue the closure of remaining regulatory and legal matters in cooperation with the relevant authorities,” and described measures it had taken to enhance its anti-money laundering controls, including re-documenting each of the organisation’s client relationships and introducing an enhanced Code of Ethics and Business Conduct.
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Julius Baer added that it has cooperated with the DOJ’s investigation since it began in 2015, during the tenure of former CEO Boris Collardi.
The FIFA corruption scandal has led to its former secretary general, Jerome Valcke, being issued a $100,000 fine and a 10-year suspension for reselling tickets on the black market. Valcke was also found to be connected to payments totalling $10 million from a FIFA bank account to another controlled by former FIFA vice president Jack Warner.
Simon Everington and Johnny Shearman, respective Associate and Professional Support Lawyer at Signature Litigation, examine the Singapore Convention and Mediation and its significance to the legal sector.
The international mediation community is abuzz with the recent coming into force of the Singapore Convention on Mediation (formally the United Nations Convention on International Settlement Agreements Resulting from Mediation) on 12 September 2020.
Regular users of mediation know that settlement agreements are very rarely breached and that, in the event of non-compliance, such agreements can usually be enforced as a contract. However, non-compliance (and therefore enforcement) is always a potential problem, especially when parties are based in different jurisdictions. The Convention establishes a regime or legal framework for the recognition of mediated settlements across jurisdictions. More specifically, it creates an obligation on contracting states to recognise settlement agreements reached during the mediation of commercial disputes by allowing for the enforcement of those agreements or their use as a defence to a claim. In practice, that means that an aggrieved party to an international settlement agreement to which the Convention applies may apply directly to the relevant court for enforcement without the need to initiate new proceedings.
The Convention applies where (i) at least two of the parties have their places of business in different states or (ii) the state in which the parties have their places of business is different from either the state in which a substantial part of the obligations set out in the settlement agreement is performed or the state with which the subject matter of the settlement agreement is most closely connected.
The Convention establishes a regime or legal framework for the recognition of mediated settlements across jurisdictions.
The Convention remarkably secured 46 signatories on the first day of sign ups, on 7 August 2019, a record for any UN trade convention. At the time of writing, 53 states have now signed the Convention, which so far has been ratified by six of those states. Signatories are from as far and wide as Afghanistan, China, India, Iran, Israel, South Korea, Saudi Arabia, Singapore, the United States of America and Venezuela to name but a few. With such global coverage, the Convention is set to have a significant positive impact on the resolution of international commercial disputes and in turn should facilitate international trade.
However, a word of caution – the Convention is not a panacea. Certain types of settlement agreements fall outside the scope of the Convention. These include settlement agreements that have been approved by a court or have been concluded in the course of court proceedings, those that are enforceable as a judgment in the state of that court or those that have been recorded and are enforceable as an arbitral award. The reason is that other international instruments already cover these types of agreement. Settlement agreements relating to certain subject matters (namely employment, family and inheritance matters or disputes concerning transactions involving a consumer for personal, family or household purposes) are also excluded.
There are also some notable absentees from the list of signatories, such as the European Union and the United Kingdom. EU member states (excluding Denmark) already benefit from Directive 2008/52/EC of the European Parliament and of the Council on certain aspects of mediation in civil and commercial matters (the "Mediation Directive"), which provides for the enforcement of cross-border mediated settlement agreements through the national courts of other member states. The EU has reportedly been mulling over the question of whether to also sign up to the Convention as one economic bloc or to require individual member states to sign up themselves. It is likely a question of time before that matter is determined and the world's third largest economy signs and ratifies the Convention.
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Closer to home, many provisions of the Mediation Directive still apply in the UK by virtue of its implementing legislation, the Cross-Border Mediation (EU Directive) Regulations 2011 (the "Regulations"). However, the Regulations will be repealed at the end of the current "transition" period (i.e. at the end of this year). Many mediation advocates are hopeful that once the Brexit dust settles, the UK will also sign and ratify the Convention. For now, no decision has yet been made. Nevertheless, parties to an international settlement agreement resulting from a UK mediation should note that (unless one of the aforementioned exclusions apply) the agreement may now be enforced pursuant to the Convention in foreign states in which the Convention applies.
Watch this space.
Russell Strong, Senior Solicitor at Zaiwalla & Co, examines the case and its significance for the field of arbitration.
The UK Supreme Court recently brought much anticipated clarity to an issue often before the English Courts in International disputes: the English Court’s approach to the principles that should be applied to determine the law governing an arbitration agreement. By a majority of 3-2, the Supreme Court delivered its judgment in Enka Insaat Ve Sanayi A.S. v OOO Insurance Company Chubb.
In setting out the approach to be taken in future, it delivers what Lord Hamblen and Lord Leggat called a “vivid demonstration of the speed with which the English courts can act when the urgency of a matter requires it.”
The dispute arose following a fire at a Russian power plant. The insurer of the plant’s owner, Chubb Russia (Chubb), filed a claim in the Moscow Commercial Court against Enka and ten other defendants - sub-contractors working on the power plant - whom it claimed were jointly liable for the damage caused by the fire.
Enka began proceedings in England contending that the dispute was subject to an arbitration agreement in the contract under which it had performed the works, and seeking an order that Chubb discontinue the Russian Proceedings (an anti-suit injunction). Enka’s application was dismissed at first instance by Justice Andrew Baker.
The Court of Appeal (CoA) reversed that decision and Enka was granted an anti-suit injunction which restrained Chubb from continuing proceedings in Russia. In considering the law that governed the arbitration agreement, it placed great weight on the parties’ choice of an English seat, holding that there was a strong presumption in the absence of an express choice of law governing the arbitration agreement that the curial law (the law of the seat) had impliedly been chosen by the contracting parties.
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Chubb then appealed to the Supreme Court, arguing the parties had chosen Russian law to govern their contract; that this should also govern the arbitration agreement; and, that the Russian courts were best placed to decide whether or not the arbitration agreement had been breached Chubb’s commencement of proceedings in Russia.
So what is the legal background? The law governing an arbitration agreement may be different from that governing the wider contract to which the arbitration agreement forms a part. Determining which law governs the arbitration agreement can be crucial to the determination of the arbitration agreement’s validity and enforceability. Parties therefore need to be very careful in ensuring that arbitration agreements in their commercial contracts are clearly drafted and that and express governing law choice is included.
Previous English court decisions determining the law applicable to an arbitration agreement had not always been consistent. Indeed, prior to Enka, there had been conflicting CoA approaches to identifying the principles to be applied law governing an arbitration agreement.
In Sulamérica Cia Nacional de Seguros SA v. Enesa Engenharia SA [2012] EWCA Civ 638, the CoA held that in the absence of an express choice of law for an arbitration agreement, but where there was a choice of law clause for the wider contract, this was impliedly also the parties’ choice of law for the arbitration agreement. So, unless it stated otherwise in the contract, the same jurisdiction would apply.
This directly contradicted the approach taken in C v D [2007] EWCA Civ 1282; [2008] Bus LR 843. In this judgment, although there was a choice of law clause in respect of the wider contract, the CoA held that there was no consequential implied choice of law for the arbitration agreement, and therefore the test for identifying the governing law for the arbitration agreement was one of “closest connection”.
In Enka v Chubb, the CoA held that, in the absence of an express choice of law for the arbitration agreement, there was a strong presumption that the parties’ implied choice was the law of the seat “subject only to any particular features of the case demonstrating powerful reasons to the contrary.”
Previous English court decisions determining the law applicable to an arbitration agreement had not always been consistent.
As a reflection of the complexity of the issues it had to consider, the Supreme Court’s judgment ran to 115 pages. It held that the CoA was right to affirm the three-stage test in Sulmarica to determine the law governing the arbitration agreement; however, its reasoning differed markedly to that of the CoA, especially concerning the weight to be attached to the curial law. It held that the test to be applied is as follows:
The Supreme Court found that there was no choice of law by the parties in respect of the contract or the arbitration agreement. When applying the test, the applicable law was therefore the law with which the arbitration agreement had the closest connection, which was determined to be the law of the seat. Albeit via significantly different reasoning, it therefore reached the same decision as the CoA: that English law governed the arbitration agreement, and that the anti-suit injunction was correctly granted. The appeal was accordingly dismissed.
The judgment also addressed the following question: In an English-seated arbitration, if it is a foreign law that governs the arbitration agreement, should the English court defer to the foreign court to decide whether proceedings before the foreign court are in breach of the arbitration agreement?
One of Chubb’s arguments in challenging the CoA’s authority to issue an anti-suit injunction was that Russian law governed the arbitration agreement, and that accordingly, the Russian court was the appropriate forum to decide whether the claim should be referred to arbitration or litigation, and it was not for the English court to issue an anti-suit injunction.
Although it was not necessary for the Supreme Court to decide this question, having found that English law governed the arbitration agreement, it did provide useful commentary. In summary, the Judgment concluded that even if the law governing the arbitration agreement had been Russian law, in an English-seated arbitration, this would make no difference to the English court’s ability to exercise its discretion on whether to issue an anti-suit injunction - based on the application of the appropriate law governing the arbitration agreement.
Although it was not necessary for the Supreme Court to decide this question, having found that English law governed the arbitration agreement, it did provide useful commentary.
This Judgment should be welcomed by international arbitration users and parties who continue to elect at the time they enter into contracts to choose London as their arbitral seat. As is so often true however, the cautionary tale is to ensure when drafting commercial contracts that care is taken expressly to state the parties’ intentions. In the present case, that is not only where an arbitration should be seated, but also which law should apply to the arbitration agreement.
New Zealand has voted to legalise euthanasia for those with terminal illnesses, with campaigners hailing the result as a “victory for compassion and kindness”.
The decision appeared as a referendum question on the 17 October general election ballot paper, alongside a second, non-binding question regarding the legalisation of cannabis.
Around 65.2% of voters supported the signing of the End of Life Choice Act into law, with 33.8% in opposition, according to preliminary results. At the same time, 46.1% of New Zealanders voted to legalise cannabis, while 53.1% voted against.
When the new law comes into effect, terminally ill people with less than six months to live will be allowed to choose assisted dying if approved by two doctors. Those suffering mental illness or decline will not be eligible, nor will those who apply solely on the basis of a disability or “advanced age”. Applicants will also need to be registered New Zealand citizens aged 18 or over.
Support for euthanasia has hovered around 60-70% in polls for several years, with both prime minister Jacinda Ardern and opposition leader Judith Collins voicing support. “It’s now clear what we have known for decades that Kiwis want, and have always wanted: the right to die on their own terms,” said Mary Panko, a campaigner for assisted dying.
The End of Life Choice Bill was scheduled for a public referendum last November, after passing 61 votes to 51 in parliament. The results announced on Friday do not include an estimated 480,000 special votes, including overseas ballots, meaning the final outcome will not be confirmed before 6 November. Given the support seen in the early results, however, the decision is unlikely to change.
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The law is expected to come into effect on 6 November 2021, one year after the final results are known. New Zealand will become the seventh country in the world to have legalised assisted dying, alongside others including Canada and the Netherlands.
