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New Government Bill to Reverse Supreme Court’s Decision on Litigation Funding

by Jack Thorne, Briana Walley, Harry Denlegh-Maxwell and James Dobias | Mar 27, 2024 | Legislative Update, Regulatory/Compliance, Transportation & Logistics, United Kingdom

The Litigation Funding Agreements (Enforceability) Bill was introduced to Parliament this week, following the UK government’s announcement earlier this month that it would introduce legislation that would reverse the outcome of the UK Supreme Court’s recent decision in R (on the application of PACCAR Inc and others) v Competition Appeal Tribunal and others.[1]

In PACCAR, a part of the well-known “Trucks” litigation in the Competition Appeal Tribunal (CAT), the Supreme Court held that litigation funding agreements (LFAs) that entitle funders to be paid a portion of any damages recovered (as opposed to a multiple of the investment made by the litigation funder) are “damages-based agreements” (DBAs), as defined in the Courts and Legal Services Act, and were therefore unenforceable unless they complied with the relevant regulatory regime (DBA Regulations 2013).

The ruling in PACCAR was set to have significant ramifications for litigation funders, claimants and claimant law firms in the UK which rely on third-party funding, potentially threatening the financial viability of swathes of the litigation funding industry. Typically, LFAs have been structured as the greater of a multiple of monies invested by the funder and a percentage of damages recovered. This percentage element is

Damages Are Adequate – But Is It Sufficiently Serious?

by Sharon Lamb and Kimberley Smith | Mar 21, 2024 | Healthcare, United Kingdom

In a highly-anticipated judgment dated January 30, 2024, the Court of Appeal confirmed that in a procurement challenge under the Public Contract Regulations 2015 (PCR), a finding of a manifest error will not automatically mean that the error is ‘sufficiently serious’ to justify an award of damages.

This blog piece is a reduced version of our wider commentary on the case, which is available here.

Background

The procurement in question was for the provision of nationwide orthodontic services, although the challenge related to a contract for services in East Hampshire for a 7-year term worth £32.7 million (the Procurement). Braceurself was the incumbent, but its bid (one out of two) was unsuccessful, and the contract was awarded to a company known as PAL in these proceedings. The difference between the two bids was very close: PAL scored 82.5%, whereas Braceurself scored 80.25%.

Braceurself issued proceedings challenging the Procurement on a number of fronts, seeking to have the score corrected and the contract awarded to Braceurself. The issue of proceedings engaged the automatic suspension under the PCR. NHS England brought its application to lift the automatic suspension and was successful, primarily as Judge Bird found that “in this case damages

English Courts Assert Jurisdiction to Grant Anti-Suit Relief in Landmark Case

by Campbell Herbert | Mar 5, 2024 | Court Judgment, Banking & Finance, Oil & Gas, United Kingdom

In a ground-breaking ruling, the Court of Appeal has confirmed that English courts have the authority to issue final anti-suit injunctions in support of arbitration agreements governed by English law, even when the seat of the arbitration is outside of England. The landmark judgment in Unicredit Bank GmbH v Ruschemalliance LLC [2024] EWCA Civ 64, which follows three earlier lower court decisions arising on substantially the same fact[1], reinforces the robust protection of arbitration rights under English law and solidifies the position of English courts as a bastion for arbitration.

Background

The dispute revolved around Italian bank UniCredit, which, along with Deutsche Bank and Commerzbank, issued performance bonds in favour of RusChemAlliance (RCA), a Russian operator of an LNG facility in the Leningrad Oblast, in relation to construction contracts between RCA and German engineering contractors. These bonds were governed by English law and provided for arbitration in Paris under the ICC rules.

Following Russia’s invasion of Ukraine in February 2022 and the subsequent imposition of wide-ranging EU sanctions, the German companies halted work under the construction contracts after receiving confirmation from German authorities that they deemed such work to be prohibited under Regulation (EU) 833/2014. RCA terminated the

Clearview AI Inc Overturns Regulatory Intervention at First Instance

by Jack Thorne, Pilar Arzuaga and Jonathan Robb | Feb 14, 2024 | Court Judgment, Regulatory/Compliance, Technology, United Kingdom

Clearview AI Inc.’s facial recognition technology has been subject to regulatory scrutiny from the privacy sector worldwide, including the UK Information Commissioner who issued the US company with monetary penalty and enforcement notices (the Notices) for alleged violations of GDPR/UK GDPR (the Regulations).

In a judgment dated October 17, 2023 (the Judgment), the UK’s First-tier Tribunal (FTT) (being the first level of regulatory appeals) upheld, on jurisdictional grounds, Clearview’s appeal of the Notices. The Commissioner sought permission to appeal on November 17, 2023. This blog piece is a reduced version of our wider commentary on the case, which is available here.

Background

Clearview is a US company providing facial recognition services to criminal law enforcement and national security agencies (and/or their contractors) outside of the United Kingdom and the European Union. In short, Clearview collects publicly available images of faces from the internet, which are compiled into a database (the Database). Clearview’s software then creates a mathematical ‘vector’ of those faces, such that they can be indexed and searched against. Clearview’s clients are able to upload their own images onto their private Clearview platform and compare those images against the Database. Clearview’s algorithmic software will return images of sufficient

Representative Proceedings | A Low Bar to the “Same Interest” Requirement?

by Jack Thorne and Briana Walley | Feb 11, 2024 | Court Judgment, United Kingdom

In Commission Recovery Ltd v Marks & Clerk LLP & Anor [2024] EWCA Civ 9, the Court of Appeal handed down one of its first decisions concerning representative proceedings following the landmark Supreme Court decision in Lloyd v Google. The Court of Appeal upheld the High Court’s decision at first instance and allowed a representative proceeding under CPR 19.8(2) to proceed, but also identified several issues that it noted will require careful case management in the future.

The underlying proceedings concern current and former clients of the two defendant firms, Marks & Clerk LLP (M&C), and its associated firm, Long Acre Renewals (LAC), alleging that those firms received secret commissions for referring clients of M&C to a third party. They allege that M&C and LAC are liable to account for the amount of those commissions. A special purpose vehicle, Commission Recovery Ltd (CRL), was incorporated for the purposes of bringing the proceedings and took an assignment of a claim from one of M&C’s clients, Bambach Europe. CRL is the representative claimant in the action.

Representative Actions under English Law

Under CPR 19.8, a Claimant can bring a claim on behalf of other persons where they have the “same interest” in

Deutsche Bank Anti-Suit Injunction

by Romilly Holland and Sadaat Cheema | Oct 21, 2023 | Arbitration, Court Judgment, Banking & Finance, United Kingdom

The recent decision of the Court of Appeal (the Court) in Deutsche Bank v Ruschemalliance LLC [2023] EWCA Civ 1144 (Deutsche Bank) confirms the strong interest in favour of granting anti-suit relief to hold parties to their arbitration agreements, even where the seat of arbitration is in a jurisdiction that does not itself provide for anti-suit injunctions (ASIs). In this case, anti-suit relief against proceedings issued in Russia was granted in circumstances where the relevant contract contained an agreement to arbitrate disputes in Paris. The Court considered that England was the proper forum for the anti-suit application, and that an anti-suit injunction was appropriate, because French courts do not grant ASIs.

The case is timely as it comes against the backdrop of a number of disputes about forum and choice of law in the wake of the Russian invasion of Ukraine. Agreements have increasingly broken down following implementation of US and European sanctions. There have been a number of consequential disputes over where to litigate – in Russia (as the Russian entity may prefer) or according to the contract’s specified forum. Paris is one of the most popular ‘neutral’ forums for dispute resolution, including in contracts with Russian counterparties. However, if

Redactions and Waiver of Privilege: High Court Provides Guidance

by Harry Denlegh-Maxwell | Oct 9, 2023 | Court Judgment, United Kingdom

The long-running battle between the Serious Fraud Office (SFO) and Eurasian Natural Resources Corporation (ENRC) has hit the headlines again. The most recent Judgment (which can be found here) concerns ENRC’s challenge to certain redactions to a report disclosed by the SFO.

The report in question (the Byrne Report) set out the SFO’s findings following an investigation into allegations that employees of the SFO improperly leaked sensitive information acquired in the course of its investigation into ENRC to journalists and other third parties. The SFO disclosed the Byrne Report to ENRC, but with redactions made to it on the basis of three distinct grounds:

Privilege;
Irrelevance and confidentiality; and
Public interest immunity (PII), as certified by the then director of the SFO.

ENRC made an application to challenge the redactions on each of these grounds, and the High Court considered these in turn.

Privilege

ENRC made two substantive arguments regarding the redactions made on the basis of privilege. ENRC argued that either the High Court should inspect the redacted material to determine whether privilege had been properly claimed, or, alternatively, the SFO should be ordered to provide an additional explanation for the basis on which it asserted

Landmark UK Supreme Court Ruling Strikes a Blow to Litigation Funding

by Harry Denlegh-Maxwell | Jul 26, 2023 | Court Judgment, United Kingdom

On July 26, 2023, the UK Supreme Court gave judgment in R (on the application of PACCAR Inc and others) v Competition Appeal Tribunal and others[1].

By a majority of four to one, the Supreme Court held that litigation funding agreements (LFAs) (which entitle funders to be paid a proportion of any damages recovered) are “damages-based agreements” (DBAs), within the meaning of section 58AA of the Courts and Legal Services Act 1990 (the 1990 Act). As a result, LFAs are unenforceable unless they comply with the relevant regulatory regime for DBAs and cannot be used at all to fund opt-out collective proceedings before the Competition Appeal Tribunal (the CAT).

This ruling will have significant ramifications for litigation funders in the United Kingdom as well as claimants and claimant law firms that rely heavily on third-party funding. This impact was acknowledged by the Supreme Court, with Lord Sales noting (in the leading judgment) that the Court had been informed that “most third-party litigation funding agreements would…be unenforceable as the law currently stands”[2].

The Supreme Court’s Decision

This issue arose in the context of the well-known “Trucks” litigation before the CAT.

In 2016, the European Commission found that

The Quincecare Duty: A Victory for the Banks?

by Harry Denlegh-Maxwell | Jul 12, 2023 | Court Judgment, Banking & Finance, United Kingdom

On July 12, 2023, the UK Supreme Court delivered a landmark decision on the so-called “Quincecare duty” owed by banks to their customers.

In a unanimous judgment in favour of Barclays Bank, the UK’s highest Court held that banks did not owe customers a duty of care in fraud cases where transactions were authorised by the customers directly. As Lord Leggatt said in his judgment: “It is not for the bank to concern itself with the wisdom or risks of its customer’s payment decisions”.

This important clarification will be welcomed by financial institutions, particularly as the level of online fraud continues to soar. However, there are a number of other claims that are currently before the courts that will still be watched with interest, as will this present case as it is remitted to the High Court to decide arguments about the scope of any duty to attempt to claw back payments once a fraud has come to light.

The Supreme Court’s decision also follows the recent passing of the Financial Services and Markets Act 2023, which provides for a mandatory reimbursement scheme, albeit limited to certain payment types within the United Kingdom. In practical terms, therefore, claimants may look

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