Legal and Financial Risk - May 2012
May 2012Legal and Financial Risk Newsletter
Hogan Lovells Legal and Financial Risk is a bi-monthly newsletter on recent legal developments that will impact upon corporates and financial institutions.
- Best endeavours clause leaves airline on cloud nine. The Court of Appeal has recently ruled in Jet2.com Limited v Blackpool Airport Limited that a best endeavours clause may lead to the parties subject to it incurring some financial cost in pursuit of its object. While the court was clear that there was a limit to the extent that a party would be obliged to act against its own commercial interests, the fact that additional costs may be incurred in the process is not of itself a sufficient reason to avoid the obligation.
- Court of Appeal upholds the decision of the High Court in Lomas v JFB Firth. On 3 April 2012, the Court of Appeal handed down its decision in Lomas & Ors v JFB Firth Rixson Inc & Ors. The appeal addressed the true construction of section 2(a)(iii) of the 1992 ISDA Master Agreement which provides that each payment obligation under the agreement is subject to a condition precedent that no event of default or potential event of default has occurred or is continuing.
- A flexible approach to the Brussels I Regulation. A recent Commercial Court judgment has backed a liberal interpretation of the Brussels I Regulation, making it easier for courts to decline jurisdiction, where appropriate, in favour of courts outside the EU.
- Jackson: Further update on implementation of the reforms on costs and funding in the UK. Over recent years we have issued a number of communications on the reform of the costs and funding of civil litigation in England and Wales. These arise from the work of Lord Justice Jackson, who was commissioned in 2008 to find ways of reducing the costs of civil litigation and increasing means of accessing justice. The so-called "Jackson reforms" are now in the process of being implemented and they will bring about significant change to the way in which civil litigation is conducted.
- S.166 reports: onwards and upwards. A recent unsuccessful attempt to limit the extent to which authorised persons are liable for the costs of s.166 reports under the new Financial Services Bill has highlighted ongoing concerns within the financial services industry regarding the regulator's wide-ranging powers in this area. Under the Financial Services Bill both the Financial Conduct Authority (the "FCA") and the Prudential Regulatory Authority (the "PRA") will inherit the FSA's ability to use s.166 reports (also known as skilled persons reports) as a costs shifting mechanism which requires authorised persons to foot the bill for such reports even in circumstances where there is no evidence of any wrongdoing on the part of the firm.
- Co-operation in good faith: food for thought. Where parties to a long-term services contract agree "to co-operate with each other in good faith", they take on a responsibility to work together to overcome problems and not to take unreasonable actions which might damage their working relationship.
- West Tankers: the never-ending story. This article discusses the various stages in the dispute between West Tankers and Allianz SpA (formerly Riunione Adriatica di Sicurta SpA), which has given rise to a series of decisions by different courts and tribunals. We consider the practical implications of those decisions, including the ECJ proceedings and the latest chapter in the English courts in April 2012.
Read the full newsletter: 'Legal and Financial Risk - May 2012'