Legal and Financial Risk

Hogan Lovells Legal and Financial Risk is a bi-monthly newsletter on recent legal developments that will impact upon corporates and financial institutions.

Safe Harbor invalidated – What next?

On 6 October 2015, the Court of Justice of the European Union (the "CJEU") declared the EU-US Safe Harbor framework invalid as a mechanism to legitimise transfers of personal data from the EU to the US.  This decision effectively leaves any organisation that relied on Safe Harbor exposed to claims that such data transfers are unlawful.

Reversing the reversal: Updates to the Senior Management Regime

The Government has reversed its controversial plans to swing the burden of proof in favour of financial services regulators by requiring senior management to prove their efforts to prevent regulatory breaches. While likely to be welcomed by the industry, the impact of the move on the new regulatory framework remains to be seen.

Say it out loud – new whistleblowing regime for financial services firms

The Financial Conduct Authority and Prudential Regulation Authority have published new rules on whistleblowing. Affected firms must comply from 7 September 2016. These changes follow recommendations by the Parliamentary Commission on Banking Standards that banks adopt procedures to enable employees to raise concerns internally and appoint a senior person to take responsibility for the effectiveness of those arrangements. The rules are designed to work alongside the recently published regulations on improving individual accountability in the banking sector – the senior managers and certification regimes and conduct rules.

Credit freeze: Supreme Court puts fraudster's funding on ice

The Supreme Court has handed down a landmark judgment that impacts the interpretation of freezing orders made on the CPR and Commercial Court standard terms.  In an appeal that marks the first time the Supreme Court has been invited to consider the standard form freezing order, the Court has held that the extended definition of a respondent's "assets" can include assets that the respondent does not himself own, but which he has the power to control. 
The case is JSC BTA Bank v Ablyazov (No 10) [2015] UKSC 64, [2015] 1 WLR 4754.  Hogan Lovells acted for the appellant bank.

The new Financial List is open for business: A faster, more efficient and economical forum for financial dispute resolution

Following a joint consultation by the Commercial Court and the Chancery Division in April this year proposing new procedural rules to establish a new specialist court list to handle court claims relating to financial markets – known as the Financial List (FL) - the final rules have been published and came into force on 1 October 2015.  They comprise new civil procedure rules (CPR Part 63A), practice directions (PD51M and PD63AA), court forms, and a new court guide. 
Hunting for assets: no need to prove exceptional circumstances to obtain an order for disclosure from a non-resident foreign officer of a judgment debtor

In Deutsche Bank AG v Sebastian Holdings Inc and another (2015), the High Court declined to set aside an order under CPR Part 71 that a non-resident foreign officer of a judgment debtor provide information needed to enforce the judgment.  There is no requirement that there be "exceptional circumstances" for such an order to be made.

Assessing a customer's appetite for risk: a balancing act

In the recent case of Worthing v Lloyds Bank (2015), the High Court dismissed a claim that the Defendant bank had breached its obligations by failing to correct its recommendation of an investment portfolio which was alleged to have been unsuitable. The original advice had not been wrong, but even if it had been, the Claimants had not established any duty on the Defendant to rectify that advice.

Commercial Court considers the material scope of the Recast Brussels Regulation

When considering the detailed and somewhat rigid jurisdiction rules set out in the Recast Brussels Regulation (EU 1215/2012) (the "Regulation"), it is easy to forget that they apply only to disputes concerning "civil and commercial matters".  This is for the simple reason that most B2B disputes fall squarely into this category.  So long as none of the exceptions in Article 1 of the Regulation applies - for example, because the case concerns revenue matters or arbitration - its material scope is usually broad enough to encompass the dispute in hand.  The fact that "civil and commercial" is not fully explained in the Regulation may worry some academics, but does not generally present a problem in practice.  Goldman Sachs International and Others (the "Claimants") and Novo Banco SA (the "Defendant").

Putting the cart before the horse: running a limitation defence

In the recent case of Oyesanya v Mid-Yorkshire Hospital NHS Trust (2015), the Court of Appeal considered the merits of a limitation defence. While the decision ultimately turned on the specific facts of the case, the Court of Appeal also emphasised that a limitation argument is part of the defence that must be proved, not a jurisdictional threshold.  Therefore, if the defence is struck out, there is no limitation question to decide.

Court of Appeal strikes out economic tort claims in air cargo litigation

The Court of Appeal in Emerald Supplies Ltd and others v British Airways (2015) has struck out a significant portion of the claims in the on-going air cargo cartel damages litigation.  The claims, based on the "economic torts" of interference with business by unlawful means and unlawful means conspiracy, were struck out primarily on the basis that the Claimants could not show that BA had the requisite intention to injure.

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