Our Insights

The High Court has granted an interim injunction to restrain a breach of contract and upheld the application of the American Cyanamid test except in extreme circumstances.

The case involved an application for an injunction to restrain an alleged breach of contract. Hildyard J held as follows:

• The only exception to the application of the American Cyanamid test was “where the relief sought, if granted, would as a practical matter foreclose any further assessment of the true merits of the legal claim and put an end to the action because such relief effectively decides the contest”. This was not the case here, as the trial would be expedited.
• If the applicant delayed the injunction application, this may affect the status quo of the case; “especially in the context of applications to restrain breaches of covenant and invasion of proprietary rights and interests, the relevant status quo is that obtaining immediately prior to the commencement of the breaches alleged, rather than the date of the hearing”.
• The injunction granted allowed the respondents to carry on some business (subject to conditions) until the date of the trial, so that they would not be driven into liquidation, which would effectively eradicate the applicant’s claim for damages or profits.

Allfiled UK Ltd v Eltis and others [2015] EWHC 1300 (Ch), 19 May 2015

It has been reported that Philip Morris International and British American Tobacco have sued the UK government over standardised packaging proposals.

The proposed laws would provide for cigarettes to be sold in unbranded packaging from May 2017, following a transition period of one year. From 2016, health warnings will have to cover up to 65% of cigarette packs under EU law. The tobacco companies argue that this would be an infringement of their intellectual property (trade mark) rights, more specifically that the measures would amount to a deprivation of property in breach of UK and EU law.

The Times reports that Philip Morris plans to rely on a legal opinion drafted by Lord Hoffman, which argues that banning branding could be a breach of trade mark law, and that blocking an internationally recognised trade mark in the UK could breach free movement of goods within the EU. It is further reported that legal papers filed in the High Court hold that the regulations do not provide fair compensation for depriving Philip Morris of its property.

The EU has updated its Syria sanctions regime in relation to the listing of certain persons and entities.

The persons are:
The entities are:
Tri-Ocean Energy and Tri-Ocean Trading are now listed separately rather than together.

• Amr Armanazi – alleged to be responsible for the violent repression of the civilian population and to support the Syrian regime;
• Wael Abdulkarim and Ahmad Barqawi – alleged to support the Syrian regime and to be associated with entities supplying oil to the regime; and
• Samir Hamsho – alleged to support the Syrian regime and to be associated with listed entities.

• Centre d’études et de recherches syrien (CERS) – alleged to provides support to the Syrian army for the acquisition of equipment used for the surveillance and repression of demonstrators;
• Tri-Ocean Energy – alleged to provide support to the Syrian regime by organising covert shipments of oil to it; and
• Tri-Ocean Trading – a subsidiary of Tri-Ocean Energy.

Council Implementing Regulation (EU) 2015/780 of 19 May 2015

Council Implementing Decision (CFSP) 2015/784 of 19 May 2015

The European Parliament has announced that it has endorsed the fourth anti-money laundering directive (AMLD).

The new directive will oblige EU Member States to keep central registers of information on the ultimate “beneficial” owners of corporate and other legal entities as well as trusts. The directive further contains specific reporting obligations for, among others, banks, auditors, lawyers, real estate agents and casinos regarding suspicious transactions made by their clients.

The central registers are intended to be accessible to the authorities and their financial intelligence units, “obliged entities” (for instance banks carrying out customer due diligence) and the public (subject to certain registration and payment conditions).

In addition, the European Parliament has approved a transfers of funds regulation aimed at improving the traceability of payers and payees and their assets.

Member States will have two years to transpose the new directive into their national laws. The transfers of funds regulation will be directly applicable in all Member States 20 days after its publication in the EU Official Journal.

At the time of writing the final texts of the directive and the regulation had not yet been published.

The Admiralty Court has held that correspondence between the parties did not constitute an offer by the claimant to submit to the jurisdiction of the English courts, where the claimant’s purpose in issuing proceedings was simply to obtain security for its claims.

The case concerned, among other issues, a claim for damages for the unlawful termination of ship management agreements which were subject to a German arbitration clause. The claimant’s purpose in issuing High Court proceedings was to obtain security for its claims. The defendants wanted the claims to be decided by the High Court and argued that in correspondence between the parties the claimant had expressed willingness to confer jurisdiction on the English High Court in relation to the claims.

Simon J held as follows:

• The correspondence between the parties could not be read as an offer by the claimant to submit to the jurisdiction of the English courts which was capable of acceptance. The claimant was merely stating that it would have been willing to submit to the jurisdiction of the English courts but for the defendants’ opposition to such a course of action. Since the defendants did not agree to English jurisdiction, the claimant was not seeking to submit the disputes for determination by the English courts.
• The object of issuing the claim was the legitimate purpose of obtaining security for foreign arbitration and legal proceedings. The claimant’s action in issuing the claim to obtain security was both unexceptional in domestic terms and consonant with Regulation 44/2001 (the Brussels I Regulation). The court would normally recognise both the obligation to submit disputes to arbitration or courts in a foreign jurisdiction, and the claimant’s right to obtain and retain security in respect of such disputes.
• The claim in the High Court was therefore stayed, subject to the provision of appropriate security in the arbitration proceedings.

Harms Bergung Transport und Heavylift GmbH & Co KG v Harms Offshore AHT ‘Uranus’ GmbH & Co KG and others [2015] EWHC 1269, 7 May 2015

Lord Justice Jackson delivered the third annual Harbour Funding Lecture on 13 May 2015, which focused on proposed improvements to costs management.

His recommendations are as follows:
A sub-committee of the Civil Procedure Rule Committee chaired by Coulson J is due to consider the above recommendations.

• To address judicial inconsistency, there should be improved judicial training on costs management, made compulsory for all civil judges, with a standard form of costs management order (from which courts can depart as required by individual cases).
• To prevent early costs budgets from being overtaken by events, 14 days before the case and costs management conference (CCMC) should become the specified time (rather than merely the default position) for lodging budgets.
• For cases which have been subject to costs management and which proceed to detailed assessment, all courts should order the receiving party to lodge a summary of its bill of costs in a format which matches Precedent H.
• Amendments to Precedent H, particularly amending the provisions in respect of assumptions and contingencies, offering further guidance on expert costs and separating the provisions for ADR and settlement discussions.
• Repeal recent amendments to CPR 3.15 and PD 3E (the consequence of which is that courts are making costs management orders in virtually every case where such an order is available). Instead, PD 3E could set out criteria to guide courts in deciding whether or not to make a costs management order. The court should not manage costs in any case if it lacks the resources to do so without causing significant delay and disruption to that or other cases.
• To address high incurred costs, the court should only budget future costs, leaving incurred costs for detailed assessment if not agreed. Where the court has sufficient information, it should have the power to comment on the incurred costs, summarily to assess the incurred costs, or to set a global budget figure for any phase, including both incurred and future costs.

In a response to the lecture, Lord Dyson MR generally endorsed Lord Justice Jackson’s input. Lord Dyson raised some points of concern regarding the issue of courts declining to manage costs due to lack of resources, as he was concerned that such opting out might turn costs management into the exception rather than the rule.

‘Confronting Costs Management’, Harbour Lecture by Lord Justice Jackson, 13 May 2015

The ECJ has ruled that Regulation 44/2001 (the Brussels I Regulation) does not govern the recognition and enforcement in a Member State of an arbitral award issued by an arbitral tribunal in another Member State.

The ECJ was requested by a Lithuanian court to give a preliminary ruling on whether the Brussels I Regulation should be interpreted as precluding a court of a Member State from recognising and enforcing, or from refusing to recognise and enforce, an arbitral award prohibiting a party from bringing certain claims before a court of that Member State.

The ECJ held as follows:

• Proceedings for the recognition and enforcement of an arbitral award were covered by the national and international law applicable in the Member State in which recognition and enforcement were sought, not by the Brussels I Regulation.
• Consequently, the Brussels I Regulation should be interpreted as not precluding a court of a Member State from recognising and enforcing, or from refusing to recognise and enforce, an arbitral award prohibiting a party from bringing certain claims before a court of that Member State. This was because the regulation did not govern the recognition and enforcement in a Member State of an arbitral award issued by an arbitral tribunal in another Member State.

Case C-536/13 Gazprom OAO v Lithuania, 13 May 2015

The Court of Appeal has held that the private acts of a head of state were not protected by state immunity, whether the person had ceased to be head of state whilst alive or had done so because he had died.

The case concerned a claim for damages for breach of an oral contract alleged to have been concluded between a Saudi Arabian prince and the widow of his father, the Saudi king. The prince had agreed to honour his father’s promise to provide for the widow for the rest of her life. The prince argued that the claim was barred by state immunity (under section 20 of the State Immunity Act 1978, which deals with head of state immunity), as such immunity would have applied to his father and therefore to him as his father’s representative in making the agreement. The issue before the court was whether immunity covered the king’s acts in dispute: specifically, whether when the king died and thereby was no longer head of state, immunity still applied to his private acts carried out while he was head of state.

The Court of Appeal held as follows:

• Determining the immunity of heads of state involved two stages: construing Article 39(2) of the Vienna Convention on Diplomatic Relations with requisite modifications as per section 20 of the State Immunity Act 1978, and testing that construction against other sources of customary international law or cases commenting on those sources. Article 39(2) did not distinguish between the position of a diplomat (or another person entitled to privileges and immunities) who ceased to perform his function because his term of office had ended and the position of one who had died en poste. No modifications to that provision were necessary to make it apply to a deceased head of state. Consequently, according to the Vienna Convention, R. v Bow Street Metropolitan Stipendiary Magistrate Ex p. Pinochet Ugarte (No.3)[2000] 1 AC 147 and other relevant international law sources a former head of state had no immunity from suit in respect of private acts, and this rule applied whether the person had ceased to be head of state whilst alive or had done so because he had died.
• The estate of a deceased head of state was not covered by immunity from suit for private acts. The estate of the deceased head of state no longer personified the state, nor was it an affront to the state if that estate was sued in respect of private acts. Though state immunity was based on broad considerations of public policy, international law and comity (Rahimtoola v Nizam of Hyderabad [1958] AC 379) this did not mean that immunity should be extended to private acts once the head of state had left office. “Neither case law nor doctrine, logic or practical considerations lead me to conclude that there is a distinction between the position of a head of state who has left office and who lives thereafter and one who ceased to be head of state upon dying in office”.
• In conclusion, the prince (i.e. the late king’s estate) could not claim state immunity in respect of the widow’s claim.

HRH Prince Abdul Aziz Bin Fahd Bin Abdul Aziz v Harb [2015] EWCA Civ 481, 13 May 2015

The Court of Appeal has held that agreements governed by Greek law had not been negligently drafted by an English law firm, and that any loss suffered by the appellant was not attributable to the drafting.

The appellant had invested in solar energy projects in Greece using an agent to find suitable local partners. The respondent solicitors drafted relevant agreements with the agent and a Greek partner. The projects failed. The solicitors sued the appellant for their unpaid fees, who counterclaimed alleging negligence in the solicitors’ drafting of the agreements by failing to advise that the vehicles used for making the necessary applications to the Greek authorities should be limited liability companies rather than partnerships (which in the event were used). In particular, the appellant alleged that the solicitors had been negligent in failing to advise him to secure the necessary control over the Greek partner by purchasing a small shareholding in the partnerships. The partner had demanded more money from the appellant for not selling the partnerships, which the appellant held that he had paid under duress. The appellant argued that lack of control over the partner (being the fault of the solicitors) resulted in significant losses.

The Court of Appeal dismissed the appeal, holding as follows:

• An appellate court should not interfere with the trial judge’s conclusions on primary facts unless satisfied that he was plainly wrong – McGraddie v McGraddie [2013] UKSC 58.
• The appellant had not sought express advice about the corporate structures to be put in place. The solicitors had not been asked to give general structuring advice; the structure had already been agreed, and their job was to incorporate it into a contract. The solicitors had in fact advised the agent to take 1% holdings in the partnerships. The agent understood the purpose of the 1% holdings, and he and the appellant chose not to take advantage of this protection. Consequently, the inclusion of such a provision made no difference to the train of events that followed. Moreover, the trial judge had been correct in finding no negligence in the drafting of the agreements.
• The appellant and his agent began ignoring the agreements soon after execution. The agreements did not oblige the appellant to make additional payments, and he did so for his own commercial reasons: he saw the potential for large profits and was willing to finance the projects well beyond his contractual obligations. His actions could not be attributed to the drafting of the agreements.

Watson Farley and Williams (a firm) v Ostrovizky [2015] EWCA Civ 457, 12 May 2015

Judges from the Commercial Court, the Technology and Construction Court, the Chancery Division and the Queen’s Bench Division have been investigating possible procedures which could be adopted to achieve shorter and earlier trials.

The review focused on business-related litigation, and involved investigating fast-track procedures. The committee has made the following recommendations for business cases in the Rolls Building courts:

• A piloted Shorter Trial procedure, leading to judgment within a year of issue of proceedings. The maximum length of trial would be four days.
• A piloted Flexible Trial procedure. This would involve limiting disclosure to the documents on which the party relies and any specific disclosure it requires from any other party, giving factual evidence by way of written statements and limiting oral evidence to key witnesses and/or issues, and giving expert evidence by way of written reports and limiting oral evidence to key issues.

The aim of both proposals is the achievement of speedy, fair justice at a reasonable and proportionate cost. Draft procedures for both proposals are in the form of pilot scheme practice directions underCPR 51.

The deadline for comments on the pilot schemes and draft instruments is 29 May 2015.

The Shorter and Earlier Trial Procedures Initiative: Consultation Document