Wednesday, 8 November 2017

Are arbitrations always confidential?

Arbitrations are often favoured by companies as an alternative to the Courts in order to resolve disputes. The main reason for this preference is that arbitrations subject to English law are confidential in nature. This protects the commercial parties from any negative publicity and safeguards confidential information such as operational processes as well as the reason for the dispute itself (which could be commercially harmful). This is why many commercial contracts have arbitration clauses - this ensures that any dispute is resolved by arbitration in the first instance.

However, the established English law principle that arbitrations are confidential was recently exposed by the High Court in the case of Symbion Power LLC v Venco Imitiaz Construction Co [2017] EWCA 348 (TCC).

The normal established principle is that no details of the arbitration are permitted to be disclosed to third parties, which includes documents produced for or disclosed during the arbitration. This ring-fencing measure secures the confidentiality of such oftentimes sensitive information. These principles are also reflected in the rules governing the main arbitration institutions, such as The International Chamber of Commerce (ICC) and The London Court of International Arbitration (LCIA).

In Symbion, one party challenged the ICC award (judgment) against them. The ICC tribunal that determined the award was based in London and therefore subject to English law (and England was the nominated jurisdiction selected in the relevant contract). Symbion, having lost, challenged the award in the English High Court alleging serious irregularity. The High Court was the appropriate forum of appeal due to the English law jurisdiction clause in the contract.

Due to the custom of High Court decisions being published, Symbion requested that any such published judgment be anonymised, that is, not contain the names of the parties in order to preserve the confidentiality afforded by the ICC arbitration. In response, the Court laid out the factors it would consider which included the concern that there is a public interest in publishing judgments concerning arbitrations to ensure that standards remain high in the conduct of arbitrations, especially in light of their confidential status. The Court went on that this factor has to be weighed up against the parties' understandable interest in confidentiality.

However, the Court chose to reject Symbion's submission that the judgment be anonymised as the ICC award had already been made public in the US and commented upon publically by the parties stateside. Therefore the Court concluded that this behaviour contradicted Symbion's concern regarding confidentiality.

This case is a stark reminder that the confidentiality of arbitrations is not set in stone. Concerns regarding confidentiality should be raised at the outset of any arbitration appeal to the English Courts and necessary orders attained to ensure such confidence. In addition, conduct of the parties, especially regarding public pronouncements, should be carefully monitored if arbitration is underway or anticipated.

Monday, 14 August 2017

The pitfalls of serving claim forms

Dear readers

For all budding litigators, I would highly recommend reading the excellent Civil Litigation Brief blog by Gordon Exall -

Gordon is a very experienced litigator and barrister and one of the nation's foremost experts on civil litigation.

His latest blog entry is a very useful recap on the dangers to watch out for when serving claim forms and particulars of claim. If this is not done properly (and it is easy to slip up as it seems innocuous when it is not!), then the claim can be struck out. Which means a very angry client and possibly a negligence suit to boot!

Please find the blog entry here -

Tuesday, 16 May 2017

Personal liabilities of directors expanding under new corporate governance proposals

Directors can be liable for their conduct or if they breach certain rules and regulations imposed by English or EU law. These liabilities can range from the risk inherent in personal guarantees and warranties of authority to legislation directly relating to directors' duties (such as the 'best interests of the company' requirement in section 172 of the Companies Act 2006), bribery, financial services, corporate manslaughter, employees or environment.

The government's campaign to galvanise corporate governance requirements is set to expand the personal liabilities of directors. For example:

- fines of up to £500,000 per director for companies engaged in excessive nuisance calls

- legal action to hold company directors to account regarding their full range of duties, with proposals to include:

            - company reports on how directors have complied with their duty to promote the success of the company  

            - company reports on how boards 'have regard' for stakeholder interests (such as employees, the local community and environment)

            - company reports to shareholders exposing any failings of the board

            - company adherence to corporate governance codes (which the government proposes to make mandatory and also apply to private companies)

Directors now need to be extra vigilant regarding their increased exposure to personal liability and should take legal advice to better understand their risk profile in order to avoid any future litigation.    

Monday, 6 February 2017

Ensure you entitle contract negotiation communications 'subject to contract'

The Court of Appeal has provided a useful reminder on what constitutes a formed contract when engaging in contract negotiations. In the recent case of Global Asset Capital Inc v Aabar Block S.A.R.L [2017] EWCA Civ 37, the Court of Appeal justices pointed out that when negotiating a contract, any communications should be headed 'subject to contract' so as to avoid a contract being inadvertently formed on the wrong terms.

In English law, for a contract to be properly formed the 'Four Corners' need to be in place, namely; (i) an intention to create legal relations; (ii) offer; (iii) acceptance; and (iv) consideration (that is, a 'quid pro quo' or trade of something of value between the parties). If you are still in the course of negotiating a contract, it is possible for the Four Corners to be triggered without you having agreed all the relevant terms. A contract does not need to be in writing so this increases the risk of these mandatory requirements being in place inadvertently, especially if the negotiation takes place over the phone.

To safeguard against a contract being formed inadvertently in this way, the Court of Appeal emphasised the need to entitle any such communications as 'subject to contract'. This then protects the parties from a contract being formed until the terms are finalised in an agreed contract, preferably in writing signed and dated by both parties.

The Court of Appeal also confirmed that the 'whole course of negotiations' should be considered by the Court when deciding if a contract has been formed. However, if the contract terms are agreed formally between the parties then subsequent negotiations will not be taken into account.

This is an important warning, especially for sole traders and small companies, to make sure that all negotiations are entitled 'subject to contract' right up until the point where you are happy with the final terms and the contract is agreed, preferably in writing. This is especially important as once a contract is formed in English law, especially a business to business contract negotiated at 'arm's length', the validity of such a contract is difficult to challenge.

Tuesday, 29 November 2016

The evolution of disclosure - the High Court gives the green light to predictive coding

The evolution into forms of electronic disclosure in litigation has been acknowledged by the English High Court in the recent case of Pyrrho Investments Limited and another v MWB Property Limited and others [2016] EWHC 256 (Ch).

Predictive coding has been in operation in the United States for a number of years. It is a search technology that aims to help the review of extremely large quantities of documents that often exist in multi-million/billion pound litigation.

Often the number of documents to review in such cases can number into the millions. The technology allows lawyers familiar with the case to review a sample set of documents and then to provide keywords and themes which are entered into a predictive coding software program to allow it to predict the relevance of the remaining documents and narrow them accordingly for manual review.

This technology, although used this side of the pond, has not been officially sanctioned by the Courts. With Lord Justice Jackson's continued campaign to promote the proportionality of costs in litigation, now seems a ripe time to officially acknowledge a proven technology that reduces the need for time consuming and expensive 'per document' manual reviews of gargantuan volumes of disclosure.

In a serendipitous judgment, the Court decided in Pyrrho that the use of predictive coding could be used in this case - a case which contained 3.1 million documents to review. The Master considered US and Irish authorities and concluded that other jurisdictions had confirmed that predictive coding is appropriate and useful in certain cases and that it appeared as reliable as a full manual review (an argument adopted in defence but rejected by the Court).

Most importantly, the Master sang to Lord Justice Jackson's tune by announcing that predictive coding could indeed promote the proportionality of costs in large litigation by reducing the costs of disclosure reviews. The judgment will certainly be welcomed by junior lawyers who undertake such painstaking reviews!

Monday, 8 August 2016

A warning from the High Court regarding the adequacy of disclosure processes

In the recent case of Vilca and others v Xstrata Limited and another 2016 [EWHC] 1824 (QB) the adequacy of a law firm's disclosure process was placed under scrutiny by the High Court.

The Defendant's solicitors had failed to disclose a relevant email exchange as part of their standard e-disclosure process. When the Claimant's solicitors discovered this omission, they questioned the integrity of the Defendant solicitor's disclosure process. This led to an application to the High Court whereby the Claimant asked the Court to order that disclosure be 're-reviewed' by an independent law firm or barrister not connected to the proceedings.

Foskett J held that the failure to disclose the relevant email exchange had been an error which was nonetheless made in good faith. He therefore concluded that an independent re-review was unnecessary and not in the interests of proportionality.

What is of interest to litigators are the obiter comments Foskett J made in his judgment. In his analysis the judge pointed out that, although unprecedented, he would be prepared to order a re-review of a disclosure process, which would be undertaken by an independent law firm. He confirmed that such a re-review would be appropriate if a law firm had clearly failed in its duty to perform an adequate disclosure process.

This is a warning shot across the bows to all law firms that are involved in litigation, especially as obiter comments often morph into future ratio decidendi. Huge embarrassment awaits any law firm that is ordered by the Court to have its disclosure re-reviewed by another law firm. As such, law firms must regularly review their disclosure processes and carefully monitor and check all disclosure, especially if undertaken by juniors or paralegals.

This becomes more important with e-disclosure as the majority of modern documents are in soft copy. Firms should regularly review e-disclosure software and providers and keep abreast of technology in these areas so as to avoid any public embarrassment which may lead to lost revenue and clients.