Brexit
It is impossible not to mention Brexit which will be defined by the politics. 2018 is also likely to bring a significant increase in UK policymaking and related legislative change. We expect to see the publication of significant amounts of draft legislation to supplement/sit alongside the European Union (Withdrawal) Bill (which is making its way through the Parliamentary process). We continue to see questions being raised about whether it is appropriate to include English governing law and jurisdiction clauses in international deals. Our views remain unchanged – in the vast majority of cases there is no need to alter your approach, even in a hard Brexit scenario.
Data protection
The EU General Data Protection Regulation comes into force in May 2018. The recent case involving Morrisons [2017] EWHC 3113 (under the current law) is perhaps an indication of what is to come. A rogue employee with IT access deliberately committed a serious data breach for which he was found to be criminally liable. Despite being found not to be primarily liable for any breach under the Data Protection Act 1998 which caused the disclosure, Morrisons was found to be vicariously liable for the employee's rogue conduct.
Dispute lawyers are most likely to come up against data protection issues in the context of disclosure. This could be to regulators/enforcement agencies or in disputes before courts/tribunals. The requests, demands or court orders for documents/information by overseas authorities or courts on the one hand, have to be weighed against competing data protection requirements on the other. The highly publicised increase in potential fines under the GDPR is likely to have an impact on this balancing exercise.
Fintech
Distributed ledger technology such as blockchain and, in particular, crypto-currencies like Bitcoin as well as so-called initial coin offers have dominated the financial press. Regulators and enforcement agencies are keeping a close eye on developments with some being more forthright than others.. In the not-too-distant future this would seem to be an area ripe for regulatory investigation and/or civil disputes. We also expect to see the use of artificial intelligence in regulatory compliance become a hot topic, particularly in the financial services sector. Indeed, it is already being considered by some banks and regulators. The use of AI gives rise to many issues from ethics and data protection through to contractual and regulatory liability.
Privilege
For lawyers, this was one of the most contentious topics of 2017 and one that is likely to continue to be an area of focus in 2018, particularly in the context of internal company investigations and criminal investigations. The outcome of the SFO v ENRC [2017] EWHC 1017 appeal in July is keenly awaited.
Parent liability for subsidiaries
There have been a few recent cases which may have an impact on the extent to which a parent may be held liable for the acts of its subsidiary. The facts in these cases tend to involve mining or drilling for oil which it is claimed has led to either environmental damage or personal injury. To date, the decisions have been on jurisdiction challenges and not on substantive issues (the most recent being the appeal of the jurisdiction decision in Okpabi v Shell [2017] EWHC 89, which was heard on 21 November 2017 and in respect of which we are awaiting judgment). If these cases proceed to trial they will be of interest to businesses in the energy and mining sector in particular.
State capacity and authority
As this article went to press, the appeal of Law Debenture v Ukraine [2017] EWHC 655 was being heard in the Court of Appeal. This concerns a State's capacity to enter into contracts as well as related questions of the authority of Ministers that act on a State's behalf. At first instance: (i) the capacity of a State was held to be unlimited once a State is recognised as such; and (ii) while the Minister of Finance had no actual authority to sign the Eurobonds in question, he did have usual authority based on a history of previous debt issuances, and also ostensible authority. This is an important decision for any business involved in contracting with States.
Consideration
We are awaiting the Supreme Court's decision in MWB v Rock. This concerns the licence of some premises (where the written agreement had an anti-oral variation clause). Rock got into financial difficulties and negotiated an oral agreement with MWB, the landlord, to give it extra time to pay. Two days later MWB insisted on the terms of the original licence. The Court of Appeal held the oral agreement to be a binding variation supported by consideration, despite the “anti-oral variation” clause. The practical benefit giving rise to the consideration for the oral variation was that MWB would recover some of the arrears and would have some hope of recovering the rest in due course; it was also better to have premises occupied since an empty property would be worth less. The decision is important since it demonstrates how carefully negotiated written agreements can be varied orally or by conduct.
Asset striping to avoid judgment
The Marex v Garcia [2017] EWHC 918 case will be heard on appeal in June 2018. The issue in this case is whether a director of a judgment debtor company can be liable in tort for moving assets of the company out of the reach of a judgment creditor after the judgment had been handed down in draft and prior to the judgment creditor obtaining a post-judgment freezing order. At first instance this was held, on an arguable case basis, to be a tort.
Disclosure
We are expecting significant changes to be introduced to the disclosure regime in the English Business and Property Courts on a pilot basis. Standard disclosure will disappear in its current form and will be replaced by five different disclosure “models”, ranging from no disclosure at all through to “train of enquiry” style disclosure. A number of Allen & Overy lawyers are helping with the analysis of the current draft proposals and are providing feedback to the Disclosure Working Group.
FCA enforcement
Many enforcement trends from 2017 will continue into 2018. For example, we expect the FCA to continue to dedicate a significant amount of time and resources to investigating individuals, and as outlined in the FCA's 2017/18 Business Plan, financial crime will remain one of its top priorities. New legislation in 2018 will, of course, bring new enforcement risks.
